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Five ways to save €6000 in one year!

Thursday, 4 February 2010

Liam Croke: Money Expert

Liam has worked in the financial services industry for the past 21 years and seen by many as an expert in the field of personal finance. He is a qualified financial and mortgage advisor.

In the past he has held senior management positions with two well known financial institutions along with one of the "top 5" accountancy practices in Ireland.
Liam gives his advice and wisdom on a daily basis to those who are just starting out to high net worth individuals. He currently works for a financial services company based in Limerick.

He is frequently asked to contribute and comment in all areas relating to personal finance on both national and local radio stations. You will have heard him for example recently on RTE's "The Mooney Show" and on Newstalk's "The Right Hook."
Liam was invited to make a presentation to the Joint Oireachtas Committee on Social & Family Affairs on trends and levels of personal debt in Ireland. He made his presentation to the committee on the 24th June 2009.

Liam is author of 4 personal finance books:

. The best selling "The Mortgage Maze Explained" published by Currach Press in 2006.

. The best selling book "Your Money Your Life - Managing your finances in today's Ireland" published in 2007.

. "I'm Broke! A teenagers guide to Money" - Published by Crabtree and distributed in the UK & USA in 2009.

. "Stash or Splash" which is being released in Ireland and the UK in September of this year.

. Liam previously wrote a weekly personal finance column for The Sunday World entitled "Mr. Cash - How to Save it, Spend it, Earn it" and has also written articles for the Sunday Business Post, the Evening Echo, the Sunday Independent, the Irish Sun, Prudence Magazine to mention just a few.

Liam's Tips: Five ways to save €6000 in one year

1. Are you getting the best from your mortgage?

For those with mortgages this is probably your single biggest monthly commitment but how many of us know what rate we are repaying and how competitive it actually is? Some of you will know the answer to this already and will be very frustrated at what you are paying and what you could be paying.

So let me ask you this Carrie Bradshaw type question?

Can you reduce your mortgage repayments if you switch lenders?

Well the simple answer is yes you can, in a big way at that!


Liam gave us an example with a difference of €190.70 per month
between the two lenders:

Assuming a €250,000 mortgage over a 30 year term. (loan to value less than 70%)

Just think about this for a second, you could save yourself over €2,200 over 12 months by moving from one lender to another! That is a crazy amount of money over a short period of time.

Admittedly this is much easier said than done though in the current environment particularly if you are in negative equity and because some banks are not particularly attracted to remortgage business but it is worth trying to move from your existing lender to a lender with a lower rate as the savings can be significant

Saving Potential for 12 Months - €2,288.40

2. Save big time on your credit card

You can do this by switching to a 0% provider immediately.

If you are paying for example 17.4% on your current card and you transfer to a 0% rate then you will save yourself €71 in interest repayments each month assuming a balance of just €5,000. So, you will save yourself €426 in 6 months alone here.

Even if you didn't switch to a 0% provider, just simply reduced the interest rate charged on your card you could save yourself a ton of money, for example:

Decrease in interest rate by €5,000 debt over 1 year;

1% Save €50
3% Save €150
5% Save €250
10% Save €500
18% Save €900

Let me give you a quick "heads up" if you don't know already about credit card minimum repayments. People think, "well I paid the amount they asked me for on time, aren't I not a responsible card holder?" - Yes, you certainly are from the credit card company's point of view.

They love customers who pay the minimum amount each month.

Why? Your balance outstanding carried forward into the next month accrues interest!!

The minimum payment is normally a certain percentage on the outstanding debt, normally between 2% and 3% with a minimum payment of €10.

The danger of paying the minimum payment is that as your debt gets smaller so does your minimum repayment so your money is effectively being sucked into a compound interest sinkhole.

Let me give you an example, if you had a debt of €5,000 and you were 33 years of age and you paid the minimum amount each month - guess what age you would be when your debt was cleared in full? 65!!! In that time you would have paid over €7,000 in interest.

That is the problem with minimum repayments and people often complain that they seem to be getting no where and they are right, they are.

Saving Potential for 12 months - €852

3. Rent out a room in your property

You can earn up to €10,000 each year without having to pay tax on your rental income under the current rent a room scheme.

Not for everyone but if you have a spare room and you are willing to rent it out to a friend, a relative or even a student for a short space of time (which might become longer) then it is great way to boost your income.

Another source of a lodger could come in the form of a foreign language student who would be coming over to Ireland during the summer or over the year. The potential here for being a host family is €160 per week to take in one student on a full board basis. There are a number of websites available where you can enquire about becoming a host family which may suit some better than having a 'permanent lodger' all year round.

Saving Potential for 12 Months - €2,000 (one room at €40 per week for 50 weeks)

4. Find the cheapest petrol station near you

The easiest way to find the cheapest forecourt in your area for petrol or diesel is buying the free website

You can search and find out who has the cheapest premiums for fuel in your area.

A quick check before you need to fill up should be enough to save you some cash.

For example I did a quick comparison of stations in Dublin 4 and the difference between the best and worst was 21cent per litre.

So, if you used 100 litres each week (about €70) then you would save €21 per week or €84 per month.

If you were to compare and save just 10 cent on a litre then you would save €40 per month!

Saving Potential for 12 Months - €480

5.Cancel your movie/sports channel

A basic TV package should cost about €20 per month going up to €32 if you want more channels, but if you have a sports and movie package this can be an additional charge of €40 per month.

How often do you really watch movies and don't they play the same films over and over? What is there to watch on the sports channel apart for a soccer match on a Sunday? Speedway, cricket, darts, American football, squash?

Saving Potential for 2 Months- €480

That is a total saving then of: €6100.40