February 2022 - Credit Connection

Savings Goals don’t have to be everything significant squished into one. Separating your savings goals into smaller, bite-sized chunks could mean that you have more wins in your savings journey and are more likely to stay with it.

Many people might start their savings journey because they want to be debt-free. This is a great goal to have, but realistically, you may want to achieve many hurdles and smaller goals. What if you need a new car? What if you have a child about to enter university? Is there a big holiday dream that you want to achieve? These can affect your end budget goal, but making small goals will succeed the overall journey.

Setting up short-term savings goals

What exactly is a “short-term savings goal”? A great question that we assumed you asked for this paragraph. Some examples of a short-term savings goal are establishing or topping off an emergency fund, home or car maintenance, a large ticket purchase such as a new TV or white goods, a holiday, or annual events like Christmas and birthdays. They tend to be savings goals that you’ll want to action anywhere between a few years or the following year.

Ensuring that you are putting money away for these events means that you are creating less stress, less need to bring out the credit card, and getting into debt while achieving your overall savings goal in the future. A bit of paperwork now for stress-free living later? Sounds good.

Next stop; medium-term savings goals

A medium-term savings goal is a goal you’ll have in the next two to five years. These are goals that you’ll have to put severe consideration and savings effort into.

Examples of a medium-term savings goal could be a new car, a home deposit or renovations, or a significant family holiday. Just because you’re saving doesn’t mean you can’t live. Putting effort into ensuring that those goals are covered will mean great success for your budgeting, saving, and overall lifestyle.

Finally, the long-term savings goals.

The long-term ones are the big ones! These are the ones that sometimes are “out of sight, out of mind” but need to be the significant factor in all of your saving goals. Examples of long-term saving goals could be your mortgage, investments, or superannuation.

These goals will take years to save for, but they, of course, will pay off in spades, or dividends, in the end.

Separating your savings goals into different categories might seem like a hassle, but it’s essential to see what you can achieve now rather than ten years from now in your savings so that you can be sure to celebrate the wins when you get them.

If you would like some help in figuring out how to best attack the long-term savings goal of your mortgage, we can help you with that! Contact our team today, and we can show you how you could save thousands and years off your mortgage.

There are some hard savings truths that we need to discuss. They aren’t the easiest to hear, but they need to be heard when you are serious about starting your journey to less debt more life.

Comparing these hard truths to something else is a lot like dieting. While many people are waiting for the miracle fix for losing weight or keeping fit, they’ll procrastinate on doing what we already know is a hard truth around fitness; we need to eat right and exercise.

When it comes to saving money and getting on that successful financial path, we need to deal with four essential hard savings truths. They may not be groundbreaking, but they are important so let’s get started.

Stop wasting money.

The statement “stop wasting money” might get us promoted from Private Obvious to Captain, but it is still a lesson many haven’t learned. Every dollar that you earn could help you take another step on your debt-free lifestyle, and if you have subscriptions that aren’t being used, buying coffee from the local shop every day, and just being careless with your money, then your money isn’t working for you.

Taking the time to sit down and work out a budget, like outlined in this blog here, can ensure that you are not wasting your money and instead make it work for you while understanding where the money is coming from and where it’s going.

Plan, plan, plan! Have a savings goal!

No one wants to worry about money. We want to be secure with our savings and know that when we retire, there will be enough money for us to do that. Well, the only way to get there is to plan. You need to take control of your money now to ensure that there is plenty there for the future. Sadly, money doesn’t grow on trees, and your wealth can’t grow without nurturing it. Time to get started!

Shed the debt ASAP!

Debt hanging over you is going to hinder your journey to financial freedom. Saving that debt as soon as possible is the only way to put those money worries behind you and start enjoying your life and securing retirement. If your mortgage is your most considerable debt, then the expert team at Credit Connection can help you save years and thousands of dollars off that debt. You can contact them here to find out more.

Other forms of debt, such as credit card debt or small loans, should be paid off as soon as possible. Paying off more than the minimum repayment means that you’ll pay it off quicker and stop racking up interest on those debts—a win-win.

Be DIY where you can!

We know that coffee always tastes better when made from that friendly shop down the street. We know that takeaway is tastier than making dinner yourself. We also know that those expenses add up REAL quick, and you’ll end up paying triple the amount for something that you could be making at home.

Making food and coffee at home might mean more effort, but it’ll drastically reduce costs and doesn’t that taste the sweetest? The occasional treat is fine and a great way to celebrate a savings milestone, but the hard savings truth is that you should be making as much as you can at home to save as much as you can.

These are just a few of the complex financial truths that we need to sort through to start our debt-free journey; if there are any more that you would like us to discuss, please let us know.

Good luck. You’ve got this!

We need to talk about budget lessons.

I know.

When the word “budget” is written in a blog, the collective groan that can be heard from readers could almost be mistaken for some mythical beast emerging from the earth’s crust to fight Godzilla.

It’s understandable because it’s not a “fun” or “sexy” topic to discuss, but there is so much to learn from having a budget. A budget shouldn’t be another chore but a tool to help improve your life.

Fewer arguments about money

If you are married or have a long-term partner, there’s almost a certainty that you’ve argued over money or at the very least a purchase that the other might see as “frivolous”.

Having a budget that you both develop and maintain means that you both have eyes on the home’s finances. With everyone contributing and knowing where the expenses are, there will be less blaming for spending and more understanding. It can also create a united front regarding savings and what savings goals you have.

Seeing the truth

When we help folks living paycheque to paycheque work out a budget, they start to see the whole picture of their spending, and the results are shocking to them. When asked what their expenses are, most people will grossly underestimate their actual expenses. This isn’t done maliciously, but because it’s so easy to forget about an extra streaming service, subscription, or regular coffee shop trip, and all those expenses add up.

You have a budget that lets you see and inspect what’s going on with your finances so that you can make reductions where you need to and put more money into areas that will do you the best.

Budgets give you a boost.

When many folks think about a budget, they think about a document that tells them what they can’t do. We’d argue that a budget tells you the fantastic opportunities you have with your money. Seeing where you can cut expenses that you don’t use means you’ll have more money to pay off debts, save for holidays or big-ticket purchases, or more money for you to enjoy the things you like the most.

Having a budget gives you the ability to give yourself a raise. You can’t go wrong with that.

The best budget lesson that you can learn from a budget is how to make your money work for you. There will be opportunities that you didn’t know that you had before. You could invest, maybe using one of the investing apps we’ve written about before, or live the #financialfreedom lifestyle that we all crave.

If you want to get started on a budget, we have a blog that covers that as well, or if you need additional help with your finances, our team of experts can help you. Click here for a risk-free consultation with one of the fantastic Credit Connection teams.

Inconsistent income is a fancy-dancy term for folks who don’t have a full-time steady gig but work on short contracts, freelance or take casual shifts. In many blogs and articles about budgeting, income is usually assumed to be steady. In 2022, that’s not the case.

The rise of the freelancer and the side-gig or side hustle is growing faster than the subscription fee for your favourite streaming service. People worldwide realise that they have more freedom, and more income, from getting out the nine-to-five office experience and working from home doing everything from copywriting to being a virtual assistant. The pros of this type of work are evident, but one significant con is that income can vary month to month.

So, it is the purpose of this blog to focus on those who have inconsistent income and how they can organise their financial life to ensure they are on the path to less debt more money. We see you.

Budget Must Take Priority!

One of the obvious cons of having an inconsistent income is that you can’t factor in an exact amount that you will earn in the financial year. However, there will be bills that are the extreme opposite of inconsistent. Ensuring that they take priority and are covered by the income coming in is key to ensuring that you stay debt-free. Working out how much you will need to make at a minimum each week to cover these expenses will help the drive behind picking gigs to cover these costs.

Worst Case Scenario

Being an optimist is fantastic quality, but when looking at your budget, it might be “safer” to turn that optimistic look around and assume that you will have a tough financial month. This way, you can give yourself the confidence that even if the gigs don’t come in this month, you’ll be ok because the ebb-and-flow of inconsistent income means that some months might be tight, but others could be lucrative to make up the difference plus some.

Put away some emergency funds.

We have written about emergency funds before, you can read the blog here, and basically, they are your “break glass in an emergency” funds. Putting away as much money as you can into an account that you won’t touch is key to filling the gaps of a dry-gig time. Even if you can only put a few dollars a week into this fund, future-you will thank you for it.

Tracking inconsistent income is a must!

As we stated before, it’s easy to budget for your income when you have a full-time job. It’s a set amount. However, you’ll need to constantly put how much you are making into your budget with inconsistent income. You could use a previous year or previous quarter of income as an average, but as gigs fluctuate, you’ll need exacts to ensure you are covering your debts and also saving.

Speaking of debts…

Paying off debt while having inconsistent income can be tricky but still very doable. There will be some differences, though, as when you have a steady income and come into a little extra money, it’s typically advised to put that extra into paying the debts. It may be the more sustainable option with inconsistent income to pay off a set amount. Even if you come into extra income, but that income into your savings or emergency fund in case you have a dry month and need those extra dollars later to ensure your debt is paid consistently.

Of course, this blog is written with a vague paintbrush to give general advice to as many people as possible. We understand that everyone’s situation is different, so the best advice we can give is to talk with a financial expert about your specifics so that you can put the best foot forward on your pathway to less debt more life.

If you would like to talk to one of our experts about cutting years and thousands of dollars off your mortgage, you can set up a risk-free virtual meeting here.

Why use a planner? It can be seen as being “old fashioned”, but there is a reason why many people swear by them. What is that reason? It makes them stick to the plan. The reason is in the name.

The introduction of modern planner apps can have the same effect, but like a lot of technology, they are sold to us on the promise that they do a lot of the work. When it comes to running your life and finances, an app will never do the work; it’s just a tool.

We are not saying that digital planner apps are useless; they provide a lot of uses. We are saying is that a traditional planner works better because it’s harder to ignore than an app on your phone. You still have to put the work in, so having a physical representation of that is better for willpower than your phone, where you can swipe the work away and play a game or watch YouTube.

Daily financial motivation tips are something that we are dedicated to offering over on our social media; please check us out if you haven’t already, and there we talk a lot about having time every day to check your finances. A financial planner can help you track spending, income, investments and plan for future spending on events like holidays and birthdays.

Using a planner can make you feel more hands-on with your finances, even without touching them. It’s about being in tune with your financial wellbeing and knowing where every dollar is and where that dollar is going.

Many planners will also include areas for notes where you can put dialling financial learnings, and some come with vision boards where you can put financial goals and dreams.

Think about planners more petite as an annoying chore that needs to be done and more about a journal that tracks your pathway to financial freedom. Isn’t that a story that you’re going to want to read back on?

While you could run out and purchase a “you beaut” planner from the story or a custom one from Etsy, a print-yourself free one is just as good to get you started.

We’ve placed a free planner template from MoneySmart here to make getting started even more accessible.

Print out the planner, fill in the information and see how your mindset around your finances changes for the better. You’ll feel more confident about your financial choices and have a better overall relationship with your money.

Now, it’s time to make that money work for you.budget-planner_moneysmart

If you would like to learn more about how your money can work for you and also how you could cut years and save thousands from your mortgage, our team of experts are ready to talk to you. Click here to get started on the pathway to financial freedom and less debt more life!

Why is toxic money thoughts still so prevalent in our culture? Because it’s the way we’ve been taught to think about wealth. Let’s break it down.

Typically, when one thinks about money, it is two ways. The first is the daydreaming of what we would do with a blank cheque or a bottomless bank account. The second way is with dread and stress as we wonder how we’re going to pay a bill or buy something we need.

Sadly, daydreaming doesn’t help matters as we finally “wake” from the dream. Our money issues are still there, and those endless funds are not. What compounds the problem is that, for some reason, talking about money is still a taboo topic. We recently did an entire blog just on that, and if you’d like to read it, you can do so here.

One of the most significant toxic money thoughts is that we’ll never earn enough money to fulfil our dreams. While the likely hood of winning the lottery to solve all our financial woes is astronomical, you might be making enough now to do precisely what you want to do if you make your money work for you better.

Of course, any big money decisions should be made by talking with an expert.

On the primary side of it, budgeting your money and investing could quickly put you on the path to financial freedom.

The second toxic money thought that paralyses a lot of people’s wealth journey is that you can’t ask for money. We don’t think for a second about needing a mortgage to buy a house or looking for investors to start a company, but if we are struggling to make ends meet, asking the government or even a family member for help should be seen as a sign of weakness. Asking for help is a characteristic of a strong personality.

While there are many other toxic money thoughts, one of the most prevalent is buying into the class system. We mean by the class system that there are rich and poor people who will never change. That’s rubbish. For every superstar with more money to burn than days in their life, there is a wealthy person that lost it all. For every struggling person, some people changed their lives for the better.

It’s not always easy to change your financial position, but it can be done. One of the biggest hurdles you face is your thinking, especially when it comes to money. Fixing that problem will open so many more doors of possibility, and getting rid of toxic money thoughts will help you knock on those doors.

If you would like to supercharge your path to less debt more life, contact one of our experts now, and they can show you how you could cut years and thousands of dollars off your mortgage.

Out with the toxic money thoughts and in with the path to financial freedom!

Inflation is one of those words that you hear all the time when you’re trying to catch up on finance news. You might be able to get the concept just by the context clues around it, but do you know what inflation is?

We’re going to break inflation down for you today. Well, not the actual inflation; that would mean we have some economic superpower. No, we’re going to break down what inflation means; and maybe break down in the process.

So, what is it already?

To put it in the simplest terms that might anger an economist, inflation is the rate at which things get more expensive. If the cost of bread was $1.50 last year and $3 this year, that means that the inflation on bread has grown 100 per cent.

The world doesn’t calculate inflation via bread, but instead “basket of goods”, which gives a rough estimation that is used. This measure changes depending on the country, economic institutions, governments, and other measures, so some countries have higher or lower inflation than Australia.

Do we need inflation?

Without a PhD in economics, it can be tricky to explain why we need it. Don’t prices always rise? Well, yes and no. Overall, prices go up generally, but some goods are lower in value over time or the demand changes.

For instance, the “Demand-Pull Effect” is an economic term for the supply not meeting the demand of a product causing the price to rise. Usually, the supply increases, which brings the price back down even if the demand is still high.

On the flip side of the “Demand-Pull Effect” is the “Cost-Push Effect”, where the cost of materials increases which causes the overall cost to increase. A perfect example of this is petrol, and it’s doubtful that petrol will ever drop to 1980s prices.

Why is inflation different for different countries?

There are a lot of factors that can go into why the inflation rate of countries are what they are, but the main two are interest rates and money supply. When the Reserve Bank of Australia changes the interest rate, they are doing so to keep inflation under control. Does this always work? No. Sometimes factors like the Global Financial Crisis back in the early 2000s affect economies in such a big way that countries can’t fix the inflation rate, and we all feel the pressure in the pocket.

Why should you care about inflation?

Does inflation affect you? Of course. Inflation can have a massive effect on interest rates as they are the frontline tool used to keep it under control. Higher interest rates mean more mortgage repayments, lower interest rates mean you get less interest on your savings, and inflation can play havoc on the share markets, which means your investments can be in greater flux.

Inflation isn’t something that you should become obsessed with, or you could end up one of those folks scrawling math on the walls of their home with a sharpened stick level of obsession. It is, however, great to have a great understanding of how it’ll affect your financial goals.

If you would like to discuss your financial goals with our team of experts to see how you can try to “inflation-proof” your future, you can do that here.

Let’s face it, pets on a budget are challenging. They can chew through savings faster than a new pair of shoes or that fancy “chew-proof” gate that did not work as advertised.

We love our pets, though; they are a part of the family as anyone and need to be looked after in our budgets as well.

Here are some areas to remember when keeping your pets and budget healthy and happy.

Don’t skip the vet!

There are so many “golden rules” when being an adult, but the idea that you don’t need to take your pet to the vet for a regular check-up or that your car doesn’t need a tune-up every few months means that you’ll probably be spending a majority of your time at both places. Of course, this will end up costing you more than if you just did the regular maintenances.

Bringing your pet to the vet for regular check-ups is more than just about the overall health of your pet but also keeping unexpected expenses from creeping up on you and destroying your budget. While you are at the vet, you can also ask for advice about exercise and food for your pet and make sure that everything is catered to your specific pet.

This brings us to.

Some pet food on the market is more expensive than what you would find in the grade-a meat section of the local butcher! While you might think that the more expensive the food, the better it is for your pet, you’re more likely just paying for the latest marketing campaign for that food brand. Talking to your vet about your pet’s dietary needs means that you can get the exact food they need, and typically it’s not the high-cost stuff.

Just no!

This next tip might sting a little, but we are keeping your budget in mind here. Yes, that little outfit you found online is SUPER cute, but you don’t need to buy it. Yes, that new toy looks super fun if you imagine being a pet but remember they are happier to chew on whatever you don’t want them to. We’re trying to get at the latest accessory for your pet is unnecessary. A simple ball, stick, cardboard tube, or a knotted-up rope of old socks are perfect toys for your pets and don’t break the bank.

DIY

While it might be easier to hire a service to do the “dirty work”, having a pet is about these responsibilities as well. Grooming, walking, nail clipping, and bathing are expensive services that can be budget draining and could be done at home. Even bribing a child to do it for an added allowance is something that could save you considerable time in the end.

Having a pet is supposed to be fun, so with these tips, you can get back to the fun and not worry so much about the expense as you continue your 2022 pathway to less debt more life!

If there are other areas of your financial journey you’d like help on, our team of experts would love to help. You can contact them for a risk-free assessment here.

Sometimes, we need to go back to basics. Our lives, houses, and minds can build up so much clutter over the years that we need to have an excellent old-fashioned cleanout and get back to our base needs.

When it comes to our financial health, getting back to basics can simplify our expenses and budget. One of the ways to do that is to look at all the different transactions in your “entertainment” blotter.

In a budget, “entertainment” tends to cover much ground. Entertainment can mean streaming television services, video games, nights out on the town, and eating out. Instead of lumping all of these together, it’s essential to separate them to make sure that we know exactly where our money is going.

One of the best ways to get back to basics regarding our entertainment expenses is board games. We know it might sound a little silly. Still, when you consider how many hours of entertainment a board game can give you, your friends, and your family while comparing it to the costs of streaming television service, the costs per hour are amazingly in your favour.

A typical board game costs around $20-30 and can easily replace a night of watching television with a much more stimulating and bonding experience with those closest to you. Even if you want to break it down further, a board game doesn’t require electricity (maybe the odd battery) and doesn’t require an internet connection.

One of the most challenging selections will be “what game”, and if you value the relationships you have with the people you play with, then maybe give “Monopoly” a pass. We’ve seen that one end marriages.

The website BoardGameGeek is a mind-blowing resource that will show you how vast the board game market is. It’ll have suggestions for skill type, age, and time commitment. You can twirl down the options and get the suitable game that will give you hours of enjoyment and, most importantly, keep that budget down.

Of course, the ultimate way to get back to basics and cut down on that expense column on your budget is to sort out the enormous debts like mortgages. Unluck Monopoly, you don’t get $200 for passing “GO”, but we can offer you a risk-free meeting with one of our experts at Credit Connection that could result in your saving years and thousands of dollars off your home loan.

Roll the dice and contact them today!

Can we talk about “wanting it all?” Because when we were children, we were all given those “sage” words of wisdom such as “money doesn’t grow on trees” and “patience is a virtue.” Some other sayings were thrown in there, probably something about “if your friends did blah blah blah” or the like.

However, parents of a particular generation did stress the message a lot around earning and saving money, probably because they didn’t have much of it when they were growing up.

Now, flash forward to when you first get a job and get those sweet-sweet paycheques and suddenly, we can have what we want when we want it. Some remember those sayings we were taught and manage to start saving; however, most people tend to lose their financial minds when they first get money and spend it all, only to struggle until the next paycheque.

Think about all the people that you know, who among your circle has their finances figured out and who among them are still living that paycheque-to-paycheque life?

When you compound these financial mindsets with the “wanting it all” lifestyle pushed on social media, you are setting yourself up for a lifetime of debt and stress. To make it even worse, the pushers that are the buy-now-pay-later companies make going into debt seem almost like a fun thing to do that all the “cool” people are doing.

It’s not. They’re not.

The time to go back to basics with financial learning has never been more needed than right now. According to the Australian Bureau of Statistics, Australians “Demand for credit was $126.3b, an increase of $49.6b”. Sure, some of that was for asset purchases such as home loans, but a lot would be from small loans, credit cards, and pay-later facilities.

“Wanting it all and wanting it now” needs to change to “wanting some and knowing how to afford it while still gaining wealth”. It’s not the catchiest of sayings, but it’s still true.

Getting back to financial basics can be challenging, but there are experts on your side to make this happen. Our team of experts can show you how to save thousands of dollars and years off your mortgage, and if that doesn’t help build wealth and buy a few things you want, then nothing will.

Less Debt More Life™

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