Consumer crusader Print E-mail
Martin Lewis is a man on a mission to help consumers smarten up when it comes to spending money. He talks to Penny Kitchen. Martin Lewis is a guru whose time has come. Like organic food and carbon footprints, his online and broadcast mantra urging consumers to wake up and fight for every last penny has touched a chord. Whether you are a student heading towards an early burden of debt or a 60-year-old approaching retirement, Martin's gospel is well worth a listen.

Woman's World caught up with the 'money saving expert' at his small West London office. His little book Thrifty Ways for Modern Days had not long been published and it's home-spun commonsense, make-do-and-mend hints seemed to me at odds with his fast-talking, striped-shirt 'City' image. When I suggested as much he quickly put me straight: "It isn't written by me but by my Web community. I edited it and got it published and I'm immensely proud of it."

So how did it come about? "Around two years ago I noticed a discussion developing on my website - older ladies were challenging some younger ladies - the things you could do with white vinegar and how you could get by on a WW2 ration book, for example. I was fascinated and I wanted to capture it." Martin is at pains to point out that, "it was very not me! I am about living your life the way you want to but spending less doing it. I'm not into thrift as a lifestyle."

Nevertheless he set up a noticeboard on the website called "Money saving old-style", quite deliberately separating it from his own advice pages. From then on it took on a life of its own. "This book is a result, a mix of new technology and old technology if you like." As it says on the jacket - a discussion on living life cheaply, healthily, ethically and thriftily, "with all generations together searching for a path to old-style bliss", and because he has drawn on the wisdom of his website's 'community', he decided that the proceeds from the book should go to the charitable fund he has set up.

At this point the crusading glint really comes into Martin's eyes, for his MoneySavingExpert.com Charitable Fund is all about education. "Is it any bloody wonder that we're so badly in debt crisis in this country? We now educate our youth into debt but we never educate them about debt," he says. "And there is no help available until you're in debt crisis. With this charity we won't pay to get you out of debt, but say you want to do an accredited course in managing personal finance, this fund is for you. The money doesn't come from the banks, which is very important." (One of Martin's high-profile campaigns this past year has been to call banks to account for their exorbitant overdraft charges.)

His second goal is to fund good ideas, which promote consumer and debt education. He gives me the example of an Army sergeant wanting to organise a course to prepare his soldiers for civilian life. Then there is a school wanting to set up a course on money management for students preparing to go to university.

With 12 staff helping him to research the best consumer buys and loopholes - everything from insurance, the cheapest energy supplier and bank charges to cheap flights - his ad-free site has a staggering 2.48 million unique users each month. Martin is a frequent name on Radio2 as well as GMTV and he contributes to The Sunday Times, yet only four -and-a-half years ago he was an unknown financial journalist. He started sending emails to friends alerting them to good deals his research had uncovered. He called his emails "Martin's Money Tips" and they spread from friend to friend and wider acquaintances like wildfire. Today by registering on his website you still receive newsletters called "Martin's Money Tips" alerting you to the best deals around.

Could you cope?

I asked Martin if he thinks it is too late at 60, say, for a woman to learn to save money and spend less. His advice was typically blunt:

"One worry I have is the assumption many women have that your partner will look after the finances for you. But your partner could leave you or die. Wonderful if you each die on the same day, aged 146, but it's highly unlikely! Either scenario will be massive tragedies in your life and by not managing your own finances you will be adding to that stress."

And he points out that men aren't always as good at managing money as they think they are. He cites a "financial make-over" he once did of a couple in their 50s: "I'm paraphrasing but the man more or less said 'I sort out all our finances, I don't let the little woman touch it... we're fine, not in debt...' Perfect - what a challenge for me!

"I looked at this guy's finances and found he had an £85,000 mortgage and £83,000 in a savings account with the same bank. His mortgage was 6 per cent and his savings were earning a pitiful 1 per cent. I asked him why he hadn't paid off his mortgage and saved himself 5 per cent a year without tax - a £4,000 saving per year!

"Then I found he had insured his home with an expensive insurer, at the market value instead of the rebuild value, so his home was three times over-insured, wasting hundreds of pounds a year. In this case the 'little woman' wasn't stupid - she was just happy to be carried."

He also has advice for couples in second relationships where there may be a history of bad debt for one or other partner: "Get married by all means because marriage doesn't automatically link you, but don't get a joint mortgage or bank account or you will be credit-scored on their bad credit history."

Best to downsize

As I had recently listened to plans of an elderly relative to enter into an equity release scheme, I took the opportunity to ask Martin for his opinion.

"I worry greatly about equity release," he replies.  "I have never seen an ER product I was willing to recommend in any way. It is a legitimate option for someone who is 75, who doesn't want to leave their house to their heirs and who has no other choice, but if you are 60-ish you should be downsizing your house if you need capital. And you should do it at 55 or 60, not after you retire or you will find excuses not to bother."

Martin explains how equity release works. "It is hideously expensive. You take out a loan on your property, which is paid off when you die. Every 12 years at the current rate the amount you borrow roughly doubles. So if you have a £200,000 house and your borrow £40,000 when you're 60, by the time you're 72 you owe £80,000 and by the time you're 84 you owe £160,000. That's how they get to own all of your house - because you aren't paying any of it off. It's been sold as a lifestyle option, but it's not."

You and the bank

The day of our interview, bank overdraft charges were headline news. Martin explains that people need to understand once and for all that the banks are no longer there to help their customers. "Many older people still think that the bank manager is there to help them, but life has changed. We live in a highly competitive, commercial market economy and companies are making their money through consumer confusion, inertia, apathy and ignorance. The older you get, the more you fall into the inertia and loyalty trap. Big companies are out to get as much of your money as they can: we have to be educated to stop them."

Further information

Martin's website is www.moneysavingexpert.com
Thrifty Ways for Modern Days £7.99 and The Money Diet by Martin Lewis £7.99 are both published by Vermillion.

Pull Quotes
I am about living your life the way you want to but spending less doing it. "I worry greatly about equity release. I have never seen an ER product I was willing to recommend in any way"
 
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