Insight 9: Interest Rates – a plan for how to get back in control

For some borrowers, its interest rate war out there. So we felt it timely to provide our top 5 tips to help you get back in control.

Number 1: Kill the piranha’s to get more cashflow.

Piranhas are a small fish known for their aggressive nature. Individual bites don’t matter, but when Piranha’s hunt in packs, they can cause real damage. In the financial sense, Piranha’s are everywhere and take the form of;

  • TV subscriptions such as Sky, Prime, Netflix, Disney, Neon – they all take a bite out of you.
  • Subscriptions for everything from dieting apps to newspapers to surfing forecasts. Sometimes, we are no longer using these things and on an annual basis, they add up.
  • Farmers, Gem, and Credit Cards – hiding under the month payment structure, they might be quietly consuming you. Get rid of these things by any means possible

Number 2: Know where your money is going.

Imagine driving a car with the dashboard blacked out! It’s impossible to know how fast or slow you are going and it leads to feelings of being out of control. Sometimes, it can be as simple as a feeling of being back in control is all that’s needed.

Business owners have their accounting system, but what about on the personal side. Make your own simple spreadsheet or download a template to add up each cost and what classification it comes under, e.g., groceries, rates, takeaways.

Number 3: Do it together

“Date night with finance” with your significant other might never catch on but have a time blocked out each month, where you and your partner can go through your finances and cover off 1 and 2 above. See if you can do a budget together and then next month, compare the actual results against budget. Self-awareness in this area, may even result in extra cash building up going into Christmas.

You are looking for that feeling where the both of you can say “I know what is happening and I’m in control”.

Number 4: Find the Interest Rate Safe Harbour

Looking at one of the Banks websites, current floating rate is 8.64%, but then the 1 year rate is 7.45% – a difference of 1.19%. But then the 3 year rate is 6.85% – a 1.79% difference. On $500,000 of borrowing, this is $8,950 per year or $745 per month.

A lot of commentators are expecting rates to start reducing in the new year. But this is you waiting for someone else such as the Reserve Bank to make the decision. If you don’t want to do that then maybe its time to get into the safe harbour. You will have known loan payment for the next 3 or even 5 years if that works for you.

Number 5: If needed, get professional help.

If you still feel like its not coming together, then get professional help. These services are discrete and work with all people across the social spectrum. I’ve had many friends, who look just like me and have engaged with these services to take back control. For them to reach out and get help was an immense relief. Just Google professional budgeting services and you will find an array of organizations ready to help.

There are lots of things you can do in this area and having a chat with a finance professional is often a good place to start.

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