Whip your Finances back into Shape
Extravagance over the holidays often leads to promises of spending less, saving more and getting out of debt. We have a handful of strategies to help you whip your finances back in shape.
The onset of a new year is always a good time to re-examine your income and spending habits over the past year. But how can you save if you’re barely making ends meet with your current income? Here’s an action plan to help you trim down your mortgage while beefing up your bank account.
Create a realistic budget and stick to it. The key word is ‘realistic’. There is no point placing a strict budget on yourself that you know you won’t stick to. Check out last week’s posts for more tips.
Budget for larger items like car insurance and registration. If you put a little aside each month, your credit card won’t take the hit come premium time.
Get educated. Keep up-to-date with the latest mortgage products available and pay attention to the interest rates in the marketplace. Newspapers and magazines are great places for the information – or you can always call us!
Put away a small amount each week for the eventual Christmas/holiday period and save yourself the ‘January Blues’ next year! Start saving now no matter how small. Set up a direct debit from your transactional account to a savings account – you can’t spend it if it’s not there.
Separate funds that are being held for future expenses into a separate interest bearing, no fee account. This stops you from ‘accidentally’ spending those funds and has the added bonus of earning interest. Better yet, put the money where you don’t have easy access to it. That means making sure it’s not in an account where you have access with your ATM/ETFOS or credit card.
Channel any surplus funds into the debt account that charges the most interest while maintaining minimum payments on other accounts. For example if your credit card interest rate is 17% and your store card has a rate of 13%, direct minimum payment to the store card and surplus funds to the credit card – this will save the interest paid at a higher rate.
Continue to live on your previous salary even if you are lucky enough to receive a pay rise – that way you can use the extra funds towards savings or your mortgage.
Fix your repayments on a make-believe rate rise. Get ahead of any future rate rises and fix your repayments on a higher rate now as if the rate were 1-1.5% higher. This enables you to pay your home loan off quicker and save a lot of money in interest before any rate rises and thus get ahead while rates are unchanged.
What other tips do you use?
Could a savings coach help you? Is debt consolidation the best option? Give us a call or send us an email.