SOME 61 PER CENT of people have €100 or less left at the end of the month once essential bills are paid, according to the results of the final 2012 ‘What’s Left’ tracker series conducted by the Irish league of Credit Unions (ILCU).
Furthermore, the report shows that 1.59 million people are left with €50 or less at the end of the month once the essential bills have been paid, and that 56 per cent of the adult population believe that the worst is yet to come in terms of financial hardship this year.
In December 2012, 72 per cent million people believed that their disposable income had fallen since December 2011.
The ILCU says this “clearly reflects” the challenge that individuals and families have in making their household budgets stretch to cover essential day to day living.
There are a growing number of people who say that their disposable income is decreasing as prices rise and wages and social welfare benefits decrease.
Budget
The Budget has had a negative impact on the financial situation of 8 in 10 adults living in Ireland, according to the survey, with property tax and PRSI contributions likely to have the most pronounced impact on the population.
Survey respondents stated the Budget has had a negative impact on their financial situation (8 in 10 Irish adults): 23 per cent said their income and supports have taken a hit and that this will have a knock on effect on them and their families, 60 per cent stated that they were anticipating the decisions made in the budget, stating that it will just be another year of struggle for them. Another 15 per cent said the budget wasn’t as bad as they thought it was going to be and a further 2 per cent said they won’t be impacted at all by the budget decisions.
Some 41 per cent believe that the introduction of the property tax will have the most significant impact on them. Other areas that are also likely to have a marked impact on personal finances this year, include – the movement of the PRSI threshold (most significant impact for 19 per cent of adults), increased car registration costs (most significant impact for 6 per cent of adults) and the cut to child benefit (most significant impact stated by 9 per cent of adults).
The areas of the budget that were of particular concern to the respondents were – not being able to pay household bills (28 per cent), dealing with extra taxes (26 per cent), the impact of the budget (14 per cent), the property tax (12 per cent, the increasing cost of utility bills (10 per cent), the European economy (5 per cent) and finding a job (5 per cent). 8 in 10 adults fear that 2013 will be a tougher financial year than 2012.
Meanwhile, nine in 10 Irish people say they have been negatively impacted by increased energy costs: 46 per cent are struggling to pay their household bills on time – slight drop on October 2012 figure of 50 per cent – and 41 per centsay they have had to sacrifice spending on other household items like food to pay their energy bills.
Moneylenders
The December 2012 findings show a growing awareness of moneylender activity in this country, but that 5 per cent of population regard moneylenders as a viable option for accessing credit.
The survey shows that 17 per cent are aware of money lending activity in their local area and a further 9 per cent are aware of intimidation by moneylenders in their local area. Meanwhile, 3 per cent say they have been approached by a moneylender in their own homes.
According to the ILCU, Irish adults are borrowing from moneylenders for a variety of reasons; the top four reasons were – to cover bills (50 per cent), to pay for Christmas (25 per cent), to pay rent (13 per cent) and for medical expenses (12 per cent).
In 2012, the ILCU called on the Government to put a legal cap on the interest rates charged by moneylenders in Ireland. It says that no such cap currently exists but in practice, the ceiling is just below 190 per cent APR. “With the level of personal indebtedness and financial exclusion in Ireland, there is a real danger of compounding the problem by allowing legal moneylenders to charge excessive rates,” the ICLU stated.
In terms of overall sentiment, 42 per cent say they will have to manage their household budgets very closely in order to get by this year, and 14 per cent feel positive about their ability to cope financially throughout this year.
The ILCU has been running the independent tracker series since the beginning of 2011 to examine the financial challenges Irish people have been encountering as the economy moves through recession. The ILCU says the aim of the trackers has been to try and shift the national debate away from macro economic analysis to try and get a real sense of the type of hardships that ordinary people and their families are facing on a daily basis around the country.
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