How we saved this couple almost €1,600
It's Your Money
Catherine Hanly and Evan Curran are a young couple from Co Westmeath who are keen to save a few bob – as they feel doing so could help them improve their lifestyle.
Both are in steady jobs. Catherine is a health worker and Evan is a civil servant. Despite this, the couple find themselves with very little spare cash at the end of each month. They bought a two-bed terraced house at the height of the boom which is now worth less than half what they paid for it.
The couple, who tied the knot three-and-a-half years ago, dream of building their own house in the country. Though they have some savings set aside for their dream home, they would like to have a bit extra to enjoy the day-to-day.
The Sunday Independent teamed up with the Irish Brokers Association (IBA) and the personal finance website, Bonkers.ie, to find out how Catherine and Evan might save some of their hard-earned cash – and between us, we saved this couple a whopping €1,580!
Here are some ways the couple could save money.
Private health insurance
Evan and Catherine are feeling the pinch from the hikes in private health insurance. The couple paid €1,863 for Laya Healthcare's Company Care Starter last year and it will cost them €2,206 for their cover this year – a price increase of almost a fifth.
Company Care Starter covers the couple for care in public hospitals, as well as some private hospitals. The plan also covers half of the cost of everyday medical expenses. Catherine and Evan said they would be happy to sacrifice cover for GP visits to bring down the cost of their insurance.
"If the couple wanted to trim their costs back to the lowest cost possible, but still remain covered for public and private hospitals, they could look at Aviva Family Value, which costs €850 per adult," said the IBA's Dermot Goode, who runs the cash-smart website healthinsurancesavings.ie.
If the couple opted for Aviva Family Value, their annual bill for private health insurance would come to €1,700 – which is €506 less than what they're currently paying.
Another option recommended by Goode is Glo Health's Better Plan, which would cost the couple €1,830 a year – and save them €376. This plan doesn't include cover for routine medical expenses.
The couple renewed their plan with Laya last month. "The couple need to be aware of the annual contract rule – that is, they are now locked into this contract with Laya and whilst they may be allowed to change plan, Laya may not allow them to cancel their contract mid-term," said Goode.
If the couple cannot switch to another health insurer but can switch to another plan within Laya, the alternative Laya plan advised by Goode is Total Health Choice. This plan would cost the couple €2,036 a year – a saving of €170 on their current plan, according to Goode.
"This plan offers better overall cover at a lower price with the same provider," said Goode.
Mortgage protection insurance
Catherine pays €34.10 a month in mortgage protection insurance. This cover, which adds up to a whopping €409.20 a year, includes life cover – which would repay the mortgage on the couple's home should she die before it is paid off, and serious illness cover – which would usually repay the mortgage should a serious illness stop her from repaying it.
The serious illness cover is the most expensive part of Catherine's mortgage protection insurance, costing her about €24 out of the €34.10 a month. Catherine is in good health however. She does not have any medical conditions, she has not been in hospital with a major illness recently, and she doesn't smoke. Though you can never predict who will come down with a serious illness, or when such an illness could strike, the couple should ask themselves if Catherine needs serious illness cover in her mortgage protection insurance policy, particularly given its expense.
If Catherine strips the serious illness cover out of her mortgage protection insurance, she could get a policy for €10 a month from Zurich Life, according to the IBA's Kidd Insurances. This would reduce the annual cost of Catherine's cover from €409.20 to €120 – saving her €289.20 a year. As there are another 20 years left on the mortgage, Catherine would save almost €6,000 over the lifetime of the mortgage if she opted for this cover.
If Catherine does not wish to give up the serious illness cover in her mortgage protection insurance policy, the cheapest quote which Kidd Insurances could secure for her was €32.38 a month from Zurich Life. This would save Catherine €2 a month – or €24 a year.
As the mortgage is in Catherine's name, the quotes from Kidd Insurances are for mortgage protection for Catherine only. It would be prudent of Catherine to get some independent financial advice before giving up serious illness insurance.
Catherine and Evan paid €594 for their digital tv package (the Sky Family + Sports) over the last year.
"As Catherine and Evan do not have any children, they could drop the Family 'extra', which includes the children's channels," said Simon Moynihan, communications director with Bonkers.ie.
If the couple were happy to give up Sky Sports as well and opt for the Sky Entertainment package, they could save €270 a year, according to Moynihan.
Sky Entertainment, which includes channels such as RTE, BBC and Sky Atlantic, costs €27 a month – that works out at €324 a year.
Another option which Moynihan recommended and which would generate more long-term savings for the couple is a Saorview and satellite tv combo box.
Although you'll pay up to €350 in set-up and equipment costs for the box in the first year, the service is free after that. Despite the initial costs, the couple would still save €244 in the first year with this combo box – based on what they're currently paying for digital tv. Furthermore, the couple would save €594 a year from the second year onwards as the service is free.
"Combo boxes combine Saorview and satellite tv in one package with one remote," said Moynihan. "The package includes dozens of channels including RTE, BBC and a range of satellite channels."
Broadband and home phone
Catherine and Evan have a broadband and home phone package with Vodafone which cost €525 last year. Their package includes a 40GB download allowance, off-peak national calls and off-peak calls to landlines in Britain and the US.
Moynihan found that the couple only use about 1.5GB a month and rarely use their phone package to make calls. Moynihan therefore recommended Vodafone's Simply Broadband, which costs €30 a month – or €360 a year; saving the couple €165. This plan offers unlimited broadband but does not include any phone calls. They could, however, use their broadband package to make free phone calls over the Internet.
"Catherine and Evan are fortunate to have good quality broadband over their phone line," said Moynihan. "With good broadband, online services like Skype and FaceTime offer excellent free voice and video alternatives to call packages. Their data usage at 1.5GB per month is low, but maintaining a decent data allowance is usually a good idea."
Catherine and Evan both bank with AIB – and between them, the couple paid current account fees of €145 over the last year. If the couple were happy to move their current accounts to Permanent TSB, and could each lodge €1,500 into their current accounts each month, they would save themselves €145 a year in bank fees, according to Moynihan.
"If you can lodge €1,500 per month to Permanent TSB's current account, you will not be charged any transaction or maintenance fees," said Moynihan. "You do not need to maintain a minimum balance and the €1,500 waiver can be met with multiple lodgements."
Catherine has about €6,000 savings in her credit union. As her credit union only paid a dividend (the credit union equivalent of interest) of 0.5 per cent last year, she made a return of about €30 on these savings. Catherine may also have to pay tax on this return, depending on the type of credit union account she has.
Catherine could earn about four times more interest elsewhere – and still be able to withdraw money from her savings at short notice.
For example, KBC Bank's Smart Access Demand account pays 2.6 per cent interest on savings of between €3,000 and €100,000. At that rate, Catherine would earn about €105 interest a year after tax on savings of €6,000.
The couple are currently on Airtricity's Smartsaver Standard Plan and spent about €780 on their electricity over the last year.
They could save €68 a year if they opt for Bord Gais's discounted electricity deal, according to Moynihan. This deal, which offers a 10 per cent discount on electricity rates, is available to new and returning electricity customers, according to Moynihan. Under this deal, the couple would pay €712 a year for their electricity over the next year – as long as their electricity usage is similar to last year.
Catherine and Evan pay €344 a year to insure their home. Gerry Daly, general manager with Kidd Insurances, found a home insurance policy which was €62 cheaper. The Kiddsure Select Home Product costs €282.10 a year.
The quote includes an excess of €500 which means the couple will have to pay the first €500 of any claim.
How we helped make the savings
THE quotes in our financial makeover were valid at date of publication and are based on information supplied by the couple at the time.
Certain assumptions were made when putting together these quotes, including the features of insurance cover required.
Where an individual is in the middle of a fixed-term contract, there may be a breakage fee. This in turn would impact on any savings which could be made. The savings outlined are for this year only.
Some of the prices outlined may come with conditions, such as minimum contracts or payment by direct debit.