November 2021 - Credit Connection

It is that time of year when most Australians make their credit card work harder than an ant pushing a boulder up a molasses-covered hill. However, it’s never too early to talk about how you could make 2022 the year that you reduce or, even better, eliminate that credit card debt.

We’re not talking about consolidation or refinancing, though that is an option you could discuss with one of our experts to see if that is right for you. We will discuss simple tips and tricks that you can do right now to make 2022 credit cards debt-free!

You are not alone

According to the data on Finder.com.au, as of September of 2021, there are 13,184,537 credit cards active in Australia. Those cards earn the lenders a national debt accruing interest of $18.5 billion (yes, with a “b”).

Out of those cards in the market, the average monthly balance is $2,633, and the average monthly balance accruing interest is $1,400. This information tells us that while folks are using their credit cards, they are not paying the balance off in full and giving those lenders that sweet, sweet, interest money.

Fix number 1

One of the first rules of financial literacy is to educate people on the correct use of a credit card. If used correctly, a credit card can increase your lending capacity but being misused could cost you a chance at a home loan. Paying off your credit card in full each month means that you get all the benefits of improving your credit without paying two or three times over for purchases in interest.

While credit card lenders’ nature is to place a “minimum payment” on the bill, this is only their suggestion to fill their interests, which is the interest they charge you on your purchases.

Flick the minimum and pay it off in full. If this isn’t an option, you might need to look at your budget to see where purchases can be cut back.

Shop around

Just like insurance or a utility, many stick with the same credit card lender for years because it’s the one they started with. The days of large corporations showing longevity loyalty are gone, so it’s in your best interest to shop around for the credit card with the best rate, best features, and no hidden fees.

A little bit of homework can save you a bundle.

Credit is not Debit misspelled.

The temptation to withdraw some cash from a credit card can be vital, especially if you’re like me and the local bakery is doing a two for one on doughnuts. Most credit cards charge an additional fee to withdraw money and can start charging interest on it immediately, therefore, negating the great doughnut deal anyway. This is another sneaky tactic by the credit card lenders, not the bakery; their intent is pure happiness.

We are not trying to demonise credit cards, and correctly using a credit card can be a powerful tool. If you need help wrestling your credit cards back under control, the Credit Connection team of experts can help you start 2022 on the journey to less debt more life.

As the end of 2021 looms ever quicker, 2022 could be the year that financial freedom becomes your focus, and we can help you achieve that.

However, if you’re looking for a few “get started” tips, then you have come to the right place.

What is financial freedom?

The term “financial freedom” might mean different things to different folks. For some, it’s being wholly debt-free, and for others, it might mean not having to worry about money.

For Credit Connection, financial freedom means helping our clients pay off their mortgage in record time while also securing their finances to ensure fantastic retirement.

No matter what your definition of financial freedom is, the below tips will help you get there.

Create a budget and stick to it!

The dreaded “B” word. It’s not a fun thing, but it’s essential to have a realistic and workable budget for your personal finances. Knowing where your money is coming in and out will ensure that you make more financially educated decisions and can help your savings or investments grow faster.

Creating the budget is one thing but sticking to it is something else entirely. Technology can help with that, as many fantastic budgeting apps can help you keep track of your finances.

The great folks over at Savings.com.au published an article about budgeting apps. You can view that article here.

Create “automatic” savings!

When looking at your bank account, it might feel easier to leave your money in your single bank account and make those savings. The problem with that is that most people will end up spending that money as it’s available with the intention of “putting more back” later. That doesn’t happen. So, why not put another step in the way.

Putting your savings into an investing app means that your money is secure, making better returns than if it’s sitting in a traditional banking account, and is still accessible if you need it. We recently published a blog about investing apps that you can read here.

Maintenance is key!

Maintenance to your car, home, and technology might seem like an expense that you can cut back on to ensure that you’re on the path to financial freedom, but the opposite is true.

Keeping up the maintenance on your items means small expenditure more frequently and cuts down the risk of a massive expenditure if your car breaks down, your home needs significant repairs for problems that were ignored, or your tech turns off for good.

While these are all tips to ensure that you’re on the path to financial freedom, nothing beats talking to an expert about it. Luckily for you, we have an award-winning team that has helped thousands of clients cut years off their mortgages and get their finances in the best shape.

Start 2022 off on the right foot and book a few minutes of your time to talk to one of the Credit Connection team.

Just seeing the term “emergency fund” can strike up imagery of medical bills or home repairs, but that is not the only thing they are suitable for.

Emergency Funds is essentially a bit of saving that you only use in the case of financial distress. Another name for it is “rainy day funds”, but in a dryer climate like Australia, that doesn’t seem very apropos. One might have to dip into “rainy day funds” because it hasn’t rained. Nevertheless, you get the idea.

Why have one?

Many might look at Emergency Funds as unnecessary as “isn’t that what savings are for?” Yes, Emergency Funds are just another form of savings, but they are mainly for when you have financial hardship. These hardships can be anything from the aforementioned medical or home issues to the loss of a job, or something as exciting as starting a new business. It’s all how you look at it.

The big question might be, “how much emergency fund should I have?” Well, we’re glad you asked.

As stated in the fantastic emergency fund breakdown over on Investopedia, “The best size for an emergency fund depends on a number of factors, including your financial situation, expenses, lifestyle, and debts. Many financial advisors recommend saving enough to cover anywhere between three to six months’ worth of expenses, which can help you weather a modest healthcare bill or short bout of unemployment.”

Think about it like it’s behind glass

Unlike your everyday savings, an emergency fund should be slightly more challenging to access. Almost like it’s those emergency buttons behind glass. It’s a safety net. While some people keep these funds in a traditional bank, others keep them in investment funds or digital wallets. A popular option is to place the funds into something like the investment app Raiz as it’s easy to put in money, easy to save and access. Because you’re investing the funds, you’ll make more on it than standard interest rates in a savings account.

We have to note that Raiz has no official partnership with us, and there are many options out there for investment apps. Do some research and see which one works best for you. We did another blog on the different investment apps here to get you started.

Use it to sharpen the financial blade

Using your emergency fund should be a last resort, and using those funds should cause you to be hyper-aware of why that money is needed and how it’s being used. It’s a hand way of sharpening your financial awareness because instinctively, you’ll want to stop using that money and start saving it again as quickly as possible.

While this blog is just a basic overview of starting and the reasons behind an emergency fund, it should be something that you institute into your budget as soon as possible.

If you would like help going over your financials with an expert and discussing emergency funds more, our team of experts would love to help you get on that journey of Less Debt More Life!

By now, you’ve no doubt heard of the great resignation that is happening worldwide. You may even be part of the great resignation, and we want to make sure that your finances can handle this new change in your work life.

What is the great resignation all about?

The COVID pandemic has changed our lives, but one of the biggest and longer-lasting impacts is around the work-life balance. Working from home and remote learning has forced many to rethink the importance of “office dwelling work”. While many employers are asking their employees to come back to a more traditional work environment, many are wondering if this is something they want. The pandemic made working from home, spending more time with family, and generally having more flexibility around work-life balance a topic of importance to employees. Some employers are embracing it, while others are fighting against it, which is causing “The Great Resignation” as employees look for work with companies embracing the change.

As stated in this excellent article from SmartCompany.com, “More than 15 million Americans (and counting) have quit their jobs since April 2021. The estimates vary, but some say 25% of women are contemplating leaving the workforce altogether, while others estimate 40% of the global workforce is looking to make a change in their job.”

Great Resignation Australia

Australia will not be immune to this trend, with many Australian companies getting ahead of this and making flexible work arrangements already.

If your employer isn’t embracing this “new normal”, you might be looking to move on. Are your finances, and maybe more importantly, your mortgage, ready for this change?

Getting Financially Ready

Speaking to an expert about your mortgage and finances is a great start. Adjusting any projections for a change of income will mean you can mitigate budget surprises later.

When it comes to finding a more flexible job, Danny King, founder and principal of Sydney law firm Danny King Legal told The Australian, “Check the money. Start with the minimum payable under the National Employment Standards and then double-check any applicable modern award, enterprise agreement, contract, and policy. Point out any errors your employer has made and ask that they confirm you will be paid the correct amount.”

No matter what side of the great resignation debate you fall onto, it is something of great cultural significance that will affect investing, employment, and keeping you on the journey to #LessDebtMoreLife.

Asking “why financial literacy is important” might feel like something written on the chalkboard when we were all in primary school. Still, sadly financial literacy for students is not something that is readily taught.

How did we get to be where we are as a civilisation without learning these fundamentals in school? I understand that we teach math’s and give some basic understanding of how economics works, but it’s left to parents to teach the finer details of budgeting, mortgages, and investing. The problem with this is that many parents might also not be the best financial literacy examples because they weren’t taught it either.

This blog isn’t to throw “shade” on parents; I think I’m also dating myself by putting “shade” in quotation marks. We’re just asking the tough questions like; how many people do you know who have a full-time job but live paycheque to paycheque? How many people do you know that struggle with interest rates, mortgages and investments?

The answer is probably a lot. Even in our own lives, how often do we learn something about financial literacy in Australia and think, “I could have used this a decade ago.”

Before you start googling “financial literacy books” or “financial literacy courses”, the good news is that there is a lot of handy information for free online. Be aware, though, there are a lot of “fly by night” or “shonky” operations out there that would be more than happy to take some of your hard-earned dough while offering some eBook that isn’t even suitable for financial literacy for kids.

Organisations like Forbes have a list of great online learning to improve these skills. Some of them might lean more toward American issues, so if you are looking for something with a touch more “green and gold”, look no further than Financial Basics, Open.Edu, or the Federal Government’s resource MoneySmart.

If you want to take the next step from that, it will mean talking to an expert. Credit Connection has been helping clients for over 15 years reduce their debts and enjoy that #LessDebtMoreLife experience.

When you or you help someone else achieve financial literacy, it’ll be discovered that money, debt, mortgages are not giant scary monsters. Yet still, a means to getting what you want out of life and securing your families future.

Christmas savings tips are for those that, instead of hearing sleigh bells this time of year, hear the never-ending sound of cash register chimes. Sure, cash registers don’t make much of a sound anymore, but the literation didn’t work as well with the soft beep of touching your card to PayPass.

The “silly season” can sure be a drain on the bank accounts but before you take that Christmas Savings Tin out to the corner and start waving it around, hoping for a few free five-cent pieces, let’s have a look at ways we can change Ho-Ho-Ho into saving you dough. I could have gone with dough-dough-dough, but I’m not THAT far into silly season.

Do you need those decorations?

What are the best decorations? The ones that you paid big-ticket prices on at the shops or the ones your family made and possibly handed down? Christmas is about sentiment as much as it is about anything else, so why not ditch the expensive mass-produced decorations for the ones made by yourself or your family. Truly one-of-a-kind pieces. You could even say they are #Exclusive.

Santa got you Christmas Gift Savings!

Having a Christmas Savings Plan for gifts is the key to ensuring the budget doesn’t lead Santa’s sleigh and fly into the horizons. If you are buying for kids, it’s good to grab things during sales throughout the year (doesn’t help now, I know), or even make Google Alerts for particular items and their online deals. Starting early means saving a bundle.

It happens every year.

Christmas is a magical time of year for sure, especially when you consider how many people it seems to appear in front of magically. Putting away a little money towards Christmas Savings for next year, even before Christmas happens this year, means that you won’t be hit with a sudden burden of yuletide spending.

If you don’t know where to start with the naughty-nice list that can be a Christmas Savings plan, you can always talk to a finance expert to get started.

Money is a hot-button topic; people generally don’t like talking about it at all. A study by University College London found that “People are seven times more likely to talk to a stranger about sex, affairs and sexually transmitted diseases than discussing their salary.”

But why?

People may even feel shame about their financial mistakes or feel like they aren’t doing as well as others.

People don’t like talking about money because the conversation quickly becomes ‘too real’ for them. Discussion of money may make some feel like they aren’t doing as well as others. People may even feel shame about their financial mistakes.

However, people don’t understand that talking about money can help them. Having a neutral discussion about personal finances with close friends and family, or the people you trust, can save you a buck in the future.

For example, the Ally Bank surveyed people who discuss personal finances socially. They found that they were able to find better interest rates on a savings account.

Money is a Mind Game

Money problems are just psychological problems. Too many people believe that having more cash will solve these problems – but money problems are like a pattern. They are continuous.

Financial stability now means a world of happiness later. It’s all about personal development along the way to address these psychological problems. This personal journey can only be completed with the proper financial knowledge.

Opening up about your finances and letting people help you along the way will only bring positive outcomes.

How Talking About Your Finances with Credit Connection Can Help You

Speaking with a financial advisor is not shameful, but it is only for the people who don’t have time to sort out their own finances. It’s for everyone – and it can benefit you, too! It would be best if you stopped associating your finances with the feeling of shame.

We help people daily reduce their mortgage interest, streamline their finances, spend smarter, and stay on track with their financial goals.

Managing your finances is like most things in life – it’s a skill that can be taught! If you’re finding your finances overwhelming, learning from us is key to stopping yourself from feeling horrible every time you think about money.

Sadly, earning more money won’t solve all of your financial burdens because these burdens are more often than not a result of mismanagement.

Navigating the world of finance is daunting, so our expert team of experts make that process a lot easier – after speaking to us, a weight you didn’t think you could shrug off will be lifted from your shoulders!

“Debt Reduction Plan” is a perfect phrase for a simple reason. There’s one scary word being “debt”, and the other two are motivating unless the “reduction” comes after income and the “plan” comes after “get rid of you”.

Barring those extreme examples, having a debt reduction plan means you have an action plan that will put you on a debt-free journey. There are many debt reduction strategies out there, but we decided to “pick the brains” of the experts on our team and get some beginner debt reduction tips that will help you start your planning.

What is Debt Reduction?

It sounds like a fundamental question, but it’s a great starting place because debt reduction is more than one thing; it’s a combination of ideas. You can reduce spending, budget, refinance existing debts, diversify income streams, and so much more. There are many debt reduction methods but understanding the core of what you want to do is essential. Talk about it with your family, and you have the starting line to your debt reduction plan.

Debt Reduction Calculator

We have seen many people open up a blank spreadsheet and work out the formulas and formatting to make their debt reduction plan make sense, and it can be a nightmare. Fortunately, we live in a time where if you think of it, some smarty-pants person has already created it online.

One such, or team of, smarty-pants have created this handy debt reduction calculator that allows you to enter all the different forms of debt you may have and see how much you need to pay off each month to get out from under that debt cloud.

We have a mortgage action plan calculator on our website if you are looking for specifically mortgage reduction.

Having these figures from the debt reduction calculator will let you know how much you need to set aside from your earnings, save, or even earn from a side-hustle or second job.

Beware of the small fees

A universal debt reduction tip from all experts is to be very wary of those small fees. They mean that small fees are service fees, credit card fees, or “cup of coffee” purchases such as another television streaming service or digital music /podcast subscription. These small fees can add up to a huge problem and can impact any debt reduction strategies.

It may be time to go through all these “small fee” services and see what can be cut or consolidated.

Debt Reduction Services

We would be remiss if we didn’t bring up this essential service. For starters, it is one of many things that Credit Connection excels at, but also because we want you to know that there is help out there for you if you need it.

Suppose you are looking to become debt-free and live that #lessdebtmorelife lifestyle, then we can also help. A quick Google search can put you in contact with several debt reduction services that can help you with everything from budgeting to refinance. You can get started with us today by clicking here.

Whatever you decide to do to get started on your debt reduction plan is only the first step to a more fabulous and financially secure lifestyle.

Of course, just like with medical articles you might be reading in the middle of the night to self-diagnose that thing (hint: don’t do this), it’s always better to talk about medical and financial matters with an expert to ensure that you are getting the best advice for your particular circumstances.

Remember, you got this!

Investment Management Apps are a fantastic way to dip your toes into the world of investing. While they are also great for seasoned investors, many of them are aimed at folks who want to get started but don’t know where to begin.

What is the best investment management app?

Isn’t that the million-dollar question, sadly we don’t have the answer for that. Not because we don’t have an opinion on it but mainly because that’s what it is, an opinion. A recent article from the folks over at Canstar did discuss this exact topic in a lot of detail. This blog is simply a brief overview, so if you are interested in their opinion and learning about how to use investment management apps, give this link a click.

Using search engines to look up investment management app reviews will give you a great indication of what the users are saying about investment management apps.

Some of the best-reviewed apps include Raiz, InvestSMART, SelfWealth, Stocklight, Sharesite Reader, and Simply Wall Street. Each app has a plethora of tutorials and walkthroughs to get you started in the world of investing.

Raiz is a fascinating one in our eyes because while it allows you to set an amount you would like to invest, it has a great additional feature. When you sign up with Raiz, you establish a bank account that you spend money from. Raiz will round up purchases from that account and invest the difference in a portfolio of your choosing. For example, if you buy a coffee for $4.50, it’ll add 50 cents and hold it in an investment transaction. Once you have $5 built up, it’ll invest it for you. It couldn’t be easier.

Where do I get investment management apps?

Most of the investment management apps mentioned are available on Android and Apple iOS mobile devices, or you can log into them via your computer. It is handy to have the investment management apps on your phone so that you can track all the changes in your portfolio whenever you want or maybe even top up your balance.

While investing on your own is an excellent way of investing in your future, it can also be daunting. If you would like to discuss your options with an expert, you can do that with our team by contacting us here.

Happy Investing!

The general idea that we were fed growing up was that if you wanted a house, you would get a mortgage, the bank would tell you how long it would take to pay it back, and you would pay it back over that time. Little did we know the term “mortgage interest reduction” would be keeping us up at night now.

That was also the time where some soda companies tried to make a “breakfast soda”. So, things have changed.

The chances are that if you’re reading this right now, you already have a mortgage and are looking to get it paid off sooner rather than later. There are a plethora of mortgage repayment calculators on the net that will give you information on the timeframe you are looking at by paying different levels of repayments. We have our handy-dandy mortgage calculator here for a second opinion.

What those cheeky monkeys haven’t told you is that there are a few ways to shave years off your mortgage. If you use one of these mortgage calculators, you’ll see that based off the information your lender has given you, it will take the timeframe they have given you to pay it off. Of course, the lenders don’t want you to know this because paying off your loan over a long time is how they make their money.

We’re more interested in making sure your money works for you.

Before you start pounding “mortgage broker near me” into Google looking to refinance or “mortgage rates comparison” to see how different the banks are treating their customers, we would urge you to have a short conversation with one of our Credit Connection experts because they know the best path to Less Debt More Life and have shaved decades off our client’s mortgages.

You can contact them here for a free consultation. Ok, enough of the selling, you want some tips.

This article is just going to cover the basics because this discussion and your situation can change a lot of the factors on how quickly you can pay off your mortgage.

Offset

Placing funds into your offset account helps bring down the interest that is being added to your mortgage. Using the offset means that you are ticking off more of the principal than you would if you didn’t use one with each payment.

Consolidate

You might have credit cards and loans from different lenders. Those services might have different interest rates and fees that could be driving up your repayments. Consolidating them can help save you brand new television’s worth of interest, and who doesn’t want a new TV?

Review, Review, Review

Just because you took a mortgage out with a particular lender doesn’t mean that you are tied to them for the duration of your mortgage. Look around often and see if there is a better deal out there. Sure, many lenders have an exit fee attached to their mortgages, but if you find massive savings, you can counteract that fee and save yourself more in the long run. Plus, as the shopaholic once said when they were in the shopping centre after discovering they left their wallet at home, “there’s no harm in looking.”

These are some fundamental tips for Mortgage Interest Reduction and getting you to the land of debt freedom, but “basic” was in the title. Contact one of our experts today for a more in-depth discussion and one catered to your financial situation.

Less Debt More Life™

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