This article is taken from Merryn Somerset Webb’s free weekly personal finance email, MoneySense. Click here to sign up now: MoneySense
The personal finance sections of the Sunday newspapers aren’t always the bits that members of my family go for first (apart from me) but this week there was a near battle over the Sunday Times Money section. I wish I could say that everyone wanted first read of my column (Merryn on Money) but it wasn’t about me at all.
Instead they were gripped by the Fame and Fortune column in which Tara Palmer-Tomkinson had somehow been persuaded by journalist Ali Hussain to tell all about her income and her spending habits. It is fascinating stuff.
Tara P-T makes £1.2-£1.3m a year from ‘TV work and endorsements.’ Recently this has included £80,000 a year for a column in Closer magazine, and a £250,000 advance for her book which will be out in September (it is to be called The Naughty Girl’s Guide to Life and is co-written by a Sharon Marshall, who I suspect may have got a slightly smaller advance).
Tara also tells us that until last year she was raking in £300,000 a year from her deal with Walker crisps. This worked out at about £100,000 a day given that shooting the adverts for the deal took 2 days a year and the annual press launch took one.
Still, it isn’t like she doesn’t need all this money. As she says, her “lifestyle expenditure is huge.” She has about 15 people working for her and her spending habits sound slightly mad: her favourite handbag cost £16,000; she has a £22,000 coat she hasn’t worn for several years; and so regularly stocked is her wardrobe that she pays someone £600 every 6 months to come in and ‘reorganise’ it for her.
Then there are her houses. She has a house in South Kensington, bought a few years back for “two point something million,” a ski chalet in Klosters (£1.5m) and an off plan (not yet built) house on a resort in Bali that she is endorsing (£1m).
This article is taken from Merryn Somerset Webb’s free weekly personal finance email, MoneySense. Click here to sign up now: MoneySense
All this is clearly completely absurd but it’s also strangely compelling. Tara T-P is living the British dream. She gets paid huge amounts of money for doing very little. She can and does shop with impunity. She thinks nothing of spending the price of 4 second hand BMWs on a handbag and best of all she has bought herself houses in smart places around the world. The one in Bali she appears to have bought for no better reason than that she got a discount and she “just wanted something on that side of the road.” Would that we all could do the same.
Or failing that, would that we could understand that we cannot. If most of us spend in anything like the same way as TPT we do so at the expense of our pensions. And if we buy foreign properties we tend to do so with equity withdrawn from our main residences in the UK, something that could mean we face negative equity here should the long awaited house price crash ever come (note that house prices fell in many parts of the UK in April).
We also can’t rely on sudden injections of £250,000 every now and then to help us out should we have over-spent in Azzedine Alaia (“six pieces could easily cost £15,000”). None of this stops us trying to live the TPT life of course – it’s just that it has the unpleasant side effect of putting us in debt. UK consumer debt now totals well over £1.3trn. (Those who want to get out of debt might enjoy the advice in this short film: https://immobilienblasen.blogspot.com/2007/05/couple-learn-high-price-of-easy-credit.html)
TPT seems to know what she is doing in most areas but looking at the interview I find myself irritated by her insistence that she “doesn’t have a clue” about her pension (“my philosophy is to live fast and die young”), about her Isa or any of the investments she holds beyond her houses. Her accountants and her bank deal with all that and the most she knows about it is that her invested cash (“probably a few million”) is in “safe funds.” Maybe it is. But even if it is not knowing how and where your money is, not knowing how it works and so explicitly not caring is just asking to get ripped off by the financial services industry.
Imagine the fees her banker must be pocketing every year from the funds he buys for her in upfront and trail commissions, to say nothing of the management fee he helps himself to from her capital every year, safe in the knowledge she’s never going to move on to someone who might charge her less or manage her money better (should there be such a person).
I’m going to send her a copy of my book – Love is not enough: The Smart Woman’s Guide to Making (and Keeping) Money. But I wonder if she – along with the many others in the UK with their heads in the sand when it comes to making the effort required to leverage income in to long term assets – might not also benefit from a new website I have recently come across.
www.askdavidson.com is the brainchild of IFA Craig Davidson and aims to offer free financial advice to anyone who asks (as long, I assume, as not too many do). You simply visit the site, type in your question (however stupid you think it is) and wait for a reply.
“Ask Davidson was born from the idea that people should feel at ease approaching their financial advisers and asking any question that they feel is relevant to their situation, without attracting the attention of sales people looking to sell another policy or endowment,” says Craig. “Credibility is vitally important in the financial sector and I felt that people were really losing trust in financial advisers. This site proves that people really do need a place to get sound financial advice, remotely, without the pressure to buy. The payback for us is that we get a good look at the concerns people have with regards their personal financial decisions, and we can then use this information to better service our clients.”
I don’t think you can say much fairer than that. The site is worth a visit.