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Sundaytimes

Don't be jobless and clueless

With unemployment figures on a relentless upward path, it's a good time to get your finances in order, writes Niall Brady

Unemployment has soared to its highest level in 17 years, with almost one-third of men under 25 out of work.

More jobs are expected to be lost in banking and the public sector in the coming months.

Ernst & Young, the accountants, said last week it could take until 2030 to restore the full employment of the Celtic Tiger. Neil Gibson at Ernst & Young said: "About 160,000 jobs have been lost in construction since 2008 and only 22,000 new jobs are forecast to be created in the industry between now and 2020.

The Irish Business and Employers Confederation (Ibec) is more upbeat, predicting its members would increase employment to pre-crisis levels by 2016. Danny McCoy of Ibec said: "Companies have ambitious employment and investment plans for the next year and the period out to 2016. Exporters are investing heavily again."

We advise on how to plan your finances in a tough jobs market.

RETAIN ACCESS TO YOUR SAVINGS

Experts say this is vital in case you lose your job. The best-buy savings accounts all require savers to tie up their cash for up to two years and many impose strict penalties or allow no access at all.

Some accounts that appear to be instant access contain restrictions. For example, AIB Direct Deposits drops the rate on its Easy Access Reward account from 3.45% to 1% if you make more than two withdrawals in 12 months.

Simon Moynihan of Bonkers.ie, a price comparison site, said: "Foreign-owned banks are the only ones offering realistic on-demand accounts." He recommends RaboDirect, which pays 2.4%, Nationwide UK (Ireland), which pays 3%, and Ulster Bank, which also pays 3%. Northern Rock is another option, paying 3.25% with a minimum deposit of €1,000.

"There are some caveats" said Moynihan. "You need €2,000 to open the Nationwide account and you only get six withdrawals per year. You'll need to keep at least €15,000 in the Ulster Bank account or it will pay you just 0.01%.

OVERPAY YOUR MORTGAGE

Some lenders, such as KBC Bank, allow borrowers who have overpaid to take payment holidays or even to reclaim the overpayments when they are short of cash - if they are between jobs for example.

Liam Ferguson of Ferguson & Associates, a broker said: "Tbhose with offset mortgages can take back overpayments. KBC has a "redraw" facility that allows you to reclaim overpayments at any time on request, even if you are in negative equity. Ulster Bank has a standard clause in most lending offers that allows you to apply for a payment holiday of up to three months after making all payments on time for at least 12 months, although it is at the bank's discretion."

Borrowers should remember that during a payment holiday, interest is stil accumulating and is added to your loan.

The above is an excerpt from page 11 of The Sunday Times Money Section as printed on 27th November 2011

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