The financial slimdown within everyone's reach (The Money Diet - Martin Lewis)

Name: Morgenhund

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Product:	The Money Diet - Martin Lewis
Date:	29/11/06 (282 review reads)
Rating:

Advantages: Good common-sense approach, written in practical and simple terms

Disadvantages: You won't save a penny unless you commit some time and energy

The Money Diet

Had someone mentioned the name Martin Lewis to me a year ago, I've have instantly thought about the newsreader. Now the concept of "happy news" associated with the name Martin Lewis has another meaning for me – thanks to "The Money Diet", the book written by a self confessed superscrooge. To try and illustrate how the book helped me, I have taken one example from each section of the book as to how I have benefited from the information contained in that section.

As in real life where I face a battle to fight the flab due to over-indulgence, it was my over indulgence that put me in a position I had to get out of. As someone who played the stock market with success, has no problems making his mortgage repayments and has a considerable range of investments around the world, and enjoys about three-four holidays a year, you'd think that I'd not be the person in need of a “money diet”. However, having realised that as a freelance translator I would always be “only as good as my last translation” and that there could be a possibility of a slow down in business which I wasn’t prepared for, I thought I’d better weigh up my financial plight – hang on that makes it sound rather grim...

I picked up the book for MTL 5.62 (GBP 7.99) on the way home from a business trip to Malta, and whilst I can not use every single scrap of advice to my benefit living in Austria, the methodology behind the money diet was of sufficient use that I was able to apply it to my circumstances. The strap line on the cover: “Martin Lewis can save you up to £6000 a year” sounded rather good – although the emphasis is on the modal verb “can” – without your own willpower you won’t manage to save that kind of money. Straightaway you’ll say, “Why did you shell out eight quid on something that is mainly common sense?" My response would be a simple one - if you leave Malta with MTL 6 in your pocket and chuck it in a jar when you get home, knowing that you are unlikely to visit Malta again before they get the Euro i.e. other than if you are collecting coins you are effectively wasting the money, you are better off spending the money on something you can read, learn from and then put something into practice.

Before even embarking on the individual cost-saving measures set out in the book, I had a look at the Money Diet Calorie Counter – ultimately this table, spread across several pages, becomes your mantra. It also starts out by trying to reassure you that thriftiness needn’t mean being mean and/or not enjoying yourself. The importance is placed on living within your means. Before the ability to save is even mentioned there is of course the "financial health check" which you should do to make you realise what you are spending in the "Money Diet Monthly Calorie Counter". This is a sensible approach as the important this is to realise that ultimately if you are only subsisting, rather than living, you are living from one pay cheque to the next - we've all done it.

The advice contained in the book is split into three parts. Firstly there is “financial fitness for life”, which focuses on trying to save money on anything. It is true that simple awareness can help you to free up money you would otherwise throw away - this was an area I was particularly vulnerable to over-extend myself on.

I took the tip on consulting newspapers and magazines for the best buys – except rather than buying a newspaper applied it instead using Austrian Werbeplakat (advertising delivered to your postbox unless you opt out) and discovered that the bedside lamps I had looked at in Leiner (i.e. like John Lewis) which were touch operated and dimmed and costing €29.95 each were available in Zielpunkt (similar to Aldi or Lidl in Britain) at €9.95 for a more or less identical product - saving €40.00. Similarly washing liquids at 2 for 1 (i.e. €.13.99 for 2 rather than 1) saved me €14 for a quarter. Similarly actually coupon clipping – not buying items simply because they were reduced (the book warns about the perils of 3 for 2, 2 for 1 and BOGOF) but buying the items I needed when they were reduced.

Secondly there is “the crash diet” i.e. how to find the cheapest of what you want, so that you can still afford the best. It teaches you that convenience often means unwanted expense – when you look at your consumer spending, how much of it do you really think about what you are spending and what you are actually getting for your money.

I applied the book’s principles to calling overseas from my landline. I have a triple play package (Internet over cable, fixed line telephony and cable TV). Having clawed back €30 a year for changing to direct debit a year ago I realised that I was still overspending - €0.20 a minute to the UK on average for my line. So I looked at VOIP solutions – I plumped for a Verizon one, and I pay €0.02 a minute to the UK on it. Granted I have to sit at my computer and speak via a headset, but 4 hours a month over the landline was costing me around €50 a month. I now top up my credit with Verizon by €10 every two months - saving €45 a month. That €45 a month in turn goes straight on paying one of my mobile contracts – including 200 free minutes and 200 text messages. So the VoIP solution has effectively turned my triple play solution into a quadruple play solution at no extra cost.

Finally there is “healthy eating” i.e. how you can stay financially lean long-term after the short term blitz - after all there is no point in getting out of debt and then getting straight back into it again - a sort of binge financing.

Here I ran into a slight problem – I couldn’t swap to an interest-free balance transfer credit card as I could not process the forms via my UK mailing address in time. However, the decision to take the plunge and pay my credit card off in full was the best decision I made. I could have otherwise bought myself more time by being a "tart" and going for the 0% balance transfer approach - but the circumstances would not allow me to. However, the main thing was the fact that a single table helped me to destroy my biggest single source of bad debt – I say bad debt because my mortgage was of course good debt.

I moved from being Mr. Minimum Payment (you’ll hopefully do similar) who was reaching a point where I was at best treading water (i.e. the minimum payment was only paying off the interest accrued that month) to diving into the deep end and incurring less interest by moving the debt into an increased overdraft (on the amount I had until I nuked the whole lot I was about GBP 40 a month better off doing this.). Snapping up that credit card and only using a card in Austria where I had to pay it off in full was the best decision I have made in a long time.

Of course the book also addresses “food poisoning” – what to do if you really are up a gum tree - and how to recognise that you are rather than being in denial about your predicament. This is perhaps a growingly important chapter, given the fact that Britain is debt centre - the lure of the never-never means that people so often over extend themselves rather than spending within their means.

If you are thinking that this book will save you thousands just by reading it, you are still wide of the mark. Ultimately you have to want to save the money to do it – but if you are willing to put the time in this book can help you reap the rewards of doing so. Even if it means that there is only less month left at the end of the money initially, you are already reaping the benefits.

I’d recommend this book to anyone who has the willpower and is willing to take the time to address their personal finance issues – it won’t work on its own, but is easy to understand, as with the exception of the sections it says are for nerds only the book is written entirely in layman's terms, with good illustrative examples. Financial freedom can be yours - and not in the same way that spam mail says it can be.

Summary: Helps you consolidate debts, and make your money go further...