Yesterday’s Budget is sure to have taken money out of nearly all our pockets.
Rumours were rife last week – as I write, in fact – that free medical cards for the over 70s might be means-tested, the child benefit taxed or means-tested.
But perhaps the most dramatic rumoured cut of all related to pension fund contributions would be reduced to the 20 per cent standard rate of tax from the marginal rate of 41 per cent.
This latter action could save hundreds of millions of Euro in one go, but it wouldn’t do much to increase retirement savings and add many thousands of euro in extra income tax payments for higher earners.
But with tax revenue crashing and the national debt soaring, and very little faith in our ability to simply trade, or borrow, our way out of it, the Government has done the right thing to cut back its own costs and spending. Now the rest of us have little choice but to do the same.
Last week, I listed 10 ways to cut your own overheads if money is getting tighter or disappears altogether (through redundancy or stock market losses) and to substitute ‘free’ stuff for costly services and expenses.
Here are another 10 suggestions, some that could translate into potentially very large savings; others that will result in only small monetary benefits, but all are worth considering whatever your personal circumstances.
1: Switch your mortgage to a tracker rate, if possible: if interest rates continue to decline, as some are suggesting, having your mortgage anchored to the ECB rate (plus a modest premium) will potentially save you thousands over the course of your loan.
If you can’t persuade your lender to switch you to a tracker, then consider a fixed rate for a year to give yourself a breather. Interest rates may keep going down…or not.
2: Don’t overpay for insurance. Contact a good non-life broker for new quotes for car, home, health and travel insurance policies.
You don’t have to wait for your renewal date. A good rule of thumb is to expect at least a minimum 10 per cent reduction in your existing premium – a small portion of the broker’s commission – and a considerably higher saving if you haven’t reviewed your policies for a few years.
3: Consolidate your debts – if you can. During a recession, cash-flow is essential and if you have a variety of debts at different interest rates you will inevitably be overpaying for your loans.
If you extend the repayment terms (and this will keep repayments lower) make sure to start overpaying your consolidated loan the moment your personal credit crisis is over. And stop any further spending until you’ve eaten away at a big chunk of the consolidated debt (www.itsyourmoney.ie) for an example about how debt consolidation works.
4: Drop down to lower cost and lower value services. We’ve done it already by switching to discount grocers. Health insurance is another good example: you could make sizeable savings by shifting from a higher to lower cost plan. Just be aware that you may not be able to shift back up to the higher plan if your health were to deteriorate.
5: Make some personal sacrifices: you don’t ‘have’ to exercise in an expensive gym that you may not use frequently enough and cost €600 a year; ditto for golf or tennis club membership when there are free courts in most towns and cities; no one needs elaborate beauty/grooming regime.
6: Re-price all mobile phone, land-line, internet and television digital/satellite packages. A family of four (parents and teenagers), each with their own mobile is probably spending at least €2,000 a year on these phones alone. Check out all phone/broadband tariffs at www.callcosts.ie
7: If you have young children and are considering sending them to private primary and secondary school, do a complete cost analysis first. Twelve years of fees in the region of at least €5,000 a year is a financial commitment that you shouldn’t make lightly, especially if you also have hopes of them going to college, where fees are likely to be introduced.
8: Don’t go Christmas shopping in New York this December. Make this a truly festive, family oriented, but cost effective holiday this year.
9: Discover the joys of eBay.ie. You can you raise extra cash selling unwanted goods and chattel on the world’s biggest auction site, though there is now even more competition, so learn your trade first by studying the eBay learning site articles.
10: Before you spend another penny on ‘bargain’ investments or property that someone may have told you has become good value (ha!) educate yourself: buy a good investing book or join some free money websites including www.dailyreckoning.com, www.askaboutmoney.ie or www.itsyourmoney.ie.
This a very old adage that seems most appropriate this week for anyone who is risk averse, and could never afford to lose any investment: “The guaranteed way to double your money is to fold it over and put it in your pocket.”
* I welcome your comments, so if you wish to contact me, please write to me via The Munster Express or email me at email@example.com.