Asset 2

How to boost your financial life in one week, one month and one year

We often overestimate what we can achieve in a short period of time, but dramatically underestimate what we can do in a longer one. And if you need to make changes to your money life, it might not be as drawn-out a process as you expect.

Here’s what you could realistically expect to change about your personal finances, in the next little while.

This week

Cut impulse spending

Make a conscious effort not to buy more than what you set out for when you go to the shops. This can be done by taking a mindful approach to your money – only spend what you need to and pay attention to each purchase. Plus, make sure you do your research rather than just take the quickest options.

Identify bad habits

Trackback through your bank statements to help you identify your weak points. Are you spending too much on lunches? Drinks after work? Are you paying for subscriptions you don’t use?

Check your KiwiSaver

Log on to your KiwiSaver provider’s website and check your settings. Are you in a fund that’s appropriate for your circumstances? Are you contributing enough to get to your goals? At a more basic level, what’s your current balance?

Talk to your partner about your financial values

If you haven’t recently, sit down with your partner and have a chat about money. Talk about any goals that you have and ask what’s important to them. See if you can work out between you whether you have any deep-seated fears or feelings about money that might get in the way of your success. Once you’ve identified those, it can be easier to tackle them.

This month

Start a savings regime

How much can you afford to save each payday? Start a process of “paying yourself first” to put the money into your savings account as soon as you receive it. Making saving just another bill to pay will mean you’re much more likely to hit your goals.

Set up direct debits

Automate your finances – set up direct debits for all your bills so you never miss a due date, and make your savings automatic. It can be a convenient way to streamline your budget.

Review your mortgage

Do you know what the interest rate you’re paying on your mortgage is? How long you have left on your fixed-rate term? Work out whether you could save money by either keeping your payments the same when your term rolls off, or, if you can secure a lower rate, increasing your repayment, or both.

This year

Build an emergency fund

If you can put aside an amount equal to three months’ income, you’ll have a buffer that will be invaluable if you hit trouble – like a car needing repairs or being out of work for a while. Having an emergency fund in place can also help you reduce the cost of insurance, as you should you be able to select a higher excess.

Boost your income

A year is enough time to increase what you earn, either by making a case for a pay rise at work, setting up a secondary income stream, or even boosting the profitability of your own business. And of course, if you’re asking for a pay rise, make the case clearly with evidence showing why you’re deserving of more.

Clear your credit card debt

If you’re carrying credit card debt, paying it off is a priority. You may find you’re able to transfer it to a zero-interest offer with another bank which will enable you to pay it down more quickly.

Need a hand?

If you’d like to talk about your financial goals, please get in touch today. We’d love to help you get on the right track.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.

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Three New Year’s resolutions for your mortgage

New year, new approach to your mortgage?

If you’re in a planning mood, you might be thinking about one of the most significant financial obligations in your life – your home loan. Here are a few New Year’s resolutions to consider making to really make a difference to your financial future in 2020.

Squeeze out a few extra dollars for repayments

Any extra money you can put on your home loan payments will save you money in interest over the term of your mortgage. It might not even seem worth worrying about, but even $20 extra a week should help you better off over time.

According to the Sorted calculator, a $500,000 mortgage at 4 per cent interest over 25 years will cost you about $610 a week in principal and interest payments, and include $291,165 in interest costs. If you increase your payments by $20 a week, you can reduce your interest bill by almost $20,000 over the life of the mortgage – and maybe more if your interest rate goes up in future.

Most lenders will allow some additional payments to a fixed-rate loan with no penalty. Of course, criteria vary from one lender to the other. If you’d like to know what your lender requires, please don’t hesitate to get in touch.

Schedule dates to check back in

It’s easy to set and forget your mortgage – especially when you have years of repayments to go. But that’s exactly why it’s important to keep your home loan top-of-mind.

Even small tweaks can have a big impact and shave years (and dollars) off your mortgage. So resolve to check in on it every six months or year, to ensure that you’re still blasting it away as fast as you can, and that you’re on track for your goals.

Understand your structure

If you’ve got one big chunk fixed on principal and interest over 30 years, you might want to resolve to think about better options.

There’s no one-size-fits-all for home loan structures, as it all depends on your circumstances. One popular structure, for example, is to split a loan up into smaller amounts, which can be fixed for different terms and spread out your exposure to different interest rates. Plus, property investors may want to choose to structure their mortgage so that they can get rid of the principal on their owner-occupied home more quickly than their investment property.

Whatever you choose to do, the key thing is to pay off your mortgage faster and reduce the overall interest you pay over time. We can help you find the right fit for your situation.

Need a hand?

As always, we are here to help and would love to get you on the right path for 2020. Please don’t hesitate to contact us if you have any questions.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.

Schedule your free
15-minute phone call

Please book in your free 15-minute phone call to see if we can help you with your financial life.

Choose your time

Should you pay off debt first or save for a deposit?

Looking to buy your first home? It’s important to make your mortgage application as competitive as possible.

Having the least amount of debt possible is a way to increase your borrowing capacity. But when you’re also saving for a deposit at the same time, paying off your debt can be challenging.

You may have left university with a student loan. Perhaps, you have taken out a car loan or incurred credit card debt. Whatever the case, you might find that debt is slowing your progress towards home ownership.

Why paying down your debt is important

The biggest hurdle for many first-time buyers is the deposit required to get in the door. And of course, any money that you divert into a loan reduces the total you can put towards that savings pot.

Plus, one of the big considerations for banks these days is serviceability – whether you have enough free cash each month to pay for everything that needs to be covered. Even a small amount of money committed to another loan can mean a big difference in how big a home loan you can service. For example, 10 per cent of your income going to your student loan could reduce the amount you can borrow by more than $100,000.

Being debt-free shows a bank that you have the commitment required to meet a target and the discipline to make repayments on time.

Lastly, owning a house is often more expensive than people expect. There’s all the stuff you might have planned for: rates, insurance, power, water… but then there are the things you don’t predict such as a hot water cylinder that stops working or your glass sliding door getting smashed by a falling picnic umbrella. If you keep as much of your income as possible free and disposable, you’ll be much more comfortable when unexpected emergencies hit.

Being debt-free: easier said than done?

Does paying off (or down) your debt feel like too high a mountain to climb? The important thing is to have a clear understanding of your financial situation, and identify the steps you need to take.

For example, it may not be feasible to repay all your debt in a short period of time, particularly if you have a big student loan. In this case, it’s a good idea to break down your strategy into manageable steps and make a plan to pay off debt at a pace that suits your budget.

If you’re making all your loan payments, and they’re clearly manageable, a bank may not consider it a huge risk for you to have a small amount of borrowing ticking over alongside your home loan. In any case, if you have debt, it’s always important to declare it. Hiding things from the bank is a big red flag on an application – and could result in you not being approved finance, even if you have affordability.

We can help you put your best foot forward

The property market is cyclical, with periods of booms, slow growth and declines. So keep an eye on where the property cycle is for the area you are choosing to invest in. When price growth is slowing, for example, first-home buyers have a bit of breathing space. But even so, they might pick up again at some point, so it makes sense to get in the door as quickly as possible – otherwise, you might find that your deposit target moves faster than you can keep up.

By paying down as much debt as possible and building a sizeable deposit, you can prepare your finances for this great purchase. And of course, we can help. Debt-free or not, if you’re wondering how to get application-ready, give us a call today. We can show you how to put your best foot forward.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek advice from a financial adviser. 

Schedule your free
15-minute phone call

Please book in your free 15-minute phone call to see if we can help you with your financial life.

Choose your time