Better Living: Sinead Ryan has some simple ideas to help you tackle your household debts
The start of the year brings with it many resolutions, many of them relating to tackling your household debts. Sinead Ryan has some simple ideas to help you get started
The best New Years resolutions are those with small, incremental changes to lifestyle rather than great sweeping plans which aren't sustainable. When it comes to your finances, it's exactly the same. Here are some things to help make yourself financially fitter this year:
Know what you owe
Debt can seem overwhelming, and never more so in January when credit card bills arrive, reminding you of your, ahem, generosity over the festive season. But there's a difference between 'good debt' and 'bad debt', so getting control over the bad is what's important. Good debts are mortgages and car or business loans (they're an investment in your life and are big ticket items you can't save up for). Bad debt is putting day-to-day spending on credit cards and overdrafts. It's also the most expensive kind, with eye-watering interest rates, so clearing it is a win-win for your finances. But first you need to know what you're looking at, so be brave, and write it all down: what you owe, to whom, and by when.
Anything that isn't asset-backed should be targeted first. Work out a realistic payment plan and be disciplined in attacking it. Just as aiming to lose 2lbs a week in weight is healthy, plan, say, €500 extra a month (or whatever you can afford) toward high interest-bearing debts.
Eliminate bad habits
Bad lifestyle habits creep up over time. In financial terms it's letting your money control you rather than the other way round, or assuming all money is the same. Remember anything you put on your credit card is in fact, a bank loan. Visualise having to go in to the bank and plead your case for your purchase - would you give a loan to you?
Day-to-day buys like groceries or lunch should only come from your 'own' money - that is, by debit card or cash. Once off purchases, such as a holiday or a new washing machine, can be financed by credit, but only with a fixed payment plan, e.g. €150 per month until it's gone. A small personal loan from the credit union or bank is far cheaper than a credit card.
Stop tapping! It's handy for purchases up to €30 but it's easy to get carried away and they all add up. Make a resolution to stop and punch in the PIN instead - it'll only take a second longer, but you're more likely to remember it, and get a paper receipt!
Visit the ATM once a week. We get so used to the 'hole in the wall' that it can become a daily routine. Guesstimate how much cash (apart from your card) you'll actually need - coffee, newspaper, lunch, tips etc and withdraw this on Monday. If you've completely run out by Wednesday, you're not budgeting sufficiently. Try again next week - you'll be astonished how much 'cash' you actually use and how much more careful you are about purchases if you leave the card at home, even for just one day.
Bring in good habits
Good money habits are very simple, after all, it's only what your granny did before all that online fancy banking came in! If you're in the habit of impulse buying, for instance, and can't resist a pair of shoes you don't need just because it's 50pc off, then when you're meeting a friend for "coffee", only bring enough cash with you for that. So €20 in your pocket will get you lunch and parking, but the plastic will be crying out to be flexed. Leave it at home and window shop instead.
If possible, grocery shop without kids. Their pester-power is immense. Stick to your list and don't shop when you're hungry. Switch to Aldi or Lidl; their brands regularly top taste and quality tests and your savings will be obvious.
Plan your treats. A night out doesn't have to be dinner, cocktails and an expensive babysitter. Consider early-bird menus, amateur drama productions, signing up to a community fitness, night or dance class and swap babysitting duties once a month with a friend or sister.
Claim your entitlements
Each year, millions of Euro goes unclaimed from Revenue on rebates people are entitled to because they don't bother claiming it, or don't know about it. Taxback.com says an average of €1,048.23 is refunded to their clients each year. Top reliefs include medical expenses (20pc allowed off everything from medicines to GP visits), single-parent tax relief and flat rate expenses for those who buy uniforms/equipment for work.