Tag: tips

19 ways to save money… right now!

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The average Australian is the second richest in the world behind the Swiss. But it sure doesn’t seem like that.

While superannuation and property values have had good gains, slow wage growth has meant has our income growth to pay bills has been subdued.

We know every dollar counts. So here are 19 ways you can immediately save at least $100… each. And maybe a lot more.

#1 – Stop buying bottled water

Bottled water is the great first world waste of money, and we can’t get enough of it. Why pay $3 a bottle, more than you do for a litre of petrol, when you can turn on a tap and get it for free. Crazy.

#2 – Stop impulse spending

Wait a day after deciding to purchase something. In other words, never buy anything on impulse. You’ll be amazed, by taking the extra 24 hours, how often you decide not to go through with the transaction.

#3 – Find the best discounts and deals

Use coupons and shopper dockets wherever possible. Whether you’re shopping online or in a store, there are bargain discounts right in front of you which we hardly ever use. On the back of supermarket receipts, promotional codes for special offers etc. There are some great deals if you bother to look.

#4 – Stop paying for international calls

Call for free over the internet. Forget about shopping around for the best long-distance or international phone plan, download apps like Skype and WhatsApp and call friends and relatives for free.

#5 – Get coffee conscious

Forgo takeaway coffee and make your own. Grab a free coffee from home or the work kitchen instead of your $3.50 latte from the local café. Save $20 a week, $80 a month… almost $1000 a year. It all adds up.

#6 – Shop smart

Anything at eye level on supermarket shelves will be more expensive than products at your toes or above your head. Eye-level shelves are prime position and food producers pay the supermarket more for this advantage.

Kochie explains some simple ways to save!

#7 – Cut up your credit cards

Switch to a debit credit card and avoid interest charges and late payment fees when you don’t pay your bill on time. Debit credit cards allow you to use credit card facilities but only let you to spend your own money so you can’t go into debt.

#8 – Call your bank

Ring the bank for a discount on your home loan. They can only say no… but they’ll often agree. Especially if you have insurance, credit cards and investments with the bank. You are a valuable customer and therefore should get at least a 0.5 per cent discount on the advertised variable home loan rate. It will literally save your thousands of dollars.

#9 – While you’re at it, call your insurers

Review your insurances. Never automatically pay a renewal, always compare and ask for a better deal. Save on insurance by having your house, car, life and income protection insurance with the same company. Increase the excess on your house or car policies if you are struggling to meet your monthly premiums but NEVER cut the level of coverage.

#10 – Take your lunch to work

It’s hard to buy a sandwich and a drink for less than $10 these days. Plan ahead when you’re doing your weekly grocery shop and take a packed lunch to work. Save $50 a week, $200 a month, $2,400 a year.

#11 – Buy second hand

You can save a fortune buying second hand clothes, furniture and toys. Online marketplace, like Gumtree, eBay or a host of others helps you search, view, bid and purchase virtually anything you want… at a bargain.

#12 – Cut energy costs

Cut your electricity bill by installing energy efficient or fluorescent light bulbs, unplugging the second fridge, using drying racks instead of the clothes dryer, and turning the heater off when you go to bed. Wear a jumper and turn the heating down.

#13 – Start cooking

Be aware of the price of convenience and take-away foods. You are probably better off spending time cooking rather than buying frozen meals for the family or things like pre-packaged salads and copped veggies.

#14 – Buy out of season

Buy big-ticket items out of season. Refrigerators are like swimsuits. When the temperature goes down, so do prices. Also, watch for new-store “grand openings” as well as beginning and end-of-season sales, which can offer discounts of 50 per cent or more off retail prices for many appliances. It takes some planning but buy fridges and air conditioners during winter while grabbing heaters during summer.

#15 – Consolidate debt

Consolidate debt. If you’ve amassed $5,000 or more in credit-card or other unsecured debt, consider bundling it into a home loan, assuming you are certain you can afford to pay down that loan. On a balance of $10,000, you could save more than $2,000 in interest payments over five years if you consolidate into a mortgage.

#16 – Buy in bulk

Cut 40 per cent or more from food bills when buying in bulk at wholesalers and markets. For fruit and vegetables, form a shopping co-op with a group of friends and do a deal with a local green grocer to buy in bulk.

#17 – Go with the flow

Low-flow shower heads are great energy and water savers. Most hotels now use them to cut water costs and they are widely available for residential bathrooms as well.

#18 – Read labels

Buy washable clothes, especially now that many silks and other delicate materials can be tossed into the washer. Dry-cleaning costs can double or even triple the purchase price of clothing.

#19 – Travel smart

Travel discounters buy blocks of “room nights” from hotels and airlines at volume discounts and pass on 20-50 per cent savings off regular rates. Take advantage of off-peak deals especially outside of school holidays. And use the range of web sites where hotels off-load vacant rooms at short notice for big savings.

That wraps up our tips to save money right now. What would you add to the list? Let us know in the comments.

Kochie’s Tips on How to Get Even With Your Bank

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Australia’s banks are some of our largest and most profitable institutions. How do they make such big profits? From you, their customers.

Last week, the major banks and many of their competitors raised their home loan interest rates, even though the official RBA cash rate didn’t change.

We say don’t get mad… get even! Here are 5 ways to turn the tables on your bank and make sure you’re getting the best possible deal.

 

Make your money work for you

Kochie’s 4 Week Money Makeover

 

1. Negotiate on EVERYTHING

If you don’t ask, you’ll never know. Simple.

In many cases, your bank would rather keep your business than lose you to another institution. So get motivated, take the initiative and give them a call.

Negotiate the interest rate on your home loan (the headline rate is for mugs). Negotiate your credit card annual fee, your regular bank fees (ideally you want to stop paying them) and even the perks you receive.

You may be surprised what the banks are willing to offer straight off the bat, but it never hurts to go in with a bit of extra ammunition. Compare your bank with others and what they offer to give you some leverage in your battle for a better deal.

2. Don’t be afraid to switch

If your bank’s not prepared to play ball, it could be time to pack up and leave. Because if they’re not loyal to you, there’s no need to be loyal to them.

Switching has become a lot easier with a lot of institutions offering to do all the paperwork for you.

Check out one of the many comparison websites out there (like RateCity and Canstar) to browse and compare offers from other banks.

Switching is simply a numbers game; if it turns out you’re better off elsewhere then don’t be afraid to pull the trigger and leave. Every little bit counts.

3. Minimise the interest you pay

Paying interest is a parasite on your wealth, sucking money out of your pocket and straight into the bank’s. So you should always aim to pay the least amount of interest possible.

Focus on cutting out “bad debt” like credit cards and car loans first. These generally charge the highest rate of interest and long-term they don’t get you anywhere.

Once you’ve ditched these, turn your attention to bigger debts such as the mortgage. Yes, negotiate the rate, but also do everything you can to get ahead on your repayments (mortgage offset accounts can be a great option here).

The quicker you can pay off the principle, the less interest you’ll have to pay to the bank.

4. And maximise the interest you receive

As well as minimising the interest you pay banks, maximise the interest you earn on your own money. Savings sitting in transaction accounts earning piddly returns are actually going backwards thanks to inflation, so compare the high interest online savings accounts in the market and find the place to store your money.

Take advantage of bonus periods and other offers to eek out every last cent of interest you can from your bank… remember, your bank would do the same to you.

5. Stop paying unnecessary fees

Credit card fees, account fees, ATM fees. Australians are up to their eyeballs in unnecessary fees and if you have any sense you wouldn’t be happy about it.

The first step is to look at all your banking accounts. Cut redundant accounts, make sure the accounts you have are the best ones for your circumstances, understand the conditions of the accounts and always stay within the terms.

For example, would you believe we pay over $500 million worth of unnecessary fees by using third party ATMs. That’s just lazy. Our suggestion? Use your own bank’s ATM!

Cancel unneeded credit cards, switch to a fee-free bank account, organise your finances to avoid overdraft or late fees and put the money back into your own pocket.

Watch Kochie’s video on How to supercharge Your Savings!

5 Things Baby Boomers Can Learn From Millennials About Money

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The financial generation gap can at times seem huge.

Us baby boomers think we are the font of all knowledge, particularly when it comes to money issues, while the younger generation just roll their eyes and nod politely at our pearls of wisdom… well, that’s the way it happens in our family.

Yes, experience does count when it comes to managing finances but times are changing rapidly and there are some things we old codgers can learn from our 20-something friends and family.

1. Spend money on experiences rather than on stuff

Unlike us baby boomers, millennials aren’t focussed on “keeping up with the Jones’s” by showing their wealth for prestige. Instead of loading up on material goods, such as a big house or fancy car, millennials are more likely to spend their cash on intangibles like experiences or events.

They generally aren’t as ostentatious as the Kardashians. Most young Australians believe excessive materialism is pretty lame and view the recent robbing of Kim Kardashian as Karma.

Oldies fret about appearances while youngsters travel, have destination weddings, volunteer for an international charity or invest in their own wellbeing at the gym or yoga.

Millennials live very much for today and are happy to live like paupers quite often to achieve their travel or experience goals. Those experiences develop them personally and professionally. They don’t feel shackled to having to work for material comforts.

Their outlook on life can make sense financially. That new car or boat drops 30 per cent in value as soon as it leaves the showroom. And new furniture or appliances generally have no or very little value after you’ve bought them.

We can also provide a very convincing financial argument which says it is better to lease a house, and invest the difference between the rent and a mortgage, than to finance a house to live in.

2. Don’t own… share

Instead of buying stuff, millennials share what they need.

A massive new “collaborative consumption” industry has emerged to cater for this change to a sharing lifestyle. Everything from accommodation (Airbnb) and transport (Uber and GoGet) to garden tools (?) and everything in between.

Thanks to this trend people can, at a cost, rent everything from clothes to bikes through websites and apps. Plus, networking sites like Gumtree make it easy for people to connect with others locally and share goods like garden equipment or power tools.

Take a look in your garage or attic at everything you’ve bought, and rarely used, over the years, and I bet you’re thinking it would have made better sense to rent when needed and give it back.

3. Do your own research… it’s all there

Millennials make better decisions because they’re better informed. They are far more likely to hop on the internet and do research which makes them more engaged in their financial planning and decision making.

That’s not to say us Baby Boomers don’t care or aren’t engaged, but the younger generation access better more timely information on which they can make a better decision. Mind you, there is a point where they have an overload of information which can swamp them and prolong making a decision.

Rather than rely on traditional old fashioned sources of information, Baby Boomers need to switch to online news websites, apps and comparative shopping sites to super charge their information and make better decisions.

4. You don’t have to have deep pockets to get financial advice

Senior Australians often view their skills with online banking or tap and go payments as a badge of tech savviness honour. But they may not realise technology is also changing how financial advice is delivered and investments are accessed.

Now things like robo-advisors make it simple for people with portfolios of all sizes to get professional wealth management and, in some cases, even personalised advice. While it’s definitely not the same as sitting down with a financial advisor for a one-on-one consultation, millennials don’t seem to mind, especially since robo-advisers eliminate many of the high fees associated with professional portfolio management.

They really want to be involved and are willing to use technology so they don’t have those fees. Tech-savvy boomers can take a page from the younger generation and find expert help online as well.

5. Fail fast and cheap… but make a decision

There is no shortage of apps and websites devoted to managing your money and wealth creation. However, unlike millennials, Boomers may be hesitant to use these resources. The main challenge the older generation has is that they’re still looking for an instruction manual.

While boomers may wait for someone to explain how technology is used, millennials are willing to jump in and learn from experience. That’s something more boomers need to do. Don’t cling to 20th century thinking and tools. Flexibility and adaptation are needed.

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5 Steps to Ditch Your Debts

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With so much talk in the media about Australia’s national debt levels and our ongoing budget deficit, it got us thinking… how do you assess your own household debt?

As the treasurer of your family budget, you are responsible for taking control of your debts. So here’s our guide on how to go about it.

 

Next course starts soon!

Kochie’s 4 Week Money Makeover

 

1. Borrow within your means

According to treasurer Scott Morrison, Australia’s debt could blow out to AUD$1 trillion in the next ten years if the coalition’s budget savings measures are not passed.

But whether you’re the treasurer of an entire country or a family budget, the key figure is not how much you owe or how much you can borrow, but how much you can afford to repay.

Claire Mackay, financial planner at Quantum Financial, says, “If you haven’t done your budget, you don’t know how much you can afford to repay”.

So start by putting together an accurate budget listing all income and expenses. As a general rule of thumb, Claire recommends 40 per cent of your money should be going towards housing costs (if you own your own home), 30 per cent to living and 30 per cent to saving for the future.

2. Take control of your spending

Australia has run a consistent budget deficit since the global financial crisis of 2008, which means as a nation we’re spending more than we’re earning (and using debt to keep the lights on).

So take a lesson from all those pollies in Canberra: don’t be like them.

Armed with your new budget, work out whether you’re in deficit or surplus. If you are in a deficit, look at what to cut to get back to the black.

As Claire says, “The pie is what the pie is. What you can control is what you think of as essential living expenses and what you consider as nice to have.”

3. Understand the difference between good and bad debt

‘Good’ debt is money borrowed to buy something that will rise in value, bring in an income and create financial discipline. A good example is borrowing to buy a house.

Bad debt is money borrowed to fund everyday expenses like a holiday, or to buy an asset that will fall in value like a car.

But regardless of what the debt is, as Claire says, “a manageable level of debt is what doesn’t give you stress. If repayments and the end goal of having the loan repaid is overwhelming, that is not a good level of debt.”

4. Make extra repayments

Funnelling extra money into paying debts off early will save you big on interest and free up money to put towards building your wealth.

Start with the highest interest rate debts fist, because they are costing you the most.

For example, the average Australian credit card debt is $4,315. At an average interest rate of between 15 – 20 per cent that’s a guaranteed return of around $700 a year in saved interest… just by paying off your card.

Once your credit card is paid off in full, you can focus efforts into the next highest interest rate loan, for example a car loan.

5. Minimise the interest you pay

In a low interest rate environment, there are always opportunities to minimise the interest you pay, and that money is always better off in your pocket than the bank’s.

Compare the market for the best rate. Don’t be afraid to negotiate with your bank or switch to a better provider if the terms stack up.

And look for product features that can help you save on interest, like mortgage-offset accounts or credit card balance transfers.

As treasurer, if you can borrow within your means, control your spending and minimise bad debts and interest, you are managing debt effectively… certainly better than the mob in Canberra!

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