Is it cheaper to rent or buy?

Deciding whether to rent or buy is never an easy decision, especially in such a dynamic housing market. Buying a home is a huge commitment, but it's also a great investment. On the other hand, renting is a lot less restrictive than owning. The key question is: which is the cheapest option?

Benefits of renting

The best thing about renting is that it can be both a long-term and short-term option. You might choose to rent for a while to get used to paying your rent and bills on time, then decide you want your own place and are ready to buy instead. Alternatively, you can have the flexibility of easily moving from place to place and can choose to rent all your life.

When you rent somewhere, you have little responsibility for the property. Of course you must look after it well, or you could lose your deposit money at the end of the tenancy; but if something goes wrong, it's your landlord's responsibility to fix it. For example, if your boiler goes bust unexpectedly, you don't need to worry about the huge incoming bill, as your landlord will cover the cost. They own the property, not you, so they must come out and fix anything that breaks.

Benefits of home ownership

With the housing market going the way it is, it's highly likely that the value of the property you buy will continue to rise, allowing you to make a profit when you sell. You can then go on to buy a larger house later down the line, or if you're nearing retirement, you might consider downsizing to fund a more comfortable lifestyle.

It's not always a good idea to rent all your life. When you retire, you might not have enough income to be able to afford the rent of a place you want to live, but if you've already paid off your mortgage, you own the home and therefore can live there rent-free.

Moreover, you're allowed to change your home in almost any way you want to. This means you can invest further by renovating it to increase its value. Then when you finally come to sell, you'll make even more money.

Other things to consider

Currently, buying a home is cheaper than renting. A recent survey from Halifax reveals homeowners pay

Britain awaiting "real austerity", says BCC director

Brits have been told that the nation's recent economic meltdown will pale in comparison to the “real austerity” that's about to come.

Speaking at the annual meeting of the British Chambers of Commerce (BBC) on Monday (March 31), John Longworth, director-general at the group, said the government's failure to make improvements in areas like infrastructure and education is due to carry serious repercussions.

Cited by thisismoney.co.uk, he said the coalition's plan to rebalance the economy by increasing exports has failed and that Britain risks the fate of becoming a “bit-part player” in the economy unless things start to change.

However, Mr Longworth says that due to the failings of the current government, the worst is yet to come.

“Contrary to popular opinion, we haven't really seen austerity in the way, for example, as has been applied to many countries around the eurozone,” he commented.

“The next stage will require more belt tightening, possibly even real austerity in some quarters.”

According to britishchambers.org.uk, Mr Longworth says the next government will face “very hard choices” as a result of previous regimes ducking big changes to Britain's rail network, airports and motorways.

The BCC head went on to urge some of the bigger businesses to loosen their purse strings in an attempt to alleviate some of the strain.

Are interest rates likely to up in the next financial year 2014-15?

Most people in the UK have been affected in some way or another by the economic downturn. Jobs have been lost and house prices have fallen, but it's not just these high-profile changes that have affected people's pockets on an daily basis – energy bills have also rocketed, along with the prices of most supermarket essentials.

While things have certainly taken a turn for the better in the last couple of years, Mark Carney, the governor of the Bank of England (BoE), said this week that the UK could be at risk of falling back into recession, but why?

Easy loans

Before the crisis started to emerge in 2008, the BoE began introducing lower interest rates on its loans, making it easier for Brits to borrow money – too easy, according to some experts. The change made people and businesses more open to taking financial risks. Basically, not enough of these risks paid off and the country suffered as a result.

With fresh optimism, a number of initiatives have been put in place to once again make borrowing easier for cash-strapped Brits. It is hoped that things like the BoE's own Funding for Lending and the government's Help to Buy schemes will help the UK to complete its recovery.

Perhaps understandably then, Mr Carney is concerned – with more people benefiting from cheap finance, what's to stop the same thing happening again?

The influencing factors

The governor's comments on the situation certainly point to the possibility of interest rates rising; this, after all, seems like the most obvious way to minimise risk. That said, any sudden changes could also impact the UK economy negatively, so care needs to be taken.

Of course, interest isn't just influenced by the rate at which people are borrowing. In August last year, the BoE said that changes would only be made once unemployment falls to seven per cent or below. Perhaps worryingly for some, we're now within touching distance at 7.2 per cent.

To make things a little more complicated, Mr Carney says that a new range of economic variables must be considered before anything is adjusted – this includes the gap between potential and actual output.

So what happens next?

The BoE certainly doesn't appear to be in a huge rush to raise interest rates, although it does seem inevitable that it will happen eventually. Mr Carney has hinted that we will see gradual adjustments, with the end result likely to be a rate of two per cent in 2017. This doesn't really seem like much but seeing as we're currently sitting at 0.5 per cent, it could have quite an impact.

On the flipside, plans are in place to change the Bank's responsibilities slightly, and this could also have an effect. If it is given what it calls “macroprudential” powers, it should be able to ensure the housing market doesn't overheat and that banks have enough capital – this alone would reduce the need to dampen excessive borrowing, meaning interest rates could well remain untouched for a little while longer.

While few people will welcome higher interest rates, it does seem as though it could help the UK to avoid a repeat of the recession that's caused such huge problems for so many people.

Five websites that will help you start saving money today

Getting our finances on track can put an element of control back in our lives. When we create financial stability, we always feel a lot happier.

Fortunately, there are a number of websites on the net that can contribute to this feeling of happiness. Here's a round-up of the top five that can help you start saving money quickly and easily.

Money Advice Service

You may have seen those humorous 'Talk to Ma' adverts on television but financial problems are no laughing matter. Nonetheless the Money Advice Service provides free, unbiased, independent advice on financial matters, helping those with debt get on the first step to recovery.

Talking about your debt problems can often be the hardest issue in finance but the Money Advice Service allows you to confide in experts you can trust. You can talk about anything including borrowing, mortgages, bills, loans, legal rights and much more. It's a hugely helpful service and should be the first port of call for people looking to control their debt.

MoneySavingExpert

As the face of money saving, financial journalist Martin Lewis has created an empire that millions of internet users (13 million unique users, to be exact) visit every month. MoneySavingExpert is an easy-to-read, clear guide on every issue involving the transaction of money, crammed full of useful advice and tips.

The site also has a number of useful tools including certain comparison programs and checkers to compare the prices of various goods and services. For instance, a student finance calculator can break down just how much you may have to pay as a student while an MP3 track checker lists top albums for the least cash outlay.

HotUKDeals

HotUKDeals is a consumer forum where users can share deals, tips, voucher codes and other money-saving tricks. It's a superb website to help the thrifty among us to save money on every aspect of their life from great rates on utilities, money off shopping bills, discounts on subscription services and a whole lot more.

Founded in 2004, the site has grown immeasurably in ten years and now represents one of the most popular consumer websites in the UK. Furthermore there is no self-promotion or marketing allowed on site so each deal is posted by a neutral party only interested in one thing: getting a great deal.

MyVoucherCodes

If you're looking for vouchers, this website should be your first stop. As host to over 2,000 codes, MyVoucherCodes can offer discounts on restaurants, bars, technology, electrical goods and a wealth of other services.

With a straight forward layout and simple navigation bar, even the most novice internet users can find a deal. Simply type in a store or product name into the command box to bring up a whole host of deals from all categories. It couldn't be simpler.

This website is extremely useful for users looking to cut their expenditure but still keep some luxuries – going out for dinner, going on holiday for instance – in their life.

Gumtree

With eBay fees increasingly snatching away the financial gains made at auction, free online classifieds like Gumtree are becoming more popular among users looking to shift (or advertise) goods and services.

For people looking to conduct a quick sale of goods – potentially helpful for those who need to pay debt quickly – Gumtree should sit high on their list. Categories range from cars, jobs, competitions, accommodation and much more and, to top it off, there are no restrictions as to who can and can't upload an advert. Filters help users sieve through information and the sheer convenience of the site has led Gumtree to acquire eight million unique users per month.

Brits miss 15 million payments as household bills rise

Brits missed 15 million bill payments in the last 12 months because of the ever increasing cost of running a home in the UK, a report has said.

The research, conducted by Moneysupermarket.com, found that these missed payments equate to a total of

Five books on budgeting that could change your life

Books delivering financial advice to people who spend beyond their means are currently flooding the bookshelves, but there are a handful of titles that stand out from the rest.

The prevalence of personal finance books has arguably worked against the everyday reader – after all, how are you to tell which out of the hundreds on the shelf will be worth your hard-earned cash? Well, long before you hit the library or bookstore in search of your gateway to frugality, you'll want to try conducting a spot of research into your possible selections.

Gather every recommendation you can and pinpoint the ones which focus on money-saving tips for living in Britain. As you begin your search for the personal finance bible, here are five highly regarded titles to get you started.

'The Only Budgeting Book You'll Ever Need' – Tere Stouffer

'The Only Budgeting Book You'll Ever Need' delivers a brave statement at the earliest possible opportunity but this doesn't make it any less true. Tere Stouffer's 250-page paperback is jam-packed with essential advice for helping you live the high life on a budget whilst including countless tips to help you stay on track with your saving goals.

It's not all about what's on the inside of the two covers, either. The book also includes a guide for free web tools that make saving as easy and comprehensive as possible, helping you create a visual portrait of your financial state.

'10,001 Ways To Live Large on a Small Budget' – The Writers of Wise Bread

Looking for something a little more digestible? Go for this title from the financial experts at The Writers of Wise Bread. Although some of the 10,001 tips do happen to focus on US financial regulations and laws for debt collection in the US, there are thousands of other pointers which apply to the everyday saver in Britain. Just don't try reading it all at once!

'The Total Money Makeover' – Dave Ramsey

Dave Ramsey is something of a controversial figure in the world of personal finance due to him losing his multi-million pound empire to bankruptcy. However, he's made sure that you can learn from his mistakes in 'The Total Money Makeover'.

While money saving tips are the primary focus of Ramsey's best-seller, this one is also a highly entertaining read and full of stories leading up to the author's financial plight.

'The Wealthy Barber' – David Chilton

If you're after sound financial advice but can't deal with the ego-centric authors that deliver it, go with David Chilton's 'The Wealthy Barber'. Based on the story of a group of friends who meet once a month at their local barber shop, the book offers pearls of wisdom for saving, investing and buying assets in the guise of a novel.

'Wealth on a Minimal Wage' – James Steamer

Young adults take note – this is how you avoid debt and maximise your wages whilst you wait for that eagerly anticipated promotion. Insightful, engaging and highly positive, James Steamer's title may have been written in the late 90s but his money-saving tips are still relevant to this day.

How does using cash help you keep a handle on your finances?

When you need to pay for something, it is all too easy to whip your card out of your wallet and tap four numbers into a machine. Contactless payment, which is becoming ever-more widespread, makes this process even easier and potentially a lot more dangerous. If you're one of those people who struggles to make ends meet every month, you could save some serious money by switching to cash payments instead.

Easier to see what you have

Spending money via a card doesn't bring home the realism of what you're spending. Unless you visit a cash point or do online banking every day, it's impossible for you to really keep track and see what you have left. For example, if you're going for a night out but know that you can only spend

Travel woes – how to recover financially from a lavish holiday

So, you're back home after a wonderful holiday and ready to work. Good, because chances are you'll have to make sure that a lot more is going into your bank account than out after undertaking a quick review of your financial state.

Many people take holidays because they feel they need to get away from the grind. Sometimes working life isn't filled with promotions, heaps of praise and subsequent pay rises, which is why so many start planning their breaks months in advance.

The smarter people among us will also start saving for their holiday long before they've decided where they're going, but even a cost-effective break can see someone out of the black and into the red.

Most are more than prepared to endure a period of financial hardship in order to afford a lavish break and rightly so. Holidays provide a great way getting away from life back home and seeing what the rest of the world has to offer.

If you're just returning from a break, here's how you can get back on track financially.

Review

Gone are the days of setting aside a pile of cash to spend on holiday and this helping to pay for everything from hotels to flights. If you've used your credit or debit card to pay for anything before or during your break, you might find it hard to work out exactly how much you've spent. 

The best course of action is to contact your bank or log in to your online account to see how much you've parted with. It's at this point that it pays to know how much you had to your name before your holiday, as you'll know how much you'll need to recoup.

Once you know how much you've spent and have set a goal for where you want to be (going on a month-by-month basis is advised), you can start to save.

Change

When it comes to saving, it's important to appreciate how far all the little things go. Changing to a cheaper supermarket or walking to work rather than getting public transport can be just as effective over the course of a month than cutting down on your nights out.

Perhaps the best method is to limit the cost of your everyday living and work from there. Avoid luxury products at all costs and, unless absolutely necessary, stay well away from the shopping centre. 

Develop a mentality that causes you to think whether you really need to buy what's in front of you or if it would just be nice to have. That way you're only catering for your needs and not your wants.

Try something you feel could help you save money and see how much you've stored up over a week. 

Resist

It's amazing just how much 'a few drinks with old friends' can cripple your bank balance, especially when the round is for six people and it's your turn to head to the bar. If you really want to improve your financial state, you'll have to make sacrifices to your social life.

It's not all bad, though. Rather than taking a trip down to the local pub and into town, you could try catching up with your friends in different ways. The kettle holds the answer in this equation, and your friends should be just as glad to hear about your holiday stories over a cuppa as they would with a glass or wine or an ice cold pint.

Track

Be sure to check your progress every week using a money saving mobile app or something similar. That way you'll be given reassurance that you're making solid progress towards your goal.

Lastly, if you find out a few unique ways of saving money after your holiday, always note them down. You might need their assistance when you come back from your next trip across the world.

How to get out of the debt cycle in 2014

In recent years, the New Year has become as synonymous with money worries as it has with resolutions, fireworks and Jools Holland's Hootenanny. Christmas over-spend, a rush to book summer holidays and a long time between December's often earlier-than-average payday means that January can often be quite lean.

For the most unfortunate, however, this isn't something that is alleviated once February 1 rolls around. Instead, these financial woes perpetuate – making the notion of a debt cycle ring very true indeed. 

Getting out of this debt cycle can be incredibly difficult, an issue only compounded by poorly-timed setbacks, such as the washing machine breaking down just when light starts emerging at the tunnel's end. It is possible, though, and below are just a few examples of what can be done to help the process along.  

Take control 

Money worries keep people up at night, play on the mind, damage otherwise happy relationships and can even have health implications. As such, voluntarily sliding into more debt should simply not be a consideration. The notion of having to speculate to accumulate is one thing, but you need to have something with which to speculate in the first place. 

Instead, draw a line under the debt and use this as a very real marker, making a promise to never voluntarily take on more debt that will elevate this total even higher.  

Ask for help

Debt is certainly nothing new – and doesn't look set to be going anywhere soon. As such, there are plenty of opportunities to talk through the issues and get free, impartial advice. The staff at these agencies have plenty of experience in dealing with debt, so will not only provide helpful solutions, but do so in a compassionate, understanding and non-judgemental fashion. 

Budget

Go back through your weekly expenditure and work out what can be cut and where. It's not easy giving up treats – often many of them don't appear this way and seem more like must-haves – but there should still be areas where the fat can be trimmed. This can also translate into the weekly food shop, with branded goods swapped for more value alternatives or a few small treats forgone. 

Keep an eye on your account

In today's card-friendly world, it can be easy to lose track of spending, as money just comes and goes in a series of numbers – often without feeling like cash has actually changed hands. It may look a bit worse-for-wear at the beginning, but checking up on your bank account every day should help alleviate this and ensure no nasty surprises creep up to scotch everything.

Switch

It may take time and effort, but switching banks, energy suppliers or mobile provider could be a quick way to unlock tied up cash without having to cut back. Spend time poring over your accounts, as well as the offers available to new customers elsewhere. There should always be a deal to be done.

Of course, there is one rule that over-rides all of these, not to get into debt in the first place. Loans or credit that cannot be paid back in full should be avoided, as it can then be all too easy to stumble into the debt cycle. For those already inside it, however, the above may provide a way out.

How do you keep New Year's Eve cheap?!

Being arguably the biggest party event of any social calendar, it's no wonder that Brits will save and save in order to thoroughly enjoy themselves on New Year's Eve.

Whether they're hosting a party or painting the town red, December 31 is the best chance for people to gather their closest friends and reel the new year in together. For some, drinking copious amounts of alcohol and putting themselves in a food coma is an absolute must. However, with so many families still feeling the bite of the recession, many people will be wondering how on earth they'll afford the New Year's Eve bash this time around.

To help you and your friends manage the cost of hosting or attending a party, we've put together a few money-saving tips. Enjoy! 

Hosting

If you're hosting a party there's a certain pressure on you to provide for your guests. Fortunately what you do decide to supply is entirely up to you, and there's plenty of room for making savings.

The best way to go about advertising your cost-effective party is to emphasise what you're contributing to the gathering – the venue. You should have no objection to asking your friends to bring as much alcohol and food as they see fit. If they want to attend, they'll have to bring their own drinks and nibbles – simple.

Invitations – Don't worry about spending money creating personalised invitations – this is the digital age, where a Facebook invite or a quick email will more than suffice. Alternatively, for those who haven't yet embraced the wonders of social media, a simple phone call or a knock at the door will do.

Supplies – If you can afford to buy a few extra bottles of wine and a case of beer to keep the fridge filled then your guests will more than appreciate the gesture. Beyond this you can't be expected to feed and hydrate over ten people, so don't try – tell them to bring their own booze. Supply basic nibbles like crisps, sausage rolls and cakes, but don't be afraid to use own-brand products. Take them out of their original packaging and no one will notice the difference.

Music – Who really needs a DJ when you can set up an iPod dock or a laptop with speakers in your lounge? You can choose your own music and not pay a penny for the privilege – it's a no brainer.   

Attending

If you're attending a party and it's within a 30 minute walk from your house, why not don a pair of flats and march to the venue – in company of course. You can always get a taxi if you feel you can't manage the trek on the way back, but you'll have saved at least a fiver in getting there.

You may also want to check what the host is supplying, as there's nothing worse than bringing a supermarket bag filled with goodies to a party where all food is provided. Even if the same might go for booze (lucky you), it's always courteous to contribute a bottle of wine. How much you spend on this is entirely up to you, but remember: the house party is meant the cheaper way of enjoying New Year's Eve. Do not make it expensive on your own accord.

Going out

It almost goes without saying but drinking before going out will save you tens of pounds. Replace three drinks at a pub with three of your favourite tipples at home and you'll have already saved around