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Individual freedom, in many ways, becomes pointless in the absence of financial freedom.

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Individual freedom, in many ways, becomes pointless in the absence of financial freedom.

This recent weekend we exercised our democratic right and voted for the next Prime Minister of our great nation. It’s all part of the freedoms we have come to expect in Australia,

BUT 

Individual freedom, in many ways, becomes pointless in the absence of financial freedom.

I am continually seeing on social media and in the press, stories relating to women and the absence of their financial freedom. With headlines like:

“A new report highlights the significant impact domestic violence has on women’s financial security and safety.“

“An estimated 15-17 per cent of Australian women are affected by domestic violence over the course of their lifetime, with an economic cost of around $13.6 billion to the Australian community.“

“Poverty means many women cannot leave a domestic situation; they are unable to access the critical support they need.”

“Women want to be financially independent and secure, they are desperate to recover from their experiences and they need support to do that.”

“It’s not just women from the boomer generation, research shows that millennial women, more than any other generation, leave financial decisions to their husbands.”

“The report found that 69 per cent of fathers and 52 per cent of mothers with children under 21 said they were fine with their daughters’ future spouses handling long-term financial planning.”

“43 per cent of female breadwinners said they also leave financial decisions to their husbands.”

As a female financial broker who specialises in both commercial and residential lending and having spent 12 years working for 2 of the big 4 banks in Australia, I have now come full circle and see why it is essential to talk about money, be educated about money and the importance of having a positive money mindset. 

I often hear people say:

“That’s all too much to think about. I don’t even know where to start?”

Well, here are few of my reflections and strategies when thinking about money.

  • Do not let money overwhelm you and don’t stick your head in the sand. 
  • Break it down into manageable pieces.
  • Create a plan, set life goals, big and small, financial and lifestyle. 
  • Create a budget, money coming in – money going out.
  • Make a list of all your debts, limits, repayments, loan life, interest rates.
  • Choose a debt to pay off in full – it’s often said to pay off the card with the highest rate, but I find paying off the smallest loan size first can help. This gives you a sense of achievement and success.
  • Set up automatic payments on all your bills and loan repayments to avoid late fees.
  • Create automatic savings by setting up an emergency fund and consider paying a little extra each week to super.
  • Take care of your belongings – maintenance is cheaper than replacement.
  • Know you credit score. It determines your interest rates in some instances. A low credit score can be seen as someone with reckless financial habits and not a good financial risk for lenders. This is not limited to the banks, also providers of credit such as gas and electricity and phone plans.
  • Pay your home loan off at the higher interest rate. Not only will you be ahead, but it also won’t hurt as much when you get those rate rises. 6 per cent is where rates are heading, so the experts are saying.
  • Spend less than what you earn and borrow less than what you can afford. 
  • Take an active role in your finances, talk to your partner, go to financial meetings, such as the accountants and banks with them.
  • Know what you are signing.
  • Take care of yourself first and foremost.
  • Create a great support team, talk to your accountant, Financial Planner, broker or even a counsellor.
  • Have a look on social media there are some great support groups and like-minded people sharing their journeys and offering support.

Fact

Women live longer than men and 80 per cent are going to end up alone, whether because of longer life expectancies or divorce. 

I would love to hear your thoughts, why not leave your comments below.

2022 and Interest Rates

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2022 and Interest Rates

What are the economists really saying? 

There has been a lot of talk and countless opinions in the media around interest rate movements for 2022.

At times ‘the economists’ seem to be speaking a foreign language when all we really want to know is “what does this mean for me?”. Unfortunately, nobody seems to have a crystal ball, so for the past few weeks I’ve listened to addresses from Westpac senior economists and the head economist from Bank of QLD.  My key takeaways are:

1. Interest rates are going to rise; and
2. Borrowing money will become tighter.

Ok. This seems logical.

My first thoughts as someone who is not an economist kicked off with, “I need to check the current rates on my home loan!”  This was soon followed by a visit to my mortgage calculator so I could consider the impact a potential rate rise of 1.5% to 2% over the next two years.

With predicted interest rate increases, it is more important than ever to be aware of your current options and those moving forward.

Here are some questions I considered, then I looked at the pros and cons for my specific circumstances:

  1. Should I fix a portion of my home loan? 
  2. Should I leave it variable and pay off more on my loan?
  3. Would a mix of fixed and variable be a better choice? 

Once any concerns about my home loan where squared, it was time to look at any other loans and debts I might have. Rinse and repeat. I’ll confirm my current interest rates for each, and then see what I can do to improve my situation. 

 Some options to consider are:

  • Debt consolidation; or 
  • Make extra payments 
  • Pay your smallest loans of first, this can be a quick win and then that extra money can be moved to your next loan.

That takes care of anything we might currently owe. Now it’s time to think about any future lending we might want. For example, is 2022 the year I set up a home, car or business loan?

As mentioned, borrowing is likely to become harder as interest rates increase. Lenders will want to see how you conduct your financial matters, which means it is time to review your credit rating.  

Your credit rating is one of the tools a lender will use to decide whether you are a safe risk. If you haven’t looked up your credit rating before, there are a few options online such as Equifax.

Once you have your report, check for any defaults and late payments. Did you know late payments show up on your credit file and can be seen for two years, even if your account is closed?

Don’t forget to check your savings habits. Can you show a regular savings plan? Consistency is the key! Putting something aside each week is another tick for many lenders.

No matter what the economists are predicting, it is important that you are in the driver’s seat of your financial position. 

Take responsibility of your money. Pay on time – set up BPay. 

Have a budget and stick to it. A budget is a road map to tell your money where to go. Understanding where your finances are currently at and taking a little action often, will assist in your overall financial health and wellbeing.

Festive financial hangover

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Bills starting to land in your inbox from your Christmas spending?

Don’t panic. Now is the time to take stock of your finances and put actions in place to:

  1. Pay off your Christmas splurge hangover, and,
  2. Set realistic 2022 financial resolutions to break the debt cycle and get ahead.

The festive season is a time when budgets can go out the window. Next minute, your savings are depleted, your credit limits are maxed and debt is sky high.

Here are our top tips for paying off that seasonal spending splurge:

  • Gather all your statements and bills – bank statements, loan statements, credit card, AfterPay bills etc. Once you have them all, make a list of all your outstanding amounts.
  • Become friends with your debt. You can’t hide from these bills, so, for each bill make a note of the outstanding amount, due date and interest rates.
  • New debt = time for new budgets. Create a 2022 budget. Calculate your income in and expenses out. Remember to also include the likes of annual fees on credit cards and bank account fees etc. All these ‘incidental’ amounts make a difference to your budget – and potential saving options.
  • Map your financial picture: what you own, what you owe, how much you earn and what you spend.
  • Now that you have a solid budget, look at potential ways of reducing debt sooner – can you consolidate your debts into one lower rate loan? Which debt has the highest interest rate? Consider making extra payments on this debt to pay it off sooner.
  • Set up BPAY through your internet banking to ensure debts are paid before the due dates to avoid unnecessary late fees.
  • Be patient – paying off debt can take some time. Constantly chipping away at it pays dividends in the long run.
  • Avoid taking on any more debt (if possible) until your existing debt is reduced or manageable.

Now that you have a budget and plan in place for paying off your debt, here’s some 2022 finance resolutions for you to work towards to help save money. Write down your 2022 financial goals – saving for a car, home loan, business improvements or starting a new business?

Next, how can you achieve these goals?

  • Reduce debt (which if you have taken our advice above, you already are working towards this – yay, go you good thing!)
  • Build your passive income. Side hustle or second employment perhaps?
  • Set up a rainy day and/or emergency saving account and contribute each pay cycle.
  • Insurances. We all have them, but are we getting our money’s worth? Shop around, compare and if there is a better deal elsewhere, change providers.
  • Have you checked in on your superannuation lately? Do you know how it’s performing, or is it underperforming? 2022 could be your year to rekindle the spark with your super. 
  • Join some likeminded face book pages such as – Australian Debt Free Community.
  • Have you got a will? If not, get one. If you do have a will, check to make sure it is updated for your current life situations – you might have upgraded your home, have accrued more super since you last looked at your will. It’s important your intentions and financial credentials are sorted in your will. 

The above is a snapshot of some of the ways you can work towards financial freedom in 2022.