Money chat with Pete Eldridge
CAB and askTheSite advisor, Pete Eldridge, dropped in to answer questions about your finances.
**helen**: Hiya Pete
Pete: Hi.
**helen**: Okay, here's the first question.
Bunnie: I'm really worried about my financial situation, is there anything I can do to put off having to pay my professional loan back, as I just can't afford it. It's with NatWest, but I don't know if it would be worth the added interest. Oh dear, what a pickle!
Pete: The main way to put it off is by talking to the bank and rescheduling it. You could also look to see if there's a loan from another company at a lower level of interest to replace the career loan. One place to compare loans is at moneysavingexpert.com
I'm afraid there isn't a lot more that you might be able to do. It may be possible to extend the repayment period and see if that helps the amount you're asked to repay each month. So the first point of call is to speak to NatWest.
BritJamez: I want to re-mortgage my flat in the very near future. What are the benefits and downsides of releasing equity from the property? (I hope this is your kind of area, since it involves money.)
Pete: It's one of those things that you may be able to get better advice on from an independent financial advisor because there are quite a few factors that we can't give advice on because we're not regulated by the Financial Services Authority.
It's also worth remembering that taking money out of a property can lead to all sorts of problems. They may not apply here, but it is one of the things that is causing problems at the moment and means that people are growing wary of equity release schemes. Another thing to be aware of, of course, is that house prices are dropping at the moment and the last thing you want is to risk going into negative equity.
BritJamez: This is true!
Shyboy: Should students panic about using their overdraft when their loan runs out?
Pete: Not necessarily. Many student overdrafts have 0% interest and providing the person can find themselves work or another stream of income during the holidays so they can get back on track, I don't think it's too much of a problem.
A word of warning though - if you go above the agreed limit then the banks will slam you pretty hard with charges and interest. Depending on the course maybe see if there is time for a part-time job, I always like working behind the student bar.
BritJamez: Can you explain how the rate of inflation and the Bank of England's interest rates coincide? What are the consequences of the scales tipping in either direction for both? Would a drop in interest rates mean an increase on store prices? I'm sorry these questions are broad.
Pete: Well that is a very broad question and I did manage to fail A level economics... but the Bank of England's remit is to keep inflation under control and about the only weapons to do this are through the money supply and interest rates. The money supply was used during the 80's under Margaret Thatcher and that was the 'Chicago school' inspired by Milton Freedman who suggested controlling the money supply. A much more classical way is through interest rates - which is what the FED, the Bank of England and the European Central Bank are now doing.
But beyond that brief overview - the best thing is to read the financial press, especially the Sundays, the Financial Times and the Economist for up-to-date information.
BritJamez: It does. Thanks.
Sofie: OK, is it possible for me to get income support on the basis of being partially sighted?
Pete: It's possible as benefits are based on individual circumstances. If you can't work and have been told you aren't able to work then you may be able to claim income support but you may do better to claim incapacity benefit and or Disability Living Allowance (DLA).
Sofie: OK.
Pete: We would also suggest that you talk to the RNIB if you are registered blind or alternatively speak to your local CAB.
Sofie: I can't work (because my problem with my eyes is now causing neck pain, due to head position) but I haven't been told that I can't work.
Pete: OK Sofie, to really be able to get income support or incapacity benefit you need to get signed off by your doctor.
Sofie: Will do, thank you.
Pete: It also sounds like things may be getting worse so you should consider Disability Living Allowance (DLA). There are two parts to DLA - a care component and a mobility component. You are most likely to get the mobility component and you could also look to try for the care component. The thing about DLA is it should help you if you can work and you're still able to work if you get it.
Sofie: I have applied for DLA, but haven't heard anything yet.
Pete: It can take between six weeks and two months to get the benefit.
Sofie: I have been told that before, I think.
Pete: Can I ask how old you are Sofie?
Sofie: I'm 18.
Pete: Because you're 18 you should be able to get incapacity benefit without having paid National Insurance contributions and you'll get more on incapacity than income support. However, remember incapacity benefit doesn't mean you automatically get other benefits such as council tax and housing benefit.
BritJamez: How about colour blindness? As this restricts jobs I am able to do, through disability.
Pete: It depends on how colour blind you are. It would have to be very serious and affect your ability to work at all. So basically everything said about benefits applies - everything depends on the seriousness of the illness, how incapacitated you are and whether you've paid enough in national insurance contributions. This applies unless you are under 20, as there are special rules for people below that age. If you haven't paid enough contributions you can't get incapacity benefit over that age or contribution based Jobseeker's Allowance. These are insurance based benefits, and if you haven't paid your premiums you can't make a claim.
ScaryMonster: I worked over the summer, but didn't count as a student. I only worked in the holidays and paid lots of tax. I didn't reach the threshold for paying tax and won't by the end of this tax year. How do I get my rebate? I had my summer placement job, but I've got another couple of jobs working for college and the swimming pool at home, so I'm still in employment with them. Do I have to wait until April or can I get it sooner?
Pete: You can make a claim to them right now but there is no guarantee, because you are still in employment, that they will accept the rebate. They will want to see your P60 for the whole tax year. There is also a possibility you might get interest on the rebated amount at the rate of 2.5% (providing the rebate is over £25). There are other rules and regulations as well so I'm afraid you can't bank on getting it. Good luck.
BritJamez: I'm looking to get a credit card for overseas use as my bank is currently charging a wee fortune for such services. I know the pros and cons of credit cards as I've been there and done that. My question is: where is the ideal place to search for good deals such as 0% on purchases, free overseas withdrawals, etc.
Pete: The website I mentioned earlier - moneysavingexpert.com offers brilliant advice on credit cards, loans, insurance and all that sort of stuff. Be aware that even when you use the credit card abroad there will be some charges incurred on the exchange rate. But give the website a try.
BritJamez: Will do. And while we're talking about cards/banks, etc. I have heard that there's a bank somewhere which offers an instant American tourist visa as part of its introductory deal. Do you know which one specifically? It may not be entirely true but worth asking before listening to rumours overheard on the web.
Pete: That's certainly not true - most Brits are able to go the states on the visa waiver program. The only reason you wouldn't be able to use this is if you have been arrested, but not convicted, for anything apart from a minor motoring offence. In that case you need to apply for a visa through the American Embassy.
BritJamez: Do you know if that's only with a fancy dancy biometric passport?
Customs will sometimes stop people if they think too much is being carried for personal use. Be warned if they stop you and decide if it's not for personal use they have been known to confiscate cars or vans.
Pete: This has been the case for a fair while now - basically since 9/11. You can get in touch with American Embassy, their helpline costs £1.20 per minute but its website is pretty useful - usembassy.org.uk.
BritJamez: I did notice they charge a bomb for that helpline.
Pete: Obviously a bank account isn't going to affect this as no bank can change entry regulations to the US, not even the Bank of America.
BritJamez: Thanks.
Katchika: I want to know about tax rebates too. I'm sure I am owed hundreds and I'm having trouble claiming anything as I don't have every single piece of paperwork they want, due to working loads of jobs. Some of them haven't even given me the necessary p45s/p60s. Is there anything I can do?
Pete: The main thing to do is to go back to the employer and ask them for it. If that won't work you could try and find the employer's tax office. If you find that then you may be able to get the p60 from them.
Most big towns around the country have what is called a tax enquiry office. Find out the contact details of your previous employer and take that along with the details of the work you did. They should then be able to help with the problems around your P60. You've got six years to sort it out as you can claim that far back.
BritJamez: I'm curious about something that happened when I was made redundant. It was in December 2006 after ten years of paying tax and NI, but I was told my income support would only have lasted until May 2007.
Pete: That's not income support, it sounds like you are describing contribution based Jobseeker's Allowance which lasts for six months. At the end of the six months if you are still looking for a job you can change to income based Jobseeker's Allowance or if you can't work you'll be able to claim income support. If you have any further concerns check with the local Citizens Advice Bureau or entitledto.co.uk which is a great website about the benefits you can claim and has an online calculator.
BritJamez: Good spot, Holmes! I knew I should have looked into it more at the time - I just took the cheques and didn't bother wondering why!
Pete: Well I hope that helped to explain it.
Lu_C: I've been thinking that maybe I should start saving into a pension as early as possible (I'm 20 this year). I've been thinking about how money value changes so much over the years and wondering if it's actually worth it yet. £100 when I'm retiring could be the equivalent of a lot less than it is now. So the money I save for it might not be worth a lot when I'm old.
Is it better to keep other savings going for now (e.g. I have a mini-ISA) and then maybe start a pension when I'm older with the money I've saved? I wouldn't be able to put a lot into it anyway because I'm not earning much. I don't know if that makes any sense but I really find money hard to get my head around.
Pete: We all find it hard to get our head around money. Putting money into a pension plan at the age of 20 and putting in as much as you can is probably a good idea. If you're employed you should look at whether your company runs a pension scheme. If it does it's quite likely that the company will put money into it too.
You can also check if an employer is involved in the stakeholder pension scheme. This is the government scheme that was introduced a number of years ago for people on lower incomes whose companies didn't provide a pension scheme at that time. However, some people in the pensions industries are now saying that the stakeholder scheme is not very good.
Being in a scheme of any kind is probably better than just investing yourself, unless you are very skilful. The bigger the pot invested means they can spread the risk when investing to make for a scheme which increases the final payout. I'd consider speaking to an Independent Financial Advisor (IFA). You can pay them in two ways. You can pay a fee for their advice or you can pay through a commission basis. As you are making a long term investment it may be better to pay the fee rather than paying the commission for the next 30 or 40 years!
But going back to the main point, we can't tell for certain whether or not savings will be less profitable than a pension, but in general money invested in a wide spread portfolio through something like a pension scheme will ride the ups and downs of the market better than just putting the money into a building society or even a mini-ISA. Do check this with an IFA.
Fiz: If I volunteer can I still get JSA? And if so do I have to do a certain amount of volunteering to claim it?
Pete: The answer is yes. This is because volunteering is often considered to be helping to improve your CV, building transferable skills. Very often people who volunteer end up working for the organisation that they volunteered for - as did I! It's seen as a positive thing by the job centre - but remember that you must still go for the job centre interviews on a regular basis. You must be able to show you are still available for work, and you must be able to drop the volunteering with about 48 hours notice so you can still attend interviews. So it's worth letting the organisation know that an interview may come up when volunteering as if you have to go to an interview you'll have to miss the volunteering or risk your benefits.
Richard: What are the limits on the amount of tobacco and alcohol you can bring through customs?
Pete: It depends on where you are coming from. If you are coming from an EEA country (EU plus Switzerland, Iceland, Norway and Lichtenstein) then providing you have paid tax and duty in those countries you can bring back a very large quantity of drink and tobacco. One thing to remember is that it is for your own personal use. You could stock up for a party - but only for your party - not for a relative's party or a friend's.
Customs will sometimes stop people if they think too much is being carried for personal use. Be warned if they stop you and decide if it's not for personal use they have been known to confiscate cars or vans.
What you can bring back from a non-EEA country is pretty complicated but here's the complete breakdown, including some information on gifts that aren't alcohol (such as tobacco and other items) -
Cigarettes - 3200
Cigarillos - 400
Cigars - 200
Tobacco (loose) - 3 kgs
Spirits, strong liqueurs over 22% volume - 1 litre
or
Fortified or sparkling wines, some less strong liquor - 2 litres
Still table wine - 2 litres
Perfume - 60cc/ml
or
Toilet water - 250cc/ml
Other goods £145
You're entitled to these allowances only if you're travelling personally with the goods and aren't planning to sell them.
If you bring in something worth more than the limit of £145 (as shown in above), you will have to pay charges on the full value, not just the value above £145. If you're travelling as a group you can't pool your allowance against something worth more than £145 - everything counts as belonging to one individual.
There's no reference to beer in the regulations but within EEA countries you can bring back 110 litres before they would consider this not for personal use.
Hope that makes it easier to figure out. :)
**Helen**: Thanks Pete, cheers for all the answers.
Pete: Good night everyone thanks for the questions!
Money chat with Pete Eldridge
CAB and askTheSite advisor, Pete Eldridge, dropped in to answer questions about your finances.
**helen**: Hiya Pete
Pete: Hi.
**helen**: Okay, here's the first question.
Bunnie: I'm really worried about my financial situation, is there anything I can do to put off having to pay my professional loan back, as I just can't afford it. It's with NatWest, but I don't know if it would be worth the added interest. Oh dear, what a pickle!
Pete: The main way to put it off is by talking to the bank and rescheduling it. You could also look to see if there's a loan from another company at a lower level of interest to replace the career loan. One place to compare loans is at moneysavingexpert.com
I'm afraid there isn't a lot more that you might be able to do. It may be possible to extend the repayment period and see if that helps the amount you're asked to repay each month. So the first point of call is to speak to NatWest.
BritJamez: I want to re-mortgage my flat in the very near future. What are the benefits and downsides of releasing equity from the property? (I hope this is your kind of area, since it involves money.)
Pete: It's one of those things that you may be able to get better advice on from an independent financial advisor because there are quite a few factors that we can't give advice on because we're not regulated by the Financial Services Authority.
It's also worth remembering that taking money out of a property can lead to all sorts of problems. They may not apply here, but it is one of the things that is causing problems at the moment and means that people are growing wary of equity release schemes. Another thing to be aware of, of course, is that house prices are dropping at the moment and the last thing you want is to risk going into negative equity.
BritJamez: This is true!
Shyboy: Should students panic about using their overdraft when their loan runs out?
Pete: Not necessarily. Many student overdrafts have 0% interest and providing the person can find themselves work or another stream of income during the holidays so they can get back on track, I don't think it's too much of a problem.
A word of warning though - if you go above the agreed limit then the banks will slam you pretty hard with charges and interest. Depending on the course maybe see if there is time for a part-time job, I always like working behind the student bar.
BritJamez: Can you explain how the rate of inflation and the Bank of England's interest rates coincide? What are the consequences of the scales tipping in either direction for both? Would a drop in interest rates mean an increase on store prices? I'm sorry these questions are broad.
Pete: Well that is a very broad question and I did manage to fail A level economics... but the Bank of England's remit is to keep inflation under control and about the only weapons to do this are through the money supply and interest rates. The money supply was used during the 80's under Margaret Thatcher and that was the 'Chicago school' inspired by Milton Freedman who suggested controlling the money supply. A much more classical way is through interest rates - which is what the FED, the Bank of England and the European Central Bank are now doing.
But beyond that brief overview - the best thing is to read the financial press, especially the Sundays, the Financial Times and the Economist for up-to-date information.
BritJamez: It does. Thanks.
Sofie: OK, is it possible for me to get income support on the basis of being partially sighted?
Pete: It's possible as benefits are based on individual circumstances. If you can't work and have been told you aren't able to work then you may be able to claim income support but you may do better to claim incapacity benefit and or Disability Living Allowance (DLA).
Sofie: OK.
Pete: We would also suggest that you talk to the RNIB if you are registered blind or alternatively speak to your local CAB.
Sofie: I can't work (because my problem with my eyes is now causing neck pain, due to head position) but I haven't been told that I can't work.
Pete: OK Sofie, to really be able to get income support or incapacity benefit you need to get signed off by your doctor.
Sofie: Will do, thank you.
Pete: It also sounds like things may be getting worse so you should consider Disability Living Allowance (DLA). There are two parts to DLA - a care component and a mobility component. You are most likely to get the mobility component and you could also look to try for the care component. The thing about DLA is it should help you if you can work and you're still able to work if you get it.
Sofie: I have applied for DLA, but haven't heard anything yet.
Pete: It can take between six weeks and two months to get the benefit.
Sofie: I have been told that before, I think.
Pete: Can I ask how old you are Sofie?
Sofie: I'm 18.
Pete: Because you're 18 you should be able to get incapacity benefit without having paid National Insurance contributions and you'll get more on incapacity than income support. However, remember incapacity benefit doesn't mean you automatically get other benefits such as council tax and housing benefit.
BritJamez: How about colour blindness? As this restricts jobs I am able to do, through disability.
Pete: It depends on how colour blind you are. It would have to be very serious and affect your ability to work at all. So basically everything said about benefits applies - everything depends on the seriousness of the illness, how incapacitated you are and whether you've paid enough in national insurance contributions. This applies unless you are under 20, as there are special rules for people below that age. If you haven't paid enough contributions you can't get incapacity benefit over that age or contribution based Jobseeker's Allowance. These are insurance based benefits, and if you haven't paid your premiums you can't make a claim.
ScaryMonster: I worked over the summer, but didn't count as a student. I only worked in the holidays and paid lots of tax. I didn't reach the threshold for paying tax and won't by the end of this tax year. How do I get my rebate? I had my summer placement job, but I've got another couple of jobs working for college and the swimming pool at home, so I'm still in employment with them. Do I have to wait until April or can I get it sooner?
Pete: You can make a claim to them right now but there is no guarantee, because you are still in employment, that they will accept the rebate. They will want to see your P60 for the whole tax year. There is also a possibility you might get interest on the rebated amount at the rate of 2.5% (providing the rebate is over £25). There are other rules and regulations as well so I'm afraid you can't bank on getting it. Good luck.
BritJamez: I'm looking to get a credit card for overseas use as my bank is currently charging a wee fortune for such services. I know the pros and cons of credit cards as I've been there and done that. My question is: where is the ideal place to search for good deals such as 0% on purchases, free overseas withdrawals, etc.
Pete: The website I mentioned earlier - moneysavingexpert.com offers brilliant advice on credit cards, loans, insurance and all that sort of stuff. Be aware that even when you use the credit card abroad there will be some charges incurred on the exchange rate. But give the website a try.
BritJamez: Will do. And while we're talking about cards/banks, etc. I have heard that there's a bank somewhere which offers an instant American tourist visa as part of its introductory deal. Do you know which one specifically? It may not be entirely true but worth asking before listening to rumours overheard on the web.
Pete: That's certainly not true - most Brits are able to go the states on the visa waiver program. The only reason you wouldn't be able to use this is if you have been arrested, but not convicted, for anything apart from a minor motoring offence. In that case you need to apply for a visa through the American Embassy.
BritJamez: Do you know if that's only with a fancy dancy biometric passport?
Pete: This has been the case for a fair while now - basically since 9/11. You can get in touch with American Embassy, their helpline costs £1.20 per minute but its website is pretty useful - usembassy.org.uk.
BritJamez: I did notice they charge a bomb for that helpline.
Pete: Obviously a bank account isn't going to affect this as no bank can change entry regulations to the US, not even the Bank of America.
BritJamez: Thanks.
Katchika: I want to know about tax rebates too. I'm sure I am owed hundreds and I'm having trouble claiming anything as I don't have every single piece of paperwork they want, due to working loads of jobs. Some of them haven't even given me the necessary p45s/p60s. Is there anything I can do?
Pete: The main thing to do is to go back to the employer and ask them for it. If that won't work you could try and find the employer's tax office. If you find that then you may be able to get the p60 from them.
Most big towns around the country have what is called a tax enquiry office. Find out the contact details of your previous employer and take that along with the details of the work you did. They should then be able to help with the problems around your P60. You've got six years to sort it out as you can claim that far back.
BritJamez: I'm curious about something that happened when I was made redundant. It was in December 2006 after ten years of paying tax and NI, but I was told my income support would only have lasted until May 2007.
Pete: That's not income support, it sounds like you are describing contribution based Jobseeker's Allowance which lasts for six months. At the end of the six months if you are still looking for a job you can change to income based Jobseeker's Allowance or if you can't work you'll be able to claim income support. If you have any further concerns check with the local Citizens Advice Bureau or entitledto.co.uk which is a great website about the benefits you can claim and has an online calculator.
BritJamez: Good spot, Holmes! I knew I should have looked into it more at the time - I just took the cheques and didn't bother wondering why!
Pete: Well I hope that helped to explain it.
Lu_C: I've been thinking that maybe I should start saving into a pension as early as possible (I'm 20 this year). I've been thinking about how money value changes so much over the years and wondering if it's actually worth it yet. £100 when I'm retiring could be the equivalent of a lot less than it is now. So the money I save for it might not be worth a lot when I'm old.
Is it better to keep other savings going for now (e.g. I have a mini-ISA) and then maybe start a pension when I'm older with the money I've saved? I wouldn't be able to put a lot into it anyway because I'm not earning much. I don't know if that makes any sense but I really find money hard to get my head around.
Pete: We all find it hard to get our head around money. Putting money into a pension plan at the age of 20 and putting in as much as you can is probably a good idea. If you're employed you should look at whether your company runs a pension scheme. If it does it's quite likely that the company will put money into it too.
You can also check if an employer is involved in the stakeholder pension scheme. This is the government scheme that was introduced a number of years ago for people on lower incomes whose companies didn't provide a pension scheme at that time. However, some people in the pensions industries are now saying that the stakeholder scheme is not very good.
Being in a scheme of any kind is probably better than just investing yourself, unless you are very skilful. The bigger the pot invested means they can spread the risk when investing to make for a scheme which increases the final payout. I'd consider speaking to an Independent Financial Advisor (IFA). You can pay them in two ways. You can pay a fee for their advice or you can pay through a commission basis. As you are making a long term investment it may be better to pay the fee rather than paying the commission for the next 30 or 40 years!
But going back to the main point, we can't tell for certain whether or not savings will be less profitable than a pension, but in general money invested in a wide spread portfolio through something like a pension scheme will ride the ups and downs of the market better than just putting the money into a building society or even a mini-ISA. Do check this with an IFA.
Fiz: If I volunteer can I still get JSA? And if so do I have to do a certain amount of volunteering to claim it?
Pete: The answer is yes. This is because volunteering is often considered to be helping to improve your CV, building transferable skills. Very often people who volunteer end up working for the organisation that they volunteered for - as did I! It's seen as a positive thing by the job centre - but remember that you must still go for the job centre interviews on a regular basis. You must be able to show you are still available for work, and you must be able to drop the volunteering with about 48 hours notice so you can still attend interviews. So it's worth letting the organisation know that an interview may come up when volunteering as if you have to go to an interview you'll have to miss the volunteering or risk your benefits.
Richard: What are the limits on the amount of tobacco and alcohol you can bring through customs?
Pete: It depends on where you are coming from. If you are coming from an EEA country (EU plus Switzerland, Iceland, Norway and Lichtenstein) then providing you have paid tax and duty in those countries you can bring back a very large quantity of drink and tobacco. One thing to remember is that it is for your own personal use. You could stock up for a party - but only for your party - not for a relative's party or a friend's.
Customs will sometimes stop people if they think too much is being carried for personal use. Be warned if they stop you and decide if it's not for personal use they have been known to confiscate cars or vans.
What you can bring back from a non-EEA country is pretty complicated but here's the complete breakdown, including some information on gifts that aren't alcohol (such as tobacco and other items) -
Cigarettes - 3200
Cigarillos - 400
Cigars - 200
Tobacco (loose) - 3 kgs
Spirits, strong liqueurs over 22% volume - 1 litre
or
Fortified or sparkling wines, some less strong liquor - 2 litres
Still table wine - 2 litres
Perfume - 60cc/ml
or
Toilet water - 250cc/ml
Other goods £145
You're entitled to these allowances only if you're travelling personally with the goods and aren't planning to sell them.
If you bring in something worth more than the limit of £145 (as shown in above), you will have to pay charges on the full value, not just the value above £145. If you're travelling as a group you can't pool your allowance against something worth more than £145 - everything counts as belonging to one individual.
There's no reference to beer in the regulations but within EEA countries you can bring back 110 litres before they would consider this not for personal use.
Hope that makes it easier to figure out. :)
**Helen**: Thanks Pete, cheers for all the answers.
Pete: Good night everyone thanks for the questions!