Get Smart - Beat the Blues

Whilst the Xmas is upon us with all the trappings and excesses that go with it, we ought to keep a clear eye on what is most likely to happen in 2008.

Our Banks, who are finding it difficult to source funds to lend out, will be tightening up on credit, in other words the cost of borrowing will be more - that is if extra credit can be obtained.

Our homes are likely to go down in value and we may no longer be able to fund short term debt by increasing the mortgage.

Our job prospects are likely to contract with the cost of labour coming back – wages may not grow and in some cases come back significantly.

Costs will increase, oil related products and services reliant on oil will become dearer.

Interest Rates are expected to increase. Inflation is increasing.

Our ability to spend may be severely curtailed and ultimately our standard of living will be affected.

In short the boom years are over and this Xmas is the last hurrah.

Challenge

How do we preserve or how do we maintain our standard of living in the face of these looming pressures?

Basic Financial “House Keeping” could be the answer.

When was the last time you had a Financial Health Check?
Have you debts all over the place?
Can I consolidate all my short term loans into just one advance?
Could I “Top-up” my mortgage to take out all these short term loans?
Am I getting the best possible rate on my mortgage?
Am I getting a good rate on my Savings?
Is my Current Account costing me too much?
What rate of interest am I paying on my Credit Card(s)?
Savings can be made in several areas.

1. Do not allow Credit Card Debt to build up - - Clear Credit Card every month – saves interest @ 20%pa approx

2. Switch Credit Card if you have an
outstanding balance where introductory offers feature discount for 6 months on trans ferred balances.

3. Open a Credit Union account – excellent value for short term loans.

4. Check your mortgage interest rate – you may have an established mortgage but the better rates have always been given to the new
borrower at the expense of the established customer - cost of switching may be
considerably less than you think.

5. Could your mortgage support a once off clearout of all the small messy loans so that you have only one major financial outlay in the month?

6. On Deposits, good rates are now available eg 3 month fixed rates of 4.85% pa.

Opportunities

Notwithstanding the Doom and Gloom, a downturn such that we are experiencing will present excellent opportunities to grow one’s wealth.

• Better deposit interest rate will be available.
• Property will be cheaper.
• Fewer people will be chasing projects and as such margins will improve.
• Unrealistic Competition will be removed – no more queues to buy houses from the plans.
• Excellent investment opportunities are available in Equity markets.

In short, do not don the hairshirt but be realistic about the way you manage your finances with a view to taking stock and time to curb leakages and at the same time look towards solid long term investments which in time will prove a winner - get independent financial advice.

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.