The Wider Rule from Martin Lewis (From Worcester News)

The Wider Rule from Martin Lewis

11:04am Thursday 14th January 2010 in

• Skip social links
• Print
• Email
• Comments(0)

I ONCE met a man with £80,000 in savings earning less than one per cent interest while he had £80,000 outstanding on his mortgage – yet he said he was good with money. Like many, he thought being thrifty and a careful budgeter was enough.

Here are some wealth warnings based on things I’ve come across during my TV money makeovers: WITH £80,000 mortgage debt at more than six per cent interest, just switching to a better deal would have cut £100 a month of this man’s costs. The family cleared the mortgage with the savings and was £5,000 a year better off. They reduced their costs by nearly £50,000 by the time the loan was due to be cleared.

THE WIDER RULE:

Pay off your debts before saving.

The cost of debt almost always dwarfs the amount earned from savings. See moneysavingexpert.com/ repaymortgage.

ONE woman had more than £10,000 of outstanding loans and credit cards and applied for a new 0 per cent balance transfer credit card. The card had a £6,000 credit limit, but she only shoved £2,000 on it, not realising she could move other debts to it too. As they had a host of other cards at 15 per cent-plus interest, filling this up would save more than £600 a year.

THE WIDER RULE:

Check all your cards’ interest charges and find out if there’s room on your credit limits. Call up each provider and ask for a special rate if you move debt to their card. You’ll be surprised how often they say yes, MBNA and Barclaycard especially. See moneysavingexpert.com/balance transfers for all the current best buys.

ONE man was changing the everescalating valuation of his house on his insurance form each time he renewed the policy. But for buildings cover, it’s a property’s rebuild value that counts – his premium went from £1,000 to £250 a year.

THE WIDER RULE:

Under covering is just as damaging as over covering. For super cheap home insurance combine comparison sites and check if you can get hidden cashback on top. See moneysavingexpert.com/homeinsurance

---

TV money guru Martin Lewis runs the consumer revenge website MoneySavingExpert.com Ensure you get his weekly e-mail so you’re constantly saving money.