Money Times - 13/05/09

Posted by Jill Kerby on May 13 2009 @ 23:09



All over the country, PAYE worker’s jaws are dropping this month as their weekly or monthly pay packets or bank statements are opened and they discover just how much the income and health levies, the higher PRSI income ceiling (€75,000 instead of €52,000), the hopefully, temporary loss of mortgage interest relief and of course, for public sector workers, the pension levies that were introduced last February that are now taking such a big chunk out of their take home pay. 


If you are now struggling to meet your monthly bills you should be cutting back as much as possible - it’s only going to get worse after the next round of tax increases that might include a property tax, carbon tax, child benefit tax, etc as well as higher income taxes. 


If you are a typical earner your two biggest outlays (after taxation) is housing and food: regarding the former, especially if you are not getting the full benefit of the ECB rate cuts or have had your mortgage interest relief cancelled, you should speak to your lender and try and temporarily extend the term of your loan and/or revert to paying interest-only payments to lower your monthly outlay. 


Meanwhile, food prices are still coming down, but cutting out processed food, junk food, eating in more than eating out (including work lunches) and of course, being diligent about comparison shopping, means that you should be able to cut your food bill by at least 10% to 20% from last year’s levels.  A typical family spends over €10,000 a year on groceries; and such cuts represents a savings of between €1,000 and €2,000.  




Another huge outlay in this country is the cost of running a car. Plenty of headlines have been written about the benefits to our pockets, health and the environment if we would simply ditch our cars and start walking, cycling and using public transport again. 


That’s all very well, but cars are very useful things if you don’t have access to decent public and even if you do, cars are very handy for picking up and delivering children and groceries and doing other necessary errands. (It also rains a lot in this country -  my excuse for being a fair weather cyclist and  pedestrian.)


However untenable it may seem at first glance, these are all reason why I think it makes sense to consider substituting someone else’s taxi for your own car in these trying financial times. 


According to the Automobile Association – based on their latest survey from June 2008 (see http://www.aaireland.ie/infodesk/cost_of_motoring.asp) – the annual cost of running a new, middle range family car worth c€24,500 is about €9,500 a year when the insurance, road tax, interest on capital repayments, depreciation, NCT, licence (over 10 years), indoor garage costs, and AA subscription is taken into account. However, this doesn’t include the cost of petrol, which could easily add another €2,000 a year to your bill, depending on your mileage and where you make your purchase. 


That total figure,  €11,500, can work out at €950 a month, €221 a week or €31.57 a day, an expense that wouldn’t necessarily reduce by much even if you do try to substitute unnecessary trips by walking or using a bike.


Instead, you could rent a Ford Focus ‘people carrier’ for five days for as little as €153 right now; multiply that by 52 weeks and it would only cost €7,800 (not including fuel).   But even this is a lot of money especially if you know that your car will lay idle for more than just two days every week. 


So why not consider substituting your local taxi service for your car?  This may not suit parents who are delivering small children to schools and simply can’t get them transported by foot, bus or bike, it still deserves consideration by everyone else who lives within a few kilometres of their work or mainly uses their car for domestic purposes. It would take a great many taxi trips to spend €30 or €35 every day, ie the €7,800 to rent a car, or the €11,500 to run your own. 


Even just the insurance, road tax, NCT and petrol on the AA’s example of a €24,500 family SUV amounts to nearly €3,900 a year, or over a tenner spent on taxis for every day of the year!


Until this country adopts the wonderful, cost efficient car clubs that exist in the UK (about which I have written in this column), your local taxi firm, if there is one in your neighbourhood, village or town would be only too delighted to set up an on-going tax account for you and your family.  It does require the loss of some driving spontaneity, but such a service would undoubtedly come at a generous discount too. 





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