November 08, 2016
Whether you're flush with money from the Melbourne Cup or not, it's a good time to get your finances in shape for summer. Here's a few tips.
Get to know your budget
Government research in 2012 found the average Australian household spends around $69,000 annually on general living expenses.
If day-to-day expenses are holding back your bigger dreams, there are a number of things that you can do to get organised. But it all starts with getting familiar with your money.
- Start small: A spending plan or budget helps you organise your money in the lead up to Christmas and prepare for one of the most expensive times of year. But it’s also a good chance to reflect on your complete financial position.
- Write it down: Write up a budget and be sure to list all the money coming in and what’s going out. This is where using a budgeting tool may also be useful. Mortgage Choice has developed a simple budget planner that makes it easy to write up a spending plan and put it into action.
- Be honest: Make sure you take the time to reflect on what you spend and the budget you have previously used. How did it go? Was it realistic? Did you fail to stick to it? Are there areas where you could further tighten your spending?
- Trim the fat: Once you have listed your expenses, see which ones you can reduce or remove altogether, which will help free up your cash flow. Where possible, use these savings to pay down other debts you may have.
Consider debt consolidation
If you’re struggling with a range of expensive debt repayments, from credit cards to loans, consider rolling them into your mortgage – which is most likely to be the debt with the lowest interest rate.
This will help you to lower the amount you’re spending in repayments and gain some peace of mind.
But depending on which debt you roll it all into, it’s possible that in the case of a home mortgage, the overall amount will be stretched over a longer period and may actually end up costing you more if you don’t manage it well.
This quick video can help you understand the pros and cons of debt consolidation. Or, for a more detailed explanation that focuses on your situation, have a chat with your local Mortgage Choice broker.
Do a Home Loan Health Check
Most economists still believe that interest rates could fall further in 2017, which means that home loan lenders are also likely to offer borrowers even better deals in the period ahead.
If you're not sure about your mortgage, ask me to do a free Home Loan Health Check. I will compare the interest rates you currently pay on loans, to see if you could be actually saving money by refinancing to something better.
Review your Superannuation
Just like home loans, there are so many superannuation funds to choose from and some are better than others in terms of performance and fees.
You can check the performance of super funds by looking at research houses like Chant West or Super Ratings, and of course by examining your own statement. Patrick Jong, my Mortgage Choice Oakleigh Financial Adviser, can help determine if you are in the most appropriate fund for you.
If you need any help, please call me 0431 376 008 or Pat 0402 643 893 anytime.