Who Spring cleans?
We all do right? What process do you take? Why do we do this? We want to clear the clutter….because it makes us feel happy and more organised!
Every year something has changed in your life, whether it be a big change or little change … but something has changed and we need to clear the pathway
So apply that same Spring Clean concept to your finances….try using the 3 "R's" ....
-Your Bank Statements…. are online now so it’s easy not to take too much notice of what is coming in and more importantly going out
Step 1 – print out your bank statement and Review what is coming in and what is going out.. …..are your expenses still relevent…or can you review some of the outgoings?
There are set living costs that have to be paid….but what else do you see coming out?
Lunch, Gym memberships, Tv subscriptions, Coffee, these are small amounts however spend a little bit of time adding them up… you may be surprised – it could easily account for about $100 extra per week in incidentals that’s $5200 per annum…what else could you do with that money?
Now I’m not saying no fun, no food, no life….
But think about your outgoings and trim them up a bit – save the pennies – it all adds up!
Review your Bank Statement, Reduce the incidentals , Remove what’s not needed
There are a couple of common things that happen when you get a Home Loan:
- You set up your Home loan for the longest term to get a handle on it - is intended to be temporary ….however the last time you thought about it was when the interest rate was up for review and you focused on the getting a new interest rate…job done! Responsibility over for another 2 years….Meantime what has changed? Income, expenses, small debt repaid?
At the very minimum at interest rate time – review what has changed and increase your repayment if you can….an extra $20 per week makes a big difference -this will mean a shortened loan term, more principal being repaid than interest, equity is building which puts you right on track to financial independence
Other ways to reduce your Mortgage faster that’s suits your lifestyle
-Lump sum payments
-Small short terms loan amounts
-Flexible or revolving accounts
Review Reduce Remove
Most of us think having a large visa limit is great! Yes? It gives us the flexibility to “buy” – with all intentions of repaying it back – Credit cards were designed to be used for convenience and repaid within s short period – however it is common to have this debt hanging around and usually is one of the highest interest rates you will pay
If you have a credit card that’s going no where its time to review, reduce and remove
Consider consolidating this debt over a short time at a lesser interest rate – watch it reduce quickly and once repaid you can then save that payments elsewhere
and yes this does effect your future borrowings….
Review Reduce Remove
-Insurance – Life, Income and General protection
When did you last review all of your insurances? – Our insurance needs change and at each lifestyle event should be reviewed …marriage, mortgage, family, career, holiday, retirement…and beyond
Often life and income insurance is taken out at Mortgage time….and then not reviewed again for quite some time….If you review regularly, your insurance will be cost effective and have all the right protection in place for your life stage
I spoke with someone recently who said they had sold one of their properties last year, asked for the insurance to be removed and assumed it had been done – it wasn’t actioned for some reason and they had been paying too much…its easy for this to go unnoticed
Assets are brought and sold – you may think you have taken them off your insurance policy – but check – it may not have happened!
Review Reduce Remove
Relationships and finances
All of this is very well if you are managing your OWN money – a little more difficult when when in a joint situation
In my experience there is usually (not always) a spender and a saver in the relationship – which one are you?
If you are the saver, you will understand review reduce remove very quickly
If you are the spender – it will take a little time to form this habit and stick to it
Whichever one you are - be tolerant of the each other – and make some creative compromises along the way … it won’t happen overnight
– but it will happen...so what are you waiting for?
At Holly Rogers Mortgages, the focus is you – Making it easy and delivering on uncompromising service - and its a FREE service!