MTTM Podcast Episode 553 – 10 commandments of money & Practical tips for reducing insurance costs

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My 10 commandments of money

Summary:

I explain the 10 core rules and concepts I use to run my own finances. These high-level commandments inform the daily actions and habits necessary for building wealth. From "dividing and conquering" your budget to "starving your ego" to prevent lifestyle creep, I outline how to implement robust financial systems. I also discuss the importance of remaining flexible, continuously educating yourself, and understanding when you have "enough" money.

Key Insights:

• Divide and conquer - Break down your finances into manageable parts. Tackle one bill at a time when trying to cut costs, and use budgeting apps or bank "pots" to silo your money and control your spending.
• Harness the power of time - Utilise compound interest by committing to regular, automated investments or savings contributions, paying yourself first before other expenses.
• Starve your ego - Avoid "lifestyle creep" and high-interest consumer debt. Stop buying things just to keep up with others, and learn the difference between good debt (like a mortgage) and bad debt.
• Shatter the ceiling - There is a limit to frugality. Once your finances are optimised, shift your focus toward increasing your income through upskilling, promotions, or a side business.
• Protect what you have - Build a robust defence by maintaining a 3 to 6-month emergency fund and purchasing necessary protection products like life insurance and income protection.
• Understand what "enough" is - Avoid greed and chasing unrealistic investment returns. Focus on defining your personal goals and the exact amount of money you need to achieve your own comfortable lifestyle or retirement.

The hidden cost of monthly car insurance

Summary:

We look at the expensive reality of paying for car insurance on a monthly basis. Recent research indicates that some providers are charging an Annual Percentage Rate (APR) of up to 30% when customers choose to spread the cost, treating the monthly payments as a high-interest loan. We provide practical ways to avoid these excessive interest charges and secure the best possible premium.

Key Insights:

• Monthly payments are loans - When you pay monthly for car insurance, you are effectively taking out a loan for the annual premium, which the insurer applies interest to.
• Interest rates are soaring - Research shows the average APR charged for paying monthly is 23%, with some providers charging nearly 30%, rivaling expensive credit cards.
• Pay annually if possible - The simplest way to avoid these charges is to pay your premium upfront in one lump sum if you have the savings available.
• Utilise 0% purchase cards - If you need to spread the cost, consider using a 0% purchase credit card to pay the annual fee upfront, ensuring you clear the balance before the promotional period ends.
• Shop around carefully - A small number of providers do not charge interest for monthly payments. Always look at the total amount payable, rather than just the monthly figure, when comparing quotes.

Resources

Links referred to in the podcast:

• Sign up to our weekly newsletter
• Best budgeting apps available in the UK
• Money to the Masses budgeting spreadsheet
• Life insurance guidance
• Income protection guidance
• Critical illness insurance guidance