4 strategies to fix your finances before 2020 ends
by The Advantage
5 October 2020
The weather warming up in Australia means Christmas time is just around the corner. For many, it’s a time of family, fun and festivities – but it can also be stressful, particularly if funds are a little tight. We explore four simple strategies to help you finish 2020 strong and position yourself for a financially fit 2021.
1. Review your home loan
If you have a home loan, a 15-minute Google search or a quick phone call to your lender could help you pay off your loan faster. A bit of time invested now could save you hundreds of dollars a month and thousands over the life of your loan. How? For many, home loans are ‘set and forget’. And this is what lenders love – lazy borrowers. But you’re about to put your home loan on the treadmill with minimal effort.
The Reserve Bank of Australia (RBA) cut official interest rates to just 0.25 per cent in March in response to the COVID-19 pandemic. This means there has never been a better time to review and potentially refinance your home loan. A home loan war is seeing lenders competing for the lowest rate, which is great news for borrowers.
A quick Google search of ‘lowest home loan rate’ will give you a picture of what other lenders are offering. This can help give you some leverage to call your current home loan provider and ask for a review of your rate. You might find they’re quite responsive to a little encourage to keep you… which can mean a lower rate and more money in your pocket. And if not, consider refinancing with another lender. Note: if you have less than 20 per cent equity in your home, you might have to pay lenders mortgage insurance if you refinance, which can make it less appealing.
2. Assess your spending
Cash flow management i.e. tracking where you spend your money, might be about as fun as watching paint dry. But getting a clear picture of where your money goes could highlight areas you can save. For example, how long has it been since you compared gas and electricity providers? Most state governments provide easy-to-use and independent energy comparison websites, such as Victorian Energy Compare.
Other simple ways you could cut back on spending and save money:
- Review how many subscription services you use. How often are you using your Netflix, Stan, Foxtel, Amazon Prime, and Spotify accounts?
- Calculate your takeaway spend. How many nights a week are you getting takeaway? Buying fresh fruit and veg from the market is not just good for your bank balance, but also for your health.
3. Consider switching credit cards
Have multiple credits cards? Struggling to stay on top of repayments? Consolidating your debts might help. By rolling all of your credit cards onto one, you can not only manage your debt easier, but you may also be able to make the most of interest-free periods – sometimes up to 24 months. This can help you make a bigger dent and get ahead of your debt, rather than simply treading water. Make sure you’re getting the best deal when it comes to interest and fees once the interest-free period expires, because it could impact how much you end up paying in the long-term.
Paying down your debt – by consolidating or switching credit cards – can also help to boost your credit score. Which is not only helpful for borrowing in the future, but it can also put you in a better position to negotiate lower interest rates – as you’re seen as a more reliable customer.
4. Get the right financial support
Talking to someone else about your finances is tough. For some, it can be a taboo topic – but it doesn’t have to be. Just like going to a personal trainer to help you get fit, speaking with a non-judgemental financial consultant can assist to get your finances in shape. You don’t have to do it alone – let a finance and investment professional support you to get ahead.
Advantage Consulting can equip you with the right information to fix your finances in 2020 and reach your true financial potential in 2021. Contact the team at Advantage Consulting today.
Disclaimer: This is general advice and has been prepared without taking into account your particular situation or needs. You should consider whether it is appropriate for you before acting on it.