Why you should have a budget!

Why you should have a budget!

Without a budget your future financial security could get lost.

Brendan Barker - Home Financing Specialist - Home Loans - Car Loans - Personal Loans

I still remember the joys of my first job.  It was the mid 90’s and I had just started as a graduate mining engineer in Broken Hill.

I had spent the previous 6 years at university between undergraduate and post graduate studies.  Having a regular income, of was that wonderful.

I could afford to enjoy life.  Enjoy it I did, while I was never a party animal, I enjoyed going out with the mates each weekend.

Bought myself a new car, a red Ford Futura.  Plus, one or two new gadgets, TV, computer etc.

Throw in a holiday or two. Not having to worry about money because I was earning a good income.

Life was good.

Or so I thought.

It was a Christmas a couple of years after I started my working career.  I was in Melbourne having a holiday.  Trying to work out how I had ended up in financial difficulty.

I wasn’t helping things with the holiday itself going on to the credit card.

I had a car loan I was paying off.

A credit card with a steadily growing balance.

A debt with the ATO, my employer had taken out the wrong amount of tax.  Not that it was their problem.

Here I was earning great money (for someone who was only starting their career) and I had nothing to show for it.  I was living pay cheque to pay cheque.

Something had to change.  But first I had to admit to myself what I was doing wrong.

I didn’t have a budget.  I had no plan for my future.  I was earning money and spending money and hoping that everything would be wonderful at the end of the day.

I had to change.

By the end of the Christmas holiday I had a plan in place.  A budget which would allow me to have some financial security.

Competition

4 steps to create your budget

  1. Work out what I was earning – easy I just looked at my last payslip. It was consistent pay to pay.
  2. Work out my living expenses – no this wasn’t what I was spending each week, but what I had to spend each week. Fuel for the car, electricity, phone, food, rent, insurances etc.  All the stuff that must be paid for each week.
  3. What did I owe – what where the debts owing, car loan, credit card and ATO and what the repayments for each were.
  4. Put the plan together – this was the fun bit
Putting the plan together

First step was to take my monthly income and subtract my living expenses and my debt repayments.

What was left was the money I had available to create the future I wanted.

The second step was to allocate this money to work for me.  I allocated some to reducing my debt, some to saving for the future and what was left I could spend as I pleased.

I can’t remember what the actual numbers, but for illustrative purposes let say I was earning $4,000 per month.  My monthly living expenses were $2,000 and I had $750 per month in repayments on my debts.

That meant I had $1,250 I could allocate at step 2.  I may have put $500 a month into savings, paid an additional $250 a month off my debts and that would have left me with $500 to do with as I pleased each month.

No guilt or restrictions on what I spent that money on.  If I didn’t spend it, I either added it to my savings or spent it the next month.

I just had a simple plan I followed each month.  When I got paid, I would put my money for living expenses aside in one account, my savings into another and pay off some debts.  I knew how much and where it was going.  The rest I got to spend.

It was simple and straight forward.

A budget doesn’t have to be complex and it does not have to be a rigid document which doesn’t allow you to enjoy life.  It must be a plan which will allow you to get ahead in life.

Uncertain whether you should have a budget?  Don’t know where to start?  Click here to get your free budget planner to help you get under way.

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Why would you use a financial planner?

Why would you use a financial planner?

We have all seen the headlines about financial planner’s, they just seem to keep coming year after year….

  • Fee for no service the latest scandal for banks behaving badly

  • ASIC charges former Commonwealth Bank financial planner with forgery

  • Financial advice scandal: Banks face $178m compo bill

  • CBA, NAB, Macquarie, ANZ front Senate over financial planning scandals

Brendan Barker - Home Financing Specialist - Home Loans - Car Loans - Personal Loans

With a new skeleton being found in the closet of the financial planning industry on a regular basis, it is hard to know where to turn for trusted advice.

Many people choose to manage their investments on their own.

But for some that’s not an option, whether you are having trouble planning for your retirement, or you have an estate you want to leave to your heirs, here’s a look at five reasons for getting the help of a financial planner.

  • You Don’t Know How To Save For Retirement

Retirement planning is more than your employer paying they superannuation guarantee contribution into your nominated fund.

A financial planner will go over your current financial situation, they will help you figure out how much you realistically need in retirement and structure a plan that meets your goals and needs.

  • A Marriage Or A Divorce Is In The Cards

One of the main reasons for divorce is financial woes… Marriage means the mingling of income, assets, and debts and a financial planner can help both husband and wife budget their money, save for common goals and make the right investment choices.

The same can be said for a divorce.  A financial planner can help you untangle your finances, you may have been left with a windfall or a large debt to service.  They can help you put a plan in place to achieve your goals.

  • You’re Caring For An Aging Or Sick Parent

Nobody wants to see their mom or dad become ill as they age, but unfortunately, that is a reality for many people.  It is not only about caring for their health, but also assisting them with managing their finances.

This is where a financial planner can help, to ensure they are getting access to all the government benefits they are entitled to and ensure their super/pension is set up correctly.

  • You Receive a Sudden Windfall

Whether your windfall is from an inheritance, winning the lottery or landing a lucrative job, managing large amounts of money can be complicated.  A few bad mistakes and in a blink of an eye it’s all gone.

A financial planner will give you sound advice and help you put in place a plan to grow your windfall so that it meets your long-term goals.

  • You have or going to have a large Mortgage

Buying a home is the largest purchase most of us will ever make, and for most of us it comes with the biggest debt we will ever have.  While we never plan to get sick, lose our jobs, or pass away, these are naturally the sorts of things that can take a toll on your family and on the mortgage repayments.

A financial planner can assist in putting in place various insurance policies which will ensure that the mortgage and your loved ones are looked after if something unforeseen happens.

So, you have decided that you need to talk with a financial planner. Your best chance of getting good advice is to ask them the following 5 questions.  They won’t guarantee a planner you can trust or of their competence, but it will increase the odds of you getting reasonable advice.

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5 Questions to Ask a Financial Planner!

  • What company owns their advice licence?

You want to find out if they or their employer receives any benefits for recommending their products.  For example, a planner working for one of our major banks which is incentivised to recommend the products of their wealth arm.

If they do…. Walk out…. Quickly

  • Have they ever recommended a managed agricultural scheme?

You know the schemes, get the big tax deduction upfront and make a huge profit in 10 years time (or not seeing most of them went bust during the GFC).  These schemes paid advisers huge fees of 10 per cent or more. If they succumbed to this temptation in the past, no matter how reformed they claim to be, don’t just walk away.  RUN.

  • Will my money be put into your firm’s funds and products?

If they answer YES, find out what steps they take to source other alternative products and to manage any conflicts of interest.

  • How do you get paid?

Is it a flat fee, commission on sales or a percentage of an asset based fee.  However they are getting paid, you have to be comfortable that there is no conflict of interest and you are getting quality advice.

  • Ask to see a sample statement of advice?

A statement of advice should cover the following major points budgeting, cash flow projections, a comparison of multiple strategies and a discussion about what you can realistically except in retirement. If the document is difficult to understand or is unnecessarily long, the adviser has missed the point and it’s time to leave.

Going it alone may seem like the cheapest way to manage your money and investments, but it can end up costing you a lot in the long-run. The help of a knowledgeable and reputable financial planner can go a long way in making sure you stay on course to meet your unique financial needs and goals.

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How $5 can change your life!

How $5 can change your life!

Can you afford to save $5 a day?

Brendan Barker - Home Financing Specialist - Home Loans - Car Loans - Personal Loans

How much do you spend on a daily basis? The morning coffee, a sandwich at lunch time, a coke mid-afternoon or a snack while doing the shopping, all these little things add up very quickly.

What if you decided not to purchase one of those indulgences and instead saved $5 each day.  Instead of picking up a coffee from the local café, make one a home before leave the house.

Instead of buying a sandwich at lunch, make a little bit more for dinner each night and bring leftovers for lunch.  Drink water instead of getting that coke, which is a much healthier option anyway.

There is so many little things we can do which would save us $5 just on the little luxuries.

What I hear you say, $5, that’s not going to change my life.

Read on and see how the simple $5 note is going to make the world of difference.

What if you saved $5 a day for a month?

You would have saved $150.  While it is a great achievement (whether you saved $10 or $1,000 it is a great result), is having $150 going to change your life?

Well if you bought a new bike and started riding it everywhere, it could have a significant difference on your health and your life.  If you went and bought a new outfit, while enjoyable not so much a difference on your life.

You could have a romantic dinner with your partner or you could spend it on the children.  While saving could make a change in your life, it most likely won’t be significant.

What if you kept on saving, say for 3 or 6 months?

Competition

What if you saved $5 a day for 6 months?

You would have saved $900.  Congratulations this is starting to look like some serious savings, but will $900 change your life?

That would be a great weekend getaway for the away for the family. That start of an emergency fund so you don’t have to reach for a credit card each time something from left field crops up.

For only the cost of a cup a coffee a day, this is starting to look like it could change your life…

What if you kept saving for a year?

What if you saved $5 a day for a year?

You would have saved $1,800.  Now if your partner had joined in on the challenge, so you both were saving $5 a day, $10 in total.  Yep, $3,600.

Now we are starting to talk about some serious money.  If you had $3,600 saved come the end of the year, what could you do?

Take the family on an overseas holiday? How about a cruise? Pay off the credit card once and for all (wouldn’t that be a great feeling).

What if $3,600 is not enough for you to reach your dream?  Nothing stopping you from continuing to save.  5 years and you would have $18,000, yep more than enough for a deposit on a new home or to buy a second car outright.

What if you don’t want to spend 5 years to get to $18,000 in savings.  There is nothing stopping you from saving a little more each day.  Instead of $5 a day or $35 a week, you could aim to save $50 per week each or you might go for $10 per day.

All it takes is looking at the little luxuries we enjoy each day and cutting one or two out.  You don’t have to cut them all out, just enough so that you can save for the future.

Uncertain how $5 a day can change your life?  Don’t know where to start?  Click here to get your free budget planner here to help you get under way.

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How to get rid of credit card debt

How to get rid of credit card debt

How consolidating your credit card debt can save you money.

Brendan Barker - Home Financing Specialist - Home Loans - Car Loans - Personal Loans

$32,000,000,000. Yes Thirty Two Billion Dollars.  That is the credit card debt currently owed by Australians, that’s an average of around $4,300 per card holder.

With interest rates on credit cards typically running at 15% to 24% the average credit card owner would be paying $650 to $1,000 per year in interest.

This doesn’t include any fee’s and charges the credit card provider may charge.

Add in a second credit card or a personal loan or two, and it is not difficult to see why it is so easy to get yourself into financial strife with debt.

How do you get on top and manage your credit card debt?  Read on to find out…..

Top Three Tips for Managing Credit Card Debt

Your individual situation will most likely be very different to the national averages.  You may have significantly more credit card debt or you may have none.

Regardless of how much or little credit card debt you may have, the following 3 tips are worth following (at least the first two if you have no debt).

  • Have a budget – if you don’t know what your income and expenditure looks like each month, there is no way to know if you can afford that new dress, latest iPhone or that cruise you have been dying to take.
  • Set up a regular savings – savings form an important part of your household finances, allowing you to afford the bigger ticket items or pay for those unexpected expenses.
  • Consolidate your debts – This simplifies your repayments and means you only have to deal with one interest rate. Typically you will end up paying a lower amount of interest which will save you money.

Competition

How to get on top of your finances with Debt Consolidation

What exactly is “Debt Consolidation” – it means refinancing your debt onto the lowest interest rate possible – and setting up a realistic repayment plan to get it paid off!

The key here is having the plan to pay off the debt.  If you don’t budget to pay off the debt, all that will happen is that you will keep on getting further and further into debt.

So what are the 3 Main Options for Consolidating Credit Card Debt?

  • Transfer your Credit Card Debt onto another Credit Card offering Balance Transfer Rates

This can be a great option, as there are many Credit Card providers offering 0% on balance transfers for 6 or 12 months.  However, this only works if you can pay off the debt within that time period.

While you can continue to transfer the debt from card to card, this will start impacting your credit score and could impact on what lenders will give you in the future.

  • Consolidate your Credit Card Debt with a personal loan

Using a personal loan for debt consolidation has the significant benefit of the personal loan having a defined lifespan.  The repayments will have been calculated so you pay off the loan over a certain timeframe (3 to 7 years).

This will save you a significant amount of money in interest, but you may end up having to repay more each month on the personal loan than you currently paying off the credit cards.

  • Incorporate your Credit Card Debt into your Home Loan

Provided you actual have a mortgage and equity in your home that can be used for debt consolidation.

By incorporating your credit card / personal loan debt into the home loan, and increasing your home loan repayments accordingly will not only save you on interest but will allow you to pay off the home loan sooner.

Of course these strategies will only work if you stop adding to your current credit card debt.  If you cannot control your spending habits the best option is to cut up the credit card.  If you can commit to controlling your spending, then debt consolidation can save you a lot of money.

Would you like some help to save money while getting rid of unwanted credit card debt?  Don’t know where to start?  Give me a call on 07 3423 8730 or fill in the enquiry form here to set up a free and no-obligation chat to see how I can help you get rid of your unwanted debt and to save money.

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