Rate rises a breeze with smart money management
March 20, 2008 // Franchising.com // A sound household budget is the simple solution to minimising rate rise stress, says The Mortgage Gallery's Ryan Dhue.
According to Dhue, a well-thought out and executed family budget goes a long way to shielding your household from the impact of rising rates.
"Let's face it, rates rise pressures are still with us," says Dhue. "The early signs are that the last three rates hikes have helped slow the economy, but there's still a reasonable chance that the next move could be up rather than down."
Dhue believes that borrowers that prepare for the worst case scenario will be well insulated should rates continue to rise.
He advises borrowers to take the time to assess their household budgets and establish which expenses are essentials, and where savings can be made.
"There are some costs that we just don't have any say in such as council tax, child care and basic utility bills; but there are lots of other areas where savings can be made without making life uncomfortable," he says.
Entertainment, food bills, even loan repayments all have the potential to be reduced with the right strategy.
Dhue emphasises that with a structured approach most households will be surprised at where extra savings can be made.
"Too many borrowers confuse needs with wants," he explains. "It's really important to know your monthly cash flows. I advise borrowers to sit down and work out what is coming in and what is going out each month. Look not only at your home loan payments but other debts, bills and groceries."
Dhue says that many borrowers are also unaware of the impact that small items can have on their finances.
"If you buy your lunch every day you could be spending at least $2,000 a year – that's a lot of easy money to put towards mortgage repayments," he says.
Families should aim to put aside 20 per cent of household income to save and use during difficult periods if necessary.
"If this isn't possible, at least make sure you put something aside," he urges. "And make sure it's automatically done so there's no chance you will spend it", adding that developing the saving mentality will always ensure there's a slush fund on hand.
If borrowers have assessed their home finances but still feel uneasy about their debt, Dhue suggests they speak with their mortgage broker for some professional advice.
"Don't despair – if you're struggling with mortgage, credit card and other loan repayments there are options. The most important thing is to take action; there are alternatives to almost every situation, however bleak things may seem."
If you would like expert advice about your home loan call Ryan Dhue at The Mortgage Gallery today on 08 9440 1999.
The Mortgage Gallery was recently identified by BRW Magazine as one of Australia's fastest growing financial services franchises. The Mortgage Gallery was established in 1992 and is one of Australia's first mortgage brokers. It has assisted thousands of Australians source the most appropriate financing for their needs, supported by over 30 different lenders.