Since then, a succession of austerity budgets along with salary cuts cost him dear. He responded by tackling austerity head on — identifying ways to combat it — and has so far managed to save his family thousands of euro a year.
A project manager by training, he has used his own system for the past five years saved well in excess of €5,000 a year on his family’s outgoings, without reducing their standard of living.
He argues that it is possible to maintain your current lifestyle, within reason, and spend less money at the same time. The key is to change ingrained habits by not just spending less but by spending smarter.
“By following the techniques, you will change your spending habits and save thousands each year.
“Better still, each year’s savings carry forward into the next year, so you could save tens of thousands of euro over time.”
So, no sooner had the details of Budget 2014 been announced than James got out the calculator again and began doing his sums.
While the Budget will leave most people out of pocket, he says there are ways of getting round the worst aspects of cutbacks and extra taxes.
Areas of saving include the following:
DIRT tax increase from 33% to 41%
How much extra this could cost you: For anyone with savings of €25,000 a 4% interest rate would gain them €1,000 a year in interest. Up to now the tax-take on that would leave them with €670 net. With the increase in DIRT tax, that amount is reduced to €590 — a loss of €80.
James says: “Shop around for a better deposit account. Rates change all the time, check banks online to compare rates. It is possible to save more than the DIRT increase by shopping around.
“We have our savings in several different deposit accounts. Some have a great rate up to €10,000 so we ensure that no more than that is in that account. I have set up a regular saver account to maximise the return. We keep the minimum required for free banking in our current account, with annual savings of around €100.”
Telephone allowance for the elderly scrapped
This could cost an older citizen €114 a year.
James says: “Visit www.callcosts.ie to compare telephone providers. You could already be paying €114 too much to the wrong provider, so switch to the cheapest provider now.
“We shop around annually.
“We are currently getting a great deal for €40 per month with Vodafone and we have fixed broadband and free local/national anytime calls.
“We got a discount for having a bill-pay Vodafone mobile phone also.
“I also use www.SayNoTo1890.com to avoid dialling 1890 numbers.
“I dial the local equivalent to avoid fees as these are not part of free local/national calls. Most 1890 numbers have a local national equivalent.”
He estimates annual savings of at least €75.
Tax increase: Beer 10c. Wine 50c a bottle
Someone drinking five pints of beer and one bottle of wine a week will have to pay €52 extra annually for the pleasure. James says: “Only buy wine on sale and stock up, it has a long shelf-life.
“We buy all our wine at 25% discount. While we didn’t cut back on consumption this habit saved us €255 in the last year.”
The new bank levy will inevitably be passed on to consumers through increased bank charges. This could cost up to €50 per year per customer.
James says: “Shop around for free banking to completely avoid this. Banks’ terms change all the time. We’re with AIB — if I keep €2,500 in my current account I avoid approximately €200 in bank fees. I moved €2,500 from my deposit account to my current account. With Dirt now at 41% this is equivalent to me getting a 13.55% annual gross return — it’s the best use possible I can make of this €2,500.”
James has also identified changes that some people will benefit from:
Capital gains tax relief extended
If you buy an investment property for €150,000 and keep it for seven years and it rises in value to €200,000 the capital gains tax would normally cost 33% of the €50,000 gained, amounting to €16,500.
James says: “If you can afford it, it’s a good time to buy an investment property. Prices are low, capital gains tax free, and rents are increasing.”
13.5% tax credit renovations on home improvements up to a maximum of €3,000.
James says: “If you have already considered home improvements, then take advantage of this saving.” He advises getting quotations from three different builders as a reasonable way of assessing the best value available.
“So as you can see, with some simple smart spending tips, taking the four budget cuts above, you can more than cancel the impact of Budget 2014. You can even gain substantially if you can afford to do some home improvements or venture into property investment.”