European Consumer Debt Network Conference Tackling Household Over-indebtedness Mybudget.ie Budgeting for a better life - Ireland Debt Prevention - Financial Education Michael Mulhall Athens, 21-23 November 2012
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Background to Mybudget.ie The Mortgage and Personal Debt Crisis in Ireland During the 1990 s and 2000 s, a combination of relaxed and sometimes aggressive lending practices, together with soft touch regulation resulted, for the first time in Ireland, in a boom in the provision of a range of consumer credit facilities. People were encouraged to avail of these products by persistent marketing and advertising campaigns, many lenders determined affordability to pay without observing due diligence, and a large amount of what is now widely acknowledged to be reckless lending took place. The vast majority of people borrowed in good faith, on the basis that credit providers wouldn t provide the money if borrowers were considered unable to repay. Most consumers incomes were rising, property values were increasing as was paper wealth, and many were sucked in by lenders (often through brokers) to hefty mortgages, remortgages, further advances, top-ups and personal loans. Nonetheless, the vast majority of borrowers were repaying these commitments until the global financial crisis struck in 2008. Since 2008, significant falls in personal incomes as a result of redundancy, small business failure, unemployment, wages cuts and levies (resulting from the economic downturn) have left many unable to service the commitments taken on in good faith when times were good. One lesson to be learned from all of this is that depending on financial service providers to calculate what people can afford to pay or repay is a flawed approach to personal finance. What is needed is an approach that concentrates more on the person and their household, on people s need to live with dignity, and their capacity to repay loans in this context. This is what mybudget.ie is all about: it is designed to be an empowerment tool for consumers and their households. mybudget.ie Money Management Software & lifestyle Website for Irish households Page 3
Mybudget Dashboard Tracking Loan & Bill Payments Page 4 Mybudget Ltd. 2012
Mybudget - The Response MyBudget is a new online household budgeting and money management software, which enables people to easily see where their money is going and helps them to control their finances and plan for the future. Not alone will it help the household to manage their loan repayments and bills, but will also allow the user to stress test future financial threats such as a reduction in income, interest rate rise etc. thus, enabling them to anticipate and make provision for such an event well in advance. All financial calculation functions are preprogrammed; the user just has to record his/her Income and Expenditure. It is designed to take up as little time as possible and to be intuitive, so it requires little or no training to set up and operate. If a person or family finds themselves in unexpected financial difficulties or maybe wishes to change a car or add an extension to their home, they can demonstrate to the lender their capacity to make repayments on a loan by using the MyBudget programme. A MyBudget user will be welcomed by lenders/creditors as someone who has their finances under control and structured. MyBudget is the most accessible and comprehensive online household budgeting tool available, by being able to access your finances via the Internet or smart phone at anytime. We have removed the mystique around budgeting and made this tool more user friendly and less accountancy focused than other personal finance software. People wouldn t travel without a travel plan, or cook a meal without planning the ingredients, why should they live their lives without the most important plan of all a household budget plan. MyBudget.ie is designed initially for the Irish Market by using Central Statistics Office data to set up a template that will suit most Irish households immediately and requires little modification by the user to tailor it for his/her own specific personal requirements. mybudget.ie Money Management Software & lifestyle Website for Irish households Page 5
HARDSHIP Emigration Depression Family Distress DESPAIR Personal bankruptcy wealth destruction Home repossession Unemployment Mortgage& Personal debt crisis
Current Personal Finance Climate Global recession following credit driven boom Result Over-indebtedness and financial uncertainty Household budgeting a key part of dealing with the problem Irish Statistics Population: 4.5 million Labour Market: 2 million (approx) 1.4 million Households 761,000 Residential Mortgages (2112 billion value) Current Economic Statistics 450,000 Individuals: nothing left each month after paying essential bills 200,000+ Homes in arrears for utility bills 83,000+ Home mortgages arrears 90 days+ 169,000+ Home mortgages in distress (216.5 billion value) 14.8% Unemployment 50%+ Drop in value of residential properties Negative Equity 33.5 billion Austerity Budget expected in December 2012 Households under financial stress Changing attitudes to personal finance Now find they have little/no disposable income Unsure of their job security Do not have the tools needed to examine their personal financial situations They feel they have lost control of their finances Lack of trust of Financial Institutions and Financial Advisors The concept of balancing Income v Spend Understanding Need v Want Moving away from Buy Now v Pay later Making a Financial plan Asking the questions Can I afford this? How much it costs? When will I pay for it? Sources: Credit Union, Central Bank of Ireland, Central Statistics Office mybudget.ie Money Management Software & Lifestyle Website for Irish Households Page 7
Mybudget Analysis of Household Income & Expenditure Mybudget Financial Plan for the Year Ahead Page 8 Mybudget Ltd. 2012
Benefits of the Mybudget software to the Household Help the user live within their means Historical view of income and spending Forward planning of income and spending Analysis and reports of income and spending Stress testing of future financial threats Making of informed financial decisions quickly Accessibility of information Preparation of financial plans for debt restructuring Help the user to reduce their cost of living Having a realistic, sustainable and affordable financial plan Self assessment Monitoring cashflow within the household Supporting applications for credit Impartial solution for lender/creditors Accessing best financial options for the borrower in mortgage arrears Minimising the risk of defaulting on agreements made with creditors Measurable records for self-assessment All calculations preprogrammed See the benefits of financial planning Prevention is better than Cure mybudget.ie Money Management Software & Lifestyle Website for Irish Households Page 9
Benefits to those Advising Indebted Clients Tool to support Personal over-indebtedness specialists like MABS, entering Mortgage Arrears Resolution Process and also to the new Personal Insolvency Practitioners when appointed Self-help Tool reduces resource time required to assess and advise clients Simple, easy to use the system Standard system reduces training time required for advisors & clients On-line completion of Standard Financial Statement by Client Clear & standard measurable record for assessment & re-assessment when required Objective minimum budgeted expenditure levels can be incorporated into the MyBudget programme Page 10 Mybudget Ltd. 2012
Recent Internet Statistics in Ireland 1.4million Homes 75% with computers and Broadband Internet access 2.8million online bank account customers 140,000 new online bank customers Q1 2012 2.4million unique visitors to YouTube 1 January 2012 47% of Irish adults use Facebook One of the fastest growth rates of online shoppers in Europe 4billion+ expected goods and services bought in 2012 Most new Software Applications now being deployed in the Cloud Environment, Software as a Service (SaaS) mybudget.ie Money Management Software & Lifestyle Website for Irish Households Page 11
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Mybudget.ie is a unique on-line Household Budgeting Tool and Lifestyle website, which enables users to easily record and track where their money is going and increase their online money money management management skills. skills. Key Features of MyBudget Software Continuous money management software for the household Create an accurate budget for the year ahead Manage your loans and bills Visualise and track your expenditure Identify spending habits and save money Carry out a what-if... analysis Easy to use and quick to set-up Customisable No software to install Access any time from any where via the Internet Bank level security Data is secure and backed up mybudget.ie Money Management Software & Lifestyle Website for Irish Households Page 13
Benefits for sole traders / small home business Monitor Cashflow from small home business income & spend within household accounts Easy to prepare a 12 month Budget of combined Household & Home Business Report Business specific Income & Spend for Tax Return Compliance Consolidate transactions of Separate Home & Business Accounts Cash Tracker, Bank and Credit Card accounts On-line Management of cashflow anytime via the internet Record Drawing Transfers between Small Business and Household Bank Accounts Page 14 Mybudget Ltd. 2012
Management Team Michael Mulhall Successful Entrepreneur Managed 3 start-ups in media and e-commerce businesses Founder Photoplan Ltd, 1989, Co-Founder Labyrinth Solutions Ltd grew to over 110 staff, sold 51% to Esat Telecom 1999/49% British Telecom 2002, Founder Argentec Software Solutions 2003, Founder MyBudget Ltd 2010 Barry Doyle Chartered Accountant & Business Graduate Worked in practice, Industry and Public sectors, involving consumer and industrial products and services Graduate of TCD & DIT Business Schools Liam Edwards Former National Co-ordinator of Money Advice and Budgeting Service (MABS) Advised Irish State Agencies in personal debt policy and law reform International networking with money advice/debt counseling experts in developing government policy Dr. Stuart Stamp Independent Social Researcher Worked at various levels in Money Advice for nearly 30 years as Advisor, Trainer, Researcher and Consultant to Government Agencies and Organisations Many Publications on over-indebtedness and Money Advice PhD (NUI Maynooth) Personal Debt, Poverty and Public Policy in Ireland mybudget.ie Money Management Software & Lifestyle Website for Irish Households Page 15
Mybudget Limited Pembroke House 30 Upper Pembroke Street Dublin 2 Ireland www.mybudget.ie Michael Mulhall Managing Director m: +353 86 248 5205 e: m.mulhall@mybudget.ie