This time last year in early January 2017 I did this piece where I tried to save a fictitious couple €1000 in 60 minutes by researching their financial products online. I managed to save them €2750 in 90 minutes. I wanted to have another go at it this year, so I am going for it again.
Just to remind us all of who the couple are.
“I took a fictitious couple aged 42. He smokes she doesn’t. They are married with 2 kids and live in a 4-bed semi in Naas, valued at €320,000. They have a mortgage of €200,000 which unfortunately isn’t a tracker. They have a personal loan they got from their bank to buy a car and a credit card with a Christmas hangover of €1500 on it. They have about €10,000 in savings and two very small pensions. Their jobs don’t pay into the pensions for them, so they had to set up their own a few years back.”
For comparative purposes let’s assume nothing has changed for this couple, lets assume they were frozen in time, they are still 42 and have the same mortgage and credit card and savings etc.
We also need to remind ourselves of the rules of engagement, they were:
There is one or two things different this year, firstly last year I took 92 minutes. I am not allowed this year, I must stick to the 60 minutes.
But secondly, I can use the knowledge from last year to help me. For example, last year I discovered the websites HIA.ie and ConsumerHelp.ie useful. So, like anybody who does this year on year I am allowed use last years knowledge but not my industry knowledge.
This took me about 25 minutes of my hour. What I felt was that everyone is singing off the same hymn sheet, in fact for the purposes of the experiment I was worried that there would not be enough of a difference!
Alas one company came out more expensive, they cost €498 for the year when the cheapest I could get was €422. Like last year however I wasn’t completely sure if I was comparing like with like, particularly given we don’t do Home Insurance in Prosperous. When comparing it to last year, for our couple, prices have gone up in the year by almost 8%, our couple paid €391 last year.
Total Savings this year, €76. Time taken 25 minutes.
This one I am going to try save some time on. I will use just one of the cost comparison sites.
We did hit a little snag, technology has developed since last year. Now you must provide a car registration number to get a quote. So, I had to change our Johnny’s car because I didn’t have the reg of a 2010 BMW 3 series. I did however have the registration of a 1.8 diesel 2009 3 series, so I used that.
The cheapest quote I found here was €650 with the most expensive being, wait for it, €2234!!!. That would-be a saving of €1584, job done I am off to play the PlayStation with the kids, but to be fair that €2234 was an absolute outlier.
Most of the quotes came in around the €800/€900 mark. I am going to use the quote for €843 and take a saving from that figure.
We don’t work in the car insurance market but something I did find out during the year for a client was that due to the level of competition in this market we are becoming attractive to some international insurers who are now quoting here in Ireland. Interestingly though, rather than going direct to the customer they are hand picking some large brokers and distributing only through them. This can result in significant savings if you are using one of these brokers.
Total Savings €193, time taken 15 mins.
Wow, this one was frustrating, I supposed it is because this is an area that we specialise in. I really struggle to see how anybody could take out life cover online without talking to somebody or spending hours upon hours reading the fine print.
Yes, life cover pays out if you die and if you're dead you're dead there is no questioning that, so what could go wrong. The thing here is there are so many variances and the comparison sites simply present it as one option only. In many cases if you paid just a little more money you could have much better cover. Rant over.
For this example, we found that the most expensive was €479.76 and the cheapest was €370.56. The savings were similar to last year.
Total Savings €109.20, total time 10 minutes.
Now I was faced with a dilemma, I was absolute I wouldn’t break the 60 minute rule this year so with ten minutes to spare I went for the big one, the mortgage. This couple has a €200k mortgage on a variable rate. I was tempted to throw them into the tracker scandal and give them a huge refund but that would be cheating.
Given the ECB rate hasn’t moved since last year you would think that interest rates haven’t moved on mortgages in the year either, but our banks are under intense political and consumer pressure to reduce rates because our banks charge us 2% more than the European banks charge their customers for mortgages. Surely they have bowed to this pressure and dramatically reduced rates, no. No, they haven’t.
For this couple last year, the most expensive variable rate on the market was 4.3% this year it is 4.2%.
Last year the cheapest rate on the market was 3.1% this year it is 2.95%.
Again, serious savings to be had if they move from the most expensive to the cheapest, in their case they would save €1536 in the first year or just under €31,000 during their 20 year term. Yes they will have to pay legals etc but the bank in question would write them a cheque for €2000 which should cover that.
Total savings €1536, total time 5 minutes because I used consumerhelp.ie
OK, so I had 5 minutes left and even though I might have made better savings elsewhere (I had to drop my financial planning hat for this one!) the credit card annoys me and I want to do something about it.
Rates on the upper end are similar to last year with the most expensive card costing 22.9%, lets just put that in perspective though. People often hear 22.9% and it makes no sense. If you have €1000 on on a credit card and you paid just the interest this year, you will pay €229 in interest on that card for the year. If you have a card with €10,000 on it that is €2290, or a holiday for a small family.
The cheapest on the market has changed however, last year we could only get a rate of 18.25%, this year we can get a rate of 13.8%. Ironically the same bank offers the cheapest and most expensive card on the market.
So for our couple, in simple maths terms, they could save €136.50 by switching to the cheapest on the market.
They could however save more if they did some clever things like switch it to a 0% interest rate card for six months, or better still use their savings to clear it! But these clients are not getting good financial advice, they are doing it themselves so let's assume they would do the most straightforward thing and switch to the cheapest card.
Total savings €136.50, time taken was 3 minutes (I was already on consumerhelp.ie!)
In 58 minutes I discovered, technology hasn’t made life much easier in the last 12 months to transact online. The same frustrations exist like systems crashing or sitting waiting on your quote to be generated after putting in loads of details to be told “someone will be in touch, have a nice day.”
I will for the next three days be answering the phone to call centres asking to speak to our fictitious “Johnny Jones” about the quote he got online.
Our couple did however manage to save €2050!!!
This is less than last year, but last year I took 90 minutes, give me the extra 30 minutes and I bet we could beat last year.
Either way I am happy working on an hourly rate of €2050 per hour.