TOO MUCH SPENDING ISN’T GOOD FOR US EITHER

ONE half of the population is saving; the other half is in debt. As the quarterly consumer spending and debt repayment statistics from the central bank show, no one is spending more than they have to; even the new car buyers are made up of mostly people replacing their older vehicles via the car scrappage scheme or the huge discounts that the car manufacturers are offering.

ONE half of the population is saving; the other half is in debt. As the quarterly consumer spending and debt repayment statistics from the central bank show, no one is spending more than they have to; even the new car buyers are made up of mostly people replacing their older vehicles via the car scrappage scheme or the huge discounts that the car manufacturers are offering.

Meanwhile, businesses all over the country, already starved of overdrafts and new capital are closing for lack of custom. Yet the nation collectively, in not broke, even if the banks and that state itself is: the latest Central Bank figures show that there is over €93.2 billion in household savings as of February 2011.

Money Express with Jill Kerby in association with Aviva

This figure is down substantially – by €700 million – from January and by over €3 million since last September, which of itself is worrying since it reflects the impact of higher taxes, unemployment but also the fear of the future austerity that the new government is now also committed to by keeping to the existing EU/IMF loan terms and interest payments at least for the next four years.

So what can be done, in the light of this unfortunate state of affairs can be done to at least encourage the heavy savers to ease up a little and take the family to dinner more often, buy a new spring wardrobe, go on a weekend break in our glorious east, west, south or northern counties, or even get the garden landscaped or that kitchen extension?

Is there any way to get those people who have savings as well as earned incomes or pensions, to feel confident enough to stop postponing a purchase or project that in itself isn’t going to do anything to convince foreign bondholders to stop treating us like pariahs or recapitilise our bust banks?

Confidence is certainly the key at this very basic level and restoring it amongst those who have some disposable earnings or savings so that it makes a real difference in your community is where it will start.

I know there is some disquiet about the on-line, discount voucher companies that are operating now in most towns and cities in the country. The offer huge discounts in many cases for goods and services if you buy a voucher and cash it in with the merchant within an advertised period. Some merchants are unhappy at the amount of pressure they now feel under to participate – so widespread are they becoming. Others aren’t happy with the margin they lose to the organisers on top of the discount to the new customer, but I know a number of retailers that I’ve dealt with through CityDeal.ie (which is part of a UK company) who are thrilled at the new business that has come in their door as a result of their participation in the scheme.

The people who buy the voucher (which they only offer every few months) tell other family and friends. The purchaser inevitably spends more than the discount on drinks or dessert if the discount is on the two main courses from a restaurant, for example. They become repeat customers in many cases.

The vast amount of money that we have been saving over the last two to three years – as much as 11%-12% of disposable income at the height of the saving boom last year, has for many older people, who may have been prudent savers anyway (a very good thing) has for some become a habit based on fear and foreboding.

Even pre-retirees, people in their 50s and early 60s, who would have also had more disposable income because they were, as a group, carrying less debt an earned more than 30-45 year olds who are carrying the bulk of the personal debt in this country, have cut back, even though they represent most of the theatre audiences on any given night, the ‘regulars’ in many restaurants and the buyers of anything reckoned to be a luxury: expensive grooming sessions, higher value clothing, jewellery and travel. However, even they are spending less than they did before the recession.

If local businesses – and our friends and family who run them and work in them - are to survive over the next few years we, the people - not the banks and not the government - are going to have step up to the plate and spend some money with them.

Yes, our taxes are going up. Yes, state services will get more expensive and we’ll be paying more for lots of essential things that are out of our control like petrol and much of the food we import. But there are also plenty of opportunities to cut the price of many of the necessities: electricity and gas prices have become very competitive and now the ESB is even in on the game.

Go to www.bonkers.ie to see how you can save on your fuel costs, mobile, landline phones and broadband/TV provider (I switched to UPC and saved over €500). (The bonkers.ie also shows you how to make big savings on mobile, broadband and landline bills and lets you find best current account, credit card and savings rates.)

It will be Easter soon. Be generous. Treat yourself to a CityDeal.ie or LivingSocial.com voucher offer in your community. Take some friends or family along, especially if they’ve been struggling to meet their bills and don’t have a stake in that €93 billion sitting in the country’s deposit banks and credit unions.

It could be a long recession. We need to develop some good spending habits again.

Get better healthcare for less in Offaly. Call Aviva at 057 86 95300

jill@jillkerby.ie