“Is that super size madam?”

After being encouraged to eat our greens, count our calories and watch our waistlines, it seems more than a little hypocritical that those who choose to live unhealthy lifestyles could actually prosper from bigger pension payouts.

But if plans from Legal & General, Britain’s biggest annuity provider, come to fruition, then that’s just what will happen.

It won’t be just shirts bursting at the seams, but wallets too!

On the proviso people with a high Body Mass Index (BMI) will have a shorter life expectancy than those who look after themselves, the good people at Legal & General are putting the finishing touches to a pilot scheme in which a person’s occupation and BMI will be used to determine how long they are expected to live, and calculate the resulting annuity payout.

Annuity policies exchange a pension holder’s savings for an annual income, a guaranteed payout for every year they remain on this planet. With payouts being calculated using the person’s life expectancy, effectively, if you live longer than predicted, you’ll be in the money.

Annuities are one of the few financial products that thrive during a period of financial downturn. Due to falling corporate bond prices, anyone looking to cash in their personal pension this summer will be significantly better off than before the credit crunch kicked in.

Until last year, when the insurance giant started the ball rolling in assessing annuity payout rates more accurately, standard annuity rates were only based on the age and the sex of the pension holder.

Legal & General haven’t been the only one to change their annuity payouts to include lifestyle as a factor however, and from November of this year, Norwich Union will be including clients’ postcodes, marital status and smoking habits as criteria for pricing its annuities. I’m pretty sure Jack Priestly, who has puffed his way through 153,000 cigars and more than 700,000 cigarettes, will be kicking himself that the new annuities assessment criteria didn’t arrive sooner.

I never thought there would come a day when being overweight would actually be a plus, as well as being a plus size. After careful consideration, I’ve decided I will have that very unhealthy chicken and mushroom Pot Noodle for lunch. If the saturated fats don’t kill me now, they’ll definitely kill me later, but in the mean time I’ll enjoy it and hopefully the wad of cash that will come with it.

 “Would you like to buy a….yawn”

The credit crunch, by definition, refers to a financial climate whereby those who have previously relied on credit, or found it easy to gain credit, are now being refused credit. Loans, mortgages and credit cards are becoming a lot harder to obtain.

Why have banks tightened borrowing criteria? Well, it’s simple. The banks have foreseen a decline in the value of the collateral one might stake against your loan (namely, your house), and they’ve got nervous.

Also, they’re wary of other banks that they trade with becoming insolvent, particularly in the aftermath of the Northern Rock debacle and recent Bradford and Bingley scare.

So why, therefore, is every conceivable rise in the cost of living being blamed on the credit crunch? It can’t all be due to banks narrowing their borrowing criteria surely?

Let’s look at the most recent issues blamed on the credit crunch and evaluate whether they are, indeed, a product of this lending meltdown, or just due to consumer negligence/completely unrelated factors/media poppycock.

(1) Worry Induced Sleep Deprivation

Yes, you did read that correctly. Apparently, the credit crunch is causing many a sleepless night in bedrooms up and down the UK, with some Estate Agents only able to get 5 hours and 50 minutes shut-eye a night due to credit crunch caused stress.

*Credit Crunch Excuse Rating: That’s not the credit crunch keeping you awake boys and girls, it’s your conscience. 1/10

(2) Business Fraud on the Rise

Business fraud in the UK has taken a 74% leap in the last six months, with the credit crunch forcing law abiding citizens into a life of crime.

The biggest threat to businesses came internally where management fraud constitutes 46% of losses totaling £705million.

*Credit Crunch Excuse Rating: Plausible I guess, although some of those managers could simply be measuring themselves against other industry fat cats and feeling they deserve more, by fair means or foul. 8/10

(3) Slowdown in the Indian Cement Industry

You’ll like this one. The Indian cement industry is in disarray because narrowing credit conditions and problems in land acquisition have made expansion for Indian cement makers almost impossible.

*Credit Crunch Excuse Rating: Indian cement, such a well established and highly treasured commodity. 3/10

(4) Credit Crunch Accounts for Lower Grocery Budgets

Due to a credit crunch caused frugal financial environment, shopping baskets aren’t quite as full as they used to be.

With a lack of credit available, many consumers are scaling down their weekly shop, spurning high quality stores and turning to high value stores instead.

*Credit Crunch Excuse Rating: There are two factors at play in the current financial climate; the credit crunch and an increased cost of living. They’re separate. Rising grocery prices are due to the latter. 2/10

(5) Small Businesses at risk due to the Credit Crunch

UK small businesses are preparing to batten down the hatches as the credit crunch increases its grip on the economy.

Consumer confidence is at an all time low, and customer numbers are dwindling.

*Credit Crunch Excuse Rating: Give me strength. Retail sales may have taken a small dip in May, but that’s been happening at this time of the year, every year, year on year, for as long as I can recall. Additionally, Germany and Greece are making a strong retail comeback this summer, and HMV sales are up 25% (for the first time in six years), so there is cause for optimism.

To those small businesses I say work harder and market yourselves harder. 4/10

(6) Australians Flee UK to Escape Credit Crunch

Thousands of Australians who settled in Britain are returning home to escape the credit crunch.

Australian authorities have recorded a 50% increase in the number of their citizens returning down under since summer 2007.

*Credit Crunch Excuse Rating: At last, a crumb of comfort. 10/10

   Sink your teeth into this…

Despite news of the credit crunch and talk of a global recession, it seems there is only one business that is fairy-ing well.

That’s right, the Tooth Fairy is proving to be one of the most successful business women of this year, and may even find herself in 2009’s Times’ Rich List. 

According to a survey, the generous little fairy, who once used to slip six pence pieces under the pillows of sleeping children who’d lost their milk teeth, now has a business worth millions of pounds. Definitely something Peter Jones wishes he’d invested in…

While parents roughly received 27p per tooth, their children are waking up to find an average of £1.05p waiting for them, according to savings experts, The Children’s Mutual. That’s more than a 500 per cent rise over 25 years.

It’s been calculated that youngsters today can profit from a total of £21 from their wobbly teeth – over 6 times what their parents would have got for theirs. For roughly one in twelve youngsters, losing 20 baby teeth between the ages of six and 11 could earn them more than £40.

And is it any wonder the averages are so high, when it’s reported that Wondermum and superior-being Angelina Jolie gives adopted son Maddox $50 for every tooth he loses, letting him spend the extremely generous payout on whatever he wants?

There is a silver-lining to this somewhat gappy tale however: children are being taught about how to look after their finances. The study found that seven in ten children talk about money and savings with their parents, 73 per cent have a piggy bank and 44 per cent of seven-year-olds play shopping games at home.

Although maybe not learning the true value of money, or about inflation rates, kids these days do seem to understand more about money matters. Only the other day did I witness a little girl, too small to reach the counter, trying to make a deposit into her Barclay’s account. She was probably saving the pound she’d received in exchange for a decaying little incisor…

As for Maddox Pitt/Jolie, it’s all very well giving the kid a fifty dollar bill for every tooth that “falls out”, but when he and his sisters start pulling all their little toothy-pegs out with pliers, I’m sure Angie will regret her “charitable” decision to give every child the same.

She’ll also be regretting not putting the money towards the dental treatment they’ll all need later on in life.

“Five for silver, and six for gold,” I wonder how magpies are getting on…

 What don’t I wear anymore?

Lindsay Lohan, the new face of Visa Swap, will soon be smugly starring down at us from the sides of buses and overhead billboards, in an attempt to remind us that charity really does begin at home.

Yes, the 21-year-old actress, who recently stood trial for thieving a fur coat, and is by no means an eco-warrior, has been chosen by Visa to front this years Swap campaign, and will be ‘displaying her wares’ in a very un-LiLo series of ads. By that I mean she’ll be photographed actually wearing some clothes.

The idea behind the campaign, which starts next week, is to get people to bring their clothes to the swap in exchange for Visa points (the better the bounty, the more points you’ll receive…), which can then be redeemed for others’ swap items.

The phrase “one person’s rubbish is another person’s treasure” springs to mind…

Clothes that fail to sell will be donated to TRAID, a charity that raises money to support communities in developing countries, through recycling second-hand clothing.

However, if you’d rather not stifle through your wardrobe looking for things you no longer wear, then there are plenty more, stress-free alternatives to help you “do your bit.”

There’s the obvious, donating bric-a-brac to your local Oxfam. You’ll feel warm and fuzzy inside because you know someone somewhere will want to buy your dusty old lamp or your rusty old watering can, and that the money they part with will be helping the needy… However, like Visa Swap, this too involves effort.

Then there are the aptly named ‘chuggers,’ the charity huggers that accost you in the street and pressure you into signing on the dotted line, so £10 of your pay packet every month disappears off to Botswana… This involves no real effort, but it is really annoying.

Finally, my preferred option, there are charity credit cards. Charity credit cards give money to your chosen charity when you sign up, and then after that a percentage of each transaction that you make on the card also goes to the charity. Effectively the more you spend, the more you give.

The best bit is you don’t have to use your charity credit card for every purchase you make, just when you’re feeling generous. As a 21st century Robin Hood, you’ll be thieving from the rich (i.e. the credit card companies) and giving to the poor, or the National Trust, or WWF, or the British Heart Foundation… The list is endless - just choose your charity and start spending.

And as for Miss Lohan, we shouldn’t expect the party-loving actress to suddenly go “green”. I see a paycheque behind this move by Visa, rather than anything of real substance. When she’s not thieving them, I wonder if she pays for her fur coats using her WWF Visa Card?

 ‘Rudderless ship lacking conviction’

Just a quick follow up on yesterday’s posting. I’ve had some very interesting mails overnight so thanks everyone for writing in.

Clearly we have to differentiate between two parallel financial funnels that are currently working in conjunction with one another: the credit crunch and the rising cost of living. They’re separate entities that are happening to take effect at the same time. I don’t think I conveyed this yesterday, so it needed to be pointed out.

So, in the rising cost of living column, we can now add football season tickets!

This will not be a big deal for everyone, but I found the figures published yesterday quite interesting. First and foremost, my beloved Chelsea is the only Premiership side to freeze season ticket prices next year.

This will be scant consolation for fans both reeling from the Champions League melodrama, and cringing at the current managerial merry-go-round. Plus, at an existing average cost of over £700 per season ticket, I can’t see the Chelsea directors going short next year.

Elsewhere, fans of Premiership clubs can expect to pay an average of 7.2% more to watch their favourite side next year. Sunderland, Spurs, Portsmouth and (this will make you laugh) Manchester United fans face the steepest price hikes overall. In the current financial climate, it really doesn’t help.

Also, I read the following headline this morning in the newspaper:

‘Brown calls for global action on oil price’

….and it reminded of the following headlines I’ve written myself over the last few months:

‘British Gas Next to Raise Prices, Brown Lends His Voice’

‘Government to Intervene in Energy Price Debate’

‘Darling gets Bullish with Banks’

‘Government to Settle Egg Card Dispute’

The net result of these government actions? Well, British Gas managed to raise their prices, and raise them again. Energy prices are still on the increase overall. Banks steadfastly refuse to pass profits onto their customers, and Egg pretty much got away with cancelling 160,000 customer accounts for no viable reason.

Do I expect the Prime Minister’s call for action to be heeded by global oil companies?

No.

And finally, if you would deign to read my news article today, you’ll notice it describes the people most likely to become victims of ID theft. Somewhat alarmingly, I’m ticking pretty much all the boxes.

I live in NW3, South Hampstead, fifth on the list of the top 25 ID theft hotspots. I’m most definitely aged between 26 and 45, and I’m a tenant in a rented flat. Better be careful with my personal correspondence then.

It’s a good job I don’t earn £50,000 a year or I’d be really screwed.

Time to get serious

In the eighteen months since the credit crunch began to engulf the UK economy, where have householders been hit hardest?

In the late nineties, household spending was growing at a rate of over 4.5% year on year. Ten years on, this figure has been reduced to just 1.9%. The fallout from the sub prime lending crisis has forced Britons to transform their cavalier spending habits to that of canny spendthrifts.

The economical volte-face has been driven by a number of factors, primarily rising energy costs, rising grocery bills, exorbitant fuel costs and narrowing credit capabilities. As the cost of living climbs and property values tumble, consumer confidence has wilted.

The big six energy suppliers raised their gas and electricity tariffs by an inflation busting 14% on average during winter 2007/08. These price rises were blamed on skyrocketing wholesale costs and record crude oil prices.

Gas and electricity costs are expected to jump again this summer. According to energy watchdog Energywatch, such are the overheads with which energy companies are grappling, these rises are necessary to prevent the energy suppliers from slipping into debt.

The days of cheap food supply also appear to be a thing of the past, as the cost of an average grocery basket of essential items took a £15 leap from May 2007 to May 2008. These increases are the product of supply problems in key producing countries, mainly caused by bad weather and an increase in the use of land to grow crops for biofuel.

Increasing food prices are forcing many consumers to use emergency payment methods. A spring survey by the Post Office revealed four in ten shoppers were using credit cards to pay for groceries, council tax and utility bills.

However, credit cards have become a precious and (in some cases) unattainable commodity. Banks have become reluctant lenders, resulting in a climate where only applicants with blemish free credit ratings are accepted for credit.

February saw online credit card supplier Egg cynically cull over 160,000 clients, in a move widely perceived as the disposal of unprofitable customers.

The narrowing mortgage market has additionally contributed to UK consumers’ financial woes, with first time buyers effectively excluded from the more competitive mortgage offers. As homeowners’ worries increased, record applications for mortgage debt advice were received by the Citizen’s Advice Bureau.

Leading mortgage providers such as First Direct began to pull their most attractive mortgages altogether during March/April 2008. The Co-operative bank and a number of smaller building societies followed suit, while Halifax raised rates and manipulated its acceptance criteria to punish those who couldn’t afford a substantial deposit.

So what happens in the future? Is the worst of the credit crunch over, as many analysts are predicting? Have we corrected our credit dependent spending enough? Could the next raft of energy increases be the straw that breaks the back of a fickle economy?

I’d love to hear your views.

Fancy Coffee - Luxury or Lifeblood?

Instant coffee can be a minefield. Heap your teaspoon too high with granules and you’ll end up with coffee soup. Go too sparing with the measures and your morning pick-me-up takes on the flavour of an old dishcloth. Should ‘washing-up liquid aftertaste’ rock up to the party, the whole sorry affair collapses like a freeze dried house of cards.

That’s why I prefer to buy my coffee out. I’m a coffee snob, self styled. In my opinion, Coffee Republic wins the prize for best coffee, Café Nero take gold in the ‘most lethal’ category (it’s like rocket fuel), and Costa gets a lifetime achievement award for its cool grippy cups.

However, it seems the great British public’s enthusiasm for little luxuries such as fancy coffee are somewhat on the wane.

Starbucks are shelving expansion plans having seen its UK sales fall away at alarming rates. Having described current market conditions as the worst in its 37 year history, Starbucks Chief Executive Howard Schultz is prepared to admit fancy coffee is a luxury that most people can no longer afford.

I recall reading an article in the Independent describing how Starbucks established themselves. Considered by rival coffee houses to be something of a suicidal move at the time, Starbucks acquired opposing properties on busy roads, and opened two facing outlets at a time.

Although it appeared Starbucks were on an insane mission to compete with themselves, the move was in fact a canny one. Think about your walk to work. Do you vary the side of the road you walk on? Not many people do, and Starbucks had the forethought to capitalise on this by snaring customers from both sides of the street.

Times have changed however, and Starbucks profits are down by a third this quarter. Somewhat ironically, most of those facing outlets will be included in a raft of planned refurbishments and possible closures. US and UK development plans have been parked, with Starbucks opting to concentrate their efforts on fast developing eastern territories instead.

As the credit crunch tightens its grip on our finances, it makes sense bourgeois treats will be the first to suffer the chop in any belt-tightening exercise. For my part, although the coffee stays, my thrice weekly trips to Marks and Sparks have been replaced with a once weekly trip to Marks and Sparks, and a twice weekly schlep around Asda (and it really is an almighty schlep).

Has anyone else changed their daily habits to save money? Maybe you’ve traded down from Harrods to Hennes, or swapped the Beemer for a bicycle?

Let me know your stories.