This Fool has decided to make life easier by picking a few Best Buys and then ditching most of his financial baggage.
"Our life is frittered away by detail. Simplify, simplify." (Henry David Thoreau)
According to research carried out by the Prudential in 2003, around a third of UK adults are "financial ostriches" who bury their heads in the sand instead of tackling their financial concerns.
Given that I write about 500,000 words a year on the subject of personal finance, it's no surprise that you'll find me at the other end of this scale. Indeed, I probably spend too much time obsessing about my household finances -- my wife definitely finds this subject a total bore!
Then again, I think that the basics of my personal finances are fairly sound. I spend less than I earn, have no debts, keep an emergency fund in cash, and invest a large slice of my income into the stock market for long-term gain. However, I think that my financial affairs have become overly complicated, with too much going on in certain areas and too little in others. Hence, I've decided to wield the knife -- here's what I plan to do over the next few months (not all at once, but one step at a time):
1) Bag a better bank account
My wife and I have separate bank accounts with the same bank, which enjoys a great reputation for customer service. However, our current accounts pay a lower rate of credit interest than the 3% to 5% paid by other top bank accounts. We don't go overdrawn and, therefore, borrowing rates don't affect our choice of account, so we've decided to open a joint account which pays a super-high rate of interest, using this article as our starting point.
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2) Find the best cashback credit card
As I always pay off my credit card in full by Direct Debit, I make money as I spend by using a cashback credit card. Over the last year, I've earned almost £110 by paying for all of my purchases using this card. However, my present cashback card only pays me 0.5% of all spending over £2,000 a year, whereas I spend at least £15,000 a year on my card. Hence, I'm going to find a card which pays me at least 1% on all of my spending and then ditch my existing card.
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3) Switch to a first-rate savings account
Currently, I have a large slab of cash resting in a former Best Buy savings account. However, this account paid an introductory bonus which has now expired, which means that it no longer tops my table. Hence, I'm going to transfer this sum to a top-notch high-interest savings account, such as the ICICI Bank HiSAVE account, which pays 5.15% AER on £1+.
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4) Track down a cheap pension
When I left the Fool last year to set up my own company, I also left the Fool's generous pension scheme. Hence, I need to find myself a replacement: a plan which provides access to stock-market returns at the lowest possible cost. Hence, I'm studying the FSA's comparative tables for pensions in order to locate a cheap, simple Stakeholder pension, personal pension or Self-invested Pension Plan into which I can pay a few hundred pounds a month. I also plan to set up Stakeholder pensions for my two young children, in order to help them long after I'm gone.
Learn more in the Fool's Pensions centre.
5) Locate cheap life insurance
According to my friendly expert on life insurance, the award-winning Kevin Carr at Lifesearch, there's one easy rule of thumb for parents: you need at least £150,000 per child. As I have two young 'uns, I need to insure my life for at least £300,000, but my cover falls short of this figure. Thus, I plan to find some cheap life insurance to top up my protection to at least this level.
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Finally, I'm also going to close down several spurious accounts (mostly credit cards) which are currently lying dormant or unused. Then I'm going to sit back and relax, confident that the simpler my financial plan is, the more likely it is to succeed!
"As you simplify your life, the laws of the universe will be simpler." (Thoreau)
More: Use the Fool to compare current accounts, compare savings accounts and compare credit cards!