Simple Pound

How many old mobile phones have you hidden in the bottom drawer of your desk, top shelf of your wardrobe or in an old box under the bed? Honestly? I found two - and I wasn’t even looking properly. Chances are you’ll find at least one old phone knocking around somewhere, especially if are (or have been) on a phone contract that promises you a new handset every 18 months.

Have you ever thought what to do with the old one? At some point the option of “I can give it to my sister/Mum/Dad/brother-in-law (delete as appropriate)” doesn’t really work anymore and the old handset will soon be forgotten. Why not get some free cash for recycling your phone instead?

The website envirofone.com will help you with exactly that. Head over there now to see what your old phone could still be worth! It’s simple, fast and absolutely no hassle at all. When you register with them, you will automatically receive a “trade pack” consisting of a delivery card and a jiffy bag for you to send your phone in. Once you agree to trade your phone for either cash or an Argos voucher (whose value will be slightly higher than the cash value you’d receive otherwise), all there is left for you to do is to put your (old!) phone into the envelope and drop it in the nearest letter box.

The envirofone website has a “My Account” section that lets you monitor the status of your trades. Once the trade is agreed, it will show up under the “View Trades” tab where the status will say “Awaiting Receipt”. You agree to send the phone within a time frame of 10 days at most and once you have done so the trade status will soon change to “Received” indicating that the envirofone team has received your phone and is currently testing whether it is in full working order.

The quote you got when the trade was initially submitted assumes the phone is functioning properly, but you’re still encouraged to send your phone even if it is not as you might receive up to 90% of the originally quoted value. If a fault is detected by the envirofone people, you will be contacted with a new (lower) quote which you can choose to accept or refuse. If you refuse to trade for the specified amount, the phone will be returned to you. If you decide to accept the lower offer (what else are you going to do with a faulty phone??), you will receive your cheque or Argos voucher in the post within 7 days.

My old phone has been received as of this morning, so I’m waiting for my voucher as we speak. I’ll keep you posted on how long it actually takes, but their overall process seems pretty streamlined and I expect only the best So if you possess one of the 80 million mobile phones that have been forgotten about in the UK, then I think it’s time for you to act…

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A year ago I wrote about Zopa, a (then) new loan concept that wanted to bring people together in order to facilitate a lending and borrowing market that wouldn’t require banks. The concept is remarkably easy - on the one hand we have people with spare cash looking for a good and (reasonably) safe return while at the same time we have people out there who are looking for some spare cash (i.e. a loan). Why not make these people talk directly, instead of forcing the former group to deposit their savings into a bank account with a mediocre interest rate and subject the latter to bank’s exorbitant fees (exceptions apply)?

After I had been watching the Zopa site grow for quite some time, I decided that it was time to join the fun and have a go at it myself. With the house purchase one of my major short-term goals at the minute, I didn’t want to tie up a lot of capital for a long time, hence the amounts I’m allowing myself to use at Zopa are fairly small (£ 25 in total at the minute, increasing by about £ 10 a month). Nevertheless I figured I had seen enough to share my experience with the site so far…

Signing up: Ideally this should have been a fairly easy process, especially since I was intending to become a lender, not borrower. However, due to money laundering regulations Zopa is still required to verify your identity and address. Since we’ve moved to our current flat only a few months ago, this identity check could not be carried out online and I had to submit the usual proof of identity and address documentation. This is nothing unique to Zopa and I’ve encountered the same issue several times before with banks, credit card and loan companies. In the end it took only 2 days for them to process my documents and I could sign up successfully! Overall impression: good.

Customer Service: Apart from the registering process I’ve had several other encounters with the Customer Service department relating simple queries as well as a functionality problem at one point. The usual way of contacting them is by sending an email and the response time is always within the promised 1 - 2 business days. All requests were dealt with swiftly and the team is very helpful and always friendly. Overall impression: excellent.

Transferring money: There are three major ways you can transfer money into your Zopa account: Debit card by phone (for instant transferral) or online (for transferral within the same business day), standing order (similar to the way you’d set up the standing order for a savings account) or by bank transfer (longest of all methods as it takes about 3 days to reach your account). With either option you will receive a confirmation email when your funds reach the account and are ready to be used. To transfer money out, you will need to have your bank account confirmed with Zopa. To do that, you simply need to transfer £1 by bank transfer once for them to be able to verify the account belongs to you. At this stage, you cannot transfer the money in your Zopa account to anybody else but yourself. Overall impression: very good.

Lending in Zopa Markets: With Zopa you have two major lending options - Markets
or Listings. If you allocate your money to the Markets section, most of the work matching your lending offer with a borrower request will be done behind the scenes for you. You merely see your money moving between the stages of being offered (currently available), processing (matched to a borrower, loan verification in progress), lent out and late payments (hopefully very few in the latter category). To determine your rate of return you can either give Zopa your desired rate of return and the longest amount of time you’re willing to tie up your capital or you can fine tune your offer by indicating an exact rate of return per market segment. These segments are determined by the borrowers credit rating and the duration of the loan and range from A* for 12 months to C for 60 months. Zopa is helping you to offer realistic rates by quoting you a range of rates that other lenders are offering.

My experience with the Markets section is thoroughly positive. I’ve got all my lending offers at the higher end of the market range and yet I find that my available money is usually processing within a time span of about 2 days. I’ve only had one slight hiccup so far that was explained to me and hence resolved by the Customer Service team within 2 days (my Zopa account contained a little less than the shown £ 10 due to the Zopa fees being earmarked but not deducted every month). Overall impression: good

Lending on Zopa Listings: Zopa Listings are essentially an eBay-like reverse auction system where borrowers advertise their borrowing needs together with an explanation of their finances and lenders can quote how much they’d be willing to lend to this one borrower and at which rate. All quotes get aggregated throughout the duration of the listing. When the borrower’s desired loan amount has been reached (i.e. funding is at 100%), lenders can continue to quote and hence will start outbidding each other with lower rates. Eventually only the minimum number of lenders with the lowest rates will be kept in the listing and hence will be able to lend their money to the borrower. The advantage of the Listings is that you might be able to get a higher rate than you’ve quoted in the Markets section by bidding at the last minute - similarly to how you can get a bargain at eBay through sniping (or old-fashioned pressing of refresh and bidding on the last second).

I’ve only (actively) participated in one Listing so far which ended at 4.20am in the morning. I waited to submit my quote until half past midnight and went to bed hoping lots of people would have already done the same. By the time I submitted my quote, I was about 50 offers (out of 130) away from being excluded so I felt pretty safe and happy as I had a good impression of the borrower. Unfortunately I was out-bid just 15 minutes before the end of the Listing… In any case, the entire process was certainly exciting and I’m intending to look out for other Listings as soon as I fund my Zopa account with more money (waiting for the paycheck, anyone?). Overall impression: excellent

Total verdict: For me, Zopa turned out to be everything I expected and wanted it to be. Obviously I can’t really comment on the bad loan rate at this stage, but then I don’t think it is a major part of evaluating Zopa itself. Every lender can adjust the risk he or she is willing to take by only offering money in certain (high-quality) markets or reducing the term of the loan they’re happy to accept. I believe that people might be less likely to default on their loans when they know that they owe their money to individual people, not big face-less institutions - if you had the choice, whom would you pay back first? Your neighbour or the bank? I might be wrong, but this is what I would like to believe and Zopa’s low bad-loan quota might prove just that.

If you’re intrigued by the concept and would like to explore alternative ways of making money / earning a return on investments, I urge you to give this a go. Sign up here to get £30 when you start lending (minimum amount applies) and become part of the Zopa Community. Trust me, it’s fun!

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It’s that time of the year again. No, I’m not talking about Easter and it’s certainly not time for Christmas again - the end of the financial tax year is nearing. And what does that mean? You have precisely until April 5th to open an ISA and make use of last year’s tax-free savings allowance.

While I certainly understand that you might be a little worried about entering the stock market at this point in time, there’s still always the option of opening a simple savings account - no more or less exiting than any of the other accounts you might have knocking around, but with the crucial difference that it will earn you at least 20% more interest over time (even more if you are a higher-rate taxpayer).

For the current tax year (2007/2008) you are allowed to put up to £3,000 into a tax-free savings account and if you’ve walked past any high-street bank branch recently you will have noticed that the competition out there is fierce. Seemingly every bank or building society is now trying to get you to open an account with them, and it’s important that you carefully consider the different options available to you before committing your hard-earned cash.

Comparison sites like moneysupermarket.com should help you with the major undertaking of comparing the different accounts currently available. At the end of the day your best choice mainly depends on your individual circumstances and how happy you are to commit your cash for a longer term. Many accounts will require you not to withdraw any cash for at least 12 months (sometimes longer) in order to secure the best interest rates and it’s crucial that you do not ignore the fine print before you sign the dotted line.

My personal favourite at the moment is Barclay’s “Tax Haven ISA” which currently pays 6.5% AER and allows for instant access and no withdrawal penalties. You can open it from as little as £1 so there’s no excuse for having money in an account that you have to pay tax on while your ISA allowance is just waiting to be used. Bear in mind that you would need to earn at least 8.1% AER on a common savings account in order to achieve the same after-tax return on your money!

One word of caution - the rate is marked as variable so you can expect it to drop as soon as the Bank of England should cut interest rates. There’s no guarantee how the rate will behave in the year ahead but it’s certain to drop by 1% after 12 months as the 6.5% includes an introductory 1% bonus. Further, this offer does not allow you to transfer in your previous year’s ISA allowances from another provider. Hence, in order to secure a market-leading rate like this you must be willing to keep your ISA money in separate accounts.

Personally, I’ll be keeping my previous year’s ISA money in an account that I can trust to consistently pay a good rate which is at least matching the Bank of England base rate. Then I will take advantage of the Barclays offer for as long as it might pay more interest than my “regular” ISA account. As soon as this is no longer true, I can simply instruct my bank to transfer the “new” ISA money and add it to the “old” in order to consolidate my accounts into as few as possible while not sacrificing a decent rate of return. After all, no one is paying you for your loyalty… (at least not yet).

Let me know if you have any questions about ISAs and I will try to help as much as I can! Just please do something with your allowance before April 5th.

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I have fully funded my mini cash ISA for this tax year (which ends April 5th, 2008). Since the contents of my piggy-bank didn’t make it all the way to the £3,000 that an individual may “invest” in cash with tax-free returns per year, I used some of the money I got from my grandparents for my 21st birthday.

Now, I fully intend to invest the full amount they gave me in a fairly conservative fund to utilise it for my first downpayment on a house - but as that is not going to happen anytime soon, I figured it might as well earn some tax-free interest in the meantime.

I have opened an ISA account with National Savings & Investments which is paying a whopping 6.30% interest. This is exactly the same amount I get from my Icesave savings account - with the crucial difference that it’s tax free and hence about 20% more in actual money being credited to my account.

The only downside to this account is that interest is only paid annually (at the end of the tax year), while I like monthly interest payments to “watch my money grow”. You also can’t transfer money from existing ISAs, but that’s not a big problem for me as this is the first year I’m making use of ISAs (didn’t really have much money to save as a student…).

Find out more about the account here.

Your best transfer-in option seems to be an account with the West Bromwich Building Society, which will pay a total of 6.50% but enforces a 60-day notice period. I’m not a big fan of notice periods, but 60 days isn’t all that bad. The real downer for this account is that you can only administer it through a branch - no online, phone or postal options at all. This clearly rules out this account for me, as I like being able to query my balance whenever and wherever I want - at the click of a button. But if you can live with restrictions like that (and happen to have a branch of the West Bromwich BS right down the road), you should definitely go for it!

Otherwise, the next best options seems to be Bradford & Bingley as they offer an instant-access mini cash ISA with 6.05% AER which allows transfers, can be managed online and you even have the choice of getting your interest paid monthly! If that isn’t good news…

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Plonkee tagged me to describe how I would live my life if I was debt-free.

Fortunately, since my parents were generous enough to pay my tuition fees at University and I used to work most summers during school and University to contribute the rest, I am actually in a position where I am already fairly debt-free.

Yes, admittedly there is a small outstanding balance on one of my credit cards, but this is mainly to do with the fact that I just moved into a new house which brings an awful lot of major expenses - especially since it’s the first time I’m actually living in my “own” (if rented) flat.

Hence, I will slightly re-phrase the question and will instead give you my opinion on how to stay debt-free.

Firstly, and this is what everyone will be telling you, set yourself a budget that reflects your personal circumstances (i.e. be neither too stringent nor too generous) and try to stick to it. Now, I’m not terribly good with that sort of thing but I found that I stay on top of my finances if I simply keep track of how much I’m spending on what (more info…). You’d be surprised, trust me!

Secondly, keep a “splurge fund“. This mainly works like an emergency fund but for shopping tours. It might well be a phenomenon that women suffer from most, but I’ve certainly enjoyed the certainty of knowing that I have some money, to balance my account with, after that particular pair of shoes just had to come home with me. Just make sure that you realise you can’t actually afford an item, if even your splurge fund wouldn’t cover it…

And finally, where possible, get interest payments for your savings credited on a monthly basis. Knowing that you’re getting a reward for your savings on a regular basis will keep you motivated and will also help you develop a habit of saving spare cash - even if it is just to see the “reward” grow.

These three suggestions are entirely taken from own experience, but I’d be delighted to hear how it’s working out for you and what preventatve measures you’ve set yourself!

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One of the mantras in the personal finance community is to have a budget in order to take control of your expenses and thus (hopefully) free up some money to save and/or invest in the long run.

Budgeting isn’t always easy and it’s especially hard if you don’t know where to start and have no idea where the money went that used to be in your account two weeks ago. This whole scenario gets even more complicated when you owe money, i.e. you’re in debt and various people/institutions expect payments from you on a regular basis.

I’ve just found an excellent starting point, that doesn’t just give you an idea where your money is going but also helps figuring out what you can afford given certain fixed costs. Make sure you check out the “State of Affairs Calculator” to get a better picture of your financial situation!

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