Melinda Arko

Funny Video about Debt

A funny video rgarding debt!

 

 

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.

Credit Card Debt Song - Hits close to home for many!

Are you suffering from a "Christmas Debt Hangover"?

Looking for help to “Dissolve the Problem”?

One of your New Year resolutions may have been to get your body fitter by working out more, but have you thought about your financial fitness?According to latest statistics you could be one of the many Australians that have been already working out during the festive season in partnership with their credit card. With figures showing that shoppers were spending $200,000 per minute & overall were expected to spend $21 million on gifts & food the last thing you want to be doing is paying for your 2009 Christmas in December 2010 or beyond. Your credit card statement may not have hit your mailbox yet but when it does the memory of your New Year’s celebrations could bring on a ‘hangover’ of a different kind. Unfortunately it’s all too easy to get caught up in the festive season spending with the majority of retailers promoting the buy now pay later attitude, not to mention the pre and post Christmas sales that seem “too good an opportunity” to miss.

If this sounds familiar and you really want to make a difference to your finances in 2010 here are some credit card tips to help you start to take control over your money.

• Change your mindset- Have a credit card for your convenience. Learn to use it to your advantage not as an easy way to obtain credit or to spend on items that you don’t really need.

• Transfer your debt to a lower interest credit card.

• Credit card rates can vary considerably from anywhere between 10% and 20%. There are also many special offers available to transfer the balance to another Bank at 0% interest. Conditions usually apply so make sure you fully understand the conditions of the transfer

• If you have multiple credit cards – focus on paying off the card with the highest interest rate first.

• Pay more than the minimum repayment each month.  If you can’t pay the full balance try and pay as much extra as you can each month.

• Make use of your savings to pay the credit card.  Your savings may be earning you a lesser amount of interest than you would be paying on the credit card balance. It makes no sense to be earning just 5% or less on your savings and paying around 19% on your credit card.

• Look at the type of card you are using. Is it the best type for your spending situation? Many REWARDS cards actually charge a higher rate of interest and usually attract a higher annual fee. Get to know your credit card terms & conditions better. “Interest Free days” can be very misleading.

• Consolidate your debt. –Depending on your situation you may be able to consolidate your debts at a lower rate of interest. This method requires a carefully structured repayment plan.

• Communicate -If you cannot see a way out of your financial hardship talk to your bank as soon as possible. They need to know your situation to enable them to structure a suitable repayment plan.

In need of Cashflow help from someone who truly understands email us or give us a call on 1300 771 358

Product Update - What is a Mortgage Offset Account

A home loan with a linked offset account which if used correctly can save the borrower a significant amount of interest over the term of the loan. You deposit your income and savings into the offset account to reduce the balance of your home loan, thus saving you interest. The best offset accounts allow 100% of your savings to be used to offset the balance of your home loan. Accordingly, the balance of your offset account is deducted from your loan amount, before calculating interest. Caution must be exercised with these types of accounts as some lenders mortgage offset accounts are not necessarily always offsetting 100% of your loan. It certainly pays to shop around for this type of account.

For more information on offset accounts contact us on 1300771358 or email us!

Break Costs Explained

Break costs have been a topical debate last year so I thought I would explain what break costs are and why banks are so inflexible with regard to them.

Break Costs are essentially charged so that the Bank doesn't lose any profit as a result of falling interest rates. For example if you sign a contract with the bank at a fixed rate of 9% for 5 yrs but interest rates fall as they have recently to 6% if you refinance your loan then the Bank can only be re-lend the money at 6% not 9%.

$500,000.00 x 9% = $45,000.00 a year in interest

$45,000.00 x 5 = $225,000.00

$500,000.00 x 6% = $30,000.00 a year in interest

$30,000.00 x 5 = $150,000.00

$225,000.00 – $150,000.00 = $75,000.00 (in lost interest/profit for the bank)

So in this example the bank looks to make up this loss by charging the client the break costs.

I know this does not seem fair but in the reverse if you locked in at 6% and rates had risen to 9% the client in the above example would have saved themselves the $75,000.00.

As always it is recommended that if you are looking at doing anything that you speak to a professional and have them explain the inn’s and out’s of going FIXED or VARIABLE.

I would be more than happy to help you or anyone else out who is looking to buying a home or refinancing their current one and explain everything in a way they can understand.

Call 1300 771358

Email: info@responsiblelenders.net.au

TIPS TO AVOID A DEBT HANGOVER THIS CHRISTMAS!

Christmas is fast-approaching with only 6 weeks to go and it is one of those times of year that we normally throw caution to the wind, and just blow our budget regardless of the consequences.

 The Christmas New Year period means increasing spending for many of us.  We often get caught up in the spirit of Christmas spending on gifts, holidays and food. More often than not Australian’s turn to their credit cards as a means of meeting these extra costs!

 

Unsettling facts from the Australian Bureau of Statistics show that over 14 million Australians are paying off over $40 billion in credit card debt and in 2008, spent $36.95 billion dollars during the Christmas season at retail stores with two in ten relying solely on credit for their Christmas Spending. One in five Australians are still paying for last year's Christmas only six weeks before this festive season, and by Christmas day almost 17% will not have totally cleared last year's debt.  Consider this for every $1000 spent on a credit card paying the minimum payments will take you 5 years to pay off.

The biggest tip is to put the credit card away for a rainy day and celebrate Christmas without dragging home a sack load of debt disguised as presents. Remember that spending less at Christmas doesn’t mean you have less fun.

Here are some tips to help you get through the Christmas New Year season without a debt hangover!

• Start Saving Early
• • Open a Christmas savings account. 
  • If you committed to saving just $20 per week of 50 weeks you will have saved $1000.

• Budget for Christmas early
• • Create a budget.
  • List all the people you need to buy gifts for and write down a specific amount for each person.
  • When shopping for each person stick to your allocated budget.

• Start Shopping Early
• • Consider shopping throughout the year. The closer it gets to Christmas the more expensive items can get.
  • When shopping leave your credit card at home.
  • Make a list of what you will need for your food menus.
  • Withdraw enough cash as per your budget to complete your shopping.
  • Take advantage of lay-by.
  • Start buying extra bottled and tin foods now. Prices increase the closer Christmas gets.

• Be Creative with your Gift Giving
• • Try and make a few personalised gifts yourself.
  • The internet is full of creative ideas.Homemade cooking makes for a great gift.

•  For Large Families, draw a name from a hat
• • This will reduce the number of gifts you need to purchase.

• Shop online
• • You can find some great bargains shopping online but ensure that you are using secure sites and keep a copy of your transactions.

Don’t fall into the debt trap over Christmas!

Christmas is about spending time with family and friends remember spending less at Christmas doesn’t mean that you will have less fun!

Sticking to your planned budget will ensure that you place yourself in a great position to start 2010.

Download Tips to avoiding a debt hangover at Christmas 2009

Are You Financially Unfit?

Have you ever been on a fitness and diet program where for a couple of weeks you are highly motivate and it goes brilliantly but then slowly those old habits start to creep in again and you often give up on the program?

Well managing your cash flow is not all that different from being on a diet and exercise program! We start off motivated but often end up giving up.

Budgets often fail because like a diet we don’t like being deprived of the things we love and we often have unrealistic goals and projections on what we want to achieve. It is important to set realistic goals and control the amount we spend instead of getting rid of that expense completely! If you love shopping and you eliminated this expense from you budget it is destined to fail.

Financially Fit Shopping Tips:

• Write a List!

Look in your wardrobe and work out what you need rather than want!

• Set a Spending Limit

Set yourself a spending limit and stick to it.

• No Credit Cards!

If you have allowed $150 as your spending limit then take that in cash and leave your credit cards at home. This will stop impulse buying!

• Stick to the List

Take the list with you and remember to stick to it. Only buy what you need.

• Take a shopping buddy

Show your friend your list and ask them to keep you accountable to the list.

• Buy your clothes at the right time

Know when the sales are on and go shopping then. For example August is a great time to buy all your winter clothes for next year because all the winter sales are on.

• Know what looks good on you and buy items you can mix and match

• Shop at Fashion Warehouses and Outlets Shops

Shopping at the outlets can do two positive things for you. One, you can save money and two; you can buy a lot of things for the price of one regular store item.

• Become a member of store databases

This will ensure you receive information from your favourite stores regarding specials they are running.

• Shop Online

Shopping online can result in large discounts but you need to ensure that the store has a liberal returns policy in case you don’t like the item or it doesn’t fit.

• Exchange with Friends and Family Members

Great Websites to Visit:

http://www.dealsdirect.com.au - great online shopping site that features all kinds of products.

www.myshopping.com.au – Helps you to compare the prices of items online.

www.closeddoorsales.com.au - Lists retail days for a range of wholesalers.

www.strawberrynet.com – Great site for perfume, cosmetics and skincare items.

www.clothingexchange.com.au  - Organises monthly My Sister’s Wardrobe frock swaps.

www.missyconfidential.com.au – Tells you when the Fashion Warehouse sales are on.

Procrastination is a Financial Killer!

The Oxford dictionary states that “Procrastination is to put off till another day or time; defer; dela

We are all guilty of procrastination from time to time! But did you know that procrastination is a killer  when it comes to pursuing long-term financial success.

Think about this!

If you invested an initial amou nt of $2000 and then started investing $300 per month for 30 years and it earnt you a net interest of 8%, at the end of 30 years you would have earnt a return of $468,000 Future Value.

          BUT, if you delayed it by 5 years and invested for 25 years your return would be $299,000.

And if you delayed your decision to invest by 10 years and you invested for 20 years your return would be $186,000.

         WOW—what a difference hey!

         This certainly shows the Power of time and Compounding Interest.

         As the cartoon states “The Longer Your Wait, The Worse It Gets!”

Don’t PROCRASTINATE any longer call us today on 1300 771 358 to find out how you could start investing in your future. Submit an email enquiry here!

 

Download Procrastination is a Financial Killer 280709

Wealth? How much have Australian's lost?

I was going through some newspaper articles that I had saved and found an article published by the Sydney Morning Herald on the 27th June 2009. That claims Australian's have lost approximately 36% of their wealth since the economic crisis hit!

Wow that is a staggering figure - it takes time and patience to accumulate wealth and puff it's gone in a mater of 9 months.

The Australian Bureau of Statistics put combined household wealth just short of $787 billion at the end of March in 2009 which is down from the peak in Septmeber 2008 which was $1246 billion. These totals are derived from household wealth held in cash, bank deposits, bonds and shares. It does exclude superannuation and real estate which we all know has also been badly hit by the crisis. If these were included the 36% loss could well be signifiacntly higher.

We’ve lost 36% of wealth - The Sydney Morning Herald, 27th June 2009.

But on a positive note as a result of the economic downturn in lies opportunities for those who have the right mindset and plan to capitalise on them. You behaviour and reactions play an important part of in planning for your financial success.  Click here for to arrange for a money management review