Melinda Arko

Funny Video about Debt

A funny video rgarding debt!

 

 

Tile removal - such hard work!

Well we are still in demolition mode (well just started really) and are lifting the floor tiles up to get ready for the new flooring. Wow this was just such hard work! Who ever layed the tiles certainly used good adhesive!

It came as no suprise!

Well there certainly were no surprises today when the Reserve Bank of Australia (RBA) raised the cash rate .25% up to 4%. ANZ, St George and surpise the CBA all reacted very quickly to the announcement and raised their rates by the .25% increase. This means that the medianstandard variable home loan rate will be 6.8%.

What does this mean for borrowers?

Based on an average home loan of $300,000 over a 30 year terms borrowers will have to find an extra $50 per month to cover this increase. The last four rate rises since October 2009 of 2% has resulted in borrowers having to find a total of $200 per month. For a large portion of the population this will hit the household budget considerably.

Tips to combat interest rate rises

• Review your loan to ensure your products still match your needs
  

• Consider fixing a portion of your loan

• Changes in interest rates only affect standard variable rates. When rates are rising, you can protect yourself from future rises by partially fixing a portion of your mortgage. Since there is also the chance that interest rates may decline at some future time, you may wish to keep the fixed rate period to a few years, so that you can renegotiate the fixed interest rate.

• Consider using an Offset Account

• With a mortgage offset account you can deposit savings you have into it. The balance you have sitting in the offset account offset against the balance owing on the mortgage. This helps you save interest.

• For example, you may have $150,000 owing on your mortgage and you also have $10,000 deposited in a mortgage offset account. In this situation, the mortgage interest is calculated on $190,000 rather than $200,000. 

• This option also gives you a tax benefit, because you’re actually saving money on your mortgage payments rather than earning assessable interest on a savings account. Note that when you use this option, you must remember to check the terms, as not all lenders offer 100% offset accounts.

• Adjust your budget to reduce your expenses

• Time to create new budget or revisit your current budget to plan expenses more carefully. It will mean reducing your discretionary spending, like buying takeaway food, and coffees.

• For discretionary spending, set and keep within a weekly limit and withdraw cash enough only for a week. Limit credit card use to non-discretionary spending only, such as utility and phone bills. Shop around for better deals.

• Match your payments

• Match your wage payments with your mortgage payments. That is, if you get paid weekly, schedule your mortgage payments weekly. On the other hand, if you get paid monthly, pay off your mortgage monthly. The idea is that you avoid having your money sit in a savings account earning little — but taxable — interest for one or more weeks each month. It also helps you to regulate money in and money going out and ensures your mortgage is paid first.