EP80- Female Financial Independence Series: Cost of living crisis

I believe that it’s important to pass on information to other people which is why in today’s episode of Accelerating your Wealth podcast I am diving into the cost of living crisis. You might be reading this right now and wondering what is around the corner and are there any tips or strategies at hand that could help you get by. So I hope that when you finish reading this you are left more educated and with some steps you can take. 

House Prices/ Rent Prices

So this question came up about what should people do if they are wanting to buy , if they are renting at the moment and if we are in a recession what will happen with how that helps with prices? 

As you can see this is such a big question to ask and it’s a really big area to cover, and not something that can be covered entirely in this blog today because there isn’t a simple and quick answer.  However, if you look at what has been presented at the moment , house prices have still increased according to Nationwide statistics. As an average for this year it’s gone up by 11%.  Yet if we look back in between 2008 with the recession ,  it was on average around 5%- 6% a year. So even then people who were renting were also struggling to keep up with the house price increases. When this happens,what I found is that some people will make a decision to wait until the bubble bursts. Yet, if you wait too long, even a year or two, you could end up seeing an increase anywhere from 10%-20%!  The issue then becomes, can you save quick enough in that time? Which brings me back to the topic today of the cost of living. 

Most landlords 63% of them have actually not increased their rent prices this year yet, so the question then becomes, what things can people that are renting do in terms of their cost of living if you are affected by landlords increasing their rent?

Below are some of my suggestions across both renting and buying to help you;

1. Have a conversation with your landlord in advance. So work out what your contract says. Find out exactly what your rights are. Then, have a conversation with them, what are their plans? What do they think they’re doing? Do they foresee changing the amount of rent that is chargeable?
2. People that are wanting to get on the property ladder, what can they do apart from a ship, they can’t get on a shared ownership. So then a lot of people are actually either downsizing the properties that they’re renting, it means making sure you got a really good credit file on your credit rating and your finances are in a good position so that you can move because there’s a lot of expectations around mortgage application.
3. The family could then look at maybe releasing equity for the house like an equity release mortgage. And obviously, it’s best to get some really clear advice on whether that’s suitable for them or not. 

There is no hiding from the fact that the cost of living is putting a squeeze on people forcing them to make decisions that they did not perhaps have to before. The problem with making decisions is when you’re stressed, you’re then unlikely to be able to make a clear decision. One of the key things to become aware of  is the mindset that we have around money.  Whatever stressful situation you might find yourself in, it helps to listen to podcasts, ( you can listen to mine right here as a starting point ) , read books, I have a book called 10 ways to accelerate your wealth. Educate yourself. This way you are setting yourself up for success avoiding the possibility of ending up in analysis paralysis, that feeling of being really overwhelmed and not really doing anything or making some bad decisions. This is the result if you don’t have the headspace to take a step back from your current circumstances. It is important to have the right support around you, having people to talk to and find out what all your options are. 

Inflation

It is foreseen that inflation basically will reach its peak around 10%, around the latter part of this year, and then it will stop. By spring, we should start to see inflation really drop off. This is basically a ripple effect. So the COVID, energy prices, energy costs and the supply and demand on certain goods around the world and staffing issues, etc, had a massive chain of events that have included increased inflation. So the housing and so the energy costs, energy prices, along with inflation are creating a higher increase in things that we buy, which then increases everybody to increase their prices.

Heat, Gas and electricity

The government is offering £400 help. So that’s added to most households’ bills. The average increase is predicted to be around £70 – £80 a month. It does depend on if you’re on a meter,if you’re paying on a card, if you’re paying by direct debit, etc

1. Insulation will be my biggest tip.
2. Extra clothing for the kids, extra Willie socks
3. Shutting doors having certain radiators turned off where possible.
4. Fire fireplace, stock up on loads of wood ready for the winter.

Mortgage

So there’s lots of practical things that we can do. But again, it is like a muscle. It is like we get really busy in our lives:

1. It can feel very overwhelming. Start considering what practical things you as a family can do and how you can come together to avoid conflict. Bring the children into the equation,
2. Look at your outgoings so looking at what you’re currently paying out for and what you could get rid of
3. If you’ve got somebody who is on a fixed rate coming up for, you can go to your existing provider early and find out what’s available. And then research the market speak or to a broker. Get appointments and have all your paperwork ready, your bank statements, you can answer all their questions. And having your accounts if you’re self employed, or a limited company director ready
4. Get a copy of your credit bar, make sure there’s nothing on there that shouldn’t be on the same if you’re renting, that’s a really good tip as well. 
5. See if you can get those better mortgage deals, and that might save you money now,

Debt

1. When you’re looking at clearing off debts, make sure you’re paying off the ones that have the highest interest rates first.
2. When using a credit card, buy certain things. It gives you points back.
3. Find ways to maximize your spendings
4. If the rolling interest rate of that purchase is like 27% – 29%, then you need to transfer that debt onto a 0%.

It is a muscle, it is a marathon, you have to keep your head above water, you have to understand ALL the options that are available to you.

Websites you can visit for help:

Debt advice: www.stepchange.org/

Government backed website which is linked to pension wise: www.moneyhelper.org.uk/

Support for families to avoid going into homelessness: www.crisis.org.uk/

I hope that you found this blog or if you listened or watched on youtube, spotify and apple the podcast, useful. There is lots of information to spark your interest. But my hope is that something gets you moving, and making some decisions. 

More than anything, I want to empower women that if there’s something that you need to make a decision about, find the people that you need to help you make that decision so you’ll be able to feel so much freer and you’ll be able to feel so much more in control and more competent, which allows you to make bigger, better decisions for you and your family.

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Listen to the full podcast here: http://rebeccarobertson.co.uk/podcast/

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