Chapter 7: The Spendy Saver’s tips
03 July 2020
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I’m going to share with you some of the helpful money management tips I’ve learnt from working in the financial services industry. Some of these I’ve used to help me get out of debt and others have been helpful for clients I have talked to.
Some of these tips may not be relevant to you right now. But others might be completely relevant and useful. It all depends on where you are in your savings journey.
Whatever stage you’re at, it’s important to make sure your financial goals are achievable, so your efforts are rewarded with successes and leave you room to still do things you want to do.
Spendy Saver tips: credit cards
Credit cards can be useful – if you’re able to manage them properly. They’re ideal for emergencies, but if you’re using your credit card to live on between pay periods, then you run the risk of building up debt that can quickly spiral out of control.
- Pay off credit card debt first
If you have credit card debt it’s a good idea to get on top of it ASAP as the interest you get charged is usually high, and the balance can really build up without you even knowing! Trust me, I know! I didn’t realise how much I was spending beyond my means until all of a sudden, I’d racked up $10,000 in debt. Thinking about paying that back was daunting!
- Credit card balance transfers
If you have a credit card balance that you need to get rid of, a 0% interest balance transfer could help. This is where you transfer a portion, or all, of your balance to another credit card provider and they reward you with an interest-free period. Often, it’s 6 or even 12 months and will save you money on interest – helping you pay back the debt faster.
Spendy Saver tips: savings accounts
I set up a couple of different savings accounts with my bank to help me with my savings. One was a long-term savings account which was money I put into the account each payday and didn’t touch. By not touching this money I was rewarded extra interest each month. This encouraged me to put the money into this account and not touch it, which I found really worked!
The other savings account I set up was a short-term savings account. I used this for small things like weekends away and cheaper purchases I wanted to buy. I was able to access this account whenever I wanted without getting charged a fee or losing interest.
Most of my savings would go in my longer-term savings account and my second savings account would just be so I could set money aside for upcoming events/purchases. It also kept it separate from my ‘bill’ money.
- Interest rates
Check with your bank which accounts suit you the best, as some savings accounts are designed for smaller savings and some may be for longer-term savings. The interest rates can vary, so it’s important to make sure you’re in the most suitable account for your situation.
- 2-to-sign account
This could be an option to investigate if your bank offers it. If you’re a spender like me, this will help you (hopefully!) not touch your hard-earned savings. Taking money out of a 2-to-sign account requires both parties to sign for the transaction before the funds can be transferred or withdrawn. Makes you double think about buying those new shoes!
Spendy Saver tips: personal loans
If you have a personal loan or are thinking of getting one, look around for the best deal or a loan that is suitable for you. Or even better, stop and ask yourself if this purchase is really necessary? Is it worth getting into debt for?
Work out if your new purchase is a ‘need’ or a ‘want’. If it’s a want, this purchase could have a big impact on your future savings. (btw: this is coming from the expert of impacting future savings…😊)
- Affordable repayments
You’ll be able to see when your loan is due to finish, this will be calculated by how many payments are left. If you are happy with the date you’ll become debt free, you could leave the payments as they are. But, if you would like to finish paying the loan sooner, you could adjust the repayments to be higher than the required amount. This will reduce the time it takes you to repay the debt, so becoming debt free will become more of a reality – exciting!
- Making a lump sum payment
Your loan repayments will most likely be made up of two parts: a portion goes to the amount you borrowed (the loan principle), and a portion will go towards the interest owing on the loan. The interest costs can sometimes be even higher than the amount you are paying back towards the loan! If you have extra money it could be a good idea to put this straight onto your loan. This way, it will go straight towards the loan principle rather than the interest costs. Check with your lender to ensure there is no charges or early repayment fee to do this.
Spendy Saver tips: home loans
My best piece of advice for home loans? Shop around. Make sure you’re getting the best package deal for you. One bank may have the cheapest home loan rates but then have more expensive insurance prices, so it’s important to think about the bigger picture and look at your total expenses.
I did a lot of research first and made sure I was getting the best deal for me. You could also use a mortgage adviser to help you if you’re unsure on the process and want to leave it to the expert.
- Check the interest rates
It’s important to check the interest rates out before signing up for a loan. Do your research. Big lending institutions are often competitive on interest rates, so if you look around you may be able to find a lower rate for the same kind of loan.
- Boarder income
You could consider getting someone to live with you to help pay the mortgage. This may not be ideal for everyone but if you have space and want to earn some extra money to go towards the mortgage, this could be a good idea!
Hopefully, these tips have been helpful to you or even someone you know. With my personal loan, I tried to pay this back as soon as I could. I’ll tell you one thing – the feeling of being debt free was GREAT!
Of course, then comes the mortgage and it starts all over again – this time for 30 years!
Read the final chapter in Grace's journey - Chapter 8: What's next for the Spendy Saver? >