There are a lot of things that you can do at Christmas time to help save a few dollars and reduce some of the financial stress most of us experience, but I’m not talking about making your own Christmas presents here. I’m talking about a financial service. Yes indeed, there is no better time to check the tyres, oil and water and make sure your wealth creation vehicle is fit and ready to roll into the New Year! Ok, lame analogy, but I promise that I’m not trying to trick you into sitting through a budgeting lecture, we all know that budgeting sucks!
For most people, the thought of doing this during the holiday period is about as appealing as a bout of gastro, but I’ll make it easy for you and even give you an incentive. The money you save is yours to do with as you wish! Aren’t I nice?
Really quickly, I want you to think about where most of your money goes after you have been paid. Is it to your mortgage, rent, car repayments, credit cards, insurance, investments, boozy good times with friends? I’m not judging, I’m here to help! I want you to write these down and rank them in order from highest to lowest.
Now you have your list, let’s have a closer look at some common cash hogs that may be in there:
This can be a scary one, because unlike an investment, you don’t generally get much help with it. If you haven’t serviced your mortgage for a few years, then it is definitely time to do so. The good news is that you can do this very easily by locating some recent loan statements (I keep mine in a shoebox) and calling a mortgage broker. Make an appointment, write it in your calendar and move on, job done! When you do see the broker, give them your statements and get them to do all the hard work and research for you, its what they are there for.
Although I don’t rent, I see nothing wrong with it. It’s cheaper than a mortgage and you usually end up with a nicer place or a better location that you could buy for similar money. What I hope you are doing is using the difference between the rent and a mortgage repayment to invest or use in a way that creates you more wealth. If you are looking for ways to reduce your rent, then your options might include, moving in with someone else, or getting in a roommate of your own (you can do this with your own home too). You could move to an area that has cheaper rent or blow it off altogether and try house sitting. Use some of your time over Christmas to explore different options and decide if any of these options are for you.
For some reason there are a lot of people that like buying brand new cars. I don’t get it myself, I’d rather buy something second hand and take a holiday with the difference, but each to their own. If you own a home, I really hope that you haven’t stuck your car loan on top of the mortgage, if you have it is going to be one very expensive car! I use a dedicated car loan through a credit union, which has a better interest rate than a personal loan as it isn’t a big bank and the car is used as security. This way I know exactly what it is costing me and how much is left to pay before I own it completely. You might want to investigate alternative loan options (the link above has some creative strategies), but if you end up adding it to your home loan without significantly increasing your loan repayments, then you really can’t afford the car!
If you really want to buy a new car, here is a way to do it properly. it might take a little longer, but you will feel better for it.
Ideally this is not on your list, but if it is, getting rid of it should be a high priority. Try to channeling as much money as you can towards paying this off. If you think you can have this done in a reasonable amount of time, then you might like to try one of my credit card hacks to save some interest. If your debt is substantial, or you only have a small amount you can put towards it, then you might like to look into a personal loan as the interest rate should be cheaper. Put aside some time to go see the bank and get this sorted out. The interest on a credit card can be crippling, so the sooner you do this the better!
I can’t tell you how much I hate insurance! It is a huge money drain and these days you need it for just about everything. If you haven’t done it already, make some subheading for the different types of insurance you have and then find a recent statement for each (I keep mine in another shoebox). Fortunately you don’t have to go very far to review these, as there are plenty of resources available where you can compare policies. If you don’t have all of your insurance with one provider, then start there by asking if they will give you a discount for multiple policies (e.g. home and car). Shop it around to at least 3-4 providers and ask your friends who they use and recommend. If you have life insurance or income protection and you pay it all out of your own pocket, make an appointment to see a financial planner and see if they can help you structure it through your superannuation instead (most, but not all can be done this way). Be smart about seeking financial advice though, do your research and ask lots of questions.
Boozy Good Times With Friends
If you find that a lot of your money is being spent while socialising then I’m guessing you don’t have a budget. I told you I wouldn’t trick you into a budgeting lecture and I’m not going to, but if you haven’t tried budgeting then you might be surprised about how easy it is to make a budget work for you. My advice would be to continue to enjoy yourself if it makes you happy, but to start thinking about some of the other things you might like in your life as well. I’d never suggest stopping completely as some of my best memories have been had this way, but if you take care of the other important aspects of your life, you are far more likely to enjoy this part too!
Show Me the Money!
Working through your list could take you a few hours and up to a day, but not much longer than that. It isn’t hard once you get a roll on, so you should still have plenty of time to enjoy Christmas with your family and friends and hopefully with a little more money in your pocket too! I also promised you could spend the money you save in any way you like, so how are you going to use it?