BEAT THE RECESSION AND SHOP AROUND

Bank Deposits: Remember the Government is guaranteeing all the deposits in all 6 Irish deposit institutions

– so shop around and get the best rate available and guaranteed 4.75% variable is still available up to Û100k, 4.9% 1yr Fixed and 4% 6m fixed.

Life Assurance: Did you take out your life assurance plan when you were doing your mortgage? You might be paying too much for basic cover and, indeed, you may not now have adequate cover to suit your family circumstances. The cost of Life Cover has come down significantly in recent years so shop around. Get a quote – you will be amazed at the savings e.g. husband and wife both aged 30, both nonsmokers, cost of Mortgage Protection onÛ200k over 20 years is Û13.72 pm.

Health Insurance: Traditionally VHI provided the only health insurance in this country. In recent years BUPA (now Quinn Life) and Hibernian Aviva entered the market. Hibernian Aviva is the only provider to be regulated by the Financial Regulator. 10% reduction is available to everyone regardless of whether they are in a group scheme or not. Hibernian Aviva provide the slightly better product with more hospitals covered and greater benefits. Students up to 23 are covered under family plan as opposed to VHI, which only covers students up to 21. You can switch at any stage even in the middle of the year. Again, get a quote there are huge savings up to Û400 per annum for average family.

Other Recession Beaters
• Avoid cranking up the credit card.
• Get rid of the credit card if possible.
• Avoid getting cash backs.
• Draw cash and use same to pay for normal outgoings.
• Seek cash discounts.
• Draw up a Budget Plan and identify your fixed outgoings.

HINTS IF UNDER PRESSURE FROM FINANCIAL WORRY

Do Not
• Stick your head in the sand and pretend the problem will go away.
• Take on more borrowings without proper advice.
• Avoid creditors, ignore post or phone calls.
• Make false promises or spin stories to keep creditors or banks at bay.

Do
• Communicate, Communicate and Communicate with your banks and creditors.
• Once difficulties become apparent advise your creditors immediately.
• Be truthful and upfront regarding your difficulties.
• Only make realistic commitments – ones that you know you can honour.
• Seek help – get a trusted adviser.
• If you are unable to meet the banks or feel that you are at a disadvantage have an adviser intercede on your behalf and make the necessary negotiations.
• Initiate the first meeting.

The Recession in General

Unfortunately, we are in the midst of a deepening and very harsh recession, with further hardships to be endured before we turn the corner. In Ireland and a lot closer to home we are seeing casualties, with business folding, significant job losses, large drops in income, less money around, incomes across the economy cut, and households struggling to make ends meet.

Our recent budget was a absolute hairshirt with the hand of the ECB weighing very heavily on the government, almost to the point of insistence that no inflationary measures be introduced and that our books must be balanced in the shortest period of time at a very great cost – in short we will suffer a drop in living standards of 10% in 09 with the likelihood that further and higher taxation will be implemented in future years.

There appears to be divergence of opinion in the international community as to what measures are required to be implemented to allow economies to recover. The USA, UK , China, Japan and others seem to favour a policy of Quantitative Easement (print money and credit) followed by a period of monetary rectitude whereas the old European powerhouse of Germany and France seek to get Monetary Rectitude in first and then let the economies grow. Unfortunately, for Ireland, we are in the European camp on this one and this will ensure that try as we may, we will be the last developed country to emerge from this very deep recession.

Yet there are signs of recovery, the financial markets are easing somewhat and the mess in the Banks worldwide appears to be moving to resolution, the stock markets are having a bit of a rally. Obama’s policies in USA appear to be starting to impact. Yes, it is early days and there will undoubtedly be plenty of more bad days before this recession is over, however, it will pass and we will emerge bruised but wiser. The world will keep on turning, life will go on, markets will recover, however there will never be nor can it ever be allowed a return to the excesses of 2005 and 2006 when we all got to be property moguls and behaved collectively like teenagers who had won a massive national lottery and basically we lost the run of ourselves. So yes, we will recover of that we are sure, but let us never forget how we managed to blow the boom and more importantly let us never forget the lessons and the pain /paying associated with our mistakes.

Jim O Kelly QFA,CEB, BFS

Jim O Kelly is executive director and sole proprietary owner of Benchmark Financial Services BMW Ltd, The Square, Ballaghaderreen. Jim Has 30 years experience in the Financial Services industry and has an Hons degree in Financial Services from UCD. Jim also holds Diplomas in Investment Advice and Wealth Management and is a member of both The Institute of Bankers in Ireland and Professional Insurance Brokers Assoc.