The upgrade problem comes through O2 somewhat setting expectations with the upgrade from the original iPhone to the iPhone 3G. Naivety on both sides has played a part here – customers in believing that there was an ‘implied’ promise to allow upgrades on the same terms when Apple refresh the product, and O2 in not thinking early adopters would interpret that offer in such a way. O2 have, quite rightly, pointed out the original iPhone was not subsidised, whereas the 3G has been – hence the drop from £269 to £99 for the 8GB. Some foresight from O2 might have allowed them to ensure the terms were absolutely clear; that the upgrade offer from old to 3G was a one-time deal because of the unique manner in which the original was provided. Perhaps also, knowing Apple’s refresh cycle, O2 might have been better off-setting the subsidy over 12 months instead of 18.

So – we shouldn’t have expected O2 to write off the subsidy, and O2 should have been clearer on terms. Mistakes made, lessons learnt – etc. HOWEVER, where O2 are currently failing is in their inability to provide a ‘fair’ means for the fans, early adopters, whatever you want to call them to commit to another 18 month contract without buying their way out of their current one. I’m currently paying £35 per month and my contract expires in February, 2010. It would cost me £315 to buy my way out of that contract – on top of the cost of the £275 iPhone 3G S (32GB as the space is the main factor in my upgrade decision). So, that’s £590 and I’d also be paying £35 per month for my new O2 contract.

A fair deal would be allowing the upgrade while recovering the subsidy cost. Looking at the pay-as-you go costs, the iPhone 3G 16GB would probably cost roughly £400, unsubsidised (between the 3G 8 and 3G S 8 pay-as-you go prices). Given I paid £169 for my iPhone 3G that’s £231 of subsidy (ignoring that O2 will have a margin built in to the pay-monthly cost – so these figures are at most - and give O2 some of that margin on the hardware too!). That’s £13 a month of my contract paying off the subsidy – with 9 months left I’d pay £117 to pay that off. Still not cheap, but a lot more reasonable than £315 – and O2 retain my business and I get a new shiny thing; win-win, right? There are a number of people saying ‘tough, you signed a contract’ on Twitter in response to #o2fail – but I’d argue that good business here would be to offer a deal as I’ve described that addresses O2s costs while not bleeding their loyal customers dry.

Next up is the price of Tethering – and this applies to all iPhone users, new and old. On our “Unlimited Data” service we would be charged £14.68 to use 3GB of data via tethering, or £29.36 for 10GB in a month. The argument from O2 is tethering uses more data. Maybe so, but data is data and when they launched the iPhone O2 couldn’t have been more clearer on what unlimited meant. This is taken from an artle on the Telegraph.co.uk:

”Customers find ‘unlimited with limits’ confusing, plus most people don’t speak in megabits or understand what they equate to,” said O2 UK chief executive Matthew Key.

”So we’ve taken the decision to remove the fair usage cap so that ‘unlimited’ really does mean ‘unlimited’ – this is a market first.”

Well, O2 – you’ve gone and confused your customers as by charging for tethering you’ve essentially said that you’ve yet another definition of “unlimited” that includes “limits”.

O2 = Fail.

In other news, I’ve also updated my budget. I’m now half-way towards my minimum savings target for a house – which is quite a nice feeling; especially given my previous poor discipline – though the long road out of debt has helped in that regard. That said, I’ve got a ski trip in mid-January, plus the last (biggest) portion of my Glastonbury ticket to pay for. I’m also intending to stay at my bro’ and family’s for TT week again – though I expect that won’t be a big dent on my savings potential given the timing. I’m also planning a few trips in addition to War of the Worlds in June. Macbeth at the brilliant Manchester Royal Exchange in February and “Walking with Dinosaurs” at the M.E.N. Arena at the end of July. Dom’s also suggested going to the Old Vic (which is just around the corner from where he and Racquel live) so I may be tempted to go on another London trip some time early in the new year.

And finally, I’ve taken my day 70 of 365 picture. Nothing exciting, just a close up with face and bright blue t-shirt dominating the shot. Title “Brown and Blue”:

This is week three of my new regime of regular exercise and no drinking on a school night – and so far it’s going reasonably well. Certainly in terms of drinking I’ve stuck to my rule on that – and have also tended not to drink so much at the weekend too. I don’t believe drinking at the awards ceremony I went to last Tuesday counts as ‘a school night’. I have had some issues sleeping during the week which I think is a ‘hangover’ from beer or wine helping me feel sleepy and therefore get to sleep – last night was probably the first time I’ve gone to sleep with ease; and this in-spite of having bought the world’s most comfortable bed.

Exercise-wise, I’ve had quite a busy three weeks which have made it hard to find the time. I have been using the Wii Fit more particularly for the aerobic exercises (i.e. those that burn fat) – but I’ve only found time to go swimming once. That said, I’ve stuck to my regular football games on Thursday nights – and on Friday we’ve got the interdepartmental football tournament. All being well I’ll be off swimming after work tomorrow and on Thursday.

The bin men read your recycle bin

Possibly. At the end of week two I put the recycle bin out for the first time since before I went to the Lake District. When I came back it had been emptied and on top, in addition to the usual blue bags for cardboard, was a NHS leaflet titled “When does drinking start to affect my health?”. It has a little chart showing the risk groups for men and women – with more than 8 units a day being ‘Higher risk’ – which probably tallied with my drinking. That obviously isn’t a good place to be – and the leaflet has served as a rather timely reminder of my motivation for reducing my drinking.

Reduction not abstinence

I remember a number of years ago a friend advised me that it’s more realistic to aim to reduce drinking than abstain completely. Basically she pointed out that if you chose to stop completely and have a drink you’ll tend to give up on the plan completely – deeming yourself to have failed. Of course I’m not an alcoholic, which I imagine would be an entirely different kettle of fish.

This leads me on to my next project – and why I’ve posted on Facebook that I’m going to need wine bottles. This week I should have my wine making kit arriving – which provides all the equipment and ingredients to brew six bottles of wine (all the equipment, except for the wine bottles, that is). I figured this would make an interesting project and – if all goes well – it will save me a bit of money on wine. The initial outlay is roughly equivalent to £5 per bottle. After that, if I stick to kits for 6, then it’s just £2.50. If I find it goes particularly well then the equipment for 30 bottles doesn’t cost that much more (probably another £20) which would make the price per bottle around £1.60 and would naturally last me for some considerable length of time.

Out of control

Since I moved out of the apartment in Manchester – and if I’m being honest erm, forever – I’ve struggled with controlling what I eat and ensuring I’m getting the best out of my spending. I’m sure the symptoms I describe below are very familiar to some readers:

1. Fresh food goes unused and past it’s “use-by”, resulting in it being thrown out.
2. You don’t feel like cooking so buy a meal at the pub after work instead.
3. You get home from work and resort to convenience food or;
4. Worse – you grab take-out on your way home, or order food delivered (Pizza, Chinese, etc.).

Out of the above the one I do least often is number 3, which is probably actually the cheapest of all four.

Numbers 1 and 2 probably occur most frequently (with 2 contributing to 1), closely followed by 4.

As it is I don’t currently know precisely how much I’m spending on take-out, delivery or meals out and therefore how much I’d save by getting things back under control. What I do know is that number 1 is primarily down to the fact I tend to buy in quantities which are best suited for meals for several people; but my house mates work shifts so are rarely around to eat at the same time, or return the favour.

So what am I doing about it?

1. Using the Freezer

Nice and simple; when I have food that’ll do more than one meal I’m now using the old plastic containers in which Chinese take-out arrived to freeze a couple of extra portions – so that extra take-out spending has come in handy after all.
2. Tracking spending separately

This is almost half the battle. Actually thinking enough about the fact I’m wasting money on take-out etc. means I think that bit more about choosing a cheaper option. As mentioned in ‘Too much money’ I keep a budget these days to track and plan spending and saving. I’ve now modified this budget to separate supermarket etc. food shopping from take-out, meals out and delivery. It’s early days yet, but I know there’ve been several occasions when I’ve thought about taking the easy option, but remembered by budget and that’s been enough to change my mind.
3. Keep long-life stuff on hand

Things like herbs and purées that’ll keep for a while, pasta, rice, frozen potato things that can all help bulk-up a meal when I’m feeling a bit lazy and all I’ve got is some frozen chicken. I make chili reasonably often and using tinned tomatos is far cheaper than the jar alternatives. I’m starting to do the same with Spag Bol too – as it’s cheaper than Dolmio and no doubt just that bit healthier.
4. Just learning to cook more

Bit by bit I’m learning how to cook with more variety. I’d like to try my hand at some Chinese stuff to replace the take-outs, but I need to work up to that.
Hopefully I’ll achieve my mission through this – save some money and eat that bit better. This month I’ve had a holiday so my tracking won’t show anything significant yet, but I plan to make a follow-up post at the end of August to show how it’s all going.

The first thing to work out is whether you need or want a deposit at all – or whether you’ll opt for a 100% mortgage – and that will depend upon your own personal circumstances. One thing that is clear, and has been much reported, is that due to the credit crunch the number of mortgage deals has been halved as lenders become more cautious about who they lend money to – in the face of not having as much to lend in the first place. What 100% mortgages remain are therefore very costly. As a result, general advice is if you can avoid a 100% mortgage, do – as they no longer represent good value.

In my case I already knew I wanted to save a deposit – so the things I’ve been looking at are when to buy, what proportion to save and where to save it. That first question is a biggy – and I don’t think anybody’s got a good answer to that at the moment so I’ll leave it for now, but the other two are a little easier to answer.

In terms of how much to save – the simply answer is “the more the better”. As with 100% mortgages, deals on low deposits have dried up a lot too – so it’s unlikely that a mortgage based on a 5% deposit would be as good value as one based on a 10% deposit. Before the credit crunch the difference wasn’t that great. I’m personally aiming to save a deposit of around 20% – and I’ll be looking for somewhere with at least two bedrooms. What I also need to consider is ensuring I can afford the payments while continuing to save and increase my mortgage contributions. As mentioned in ‘Too Much Month’ the main thing I’ve done to maximise my savings is moved somewhere sharing the rent with two other people – so I’m now spending £250 per month versus the £635 I was paying when living in Manchester on my own. It’s also closer to work – so my travel costs have gone down significantly too. I took a look at what I spend on essentials (including savings of £100 per month for an emergency fund) and realised that I basically live on a salary of just under £15,000 a year, gross. The bulk of everything else is going in to savings, with the remainder being things like comics, DVDs etc.

If you’re living in rented accommodation on your own then I’d recommend looking at sharing – it can reduce your rent as well as other outgoings – like council tax (given you only get a reduction to 66% for living on your own). Share with just one other person and that’s dropped to 50% – so you can save something there so long as you aren’t moving in to a property in a higher band. Another suggestion I’ve read is moving back in with your parents to reduce your outgoings; not an easy thing to do but it may well be worth while to allow you to reach your overall goal. Another thing I’ve done is move increases to pay to savings rather than spending – though given the rise of fuel and gas/electricity going on at the moment that’s probably less of an option than it once was.

Of course these steps are just as applicable to clearing debt as it is to saving for your house deposit.

Next up – where to save? In my case I’m currently using an ISA and HSBC’s Online Bonus Saver, plus the HSBC Flex Saver for my emergency fund. I opened the ISA last April but only filled it in December thanks to a combination of savings and the Christmas Bonus at work which all went in to the ISA. This year I’ve been more fortunate as a combination of savings (including cashing in on 6 days of untaken holiday, which I got the money for in January) plus a significant chunk of money from my family, I’ve managed to reach the £3,600 limit for this year as of my most recent pay-day. The rest of my money (barring £100 a month for the emergency fund) is now going in to the Online Bonus Saver – which has a variable interest rate of 5.25% AER. I can get instant access to that should I need it – but I’m thinking that I might be able to get a better rate elsewhere. Handily enough I wandered to the Financial Services Authority website – which maintains comparison tables for a variety of areas – including savings. I’m going to have a think about what I need from the savings account (immediate thinking is I need to be able to switch money to my ISA next April without penalty) and see whether there is something that better matches my requirements.

If, like me, you’re looking at saving money to buy a house then hopefully this has been of some use to you.

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I finished my last post having moved to a shared house with a friend from Zen. It’d be nice to be able to say that at this point I finally took stock of my position and begin to turn things around; but that wouldn’t be true. In fact I continued to bury my head and ignore the position I was in. I still insisted on my little luxuries – like Sky TV and the best PC I could build. I continued to pay the bare minimum on my bank loan – meaning for £50 per month I was paying off just £5, of a debt of around £4,000. Other credit card debts went ignored, and of course I had the huge commitment for four years on a three-year-old Fiat Brava of around £9,000. This situation continued or 12 months.

At this point I moved to Rochdale, even closer to work. Prior to doing so I had moved to my parents for six months and had saved what I would have spent on rent – which proved useful later on. After discussion with friends and the example set by one or two of them on how they achieve what they want it dawned on me that I really needed to address my situation. The very first thing that helped with this was as simple as an Excel spreadsheet that a colleague was using to help with his own financial problems – which had been created by his accountant friend. It provided the opportunity to break down my money in to several areas; debt, food, bills, rent, entertainment and savings. It got me to look at what I was spending and set a budget for a 12-month period.

I had a credit card bill which was being sent to my parents house, and this was something immediate that I needed to address. I also realised I had other debts I needed to face. I dug out old letters from companies I owed money and also obtained my credit report from Experian – to make sure I had details of what I owed everywhere. In my spreadsheet I marked what I had to spend money on – rent, bills, car insurance, fuel and credit, food and I also made a provision for savings. From this I worked out what I had available to pay off debt. In addition I had the money I saved while at my parents.

I wrote to the companies I owed money to and requested details of how much I now owed them – including interest earned. A couple of them simply sent the figures, but others replied with details of what I owed and provided offers to reduce the debt if paid within a certain time scale – varying from one who’s offer was conditional on immediate payment to another which was to be over a few months. Given I had money saved I paid the offer based on immediate payment in one, and didn’t start making payments on other debts that month as it wiped out my savings and also took my spare money for that month. Still, one down… with close to £1,400 reduced to £700 in a single payment. The offer that was over several months was not affordable. I called them and negotiated a couple of extra months from them. They agreed to this and that reduced an around £1,000 debt to roughly £500. To my remaining creditors I offered token amounts of what I had left to show I was committed to paying the debt.

I ensured I was putting £50 a month in to savings. While this didn’t reduce my debt, this ensured that I had money available for emergencies (including car maintenance – I still owned a Fiat, remember), holidays and the occasional treat if the emergency fund got above what I required.

I still continued to pay the £50 per month on my bank loan initially as – while the interest was a killer – the longer standing debts where I had obtained deals represented a more significant saving in the long term. Once the deals were dealt with I continued with small payments to my other creditors and increased the amount going to my bank-loan – so as to reduce the interest and start to make some head-way on that loan.

As part of my analysis of what I owed people I reviewed the contract on my car credit to determine whether there was some means by which I could get out of that agreement. I discovered that after two years I could simply hand the car back – however I would still be left with just over £1,600 of debt due to the ‘warranty’ they had me take out when I bought it. One year after moving to Rochdale I bought a Rover 220 Turbo (I really haven’t learnt about buying reliable cars at this point! ) for £600 and took the Brava back. This meant I had reduced my debt by just over £3,000 (having paid off £4,700 over the two years I had the car).

Around the same time one of the other companies I owed money made an offer to reduce the debt for immediate payment. Because my payments on my bank loan were not fixed I was able to shuffle my money, and savings, around to further reduce my debt (albeit just a couple of hundred quid).

I cleared that one, and that left me with the remaining car debt, ongoing insurance debt and one credit card. It was also this time of year when finally I wasn’t able to defer my student loan any more – so I began making the minimum payment on this. I had saved a fair bit, originally with the intention of buying an iMac, but then Sky announced their HD service ahead of the World Cup 2006. I decided the PC I had would suffice and decided to opt for a Sky HD Box and an HD television. The principal debt I was paying at this point though was my bank loan – and with my ongoing Excel budget I ensured every spare bit of money went on this, while still continuing to save for one-offs. One year later, I had cleared my credit card debt, my bank loan and my car debt. All that remained was my student loan and I increased the payments on that, but my savings were my priority as the interest on savings was higher than the interest paid on my student loan. Also, in 2007, I once more had the savings for the iMac 24″ I had waited a year for.

The key there was that the savings I had started making were now putting me in a better position to allow me to buy ’shiny things’ without using credit, and without putting me in an uncomfortable financial situation. When I moved to Manchester City centre, to sample “city-living” I continued to use my same budgets (albeit with higher rental costs) to ensure I still limited entertainment spends to ensure I retained a focus on longer term objectives. As debts were paid off I transfered money primarily to savings, with slight increases to the entertainment budget as a ‘reward’ for reaching a more comfortable and sensible position. I basically still “live” far below what I earn and that is very important to ensuring my longer term goals can be satisfied comfortably – and to ensure I’m best able to deal with the unexpected.

After six months of sampling Manchester I decided it wasn’t for me, so my objective switched to getting the deposit I needed to buy a house – and that’s where I am now (with some shiny things also existing on my agenda along the way). I once more returned closer to work (in steps, Prestwich just over six months ago, and now back to Rochdale). I’ve bought a cheap-to-run car, a Diesel VW instead of the Petrol Turbo Rover and am sharing with two other people to maximise my savings. I still buy some things that aren’t strictly ‘necessary’ – but I do get enjoyment out of them and I don’t feel it’s right to sacrifice all of the ‘nice-to-haves’ and exclusively focus on long-term aims. The important thing is they’re budgeted – I know how I’m paying for them – and I do not get in debt to obtain them.

At the end of May this year I made my final payment on my student loan – finally freeing me of all debt… until the rather huge one I’ll need to take on next when I buy a house…

As context for this post I’ll start by saying I have never been good with money and I wouldn’t be being honest if I said I’d mastered the art of controlling my money. What I can say truthfully is that I’ve got much much better with money and I’m far happier for doing so. I used to have a real habit of spending every bit of money I earned when I worked part-time. It’d mostly go on computer-related purchases or nights out. When I had an allowance from my parents I didn’t save any of it and sometimes I’d end up ‘borrowing’ from my food money to pay bus fares to school/college. My first car was bought a “200 quid special” (a moniker my later cars shared for some time) and was bought and insured using money my grandparents had put in savings for me. The car obviously cost to run so this was another drain on my part-time earnings – so I never developed a habit of saving.

Early in ‘99 I left college and obtained my first full-time job at local Warrington ISP, U-Net. I also in the same measure moved out of my parents. Sure, more money, but also more expenses that I was in no way clued up on or prepared for. I figured I had more money than I really had – and got myself a credit card which I used to bridge the gaps between what I could afford and what I wanted, the most obvious purchase being the Game-Cube (which I still have). I made minimum payments until – very foolishly – I let payments be refused because I had insufficient money in my bank account. I dipped in to savings I had been given to cover bills when the heat from the credit card company or debt collection agency got too much – resulting in those savings being completely depleted. When given money for my 21st I spent it on things I didn’t really need – an amplifier, floor-standing speakers (I also still have these) and a NAD CD player.

I was sharing a house in Warrington – a bungalow – with two friends and co-workers at U-Net. I maintained a Web site which got the attention of a local news agency – and was offered a role as a junior reporter. This meant a significant pay-cut, when I wasn’t exactly raking it in at U-Net. I went down from £10,500 per year to £8,000. I did a reasonably sensible thing at this point and moved in to another house with friends in the centre of town – within walking distance of my new work place. However, I continued the bad practice of using credit cards to cover the gaps in my finances but eventually reached the limit of what these companies would lend to me – 9p noodles were a staple for me at this point. I remember I took my NAD CD player to Cash Converters to give me some spends on a trip to the Isle of Man to visit my brother. I had the Renault 5 my granddad had given me, but it wasn’t being maintained properly due to lack of funds.

I returned to U-Net (renamed VIA Net.Works) after two years – with a big jump in salary from the £8,000 I had remained on for two years o £11,500 and then £12,500 after a quick promotion to Second Line. During this time my bank consolidated the £2,000 credit card debt I had with them and a £2,000 overdraft in to a single loan and I made minimum payments on this of £50 per month. Interest every month on that was in the region of £45 per month. I was going nowhere fast in clearing my debt and I was effectively ‘in hiding’ from some other credit card companies. Phoolish Phil.

After one year at VIA I moved to Zen Internet, where I continue to work today. At this point I elevated myself to new heights of stupidity. I continued to live with friends in Warrington and determined I needed to ensure I had a reliable means of getting to work in Rochdale, my Renault 5 having basically given up the ghost. Now, my stupidity is two-fold. First, there was a conflict with my objective in that I opted for for a Fiat Brava. Fiat and reliable do not go together (and, in fact, the alternator failed in my first week at Zen, leaving me to rely on public transport to get to work for my first two weeks). Second, I bought the car from Yes Car Credit and that meant extortionate interest rates and rather unpleasant terms. Each month the car was costing me £200 per month – and would continue to do so for 4 years. A new car would have been cheaper! Add on to that maintenance and fuel. The move to Zen and my desire to have something better than my usual “200 quid specials” had meant a big reduction in my available finances.

After six months I followed my previous example and moved closer to work with a friend at Zen, but I was still not addressing the debt I was in – at this point I must have been around £16,000 in debt including car, bank loan, credit cards and student loan.

Part two of this post will talk about what measures I eventually took to get to my current situation…