Authors: Steve Shipside
The Way to Wealth (8 page)
‘Plenty of time to sleep when you’re dead’, say clubbers, rad dudes and candle-burners generally, but few of them realise that Benjamin Franklin beat them to it by more than a couple of centuries when he said
‘there will be sleeping enough in the grave’.
However, Franklin probably didn’t mean that it was cool to fuel your all-nighters with Red Bull and vodka—but he did have a horror of wasted time and argued strongly that
‘how much more than is necessary do we spend in sleep! Forgetting that the sleeping fox catches no poultry’.
DEFINING IDEA
…My sense is that planned, permitted, endorsed napping by management is still rare.
~
DAVID DINGES, SLEEP RESEARCHER
Modern foxes may be interested to know that research suggests that while the brain definitely needs some occasional down time, it almost certainly doesn’t require ten hours of one-to-one with the duvet. In actual fact short ‘power naps’ of twenty or thirty minutes are probably all you need to refresh the grey matter and power up your productivity accordingly. NASA researchers have found that a thirty-minute power nap resulted in better scores from volunteers taking IQ tests as a gauge of mental agility. The results were quite marked—their scores were up to 40% better, in fact.
Power-napping proponents also point to lower stress rates and incidence of heart disease amongst those who regularly practise the art. None of this will surprise people who come from Latin cultures, for whom the siesta has long been seen as an essential part of the daily routine. The benefits of a siesta will also be immediately apparent to anyone who has had to present something important—or indeed, anything—to that first meeting after lunch.
All of this should not be seen as an excuse for the chronically lazy among us, however, as most research suggests that there is an upper limit to the length of a nap for optimum effectiveness. After about forty-five minutes you might well still be snugly asleep but you’re not doing any more to boost your brain.
There is one major downside to the power nap, however, which is persuading your colleagues that you are in fact upping your productivity rather than slacking off like Homer Simpson. Whilst there are one or two work environments that have accepted the power nap, you may find that your particular boss takes a dim view of it. If you’re lucky enough to have a boss who sports a droopy moustache, an oversized sombrero and a poncho then try suggesting a snooze lounge for tag-team napping.
And if you have no success, and you don’t have a dedicated snooze room, there’s even a thing called an Executive Hammock which is a tiny nylon foldaway hammock intended for use in the office, maybe strung up between the filing cabinets. Or if you can’t find a suitable fixing point then you could simply have two flunkies hold up the ends while you refresh yourself…
HERE’S AN IDEA FOR YOU
…There are phone/iPod-friendly mp3 files specifically for snoozing along to. These consist of twenty or thirty minutes of white noise (intended to help drown out external sound) followed by a series of gentle waking noises to bring you back from the land of nod. Search online for free samples; try
www.placebo.serv.co.za/?page_id=7
.
27
THE ART OF THE TART; RATE TART QUICK START
‘The borrower is a slave to the lender’
, as Franklin put it and as the credit crunch starts to kick in, a great many of us are just learning the real truth of that.
DEFINING IDEA
…Money is just the poor man’s credit card.
~
MARSHALL MCLUHAN
It’s not just that money has been cheap to come by, but it has also been relatively easy. Cheap, meaning interest rates have been low—not many of us can remember double-figure interest rates, for example.
Easy, in that credit companies have been all but battering down our doors in the rush to lend us money whether we need it or not.
Those rates are going up, though. I’m willing to bet you don’t know the exact rate your lender is charging on your credit card so go and find out—banks tend to bury the bad news a little, but somewhere on that corporate website it will say what the current rate is. Found it? More than it used to be or than you thought it was? Thought so, which means that if you’re not a rate tart yet then it’s time to pucker up.
‘Rate tart’ is the term for somebody who keeps their borrowing cheap by constantly moving their credit card balance around to take advantage of 0% interest deals from new cards. A few years ago this was relatively easy, as just about every bank was offering 0% for nine months or so, but a couple of details have now come in to blot that picture.
The first is the story that constantly applying for new cards spoils your credit rating and makes it harder to get a loan. That appears to be untrue. While credit ratings do take account of the number of times you apply for credit, they also treat balance transfers as paying off the old debt. So as long as you don’t do it too often (more than once or twice a year, for example) and as long as you’re successful in each application, then you should be fine.
The second point is that the truly great offers of extended and catch-free 0% deals have melted away a bit as the banks have tended to pull their horns in and look for liquidity. They’re still out there, however, so this just means looking around a bit more to find the right one.
The third development is that more and more transfers are subject to a fee, either as a fixed cost or as a percentage of the balance being transferred. This isn’t a disaster as long as you bear it in mind and do the maths.
The art of the rate tart is not dead, but it is getting harder—which means you have to shop around more carefully with calculator in hand. Above all, remember that banks make their money when the free period ends and the punitive rates start—so red-pencil that diary date and either have the debt paid or moved before D-day.
HERE’S AN IDEA FOR YOU
…Good research is the secret to the art of the rate tart. If you want a short cut to the current deals worth moving your balance for, then have a look at the credit card section of comparison websites like
www.moneysupermarket.com
. Hit the search engines and find one that is relevant to you.
Once upon a time you probably thought the worst date you could forget was your anniversary. That would have been before you missed that repayment date. As Franklin said:
‘creditors are a superstitious sect, great observers of set days and times.’
It pays to stay on the right side of those superstitions.
Forget your anniversary and you’re in for an orgy of flouncing, slammed doors, industrial-strength sulking and whiny tears. That’s presuming your partner is a man. You think that’s bad? Try forgetting a bank payment.
DEFINING IDEA
…If you make a couple of late payments on a new card with an introductory rate,…your annual percentage rate could jump as much as fifteen percentage points.
~
KEN MCELDOWNEY, CONSUMER EXPERT
You may have read that the charges imposed for late payments in the UK have been lowered to a flat fee of £12 by the Office of Fair Trading after a nationwide campaign against unfair and potentially illegal fees being charged by lenders. Excellent news.
You might even be tempted to think that the new £12 is so reasonable that it’s almost worth it to run a little late when things get tight come repayment time. Think again.
Every late payment will be noted on your credit record and will be seen as an indication that you are struggling with your existing level of debt.
That will mean a reassessment of your creditworthiness, so it can also affect your APR and monthly minimum repayment sums. You almost certainly didn’t read all the small print when signing up for that shiny new card or balance transfer but most likely the agreement you signed included the right of the lender to assess and adjust both interest rates and monthly minimums as you go, depending on your financial behaviour.
On the same basis a card issuer may decide to reduce your current credit limit on the grounds that it is already beyond you. In extreme cases they could recall the debt altogether—and you simply can’t afford to pay off that debt in one go. (If you can, then what are you doing making those late payments?)
That then has the knock-on effect that your chances of future borrowing will be reduced. Which could really hurt when you try to get a mortgage (or a remortgage if things are getting really tough). This, of course, means that your ‘cheap’ fee could be one of the most expensive financial choices you ever opt for.
So don’t miss your payments, wherever you are, and don’t try to bury your head in the sand. If you realise that the money just won’t be there to pay that direct debit then get in touch with your lenders immediately. If you are seen to be acting responsibly there should be no problem working out a new schedule of repayments, and possibly a repayment ‘holiday’ during which you take a break from those regular payments until your financial situation improves.
HERE’S AN IDEA FOR YOU
…Go a step further than direct debits to sort out your regular outgoings. Open an instant-access savings account with the amount needed to cover one month’s repayments. That’s both your buffer and your alarm. The month you transfer the buffer to pay them is the signal to talk to your lender.
‘Creditors have better memories than debtors,’
observed Franklin. These days it’s not so much about memory per se as records. Your personal tally takes the form of your credit rating.
Fortunately it’s no longer so hard to get a peek at your credit rating.
DEFINING IDEA
…Lenders are increasingly using risk-based pricing to make loans. If you don’t find out your credit score, check your credit report and correct mistakes, you’re going to be totally in the dark, and run the risk of paying far higher interest rates…
~
KEN MCELDOWNEY, DIRECTOR OF CONSUMER ACTION
Credit reports are financial records kept by the credit reference agencies (like Experian, Equifax and Callcredit) to help lenders decide whether you’re a good risk or not. This is done with your consent (it’s in the small print when you apply)and the information is available for you to check at any time. The report is personal—it doesn’t include details of your wayward brother unless a formal financial link has been made and, despite what we all once believed, there is no blacklist. In fact, credit reference agencies don’t give you a credit score at all.
That’s done by individual lenders who assign their own points system to the information on the record and tot up the total to achieve a ‘pass’ mark on which they base their decision. Different lenders have different points systems, so one might decide to give you credit and another could refuse you—though both use the same information. You might also be offered credit at a different rate to your mate who applied for exactly the same thing. A look at your credit report should help demystify the dark workings of the lenders.
Nor is a ‘no’ the end of the story. You can ask a lender about the way they tot up a credit score and if you are refused they should tell you why. These days the scoring is very likely to be done by a computer, in which case you can ask the lender to take another look at your application using a manual system. Be prepared to supply further information to support your claim.
You can also take some simple steps to improving your own record. Credit reference agencies have the right to charge a fee for revealing your details but Experian UK and Ireland is currently offering a free sample service online so you can check your reference information through their website (
www.experian.co.uk
). Take a look at it and see what might be the problem. Remember that while creditors do indeed have better memories than debtors, they don’t remember for ever and some negative points are automatically removed after a period of time. Similarly, each time you ask for credit a record is made but that only stays on your file for two years with Equifax and Callcredit and only one year with Experian. You may also up your score simply by getting a bit older, so patience can pay.
HERE’S AN IDEA FOR YOU
…Different countries, different rules. In the UK you can improve your score just by joining the electoral register, so do it. In the US you can balance your cards to bring down the average limit—four credit cards at 25% of their limit gives a better score than three nearly paid off and one out of control.