Continuing from last week, in part 2 John Lowe, The Money Doctor, looks at an area where savings can be achieved - the field of discretionary spending .. but this requires discipline.

Consider this: You go to the ATM on Friday afternoon and withdraw, say, €300. Monday morning check your pocket to see how much, if any, remains. How much of this spending can be accounted for, or has it just fallen through a hole in the pocket?

This is where the diary or a track your spending APP will help (you can download the Money Doctors APP for free from the App store or Playstore). Find out what you are spending. Then you will know whether it was frivolous and unnecessary. You may have more important things to do with your money.

Know your position
By now you will know your position and whether meeting your monthly commitments is causing or is likely to cause you problems. You should be totally honest with yourself because the early acceptance of difficulties can be crucial.

Remember, life can throw up mini financial crises on a regular basis so factor some unexpected outgoings into your calculations. It is after all, about obtaining the best value for your hard-earned money.

Examine your options
Mortgages - your mortgage repayments are likely to be your biggest commitment but in terms of interest rate they are also the cheapest. If you are fortunate enough to have a Tracker Mortgage (tracked to the European Central Bank - ECB - rate, currently 0.0%), do not be tempted to switch to any other product.

If, however, you are on a Standard Variable Rate Mortgage, some of these vary from lender to lender. The average standard variable interest rate in Ireland for last September was 2.96% while in the eurozone it was 1.41% - a disgrace in itself - but there are some decent fixed interest rates around.

  • Best 2 year fixed rate 2.3%
  • Best 4 year fixed rate 2.6%
  • Best 5 year fixed rate 2.45%

Check where your rate is and certainly if on the high side, you should first of all consider switching to a cheaper rate but contact your own lender first to see if they are willing to match. Some lenders do not offer the same attractive fixed rates to existing customers – watch out for this too.

If you are not offered the attractive rate, you could shop around if you qualify for:

  • Less than 80% loan to value (no negative equity switches)
  • Have sufficient earning to justify such a switch (generally 3.5 times your annual income for both applicants unless you have professional status)
  • Most lenders will now approve a mortgage up to age 68/70 – this has to be borne in mind if switching.
  • You have a good credit history – no missed payments or judgments.

Check your record
Go to the new Central Credit Register (www.ccr.ie – it's free to do a check on yourself) or Irish Credit Bureau in Newstead, Clonskeagh Dublin 14 – they cost €6 for the report.

They track all loans, record missed payments – the record stays there for 5 years if you miss one payment, judgments – the record stays there for life. Call them at Dublin 2600 388 for details of your credit rating. Email me for details.

Next week in part 3, we look at all the other credit facilities and how to utilise them.

For more financial information click on John Lowe's profile above or on his website.