Your Money

Be prepared for the best of times and the worst

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A recent ING Direct survey showed Australians are saving like never before. Businesses are looking at every cost line by line and it’s great news that households are doing the same thing. How can you follow suit?

First, list every expense and ask yourself the question, ‘Can I cut down this expense?’ In the past, I have suggested GST’ing your life by imposing a 10 per cent ‘tax’ on yourself. If you spend $30,000 a year and you slug yourself 10 per cent, you find $3000.

Get the whole family on board because there’s nothing more likely to cause a fight than one person skimping and another splurging.

Make a few lifestyle changes

A related strategy might call on you to change who you are, but it’s for a good cause – your bank balance.

Do a complete budget with all of your income and costs. Ask yourself, ‘could there be another way to live your life and save?’ For example, if your takeaway food bills are high, start doing a lot more cooking at home.

If you go to the movies and the bill is high, then maybe a Foxtel subscription could actually save you money. Also think about doing cheap stuff like reading books and having picnics in parks by the Harbour, a river or down at the beach.

These lifestyle changes not only save you money, it could save a relationship or even your life. (I know I am getting a bit deep but a change can be as good, if not better, than a holiday). 

Look at job opportunities

Next, see if there are any part-time jobs out there. Lots of part-time jobs are done by backpackers and other less reliable types, who like to come and go. For example, a local hotelier might like a local who wants to do some permanent part-time work to get ahead. Put your name down in places where you would like to work part-time. 

Find extra cash

Check out all of your loans and make sure they are at the best rate possible. Remember, you’re on the hunt for cash you have been ignoring. You need to become fanatical and professional in finding money inside and outside of your life.

It’s a good idea to seek professional help with your loans. Mortgage brokers could help you find the best loan but make sure they are trustworthy.

I would go to a couple of banks and a few brokers to see what is the best deal out there.

One word of warning: don’t get sucked in by the advertised rate of interest. You must ask for the comparison rate of interest, which adds in all other charges and fees that can come with a home loan.

Think about hiding the credit card until you feel comfortable with your money situation. Get a debit card and only spend what you have. By the way, use only your own bank’s ATM to save on the $2 slugs (and, at some ATMs, even higher!).

This might be a challenge to many people, but don’t be afraid to go into St Vincent de Paul and SALVO’s shops. Lots of people throw great stuff out because they have no room, they are going overseas or they might have kids that have grown up. 

Look out for deductions

Also, look after your stuff. Many people fail to look after their car and end up with big repair bills and a very depreciated car. On the subject of cars, if things are really tight and your job looks shaky, it might be worthwhile examining whether you can live without a car. Your motor vehicle is an enormous drain on your hip pocket.

To be more positive, see if there are little, self-employed jobs you can do with your car, which not only might help with income, but could give some tax deductions.

Go to the tax office website — www.ato.gov.au — and see what deductions you are entitled to. If you have never had tax advice, maybe it’s time to invest in information that could reduce your tax bill. Some people have ignored legitimate tax deductions that can be back-claimed. 

Act quickly

One last thing. If you lose your job, talk to your lender ASAP. Don’t let a bad situation get worse. Sometimes a lender can cut you some slack while you look for work, but if you turn up when the you-know-what is hitting the fan, it could be curtains for you, your credit rating and your home.

The preparation you do to prepare for tighter times will make you into a more professional money manager. And this will help you build wealth over the better years ahead.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Thursday, July 21, 2011

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