Burning cash
A lot of people like Alison are earning good money yet still seem to struggle with their finances -- but some simple changes in spending habits can make a huge difference, writes Carissa Casey
Money worries: many are becoming stressed about mounting bills and debts that are getting out of control (Picture posed)
TWENTY-eight-year-old advertising executive Alison Moore (not her real name) is in a state. Her financial situation is so precarious, she doesn't even want to think about it.
She struggles each month to pay her mortgage, has maxed-out her credit card and owes money to her parents. She has no savings, no pension and is worried that the economic gloom could put her job at risk.
"Until now I had a healthy case of denial going on," she says.
"Everyone keeps talking about job cuts and credit crunches and negative equity. I would rather not know. I think if I lost my job, I'd die."
Alison is not alone. According to Beth Fitzpatrick of Dublin-based Access Counselling, a lot of people are suffering from severe financial anxiety at the moment.
At the National Counselling Institute of Ireland, policy director Declan Carey, says referrals to the Money Advice and Budgeting Service have soared in the last few months.
"It's been so easy for people to get into debt. Now the economic climate has changed and panic is setting in.
Alison hasn't considered the recent rise in fuel prices, which will inevitably hit home this winter. She remembers the €1,500 management fee she has to pay on her one-bedroom apartment in January next year. She describes a "dodgy period" last Christmas when she moved money from her credit card to make her mortgage repayment.
"I don't really know where my money goes. It would probably be good if I sat down and worked that out," she says.
Alison has about €1,500 after her mortgage payment each month. She goes out on average twice at the weekend and spends about €100 a night. That's over half of her disposable income.
Going through bank statements, she notices she keeps withdrawing €20 from ATMs. "I've no idea what I'm spending this on although it's more than likely coffee. That's e3.25 every morning by 20 working mornings a month which comes to €65. How have I been spending €65 a month on coffee?"
Michael Culloty of MABS reviews Alison's first attempt at a budget. "She's in a good place, in that things haven't gotten totally out of control," he says.
"The first thing she needs to do is sit down and work out an accurate budget of her non-discretionary payments, that means no luxuries. There's no allowance in her budget for car tax, car service, medical bills, that sort of thing. She needs to put all of those things in there," he says.
Lunches
Mr Culloty points to a number of areas where Alison can cut spending. He asks whether she really needs the cable TV package which costs her €54 a month. He suggests she saves at least some of the €60 a month she spends on lunches by bringing in sandwiches to work.
"As for the credit card, I suggest she changes supplier and moves to someone who will give her interest-free credit."
Once she's cut back on her discretionary spending, Mr Culloty advises her to get saving.
"If she gets made redundant, her first port of call must be to her mortgage supplier," he says.
On the 'Money makeover' section of the www.askaboutmoney.com website, most of the people posting believe that with €1,500 to spend after her mortgage payment, Alison is far from on the breadline.
Alison rarely watches TV, she says, and doesn't know why she has the full movie package. By cutting back on the cable service and the morning coffees, she realises she has saved the equivalent of her apartment's management fee.
"I thought I'd have more money as I got older but now I'm going to have less.
"I half suspected my spending was out of control. I suppose it's about thinking more about where you're spending money. My mum is always going on at me to open a credit union account and I think I will look at doing that."
- Carissa Casey
