Car Finance Agreements Update & Ask Martin ANYTHING!

26:15Oh, I tell you what, I'm finding this interesting, these random drawn ones, because I'm not mentally prepared for them. So I hope no, I may be going round in circles. That's because I'm thinking while I'm talking. Let's do another one. OK, into the box I go and I've got one. At Matterhue on X says, Why isn't finance taught at school to set people up for success in life? Well, it is on the national curriculum. If it's not too self-aggrandising, I led the campaign to get it on the national curriculum in, I think, 2014. But that was a Pyrrhic victory. So what happened effectively is many of the big banks and others who had been putting money into resourcing financial education pulled the money out, understandably, because it was on the national curriculum.

26:56And at the same time, we had the move towards the academisation and free schools. that meant that those schools didn't need to follow the national curriculum. And in fact, now we're at the point where less than 50 % of schools need to follow the national curriculum. And financial education is not in the compulsory part that all schools need to follow. So then we had a big issue that there were, it was on the national curriculum, but very few schools were teaching it. There weren't any resources. The government weren't putting resources in. I then, and I've talked about this before, I won't go into full details.

27:26I then, after having a bit of an argument with them, I agreed I would do a textbook. So there is a textbook available. It's curriculum mapped for all four UK nations. You can get it from the Young Money website. I did it via a charity, but it was ridiculous that a private individual had to fund the textbook to get it in schools. But it is in schools and there's teacher training guides too. So some schools do teach it, but nowhere near enough. Now, there is a curriculum review being done at the moment by the government. I have met the head of the curriculum review to champion the case of financial education.

27:58and the real push that we are doing is trying to get it in the compulsory element because you are absolutely right. If we look at the scale of some of the huge misselling campaigns that we've seen in this country, you know, 40 billion paid back on PPI alone. It's not 1 % of that. It's not 0.1 % of that. It's 0.01 % of that that would be enough to fund financial education. And if we had better financial education, we perhaps would have far fewer of these mis-selling scandals and we would set up our young people who we educate into debt when they go to university or at least educate into what we call debt.

28:36And we, so many of our young people, when they get out into our competitive consumer economy, are not tooled up to deal with it, make mistakes that haunt them for years. So I absolutely agree with you. We need financial education and we need to get the politics right and we need to help teachers, resource teachers, train teachers and give them what they need to make it easy. And I'm doing my best to try and get there. Right, Matt, we're doing well. I'm on a roll now. What's next? What's next? OK, I have pulled out a question from Sarah. If my partner and I don't want to marry but have joint assets, is it best to write a will or is a civil partnership more secure?

29:14Oh, I mean, I would absolutely go for a civil partnership. A will is about what happens when you die. It's not about what happens when you're alive. And if you're buying a house together, what's the agreement that would happen if the two of you split up? All of these things are very complicated. There are many tax advantages to marriage, but there's also a consistency advantage in that you get absolute rights and know where you stand. Now, for those people who don't want to get married, that's where a civil partnership comes in. A civil partnership is a legal agreement that gives you exactly the same rights as if you were married without the baggage.

29:50Now, many people like the baggage of the religiosity or the paternalism of marriage, but many people don't like it. I don't want to get into the pros and cons of that. But a civil partnership gives you that. Let me just run you through some of the advantages of marriage or civil partnership. You may be entitled to£1 ,260 worth of tax breaks if you're married or in a civil partnership through the marriage tax allowance. That's where a non-taxpayer is with somebody who pays tax at 20 % and you can move tax across. Your spouse or civil partner won't pay inheritance tax on anything that you leave them.

30:24And the big part of that is an even more important inheritance tax boon. You can pass on your unused inheritance tax allowance to your spouse, which means between you and your spouse, if you have children and you leave them your house, you have a million pounds of assets that you don't pay inheritance tax on. If you're not married or in a civil partnership, you don't get that. It's half that. You can freely move savings and investments between spouses or civil partners. So you can take advantage of both your tax-free allowances. You can do the same with capital gains tax. There are far more protections if the relationship ends within a marriage or civil partnership than just cohabiting.

31:04And if you just got a will because you're living together, that does not give you any cohabiting protections. though there are cohabiting agreements that you could look at. You may get a big estate pension if your spouse dies but that probably won't apply to you because you can tell I've searched a blog that I wrote on this to go through the headlines of it. I'm not quite that capable of reading them off otherwise. You may get a big estate pension if your spouse dies probably doesn't apply to you because that's for older people. You can inherit your spouse's ISA allowance and the final one on my list which you wouldn't do because you were talking about getting a will is if you die willless an unmarried partner may get nothing.

31:39So if you ask me as a 53-year-old man who's sitting there and who's looked at this for a long time, should you and your partner just get a will or should you get a civil partnership? Well, if this is your long-term partner that you're hoping you will be with for life, I would absolutely get a civil partnership with them, especially if you're planning to have children. It makes things simpler, easier and gives you both more rights and is very tax advantageous too. One from Ray. I think he's taken this Ask Me Anything a little bit too literally. Okay. You left some of those in, did you? I did. He is asking, what is your second favourite cheese?

32:18Ooh, second favourite cheese. I will answer this one. Caffili. No, okay. First favourite cheese, Gorgonzola. I like a Gorgonzola. That's my number one cheese. and what am I going to throw in this second? Oh, I've got one. Yeah, we discovered one. You might not have tried it. It's very good if you haven't. Try a Telaggio. I like a Telaggio. A little bit posh, a little bit upmarket. Maybe you weren't expecting that in a money-saving podcast, but I do like a Telaggio. Do you know what country it's from? It's from Italy. Telaggio is an Italian cheese. Worth a try. Drawing another one. We've got Mrs.

33:00B. I have two sons. they want to move out and rent, not buy. I see that as wasted money as they could have saved it towards the deposit instead. Is renting a waste of money? No, I don't think renting is a waste of money. First of all, it pays for you to live somewhere and that's important. I do think many years of property porn television have tended to make it feel like renting is a dirty word. It isn't that simple. If you rent somewhere, you have flexibility of where you can live, you're not locking yourself in, and that can be quite useful. Also, if we get really clinical financially on this, if you were to buy a property and property prices were to crash, or there were to be a problem with that property, for example, you bought a property that had cladding on it before the cladding scandal and everybody realised that would then be impossible to get a mortgage on it afterwards or impossible to be able to sell it so you were locked in, you would be a lot better off if you had rented.

34:00Equally, if the market is on an up and house prices are rising rapidly and you're renting, not buying, then you're missing out and causing yourselves problem in the future. So there are pros and cons to both renting and buying your own house. Now, if you ask me over a long-term basis, is it good for a young person to save up so that their finances are in a good position, a deposit for a property on a mortgage where they're planning to live over a longer period to give themselves some stability in owning, then yes, it is a good aim. But I don't think that means that renting is throwing money away and that renting should be a dirty word.

34:43It depends on your life stage and your choices. so all of that needs to be factored in but generally yes it is better to try and own your own property though I'll be honest with you I didn't get my first property until I was 33 and I think that that decision wasn't necessarily bad for me it suited my life at the time. Tony's asking how much longer do we have to wait for you to be ready to go into government either as a minister or a peer? I know a few years ago you wanted time with your family. you're going to have to wait an awfully long time it's not going to happen I do not want to be involved in politics it's way too nasty we have an adversarial system where you have people set up to oppose you I would be as deeply unpopular as many other politicians sadly because you have to baron all those vested interests and you tend to please nobody when you're trying to do the right things and it's not right for me or for my family you talked about a peer you are quite right I did apply for the House of Lords people was going, you applied?

35:42There are different ways you get in the House of Lords. There are political appointees, but many people in the House of Lords are crossbenchers who apply like a job. And I applied. I was rejected. I believe I was rejected because I said that I'd want to go home to put my daughter to bed at night and then come back. And I don't think that they thought that was that suitable. They dispute that. I should be honest on that. I've actually moved on from it now. And I'll be really honest with you. I don't think I will apply again, although I can apply again, for the House of Lords. I think that to spend three days in that chamber waiting to hear people speak for a long time is less productive than the work that I currently do now.

36:21And I do do a lot of the work I do now is, you know, working with my money mental health charity and working on campaigns with my money saving expert team that are for the consumer. And I think I probably have more impact doing that than I would in the House of Lords. so I would not apply for the House of Lords again. So I'm afraid you're going to be disappointed. It would give you a serious question for what you wanted but that's the true answer. Right, Matt, what's next? Are you dipping into your box? I'm not dipping into my box because we have a caller. Aaron in Maidstone is here. He's got a question for you.

36:52Hello, Aaron. Welcome on board. Good afternoon, Martin. What's your question? Slightly more personal question if I may than usual. Well, it's asked me anything but if you're asking my inside leg measurement we're not going there sir oh that's blown that one right ready yeah i've been volunteering for soup kitchen for a few years good for you when was your key moment in life which moved you towards helping others less fortunate than yourself that's a very good question there is actually there is actually a seminal moment so yeah i'd already started being the money saving expert i had the website set up.

37:35It was growing very quickly. And I enjoyed that. But when I first set Money Saving Expert up, I had this philosophy. I called it the Adversarial Consumer Society. And basically, the line then was, a company's job is to screw us for cash. Our job is to try and screw them back. And it was all very black and white and quite militant. And I didn't say companies were wrong. I always used to use the analogy, you know, I'm a Man City fan. If Man City are playing Man United, I don't want Man United to score but I don't think they're wrong for trying to do so and that was sort of the same battle between consumers and companies so what I did was about helping people but you've used helping people less fortunate and at that time I wasn't quite sure I'd realised this was I was in my early 30s that a lot of what I was doing was for people who were capable and could read and were happy to you know not read in that sense but could understand instructions go through it and had the confidence to take people on didn't have issues calling people up on the phone and all of that type of stuff and then so I set up the website in 2002 three I remember very plainly in about 2005 two things happened the first is that I went to a party of a friend and somebody came up to me and said love your website and I went thank you very much She's very good.

39:00And they they said, I said, do you use it? And they say, yeah, I use it. I don't use it for me. I'm a mental health worker and I spend loads of time helping my clients with their finances because it's catastrophic. And that got me quite interested in the mental health element, which is something I've taken up since. And realizing that there are many people who are not capable of helping themselves, whether on a temporary or permanent basis, through to mental health and mental capacity. and at a very similar time I'd started the bank charges campaign about unfair bank charges because back in those days you used to get a charge of£35 a pop for going beyond your overdraft limit even if it was only for a penny and then that charge would mean you got other charges because you were now even further over and I met a woman who had had her benefits payment was late and her direct debits were going out of her bank account but because the benefits payments were late the direct debits bounced.

39:55She had charges of£200 because of the bank charges because the direct debits bounced. And then charges on charges by the time I met her were up to£3 ,000. And this is a woman who was on benefits because she was caring for her child. She had a child with disabilities and she was£3 ,000 in debt because of the systematic destruction of bank charges. and I got quite angry about it. And that was the point that I started to change what the site did so that it was always still cutting your bills is the first priority. But instead of what it used to be where my website and my work was about, you know, their job is to screw us, our job is to screw them back, I changed the sub name and the sub name that still lasts now from the site.

40:41I'm not trying to talk about the site, but that's sort of my philosophy of what I do is cutting your bills and fighting your corner. because I started to realise we need to help the people who can help themselves, but you also have to help the people who can't. And that's one of the reasons I set up my money and mental health charity. Funny, sitting in the room with me now, just fact-checking for me, is the wonderful Sally, who just got married. And so I can't remember. Sally, what's your new last name? Richardson. She got married last week. So I'm trying to... Sally Richardson, who works on my campaigns team, and it's why I have a campaigns team, which we just work with.

41:11None of that is about campaigning for the site itself. It's all about campaigning for consumers. and I've got a great team who do that. And that's been the gradual change over the years, but they were the two points that started it. And listen, and you're doing great work yourself. How's the soup kitchen going? Are things easing? Are less people? I hope you're going to say yes. More people, but we don't discriminate, although we do it for the homeless. We do it for people with mental health issues, people that are losing their jobs and just in a tricky place in life. So you don't discriminate.

41:40We help whoever comes along for food, a chat, whatever they need, sometimes a hug. oh well done I'm just lovely and well done for all the work that you're doing and all the millions of other volunteers and carers out there who don't get enough praise I mean I'm very lucky I get more praise than I know what to do with that's part of being in the media but you're doing it without the praise so if I may give you this while you're on thank you good luck to you and to all of your colleagues well done cheers mate keep going okay drawing one out we've got David Anything? Well, here goes. Where does your lap go when you stand up?

42:20If you're travelling at the speed of light and you look backwards, can you see anything? And how do you know whether a worm is laying on its back or its belly? All right. Well, if he's being a smartass, I'll be a smartass back. Give me those one by one. OK, first one. Where does your lap go when you stand up? Well, it just becomes the top of your legs. If you were to wear a lap pack and you were to tie it around your lap and stand up, it would be the top of your thighs. I don't see why the one is that difficult. Your lap stays there. Next. If you're travelling at the speed of light and you look backwards, can you see anything?

42:48Yeah, because you're probably in a spaceship, so you'd see the back of the spaceship. That's simple. Next. How do you know whether a worm is laying on its back or its belly? Why do you think it has a back or a belly? They could turn sideways. It could be both on its back at the front bit and its belly on the second bit, because they can twist around. David, I think you're looking at this from a narrow species perspective. OK, Matt. So, we've done lots of big questions where I've done full answers. I want to try and get through some more questions. So let's try and do quick fire. Now, to anybody listening, some of these might need more detailed answers, but I'm just going to try and answer it quickly to try and get more of your questions answers while we can.

43:24Matt, let's start drawing out of the hat as quick as you can. OK, first one, Donald, if I pay for next day delivering, it doesn't come the next day. Am I entitled to a refund or compensation? It would tend to involve what the contract and what their operation and what their caveats were and why it didn't come. I would always, though, if we get away from your rights and go to your expectations, I would always make a complaint. And remember, if you're ordering something online, it is the firm that you ordered from who you have your contractual relationship with. It is not the delivery company. They've been subcontracted.

43:57Your relationship is with the company you've paid. So I would get in touch with them and politely say, it didn't come. I paid extra to have next day delivery. I would like that money back. They should give it you back. What your rights are depends on the underlying law and the contract and what they actually said. So I can't give you a firm answer. Next one, Keith. Is it good to get credit cards even if you don't plan to use them? Well, if you've got financial discipline, credit cards tend to be the best way to spend because you get Section 75 protection that means the credit card company is jointly liable with the retailer.

44:26And also there are credit cards that give you cash back and rewards when you spend on them. Just make sure you pay them off in full. If you're not going to be using a credit card to spend, then the only reason you would have it is to try and build or rebuild your credit score. So that would involve putting a£50 to£100 a month of normal spending, not an excuse for spending anymore, on the card, doing that, paying off in full so there's no interest over a year, and that can help you, give you, improve your credit worthiness when you apply to lenders. But if you've got a great credit score and aren't already looking to apply for any other lending and don't want to use a credit card for rewards, then there's no point getting a credit card.

45:01Next! I love this. Keep going. Do or did you play video games? That's from Unknown. I did play video games as a kid. One of my proudest moments as a child was Crash Magazine for the ZX Spectrum. I got in their rankings for the best long jump on Daley Thompson's Decathlon. I've since met Daley Thompson and enjoys talking to him. He's very full of banter. He tends to take the mickey out of you when you talk. So you end up having one of those sort of male conversations where each making fun of each other. But I couldn't believe I'd met Daley Thompson when I used to be long jump control for him. Now I do actually play games on my phone.

45:32I'm into F1 Clash. I probably shouldn't advertise at the moment. I'm into F1 Clash because I find it a good way when I'm trying to wind my brain down and not think about work. I find the stimulation from a game can move me away from that. Next one, Matt. Next one. Next one, Stephen. It's like a game. Stephen has a five-year-old boy. My brummie came out then. What's the best way to get started for his money life? We don't have tons of money. Where's best to start? Well, any money that you can put aside for him. If it's not money you're going to want him to have when he's young, then I'd be looking at investing it.

46:03I'd probably put it, you know, something like a junior ISA so it's locked away till he's 18 because otherwise it would be his money and he could get access to it. And I'd be looking for something which you could put in an investment that will hopefully grow pretty well over that longer period. As for lessons for him, one I would give is when you go in the supermarket, say, why do you think there are sweets by the till? And he'll say, because they're all good. and you say, well, no, it's because the supermarket's job is to make money. So they know that people like sweeties, so they like to put them near the tills so that people will spend more when they're in there.

46:31It doesn't necessarily mean that it's good for you. And just start to talk about money, counting money, showing digital forms of money, giving some independence of spending. A little bit young at five, but any form of conversation that you can have is always a great start. Don't hide money away from children. That means they don't engage and envelop it as part of the absorption that they have, their young minds have. Talk about it, be honest. I mean, maybe don't talk about any life struggles that you're having with it at this age, although when the teenagers award. Next question. Fee is asking, why is it that single people are routinely worse off than couples?

47:02It feels so unfair. Council tax, holidays, everything seems to be designed for two. Well, council tax is a government scheme. It isn't actually divine for two. Remember, you get a 25 % discount if you are a single person in the home or living with under 18s or living with full-time students or living with other people who are discounted for council tax purposes. And people always say, why isn't it a 50 % discount? Well, because a household doesn't necessarily have two people in. It might have five people in. So exactly what the discount should be is a little bit complicated and confusing. But basically, because council tax is a terrible system, it was set up, it's got so many flaws and holes in it.

47:38People will know from past programmes I've been campaigning on it, but no one is brave enough to touch it. The single person discount is 25%. They'd have to change legislation to change that and nobody really wants to do that. So I can't see that one changing in the coming future. As for why it's more expensive for single person, well, it isn't an excuse. I'm not justifying, but it's called economies of scale. Generally in this world, the more things that you do at once, like bulk buying, the cheaper it gets. So if you're doing it for one person, it tends to cost more, I'm afraid. Carl, with the rise of new online banks such as Monzo, how protected are we if using them compared to the traditional banks such as Lloyds?

48:13Depends what you mean by protection. If you're talking about financial services compensation scheme protection, you have exactly the same compensation in that you're protected up to£85 ,000 per person per financial institution if Monzo or Lloyds were to go bust. Although what happens in practice more often is they just port all the savings part of it to another bank and they operate it that way. In terms of other protections, you know, security and online security, Well, they tend to be pretty swift when it comes to the new tech firms. I would think they're similar, but it's not something that I've done a study on.

48:47But Monzo is a bank, so it has the same bank regulations as other banks. Revolut, for example, does not have a UK banking licence, so you don't have the same protections in the UK as you would with a bank. And so knowing a new bank has the same protections as old banks, a payment system that isn't a bank has lesser protections. Next. Next, Craig is asking you, is Cash is King dangerous? Specifically, he's talking about inflation erosion, a false sense of security and a risk of a lack of compensation with theft. absolutely i mean people often say shouldn't i just put my money under the mattress well no i mean when you put your money in a savings account you've got that 85 000 pound protection we've just talked about it put it in your mattress well even the best home insurance policy would only protect you up to about 500 quid cash if it was stolen from your house so you have very little protection when you pay for things in cash then again you're limiting your protection paying a credit card.

49:46You've got section 75 protection for items costing between£100 and£30 ,000, which means the card company is jointly liable with a retailer. Pay for lower transactions on credit cards or pay on a debit card. And you have chargeback protection that means at least if something is delivered, you can get your money back. Even via a bank transfer, far less protections. But if there were to be fraud or push-only scams and you pay by bank transfer, there at least is some form of recourse. Paying cash, you have absolutely no form of protection. You also don't get the rewards that are available when you're paying on plastic.

50:20So I do all my spending that I can, apart from trivial spending on plastic these days. You're far better protected. As for money in cash, I think you were also talking about savings because you were talking about, yeah, I mean, if you put your money in savings in the bank, then you have to factor inflation. At the moment, the best savings outpay inflation. So they are actually growing. But we many years where inflation prices were rising quicker than savings interest, which meant in real term, your purchasing power on money you had saved was being diminished. So savings were losing. So yes, there are lots of issues there.

50:54One more of these quick fire. I'm not sure I can keep going anymore. Okay, one more. Richard is asking about student loans. He said, it would be good to understand what the average cost for a parent to put your child through university on top of the grants and funding a student can get, which I understand is means tested. As a parent, the numbers are quite scary. So it'd be good to know how best I can prepare for this when I have around a year before my first child goes to school. Well, you're doing it nice and early and it's good to be thinking about it. You are absolutely right. While much of the political discussion focuses on tuition fees, tuition fees are not really an issue for most students.

51:30Now, before anyone writes in and says, what are you talking about? they're an issue for graduates and university leavers. Most people, first-time UK undergraduates, they, if they have to pay tuition fees, it is paid for them by the student loan company, and they will pay it back afterwards if they earn enough in proportion to what they earn. So 9 % for current English students, 9 % of everything they earn above£25 ,000. It's expensive. It works far more like an extra form of taxation, you know, 9 % higher marginal tax rate above£25 ,000 than actually paying off a debt. The practical issue for most students is having the money to live off while you are at university.

52:10Now, I'm going to focus on the English system. It changes in some of the different countries, but I'll come to those in a moment. In England, the amount of maintenance loan, that's a living loan that you get, for most under 25s is based upon family income, which is a proxy for parental income. So the higher your parental income, the less a maintenance loan you get. Now, for me, that means there is an implied parental contribution, because if your child is only getting 50 % of the full loan that's available to those on the lowest incomes, that full loan is designated of the minimum amount that you would need to live off, then, and their only reason they're getting less is because of your income.

52:50Well, it's implied by the state that that That means parents need to make up the difference. So let's just go through how it works. The loan that you get starts to be reduced from family income of just£25 ,000. So that's total family income of£25 ,000. I mean, that's two people on minimum wage. So it really isn't very much at all. Until you get up to around£65 ,000, by which point your child would only get half the full loan. Now, for 2025 starters, just to put it in context, the living at home loan is about nine grand a year. Living away from home is about 10 and a half grand a year. And living away from home in London is about 14 grand a year.

53:32So if you half that, that's four and a half thousand pound maximum parental contribution living at home. It's about 5 ,250 quid living away from home. And it's getting on for 7 ,000 pounds per year living away from home in London. Multiply those all by three and you see we're starting to talk with someone who, you know, has got family income of£70 ,000 of needing between£15 ,000 and£21 ,000 to be able to support your child while they're at university. Obviously, if your income is less than that, let's say family income£40 ,000, the amount is smaller, but you still need to put some money aside and it would still be proportionately difficult from that amount of income.

54:13so the earlier you think about it and the earlier you start saving towards that most important part which is the living cost for your child when you're at university the better and there are parental contribution calculators out there that can give you an indicative example of how much money you would need to save I should note in Wales there is no parental contribution because the only thing family income changes is how much of the funding you get is a loan and how much of the funding you get for living while you're at university is a grant. There are, in my view, parental contributions in Scotland and Northern Ireland, because even though there is some grant and some loan, the total amount you get does depend upon family income and can be reduced with half family income.

54:56But the parental contribution is much smaller there than it is in England. So basically, for those living in England who want your kids to go to university, of course, the system could change. Well, depending on your income, you could be looking at needing between, let's make it really rough, 15 and 25 grand once they get there. It's a lot of money. I know it will scare many people, but the sooner you think about it, the better. And we need to be far more upfront about the fact there is a parental contribution. It's not talked about enough. Parents should be told the day their kids are going to secondary school that they may have to be able to put this money aside.

55:32Of course, the child can contribute by going and getting a part-time job and they might be able to even be grants or other things available for them. But ultimately, the reduction in the living loan you get when you go to university is based on a proxy for family income, which is a proxy for parental income. And therefore, there is an implicit parental contribution. The sooner we start talking about it, the better. And I think that is a good point to end the quick fire.

55:57And that is it for this week. If you have enjoyed it, please tell your friends you've been listening to the Martin Lewis podcast. I do quite like this Q &A format. I think we're going to do more of those in the future. We do tend to put out a new episode every Thursday. Do subscribe to keep up to date and your pockets will be pleased with you. As I said at the start, I'm taking a wee break for the summer now. But don't worry, just to keep you up to date, we'll be doing some best of podcasts while I'm off, putting out stuff we've already done before that's still up to date that you might enjoy listening to again.

56:27Or maybe, if you're new, it'll be your first time. Take care.

56:45Martin Lewis is the founder of money-saving-expert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing martinlewispodcast at bbc.co.uk. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.