The cost of living crisis has become so serious that for many people it is now a matter of eating or heating.
Rising energy costs have forced nearly four in 10 people to cut heating or electricity bills and almost one in five to cut back on other essentials, like groceries, according to a recent report by the St. Vincent de Paul Society.
“Fuel poverty is now a reality,” said Eoin Clarke, managing director of switcher.ie.
“The bills are so high that many families turn off the heat to afford food.”
With the rising cost of living likely to be with us for some time to come, and the Ukraine crisis likely to drive up fuel prices even more, what can you do to better manage the rising cost of living if you already have Struggling to make ends meet, or scared you might be soon?
1 KNOW YOUR CASH FLOW
“Get a better understanding and full knowledge of the money that regularly flows into your household – and the money that is spent,” said Michelle O’Hara, regional manager of South Leinster’s Money Advice and Budgeting Service (MABS) – the government agency offers free counseling for people with debt.
The money flowing into your household can include salary, pension and welfare. The money spent can include grocery bills, transportation expenses, childcare fees, mortgage or rent payments, utility bills, entertainment expenses, garbage fees, cell phone bills, and so on.
One of the best ways to find out what you’re spending your money on is to look at your bank and credit card statements — especially if you mostly pay electronically (e.g. direct debit and debit card).
Another great way to track your spending is with a spending diary — where you record everything you spend your money on over a month.
“People often don’t realize how much they’re paying for something, or that something costs as much as it costs, or that the price of something has gone up,” O’Hara said.
“We often set up direct debits for things, forget them — and don’t realize we’re still paying for them,” she said.
2 CUT OUT THE UNNECESSARY
Once you know how much money goes in and out of your household, you should know if you’re spending more than you’re earning — or just making ends meet.
If that’s the case, cut or reduce your voluntary spending — like TV subscriptions, weekend getaways, takeout, coffee to go, weekly lottery tickets, designer clothes, and so on.
It’s important to prioritize essentials (like your mortgage or rent, groceries, electricity, heat, and medication) when your household income is tight.
“One of the areas that can eat up a lot of disposable income is subscription entertainment services [such as video streaming services and TV subscriptions]’ O’Hara said.
“These packages can be very expensive and their costs can increase. It’s always worth calling your provider or another provider to see if you can get the same package at a lower price.”
While it’s always good to save up money for the bad times, the time to set aside — and put your savings on hold — is precisely when you’re struggling to make ends meet.
However, only use your savings to cover the cost of essentials — and resume your savings when your finances improve.
3 DO NOT PAY MORE TAXES THAN YOU HAVE TO
Make sure you’re getting all the tax breaks and allowances you’re entitled to when you work.
This can save you hundreds, maybe thousands of dollars in taxes a year – and put more money into your household.
“If you work, find out if you can get all the tax credits available to someone in your situation,” O’Hara said.
For example, you may be eligible for the Single Person Child Carer Credit (SPCCC) if you are a single person caring for a child on your own. The SPCCC tax credit is worth €1,650 per year and reduces your tax amount by €31.73 per week.
“It also increases the amount of money you can make before you’re affected for the higher income tax rate from €36,800 to €40,800 — if you get the SPCCC tax credit,” O’Hara said.
For parents who are married or in a civil partnership, the home care credit can reduce the family’s tax base and thereby increase household income.
The care allowance deduction of 1,600 euros would be possible if one of the spouses or life partners is a parent who stays at home and the spouses are assessed together.
In addition, the stay-at-home spouse or partner could earn up to €7,200 per year and still be entitled to the full tax credit.
However, if both spouses or life partners purchase, the couple should pay attention to this You cannot take advantage of both the home caregiver tax credit and the increased tax band (which allows married couples who both work to pay the normal income tax rate on up to €73,600 of income, instead of up to €45,800 if only one spouse works).
For a dual-income couple, it may be more beneficial to forego the home caregiver tax credit and instead take advantage of the increased tax rate bandwidth.
Other valuable tax breaks that could put more money in your pocket are the Health Expense Tax Break (where you can reclaim 20 percent tax on the cost of certain medical expenses and 40 percent tax on nursing home expenses) and Flat Rate Employment Expense (tax breaks, you may receive to help cover expenses incurred in the performance of your job).
Lump sum employment costs could be worth a few hundred – and in some cases a few grand – a year.
4 INCREASE YOUR INCOME
If you work, try to get a raise from your boss. You need to be able to make your case if you’re going for a raise, so find out who’s getting paid in similar jobs and with similar experience to yours.
Explain to your boss what you do for the company – and why you think that contribution deserves a raise.
Doing some freelance work on top of your day job could be another way to make some extra money.
Those whose only source of income is welfare should contact their local Citizen Information Center to verify this they receive all the benefits to which they are entitled and that they receive the most favorable benefits for someone in their situation. You do not have to be unemployed to receive social assistance.
You can be entitled to employed family allowance if you have at least one child as a part-time employee – as long as the child usually lives with you or is financially supported by you.
“Sometimes a basic welfare payment unlocks your eligibility for other payments,” O’Hara said.
“With the Working Family Payment, you may be eligible for the Back-to-School Clothing and Footwear Allowance (which helps cover the cost of uniforms and shoes for children who go to school) or the Back-to-Work Family Dividend (which provides financial support for those transitioning from welfare to work) for example.”
Other welfare benefits you may be entitled to include the flat-rate heating allowance (which helps with heating bills during the winter months) or the Exceptional Needs Payment (which covers essential, one-off costs – such as meet out of your weekly income).
Note that as part of the government’s latest cost-of-living package, those receiving the fuel allowance will receive an additional one-off payment of €125 earlier this month.
Another avenue you could explore to earn more income, whether you work or not, is renting out a room in your home. You can earn up to €14,000 a year tax-free by renting out a room in your home or hosting a foreign student in your home—as long as you meet the terms of the Revenue Commissioner’s Rent-a-Room relief program.
Selling second-hand items via donedeal.ie, ads.ie,
Depop and eBay can also help generate additional cash.
“If you’re struggling to pay your energy bills and it’s heat or food, contact your energy supplier as they should be able to offer a solution,” said Eoin Clarke.
“Don’t let two billing cycles build up and become a mess. In some cases, your energy supplier will ensure you get the cheapest rate.
“Your supplier could also put a credit meter in your house.”
Credit meters are electricity or gas meters that you top up with credit and then pay for your energy on the go – instead of getting a bill at the end of the month.
Although these meters can help some homes better control their energy use, electricity and gas costs are often higher than standard post-payment bills. You may also have to pay a service fee using a credit meter.
Get help from MABS (0818072000 or visit mabs.ie) if you’re behind on bills or need advice on how to make ends meet.
“When people realize they are falling behind or falling behind on bills, it can have a powerful impact on individuals, and sometimes they back off rather than do something proactive,” O’Hara said.
“Retreating could mean ignoring the issue or not opening invoices. Understand that you can overcome your position – with the right supports.
“It’s never to late [to sort out a problem] – even if it’s out of control. MABS can negotiate with your creditors on your behalf.
“Or if you have a reasonable income but find you’re getting tight, we can help you with your budget.”
https://www.independent.ie/business/personal-finance/surviving-the-price-squeeze-five-simple-ideas-to-help-you-beat-the-cost-of-living-crisis-41413639.html Surviving the Price Pressure: Five Simple Ideas to Help You Overcome the Cost of Living Crisis