Personal Finance

It's Sad. Some People Think Getting Rid of Their Home Loan Is About Money!

Thu, 15 Sep 2011 01:04:00 GMT

If you're reading this, you are probably already converted.

We've all heard them. You know, the people that weigh up the mortgage features and tax implications of having a mortgage. Is paying off my mortgage the best strategy? they ask.

Unfortunately, our friends that ask this question forgot to ask something else.

These friends missed something important. Something that is only slightly related to money.

The important question is: "What would you choose to do if you had NO mortgage.

You can bet, the answer won't have much to do with tax.

So, I know you're convinced anyway, so what can you do to get rid of the damn thing?

The mortgage got you the house, and that is what it was for, but... I hope you're not too attached to that mortgage.

It has now fulfilled its purpose. Your mortgage has lived its life. It's time for it to leave.

Unfortunately, like an old car in need of an awful lot, it may need a bit of a push.

To start, you've got to pay more. Let's face it, if you borrowed 200 grand (or whatever figure it was), that's what you need to pay back, so start putting any windfall money into the loan. Money like a bonus. A tax refund, maybe even sell that exercise bike that was only used twice, and dump the money into the loan.

Next, increase your standard payment by a few dollars (and do that again in 6 months time).

And last, twist its arm so it costs you less. What is your interest rate? Is it the best deal? If your rate is a bit on the poor and ordinary side of good, maybe there is a better deal that could push it closer to fantastic. Ask a broker and see what it costs to shift the loan and how much you'll save. Make sure you take into account the costs of switching. It's not so good saving $500 if it will cost you $1,000 to do it.

Make sure you don't drop the repayments though. If you do get a cheaper deal, make sure you keep paying at least what you were before. Don't swap your interest saving for coffee. We want that loan gone!

With these steps done, look at the next biggest expense in your weekly budget and try to shave 10% straight off the top and dump it into your home loan.

As you can see, getting started is easy. Simple even.

Down with the mortgage!

Graham

I've put together 6 free tips to help you get started, plus 5 free personal finance coaching articles. If you think this might be useful, just go to http://www.payoffyourmortgagefast.com , look for the free tips link and register.

Reduction in Property Demand and the new credit squeeze for older Australians

Tue, 19 Jul 2011 20:58:00 GMT

These days as a finance broker, I am seeing first hand the results of lender's interpretation of the new NCCP legislation that impacts on personal lending.

I think the old saying in politics applies to this legislation:
For any new piece of legislation there will be 2 results. The result you expected and the result you didn't expect.

At least I hope ASIC didn't expect that they had decided not to lend money for housing to anyone over 50 that didn't have substantial assets outside their principal place of residence. The more years past 50 you get, the harder it is.

This is a genuine credit squeeze and age based discrimination and has to be impacting on the property market as a whole by excluding a big chunk of our population from that market.

ASIC made an announcement to 'clarify' its position in April. The announcement simply restated the conundrum.

Whilst we can all look on, like economists do, and shake our heads thoughtfully, there are 2 big impacts no-one is talking about:

The first is the reflection of the big demand reduction on house prices.
The second is the psychological and emotional impact on those who have been disenfranchised by stealth.

You see, free choice has been removed. Apparently you can't decide to sell your house if your loan is still too big when you want to retire. No, if this is your 'exit strategy' the government won't allow the lender to lend. Forget the fact that this same group of people borrowed money for the past 30 years without problems. You can't choose. Your bank (and your government) knows best. Just ask them.

Too bad isn't it? If you're 25 and want to travel around the world, you can sell your house and then quit your job.

If your 60, that's not an option. apparently! Sometimes the law, and society, is an ass.
This law must be changed. it's not fair.

Pay Off Your Mortgage Fast has arrived

Wed, 29 Sep 2010 21:23:00 GMT

'Pay Off Your Mortgage Fast - How to Get Rid of Your Home Loan in under Five Years' has arrived and we have been unpacking boxes and shipping the book to bookshops and people who have ordered the book.

We are also receiving feedback from people who purchased the eBook, with dramatic reductions in the predicted loan term already. Keep up the good work. Now as well as having the 'will', you have the 'way'.

The system is not complicated. If you are committed and you really want that loan gone, you can do it.

Many people have asked about the difference between the eBook and the Paperback.

While the two books are based on the same ideas, they are quite difefrent books. The eBook is a bare bones, how to guide, while the paperback is a much larger book with a more relaxed and informative style.
(Also it's easier to read in your lounge chair).

Housing Affordability and Cash Management

Mon, 06 Sep 2010 22:43:00 GMT

You have started to consider buying a house. What’s the first thing you think about?
You compare the rent you are paying now with the proposed loan repayments, right?
Only half right, I’m afraid. That’s a good start, but you need to add:
Council Rates
House Insurance
Building Maintenance
These can turn out to be a fairly large sum when you add them to the loan repayment.
Sometimes these extra costs push the purchase out of reach, so, what to do about it?
Solution:
Find some more money.
You can do this in two ways: 1. Earn more, or 2. Spend less
Earning more usually involves more hours worked, but spending less means you don’t have to work longer hours. The thing is, to reduce your expenses so you can afford a house, you can’t just spend less this week, we can all do that, just by putting off purchases until next week.
The key is to spend less consistently to free up money for the rates etc. The easiest way is to use a budget, set yourself an allowance each week, and live within it.
We wrote about this (among other things) in the book, Recession Proof Yourself.
A couple of quick tips to save money every time you shop:
1. Shop with a list, and only buy what’s on the list
2. Never shop on an empty stomach, you spend more .

Exciting news for us this week. Our new Book, ‘Pay Off Your Mortgage Fast, How to Get Rid of Your Home Loan in Under 5 Years’, arrived on the wharf in Brisbane on Sunday. Can’t wait.

Graham Couper-Smith

Back to The Future and 5 Ways to Make Lenders Want To Lend You Money For Housing

Wed, 11 Aug 2010 22:44:00 GMT

Remember in school, when our history teachers told us:

“Those who don’t learn from the mistakes of the past are doomed to repeat them in the future.”

Maybe this applies to loans.

The Australian National Banking Crisis of 1893 resulted in many banks closing, amalgamating, and an increase in regulation (emphasis mine).

The 1931 banking crisis brought on by the default of the NSW government on some interest obligations to the NSW Govt Savings Bank was followed by amalgamation of that bank with CBA and then an increase in regulation.

The Australian 1990s recession resulted in the collapse of some small lenders and large losses by 2 of the big 4 banks. The government responded in 1996-98 with an increase in regulation.

In 2008 many overseas banks failed (the Australian banks all survived). Many would say, the positive Australian experience is largely due to those regulations.

The point of all this however, is that the world is a global village these days, and internationally, there is discussion about, (wait for it), an increase in regulation.
This article is to get you thinking about how this affects the average person who wants to buy property.

Increases in regulation tend to be around reducing the risk to the bank of, and loss in event of, default on loan obligations.

The kind of things that reduce these risks are:

Larger deposit or equity in housing loans;
More margin of income over costs by borrowers; and
Stability and reliability of the borrower’s income source.

Of course, we have no idea to what extent Australian banking regulation will actually increase, but personal action to reduce your own risks will stand you in good stead if this occurs, and if it doesn’t, this action will be helpful anyway.
So, here are 5 ways to reduce the lender’s perception of the risk of lending you money:
1.   Get rid of consumer debt (whitegoods etc).
2.   Reduce credit card limits.
3.   Save for a deposit, in an account which shows a savings pattern.
4.   If you have a choice of permanent or casual employment, consider permanent as better.
5.   Maintain existing property, to maximise its value.

These steps will help to ensure you stay attractive to lenders in tougher lending times.

Graham Couper-Smith

The Right Home Loan

Wed, 09 Jun 2010 22:30:00 GMT

I am often asked how do you find the right home loan, or how do you check your existing home loan is right for you?....

The right home loan is one that suits your current situation as well as your future plans. Everybody is different.

Lots of people just shop on interest rate, but this can be short sighted. While interest rate is important, it is by no means the only important factor, and sometimes not even the most important.

To find the right home loan, you just need good advice. Where to get it?

You can get good advice from either a knowledgeable banker or a knowledgeable broker. Even though I am a finance broker these days, I do not believe that one is necessarily better than the other, because what you need to look for is:

· enough experience with home loans to fully understand the options you have, and

· Asking enough questions about you and your plans (and listening to the answers) to be able to apply their knowledge of home loans to your situation.

If you know your bank manager well, that person may be a good place to start. A good broker though, can choose between different lenders and sometimes this can be an advantage.

Be careful about refinancing. Even though I am a finance broker, I sometimes advise against refinancing because the costs of refinancing often outweigh the benefits. Sometimes there are big savings, but sometimes not...

Today Tonight Story Pay Off Your Mortgage Fast

Fri, 04 Jun 2010 15:30:00 GMT

Pay Off Your Mortgage Fast was featured on Today Tonight with a great article. You may still be able to watch it under the title Home Loan Shortcuts .

The eBook, Pay Off Your Mortgage Fast - How to Get Rid of Your Home Loan in under 5 years; is now available in Australian Dollars ($19.95) from our website www.payoffyourmortgagefast.com

The physical book can be ordered off the website (above) or through Angus & Robertson and Dymocks bookstore.

Can I ask you a question? I don’t know if you’ve ever thought about this, but if you had no interest to pay at all, how long would it take you to pay off your home loan at your current repayments?

If you have a calculator handy, just take your home loan figure and divide it by your weekly payment. This is the number of weeks it would take you to clear the loan with your current repayments.
The answer is probably too large to make much sense, so divide it again by 52.
The new answer is the number of years it would take you to pay off your home loan at your present repayments but without interest.

The answer is food for thought, because it’s probably still quite a while. I worked this out for a $350,000 home loan with payments of $538/ week for 30 years.
Without interest, it would still take some 12 and a half years to clear the home loan.

“What does this mean?” (I hear you say), and “How is this relevant to me, because my home loan isn’t interest free?”

The relevance to you and me is that to get rid of our home loan in under 5 years, we need to pay more money off the loan. The interest cost just adds an extra component to that.

The book is all about understanding how loans work and helping you find money to pay off the loan in addition to your normal repayments.

Down with the mortgage!

Pay Off Your Mortgage Fast - A Quick Guide (the eBook) is finished

Wed, 23 Sep 2009 22:02:00 GMT

At last. The book is finished. Currently it is being put together and illustrated.

Knowledge is the key to getting rid of the mortgage fast. The book provides this knowledge so we wanted to make it accessible to you immediately wherever you live.

When we thought about it it seemed obvious to write this book as an eBook so you could download it immediately and start work on your mortgage without delays or postage costs regardless of where you live. When getting rid of the mortgage, soon is good, sooner is better, and soonest is best of all. After all the sooner the mortgage is gone, the sooner you can enjoy the freedom of not having to make that payment.

What will you do with the time you used to spend working to pay the mortgage? Will you continue to work and use the extra money for a better lifestyle, or will you choose to work less and spend time with loved ones?
The beauty of getting rid of the mortgage is that the choice is yours. There are as many different options as people making the decisions. What will your decision be?

When writing the book it was fun distilling so many ideas for how to achieve early payout of the mortgage.

Is it even possible to pay off your mortgage in under 5 years?
Many have achieved this goal. You can too. We'll help you set an effective goal and show you how to go about achieving it.

'Pay Off Your Mortgage Fast - A Quick Guide' will be available from this site in just a few days.

Down with the mortgage!

Pay off Your Mortgage Fast (the Book) is coming

Fri, 07 Aug 2009 15:01:00 GMT

Imagine if the mortgage was gone!

Some life options available to you if you had NO commitment AT ALL for your mortgage are:

Accepting a lower paying job or reducing working hours.
Using the time for something you’ve always wanted to do. I know someone, we’ll call him Tim, who chose a part time job so he could follow his passion and coach Rugby.
Drop an income. If you are a family with children, the option for one parent to be home with the children is a wonderful thing. Not for everyone, but many would deeply appreciate this option.
Move to somewhere less hectic with a slower pace of life and more fun. A typical sea-change. Not earning as much perhaps, but the morning surf before work is harder to do in the CBD.
Just have less risk. Not having a big mortgage commitment may mean you need a lot less cash to make ends meet if things get tough. A job loss is much less likely to cost the house.

So, we’re agreed. The mortgage has to go!

Finance doesn't have to be this expensive. The key is to get rid of it quickly.

Understanding a mortgage requires you to deal with two separate realities:
Principal (The amount you owe), and Interest (the rent you pay) on that money.
To get rid of the payment, the principal has to go.

There are lots of little steps that will make a big difference and speed up the clearance of your mortgage. For some of them check out our page: How to Pay Off Your Mortgage Fast - 6 Quick Steps.

Ultimately though, very rapid clearance requires you to dramatically increase what goes into the loan. There are so many ways to do this, I'm writing a book about them.

Things to do right now:

Read the 6 quick steps at the link above, and start them now.
Think about ways to generate more money to dump into that loan!
Reserve your copy of the book by emailing - 'Reserve me a copy of Pay Off You Mortgage Fast book' to contact us and we will reserve you a copy.

Down with the mortgage!

Getting the Most From Your Shopping Budget

Fri, 10 Jul 2009 22:58:00 GMT

For most of us, particularly with families, our grocery spending forms a very large part of the weekly budget. If you look at the 80:20 rule, 80% of your expense comes from 20% of your spending categories.

All this means is that you have to save some money in your big expense areas to have much chance saving money overall. This almost always includes groceries.

Start with a target amount of savings, say 10%-15% of your typical weekly grocery allowance.

Now I have 7 tips to help you achieve your new goal:

1. Only shop weekly or fortnightly except for milk and bread. Shopping on demand is often a recipe for spending more.

2. Resolve to always shop with a list. These can seem cumbersome but if you use a list and then only buy what's on the list, you protect yourself from impulse buying and can save heaps.

Put a notebook somewhere at home and write on it each time you run out of something or notice you're getting low. If you decide a particular meal would be nice next week, check the ingredients now and put the ones you have to purchase on your list.

3. Never shop on an empty stomach. It's surprising how much more tempting some purchases are when you are hungry.

4. Consider if your personality copes with shopping with children. If you are unable to resist the "I wants" then do a deal with a friend and mind each other's kids when you shop. This alone can save considerable amounts of money and often means the children eat less junk food.

5. Cook more meals yourself and eat less pre-packaged food. This strategy has the double effect it's good for the budget but it's also usually good for your health.

6. Eat more fruit and vegetables. Like tip 5, this can be good for you as well as saving money.

7. Buy specials and freeze/store. e.g. if you know you normally buy 500g (1lb) of butter each week, and the butter is half price one week, buy 2 or 3 and store. You won't have to pay the higher price for another 2 weeks.

Take control of your personal finances

Sat, 02 May 2009 20:13:00 GMT

Welcome to manageyourfinance.com.au

For the past few decades I have been observing the spending habits of the average person.

Most people would not be surprised to find that the average person seems to live Pay Day to Pay Day, and that to pay a bill received this week, they require the income received this week. This means that these people essentially have no buffer of cash to protect them against a job loss, or unforeseen event. This habit (yes it is a habit) of living Pay Day to Pay Day creates a dire risk if something goes wrong. You and your family deserve better, and breaking the habit does not need to be difficult.

I have been researching bankruptcy and it is shocking to note that the biggest cause of Bankruptcy in the US is serious health issues and the double hit of a lost job and large unfunded treatment costs.

Manageyourfinance.com.au says you can take action to protect yourself and your family from these risks. Take control of your finances. If you are feeling at a loss as to how to do this, I suggest you pick up the book, ‘Recession Proof Yourself’ and give its proposal a try.

Based on tried, centuries old, techniques, this easy to read book will help you get your finances under control. Why not give it a try? It has the potential to change your life.