Cash-strapped families feeling the pinch can take our 12 steps to getting their budget under control, writes Eddie Lennon
Consumers are being forced to make painful cuts, but the savings they hope for could prove elusive without careful planning. The Central Statistics Office says that almost 80% of households have reduced their spending in the past two years, cutting back on clothes, going out, foreign holidays and groceries.
One fifth of households have delayed or skipped bill payments while 10% have borrowed from family or friends to make ends meet.
Switching insurance and phone suppliers, or the supermarket where you shop, is one of the best ways of saving money, according to the National Consumer Agency (NCA). It said last week that 85% of those who switched in the past 12 months claimed to have saved money.
Ann Fitzgerald, the NCA’s chief executive, said: “The incentive to switch is strong in relation to car and home insurance, with more than nine in ten respondents making significant savings in these areas.”
Here are some ways of getting your budget under control.
CREDIT CARD DEBT
Stubborn credit card borrowings can be one of the biggest drains on your finances. The NCA says it would take two years to clear a debt of €3,500 if you pay back €250 a month at 17.9% interest.
You could switch to MBNA’s Platinum card and pay off the debt interest-free over 10 months. Tesco and Permanent TSB offer interest-free balance transfers for six months. They are unlikely to accept transfers, though, if you have a history of arrears or failed to make the minimum payment in some months.
A credit union loan is a better bet, especially if you are unlikely to clear the debt within the limited interest free periods offered by the credit card companies. Interest rates vary between credit unions, with many charging about 10%.
Do not renew insurance cover automatically. Get a better deal by checking quotes from less well-known insurers, brokers and online providers. The NCA found that 95% of those switching cover in the past year saved money, with average savings being €102.
Surveys by the NCA and other customer organizations regularly exclude online providers such as aoninsure.ie, nononsense.ie, bestquote.ie and quoteme.ie. They tend to offer the best deals for certain types of motorisits, especially for those with claims free history. The Sunday Times has found a difference of up to €600 a year for male drivers and up to €500 for women.
You are probably paying too much if you bought your policy from the lender or broker that arranged your mortgage. The NAC found 91% of those switching home cover in the past year saved money, with the average saving being €84.
Simon Moynihan of bonkers.ie, a price comparison website, said: “It’s in the bank’s interest to tag on insurance [when selling a mortgage], but the same level of cover can usually be found for less through another provider. You need to phone around for quotes, and get details of coverage levels and any deductions they offer.”
ELECTRICITY AND GAS BILLS
Moynihan said households could save between €100 and €250 per year on these bills. “The way the market is at the moment, you need to switch providers once a year,” he said.
“The discounts Bord Gais gives only last for a year and then you go on expensive standard rates. Electric Ireland [formerly ESB] has good electricity tariffs now and again, and has just launched some new ones. These are great for people who have exhausted the big discounts at Airtricity and Bord Gais and who want to switch again.
“Airtricity also has good discounts, but Flogas is by far the cheapest gas supplier.”
TELEVISION AND CABLE BILLS
To get the best value, bundle your television package with a phone or broadband service.
Moynihan said: “Anybody paying for these services separately should try to bundle them together.
“You can get a television, broadband and phone bundle for €60 a month from UPC. Even bundling the two services will generally be better value than buying them separately.” You could save €200 per year.
MOBILE PHONE AND BROADBAND CHARGES
Use callcosts.ie, the online calculator managed by ComReg, the telecommunications regulator, to see whether you are paying too much for your mobile or broadband. The more details you can supply about your usage patterns, the better the site’s suggestions will be. Finding a cheaper mobile deal could save you €200 a year.
FREE TEXTS ON YOUR MOBILE
So-called webtests could save you up to €60 a month. Mobile phone companies allow you to send up to 600 messages a month (600 with Vodafone; 333 with 3; 300 with eMobile and Meteor; and 250 with O2). Log on to your mobile provider’s website and sign up.
If you have a smartphone download the free viber app and enjoy free calls and texts to other Viber users.
Overcharging is more common than generally acknowledged, with mistakes often favouring the bank, mobile phone company or other povider. Jane Fitzpatrick of Guardian Financial Advisers said: “People don’t check their statements from banks, and mobile phone and broadband providers. You should always do this. Query unusual charges, because mistakes are often made.”