Spring Clean Your Finances - August 2022
August 22, 2022 / Written by Rich Harvey
By Guest Blogger, Louisa Sanghera, Principal Broker,
With rising inflation pushing prices up in almost every area of your life, you’ve probably read many stories in the media about ways to boost your income or earn extra money. But I want to talk about the flip side of this coin, which is a way to manage the cost of living crisis without taking on an extra side hustle or working more hours: it’s a savings spring clean.
Mortgage interest rates are rising every month at the moment, and the cost of energy, petrol, rent and groceries are increasing, too. If you’re feeling the financial pinch, how can you spring clean your financial situation and stay ahead?
Step 1: Make an appointment…
With yourself! Book a few hours into your calendar to look at the state of your finances. I recommend you grab a credit card and bank statement and then go through them, line by line, and start noticing how much you’re spending on everything from household bills to discretionary spending.
With your regular bills, you can compare and shop around for a better deal – it’s a proven way to save money, and there’s no point in paying more than you need to for the basics, like internet, mobile phone plans and energy. It’s the discretionary, impulse spending that can be harder to track and manage.
One suggestion I have is to set up a “spending” bank account that you use to pay for all your coffees, brunches, cocktails, impulse buys and any other spending you weren’t planning for the month. Once that account runs out and your discretionary spending limit has been reached, you can decide whether you top it up from savings/spend in your credit card, or stick with your predetermined budget for the month. It’s a great way to get a genuine understanding of how much you actually spend each month (warning – it’s usually more than you expect!).
Step 2: Hit the phones
With your major expenses, such as your home loan and your electricity bill, pick up the phone and call your lender or provider. Ask them: “can you offer me a cheaper interest rate/better deal?”
Better yet, if you have a mortgage broker, contact them and ask them to do this on your behalf. They will either be able to negotiate a better deal with your bank on your behalf, or they can look at helping you refinance into a better mortgage with a lower rate. They are a wealth of knowledge and get the latest updates on interest rate changes every day, so do yourself a favour and use their services. Don’t forget - they’re free!
Step 3: Consider your long-term plans
There’s no doubt that people are feeling the financial pinch right now, so part of your focus at the moment should be around managing the costs of your day-to-day bills. But it’s also a good idea to consider your long-term needs and goals.
For instance, do you think you’ll stay in your current home for the next 12 months or longer? Do you plan to invest in property any time in the future? Property values are starting to fall, and they’re probably due to fall a little further, so if you want to withdraw equity to use as a deposit on an investment in the next year or so, it may be worth putting that plan in action sooner than later.
Speaking to my friend Rich Harvey, CEO of Propertybuyer, he reckons that the property market will level out and find a new floor within the next 6 months and suggests that buying while the market is softer is a great idea as there is less competition around from other buyers. And taking a long-term view makes a lot more sense.
A mortgage broker can assist you with obtaining and managing your mortgage, now and in the future. They can work through different scenarios with you, such as:
How much are your loan repayments now, and how much higher are they likely to be in 6 months time?
Do you have a clear budget, so you know you can service your loan if interest rates continue going up?
Given that fixed rates have gone up, and there are better deals out there for variable rate loans, is now a good time to refinance? If so, what are your goals and how can refinancing help you achieve them?
Are there any typical traps you should watch out for when signing up for a new mortgage?
If you’re considering refinancing, are shopping for a new property or just want to see what your options are with your mortgage, contact your broker for a chat, so they can see if you can save money and help you achieve your financial goals.
Contact us today on 1300 855 022 or visit www.zippyfinancial.com.au
Louisa Sanghera - Director and Principal Award-Winning mortgage broker at Zippy Financial
Louisa created Zippy Financial after a 25-year career in banking, with the goal of using her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients grow their wealth through smart property financing. Whether you are looking to buy your first home, re-finance or build your property investment portfolio, Louisa and her team of experienced brokers can help guide you through the challenging maze of finding & securing exactly the right loan for you.
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