budgeting Archives - Focus Property Wealth - Perth Mortgage Broker

How to beat the urge to splurge

glennadmin — Wed, 22 Nov 2017 02:39:34 +0000

Christmas is just over the horizon and decorations are already starting to appear at the local shops. It’s a time of year where it’s almost common practice to splurge so it is time for a Christmas budget ! Marketers are all working hard to encourage you to buy, buy, buy and you may have already picked up a few things for yourself and to put under the tree for family and friends.

It’s easy to resort to “retail therapy” when you need a bit of a pick-me-up, and it’s also easy to overspend on gifts amidst all the excitement of Christmas. But what will really give you a thrill and a sense of satisfaction is reaching your savings goals and using the money to buy an asset that will help you grow your nest egg even further (like a house) and that is where a Christmas budget can help. Here are our tips for beating the urge to splurge this Christmas.

Establish a Christmas budget

The most valuable thing you can do for your bank balance this silly season is to create a budget and stick to it. This is especially important if you are buying Christmas gifts.

Write down all of your income and expenses and set an amount for regular savings. Once you have a budget in place, you’ll know your spending limits, and how much you can afford to spend on things like Christmas presents or summer holidays. You’ll also be able to establish good savings habits – something that’s vitally important when the time comes to apply for a home loan. When creating your budget, set yourself short-term savings goals to stay motivated, plus long-term goals to set your sights on where you want to be financially.

There are plenty of online tools to help you create a budget. You could use a simple Excel spreadsheet or a budgeting app. Wally, for example, allows you to manually log your expenses and store pictures of receipts in a virtual budget journal. The app alerts you when you hit your savings goals or when a bill is due. TrackMyGOALS allows you to set, plan, track and manage your savings goals (we’re thinking a new home could be a goodie!).

Think outside the box

If you want to avoid splurging, you need to think outside the box and make a fun game out of finding ways to save money. The key is to challenge yourself to find ways to feel good without buying stuff you don’t really need. If you’re feeling blue and needing some “retail therapy”, do some exercise instead or head to your local park. The endorphins and fresh air will do you a world of good!

When it comes to Christmas gifts, simple home-made presents can potentially save you a load of cash. Get creative! Make some yummy treats and jazz them up with some pretty wrapping. Get a professional photo done and buy some frames in bulk at wholesale prices. Don’t be shy about ‘re-gifting’ anything you don’t need, just give it to someone else who may enjoy it. The options are endless!

Avoid temptation

It’s important to know your spending triggers and to keep them in check to avoid impulse shopping. If you’re a fan of online shopping and find yourself gravitating towards those advertisements on Facebook, perhaps take a hiatus from social media during the silly season and ‘unlike’ your favourite shopping sites, your Christmas budget can keep you on track.

Similarly, if you find yourself being tempted to buy things for yourself when you’re out and about buying Christmas presents for your family, it’s wise to avoid shopping centres. After all, if you don’t see those killer shoes in the shop window, you won’t know what you’re missing out on. If you have to go out to buy Christmas gifts or essentials like groceries, write yourself a shopping list and take cash with you. By keeping your credit cards safe from yourself (and locked in a drawer at home), you’ll spare yourself a spending hangover.

If you’d like to explore your home loan options, we’d love to hear from you. Even if you don’t have a huge deposit saved, we may still be able to help you, so please don’t hesitate to get in touch. Remember, you’ll need a good savings history if you are planning to buy a property, so resist the urge to splurge this Christmas! Make some savings goals, change your spending habits and set the wheels in motion for a splurge-free future today!

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. This article does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

The post How to beat the urge to splurge appeared first on Focus Property Wealth - Perth Mortgage Broker.

Home loan savings to pay your home loan off….FAST.

glennadmin — Tue, 15 Aug 2017 06:11:48 +0000

PART 2 - The Solution

We will provide the solution to really turbocharge our clients plans to find home loan savings to pay their home loan off years faster. Previously we laid out a common client scenario.

The Solution....

To save John and Jenny they have decided to take the following action, each of these items will accumulate to reduce their home loan term without any additional repayments to the amount they are currently paying. Just like magic.

Refinance - to a new loan at a much lower interest rate - new loan will be at $420,000 on Bank option A, current repayments at $1,043 is used to determine the loan term along with item 2 below.
Consolidated car loan into refinanced loan - The $20,000 car loan is consolidated into the new home loan which will be at $420,000. It is important to not when consolidating a short time loan such as a car loan, if you were to pay that small loan over the longer term of a home loan then you will end up paying thousands more in interest. In this case the same repayments as the current car loan of $184 per fortnight will be paid into the consolidated home loan.
Offset all savings - all current savings will be moved into the newly setup offset accounts as they can have multiple offset accounts they can have a number setup for various household / living costs. As all accounts are 100% offsets accounts all funds save interest on the home loan so $5,000 will save around $192.50 per year. Granted this is not a huge amount but combined with the other items and interest saved over the term of the loan it all adds up.
Setup budgeting / accounts - This initially does not sound to exciting and many will want to switch off right now but this is the most important item. Some form of budget only serves to give you an overall snapshot on where your hard earned after tax income is going and like the interest rate slipping up to a higher rate over time there will be money leaving your accounts for things you had no idea you were paying for and probable do not need. Once you have an idea on the various areas you can setup a separate account for key items, if there is a item that perhaps you are prone to overspend on you would create a separate offset account for this and transfer your allocated amount in each fortnight / month. When that account hits $0 (or an allocate balance) you know your blown your budget. All this is designed to do is to help you put the brakes on pr readjust your budget. I will write a more comprehensive article on the account setup in a subsequent article however the government Money Smart website is a great starting point.
Set long time-frame goals - These are the realistic goals you hope to achieve that can be linked to something you want to do in your life, each goal should have a a dollar and date linked to it because doing stuff costs money right. Write each goal down and setup smaller targets and dates to get you there. Goals are fun because they are real and when you work towards and reach those goals, well that's what is all about. More on goal setting another time.

The Numbers.

So how did we go, Jenny and John are currently paying $1,043 per fortnight on the current $400,000 home loan and $184 per fortnight on the current 20k car loan. The new home loan is $420,000 at an interest rate of 3.85%, so we are going to set this $420,000 loan up with repayments of $1,113 per fortnight (ie $929 + $184).

This new loan term will be 20 years with the exact same repayments as before the refinance and consolidation. In addition to this the interest saving over the loan term is around $42,500, not bad right. This repayment amount and loan term could be adjusted to meet the clients cash-flow requirements depending on their budget and level of comfort in paying the home loan down, however the ideal outcome would be to increase the regular repayments slightly. As an example they could easily reduce the loan term to just 15 years by paying $328 per fortnight more than their current level of repayments (saving almost $100,000 in interest cost over the term of the loan.)

"This new loan term will be 20 years with the exact same repayments as before the refinance and consolidation. In addition to this the interest saving over the loan term is around $42,500, not bad right. "

The refinance process takes around 3 weeks to settlement. When the new home loan is settled we can setup the offset accounts as these will save further interest with every dollar in each offset saving the day it is deposited into your account.

The combinations of these and a continuous check that everything is humming along will get you, like Jenny and John, on the road to being in total control of your money.

Need help or have any questions?

Contact Us any time or visit Focus Property Wealth Website or call Glenn directly on 0433 212 444

About the Author - Glenn Biggins is the founder and director of Focus Property Wealth, a finance and property investment advisory firm with a focus on their clients goals and objectives. Glenn is an active property investor himself and has been investing in property through a number of property cycles; he currently owns a portfolio of properties throughout Perth as well as in other states in Australia.

Disclaimer

The advice provided is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice. This needs to have regards to your own objectives, financial situation and needs. Where quoted, past performance is not indicative of future performance.

The post Home loan savings to pay your home loan off….FAST. appeared first on Focus Property Wealth - Perth Mortgage Broker.

5 Ways to pay your home loan off years earlier with no additional repayments!

glennadmin — Mon, 14 Aug 2017 04:59:35 +0000

PART 1 - The Scenario.

Have you ever wondered how some people seem to get ahead to pay their home loan down whilst others struggle from pay to pay and yet both generally have similar incomes?

I see this a lot and then I am privileged to be able to drill down deeper into our clients financial lives to see how they operate and find areas we can create efficiency in their finances. This may be the last thing you may want to do but I just love it because I know what this means to our clients to get on top of things..... It gives them the freedom to choose how to live their lives and what to do rather than being held back by a constant lack of money.

The Typical Scenario

I would like to take you through a typical scenario - As an example lets say John and Jenny have the following scenario:

A $400,000 home loan at an interest rate of 4.45% with 27 years left on the current loan term. Repayments with this home loan are currently $1,043 per fortnight.
In addition to this home loan they have a $20,000 car loan with an interest rate of 7.5% and fortnightly repayments of $184 per fortnight. This loan has 5 years left to pay this loan down to $0.
Currently their pay is deposited into a bank account with a balance of $5,000 currently, this account is used for all household bills and earnings a little bit of interest and is with a bank other than where the current home loan is.

This represents a fairly standard client scenario with the household income often equalling the household costs (including discretionary spending and those bills you just do not know what they are for) as most of us mere mortals spend what we earn without some form of control or indicator to let us know to stop spending in place. How to keep your household spending under control is a subject for another time.

"Ultimately the goal is to pay down all loans as soon as possible whilst allowing you to continue to live your life."

The idea is to increase the efficiency of the operation of all finances so the clients minimise the interest, fees and charges they pay the banks above the funds they owe. Ultimately the goal is to pay out all loans as soon as possible whilst allowing them to continue living their busy life and spend after tax money on things that really matter.

About Home Loans:

Although interest rate is not the only consideration in getting a home loan, if a client can save say $3,000 of interest cost per year they can reinvest these saved dollars back into the loan and pay the loan of years sooner.

What is the right bank choice?

There are literary hundreds of loan products to choose from with a range of features, fees and charges. Usually the correct loan comes down to two key items, the one that has the functional requirements of a client and also is the cheapest overall. Paying for extra features that are not being used is a waste of money so the right loan can be different for each client.

As an example three typical options offered to John and Jenny might be:

Bank A - Second Tier bank on their professionals package with an annual fee of $395 per year and package discounted interest rate at 3.85%, excellent package with 10 offset accounts available, credit card included in package and a very good ATM network. This option has not rebate offered to refinance however so costs to move will need to be factored in.

Bank B - a No frills basic home loan with a non-major bank, no annual, ongoing or setup fees. An interest rate of 3.94% and this product being no frills does not have an offset account or any package benefits.

Bank C - Professionals package with an annual fee of $395 per year and a packaged discounted rate at 4.04% with a major top four bank. This is an excellent package with 10 offset accounts available, credit card included in package and a very good ATM network. This option does have a refinance rebate under a special pricing approval of $1,250 to account for costs to move from the current bank. (actual costs are expected to be around $700 for John and Jenny so this rebate would put them in front).

So this is the Scenario, next is the solution.

Need help or have any questions?

Contact Us any time or visit Focus Property Wealth Website or call Glenn directly on 0433 212 444

Disclaimer

The post 5 Ways to pay your home loan off years earlier with no additional repayments! appeared first on Focus Property Wealth - Perth Mortgage Broker.

Ways to Pay your way off to Mortgage Freedom

Focus Property Wealth — Wed, 10 Aug 2016 08:11:18 +0000

It’s not uncommon for Australian’s to feel in over their heads when it comes to monthly mortgage repayments, eating up most of their hard earned income. There are solutions to getting ahead to pay off your mortgage sooner… here are our top tips:

1. Could you be making an extra months payment every year?

Structuring your payments differently could result in making an extra repayment! If you pay your repayments every month that is 12 payments per year however if you change your repayments to fortnightly that is 26 payments per year. So essentially by paying fortnightly you are paying an extra 2 payments a year. If you maintained a payment of half the monthly repayment, then you are squeezing an extra months payment into each year!
It may sound surprising, but paying this way can cut tens of thousands of dollars in interest off the loan.

2. Variable and fixed – the best of both worlds

Splitting your home loan between variable and fixed rates often provides borrowers with the solution of paying off more if they can. Having a variable portion gives freedom to make extra repayments without a penalty, while the fixed portion gives certainty about what repayments will be each week. Make sure you do weigh up the pros and cons of both fixed and variable rates before committing.

3. Having an Offset account

An offset account is a separate transaction account linked directly to the mortgage. It provides access to the funds it has available, however the balance on the account offsets the interest charged on the home loan. This is a great way to reduce the interest you are charged but of course, home owners should always seek independent financial advice regarding if an offset account is right for you.

4. Making the most of your tax return refund

Tax refunds can seem like a yearly windfall of several thousand dollars. By putting this towards your mortgage it could be a full extra repayment every year, paying off your mortgage sooner.

5. Look beyond the big banks

When it comes to finding the best loan, don't think there are only four options. Whether you are a first time borrower, investor or an existing customer of a big bank, it is worth exploring the different home loan options available on the market. It could be that the best product for you may be from a lender you haven't heard of before and that is where the services of Focus Property Wealth could come in handy!

Another Idea:

Deciding to put a dollar amount extra every month towards your mortgage it really adds up, even an extra $50 a month can go a long way! This extra monthly payment, especially in the beginning of your loan term, will really cut down on the high interest payments, it’s worth giving up a daily coffee for!
For more ways to reach mortgage freedom sooner call Focus Property Wealth on 6162 6577 or Contact Us for a complementary no obligation chat.

The post Ways to Pay your way off to Mortgage Freedom appeared first on Focus Property Wealth - Perth Mortgage Broker.

Your Budget – Where you go wrong

Focus Property Wealth — Thu, 19 May 2016 01:43:26 +0000

We all have some bad habits when it comes to money and your budget, but the good news is, you can change them. You can start by breaking lifelong patterns with a few simple strategies below:

Budgeting Tip 1# Write down expenses

It’s almost impossible to stick to a budget if you don’t know where your money is going. The small things we forget such as a morning coffee or parking receipt can eat into your budget over time.

For a month, make the habit of writing everything down (or entering into your smart phone) and update your budget accordingly.

Budgeting Tip #2 Don’t impulse buy

Chocolates at the service station, takeaway coffees at your local cafe and checkout items especially if made weekly add up quickly as well. These small purchases once a week, can cost you $8 a month which is $100 a year. Removing the impulse buys can save you hundreds of dollars in the long run.

Budgeting Tip #3 Don’t bust your budget

We all have budget blow outs. You go for dinner and it turns into drinks after. A shopping trip ends in purchasing additional items. Once in a while life happens, but if this is a regular occurrence make a shift:

If you know you have a tendency to buy more than just one thing when you go to the store, or friends change their plans, either avoid these activities or create a bigger budget ahead of time.

Budgeting Tip #4 Set Clear Goals

Having a goal of “I’m going to save” without defining how much and by when makes it hard for the goal to happen. Set realistic goals with a specific and detailed action plan. As an example, instead of saying “I’ll save money”, say that “I’ll increase my superannuation contribution by $2,000 a year”. Instead of “I’ll spend less”, say “I’ll cut $30 a week from my grocery bill” or “I’ll only buy one takeaway coffee a week”.

Budgeting Tip #5 Make things simple

Budgeting doesn’t need to be complicated. You can simplify it by not using elaborate systems or special budgeting tools. A budget can be as simple as a running total of your expenses using your smart phone giving you the freedom to update and adjust your budget regularly.

These budgeting tips can assist you to realign your budget and financial goals.

If you're saving for your first home or expanding your property portfolio, Focus Property Wealth can help you make it happen. We'll show you how to achieve your wealth creation goals within your budget. Complete the form above or call us today on (08) 6162 6577 of CLICK HERE and we will call you back right away.

The post Your Budget – Where you go wrong appeared first on Focus Property Wealth - Perth Mortgage Broker.