Control your borrowing with Martin Lewis' beginner's guide to saving on interest rates and getting the best deals.
Are you in debt? Heard about a special mortgage deal but wonder if you can get a better offer elsewhere? Or do you simply want to know what APR actually means to your purse? In this climate of financial insecurity, it is more important than ever to tackle these questions.
Take Control
The best way to steer a course through this quagmire is to become a savvy consumer. The Money Diet (Vermillion, 2005) is Martin Lewis’ straightforward introduction to the world of spending and debt. Although based on the British system, the main principles are applicable all over the world.
How Borrowing Works
The author explains the nuts and bolts of borrowing, and explodes some myths. For example, a five percent interest rate is better than a ten percent interest rate – right? It depends. He explains:
‘Repay £1,000 at 10 percent over five years and it costs £260 in interest. Repay the same at just 5 percent over a 25-year mortgage term and it costs £740.’
Beware Compound Interest
The book explains in very simple terms how borrowing money has a raft of hidden costs. For example, compound interest means that five percent interest on a tiny loan such as £100, if not paid back quickly, can increase sixfold. Just think what that means in terms of bigger debts.
Credit Cards
This section includes a back-to-basics guide covering what a credit card is, when to be wary, and how to play the system so plastic can actually make you money. Find out if you are a potential player, a credit survivor or in debt crisis.
Improve Your Credit Score
The Money Diet explains why your neighbour may be able to borrow money (from the same loan company) more cheaply than you – it all comes down to your credit rating. The 10 factors that affect credit scores are set out clearly: learn how too many loan applications, joint finances and moving house impact on the cost of borrowing.
Beat Debt Crisis
Martin Lewis really makes you feel he is on your side with helpful chapter headings such as ‘There’s Always A Solution No Matter How Bad The Debt’. He lays down four cornerstones of dealing with debt crisis - cut your expenditure, lower your interest, pay off the loans with the biggest interest first and use any free help available.
With its five page contents section and similarly detailed index, The Money Diet is easy to skim through – but equally a highly readable rookie’s guide to money if read from cover to cover.
