Question: I work in the private sector for a modest salary, but I’ve always been economical with my money and get along quite well. However, I’m starting to feel the pinch each month and can see my weekly purchase increasing all the time. Some pundits are warning inflation could top 10 percent in the fall, which makes me nervous. I have a car loan and some small savings and have an adjustable rate mortgage. Is there anything I can do to protect my situation in the coming months?
answers: The rising cost of basic necessities like food and fuel has started to impact daily life for many people. In the short term, this will be further exacerbated by continued increases in mortgage repayment costs and higher fuel demand during the winter months.
Unfortunately, wage inflation is significantly lower than consumer price inflation. This affects the purchasing power of most people. The main priority should be to maintain your current lifestyle while meeting your financial obligations.
You have signed deals with financial institutions for a car loan and mortgage. Default on these loans can have a significant impact on your future borrowing ability and make future borrowing more expensive. Therefore, making any possibility of default less likely is the right course of action.
You mention you have some savings, do you have a goal for that? It’s good financial planning to try to build up three to six months’ net worth, put it in the bank, and classify it as an “emergency fund.” This will not keep up with inflation and bring little interest, but serves the purpose of having cash on hand when needed. That being said, it’s wise to invest savings in long-term goals or use them to reduce debt. Do you have an opportunity to cut your car loan from your savings? If this is the case, this will free up some cash flow each month to offset some of the increase in the cost of living.
With regard to your mortgage, you have a variable interest rate. Schedule a call with your lender now to ensure you get the best interest rate they are offering. If you have a strong loan for your home or it is designated as a green property, you may qualify for a lower interest rate. You can also consider a fixed-rate mortgage if it suits your circumstances and protects you against rising interest rates.
Create a comprehensive budget, there are many online calculators available through financial planning websites. Identify areas where you can save on spending. You take the right approach in exploring options.
Question: My employer was very interested in bringing employees back into the office and I really don’t care anymore. It’s a high pressure job and I’ve found I can balance things out a lot better when we work remotely. The daily commute has been particularly tough since lockdown ended. The bottom line is that I really think it would be fantastic to retire earlier. I have a regular company pension, but there are still a few years left until retirement age. Is early retirement a pipe dream or is there a way to make it happen?
Answers: Covid and the different circumstances of the last few years have changed the mindset of many. The question many have asked is what are they working for?
Work-life balance and wellness are key considerations. When decisions are made, everything underpins financial feasibility. Dramatic change doesn’t work if the finances aren’t right.
You must be asking what retirement would be like for you. What lifestyle do you want and can your current plan fund it?
It’s often more realistic to just stop making a plan now. The time frame depends on your calculation of the income from your pension scheme that is required for subsistence. Can you now afford to maximize your retirement contributions? Obviously, by maximizing the contributions in your plan, there is a greater chance of reaching your goal figure faster.
It is important to consider the risk profile of your investment in your decision making. For example, if you are 15 years away from the normal retirement age and this falls to five years, it is advisable to reduce the risk profile of your investment accordingly.
A growing trend is that people never stop working. They only reduce their workload as they enter traditional retirement years.
It’s worth factoring this into your retirement thinking and financial planning.
https://www.independent.ie/business/personal-finance/i-have-always-been-careful-with-money-but-how-do-i-protect-myself-now-that-i-am-feeling-the-pinch-41924080.html I’ve always been wary of money, but how do I protect myself now that I feel the pinch?