Saving money
Simplified ways to do so
So what?
Whether you’re saving money on big-ticket items or avoiding small everyday purchases, any money you spend adds up. Making incremental changes and taking quick steps to cut your costs on small and big life outgoings will have the following outcomes:
- Be prepared for job loss, disability, injury, a sick child, a car breakdown and other emergencies;
- Go on adventures, take holidays and spend time with your loved ones;
- Give you peace of mind and lead to a stress-less life; and
- Plans for and achieve short and long term goals.
This series of blog posts provides you with short and sharp ways to cut costs on a range of life outgoings that we regularly spend our hard-earned money on.
Insurance
Insurance premiums are unpredictable, especially when it comes to increases when your renewals come up. The best thing to do in order to combat this is to shop around. There are a number of websites that allow you to compare certain insurances such as comprehensive car insurance, health insurance and travel insurance. When shopping around, consider the benefits that you use, are likely to use and find important. One thing to keep in mind is the excess that you opt in for. This is critical for comprehensive car insurance and health insurance as your premium will vary significantly. Consider choosing an amount that you feel comfortable paying given your financial situation.
Mortgage
With the cash rate increasing, interest rates on mortgages are going up along with it. The easiest way to save on your mortgage is to make weekly or fortnightly repayments rather than the standard monthly payments. Because the interest on your mortgage is calculated and compounded on a daily basis, more frequent repayments mean the balance of your mortgage will be lower when the interest amount is calculated. Paying off more than the amount you agreed with the bank by making extra repayments has the same effect. Your balance on a daily basis will be less which in turn will make the principal portion of your repayment will be higher and the interest portion will be lower. If these steps aren’t viable for you, consider refinancing your mortgage with another lender or through a mortgage broker. Often times, lenders will have new customer bonuses and other quirks that may be of benefit to you financially or offset the time and effort that will be required for the loan application process. While you’re at it, get an offset account if your new mortgage allows it.
Rent
Not everyone is fortunate enough to have a mortgage. In short of being a professional house sitter, there are things you can certainly do to save on your rent but they’re less ideal and require more effort compared to what you can do with a mortgage unfortunately. We are sad to say but none of us can just go out and buy a house if we can’t afford to pay rent.
If your situation allows, rent a studio rather than a one-bedroom apartment. Whilst they are designed for one person, couples can work to live together. If you’re not up to the challenge of living in a studio, you can opt out and relocate to outer skirts of the CBD. The further you are from the CBD, rents tend to be cheaper and living areas bigger. When looking for a new dwelling and signing a new lease, negotiate a lower rent by agreeing on a longer term. If you have good rental history and find the right landlord, you will be able to make some savings off of the advertised price.
My experience
After renting for more than 15 years, we recently bought a house. Upon signing our first mortgage, we made a vow to refinance our mortgage on a regular basis to get the benefit of new customer discounts and benefits as well as negotiate lower interest rates. We are on our second mortgage and have gotten $6,000 just on new customer bonuses.
What now?
- Whether you just paid your insurance premium or your renewal is coming up, it’s always good to shop around if you are looking to save money. This will ensure you get a competitive quote and force you to reconsider the benefits you use and don’t use.
- Remember that you have every right to take charge of your home ownership or the rental market. Don’t be intimidated. Take a stance and save some money.