Beat Credit Crunch – Sell Your Home!

Bet you never thought you would hear that advice about beating the credit crunch from us eh?

I was moodling around Google Trends today, looking at the interesting key words and phrases thrown up around the phrase “credit crunch” and I came across something – by a “So-Called EXPERT” – that absolutely incensed me. Have a read below and then carry on to hear my thoughts on the subject……!!

(This article is was featured on the Money Week website and was taken from “Merryn Somerset Webb’s free weekly personal finance email, Money Sense)

Merryn says: We’ve heard that 41% of people paid for some part of Christmas on their credit cards; that more people than ever before will go bankrupt this year; that repossessions are likely to keep rising all year; that mortgage rates are going to keep going up even as base rates fall; and that the average person only has enough cash to last 12 short days should they leave their jobs.

Hot on the heels of this has come a plethora of articles telling us what to do about it. Anyone who doesn’t know how to consolidate their loans, find an interest free credit card, cut their utility payments, create a budget spreadsheet (you can download one here) and get a cheaper mortgage by now clearly hasn’t been listening to the personal finance experts properly or spending enough time on the Moneyweek website.

But reading – and writing – all these money makeover articles this month (see also: How to give yourself a money makeover), I’ve been beginning to wonder if for many people the best way to survive the credit crunch and free up a lot of cash in a hurry might be to stop bothering with financial micro managing, dump their mortgages altogether and rent somewhere to live instead.

Why it makes sense to rent, not buy.

Selling to rent (STR as it is now known) has made some financial sense for some years now in cash flow terms – i.e. rents have been generally cheaper than mortgage payments on most properties. But now that the chances of making a capital gain on owning a house (the only reason to have bought over the last 3 years) look pretty low, it seems to make more sense than ever.

READ MORE HERE >>> (If you can bear to…..)

Right then, deep breaths all round!

Any Money Gym client will be spinning on their mouses (mice? meece?) right along with me because we all know something that the majority of the population does not seem to know….or believe……or worse……they seem to forget in times of TEMPORARY crisis like these….

Property doubles in value every 7-10 years in the UK on average, and it’s quicker in the South East. Even taking dips in growth (because that is what this is, a dip in growth).

The GOVERNMENT for heaven’s sake, have recently upgraded their estimates of ANNUAL GROWTH of property in the UK, for the next ten years, from 5.5% per annum to 8.5% per annum. And that’s the whole of the UK. The South-East historically has risen at around 14% over the last 50-60 years.

So, when your average family home is worth around £240,000, and the family who lives in it is set to make another £240,000 over the next ten years, without having to work for it, or even pay tax on it……..

HOW CAN IT POSSIBLY MAKE SENSE TO SELL IT?

How else could they make that money? That’s £24,000 a year…..more than many people make per annum in their JOBS.

Sorry, I’m shouting I know, but I’m bloody furious!! If I had my way, old Merryn would be taken outside and shot at dawn. With a paintball gun obviously, but publically and with dayglo paint balls that HURT a bit. While wearing a sign that says “STUPID ALERT: DON’t BELIEVE A WORD I SAY”

Even if this fictitious family have to borrow some money to keep up the mortgage payments or GOD FORBID, GET A SECOND OR THIRD JOB to keep up with their payments, surely that’s got to be worth doing?

My business partner Judith Morgan gave up two properties in London in the early 90′s because it was that, or let her business go down the tubes. She subsequently sold the business for well over six figures, but now she says she should have kept the properties, and DONE EVERYTHING in her power to do so, because they would be worth MILLIONS to her now. And have taken a lot less work!!

Read Judith’s story here – and she’s an accountant, so she knows.

Unlike Merryn somerset Webb, MoneyWeek editor who doesn’t know, to the point of being dangerous.

Her biography reads thusly:

Merryn was a senior scholar at Gonville and Caius College, Cambridge, where she gained a first class degree in History & Economics. She then became a Daiwa scholar and spent a year studying Japanese at London University. In 1992 Merryn moved to Japan to continue her Japanese studies and to produce business programmes for NHK, Japan’s public TV station. In 1993 she became an institutional broker for SBC Warburg, where she stayed for 5 years. Returning to the UK in 1998, Merryn became a financial writer for The Week. Two years later, in 2000, MoneyWeek was launched and Merryn took the job of editor.

She writes a FREE weekly personal finance email called Money Sense and has recently published a book on personal finance for women, Love is Not Enough: The Smart Woman’s Guide to Making (and Keeping) Money (HarperPress, 2007).

Note: Nowhere does it say she’s a professional property investor. Oooooh, were those all JOBS she has had? Methinks they are. High paid jobs, but jobs nonetheless.

Money Gym’ers……….avoid this woman like the plague! In her articles credits she lists one article called “Your house is not your pension” – I have read it and I tell you now, you should not.

In the third paragraph, she says “But if your house isn’t your pension, what is? Personally, I think it is a nice savings account backed up by a SIPP (Self Invested Personal Pension) into which you put a variety of low cost exchange traded funds which you then hold for 20 years”.

Hahahahahhahahahahahahh – the sound of hysterical yet still FURIOUS laughter echoes round Money Gym Towers, startling the seagulls and the children of the beach. All very well if you have excess income over expenditure and you have 20 years till you want to retire. Which most people – most women – don’t!

God almighty, comment by clicking the link below, will you Money Gym’ers?

Let me know I’m not alone in my fight to save the ordinary people – particularly women – of the UK from being trapped in their “Just Over Broke’s” and total financial poverty in old age?