plonkee money an english-er's thoughts on personal finance

September 28, 2009

when is taking on debt sensible?

Filed under: Uncategorized — plonkee @ 9:17 am

In principle, I don’t take out loans. I have a couple of credit cards, which I use sometimes and pay off  in full (although I try not to use them, because it’s not unknown for me to forget to make a payment). When I was a student, I had a £1200 overdraft which was interest free, and so I spent as long as possible paying it off – whioh is what I’m doing with my very cheap student loans. I also have had a mortgage out for the last two years. But actual personal loans, I’ve never considered.

I’m not claiming to be really financially savvy, self-restrained or aware. I just can’t think of a good reason to take out a loan. However, that doesn’t necessarily mean that I’m right. Kevin, a commentator at Get Rich Slowly said:

Furthermore, “financing” something just means you’re paying more for it than you have to. However, if that difference lets you enjoy it sooner, then the real question is, “how much would you pay to have that item/experience now, rather than later?”…

…phrasing it in the proper context like that serves to highlight the real, underlying value judgement being made, rather than simply adhering to some blanket “never finance anything” dogma.

Objectively speaking, I think this is true. Taking out a loan just means paying a premium to have the item or experience now, rather than in 6 months, or a year, or however long it would take to save up the money (or pay off the loan).

Of course, there’s always the likely possibility – if you don’t think you can save up for it, then why should you think you’ll be able to pay more for it later? Also, taking out a loan for some purchase means that you are also carrying extra risk – there’s the possibility that your income will decrease and you’ll be unable to make the loan payments.

But maybe there’s a case that sometimes it’s worth taking out a loan?

If I had an emergency that extended past the reach of my savings then I would take on debt if I could, because there is little other choice. When I am into my retirement, I shall probably consider a reverse mortgage against my house, because I don’t feel any need to pass on an inheritance.

Are there other circumstances in which it’s sensible, or at least acceptable, to take on debt? I can see how it might be more true as you get older. Everyone’s lifetime is finite, but the older you get the more important that fact becomes. It might be worth taking on debt to enjoy an experience that you might not be able to participate in fully if you left it until you had saved up.

What do you think about taking on consumer debt? Let me know in the comments.

March 26, 2009

keeping down the Smiths

Filed under: Uncategorized — plonkee @ 2:03 pm

Less worry about what other people are doing.

If there’s one thing that’s more foolish than attempting to keep up with the Joneses, it’s trying to make sure that the Smiths can’t keep up with you.

I was out at dinner last night, and the conversation turned to my least favourite subject – immigrants are stealing all our benefits money. My sole contribution was to point out that born and bred Brits also make false benefit claims, and given that they are the vast majority of the population, they probably form the bigger problem.

Everyone was excised that if they had savings, they wouldn’t be able to get government help. And that it wasn’t fair that some people got more money than them. Whilst I get the point and don’t like people committing fraud either, I wasn’t happy with the conversation at all.

Seriously folks, life isn’t fair. There will probably always be people richer than you, and poorer than you. Instead of wondering how Ms Jones manages to afford a Mercedes and a luxury holiday, or worse, how to stop Mr Smith’s kids from getting free lunches at school, why not just practice sensible personal finance?

Spend less than you earn, save and invest the difference. Do things that contribute to your own happiness. Look after your health. Spend time with friends and family. Exercise your mind.

Quit worrying that benefit thieves are making off with all the money unless you either (a) have specific examples in mind and are willing to shop them, or (b) are about to vote in an election and this is the most important issue in the world to you.

Worry is bad for you, limit your worry to things that will affect you that you can do something about, and leave the rest well alone.

March 4, 2009

SWOT analysis

Filed under: Uncategorized — plonkee @ 8:08 pm

Introspection is generally the order of the day at plonkee money. Both times I’ve done Myers-Briggs tests I’ve come out as *as introverted as it’s possible to be* on the introvert-extrovert scale. Which I think is just fine, but other people think is wierd.

Anyway, enough about me. Well, except to say that I wrote a few days ago about how I wasn’t sure if a recession was a good time to re-evaluate your career or not.

I’m not entirely sure what I was thinking. It’s always a good time to re-evaluate. It’s just that it’s not always a good time to act. Sometimes the re-evaluation is going to lead you to the realisation that you need to sit tight for a while, or put up and shut up.

SWOT analysis

One framework that you can use to re-evaluate is to carry out SWOT analysis. Now, as far as you and I are concerned, this is definitely a geeky engineer tool.

When I was at university, I studied mathematics (and only mathematics, the English specialise very early). When I applied for my post-college jobs, went for quite a few of graduate trainee schemes which require formal assessment centres. It’s not such a great feeling actually to first encounter SWOT analysis in an assessed group exercise and be going *what on earth is that?* (thinking politely of course, because it’s best behaviour time). Most of the other people in the group were engineering students and knew exactly what it was, I attempted to absorb by osmosis, rather than admit that I didn’t have a clue. (No, I wasn’t offered that first job, not sure why 😐 )

Fortunately, understanding what SWOT analysis is and how to do it, is fairly straightforward, if you posess common sense. SWOT stands for:

  • Strengths
  • Weaknesses
  • Opportunities
  • Threats

Applied to yourself and your career, you look at your own internal characteristics and skills (strengths and weaknesses) and external forces (opportunities and threats).

Get a piece of paper and a pen (or however you prefer to brainstorm) and think about the following ideas.


What is it that you can do well? What skills have you developed? What personal qualities do you have?

It’s difficult to think of all the possible skills that you might possess, so I’ve found a few resources that might help you with the brainstorming phase:

In trying to do this, it’s helpful to have the most up to date cv you have to hand, plus any other notes on what you’ve done at work, but don’t forget that you are more than just a corporate slave. What strengths have you gained from your other activities?

Because at work we have to keep up to date cvs on file, it’s fairly easy for me to pick out the key strengths I’ve developed there. But outside of work, I’ve also developed skills in web related stuff (ok, so the blog thing isn’t amazingly difficult but still, it’s a skill), there’s also the writing and public speaking that I do for a community organisation, skills in music (not sure how that might help, but no idea is a bad idea at this stage).


What are you rubbish at? What limiting factors do you have?

Speaking personally, I’d say that I’m fairly lazy (I work better under pressure), not amazing at the whole attention to detail thing and I’m basically tied to working within commuting distance of my house. Amongst other things.


This requires creative thoughts. Is there anything that you know about already? Potential for promotion at work? Or an internal transfer? A business venture someone told you about? Ideas that you’ve picked up from your blogging colleagues? (Not that I’d ever steal ideas, of course). Could you leverage your hobby into paid income – full or part time? Is there anything you can sell? Do you have children who could you could send down the mines?

Ok, maybe not the last one. But think outside the box. Getting the most of out having to generate an income, means that you need to consider more than just a full time job. Perhaps you could go into business for yourself. Or work a couple of part-time gigs.


Now is the time to wallow in despair and despondency and think of all the bad things that might go wrong.

What are the risks to your current job? Is your industry in decline? Is your whole neighbourhood looking a bit shaky? Do some of your skills need upgrading? Do any of you opportunities have obvious downsides? Does your small business have too many competitors? Are you in a crowded niche?

Be as honest as possible in this section, there’s no point in doing this if you’re going to hide your head in the sand over something. If wishes were horses,…

the magic

The final bit is the magic. If you look at your strengths, weaknesses, opportunities and threats all together, you’ll usually be able to match some things up, see how you can mitigate against the threats and generally find some reasonable actions to pursue. This might include a radical career change, but is far more likely to involve some kind of incremental improvement.

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