Monday, April 11, 2011

Money matters.

I hate money. It's confusing. Unfortunately everyone needs to have some these days. If you want to live in a house, even if you own it outright, there are taxes due just because you choose to live in one place. So even having no income does not allow you to escape tax. You have to continually earn money even if you don't owe any to anyone, and when you earn money, they tax that too. It's a game you can't win and can't opt out of unless you live in a tent in the mountains. I have been tempted.

Then there's all the food and clothing and electricity which I could produce myself but then I'd spend all day, every day, doing that and nothing else. I don't really want to live like a 13th century peasant, no matter how much our government want me to. On the other hand, my idea for rain-power is still on the drawing board. We get far more of that than sun here.

Years ago, I lived in a flat with a mortgage. It was small and cheap and to be honest, I didn't like living there very much. The mortgage was of the endowment type, which means you only pay the mortgage interest every month and then pay into a sort-of insurance policy that is meant to cover the price of the house when the mortgage is due.

What I wish I had known at the time is that a) there's no guarantee the policy will pay as much as you'll need and b) if the amount owed stays the same, so does the interest. With an ordinary repayment mortgage, you pay the interest and part of the capital every month. So the interest reduces as the amount owed reduces.

Well, I sold the flat a long time ago but let the endowment continue. Cashing in early would have meant losing money and it wasn't expensive to keep going. Then I bought a bigger house (this time with an ordinary repayment mortgage). I reasoned that the endowment would knock a big chunk out of this mortgage when it became due, and it's now due.

So they sent me forms. Lots of forms. They have taken payments from my bank account for all these years and never cared who I was but now it's time to pay out it's all 'Oh, sorry? Do we know you?'

It's simple. Just pay the money into the same account it's been coming out of for 25 years. The account hasn't changed. Yet I had to send photo ID to people who have never met me and who have no idea what I look like. I had to have my signature witnessed by someone who works in finance. I send forms back, they send new forms. It's like some weird game of postal tennis. Why does it have to be so complex?

If I'd known the hell I'd have to go through to get this money back out I wouldn't have spent the last 25 years paying in.

This wad of cash would take about a third off the remaining mortgage and that is my only debt. I have no other loans at all. Debt makes me nervous. If I were ever to win the lottery, my first act would be to pay off the mortgage and my second would be to get a T-shirt printed with 'Ha! I owe nothing.'

The only financial advice I'd offer anyone is - keep it simple. Don't be swayed by fancy plans promising huge returns. If you don't fully understand it, take nobody's word for it, don't get involved.

Anyway, the latest forms went off today. Their turn now.


Southern Writer said...

If you won the lottery, then you'd really owe a lot! Taxes!

Hope you get those idjits straightened out.

Romulus Crowe said...

Finally got the money through, then there was a pair of holidays with a royal wedding in the middle. It was impossible to get any sense out of anyone for two weeks.

So I phoned the mortgage company and the whole charade started all over again. Seems that anything I put in goes automatically to the repayment rather than the interest-only side so I have to make sure they put it all in the right place with a carefully worded letter.

Money was so much easier years ago, when I didn't have any.

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