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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.

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Navigating Your Mortgage in Your Prime Years

Jan 17, 2024 | Book of the Week, Building Emotional Muscle, Building Financial Muscle, Educational Series, Episodes, Financial Management 101, Mindset, Mortgage, Saving Money, Self Development

If you are between the ages of 35 and 50, chances are you have a mortgage. It is an important part of your financial picture, but it does not have to be overwhelming. Navigating your mortgage during these prime years can be both empowering and financially rewarding if you take the right approach.

UNDERSTANDING YOUR MORTGAGE

The first step in mastering your mortgage is understanding the terms of your loan – the interest rate, the type of rate (fixed or variable), the term, and any associated fees or penalties for early repayment. Knowledge is power, and understanding these basics is key.

2. CONSIDERING REFINANCING

The world of interest rates is ever-changing. If interest rates have fallen since you took out your mortgage, refinancing could save you a lot of money. But refinancing is not just about lower rates; it can also help you pay off your mortgage faster or free up cash for other investments.

3. EXTRA PAYMENTS: A LITTLE GOES A LONG WAY

Making extra mortgage payments can significantly reduce the amount of interest you pay over the life of the loan and shorten your payment term. Even small additional payments can add up over time.

4. BALANCING MORTGAGE WITH OTHER DEBTS

If you have other high-interest debts, such as credit cards or personal loans, it may be more advantageous to pay these off before making additional mortgage payments. It all comes down to prioritising your debts according to interest rates and financial impact.

5. UTILISING MORTGAGE OFFSET ACCOUNTS

Take advantage of any offset accounts that your mortgage may provide. Money in these accounts is used to offset the balance of your mortgage, lowering your interest payments while not committing to a longer repayment schedule.

6. EXPLORING MORTGAGE BREAK OPTIONS

Life can be unpredictable, and financial situations can change. Know your options for deferring mortgage payments if you ever need to, whether due to job loss, illness, or other major life events.

7. BE MORTGAGE-SAVVY WITH TAX

Learn how your mortgage affects your tax situation. There may be tax benefits associated with your mortgage for some people, particularly those who own investment properties.

8. SEEK PROFESSIONAL ADVICE

As a mortgage broker, we can be a valuable resource for you. We can provide tailored advice, assist you in understanding your options, and even assist you in obtaining a better mortgage deal.

9. PLAN FOR THE FUTURE

While you are focused on your current mortgage, do not forget to plan ahead. How will your financial situation look as you approach retirement? What role does your mortgage play in this picture?

10. CELEBRATE MILESTONES

Paying off your mortgage is a marathon, not a sprint. Celebrate the milestones, like reaching the halfway point or getting below a certain balance. It’s important to recognise and celebrate your financial achievements.

Managing your mortgage during your prime years requires a combination of strategy, knowledge, and foresight. You can transform your mortgage from a financial burden to a key component of your financial success by understanding your options and making informed decisions.

If you want to know whether your home loan is working effectively for you and your personal finances contact me at karen@harkenfinance.com for a chat.

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How to Be Mortgage-Free in 4 Easy Steps

Nov 23, 2023 | Book of the Week, Building Emotional Muscle, Building Financial Muscle, Debt, Educational Series, Financial Management 101

Can you imagine seeing your home loan balance diminish every month to the point that you now have no debt and no mortgage? Now enjoy a happier, less stressed lifestyle, knowing the major debt in your life has finally been paid off.

Imagine receiving the deeds to your home with just your name on it and not your bank, as previously they had joint custody of your home.

Just imagine what it would be like to not pay a mortgage, or better yet, to be well on your way to owning your investment property.

Putting you, and not your bank, in the driver’s seat of your financial life.

We give you the tools to own your home faster – the one big debt looming over your head.

I am often asked to examine potential clients’ home loans, as they want to know if they have the right home loan structure to help them reduce it quicker.

There are 4 steps to becoming mortgage free faster, and they are:

1. Set your goal
2. Get a coach – mortgage coach and financial & mindset coach
3. Learn how and what to do to achieve your goal of becoming debt-free sooner.
4. Create a plan and stick to it
5. Take action, do what others won’t do, and you will see the benefits of becoming debt-free sooner.

So I hear you saying, what can a coach do?

Firstly, there are two types of coaches when it comes to reducing your mortgage. The first is a mortgage coach, and the second is a financial and mindset coach.

1. The mortgage coach is the one who ensures your home loan is structured and set up correctly, utilising the latest strategies available to maximise the full debt reduction potential. The mortgage coach’s responsibility is to ensure they are working with you to understand your home loan so you can work towards paying it down as quickly as possible.
2. The financial and mindset coach is the one who works with you regularly to help you stay focused and on track towards achieving your financial goals. The financial and mindset coach ensures that when life suddenly throws you a curveball, as it often does – they are there, ensuring you have the tools and resources necessary to stay motivated and on track.

So let’s take a look at what it may cost you to not get a coach.

If you had a home loan of $400k with a 30-year term, this would cost you at the end of your loan around $733k. That’s an additional $333k of your hard-earned money going to the bank for the privilege of them loaning you the money.

Perth Mortgage Finance Broker - Karen G Adams

Now let’s take a look at a home loan that’s adopting the mortgage reduction strategy along with getting support from a coach.

When the mortgage coach got to work with this client, they were able to save over $210k in interest payments alone, not to mention over 11 years in the term of their mortgage.

It’s really possible to pay your home loan off faster with the right home loan structure, and the right coach on board can help you achieve this.

This is one of the strategies I teach in my course “How to Keto Your Money – 21 Kick Start Program”. You get coaching from me on how to pay your home loan down fast and get the support you need to stay on track.

This is also what I often talk about in building financial muscle and having money work to YOUR advantage and not to your bank or financial institution’s benefit.

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.

Let me help you!

Get in touch with me today to see firsthand if you have the right loan structure and how my coaching style can support you to achieve your financial goals sooner.

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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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Flat Chat: Why Units Could Soon Become Hot Property

Oct 27, 2023 | Book of the Week, Building Emotional Muscle, Building Financial Muscle, Debt, Financial Health, Financial Management 101, Home Loan, Mindset, Mortgage, Self Development

Could a smaller dwelling be a solution for you, with apartments, units and townhouses widening their appeal in the property market? If you’re considering your options, reach out to discuss your situation today, there could be a rewarding solution for you!

Apartments stand out as an affordable choice when it comes to cracking the property market, not to mention downsizing. But a looming shortage may soon push unit values higher.

For many of us, buying a house on its own block of land is the ‘great Australian dream’. While plenty of people achieve this goal, our property journey is often book-ended by apartment living.

For first home buyers, units can be an affordable choice, costing around 30% less than houses according to CoreLogic.

Then, as we head into our senior years, an apartment offers secure, low-maintenance living, often with a wealth of amenities right on the doorstep.

Apartment demand is outstripping supply

Apartments may be affordable today, but a lack of new apartment construction, coupled with rising immigration levels, points to a looming apartment shortage according to CoreLogic. And that could push values higher.

Over the next few years, new apartment construction is forecast to be 40% lower in the 2010s, leading to a shortfall of over 100,000 homes by 2027. Close to 60% of the new home shortfall is expected to be in the apartment market.

On the demand side, CoreLogic says a stronger-than-expected level of migration into Australia has seen overall housing demand “skyrocket”. Historically, new migrants head to the high-density areas of our big cities, putting extra pressure on the unit market.

As CoreLogic explains, with interest rates potentially easing in 2024, greater demand and tight supply could fuel a “price boom” in the unit market.

Why more of us are choosing apartment living

Modern apartments are packed with the latest design and sustainability features, meaning they are no longer the poor relation of freestanding houses.

Across our major cities, apartments now account for 30% of all homes, up from 23% in 2010. And the appeal doesn’t just lie in affordability.

Today’s apartments usually come with a wealth of benefits, including:

Government Schemes: because apartments are generally cheaper than houses, they’re more often under the price caps for a range of government schemes, including the Home Guarantee Scheme, stamp duty concessions, and first home owner grants (usually for new builds). These schemes can be combined to potentially save you tens of thousands of dollars and get you into the property market years sooner.

Sought-after Locations: apartment living can be the difference between living close to work, or facing a long daily commute from the outer suburbs.

Lifestyle Advantages: the days of apartments being cramped and lacklustre are over. A variety of on-site amenities, from barbecue areas to pools, gyms and car-wash bays, make unit living convenient and relaxing.

Low maintenance Living: not interested in spending precious spare time mowing the lawns or cleaning the gutters? It turns out plenty of others aren’t either. Unlike houses, units require minimal upkeep, letting residents enjoy more quality time.

Improved Security: if you’re after a lock-and-leave lifestyle, modern apartments fit the bill. Advanced security features add up to a safe and secure living environment.

Modern apartments are packed with the latest design and sustainability features, meaning they are no longer the poor relation of freestanding houses.

Is now the time to take the leap?

Right now, apartments still present an affordable option for first-home buyers, downsizers and investors.

The median apartment price across our state capitals is currently $637,593 – but if CoreLogic is correct, that figure could soon increase as demand outstrips supply.

So if you’d like help exploring your options to purchase your first property – for example, with just a 5% deposit via the Home Guarantee Scheme – then get in touch today to discover your borrowing power.

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.

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