Thursday, December 13, 2007

Step 1: Save money

This is the start of it all.

Even if you are going to go for a 100% mortgage there are a lot of expenses so you should start saving as soon as possible. It is surprising how quickly the time goes by while you are saving, and how much you have to get done in that time.

We found that the step from saving to looking for a house flew by, although we were looking online almost from day 1. As they say - no harm in looking.

1. Keep savings separate

When saving it is a good idea to keep your savings separate from your day to day cash. In month one I had everything in one account and found it way too easy to spend an extra couple of euros on lunches or a pint with friends. After that I had a separate account where I put my savings each pay-day and so found it easier to manage my day to day spending separately from my savings.

2. Save first thing when you get paid

Don't be tempted to put the savings away at the end of the month. I was tempted to do this, thinking I could add the extra I saved to the main bit and so save more. It is better to save it first thing when you are paid. If it is not there you don't spend it. You can always add a little more when you have it.

3. Be interested in the interest

Over about 5 months I managed to add about €150 to my savings by choosing an account with a high interest rate. There are lots of options out there so look around before choosing one - and be wary of charges. What's the point in picking an account with high interest only to find they will charge you more than the interest in charges?
We decided to use rabo-direct, which is a Dutch Bank that trades under that name in Ireland. They are a 100% online bank which is a bit strange at times, but once you have your account set up and get used to their digipass (shown) it is plain sailing. They are currently giving 5% on balances up to 10K, although you are best checking the rate when you go to open your account. Their url is -

4. Where do you shop?

When trying to get a lot of money together in a short time it is well worth shopping around. We have all ready and heard Eddie Hobbs go on about finding the bargains in rip-off Ireland, but half of it is just to stop buying. I laughed as I read Eddie Hobb's mag 'yo and your money' and saw advert after advert for products I am not going to buy. Why? Because I want to keep my money. Obviously the mag needs to make money through advertisements, but the true way to take care of you and your money is not to spend your money on you.

While most Irish have become accustomed to their expensive pamper goods and stopping buying that starbucks coffee on the way to work may save a few euros, the biggest saving I noticed was with were we do our shopping. We have been doing a weekly shop in ALDI or LIDL once a week, and avoiding any other shopping other than milk and bread. This means for two people we are able to live on food costs of under €50 a week, so under €25 each a week, which if I am not wrong would be about two large lattes a day!

It can take a while getting used to the products you are not used to, but when you are sitting in a lovely home of your own it will be well worth it (I write while still renting!).

5. Just the one? No.

Your friends are your friends if you are there or not, so when if you have to skip a few events to save some money it will not matter. I am terrible for being tempted out for a pint, but with a bit of discipline have managed to save that few quid extra too. Give it a try, and if it proves too hard stay home and have your friends round. It'll still be far cheaper than the pub.

6. Stick with it

No more details on that one. Just stay saving.

So, give that about two months so you are aware of your expenses, earnings and savings. Now you get to do the fun part - work out how much you will have saved at what point. Make a chart of the next few months and then you can mark your progress against it. Try to be realistic - remember Birthdays, Christmas etc. It is worse being disappointed missing a goal, than it is to have a lower achievable goal in the first place.

At this stage you can look into any other methods of making some extra cash. Maybe sell those old X-Box games on E-Bay, or design a web site for your bosses wife. Who knows, but you do know there are a few euros out there waiting for you to earn them!

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