Money

Getting your finances in shape

If you’re concerned about rising living costs in 2012, it’s worth embarking on a savings plan.
If you’re concerned about rising living costs in 2012, it’s worth embarking on a savings plan.

A NEW Year provides the incentive to sweep a new broom through many areas of our lives, and there's no better place to start than with your household finances.

Kick off a personal money makeover by listing your assets - things of value you own like your house, savings and investments. Then compare this to your liabilities - your mortgage, personal loan, car loan and credit card debt.

If your assets are worth substantially more than your liabilities give yourself a pat on the back, you're on the way to achieving financial security. But if your liabilities are close to, or overtaking your assets it's time to get serious about bringing debt under control.

Your home loan is likely to be your biggest debt, and while it's backed by a property that should grow in value over the long term, it's still important to look at ways to cut the cost.

You can save substantial amounts of interest by shopping around for the most competitive home loan, and switching to it - but do check what switching fees might apply first. Some of the best rates at present include UBank (6.14% for refinancers), eMoney (6.33%) or MyRate (6.35%).

Next, take a look at your credit card balance. Despite two cuts to official interest rates late last year, card rates remain very high, averaging 19% on premium/gold cards or about 15% for standard cards. At this level, even a small card balance could generate a substantial annual interest bill.

There are more than 100 different balance transfer offers available, each charging very low rates for limited periods. However I reckon simply knuckling down to pay more off your card each month is a far easier, and potentially more effective solution.

Making a commitment to pay an extra $20, $50 or $100 off your card each month will see you clear your card balance ahead of schedule, with big savings on interest in the process. Avoid taking on fresh debt by leaving your credit card at home and using a debit card when you go shopping.

If you're concerned about rising living costs in 2012, it's worth embarking on a savings plan. Having a pool of spare cash makes it far easier to meet regular bills or even emergency expenses when they arise. 

Setting up a regular automatic transfer from your everyday account into a high interest savings account makes it easy to stick with a savings goal. Find the extra cash by drawing up a household spending budget, or keep a spending diary for a week to see exactly where your money is going and where you can cut back.

Next, give your personal insurances a thorough check. It's important that your most valuable assets like your home, its contents and your car are adequately protected by a competitively priced policy. If you have undertaken any home improvements in 2011, update the insured value of your home. It should involve only a small increase in the annual premium.

Finally, take the time to work out a couple of few simple goals for 2012. Something as easy as setting up a savings account for the kids or hunting down any lost super can make a big difference to your family's financial wellbeing over the coming year and beyond.

Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. For more information visit www.paulsmoney.com.au

Topics:  finances, investment, money, paul clitheroe



Police news in five minutes, September 26

Tweed Heads police.

Teen held up, knife arrest and man arrested after doing burn-out

Charities shouldn't be out of pocket

COMMUNITY SUPPORT: Tweed Shire Council candidate Michael McNamara with Rotary Club of Murwillumbah Central president Peter Kelly and executive secretary Denis Hallworth at the club's regular fundraising sausage sizzle.

Council candidate calls for a community group policy review

Candidate up for fit fight

CHALLENGE: Tweed Shire Council candidate James Owen with his best mate having a jog on Salt Beach.

CANDIDATES on the Tweed election trail have been issued a challenge.

Local Partners

Josh Brolin and Kathryn Boyd tie the knot

Josh Bolin marries in front of close friends and family

Marilyn Manson wants a 'nice' girl

Marilyn Manson wants a girl who understands both of his identities

Angelina turns to Depp for consolation after divorce

Brad Pitt and Angelina Jolie with their six children

Angelina Jolie is reportedly being consoled by Johnny Depp

Conner's food distraction leads to elimination

Australian Survivor contestant Conner Bethune.

HUNGER gets to castaway as Australian Survivor's tribes merge.

Bonus point gets Dan and Carleen over the line on The Block

Dan and Carleen in their winning living and dining rooms in a scene from The Block.

BABY boomers win living and dining week as show hits halfway mark.

Olivia Wilde having a girl

Olivia Wilde revealed she is expecting a baby girl.

Casuarina sets the benchmark in Tweed market

Our property market is as strong as it's been since the crisis

UPDATE: Former rodeo champ's sale rained out, now back on

Larkhill local Ken Consiglio is having an auction of most of the things on his property.

'People kept showing up and we had to turn them away'

Couple build their own 'tiny house' for $45k

Holly Bowen and Oli Bucher built their "tiny house" themselves, only hiring a plumber and an electrician. Photo/supplied

The house, which is built on a trailer and can be towed.

Sunshine Beach property breaks real estate record

The property overlooks Sunshine Beach, as the backyard lawn meets the sand.

Sunshine Beach mansion sale smashes real estate record

SOLD: Historic hotel finds new owner

Post Office Hotel Grafton

Photo Adam Hourigan / The Daily Examiner

Pub in new hands and heading in a brand new direction

Peppers Airlie Beach put on the market

ON THE MARKET: Peppers Airlie Beach is being for recievership sale by CBRE Hotels and PRD Nationwide Airlie Beach.

Peppers Airlie Beach is being offered for sale.