Of course, just because they’re cheap doesn’t mean they don’t have to meet the same safety standards as higher priced airlines, just that you won’t get any food, entertainment or indeed space for your legs.

What the chart also fails to show is the extra money that budget airlines are trying to make charging for check-in, extra luggage and even going to the toilet.

Via the ever enlightening Bitterwallet.

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How Budget Airlines Cut Costs

There’s an interesting look at this dilemma from economist Tim Harford. Applying some game theory to the situation, he concludes that a non-nostalgic fan should indeed take the refund.

Game theory makes demanding assumptions about human rationality that may not apply to grieving fans. I would pay closer attention to research in economic psychology that suggests people are very unwilling to part with an item once they feel a sense of ownership. A non-nostalgic fan should go for the refund.

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Jacko Tickets: Refund or Souvenir?

Over at AllFinancialMatters, JLP recently asked his readers what their total debt to income ratio (DIR) was.

This calculation looks at the total debt you owe, including mortgages, loans and everything else, divided by your income (in this case, gross income, to make the calculation a little easier):

Total Debt / Gross Income = Total Debt To Income Ratio

Some of the commentors on the post suggest that it’s not a great measure of financial health, as people in very different situations can come out with the same Debt to Income Ratio (a little like using BMI as a measure of your bodily health – for example rugby players may have a higher BMI than most people, but they might also be considerably fitter).

However, if you’re trying to rid yourself of debt and calculate it every so often it could be a useful guage of how you’re faring.

JLP reckons that the average DIR in the US is around 1.3 (130%) – having done our calculation, I’m a little worried that we’re coming out at around 3 (or 300%)! I wouldn’t say that we’re particularly indebted, or have particularly low salaries, which could push the figure up. Our largest debt is naturally our mortgage, but I wonder how we compare to the UK average, and if we’re average, which I suspect we are, what the reason for the difference between the UK and US is. Is it because house prices are relatively higher over here?

In any case, to calculate your Total Debt to Income ratio, add up all of your debts, and divide by your income – use either gross or net income, but remember which one you’re using if you’re comparing either your own DIR going forward or with others.

Calculate it for yourself, and let us know what your ratio is in the comments below. If it’s 3 or above it will make me feel much better.

photo credit: JasonRogersFooDogGiraffeBee

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Total Debt To Income Ratio

Some interesting stats on bankruptcies over at WalletPop, pointing to an accountancy firm survey which shows that there are more women from the 18-24 age group going bankrupt than there are men.

The blame for this is largely (and probably more importantly, more newsworthily) laid at the door of the “WAGs”, with women trying to match the spending of the likes of Victoria Beckham or Colleen Rooney. It’s quite sad that this should be the case, but at the same time, with the exposure they get and the lifestyles they lead, it’s not particularly surprising.

But another possible explanation is given: women of this age are much more likely to be living in their own place by the time they reach 24, as opposed to men.

According to the Office of National Statistics, 29% of 20 to 34-year-old men still live with their parents compared to just 18% of women. Those young women are then taking out mortgages which consume too much of their salaries, leaving them vulnerable to interest rate changes and more likely to go bankrupt.

Why is there such a difference between the numbers of men and women leaving home in their early twenties?

Add to this the fact that women are generally paid less than men, and the bankruptcy split between male and female starts to become clearer.

photo credit: tiny_packages

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Majority of Young Bankrupts Are Women

Why am I doing this? Well, for a start, it’s to help me keep an eye on where all my money is going. If I’ve got to publish my expenses, then I’ll have to keep track of every single penny that I spend.

Publishing my expenses will also prove to my wife see where all my money is going.

Now, don’t get me wrong, we don’t have a trust problem here (unlike politicians and their constituents, and the BBC fat cats and us licence fee payers). But for a while we’ve failed to save any money (blame the wedding?!), and given our incomings and outgoings, we feel we should have some left over at the end of each month to put aside for a rainy day.

So it’s the old problem – we need to know where our money is going before we can do anything about it. I’ll be using Expensr religiously once again to track my spending, and I’m already trying to have No Spend Day’s (NSDs) as often as possible.

Talking of which, I’m pretty strict when it comes to NSDs, as I count not only money spent from out of my pocket, but also if any Direct Debits go out of my current account, that’s spending and so that day isn’t a No Spend Day. Whether you choose the hardcore measure of an NSD like me, or the simpler method, it’s a good little test  and target to get your spending down.

One of the nice things about Expensr is the graphs which it produces, which I can plonk in front of the wife at the end of the month to show where all the money’s gone:

It also allows me to drill down further into the individual items making up each category. Hopefully after a month or two of doing this we can identify where all the leaks are and do something about it.

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Publishing My Expenses

Thanks Aidan.

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CassetteBoy vs The Apprentice

The Michael Jackson ticket saga took another twist today when concert promoter AEG said that ticketholders could either choose to have a refund or still receive their tickets, which they say could become collectors items.

Promoter AEG Live said the tickets feature graphics “inspired and designed” by the music legend, who died at the age of 50 on Thursday. It adds that the originals will become collectors’ items, and feature special images which give them a 3D moving effect.

It’s an interesting choice. Cold, hard cash in your back pocket, or the gamble that your souvenir Jacko hologrammed ticket might one day be worth more than the amount you forked out in the first place. Of course, it’s worth remembering that 799,999 other people will be thinking the same, and about half of those who do take up the offer of souvenir tickets will be thinking about putting them on eBay the minute they drop through the post box.

I should imagine that for some of Jackson’s most ardent fans (and admittedly, there are lots of them), it will be a no-brainer to keep the tickets as (expensive and disappointing) souvenirs. For the rest of the ticketholders, I would have thought that the refund would be the way to go, rather than having to find somewhere to keep a piece of shiny paper as a constant reminder of a day out you shelled out for that never came.

Fans have until 14th August to decide.

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Michael Jackson Tickets: Refund or Souvenir?

I recently received an email about a new balance transfer deal on an MBNA credit card – normally I’d delete this sort of email without much thought, but as this one was offering a 13-month 0% deal, I thought I’d check it out in more detail.

A little background on 0% balance transfers.

If you have a big balance on your credit card, 0% balance transfer deals can be a good option for you, as they can potentially save you money on the amount of interest you pay. Rather than the standard interest rate being applied to your balance (which is likely to be between 10%-20% APR), you just have to make the minimum payment on the card for the duration of the deal, and providing you don’t spend on the card or worse, take cash out using the card, the balance won’t have anything added to it during the deal period. These cards do take some will power to prevent yourself spending on them (which is a real no-no, thanks to credit card companies’ cunning “negative payment hierarchy”).

Credit card companies offer these deals to get new customers in the hope that when the deal finishes you’ll keep using them. In the past it was reasonably easy to be a “rate tart”, switching from one 0% balance card to the next whenever the deals ended, but these days this is not so simple. It’s because these deals are somewhat rarer that this one jumped out at me.

As is standard with these credit card deals, there’s also a handling fee – in this case it’s 2.9%, and this has to be factored in to the overall saving calculation, along with thinking about how much you can afford to pay, taking into account any minimum repayment amount that the credit card company may enforce.

Now onto the calculations. I’m not going to get you to calculate the saving manually – as you can see, with interest rates, minimum payments and transfer fees, there’s quite a lot to take into account. Thankfully, there’s already a balance transfer calculator available that will do this for you. Plug all of the details in to the calculator to check whether the deal you’ve been offered is worthwhile.

Here’s a couple of examples based on this particular card to show you the potential savings:

As you can see, where these deals really come into their own are on large balances.

Although the savings are there to be had, paying just £50 per month off a £5,000 balance is pretty poor, and would take you a long, long time to pay off the credit card in full (there’s a calculator for that, too, unsuprisingly). In the table, you can see how much is left to pay on the card once the 0% deal finishes – still some way to go, so they’re not the answer to all of your problems if you do have a large balance. By “snowflaking” as much money as possible to the card whilst you have a 0% deal you can cut the amount of interest you pay, along with the time it will take to clear the balance.

In summary, 0% balance transfer deals (along with low interest “life of balance” credit card deals) do have their place, and if used carefully can save you money. But they do require some thought and will power, and the ultimate aim should be to not get a large credit card balance in the first place.

photo credit: Ciaran McGuiggan [Away to Glasto for a Week!!]

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0% Balance Transfer Credit Cards & How Much You Could Save

This week has seen the launch of Vanguard, a US fund manager, into the U.K. market. Their entry and the arrival of its tracker funds was hoped to have set a challenge to other fund managers to make their funds cheaper to invest in – as some of Vanguard’s tracker funds charge just 0.15% per year, whereas most other fund manager’s trackers charge considerably more, with none-tracker funds charging as much as 1.5% per annum.

I used to be pretty dismissive of tracker funds, as the are generally run by computers which follow a given index, and are not actively managed by an experienced fund manager or team of people. But more recently I’ve come to appreciate that they can perfrom pretty effectively, even compared to actively managed funds. And because tracker fund charges are generally cheaper, your investment doesn’t have to perform quite as hard to get the same performance as a managed fund.

Anyway, back to Vanguard. As we mentioned, their entry into the market should have helped to highlight the high charges on other funds, however, there seems to be some confusion on how you’ll be able to invest in their funds.

Ed Bowsher at Lovemoney suggests that they’ll only be available if you buy them via an IFA - who will charge you their own fees – rather than through execution-only brokers, who tend to offer funds far cheaper than IFAs (as you get no advice as to whether the funds are suitable for you).

However, Vanguard’s website suggests that their funds will be available on the popular fund platforms (such as FundsNetwork or Cofunds), although they’re yet to reveal which ones, and the FT reckons that they’re yet to sign up with any platform.

Also, Vanguard have put a minimum investment amount of £100,000 if you’re investing with them – which will exclude the vast majority of investors, and definitely isolate themselves from any ISA investments. Yet they’re suggesting that this restriction will not apply if you’re buying through a platform (you’ll have to invest the platform’s minimum amount) – but as they’re yet to sign up to any platforms, it’s pretty academic at the moment. I’m led  to believe that negotiations with platforms have fallen down because of the charges that a platform would make – these would either cost Vanguard more than they’re making on the funds, or would eat into the margins that Vanguard has over other manager’s charges.

All-in-all, it’s a disappointing start to something that could have sent some shockwaves through the fund management industry, but hopefully Vanguard can sort the distribution confusion out and we can all have access to some extremely cheap investment funds.

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Vanguard Enter UK Market With Some Confusion

People are always leaving donations outside the charity shop near us. Walking past recently, my son spotted a guitar on a pile and asked if he could have it. I said yes. A friend accused me of stealing and asked whether I would take flowers off a grave. Who’s right?

Naturally, there’s quite a lot of uproar in the comments, many suggesting that this amounts to no more than simple theft, although it’s probably not that clear cut. I wonder how many of us, faced with a similar tempting situation, would actually do the same? Guitars are particularly close to my heart, so had I been faced with this exact same dilemma, I may have done the same thing (or at least, taken it for myself, not let my son have it!). But i do think they should make a fair donation to the charity that should have benefitted from the sale of the guitar.

Of course, normally, there is little of value left outside charity shops, just dodgy frocks, tacky ornaments and Des O’Connor records (and the shops themselves try to discourage donors leaving items outside, precisely because they don’t want the best items stolen).

Anyway, what are your thoughts? Is this simply theft? Should they return the item, or make a donation to clear their consciences? Let us know in the comments below.

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Take Donations From Outside A Charity Shop?