With the Sunday Mail/Nine News Big Squeeze survey showing almost 80 percent of people struggling to make ends meet, it’s time for change. Experts say small steps can reap big rewards. Cutting out a daily $3 cup of coffee can save more than $1000 a year and a few hours on the computer can find the best deals on insurance, phone plans and home loans and put possibly a thousand of dollars back in your pocket.
Ellerfield Planning director Aaron Zamykal said families often put budgeting in the too-hard basket and continued bad habits because they can’t see a way out. Brisbane AMP financial adviser Tony Gigby said having a budget was the first port of call. The survey highlighted that only 18 per cent of people stick to a budget. “You must keep an eye on incomings and outgoings so that you spend within your means.
If you are overspending then look at ways to make easy savings first,” he said. He recommended spending $50 on the State Government’s Climate-Smart Home Service. “You will be provided with a wireless power monitor, 15 power-saving light globes, a water-efficient showerhead and a household power assessment by a qualified electrician for $50,” he said. He also said monthly direct debits to cover big quarterly bills was worth thinking about. “Although it might be slightly more expensive to pay monthly, it can be easier to budget for smaller, more regular payments,” he said.
Mr Rigby was concerned that the survey showed that only 6 per cent of people would switch mortgage providers to get a better deal. “Often the mortgage is the biggest ticket item in the household budget and any savings could be a saviour.” For a typical 25-year mortgage, anything extra paid in the first five to eight years will cut the interest bill and shorten the life of the loan. Credit cards are also a big debt trap for many Queenslanders and the Australian Securities and Investments Commission’s senior executive leader for financial literacy Delia Rickard said many people fell into the trap of paying only the minimum payments.
If you have $3000 owing on your credit card, a 16.5 per cent interest rate and you pay only the minimum for each month, it will take you 31 years to pay it off and you’ll pay more than $5500 in interest. Make a step-by-step approach to clear your debt. Continue to make the minimum payments on all of your credit cards and stop using all but one. Try to only use this one for emergencies.
The Sunday Mail/Nine News survey showed 19 per cent make minimum credit card payments.
By Jackie Sinnerton and Kate Higgins
From: The Sunday Mail - March 27th 2011
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