The principles of saving money are pretty simple, spend less than you earn. But in today’s world of easy credit and growing debt, how can you get your finances under control.
Moneysmart.gov.au is your one-stop website for all matters money. Aimed at informing people of their choices using plain English, it’s an incredibly useful resource. YOURLifeChoices has expanded on Moneysmart’s five tips to get your finances under control in 2013.
1. Create a budget
You may think you know what you have coming in or, more importantly, what you have going out, but a few dollars here and there can make or break a budget. Creating a budget doesn’t have to be complicated, but it does have to be realistic. Moneysmart.gov.au has tips on how to create a budget and stick to it by managing your income and expenditure. There’s also a useful budget spreadsheet which you can use online, or an excel version you can download. To get your budget started, visit moneysmart.gov.au.
If you are a smartphone convert, you can even keep track of your spending on the go with one of the many apps available. YOURLifeChoices has details of two apps you may wish to try.
2. Start paying off your credit cards
While most people may know that paying the minimum repayment due on your credit card isn’t enough to make any real dent in the balance owing, you may not realise just how long it will take to pay off even a small balance. It makes sense to pay the most to any card which has the highest interest rate first. Understanding how additional payments can reduce the balance on your card quicker is the first step to getting your debt under control.
Credit Card Finder has a useful calculator which allows you to enter details of all loans and cards on which you owe money and what is the minimum repayment. By inputting the combined minimum total repayment you can make each month, a payment schedule will be generated to suggest which card or loan to pay first and how long it will take you to clear the balance. To get your debt under control, visit CreditCardFinder.com.au
3. Arrange a direct debit to your savings account
With the best will in the world many people resolve to save more, but seldom does the money ever reach your savings account. A direct debit will ensure the money goes directly to your savings account, removing any temptation to spend rather than save.
Thanks to compound interest, just a few dollars each week or month can soon add up. Use a savings calculator to find out how quickly your nest egg will grow.
4. Pay extra off your mortgage
The recent interest rate reductions may have brought relief to many household budgets, but it’s worth noting that rates also have the habit of rising eventually. Cushion yourself against future rate increases by continuing to make mortgage payments at the highest rate you can comfortably afford. If you can continue to do this for a prolonged period of time, you will eventually pay off your mortgage earlier and potentially save yourself thousands in interest payments. Work out how a few extra dollars each mortgage payment can reduce the term of your home loan by using the extra repayment calculator from Mortgage Choice.
5. Switch loans if you can get a better deal
The hassle of changing lenders is usually what keeps people with the same financial institution even though you may be able to get a better deal. Recent changes in legislation which have led to lower exit fees and simplified application processes have made it easier to switch lenders. Mortgage brokers can do all the hard work for you, just ensure you use a certified and reputable broker. Use Canstar’s simple loan comparison tool to work out by how much you may better off by making the switch.
Do you know of any clever ways to manage your money? Have you found yourself better off by changing lenders?
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