Jill Kerby

ALTERNATIVE WEDDING GIFTS FOR AN AUSTERITY AGE I went to some pretty lavish weddings in the boom years: there were never fewer than 150 guests and four bridesmaids; wedding gowns were more likely bought in London, Paris and New York than in Dublin or Cork. l Some of the weddings, actually too many of the weddings, took place outside this country with invitations to attend the nuptials in the Canaries and mainland Spain, Italy, France, the Seychelles (for crying out loud) and even the American Virgin Islands. Some of those Tiger era brides and grooms are now - privately at least – expressing a certain amount of wedding regret. They are deeply entrenched in a general state of negative equity, as opposed to just on the mortgage, having spent €30,000 on the wedding, another €10,000 on the honeymoon and €20,000- €50,000 completely outfitting their brand new homes and garden. (Boy, do they regret putting in all that wooden decking.) Some lessons appear to have been learnt from those experiences however. One couple whose wedding we will attend this summer, will marry in her local church and have the reception with marquees at her mother’s home which has a big garden. Another has booked a lovely country house hotel for just 50 guests in Co Meath; another is having their tiny reception in their favourite Dublin restaurant. Are they the exception? Probably, but modest country hotels, GAA and rugby club halls and restaurants report that their wedding business is holding up very well. A recent survey done of 1200 couples who got engaged since 2010-11 and will marry this year, by an Irish wedding planner website (and reported in Journal.ie) claims that the average cost of a wedding is now just €23,500, with another €5,500 spent on the honeymoon. From previous estimates this is about €10k less than was spent during the boom years. Unless the finance has been in place for some time, however, I would doubt that the bulk of that c€29,000 is being borrowed. Banks are not lending heavily for mortgages, let alone weddings. The survey does say that nearly half of couples are saving money making their own invitations and table favours and brides are skimping more on flowers (but not on their makeup). Average guest numbers are closer to 100-150 than 150-200. One trend that is well established is that only 1% of future brides expect their families to pay for their wedding and 50% of the couples say they prefer cash and gift vouchers to actual gifts. Like my mother and her mother before her, I prefer to give beautiful bed linen to cash, ideally chosen by the bride as part of her bridal list. But I am also sticking to a gift ‘budget’. I’m also willing to give a voucher to couples who already have plenty of goods and chattel so that that they can choose the items they want themselves. (The One4All vouchers I wrote about recently are ideal because of the huge number – over 5000 – retail outlets where they are accepted and because they carry the An Post guarantee and can be replaced if lost or stolen so long as you record the card code.) For brides and grooms on tighter budgets, lower incomes and modest expectations (and are not spending a year’s wages on their wedding and honeymoon) a really generous friend or family member might consider more novel and perhaps modest “cash” options. I know a gardener – short of cash - who offered his labour free and a pallet-ful of plants for a newly married couple with a new home as his wedding gift. They also received restaurant vouchers from a group of friends who promised to try and join them for nights out they otherwise might not be able to afford. I know parents who offered to pay their new son and daughter-in-law’s rent for the first year of their marriage – they already had a baby - as they saved for a down payment for a home of their own. “It’s tough enough that first year with a baby. We thought this was a way to take some pressure off them and to allow them to put that savings where it was really needed,” his mother told me. Other alternative gifts that have arrived for the couple who are marrying in her parents’ garden this summer, included a couple of restaurant vouchers and the offer of the use of a holiday home in Portugal for two weeks in the coming year. “The older friends who offered them their place in Portugal are very generous in letting people use their holiday place and they said they should invite as many of their own friends who can afford the flight to come out too,” her mother explained. “The kids are making a big contribution to the wedding and we (both sets of parents) are also paying. But money is tight for everyone and a gift like this is really thoughtful.”

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JOIN THE ICA ‘MOTHER & DAUGHTER TOUR’ FINANCIAL SEMINARS

 

Do you talk to your grown daughter about important money issues, like health care costs, your pension income or long term care?

Do you confide in your mother about the struggle to keep the mortgage paid and the cost of educating your children? Are there inheritance issues that you’d both like to discuss?

And are there times when you wish your extended family could somehow build a financial Ark together into which everyone could seek refuge some day?

Next Thursday night in the Park Hotel in Dungarvan, the nationwide, Irish Country Women’s Association Mother and Daughter Personal Finance Tour begins, with yours truly presenting the first, free seminar, designed for and aimed at different generations of women.  

The event, which begins and 8pm is open to all women (bring a sister, mother or friend) and will be hosted by the Waterford ICA Federation and sponsored by Standard Life. 

(On May 29, the Tour moves to the Longford Rugby Club just outside Longford Town and then to Dublin on June 13.

I’ve been wanting to bring groups of women together to talk about their money and personal finances in a nationwide tour like this for many years after the idea was raised by some attendees at seminars I gave at the ICA’s rural retreat, An Grianan in Termafeckin, Co Louth.

Some of the older members who attended told me at the end of the seminar that they’d wished their daughters could have been there too, but they were working, or too busy with their young families to join their mothers.

“I know she would have really benefited from all the information and advice you gave, the ladies explained. 

The money and personal finance issues we discussed haven’t gone away since the post Celtic Tiger collapse of the economy, but they have become more urgent and have evolved into complex intergenerational ones.  Increasing numbers of younger family members are dependent on the financial (and especially the child-care) assistance they are getting from their parents.

Too many families are breaking up because of the lack of employment and housing opportunities here. Emigration looms and grandparents are now watching their grandchildren grow up via the Skype connection.

In the past week three new surveys have shown just how significant these intergenerational financial issues have become. The ESRI, the state economic research institution, gathered some very interesting data on the changing spending patterns of income and spending based on different age-led households. 

It showed how households led by people under age 45 have been the hardest hit by the recession and the rise and fall, since 1994-95 of incomes and spending, and especially of mortgage related expenditure.

The income and spending rise on the chart looks positively Alpine, peaking in 2007 and then sharply collapsing, nearly back to the 1994 base point by the end of 2010. In contrast, the over 45’s households, but especially the over-65 year ones, are represented by a steady steep line (of income and expenditure growth) that had not collapsed by which has not fallen back in the same way. 

The charts that illustrate the mortgaged households (and indebtedness) are just as stark:  nearly 60% of the ones led by the under 45s are mortgaged; only about 23% of households led by over 55s are, and fewer than 5% of over 65s. Three times as many younger than older households (by 2010) are in arrears while only about 2% of older households have any negative equity, compared to a 40% average for the under 45s.

Meanwhile, two other reports from the National Economic and Social Council and a health insurance survey conducted by economist Colm McCarthy for Aviva focussed on the huge rates of unemployment of young people in rural Ireland in particular…and how without lots of young employed people, the system of community rates private health insurance is now in danger of collapse.

These intergenerational ICA Mother & Daughter seminars, starting on Thursday but to be held all over the country in the coming year will be held all over the country over the coming year, aim to find ways to cope with our financial positions in the here and now.

I’ll be giving practical information about the best places and returns on your savings; ways to deal with debt and credit issues; the best banking and credit products, how to ensure you get the best value insurance, especially all important health insurance options.

We’ll talk about how important it is for every woman to have her own pension, a Will and how testy issues like inheritance and succession planning are vital to prevent bad feelings within families and to limit the impact of those inevitable taxes.

We’ll also get cracking on with how families can build that financial Ark. 

 

(On May 29, the next leg of the Tour moves to the Longford Rugby Club just outside Longford Town and then to Dublin on June 13.) 

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STILL HAVEN’T PAID THE PROPERTY TAX?  YOU HAVE UNTIL MAY 28

 

 

The first Local Property Tax (LPT) deadline of May 7 has now passed and the final one of May 28, for on-line filing of your LPT declaration is less than two weeks away.

With the majority of households expected to file on-line now (only about a half million households out of 1.66 million have sent them by post) you might want to familiarise yourself with the process now. If you don’t have a home computer, you may want to ask a family member or friend to assist you in making your return.

The on-line filing process is relatively simple: you will need your PPSN or tax reference number, the unique property ID number and the secure PIN number onto the blank three fields that come up on the LPT site at https://lpt.revenue.ie/lpt-web/views/login.html?execution=e1s1 

These details should be on the LPT form you received from the Revenue, but if you don’t have one, you will be prompted on that initial on-line page to fill in your PPSN number, your name and the address of the property.

You will also need to have your a credit or debit card handy if you are paying the tax in a single payment or your bank details if you intend to pay direct debit.  If you want your LPT to be paid directly from your salary or pension and you choose that option from the on-line payment options the Revenue will notify your employer or pension provider to deduct the LPT on a monthly or weekly basis and send the money to the Revenue via Form P30.

Since May 28 is the deadline for your on-line declaration, anyone opting for the employer/pension provider payment option needs to get onto the appropriate person in their company to alert them to their decision. There are penalties both for late filing and for late payment of the tax, which will start being collected from July 1. The payments will continue to December 2013. Next year’s LPT will begin to be collected from January 2014.

Also, anyone who is exempt from the tax or is applying for a deferral (see above Revenue website for qualification terms) also has to fill out the on-line form by May 28.  The deferrals are based on income only; exemptions from the tax are limited mainly to unfinished estates, properties that are not fit for human habitation and unoccupied properties whose owners are in residential care. 

Before you file your LPT declaration, you need to assess what value you are placing on your property and this is still causing no end of confusion for many people.

Just last week I met two women, both of them who had taken very different approaches to their valuation. The first had her home on a working farm with a Revenue estimate of between €150,000-€200,000. But she and her husband had reduced its value down to the first valuation band of less than €100,000 on the grounds that it was unsellable as a separate entity to the farm property itself. “The water we have plumbed into the house comes from its source on the other side of the farm; the sewerage is linked to the farms’,” she told me. A new buyer would have to build a separate road just to get to the house as it passes through the farmyard.”

The other woman’s house is in a new estate outside a large town. Very much like the other, nearly identical homes, hers is right next to a busy motorway exit. She too had dropped the Revenue’s estimate by €50,000.

There are many criteria to take account before you submit your on-line valuation, but should include the Revenue’s own register (www.propertypriceregister.ie); the monthly price changes recorded by the CSO property index (www.cso.ie); the LPT calculators at www.myhome.ie and www.daft.ie LPT which let you see the prices achieved by similar sized and styles of homes in your neighbourhood. Even the energy efficiency rating (the BER) of your home can impact on its selling price and rental prices achieved.

Getting the correct valuation in on time is the least of many people’s worries, of course.

The property tax amounts to 0.18% of the taxable value of the property – a fraction of what most people in other countries pay – but is a serious financial liability for tens of thousands of people struggling to pay mortgages and their other bills.

How open the Revenue will be to pleas of ‘inability to pay’ after the July 1, is yet to be seen. If you do not qualify for an LPT deferral but still intend not to pay the tax, you may want to start preparing your argument now…and hope the queue in front of you is not too long:  every month the tax goes unpaid, the penalties and surcharges grow larger.

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XTRAVISION’S RECEIVERSHIP RAISES GIFT CARD CONCERNS

 

These are scary times for the 1,023 workers in the 152 Xtravision shops around the country:  the receivers have arrived.

From being one of the most popular high street retailers, the movie and game rental chain has been struggling in recent years, not just against the Great Recession, but against the great changes that are happening in the entertainment distribution industry.

It is many years since I rented a DVD (or a video before it). Instead, as the price of films and TV box sets started to drop to the €5-€10 mark, we started buying our favourite old movies and missed telly programmes and gave the expensive new releases that we missed at the cinema to each other and The Child for birthdays and Christmas or we waited for the price to drop and then bought them.

We then started trading our collection with friends who’d bought different films/box-sets to ours.

More recently, we’ve cut down on our purchases and now stream them on Netflix (or the BBC iPlayer international service) for as little as €6.99 a month. Occasionally I buy a film (usually an old black and white classis) on-line and stream it only my computer.

This trend is going global and is as much a feature of the pace at which technology is moving as it is a feature of the need to cut costs and ensure value for money in countries with struggling economies and high unemployment.

The great challenge for Xtravision and other retailers (like bookshops and travel agencies) is how compete against such great change.

According to the joint receivers, Luke Charleton and Colin Farquharson, of Ernst & Young, Xtravision has already “transitioned” from being just a movie rental company to an entertainment centre and it was reported that “the majority” of the shops were profitable. 

Let’s hope so. But until they get the “all-clear”, anyone holding Xtravision vouchers or gift cards may not want to delay using them.  Last January, when the high street music/video giant HMV went into administration, thousands of Irish customers (unlike those in the UK) who bought and received million’s worth of the company’s gift cards mainly as Christmas gifts, found out they were worthless.

Currently, all Xtravision cards and vouchers can be used but the precedent is not good should the company be wound up; even if the majority of individual shops do survive there is no guarantee that the new owners will be obliged to honour these pre-receivership purchases.

The problem of what happens to gift cards and vouchers in this situation has been a concern of the biggest gift card company in the country One4All, founded 12 years ago by Dublin entrepreneur Michael Dawson and now partnered with An Post (which now has a majority 53% stake-holding).

The HMV debacle prompted Dawson to commission a YouGov survey last March of people’s views here and in the UK about gift card security.

A poll of 2000 respondents found that while more people (42%) are concerned about the general safety of gift cards than they were before the HMV collapse, 86% agreed that all gift cards should be regulated. 91% were not aware that such legislation already exists (in the case of the An Post One4All card.) 78% said they’d feel more confident knowing their funds were safeguarded. Nearly 70% said they would be more confident buying a multi-retailer card like One4All (which gives you access to 5,500 retailers in Ireland) than a single store gift card.

These findings are hardly surprising. Money is tight and we want to make sure that if we “pre-pay” for goods via a gift card it isn’t going to disappear along with the unfortunate high street shop.

HMV was one of the biggest names in UK and Irish retailing and it sold millions worth of store cards, without any form of payment regulation.  The One4All card, said it’s CEO, sells €165m worth of the cards in the UK, Ireland and Malta and is planning to expand into France and Italy. It couldn’t do so with any confidence without proper, state-backed regulation to protect the card holders.

Finally, even this survey confirms that some things don’t change just because there’s a recession on:  YouGov survey found that women are still the biggest single group of retail shoppers, that they buy more gift cards than men and are more keen for card safeguards than male buyers. The biggest age group of women buyers of gift cards (again, no surprise) are between 25-35 and then 35-50 year olds.

And perhaps the most interesting, and perhaps heartening statistic of all is that in spite of all the hardship, when it comes to giving, you can never beat the Irish: the average spend on a One4All gift card in the UK is €25 …and €72 here in Ireland. 

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EVERYONE NEEDS A PERSONAL FINANCIAL PLAN…EVEN THE SMALL BUSINESS OWNER

 

 

We take for granted the local businesses that provide us with so many services – the garage owner, the family run supermarket, the post office, dry cleaner, the butcher and chemist. We certainly notice them when they are gone.

There is also too much of a tendency to assume that the owners of small businesses in Ireland are personally doing all right financially, even if the business itself might be struggling in the recession. 

The reality is very different:  last year, five SME’s (with between 50-250 workers) were going out of business every day, a 2-% rise on 2011 figures. Half of all SME loans are impaired according to the Central Bank.

You only have to look around to see the empty shop fronts to see how difficult business is and the SME owner, just like his customers, is struggling with higher taxes, personal pay cuts, a neglected pension fund, a rise in personal debts linked to plant costs and meeting payroll obligations, as well as cancelled life insurance policies, reduced personal household spending and even mortgage arrears.

The difference between the trappings of wealth (an apt description), accumulated with credit and debt, and the genuine thing is going to be revealed as never before when the Insolvency Service opens its doors this summer.

It won’t just be homeowners unable to meet their repayments who will be seeking protection from insolvency; it will also be the local business people and many of them will inevitably find themselves in the new bankruptcy court.

Last Sunday, I was invited to speak about personal finance issues to pharmacists at the Irish Pharmaceutical Conference annual conference.

The timing couldn’t have been better. On the previous Monday I had been at a seminar held by the recently formed Society of Irish Financial Planners (part of a global network of certified financial planners) who are passionate about the need for people to understand that good financial outcomes are part of a process, that involves not just an understanding of their needs and goals, but how to control their fears and emotions too.

These issues, say advisors are just as relevant to people who own businesses and earn higher salaries as they are to the person on the average industrial wage.

‘Sometimes it is just a combination of luck and hard work that results in someone becoming personally wealthy by being a company owner, outside of selling their firm for a profit,” one advisor told me. “Proper planning doesn’t play a big part. The problem is, in order to hang onto that wealth as an active owner, you need to be lucky all the time.”

You may be that person – the local pharmacist, hairdresser, grocer, high tech company owner or farmer.

At the Pharmaceutical Union seminar I asked the following questions and suggested that the answers the participants came up with would give them a pretty good indication of the state of their personal and family finances and how much part luck was playing.

Why not take the quiz yourself…

-       How much do you earn every year?  How much tax do you pay? 

-       Do you save money regularly?  What rate of return do you get from your personal savings?

-       How much does it cost to run your household every year, including educating your children?

-       Do you keep all your company and personal banking separate? Are your personal finances ring-fenced from your business finances? Do you have a Will?

-       Do you have a personal or executive pension? A personal savings account? What is its current value?

-       Do you know what assets and funds are under investment and in what proportion?  Is your pension on target to meet your spending needs and goals in retirement?

-       Do you manage your personal investments/pensions/insurance contracts yourself or do you use an advisor?

-       Does the same advisor (whether a financial advisor or an accountant) provide services to your company as well? Are you happy that they give the same effort and weight to both?

-       How experienced/trained is the advisor? How is (s)he paid?  Are you getting good value advice?

-       Do you arrange an annual review of your personal finances, in the same way that you have a business audit/review (say, at the end of the tax year?)

-       If you don’t have a private pension and retirement plan in place, what will you live on in retirement?

Start-up businesses are often run on shoe-strings with the owners foregoing a living wage, let alone a personal pension. But that’s not a sustainable prospect forever. Everyone needs a personal and family budget, some savings for the future, insurance to cover accidents and health emergencies and a properly devised pension fund and retirement plan.

The small business owner who postpones that plan isn’t doing themselves or their families any favours. 

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