A little financial planning will ensure you don't feel the pinch so much each month, writes FIONA REDDAN
IT’S TIME to look on the bright side. Yes, last week’s Budget is going to hurt some people and if you’re a public sector worker, it’s going to hurt an awful lot more.
However, the recession does mean prices are coming down for goods and services. If you add in a little careful financial planning, it will mean you won’t feel so hard done by at the end of the month. So, if you want to get your expenses in shape for 2010, here are 10 new year resolutions to help you cut costs and save you some shillings.
GO TO THE DENTIST – NOW
Given that the recent Budget introduced cuts to entitlements under the Treatment Benefit Scheme, if you’re due a visit to the dentist make that appointment now.
From January 1st, 2010, some two million workers with sufficient PRSI stamps looking for a discount on the cost of their dental work will only be entitled to a free dental examination. Under the old scheme, provided that you qualified, you were entitled to a range of discounts, in addition to a check-up, on services such as teeth cleaning, fillings, extractions and root-canal therapy.
From January, all that you will receive is a free check-up and, while this may save you about €50, you will have to pay for additional treatment yourself. So, if you don’t want to pay €80 for teeth cleaning or upwards of €100 for a filling, get on the phone now.
GET SWITCHING
You can save hundreds on everything from bins to mobile phones, from gas to electricity by shopping around, so start off the new year as you mean to go on by switching providers now.
An Bord Gáis is still offering savings of up to 14 per cent on electricity costs if you switch over from the ESB, while Airtricity is also actively targeting households. It promises savings up to 13 per cent if you switch to the renewable energy provider. On bills of €1,500 a year, switching could save you more than €200.
And, while An Bord Gáis may be cheaper for electricity, you may do better to switch to Flogas when it comes to your gas bill. It promises savings of 7 per cent compared to An Bord Gáis, with an additional saving of 2 per cent if you commit to paying by direct debit. The service is available in all areas of the State which are on the natural gas pipeline grid.
When it comes to refuse charges, private operators are typically cheaper than the county council. For example, in south Dublin Panda charges an annual service charge of €64 compared to Dún Laoghaire-Rathdown County Council’s charge of €80, a bin-lift charge of €3.20 compared to €4 and a weight charge of 20 cents a kilo compared to 25 cents a kilo with the DLRC.
SHOP AROUND – FROM HOME
Before you head out to do your weekly shop, fill your car with fuel or buy a new washing machine, take the time to do some internet browsing first. Keeping an eye on price comparison websites can pay dividends in the long-run.
Uchoose.ie offers comparisons on a range of utilities, financial products as well as travel services. If you’re heading off for a holiday in the new year, for example, and are looking for travel insurance, the site would recommend a European annual policy from multitrip.com for just €21.99.
Buyonegetonefree.ie displays special offers and cost saving deals offered in food and grocery outlets throughout Ireland, so you can search for the best buys in your area. This week for example, it reveals that Spar on Parliament Street in Dublin 2 has a six-pack of mince pies on sale for just € 1.
If you still have to do your Christmas shopping, Compare.ie can help you get the best price for a range of products including cosmetics, digital cameras and MP3 players, while Compareireland.ie has a very wide range of products you can check the price of.
For petrol prices, check out pumps.ie, which compiles prices of petrol and diesel offered by stations all over the country. You can even download it to your iPhone. Given the latest price hike due to the introduction of carbon tax, shopping around has become even more important. Earlier this week, for example, some of the cheapest prices were found at Maxol on the Dublin Road in Longford and Tesco in Clonmel.
CUT UP YOUR CREDIT CARD
If you can’t afford to go to the ATM, but you withdraw money from your current account and then purchase a good or service, you can’t really afford it. In 2010, don’t be fooled into thinking that just because you have a credit card, you can still buy what you want. Cutting up or keeping your credit card in the freezer will save you lots in the coming year.
For example, if you spend €5,000 on your credit card next year and can only afford to repay the minimum each month, which can be as low as 2 per cent of the balance, it may take you until 2016 to repay your debt. So think extra hard before you book that skiing holiday you can’t afford.
If you must use your card and aren’t in a position to pay it off each month, keep an eye on how fees are charged. As MBNA customers found out recently, calculating charges on your credit card can be very difficult, so much so that the institution charged an extra €18 million in fees, unbeknownst to credit card users.
Withdrawing money from your credit card is one of the simplest ways to rack up out of control bills. For example, while AIB charges an interest rate of 8.5 per cent on its “Click” card, cash withdrawals are charged a whopping 23.4 per cent, while a cash advance fee of 1.5 per cent of the transaction is also incurred.
Late payments can also send your bill soaring. Postbank charges €15.24 for a late payment and if you go over your credit card limit, MBNA will charge you €12.70.
Moreover, if your repayments are in arrears, credit card companies may hike up the interest rate it levies on your balance.
GET FRIENDLY WITH YOUR CREDIT UNION
With the banking sector still facing serious difficulties and consolidation, and changing business strategies wiping out competition, consumers are going to start paying more for their banking services.
While keen rates may still be available on deposits, banks are already starting to increase the cost of other services such as loans.
Moreover, given how tight banks have become when it comes to lending out money, you may find a more favourable response to a request for a loan for a new kitchen from your local credit union.
REVIEW YOUR HEALTH INSURANCE
With the cost of private health insurance policies soaring, now is the time to reconsider your level of cover. If you’re a member of Quinn or wish to switch to the insurer, by doing so now you can lock into 2009 prices, before it applies a 15 per cent increase from January.
If you have children included in your policy, you may realise that having cover for them in a private hospital is unnecessary, given that up until the age of 15 most children will receive the best treatment in a public facility. So, if you’re paying €274 a child to Quinn Health for its Essential Plus plan, consider downgrading the children to Quinn’s Essential plan, which only costs €155 a child.
Similarly, you may find that you’re prepared to go forgo elements of your cover at the moment, such as full cover in a private hospital or good outpatient cover. Just remember before you make any change that if you wish to upgrade later on, waiting periods may apply.
BUY IN A LIQUIDATION SALE
With more and more businesses falling foul of the recession, the number of liquidation sales is on the rise and you can expect to see more in the new year. While there have already been some high-profile property sales due to the collapse of developers, this flow should continue. For example, Kavanagh Fennell has a range of properties for sale from firms that have gone into liquidation, including holiday homes on Hook Head in Co Wexford, which are on sale from €145,000 and terraced houses in Co Westmeath from just €90,000.
Wilsons Auctions sells a wide range of products in its auctions, including furniture, wine, cars, antiques and art. Tomorrow, it will hold a monthly disposal auction in Dublin, which will include a range of motorbikes, quad bikes, desk top computers and office equipment.
The collapse of car dealers means there is a glut of cars waiting to be sold on forecourts all around the country. Merlin Car Auctions regularly holds sales of cars while, in mid-January, the stock of car dealer EP Mooney, which went into liquidation in November, is expected to go on sale. The auction will have about 400 vehicles from the firm, which had franchises for numerous dealers including Opel, Volvo, Honda and Hyundai.
ASK FOR A GENERIC DRUG
The cost of pharmaceuticals is only going one way – up – and the Budget hasn’t done anything to relieve the expense of prescriptions on families. For those with long-term medicine needs, the increase in the monthly threshold for the Drugs Payment Scheme from €100 to €120 will start biting from January.
If you have a medical card, from April 2010 you will have to make a €50 cent contribution towards the cost of prescriptions following changes in the Budget. The charge is subject to a monthly ceiling of €10 a family.
So, to try and keep your costs in check, consider asking for a “generic” version of the drug you need. When drugs are first launched, they are exclusive to the company that develops them, but when the patent ends any pharmaceutical company can start making generic versions, which are often sold at a fraction of the cost. While some pharmacies don’t stock a broad range of generics, shopping around may allow you to find those that do.
And, if you’re heading North to go shopping, you could also consider buying everyday drugs such as paracetamol or aspirin in Tesco, which sells its own-brand products in the UK at very low prices.
SAVE FOR IRELAND
If you want to help “stimulate economic recovery and create employment” – while at the same time making a decent return on your investment – you might consider investing in the National Solidarity Bond in 2010.
Announced in the Budget, the bond will be used as an additional source of funding for capital investment and will be targeted at small investors. Both the Department of Finance and the National Treasury Management Agency (NTMA) are working on the details of the bond, but it is expected to be open for investment early next year.
While government bonds are offering attractive returns, smaller investors can find buying gilts too complex and expensive a process, so the new scheme should appeal to many.
The bond will be available in addition to the range of “State Savings” products, which include savings bonds, savings certificates and prize bonds, and it will be sold by An Post on behalf of the NTMA via the internet, telephone and at local post offices.
Once up and running, investors will be able to choose to invest in the bond for a period of five, seven or 10 years, and interest will be paid annually. Like most savings products, you will be able to either lodge a lump sum into the bond or make regular contributions.
With investors receiving returns of up to almost 6 per cent on government bonds, savers may be offered a decent incentive under the new scheme.
In addition, investors will be entitled to “a final redemption bonus” when their investment matures, to encourage them to leave their funds invested for the full period. Watch out for the Finance Bill for further details on how the bond will be taxed.
DITCH THOSE COFFEES
It’s not good for you, it’s expensive and it’s bad for the environment, so start as you mean to go on by quitting your daily (thrice daily?) cup of coffee. With a coffee costing about €3 on average, buying just one every day you work can add up to €60 a month or more than €700 a year. If you have a more regular habit, you could be looking at wasting serious money.
If the thoughts of going back to instant turns your stomach, you could consider investing in a decent coffee machine. One option is to club together with colleagues to buy a Nespresso machine, which delivers tasty brew at a fraction of the cost of coffee outlets.
Kitchendresser.net has a Krups machine for €149.95, with free delivery, while you can buy the coffee cartridges on eBay.
