Finance Broking

2020 Financial Year Health Check

By July 7, 2020 No Comments

So, here we are halfway through 2020… is the glass half full or completely broken?

It’s definitely been a wild ride!

Let’s start the 2020 financial year off the right way!

If you are PAYG, entering another BAS period, or self-employed, it’s a great time of the year to get everything reviewed. Think of it as “end of financially paying too much”.

You would’ve noticed a lot of retail stores had EOFY sales so they can clear out their old stock and achieve their sales goals for the year. For them, it’s a good time to reset and get ready for the busy time of the year. And the same can be said for you.

While you’re busily grabbing your receipts for items you can deduct from your tax return, a well worth exercise would be to also grab your Home Loan / Investment Loan statements, along with your Super and Insurance ones as well.

In addition to this, it would be a good time to look at things like utilities and mobile phone plans, that with a little guidance, can save a lot more than you think. And the only thing it will cost you is a little time.

Finance – Home Loans, Investment Loans and other debt instruments

It should be no secret that current clients of banks are generally not given the same discounts that new customers can be eligible for. It goes against one of the most common and accepted sales principle known to man, keeping current customers happy and loyal is far cheaper than sourcing new clients. It just doesn’t make sense until you unravel the reason why…

Every day a bank keeps you on a higher interest rate is a day the bank makes more money from you. Conversely, every day you are on a higher interest rate, is another day you lose money to the bank. It is imperative that your interest rate is checked at least once a year, if not more frequently.

The banks are constantly discounting rates for new business, that doesn’t mean you can’t get these deals with your current lender as well. The important thing to do is to have an expert ask for you. That’s what we’re here for! We go in and negotiate on your behalf for a rate reduction with your current lender. If they don’t come to the party, we look elsewhere. Simple.

Superannuation and Risk (Life) insurances

Superannuation and insurances are a little more complicated than home loans. Aside from looking to save money on fees in your super, the focus should be on the results. Will it allow you to live the lifestyle you want to upon retirement? Does it meet your investment profile, and do you have more than one account?

What about your insurance? Does it adequately cover you and your family should something go wrong, and am I paying for things I do not need? Have my circumstances changed, and with this should my cover too?  

Utilities and other consumables

Otherwise known as “the little things that add up”.

Some of these may only be $50 per month, or a couple of hundred dollars, but at the end of the day, they do add up. The ability to save on these items is considerable and the buying power is quite high. Think of it this way:

If I can save up to $350 per month on reviewing my Gas, Electricity, Phone and Internet, it is likely I would be able to borrow an additional $100k from my bank! Not that you should, but I am just letting you know the power of the money you are likely throwing away. It is quite substantial.

Now, let’s do an assumption and apply all of this information to build a case study:

Your Home Loan

Let’s say is balance is $600,000 and you are able to shave 0.25% off your interest rate by going back to your bank and negotiating a better deal with them. This equates to around $125 per month, or $1500 per annum, or $45,000 over the life of the loan!

Your Super and Insurances

Let’s say you can save $50 per month on superannuation fees and an additional $75 per month on your insurances. That’s $125 per month, or $1500 per annum or $45,000 over the next 30 years!

Your Utilities

It’s not unreasonable to expect to save $50 on Gas and Electricity per month by switching. (I just did it 3 months ago and save around $110 per month on both).

If you can switch from a mobile phone plan to a pre-paid, you can easily save $100 per month here.

Let’s just say we saved your phone bill $50 and your internet $30 to $50 per month, all up we have a total saving of roughly $180 per month, or $2160 per year, or $64,800 over the next 30 years.

I would estimate the total saved over this period would be approximately $154,900 – for around 5 hours of work. When was the last time you made $30,960 per hour?!

So, the moral here is to watch the little things, as they add up to be substantial over time, and can stop you from funding the bigger things.

If you need help on where to start, give us a call and will be more than happy to guide you through it.  

HTA Finance

HTA Finance

HTA Finance (518156) and Ben Seeger (518155) are credit representatives of NewCo Financial Services Pty Limited Australian Credit Licence 385054

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