Foreign Perspectives

Archive for November, 2008

I was leafing through the categories and funnily enough though I write a fair bit about both holidays and finance I don’t think I’ve ever written something that covers both!

So, with the Christmas holiday season coming up, how were you planning on financing the holiday? Christmas is perhaps the worst holiday to finance as you can have a “worst-case” scenario in terms of finance with the potential for both Christmas presents and a foreign holiday which makes for quite a big bill for some people.

In an ideal world, you’d have saved up for it all months in advance, but then this isn’t an ideal world, is it? Therefore many people are looking to borrow money to finance it all.

Fortunately, many people are in the same boat and therefore there are lots of offers of credit around at this time of year. As a rule, avoid store credit for the presents as this is often the most expensive form of credit and instead look towards the banks. If you’ve not used up all the 0% card offers, this is the time to get filling in the appropriate application forms which can get you up to 9 months interest free credit on purchases and, if you’re lucky enough, you might be able to finance both the Christmas presents and the holiday with one of these cards.

One thing to avoid though is the head in the sand approach that many people take. That attitude will almost certainly cost you dear and you’ll end up paying way over the odds for your borrowing. Even if you can’t get 0%, at least check what interest you’re paying on your credit cards and use the one with the lowest rate to buy whatever needs bought.

If you’re selling property outside your home country it’s easy to fall into the trap of pricing it in the local currency and then forgetting about it.

That usually works fine if property sales in the foreign country move at a fairly brisk pace but often they move at a much more sedate pace than you are accustomed to. Whilst exchange rates between the major currencies rarely move quickly they do move and over a period of many months the price translated back into your home currency can change quite substantially.

For example, take a property that you wanted to sell for £60,000 at the start of 2007 and you therefore priced it at EUR 90,000 (£60,641). By the start of 2008 you could sell that property for EUR 85,000 and pick up £62,553. You might think that a year is a long time to have a property on sale but in many European markets property sales proceed at a very sedate pace and it’s not unusual to have a house for sale for quite an extended period before you find a buyer.

If you are counting in your home currency it can often pay to check whether or not you can lower the local price but still collect the same amount of money as obviously it can speed up the sale of the property.

One of the handy things about where we live is that we have a choice of four airports within reasonable striking distance which makes for an enormous range of choice when we’re looking for a short break.

In practice, we try to aim for afternoon departures to get a sensible starting time for ourselves but this time Venice seemed too good to miss out on so we had to set off at 7am to get there in time for the 10am flight. Online checkin is wonderful if you want to skip on the sitting around in the airport but unfortunately Wendy’s Australian passport means that we can’t avail of that.

The earlier than normal departure meant that we arrived in Treviso (Ryanair’s “Venice” airport) just after noon and by the time we’d checked into the apartment we were still in reasonable time for a late-ish lunch. Treviso airport is fairly small so there’s not much time wasted walking miles to the exit as you often find in regular airports these days although you lose time on the hour long coach journey to Venice itself (EUR 10 return, children under five free) which takes you through some pretty grim looking towns.

From the bus station you walk across the road to Piazza Roma where you get on one of the quite expensive boats that take you pretty much everywhere in Venice. It’s EUR 6.50 for a one hour ticket (enough to get anywhere) or EUR 14 for a ticket valid for 12 hours. In theory you can get one two or three day tickets as well (actually 24, 36 and 72 hours) but Venice is quite a small place so it’s best working out roughly where you’ll be going as often it’s quicker walking. In our own case, over a four day stay we bought two of the one hour tickets (to get there and away) and one 12 hour one when we were going over to Murano for the day.

Unless you’re seriously into churches, there isn’t really an awful lot to see in Venice. Yes, it’s a lovely place but it’s not one that you’d be wanting to stay more than a week and in practice we found that four days was enough to see all that we wanted to see at a nice gentle pace ie it’s perfect for a short break.

What is there to see though? Well, the major sights are:

• the cathedral square containing San Marco (that’s the interior above);
• the Rialto bridge;
• the island of Murano for the glass;
• the island of Burano for the lace;
• Lido; and
• the canals themselves.

In between all the above you’ll be surrounded by the typical Venetian architecture with loads of cute buildings and, of course, untold numbers of very upmarket shops.

This is probably the worst time of the year in terms of bills with all the cost of Christmas just coming up and it’s not too long since vacation time either.

Add that all up and many people are finding that they’re short of money at the moment and looking around for a quick and easy way to raise some additional cash to tide them over until they get paid at the end of the month.

Therefore payday loans seem a very attractive option. They’re one of the easiest and quickest loans that you can get with the money deposited in your account within a few hours. Not only that but the lack of a credit check means that any credit problems that you may have aren’t an issue.

The requirements are really very basic:

1. You need income of at least $1000 per month.
2. You have been employed at your current job for at least 3 months.
3. You have had an active checking account for at least 3 months.
4. Your paycheck must be direct deposited into your checking account.
5. You are at least 18 years old.
6. You�aren’t delinquent on a previous payday loan.

Beyond that the only limitation is that the loan is intended to be repaid with your next paycheck (though it can be rolled over) and that the amounts are from $100 to $1500.

So that’s how they work, but is it worth getting one? If you can get the money somewhere else then no, they aren’t, because the costs are astronomical since all the administrative costs are being carried by what is a small short-term lone (hence the APRs of 300% and more). However, if you have no other option you need to weigh the cost of getting hit by late penalties on other finance that you have against what the payday loan will cost you and in such circumstances it may well be your cheapest option.

Normally people move from savings to investment but draw the line at risky investments and don’t consider gambling as being in the same continum.

But it is. Certainly savings and gambling are very much at the extreme ends of that continum but some high risk investments aren’t nearly so far from gambling as the investment community in general would have you believe.

Is it any more risky to put £1 on a horse or to put £1 on a penny share? Well, sure, it’s usually riskier to put it on a horse BUT remember that whilst you might put £1 on a horse, chances are it would be more like £1000 that you’d be putting on that penny share which is a whole lot more to lose.

Of course, that difference in the amount of money involved is critical in how you should rate a gamble as compared to a very high risk investment. However, don’t forget that even the safest investments are also gambles as any investor in Northern Rock will tell you now or for that matter policy holders in what was the even more solid Equitable Life.