Financial Abuse

Today I’m going to write a topic that is very close to my heart. As a health professional, I have unfortunately witnessed this awful phenomenon on more occasions than I care to remember. Often within situations that would appear quite normal to an outsider – between apparently loving husbands and wives, or between families and an elderly relative. There are of course many more circumstances where financial abuse can occur.

I’m prompted to write this post today, after reading a post from a large and well-known US blog (popular within the frugal and money-saving community). The author basically promotes the idea of financial abuse within a relationship, as if it is the healthy and loving thing to do. Let me be clear right now – if you have to ask or have a discussion with your partner before you can buy something as insignificant as a kitchen spatula, then you are a victim of financial abuse.

Financial abuse is a discrete form of coercive control (a pattern of controlling behaviour which can be threatening or restrictive). It is considered to be a form of domestic abuse and as such, is incredibly serious. It involves the use or mis-use of finances, so as to limit a person’s current or future actions and freedom of choice. In the USA, they have identified 3 distinct components to financial abuse under the ‘Economic Abuse Scale’:

  1. Economic control – i.e. monitoring of resources
  2. Employment sabotage i.e. stopping someone working, making them work for free
  3. Economic exploitation i.e. use of money, generation of debts

Despite the many preconceptions, any person, of any gender and income level can be affected, even higher incomes and socio-economic groups. Financial abuse not only comprises of control of money, but also exploitation of income and time, and possibly sabotage of efforts to gain or maintain paid employment. Financial abuse is often accompanied by other forms of controlling behaviours or types of abuse – such as, emotional abuse.

To all intents and purposes from the outside, it may appear as though the finances are being addressed quite normally. But there are often very subtle cues to be picked up on. Such as; someone having to ask their other half before they can make any purchase, or perhaps an elderly person claiming that a family member just takes care of everything for them. This subtle blurring may not be obvious to the victim, particularly at the time. If the victim is living with the abuser, they may find it impossible to leave without means to do so.

In the blog I am referring to, I have noted the following characteristics over time;

  1. Being required to ask the partner before any purchase is made, however insignificant
  2. Reluctance to spend money on things like eating out, drinks out or anything new and having to justify every purchase – no matter how big or small
  3. Being given an allowance for household spending and having to document every aspect of this spending (control tactics)
  4. Not being able to buy new clothes
  5. Then spending large amounts of money and bragging about it to other people
  6. Moving to a remote location, so that one partner has a restricted ability to earn
  7. Money is the mood – everything revolves around money, it underlies everything, every conversation, every decision
  8. Being prepared to spend money initially in the relationship, but then holding back more and more as the years progressed

In the UK this type of behaviour is now recognised as a potential criminal offence and it is crucial if you recognise the signs, within your own relationship or someone else’s that you report it to the police or social services (it would fall under the protection of a vulnerable adult legislation). Financial abuse strips a person of their sense of self, and their personal liberty or freedom. It also commonly occurs with other types of abuse (in over 90% of cases), so it is very important that if you notice the signs – you mention it.

However financial abuse can be very difficult to spot sometimes, or to pinpoint when it started. Then over time, it so invades the relationship that one could be fooled into thinking that behaviour is normal. There are just tiny signs that tip over from normality to abuse. I can speak from experience to say that it can be incredibly hard to bring up with a friend, for this reason – be prepared for them to deny any problem.

References

Unequal, trapped and Controlled. Women’s Refuge. Available from: https://www.womensaid.org.uk/financial-abuse-report/ (Accessed: 12/02/18).

The Truth about Frugalwoods and other US ‘Financial Independence’ Blogs

If you are like me, you read a number of financial independence blogs for inspiration. I admit to reading the occasional bit of Frugalwoods or Mr Money Mustache. However, the more I have read the more I have pondered whether these US blogs can bear any relevance to UK readers hoping to achieve financial independence? Today, I hope to uncover more of the truth about this for my UK readers. This is as much to put my mind at rest, as yours.

Frugalwoods say that they own a large detached homestead with land in excess of 20 acres. The only equivalent I could see here in the UK is buying a VERY large country property or ex-farm, with a lot of land. I’ll plump for the farm option, as they state they have outbuildings (from their photos it is a very large barn, the size of 2-3 massive houses here in the UK), as well as woods and more. From their photos, I would estimate the main residence to be twice the size of a large UK house, although that is not unusual by US-standards. Actually here is their run down:

Frugalwoods Homestead Specs:

  • 66 acres of primarily wooded land in central Vermont, 35 minutes from Hanover, New Hampshire (where Dartmouth College and every attribute of the ‘big city’ are located)
  • A 4 bed, 2.5 bath, 2,300 square foot house, built in 1991, with two woodstoves
  • An 1,800 square foot barn/shop with a woodstove
  • One pond
  • Many streams
  • Countless apple trees, several plum trees, and a forest of sugar maples
  • Two acres of cleared “yard” with extensive garden beds

They paid $389,000 for their homestead which equates to £300,000. So now you start to see how these US financial independence blogs are laughable here in the UK. I mean, no-one but a multi-millionaire would own a piece of property that large over here! And you’d be lucky to get a normal 3-bedroom, semi-detached house where I live, on a tiny plot of land. I doubt that would even buy you a studio flat in London. They would have put around £97,000 down as a deposit.

They also have a rental property in a US City, which they paid $466,500 for and that equates to approx £360,000. They only put a £50,000 deposit down on it. So, now we’re looking at that owning around £660,000 of property but none of it is fully paid for. They have 30-year mortgages (the norm is 25 years here in the UK). They are in their mid-thirties, so they’re looking at carrying that debt until they are 75. I wouldn’t want that noose around my neck until well into retirement!

You can read the reality is then that they worked solidly from University to their mid-thirties to be able to put £147,000 cash on houses. I’m not knocking that, but I expect most people in the UK would be able to sock that away as a deposit too, if they had the luxury of a well-paid job. 20 years of  2 people working full-time and saving 65% of their income, means they were only saving £7,350 a year. That’s as little as £3,675 per person. Undoubtedly achievable here, if not more- it’s just that you would never be able to buy a home or retire on that here!

The truth is that both of these properties still belong to the bank and they’re only a few years into the mortgages on each. If anything happened to prevent them from keeping up payments, they could lose both in a very short period. For example, if they couldn’t get tenants for their city house – one wonders if they would be able to cover the mortgage? They also only keep around 6 months worth of liquid cash which is a very small amount. The rest of their ‘net worth’ they have ploughed into stocks and shares. Whilst it is all very nice to base your ‘net worth’ on what the current selling price of the shares is, it’s all pie in the sky really. In 10 years the value of what they have put away could halve or worse. They are basing their ‘net worth’ on a projected rate of return of 7%, but the reality again is that if anything happened to the stock market (which I think is very likely given the volatility of world markets lately) they could lose a significant proportion of their money or the whole lot! They won’t even have the properties they live in to sell because they don’t own them. I bet you would then find they have stopped blogging and had to go back to work. Probably renting somewhere and lamenting their former choices, except they wouldn’t blog about that!

In actual fact, I think they are quite dangerous examples of how to live. Unless you like an extreme level of risk. I wrote this because I don’t want UK people to compare themselves to some unrealistic ideal. Unless you are planning to move to America, then you’d better expect to be working the rest of your life to pay off a small piece of modest UK property. I don’t think anyone lives under the illusion of early retirement here anymore! The best you used to hope for was retiring at 50, but certainly not 35!!!! You are better to pay off your mortgage before making too many other investments so that at least you have something solid that you own. I think it’s safer to pay into a pension, than invest all your money into stocks and shares.

If you want to read the RIDICULOUS nitty gritty about their finances –then click here – Mr ‘Frugalwoods’ earns £100K more than the UK prime minister! So frugal my arse!!!

Frugal Living Tips- Spend Less, Live More!

Minimalism includes the idea of spending less on consumer items and more on experiences. This month I’ve been thinking  about the necessary (I believe) expense of insurance. Here in the UK it is a legal requirement to have car insurance and after the recent occurrences of extreme weather, which have left people flooded out of their houses and far worse- I think you would have to be foolhardy not to have home insurance. This month is the unfortunate month in the year, when all our insurances come up for renewal, along with all our car insurances, car services and MOT, plus road taxes. It most sincerely was not planned that way, but we manage by saving all year.

Even so, you do not want to spend more on these things than you have to, but you still want a reasonable level of cover with decent customer service, in the event that you should need to claim. I have always subscribed to the school of thought that you should shop around for these things and it has never let me down, as I have always been able to save money and not always needed to change provider. It takes a small amount of time, particularly in the age of comparison sites. I have even found that you can get paid to both shop around for prices and disclose your renewal price, or allow your details to be used to obtain quotes (usually under a false name). To do this, you will need to register with various mystery shopping companies and survey sites. I earned £25 the past 2 years, just to shop around certain providers for quotes on the telephone and complete a short questionnaire about my experiences.

Not only this, but the savings from shopping around can be significant. This past year I kept £136.62 in my pocket. Here’s how I did it:

I shopped around for home and car insurances, mostly using comparison websites. I ended up switching home insurance provider and saved £71.56. I rang up my current car insurance provider and asked them if they could give me a better price (as I knew there were only savings of £30 to be had by switching). Simply for asking, they knocked £52.56 off my renewal price. It makes you feel like they simply are trying to fleece people who aren’t brave enough to ask. It’s possible I guess, that I could have haggled further. But I knew that was a better offer than I was going to get anywhere else- so I took it.

I have a courtesy car whilst my car is in for its service and this has always been free, until now. The garage wanted to charge me £12.50 for a day’s insurance with a £500 excess, should I have an accident. I came home, rang up my current insurer and they set up a day’s policy for FREE, just because I asked with a £150 excess!

I may have been able to get a better price for my car service too, since my local main dealer offers to price match any service using genuine parts. But I would have needed to obtain a written quote and I personally don’t know which other garages I would have approached that I felt were trustworthy. I checked around with friends in the know and made sure that they were offering a fair price for the work needed. In addition, after all this shopping around for insurance- I didn’t really have time to fit in the research required as well. I need to plan better for that in the future!

I am planning to take a mystery shop for the other car’s service, which means that I will get the service for a lot less. In the past, this has sometimes meant having a video researcher accompany me with a hidden camera! (I had to pretend they were a friend who I was dropping at work afterwards). I am not sure yet what is involved this year, but I feel answering a few questions is a small price to pay for a chunk of money off! With this particular car (a Nissan), if we get a main dealer service (not only do we get the chance to mystery shop them), they also throw in a year’s free breakdown cover. It’s not expensive and basically a very good deal!

I hope these tips help you to save more money on the essentials and more on great experiences in life!