Financial Health | Financial Management 101

Debt Consolidation: A Midlife Financial Tune-Up

Jan 24, 2024 | Book of the Week, Building Emotional Muscle, Building Financial Muscle, Educational Series, Episodes, Financial Health, Financial Management 101, Home Loan, Mindset, Mortgage, Saving Money, Self Development

As we navigate our 30s, 40s, and early 50s, managing multiple debts can be like juggling with too many balls in the air. Whether it’s credit card debts, personal loans, or car payments, keeping track can be overwhelming. This is where debt consolidation comes in as a practical financial strategy, providing a much-needed tune-up for your finances.

1. UNDERSTANDING DEBT CONSOLIDATION

Debt consolidation is the process of combining multiple debts into a single loan with a lower interest rate. This simplifies payments and may save you money on interest, making debt management easier and less stressful.

2. ASSESS YOUR DEBTS

Begin by making a list of all your debts, including their balances, interest rates, and monthly payments. This exercise provides you with a clear picture of your overall debt, which is essential for effective debt consolidation.

3. FINDING THE RIGHT CONSOLIDATION LOAN

Look for a consolidation loan with a lower interest rate than the one you have now. Consider the loan term as well; a longer term may result in lower monthly payments but higher interest over time.

4. BEWARE OF HIDDEN COSTS

Keep an eye out for any fees associated with debt consolidation. Origination fees, balance transfer fees, and early repayment penalties can sometimes cancel out the benefits of a lower interest rate.

5. BUDGETING POST-CONSOLIDATION

It is critical to adjust your budget after consolidating. The goal is not only to effectively manage the new loan, but also to avoid incurring new debt.

6. BUILDING HEALTHY FINANCIAL HABITS

Debt consolidation is an excellent way to establish better financial habits. To avoid falling back into debt, commit to spending within your means and saving for emergencies.

It is critical to adjust your budget after consolidating. The goal is not only to effectively manage the new loan, but also to avoid incurring new debt.

7. CREDIT SCORE CONSIDERATIONS

Understand how debt consolidation may affect your credit score. Initially, it may cause a dip due to the hard inquiry from applying for a new loan. However, consistent payments can improve your credit score over time.

8. AVOIDING THE DEBT TRAP AGAIN

Consolidating debt should not be seen as a green light to rack up more debt. Avoid using credit cards or taking out new loans unless absolutely necessary.

9. SEEKING PROFESSIONAL ADVICE

Consult with a financial advisor to determine the best debt consolidation strategy for your unique situation and long-term financial goals.

10. CELEBRATIONG FINANCIAL MILESTONES

Track your progress and celebrate when you reach significant milestones in your debt repayment journey. This keeps you motivated and focused on your financial goals.

Debt consolidation, when done right, can be a game-changer in your financial journey. It’s not just about easing the burden of multiple debts but also about setting the stage for a more secure and stress-free financial future.

The LEARNING HUB at Financial Management 101 aims to help you gain more financial knowledge, while providing you with the support and help you need. Join the Learning Hub today for only $79 per month.

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Smart Budgeting for Midlife Adventures

Jan 10, 2024 | Educational Series, Financial Health, Financial Management 101, Mortgage, Saving Money, Self Development

In the journey of life, the years between 35 and 50 are often the most dynamic. You’re navigating the peak of your career, perhaps raising a family, and dreaming about those well-deserved vacations or adventures. But how do you balance these dreams with the reality of financial responsibilities? The answer lies in smart budgeting.

1. UNDERSTANDING YOUR FINANCIAL SITUATION

The first step is to examine your financial situation thoroughly. List your sources of income, monthly expenses, debts, and savings. This bird’s-eye view will help you understand your financial situation. Remember that budgeting is not about limiting yourself; it is about making informed choices.

2. GOAL SETTING

What are your midlife ambitions? A family trip to Europe? Funding your child’s education? Maybe starting a small business? Setting clear, achievable goals is crucial. Break down each goal into smaller milestones with a timeline. This helps you to make your dreams more real and reachable.

GET YOUR FREE BUDGET SPENDING PLAN HERE!

3. CREATING A REALISTIC BUDGET

Now, create a budget that aligns with your goals. Set aside money for necessities (such as a mortgage, utilities, and groceries), savings, debts, and a ‘fun money’ category. Yes, set aside money for fun! It is critical to enjoy life while remaining financially responsible.

4. THE ART OF CUTTING BACK

Examine your spending to see where you can save money without sacrificing your quality of life. Perhaps it is eating out less or opting for a staycation over an expensive trip. Small savings can add up to a significant sum over time.

5. SAVE SMARTLY

Create a separate savings account for your goals. Consider automating transfers to this account immediately following payday. It is a “set it and forget it” strategy that ensures you save consistently without having to think about it.

6. INVOLVE THE FAMILY

Make budgeting a family affair. Teach your children the value of money and involve them in age-appropriate financial decisions. This not only aids in budgeting but also instills financial literacy in the next generation.

7. MONITOR AND ADJUST

Regularly review your budget and spending. Life is unpredictable, and your budget should be flexible enough to accommodate changes. Regular check-ins ensure you stay on track or make necessary adjustments.

8. EMBRACE TECHNOLOGY

Make the process easier and more efficient by using budgeting apps and tools. These can help track spending, set reminders for bill payments, and even offer insights into your spending habits.

9. REWARD YOURSELF

When you reach a milestone, celebrate! This could be a small treat, a day out, or simply an evening of relaxation. Acknowledging your hard work towards your financial goals is crucial for motivation.

10. SEEK PROFESSIONAL ADVICE

Don’t hesitate to consult a financial advisor for personalised advice, especially for complex financial decisions like investments or retirement planning.

Budgeting in your midlife isn’t just about saving money; it’s about creating a roadmap for your dreams and enjoying the journey along the way. With smart budgeting, you’re not just planning for a better financial future; you’re making the most of today.

At Financial Management 101 – we are committed to providing YOU with excellent financial education, training and support so that you can live the life you truly desire. Join the LEARNING HUB today!

GET YOUR FREE BUDGET SPENDING PLAN HERE!

New Year – New Financial Goals

Jan 7, 2024 | Book of the Week, Building Emotional Muscle, Building Financial Muscle, Educational Series, Financial Health, Financial Management 101, Home Loan, Mortgage, Saving Money, Self Development

Smart Money Management and Mortgage Strategies for 2024

As we welcome the year 2024, it’s the perfect time to reflect on our financial journeys and set new goals. For many, this means re-thinking our money management habits and looking at our mortgage options. Let’s dive into some key strategies that can help you achieve financial success in the New Year.

Reviewing Your Budget for 2024

The foundation of effective money management is a solid budget. This year, take a fresh look at your income and expenses. Could you allocate more funds to savings or investments? Are there any expenses you could trim or cut back on? Consider using budgeting apps or tools to track your finances more efficiently. I do have an easy spreadsheet that calculates your net position, so feel free to download this and link is at the bottom of this post. Remember, a budget isn’t just about restricting expenses; it’s about making your money work effectively for your goals.

Invest in Financial Education

Knowledge is power, especially when it comes to finances. Dedicate time this year to educate yourself about investment options, market trends, and updated mortgage products. Whether it’s through books or joining my Learning Hub to access the online courses, coaching, and live events, enhancing your financial knowledge can lead to more informed decisions and better outcomes.

Review and Refinance Your Mortgage

Interest rates fluctuate, as do your financial circumstances. It might be a good idea to review your current mortgage this year. Could you possibly get a better deal? Are there better mortgage products available to meet your current needs? Consulting with a mortgage broker like myself can provide insights into refinancing options that could save you money in the long run. Mortgages are not set-and-forget product.. This year, it’s crucial to review your current mortgage terms in light of the changing economic landscape.

Embrace Technology in Money Management

Technology is transforming the way we manage money. There are numerous tools at your disposal, ranging from online banking to investment apps. Explore how technology can help you simplify your financial management this year, whether it is setting up automatic savings, tracking investments, or managing mortgage payments.

Set Clear Financial Goals

What are your financial goals for this year? Maybe it is paying off a certain amount of debt, saving for a large purchase, or investing in real estate. Set clear, achievable goals and create a plan to reach them. Remember, goals are more effective when they are specific, measurable, and time-bound. Goal setting for some is not an easy task, so getting support and having someone that can keep you on track is important. More information and support can be found in the Learning Hub to get you started.

Work with Professionals

Finally, don’t hesitate to seek professional advice. Money management and mortgage broking are both complicated fields, and working with someone like myself and a financial advisor can provide tailored advice specific to your own situation.

In conclusion, 2024 presents a new chapter in your financial journey. By reevaluating your budget, enhancing your financial knowledge, optimising your home loan, embracing technology, setting clear goals, and seeking professional advice, you can take control of your finances and make informed decisions that pave the way to financial stability and success. Let’s make this year your best financial year yet!

10 Tips on How I Help My Clients Get a Home Loan as a Mortgage Broker

Nov 22, 2023 | Building Emotional Muscle, Building Financial Muscle, Debt, Financial Health, Financial Management 101, Mortgage, Saving Money, Self Development

1. Evaluate your financial situation:

Before you start the application process, we need to assess your financial situation to ensure you are eligible for a home loan.

2. Determine your affordability:

What I do next is work out your borrowing potential and calculate how much you can afford to borrow.

3. Find the right lender:

Depending on your own financial situation, credit score, and other factors, I research the extensive list of lenders on my panel to find YOU the right lender.

4. Pre-qualifying you for a home loan:

Pre-qualifying you can help understand how much you can afford and make the process smoother.

5. Explain the different types of loans and features available:

Part of my role is to ensure you know the various types of home loans available and help you decide which one is best based on your individual financial circumstances.

6. Assist with the paperwork:

As a mortgage broker, I work with you to help gather all the necessary paperwork and documents required for your home loan application that a lender requires.

7. Guide you through the application process:

Walking you through the application process and explaining the various steps involved are all part of the process.

8. Communicate with the lender:

As the intermediary between you and the lender, I handle all communication with the lender on your behalf to ensure the process moves smoothly and provide any additional information the lender may require.

9. Staying up-to-date on mortgage rules and regulations:

As a mortgage broker, it’s essential that I stay informed about changes to mortgage rules and laws that may affect you.

10. Provide ongoing support:

Even after your home loan is approved and long after your new loan has settled, I will continue to offer support and guidance to help you manage your home loan and navigate any issues that may arise.

Want to have a chat about refinancing or obtaining a new home loan? Reach out to me at karen@harkenfinance.com to see how I may assist you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Grab a Copy of "Your Step-by-Step Guide to Being Home Loan Ready"

Buying your first home is a BIG and important step in your life. This guide is here to help you in becoming home loan-ready before applying for a home loan. Get your free copy today!

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Struggling with the high cost of living?

Oct 31, 2023 | Building Emotional Muscle, Building Financial Muscle, Debt, Financial Health, Financial Management 101, Mindset, Mortgage, Relationships, Saving Money, Self Development

Here are 9 ways to make your dollar go further and relieve some stress.

If you are looking for ways to tackle the rising cost of living, here are some things you can do TODAY to put money back into your pocket. Every dollar saved can make a difference!

As life changes, you need to review the major expenses in your household and see if you’re paying for things that you needed years ago but don’t now.

1. Take a look at your major costs.

When times are tight, it can make a world of difference to take a look at your subscriptions, recurring payments, gym memberships, and even your home, car, and health insurance. We recently went through the process of reviewing all our insurance policies, and we were actually surprised that we were able to save money and cut down on areas where we were over insured. As life changes, you need to review the major expenses in your household and see if you’re paying for things that you needed years ago but don’t now.

2. Look at how you’re paying for things.

You could save money in the short term by switching some of your subscriptions or payments from monthly to yearly, or you could temporarily reduce your spending by putting these items on hold to free up some cash in the short term. Once you have more surplus cash, go back to yearly payments for subscriptions, as you can get a deal or save by paying for the full year.

3. Check your home loan rate.

If you want to save money, your home loan is a great place to start. Now is the time to review your home loan if you haven’t already. There are many features within your home loan that can make a BIG difference to the interest portion your bank or lending institution charges at the end of the month. One example is that if you have an offset or redraw facility, learn how to maximise to take full advantage of how using these can save you money on your regular mortgage repayments.

4. Review your online streaming services.

I often review my online streaming services to see if we’re using them as often as we think and a month back cancelled those that I barely used. There are so many out there, and do you really need them all? By cutting down on one or two, you could save up to $20 – $30 per month, and that’s a big saving when money is tight. So think about canceling subscriptions to some of the streaming services you no longer regularly use.

By cutting down on one or two subscriptions, you could save up to $20 - $30 per month, and that’s a big saving when money is tight.

5. Cut down on take-away food

One of the biggest expenses for most households is buying takeout. Take away food outlets are a time saver for busy people, but they are one of the biggest expenses in many households. By saving $50 – $100 per month and not buying takeaway food, this can make a huge difference to your bank balance and can be used to pay down potential credit cards or other debt, which in the end will enable you to have more cash flow.

6. Plan your meals and think outside the box.

Sorry to be the bearers of bad news, but it is true: sticking to a reasonable meal plan can save you dollars at the checkout. Make a week long menu with everything from breakfast to dessert planned out, and include the family in what they’d like to eat. By getting them involved in the process, they are more likely to enjoy the food you’re cooking. Make it a family event and teach your kids the power of saving by preparing and cooking meals the whole family will enjoy. Cook a little extra and freeze it, so on the days when you don’t feel like cooking and want to order take away, you can grab what you cooked the week earlier for dinner or lunch.

7. Shop for groceries online.

You can stick to your budget and meal plan when you shop for groceries online. Wednesday is a good day to shop at the supermarket because that is when many stores update their weekly specials.

8. Look at separate spending and savings accounts.

With your regular bills, put aside a set amount for your ongoing expenses into a separate account and have them directly debited from that account so they are paid automatically without you having to think about it. All you need to do then is put regular money into that account at payday to ensure the amount is in there when the bills are due.

By having a separate spending account for bills, this stops you regularly dipping into your savings for non-essentials

I have more information on how to manage your spending and savings and you can find this in the “Learning Hub” at financialmanagment101.com.au

9. Compare petrol prices

And last but not least, the costs of fuel today are so high that it’s sucking every dollar from you just to fill up your tank today!

There are apps that you can get on your smart phone to check daily fuel prices, so I would encourage you to do this when your tank is around ¼ – ½ left to go, so you don’t fill up at the last minute and have to pay a higher price.

Want more help managing your money? Then check out this course that helps you budget and save your hard earned money.

Use apps that you can get on your smart phone to check daily fuel prices.

Mastering Budget and Savings Techniques by Karen G Adams - Financial Management 101

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How to know if you are home loan ready?

Oct 31, 2023 | Book of the Week, Building Financial Muscle, Debt, Educational Series, Financial Health, Financial Management 101, Mortgage, Saving Money, Self Development

So you want to buy your first or even second home…but not sure if you are Home Loan ready?

Here are 8 “Must HAVES” in place to ensure you are home loan ready before applying for a home loan.

STEP 1: Your Income

If you’re looking at changing your job, DON’T until you have been approved for the loan and setted on your new home.
If you are on probation, you will need to wait until you’re off probation before a lender will consider you for a home loan. There are exceptions to this and will depend on your current employment and work history.
Ensure your payslip represents the income you are earning, including the year to date figure, as lenders will look at this figure to calculate your annual income.
If you are self-employed or looking at setting up a business, lenders will require 2 x years financial history plus 2 x years tax returns to verify your income. There are exceptions to this, if you have started a busines and going doing the same work as when you were a PAYG employee, reach out and I can explore lending options.

STEP 2: Your Deposit

Have you saved up a minimum 10% deposit, or have you saved up more?
Or are you looking to use the equity in another property to fund the next purchase?
➤ This can be done if your property is worth more than the outstanding debt owing.
➤ A quick and easy way to check this is to obtain a valuation on your home.
➤ As a mortgage broker, I have access to free valuations, so I am able to assist you with this.

You will require generally a minimum 10% – 20% to be able to afford getting into your own home as there are costs associated with purchasing your home for eg; govt costs as stamp duty, property registration costs, possible lenders application fees and settlement costs. However, there are exceptions to getting into your own home with as little as a 5% deposit, reach out so I can expand and explore you own personal circumstances.
Does your bank account statement demonstrate to the lender that you have savings? As they check over a minimum 3 x months bank statements to show genuine savings?
➤ One option a lender will look at if you haven’t been able to save the full deposit is paying rent and having a lease agreement in place. Some lenders consider this, as it can show you are able to meet your regular liabilities on time, which is what they are looking at when looking to loan you money.
➤ Another option is that if you haven’t been able to save up the minimum deposit required, gifting is acceptable with the majority of lenders. Gifting is where a family member provides a cash amount to assist with obtaining a home loan and does not expect this to be paid back. Lenders will require a stat dec (statutory declaration) signed by the person giving the amount to verify this is a gift and not a loan.

STEP 3: Check Your Credit Report

You will want to look over your credit file to ensure there are no nasty surprises, and when it comes time to assesing your loan, if your score is low or there have been any missed payments on any bills or liabilities, they will pick up on this and may stop your chances of obtaining the loan.
Checking your credit report is easy and free to download from one of the credit check companies online.
Or alternatively, you can request a copy of your credit report from me and I will look over it for you to ensure your chances of getting your loan are not decreased.
At the end of the day, lenders are looking for good credit conduct and seeing before they decide to loan you the money that you are able to pay your bills and other commitments on time.

Checking your credit report is easy and free to download from one of the credit check companies online.

A low credit score or any missed payments on any bills or liabilities may stop your chances of obtaining the loan.

STEP 4: Bank Statements

The majority of lenders will look through your bank statements line by line to see how you manage your money.
They are looking to see your spending habits as to whether there is money left at the end of your pay period and verifying whether there is more going out than staying in your bank account.
They will require the last 3 months of statements, so make sure they look clean and have no surprises for a lender who will question why something doesn’t appear to look like a normal transaction on the statement.

STEP 5: Identification Verification (ID)

Lenders will require a minimum 2 x pieces of identification to verify who you are, and the ID will be in the form of:
➤ A current Drivers License
➤ A Current Passport and/or
➤ Birth Certificate, and
i. Any visas, if not an Australian Citizen or Resident

STEP 6: Your Borrowing Potential

Your borrowing potential looks at whether you can actually afford to purchase the new property and this is where your deposit comes into the equation.;
It looks at the purchase price of what you are looking to buy, plus the costs to purchase and get into the property, less your deposit, which equals the actual percentage of how much you’re looking to borrow.
➤ Where you are borrowing less than <80% from a lender, you will not incur lender mortgage insurance, or LMI, as it’s known.
i. LMI is the lender’s insurance policy in case something occurs during the term of the loan and protects the lender’s investment in loaning you the money.
ii. There is an additional cost added to the loan when in LMI territory, ie; borrowing more than 80%
➤ If your borrowing potential is higher than 90% and even up to 95% then this may limit the lender’s choices available to you, as some lenders do not loan above 90% – 95% (including LMI), while others put a premium on their interest rate for loaning above 95%
➤ So if you are considering a loan, it is best to save as much as you can to access a lower interest rate and lower costs of getting your loan.

STEP 7: Your Affordability

At the end of the day, are you applying for a home loan that you can really afford?
Lenders take careful consideration when you apply for a home loan to ensure you are not going to go into mortgage stress
When a lender considers you for a home loan, they factor in higher interest rates and higher monthly ongoing living expenses, as during the loan term interest rates may rise and the ongoing costs to live increase throughout the years.

STEP 8: Consult With a Specialist Mortgage Broker

As a Mortgage Broker, it’s my job to assist you in successfully being eligible for a home loan.
I have the tools and resources to work out if you are home loan ready, and;
It’s my job to ensure it goes as smoothly as possible so that, at the end of the day, you get your home loan.

Are you home loan ready?

Buying your first home is a BIG and important step in your life. Learn 8 essential must-haves in this guide that will help you in becoming home loan-ready before applying for a home loan. Get your free copy today!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent

Your Step-by-Step Guide to Being Home Loan Ready - Karen G Adams of Financial Management 101

GRAB A COPY OF "YOUR STEP-BY-STEP GUIDE TO BEING HOME LOAN READY"