3 tips you can use today to create a better tomorrow
If you’re one of the roughly 8 million Australians whose home is partly owned by a bank, here’s a fact that you should always bear in mind:
“Your” bank works for its shareholders – NOT for you as a mortgage holder.
That’s why it’s very unlikely that your bank will give you the best advice on how you can pay off your mortgage faster. After all, it’s in their best interest for you to simply take the standard 30 years to pay off not only what you borrow; but a mountain of interest over the journey as well.
So if your bank won’t be motivated to help you save money on your mortgage, where can you go for the advice you need?
We asked our Henderson Matusch financial advisers for their tips on how you can save money over the life of your mortgage.
1) Take a close look at your expenses
As a mortgage holder, there are so many competing interests for your monthly pay check – it’s not all takeaway lattes and smashed avocado on toast!
On top of your ongoing mortgage payments there’s filling the car with petrol, paying for those ever-increasing energy bills, and all the many things that contribute to your general cost of living. Sometimes it’s all too easy for you to feel like you’re never going to get ahead.
Chances are though that there will be some small changes you can make, that can add up to a big difference over time.
To use the example above, if you buy that takeaway latte and a humble sandwich for lunch for “just” $15 a day, that’s $75 every week – or an eye-watering $3,900 every year!
Imagine what you could do with that amount of money if it magically landed in your lap. You could afford to pay off the credit card... take an overseas holiday... or simply make a substantial payment towards your mortgage.
Well of course, magic doesn’t happen – yet you do have the means to ensure a similar saving.
Go through your spending plan and identify costly habits – such as indulging in lunch every day – that you can change in order to benefit from a big annual saving.
2) Set up a passive source of income
When you’re looking at decreasing your expenses, the other side of the coin is increasing your monthly income.
As we’ve seen, your weekly salary only goes so far. That’s why you could really benefit from setting up a source of passive income to supplement your wages – and eventually replace them altogether.
A financial adviser can advise you on the strategy you need to borrow against your home equity, and invest in a managed fund. This strategy can then reduce the amount of tax you pay, freeing up more funds to help you pay down your mortgage much more quickly.
3) Understand that YOU have the power to change your financial future
If you’re finding it difficult to make ends meet, you’re not alone. Statistics show that 1 in 7 Australian households spends more than it earns – a problem that affects people from all walks of life.
They’re called “the working poor” – people who are struggling to service the debt from their monster mortgages. Of the poorest 20% of households, 1 in 5 cannot pay their bills on time, and 1 in 4 spend more than they earn.
And it’s not just the lowest income households that are affected. 8% of the so-called “richest” households are actually living on credit card debt, with 3% being unable to afford to pay their gas and electricity bills on time!
But just because this issue is widespread, doesn’t mean you have to simply accept the status quo. Ask yourself – what is stopping you from taking the steps today that will make a huge difference to your financial future?
Is it your mindset? Do you find it difficult to focus? Do you lack the structure or discipline that’s needed to get your finances in shape? Having an honest conversation with yourself can help you take the important steps you need to meet your future goals.
The most important thing is not to leave it too late! Making a few small changes today can make a world of difference to your future situation.
Talk to Henderson Matusch for help with paying off your mortgage
If you’d like expert advice and assistance with reducing your expenses, increasing your income, and removing the barriers to wealth creation, Henderson Matusch can help.
For a complimentary obligation-free chat with a Henderson Matusch financial adviser, simply call us on (07) 3229 3688 or fill out the simple contact form here.