Beating the Rising Cost of Living: Strategies to Navigate Inflation and Protect Your Finances

The cost of living has been on the rise, affecting consumers worldwide, including Ireland. Factors such as the COVID-19 pandemic, Brexit, and supply chain disruptions have contributed to the inflationary pressure, resulting in higher prices for essential and non-essential goods and services. In this article, we will explore the impact of inflation on personal finances and provide practical tips to help you manage the increased cost of living.

Understanding Inflation 

Inflation is the term used to describe the rise in prices over time, which diminishes the value of money. This means that you can purchase fewer goods and services for the same amount of money than before. With inflation reaching 9.5% in Ireland as of October 2022, it is crucial to be aware of its implications on your finances.

Strategies to Manage the Increased Cost of Living

Make a budget: Creating a monthly budget allows you to track your expenses and identify areas where you can reduce costs. The 50/30/20 rule is a helpful budgeting guideline that suggests allocating 50% of your income to essential items, 30% to wants, and …

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Understanding the Impact: How Interest Rate Hikes Affect Irish Mortgages

In this blog, we journey through the intricate world of interest rates and their profound influence on our mortgages. With recent rumblings of potential interest rate hikes, it’s essential to understand how these changes can impact our financial lives. We’ll explore the key aspects of interest rate hikes, their implications for Irish mortgages, and provide real-life examples to help you grasp their significance. So, let’s dive in and gain a deeper understanding of this critical subject.

 

The Basics: Interest Rates and Mortgages

Before we delve into the impact of interest rate hikes, let’s refresh our understanding of the fundamentals. Interest rates are the cost of borrowing money, and they directly affect the amount you pay on your mortgage. When interest rates rise, the cost of borrowing increases, leading to adjustments in mortgage payments. Conversely, when rates decrease, mortgage payments may become more affordable.

The Ripple Effect: Monthly Mortgage Payments

Interest rate hikes have a direct impact on your monthly mortgage payments. As rates rise, your mortgage interest charges also increase, resulting in higher monthly payments. For example, let’s consider …

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Comparing the 2008 Financial Crisis to Recent Interest Rate Hikes in Ireland

In this blog, we look at insightful parallels between the infamous 2008 financial crisis and the recent interest rate hikes in Ireland. While each event has its unique characteristics, examining their similarities can provide valuable lessons for navigating the current financial landscape. We’ll explore the key resemblances between these two periods, highlighting real-life examples to deepen our understanding. So, let’s dive in and uncover the lessons history has to offer.

 

The Domino Effect: Fragile Housing Markets

Both the 2008 financial crisis and recent interest rate hikes have exposed the vulnerability of housing markets. In 2008, a burst in the housing bubble triggered a wave of foreclosures and plummeting property values. Similarly, interest rate hikes can impact affordability, leading to a potential slowdown in demand and a correction in housing prices. These dynamics remind us of the importance of balanced and sustainable growth in the housing sector.

Financial Strain: Increasing Debt Burden

During the 2008 crisis, many homeowners found themselves burdened with high levels of debt. Adjustable-rate mortgages with low …

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What does “Get Rich Quick” even mean?

It is not uncommon that you probably have stumbled upon these ads where people claiming, “Want to know how I got rich quick? Watch my video for more!”. They show off their riches while standing in front of large mansions and Lamborghinis and if you continue to listen, they most likely tell you an inspirational story about how they came from rags to riches. We know this cannot be real, but we all have a small voice in our head saying, “Is it actually possible?”. Are they actually teaching us useful financial advice that could put us in jeopardy or are they just a regular old conman?

We may typically think of a conman to be the same thing as a thief or a liar but a true conman does not force us to do anything. They do not forcefully steal our possessions away from us, rather they trick us into giving up our own things. They are manipulators and we are obsessed with them. We see them in movies and comics but fail to see them in our day …

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Newstalk features Irish Mortgage Brokers

We were asked to discuss the idea of a continuation of an eviction ban on Newstalk the other week. The article they wrote and the radio segment are here. The issue with many types of ‘bans’ or ‘prohibitions’ is that they don’t work. Some we do in spite of this such as the prohibition on hard drugs like heroin, yet despite this drugs are regularly available in prisons in most of the same countries which have these bans, and I think we can all agree that prisons are one of the most controlled environments in civil society.

The problem of this when it comes to housing is that you could then have people who are expecting to move into a house or who want to sell a house and they inadvertently become victims of policy, these are real people living real lives and in taking sides on the side of the person who is renting a home we forget about them with the defense of ‘what about homelessness’.

The good news is that most of the people who move …

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The Economy of Czechia

Czechia is an advanced country that ranks among the countries with the most developed economy in the world. Czechia is a member of the OECD (Organisation for Economic Co-operation and Development). It is based on industry and services (60%), agriculture and other primary production.

The main industries are automotive manufacturing, electronics, mechanical engineering, high technology , steel manufacturing, transportation equipment, chemical manufacturing and pharmaceuticals.

The main agricultural products are cereals, vegetable oils and hops. Key mineral resources mined in Czechia include black and brown cleansing, kaolin, building materials and uranium. The most important product of the Czech economy is Škoda Auto.

Czechia has the most self-employment per population in Europe. The average wage as of 2021 is around CZK 37,800 (EUR 1,540). It is among the countries with the lowest proportion of people at risk of income poverty in the EU. Unemployment and state indebtedness in Czechia remain among the lowest in Europe.

In the first quarter of 2015, the Czech economy grew the fastest among the EU states. The Czech economy grew by 3.3% in 2021 and the following …

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Are Irish banks the most generous in Europe?

Mortgage rates are rising, but at the time of writing they are higher in Germany than in Ireland, that isn’t the strange bit though.

What’s really strange is that the risk free rate in Ireland is higher than the mortgage rates available. In other words, financially speaking it is safer (if by ‘safe’ you mean accepting a lower return) to lend to a person in Ireland on a house than it is to lend to the Irish government. This is insane and it won’t last.

The response will need to be one of two things.

Banks stop lending Banks raise mortgage rates (or perhaps a little of 1 and a good dash of 2).

Take a look at government bond yields from last week, if a bank has a choice they can lend to the Irish government at 2.8% but they lend to people at closer to 2%. This is typically seen as an impossibility in financial markets so it will only last for a short time because as a rule there is no arbitrage, markets close them down …

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The economy of Heppenheim

Heppenheim has a lot of commercial companies. The INFECTOPHARM for medicals. This company has approximately one hundred and eighty three employees and makes 121,4 millions in sales a year. The next one is KLN Ultraschall (builds ultrasonic devices). This one have two hundred employees and makes 50 millions in sales in the year. The third one is Odenwald Quelle GmBH. This company produces various types of beverages. There are one hundred eighteen employees and makes 22,42 millions in sales a year. And the last one is Lies Elektroanlagen. That’s a global company specialising in mechanical and electrotechnical assemblies and switchgear construction. This company has one hundred sixty employees and makes 19,2 millions in sales in the year.

 

Heppenheim is Part of the economically strong Rhine-Neckar metropolitan region and is designed as a medium-sized center in the southern Hessian regional plan. Heppenheim is centrally located on the B3,B460 and A5/A7, almost halfway between Heidelberg and Darmstadt.

The Heppenheim train station is located in the city center with two platforms on the Main-Neckar-Bahn. The airfield is southwest of the city. The …

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Negative interest rates are both gone and here at the same time.

Many commentators are talking about the end of negative interest rates in nominal terms and it’s true, interest rates are rising but in real terms they are still negative. Look at mortgage rates (for instance), you can borrow at 3% and below and meanwhile you have property price appreciation at 15% meaning that in real terms you are paying -12%.

If you can ever get something on a continuous basis at -12% that indicates ‘buy’, and that’s what people are doing, but notice that we mentioned ‘continuous’, the reality is that there is no arbitrage most of the time and this will be closed down by either rising costs, falling prices or some other outcome that we can’t forsee. Trees don’t grow to the sky, they never have and never will so the trajectory of house prices must rationalise but it’s hard to see how or where at present because the demand side seems so demonstrably strong.

I bumped into Kieran McQuinn on Pearse Street today and in our brief chat mentioned how the price changes are not sustainable, he …

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What is happening with interest rates, why, and what can you do?

What is happening with interest rates?

Interest rates rise and fall, we have been in a secular-ZIRP (zero interest rate policy) environment for quite some time and as people who subscribe to the monetarist school of thought, this would always lead to inflation which we are seeing now, albeit a fairly delayed response given how long this policy has been in place.

Why?

Not too long ago the yield curve was negative 20 years into the future such was the dismal outlook of markets for any level of inflation, but then you had a pandemic, the ‘great resignation’ and between labor and supply constraints along with monetary policy effects, there is inflation you haven’t seen in 40 years. Now the curve is negative only one year into the future and the price in the money markets has risen.

Just to clarify this, many mortgage providers get their money by buying it (you buy at X + interest rate and then ‘sell’ it to borrowers at X+margin [which is ideally above the price you bought it at]). In an oversimplified manner, …

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