Money coach Morgan O’Connell examines our debt-to-income ratios, impulse buying and government financial support in a new weekly advice column for the Irish Sunday Mirror and irishmirror.ie
Debt to income ratio
If you’re looking to get your debt under control, it might be a good idea to start by looking at your debt-to-income ratio.
This is a measure of your debt repayments compared to your gross income per month.
To calculate this, add up your total monthly repayments for all loans, including mortgages and credit cards.
Then divide this figure by your gross monthly income per month.
So, for example, if your income is $2,500 a month and you’re paying off $1,000 in debt, that’s 40%, and that’s a concern.
Banks will look at this figure when assessing your ability to repay loans and mortgages.
The general rule is that it should be 35% or less, and the higher it is, the more likely a lender will raise their eyebrows.
You will also feel it in your pocket as your percentage increases as disposable income begins to shrink.
Knowing this number can arm you with a numerical goal to reduce debt or, even better, strive to become debt free.
Don’t cry over an impulse buy
It seems like every day we wake up to new price spikes due to one global event or another.
Reducing expenses across the board is something many of us will need to consider.
This is also the time to carefully consider impulse purchases. You know this type of expense, the one where a moment of weakness coincides with an irresistible craving for something.
It can happen in the blink of an eye when we shop online. Making it a little harder to buy online makes a difference and gives that extra time to ask yourself “do I really need this now?” »
Try deleting or unlinking all saved cards from sites where you are likely to make impulse purchases. This means you have to enter any card number every time you buy, giving you just that little bit of time to pause and reconsider.
Don’t get taken for a ride
Most people would rather do the ironing or even clean the toilet than sit down to work on their personal finances. I know it so well.
This is often because we feel inferior to those selling financial products, or simply because the amount of information and jargon overwhelms us.
It is nevertheless something you will have to make decisions about for the rest of your life, so it helps to develop a certain degree of awareness and understanding.
For example, if you don’t understand the composition of interest, you will spend more on paying off your debts and incur higher interest rates on the debt you incur.
This has a ripple effect in other areas like savings, planning and retirement and, of course, ownership decisions.
One test I use is to ask others to clearly explain their own financial products and situation to me.
If they can do that, they have their finances under control. If they can’t, it highlights areas they may need to refresh.
Once information gaps are identified, there is no shortage of information out there to help you.
The difference is that the control is now in your hands and not with someone else.
Financial support for caregivers
If you are caring for a child with special needs or an elderly or disabled adult, it is important to make sure you receive all of your rights from the state.
According to Family Carers Ireland, carers save the state €20 billion every year and provide 19 million hours of unpaid work every week.
While many juggle work and care (57%), it goes without saying that financial support is vital for all carers.
Here is a list of some of the main rights of caregivers:
This is available if you are providing full-time care to other people due to age, disability or illness requiring full-time attention for at least 12 months, but does not cover people who are hospitalized , nursing homes or convalescent homes. You are entitled to a free transport ticket with carer’s allowance.
There is a means test and residence requirement and the rate is €224 per week if you are under 66 and rises to a maximum of €393 per week if you are older and/or you are caring for more than one person.
Increases are also provided for dependent children. If you receive other social benefits, this may reduce the carer’s allowance.
This is for those who give up their job to care for someone full time and can last up to two years. You can return to work after this period and your job will remain open, subject to conditions.
Caregiver’s benefit can be paid during this period and is not means-tested like the allowance. The weekly rate is €225 but increases if you are caring for more than one person.
As it depends on the PRSI contributions, you cannot benefit from it, but you can benefit from the care allowance.
If the person you are caring for is under 16, you must receive home care allowance in order to be entitled to care allowance.
Home care allowance
The home care allowance (DCA) is a monthly allowance intended for a severely disabled child under 16 living at home. The child must need ongoing care and attention far beyond what a child of the same age usually needs.
It is not subject to a means test and the price is €309.50 per month.
You will be informed of your options when the child approaches their 16th birthday.
Caregiver Support Grant
This is an automatic annual payment to carers who receive carer’s allowance, carer’s allowance or home care allowance.
It is €1,850 and is paid every June.
Don’t overlook the tax credits available for employing a caregiver for a disabled adult or child.
The cleaning package, including a monthly payment of €35 for gas or electricity and a free TV licence, is available to everyone over 70, but people under 70 benefiting from the carer’s allowance can also do so. claim, under certain conditions.
The best source of information on financial help for carers is the Citizens Information website – www.citizensinformation.ie – but I would always seek help from a real human being from the Department of Social Care and you You can get the direct numbers for each benefit from www.gov.ie.
See more and contact Morgan at www.arrowcoach.ie