the richest man in atherstone

Having read this post by Neville of NevBlog fame, it reminded me of a birthday present I recieved around 6 months ago.

Knowing of my 'obsession' with money, my wife bought me an Electronic Money Bank to store my spare change in. I think she must have been fed up with finding the piles of coppers that had been extracted from my bulging pockets and deposited everywhere from window sills to worktops. And this doesn't include the coins that have fell out and ended up on the floor or down the back of the sofa.

I've now got into a habit where every day I empty my pockets and deposit my coins (of less than 50p denomination) into my Money Bank. If I see a coin lying around the house or even on the pavement, I add it to the box. Not only does the device count the value of every coin I put into it (based on diameter) but it also has a built-in calculator and clock and allows me to set savings targets. Upon meeting a target, the crazy contraption plays a congratulatory tune. On top of this, it comes with a 'Security Card', which must be inserted to make withdrawals, along with entering a PIN number. The security is not industry-standard, as the box is made of plastic. A small hammer or even a brick would be enough for a thief to get access to the cash, but it is good enough to stop the kids getting in!

And now, the crunch. The money I have been putting in has been enough to buy a couple of crates of beer for myself and my wife every couple of months. I can think of no better reward When I reach around £25, I empty the box into a polythene bag and take a ride down to the local ASDA, where they have a magic CoinStar machine. I fill up the machine with my money and it gives me a receipt that I can cash at the customer service desk. I should note that it charges something like 7p in every pound for this service. Cash in hand I get my beer and purchase it at the checkout (using my Morgan Stanely Credit Card for which I recieve 0.5% cashback). I substitute the Money Bank cash for money which I would have withdrawn from a cashpoint an in turn use the money I haven't withdrawn to pay my Credit Card bill........if that makes sense!

This is a perfect example of making money from nothing. I certainly don't miss the money I've been adding to the Money Bank, which makes me wonder how I couldn't notice around £150 of cash per year. Strange....

I'd recommend that anyone looking to save money give this a try. You don't have to buy an Electronic Money Bank - I don't think I would have spent the money on it myself. A home-made jar, box or bottle can achieve the same results. I'd be interested to hear what returns other people have got from using this technique.

I'm a little over a year into my 5 year mission to increase my wealth. I've gained a lot of knowledge along the way and enjoy the sense of security that comes with actually having savings! I thought it would be useful to summarise the past 12 months by compiling a top 10 list (everyone loves lists!) of my most successful money-saving and money-making ideas.

1. Get organised

   Once you've decided that your going to take an active interest in your money, the first thing you need to do is get yourself organised. Go through your paperwork and find out exactly where you stand financially. Any assets that are performing poorly and look like they won't do any better in the future should be liquidated (cashed) to use in more profitable investments. Consider keeping track of your finances using a software application such as GNUCash.

   For me, I had a couple of NS&I investment accounts that were earning around 3% interest, which I duly cashed. I also tried to cash a pension I had but didn't realise pension equity can only be released upon retirement!

2. Control thy expenditures

   If you've never changed your utility providers, you're probably paying too much for them. Make a list of all the companies you pay on a regular basis. This should include Gas, Electricity, Telephone and broadband ISP. Seek out alternative providers that will provide the same thing at a reduced price. It looks daunting but tackle each expense one at a time over the course of a few months.

   I significantly reduced my telephone (part 1,2 and 3) bill and broadband (part 1 and 2) bill my switching suppliers. I also reduced my gas and electric bill (part 1 and 2) by doing the same thing. I am paying more than I need to for my mortgage, but we're planning on moving house soon so I will change mortgage when we move. I tried to save a small fortune by quitting smoking but failed miserably. I shan't give up though and plan to be clean of tobacco by the time I reach 30.

3. 10% of all you earn is yours to keep

   This is my favourite tip. Every month, as soon as you get your wage packet, take 10% of it for yourself. To most people this sounds difficult. I was no exception. I was struggling to live on all my salary every month, but once I got myself organised and reduced my expenditures, I was surprised how easy it was to put 10% of my salary away in a savings account each month. A year later, I don't even miss it! I'm living on 10% less than I earned before and feel wealthier. Open the best savings account you can find. Transfer the money you liquidated in step 1 to your savings account. Add 10% of your salary to it each month. Watch it as it earns you interest. Speaking from experience, its a deeply satisfying experience.

4. Get out of debt

   If you're in debt, your priority is to pay off your creditors. I've never been in debt (except my mortgage), so I can't really speak from experience. However The Richest Man in Babylon suggests witholding an additional 20% of your salary each month to get out of debt, as well as keeping 10% for yourself. Is it possible to live on just 70% of your salary? The honest answer is 'I don't know' but other tenats in this book have worked well for me so I would be inclined to support this idea. I would also suggest that, if possible, you transfer all your debt to a product with the lowest interest rate you can find.

5. Accumulate an emergency fund

   The first thing I did when I started saving 10% of my salary was to create an Emergency Fund. This is a lump sum of money that can be used in exceptional circumstances to dig yourself out of hole. Uses include redundancy, surprise tax bills and surprise car or house maintenance expenses. Ideally, this money will never be used. It will just sit in your savings account earning interest indefinetly. Should the worst come to the worst, however, you will have money to cover any surprises.

   I saved £4'500 for my Emergency Fund, which roughly equates to 3 months living expenses. I would recommend an Emergency Fund of 3 months living expenses as a minimum. Once you've saved your Emergency Fund anything in excess of this amount can be invested in different products or just kept in your savings account.

6. Make thy gold multiply

   Having organised your finances, reduced your expenditures and accumulated an Emergency Fund, you're now ready to find some investment vehicles for your spare cash. Ideally you're looking for something that guarantees your 100% of your capital. Savings accounts are good for this but you've already got one of those.

   Consider opening an ISA (Individual Savings Account). The interest rates of ISA's are comparable to savings accounts but you don't have to pay tax on your earnings. However, there are limitations to how much you can save. An ISA wasn't an option to me as my mortgage uses my ISA yearly ISA limit.

   Regular Savings Accounts can offer up to 10% interest rates but there are often limitations to how much you can save and penalties that are imposed if you don't follow all the rules. Always read the terms and conditions.

   If you are happy to risk your capital, you may want to consider investing in stocks and shares. Investing in shares of a company means that you own a percentage of that company. You can make money if the price of your share increases, which happens when the value of the company increase. A lot of companies also pay periodic dividends to shareholders. WARNING: Share prices fluctuate and you could lose your capital if the company winds up. Only use money you are prepared to lose.

   This is by no means an exhaustive list. Always keep you eyes peeled for new financial products.

   After I'd finished accumulating my Emergency Fund, I continued saving up another £1'500 before investing £1'000 in NS&I Premium Bonds and using £500 to invest on the stock market. Premium Bonds are a bit like a prize draw. They offer a (small) chance of winning £1'000'000 and a bigger chance of winning smaller prizes, the minimum being £50. I also invested £500 on the stock market, the main reason being to increase my knowledge of it. It was money I could afford to lose, which is just as well, because I've lost around £100! However, I do feel that I've gained a valuable insight into stock trading and have learnt a lot. I also think the company I invested in is capable of going up in value over the next year. I've also recently opened a regular savings account with Lloyds TSB. The Monthly Saver offers an 8% interest rate and there are limitations to how much can be deposited per month but there are no penalties for withdrawing your money early. I'm going to transfer my Emergency Fund over to my Monthly Saver over the course of the next 12 months.

7. Keep an eye out for free money

   Some people say that free money doesn't exist. 'There must be a catch' is a phrase I hear very often. My experience has shown me that free money does exist but it is very difficult to find. I'm not talking millions of pounds here but it is possible to make £10, £20 or even £100 or more by taking advantage of offers aimed at the consumer. For example, I got myself a cashback credit card that gives me a percentage back of what I spend. The Alliance + Leicester gave me £100 to open a current account plus an extra £50 because my mum referred me to them. A website (Quidco) offered me multiple £20+ incentives to make a £10 bet. The deals are out there, it's just a matter of find them. The only word of warning is to always ensure that the offer is safe and is backed by a legitimate company. Common sense always prevails.

8. Don't spend more than you have to

   Whenever you buy something always make sure you get the best value for money. When I last got my car insurance, took an hour or so to get quotes from as many suppliers as I could. I also filled in my details to a number of 'broker' websites that retrieve multiple quotes from lots of companies for just filling in a single form. If you're going to have to pay for a phone call, get a quote online instead. Remember that emails, in general, are cheaper than phone calls. If you have to phone a company, don't use an 0870 number. They're expensive. Find a regional number instead. Try to haggle whenever you can. Don't worry about being embarrassed - the worst they can do is say 'no'.

   Always seek out the best deal. It takes a little more time but its worth it both for the money in your pocket and the feeling of satisfaction you get after completing a good deal.

9. Don't stop learning

   Things change all the time. If you don't keep up to date, you could lose out. Personally, I enjoy learning about new financial products, improving my understand of financial jargon and seeking out the best deals. I also thing that part of the learning experience is to take action and do something. It's one thing learning the theory to get a sound foundation but you only learn the ins and outs by doing it. That's one of the reasons I invested in the stock market. I'd read a number of books and articles and taken advice from those in the know, but nothing compares to how much I learnt when I actually put my money down and bought some shares. Making the decision forced me to find out all I needed to know about the company I invested in and losing money on my shares gave me the incentive to find out where I was going wrong. Mistakes are good. We all make them and, as long as we can take something from our mistakes, we get better. If I hadn't took that leap, I'd be £100 better off but my knowledge of the stock market would be vastly lower than it is now. I treat it as good investment. Always be ready to learn and always be ready to try something.

10. Don't love money more than yourself, your family and your friends

    My wife and I went through a bad patch time a while ago and it was mainly down to my penny-pinching. I would try to save every penny I could, which meant we never went out, never treated ourselves and hardly ever enjoyed ourselves. Never put money before your life. This doesn't mean spend all your money on your family and friends. It means budget accordingly. Don't neglect your family holiday for the sake of a few hundred quid but, on in the same vein, don't go on the most expensive cruise you can find for the hell of it. Save and spend. Don't sacrifice your life for your money. What's the point in being the richest man in the graveyard?

Title: The Richest Man in Babylon
Author: George S. CLason
ISBN: 1-930097-44-1
Publisher: Lushena Books

I've been meaning to write a review of the book that inspired this website for a while now but haven't gotton around to it. I've read it cover-to cover thrice but every time I sit down to type out my critique, my mind goes blank. It must be what writers refer to as mental block.

Growing weary of my failed attempts, I decided to sit down with the book again, a notepad at my side and read it again, this time jotting down anything I thought might inpire me or jog my memory when it came to writing the review. I'm glad to report, the plan was successful and I can finally tick this task off my todo list...

Lo, money is plentiful for those who understand the simple rules of its acquisition.

The Richest Man in Babylon by George S. Clason is a collection of parables set in ancient Babylonia, which tell the stories of various characters as they learn how to acquire money, keep money and make more money from any surplesses they have.

By reading these tales, the reader obtains a timeless knowledge of financial principles that are as true today as they were when the stories were written (originally in pamphlet form) back in 1926 as well as over 3000 years ago (the period that the stories are set).

Clason uses his stories to subtly explain a myriad of financial tenats as well as showing how they have been put into action and the results of following the advice, albeit in a fictional world.

"A part of all I earn is mine to keep."

From the first chapter, Clason explains how desire for wealth is a key part to its acquisition before going on to explain how any individual can build up their own personal wealth to help them lead a fuller and happier life and provide themselves an income for the future. Additionally, a couple of the stories are based on characters who are in debt and wish to increase their wealth and pay off their creditors at the same time.

"If you pay for all you buy and then pay some of what you owe, that is better than you have done, for ye ain't paid down the account none in three years."

The fables are enjoyable to read in themselves, which makes the book all the more valuable for someone wishing to learn about personal finance without being confronted by text that is dull and boring. The style of writing includes what I call 'olde worlde' speech, which means there are a lot of 'thees', 'thous' and 'arts', however I still found the book easy to read in one sitting. Being a mere 157 pages, it is easy enough to read in a few hours but never fails to get the points across. The price (under a fiver) seems to reflect the low number of pages compared to other books in the genre but don't be decieved - less pages does not mean less content. Personally, I would rather read a short book that gets the message across clearly than a long book that hides its tenats behind pages of waffle. The Richest Man in Babylon achieves the former admirably.

Unfortunately the copy has a number of spelling mistakes that one would assume the publishers would have sorted out by now (after all, it has been 90 years since first published). I should add that a number of re-publications exist, which may have addressed this issue.

All in all, I would recommend this book to anyone that has a keen interest in their own personal finances and wishes to make their purse fatter. It is the most inspirational book that I have ever read on the subject, which is why I created this website.

While on the Lloyds TSB website today, I found a new account in their 'Savings' section. The Lloyds TSB Monthly Saver boasts an interest rate of 8% (6% after tax) and unlike most Regular Savings Accounts there is no penalty for withdrawing money early (although if it is closed, you can't open another for 2 years). Between £25 and £250 can be deposited monthly and an additional lump sum of £500 can be deposited upon opening the account. The account runs for two years and interest is calculated daily and paid yearly. A Lloyds TSB Current Account is required for the Standing Orders to be sent from.

Doing a quick calculation, this should earn me around £250 over two years if I deposit the maximum amounts possible (please correct me if my maths is wrong!). Sounds like an ideal place to store my £4'500 Emergency Fund. I plan to transfer £250 per month from my Online Saver via my Current Account as well as the initial deposit of £500. Best of all, the money can be accessed instantly with no interest penalties if I have to get at the cash urgently.

Happy with my discovery, although a bit miffed that Lloyds hadn't written to me to tell me about the account (they're always mailing me with details of their latest loan offers!), I called them up to open a Monthly Saver account.

Over the phone the call operator asked for my name, sort code and account number (of my current account) as well as confirming my address and DOB. He then asked me for more personal details so they could update their database. I agreed.

I then proceeded to tell him my place of work, the address, my salary, mobile phone number and a few other questions. It was then that I suddenly realised that armed with all the information I had divulged, the call operator had just about all he needed to steal my identity. Identity theft has become quite common over the last 24 months or so (for more information see www.identity-theft.org.uk). I politely asked that he stopped asking me personal questions and continue with opening my account. The Call Operator understood what I was saying and did as I requested. I should also add that the operator was very polite and helpful all the way through the call and I have no problems with him whatsoever.

Upon finishing the phone call, I typed out an email to Lloyds TSB expressing my concerns and requesting their assurances that I had nothing to worry about. I also requested that they review their procedures for 'updating their database'. When I get a reply I will post it here in my journal.

Armed with just a few personal details, it is possible for fraudsters to obtain credit cards, loans and forged documents in your name. I urge anyone reading this to be careful when divulging details about themselves and vigilent if required. I am certainly going to be more careful in future. I'd hate to have the bayliffs at my door because someone has gone on a spending spree with a Credit Card in my name!

A short while ago I invested £500 in Premium Bonds, with the aim of increasing the stake to £1000. I bought another 500 bonds today (they cost £1 each).

Every Premium Bond gives the holder a 1 in 24'000 chance of winning a prize. As the owner of 1000 Premium Bonds, I calculate I should have a 1 in 24 chance of winning a prize every month. My mathematical probability is a little rusty, but I expect that statistically means I should win once every 2 years.

If I kept £1000 in a Savings Account for 2 years, I would earn around £80 of interest after tax (given that the best savings accounts pay around 5% Gross). By investing in Premium Bonds for the same period statistically, I should earn at least £50 but could win £1 million (although the chances are very low).

On top of this, my capital is safe (backed by HM Treasury), quick and easy to liquidate and all earnings are tax-free.

In my opinion, this constitues as both a worthwhile and enjoyable investment for my portfolio. My views of Premium Bonds may change over time (especially if I don't win!) so I have decided to re-asses this investment in 12 months time.

Fingers crossed...

Since buying my stock in Plusnet last Friday, the stock market has taken a turn for the worst. Not just the AIM index but the FTSE and Dow Jones too, as well as whatever its called in Japan. Everything seems to have gone down in value!

The shares I bought at £2.62 each are now worth around £2.30. Earlier today I realised that I had to make a decision. Should I:

1. Sell the stock and cut my losses
2. Keep the stock
3. Buy more stock at the lower price

I looked at all the news stories I could find and market analysts could basically be lumped into two groups; those that thought this was the beginning of a market crash and those that thought it was just a blip and would recover.

I decided to buy some more stock. Although I'm no expert, I figured that this was most probably a correction to the market. Its been rising steadily for a while now and is due a small (I hope!) fall. Hopefully it should continue to increase over the long term. Also, it looks as though investors have panicked a bit as the volume of shares sold have increased over the last few days. Unfortunately, this has increased the downward spiral. I believe it was Sir Isaac Newton who said after losing a fortune:

"I can calculate the movement of the stars, but NOT the madness of men."

Personally, the most important thing for me to do was to continue my adventure as a shareholder. I knew that if I sold up now, I would never risk putting money on the stock market again and an important part of my 'Financial Education' would be finished before it had begun.

I bought another 100 shares in Plusnet, this time at £2.35 per share. I've now spent £499 in this stock and still feel confident it will grow in value. Not being one to change my mind quickly, I stick by my original forecast that over the course of the next 12 months or so, Plusnet will be bought by a bigger Telecoms company and I will be able to sell my shares at a profit (a minimum of £3.00 per share).

I feel over the last few days, by actually doing something instead of procrastinating, I've learnt a fair bit about the basics of investing, which was my original objective. If I lose my money now, I think it will be money well spent.

Well, I went ahead an did it. I've bought 100 shares in PlusNet at £2.62 per share. For some reason, shares are referred to in their value of pence (262p in this case). Maybe I should find out why....

Over the course of the day, I've seen the share price drop to £2.58 per share so I've lost money already. No wonder people pay professionals to pick stocks for them!

I keep telling myself that I was in for the long haul. I think it wouldn't be fair to make comparisons until I've held the stock for 12 months as per the original plan. Over the next year or so, I expect one of the following to happen:

• Plusnet go bust due to pressure from competition
• Plusnet do well and their share price goes up
• Plusnet are bought out by either TalkTalk or another big telecoms provider

Of the three I expect the final option to be the most likely. Time will tell if I am right or wrong....

I've been thinking about investing on the stock market for about 12 months now. It's one of those things I've always wanted to do but felt I didn't have enough wisdom to go ahead with. Well, today I've finally decided to give it a try. I'd be lying if I said I knew exactly what I was doing but I think that even if I make a complete balls up of it, at least I'll have gained some experience.

Finding a stockbroker

Shares are bought and sold by stockbrokers. Some offer advice, others just do as they're told (execution-only). It is the latter I'm interested in. The fact is that if I want advice, I have to pay for it and I'm too dumb to know if they're doing a good job or not. Therefore, I'll pay the broker to do the transaction and nothing more. The research I'll do manually. Following a bit of investigation, I've found the company Hoodless Brennan. They provide an 'execution-only' service for a flat fee of £7 per buy or sell. Most other stockbrokers charge more than that plus an annual subscription fee, so in my opinion they are the best bet. On top of that, they provide online services, which means I can buy and sell from the comfort of my own home and trading for the first month is free. Great to experiment with the stock market game.

Finding a stock

There are loads of stocks to choose from! I have a couple of books about investing in the stock market but haven't gotten around to reading them yet so, I guess I'll be playing it by ear.
I've saved a fair amount of money over the last 12 months or so and I've decided to dedicate £500 of that money learning about stocks and shares. Trial and error is a far better investment than any training course in my opinion.

Trying to find a stock to invest in is very difficult. In the end, I decided to invest in a company that I know and use the services of. My first share investment will be with my ISP, PlusNet.

This company floated on the AIM market on the London Stock Exchange a few years ago. Since then, there share price has increase rapidly, month-by-month. Details of their progress can be found here.

I decided to invest in this company because they have been improving constantly, since their floatation. Recently, they admitted responsibility for outages and explained how they were going to correct the problem in the future. I don't know of any other ISP that would do this. They have always provided an excellent service to myself (never suffered an outage and always fast speeds) and on top of that, their customer service is the best I've come across. They also have their own proprietary operating system called 'Workplace' which, I believe automates the selling and accounting side of the business. This alone must increase the value of the company. They are on the AIM index. This is an exchange for smaller businesses with high growth potential. That is the main reason I am buying. They have never paid out dividends to shareholders, but I expect their stock price to increase quite rapidly over the next 12 months. I should be able to sell at a profit.

Basically, as I understand it, there are two ways of making money from stock. Either it is an income stock (the company pays good dividends bi-yearly) or it is a growth stock (the share price increases rapidly over a period of time). I do not expect dividends from PlusNet. I expect the share price to increase over the next year (or maybe few years) so that I can sell the stock at a profit.

Over the last month or so, there has been a slump in PlusNet's share price. This is because the company TalkTalk has launched a telephone service that offers free broadband. In PlusNet's defence, they have countered this offer with one of their own that offers similar services. Time will tell who wins the battle.

In all honesty, I expect either TalkTalk or another large telephone/internet provider to buy PlusNet in the next 12 months or so. This is a credit to what PlusNet have achieved and their future outlook. Having a buyer lined up tends to push up share price and, for me, this will be the time to sell.

I know I'm an amateur and I'm prepared to lose my money if it all goes tits up but I feel that no matter what happens, what I learn about the stock market will pay dividends (pun intended).

The market is closed now, but I've opened an account with Hoodless Brennan and plan to buy shares in PlusNet in the morning.

Okay. I've made my purse fatter and controlled my expenditures. Now I think the time has come to make my gold multiply. I've accumulated a £4'500 Emergency Fund, so any cash I have on top of that can be used for profitable investments

This is the first time I've really thought about savings and investment vehicles other than standard savings accounts and I wasn't really sure where to start! I wanted something that had the potential to outperform normal savings but without a risk to my capital.

It was then that I stumbled across Premium Bonds. These can be bought from National Savings & Investments (NS&I). The way they work is that all the interest that has been earned on all the issued Bonds is lumped together and a prize draw takes place every month to dish out the money. There are two £1'000'000 prizes and many more smaller prizes. Each bond has a 1 in 24'000 chance of winning some sort of prize money each month.

I have made a list of the advantages and disadvantages of this investment below:

Advantages

• All winning are tax-free
• Capital is secure (you can't lose money)
• Money can be withdrawn at any time by giving 8 days notice
• Odds of 24'000 to 1 per bond of winning a prize (better than Lotto)
• An enjoyable way to invest
• A (small) chance of winning £1'000'000

Disadvantages

• You could end up with less than if the money was in a Savings Account
• Capital doesn't rise with inflation (£100 today will be worth less in ten years time)
• Minimum investment of £100
• Cash is 'in limbo' for one calendar month (see below)

Personally, I thought they would make a nice first investment for me, so I decided to buy Premimum Bonds to the value of £1'000 - my savings between January and May of 2006. This should give me a 24 to 1 chance of winning a prize every month.

I wanted to buy the bonds using my Morgan Stanley Cashback Credit Card (to earn £5 cashback) but, upon investigation, discovered I could only buy them using my Debit Card. Never mind. The next problem I ran into was that, for some reason, NS&I wouldn't accept payment from my Debit card. I figured it was because Lloyds TSB tagged it as an 'unusual' transaction and were protecting me from fraud, so I called them up and requested they allowed the payment. They asked when the payment would be made and I told them and tried again. The payment bounced again.

I decided to give up.

A couple of days later, I was transferring the monthly requirement to my A+L Premier Direct account and remembered that I had recieved a Debit Card when I opened this account a few months earlier. I found out the card and tried to buy my Premium Bonds for a third time. This time, I opted to buy £500 worth and follow it up with another £500 at a later date. Third time lucky...it worked.

A week or so later, I recieved a form through the post that required a signature. I signed it and posted it back in the freepost envelope provided. A week later I recieved my Holders Number (same as an account number) and my bond details. I won't be entered into the prize draws until June as you have to hold the bonds for one calendar month first (they were bought at the end of April).

I intend to increase my investment in Premium Bonds by £500 to £1'000 in the next few weeks. I think I'll hold them for 12 months and re-assess my options at the end of this period.