With the passing of the Australia Day-long weekend, we’ve said goodbye to the last of the summer holiday season.
Over the last two months, consumers have opened their wallets for dad’s Christmas socks, work Kris Kringles, holidays, New Year’s Eve celebrations, back-to-school packs and other annual expenses.
But just like that fourth mojito, we don’t care about the ramifications until later-on.
But with reality now upon us, the only thing sadder than the faces of commuters trudging out of Flinders Street station at 8am is their credit card and savings balances.
Losing weight … finding a new job … booking the European summer holiday … most people have finalised a plan by now for what they want to achieve in 2020.
But what about their personal budgets?
Taking charge of finances
Loads of customers approach Entourage Finance, frustrated by the challenges that they hit when applying for a loan. They earn good money – sometimes, really good money – but they’ve been continually knocked back.
This is when we give them Entourage’s Guide to Financial Success 101: IT’S NOT WHAT YOU EARN, IT’S WHAT YOU SPEND!
Below are our simple guides to getting your finances back on track after the holiday blow-out.
This is so easy – it blows our mind that not everyone does it.
Most bank apps now allow you to schedule payments. So, 24 or 48 hours after your fortnightly or monthly pay cycle comes in, divert a portion of your wage into a dedicated savings account. You don’t even know it’s gone.
And when something comes up – the fridge motor keels over, a hen’s weekend or a closing down sale at your favourite high street fashion retailer – you have a delightful little pot of savings sitting there at the ready.
Reprice with your lender
Our brokers ensure all our clients are on the most competitive rate available in the market. With the official cash rate at a record low, it amazes us to find so many people paying interest rates well above what they need to. But hey, life and work keeps us busy.
Remember, your lender is unlikely to offer you a better rate out of the goodness of their heart – that’s why we’re here. We know which banks and lenders are offering the best rates and products that suit our clients. And, as a high-volume brokerage, we have the Bat Phone to the people that matter. That means our clients can always be assured they’re not paying more than they need to.
Do you have an offset account? This is an easy way to reduce the interest payable on your mortgage.
An offset account is tied to your home loan. You can redraw and direct savings into the account. In a way, it’s a risk mitigation tool offered by the banks: if they see you have a solid amount of cash next to your home loan, they’ll be confident that you have savings to support you – and your asset – in the event that anything goes pear-shaped.
The advantage for you is that the offset account, over a length of time, will reduce the amount of interest you pay on your mortgage by offsetting the balance.
Pay your mortgage like it’s 2015
As mentioned, Australia’s interest rates are at record lows.
In 2015, the official cash rate was 1.25% higher than it is today.
That means, on a home loan of around $400,000, mortgagees on variable loan rates over a 25-year term are saving themselves around $300 per month in repayments compared to rates of five years ago.
If you can continue to put the extra $300 per month onto your repayments, you will shave tens of thousands of dollars off the life of your loan.
Review your car insurance
Every year the car insurance premium arrives in the mail. We open the envelope with trepidation – how much has it gone up this year?
If you have a good driving record, use this to your advantage and challenge your insurer for a cheaper rate. If you’re unsatisfied, shop around.
Review your utilities
Same again. There are scores of utilities providers in the marketplace competing for customers. Make the compete for you and you’ll save yourself hundreds of dollars a year through cheaper gas, electricity, internet, phone and other utilities providers.
Get financially fit in 2020
If you’re unsure where to start, contact the team at Entourage Finance today. We have the finance personal trainers – our trusty brokers – to help you shed the holiday season debt and streamline your budget for 2020.