Hedland & Newman

Is being complacent costing you money?

It seems like this time of year we get even busier, with no time for planning ahead. Many people fall into the trap of the day to day hoping the future will just work out. I however believe in the Benjamin Franklin quote “failing to plan is planning to fail”, not just to enjoy the life you want, but also as a responsibility to our family and loved ones future as well.

So my topic for this week is… Is being complacent costing you money and lost opportunities?

Here are some points for you to consider.

1) Your investment and PPR Property loans

When was the last time you reviewed your loans?

You probably spend a huge amount of time researching whether to get the latest iphone or gadget but how much time do you spend reviewing the largest expenses we have being interest and tax?

With the current low interest rates it is easy to get complacent. Many of us have reduced our loans from the 8% rates from five years ago and now they have come down to around mid-5s, we think we have a great deal.

But you can actually do yourself a disservice if you aren’t looking around and reviewing the interest rates. The banks won’t be ringing you. By being more proactive and even getting yourself a mortgage broker can help you save even more.

2) Do you know how much you can borrow?

Understanding your borrowing capacity and how it can move up and down depending on the marketplace, your working status, equity in your existing properties, even the lending criteria applied by your lenders. Constantly updating your buying capacity by keeping in touch with your broker will ensure you have a clear understanding of when you can purchase again and how much you can spend. This is key to capitalising on the best deals on offer at the right time.

3) How much equity do you have?

Eighty per cent of property investors only own one investment property. Many investors simply don’t invest to their full potential. They become complacent either thinking they have done enough by investing in one or two properties, or don’t have their finances structured correctly to allow them to move forward.

Have you tapped into your equity to leverage into an investment property? Are you literally sitting on your next step to wealth?

4) Have you reviewed your monthly bills and insurances?

We all know the cost of living is getting higher and higher but these days there is much more competition with insurances, gas, internet and household services which we can use to our advantage.

Shop around, get quotes – you can’t save what you don’t know and you can be literally saving thousands a year by changing your suppliers.

Complacency is an easy trap to fall into. The most successful people make things happen, they don’t watch things happen. It takes effort, sacrifice and forward planning not to get complacent but you need to start today.

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How to invest and still have the money for luxuries

Whenever I ask the question in my seminars “by show of hands, how many of you want to invest but still have money and be able to afford the things you want” almost every hand goes up.

The challenges that prevent this usually fall into two baskets… saving and paying off debt.

Saving is serious stuff. It’s the step that allows for investing in the future and building our financial security. A study just came out from ME Bank that found less than half of us (46%) manage to save money on a regular basis and 12% of us dip into personal savings just to make ends meet.

Rest assured, saving, investing and still having money left over for life’s comforts can still be achieved.

Here are some of my savings/invest/spending balance suggestions which has worked well for me and my clients as well as some of my best saving for investment tips.

1) Take control of your cash

The starting point to freeing up cash is to know where it’s going so get honest and track your spending. This can be a real eye opener but is crucial to be able to free up cash for saving and investing.

2) Get serious about saving

Growing savings requires commitment. Not sometimes. Not when unexpected money comes in but week in week out it needs to become a habit. It doesn’t take a lot to get started to see regular savings become a nest egg to be able to invest with.

3) Get clear on how to reach your financial goals sooner

I cover in my events how clarifying your financial goals will get you where you want to go faster. While there are no overnight get rich quick guarantees, there are many options to consider to accelerate your savings and achieve your goals sooner such as reviewing your budget and spending as per point 1), borrowing and joint ventures are a few to evaluate what is right for you.

4) Immediate wants vs long term wants

Learn to prioritise and before you spend, think long term. The key is don’t dip into your long term savings to pay for short term luxuries. With a little planning you can have both and maintain a healthy sense of balance without too many feelings of “going without”.

5) Change your perception

When saving and focusing on “going without” it seems like your friends or work colleagues are buying the fancy car, booking the expensive holiday and living it up. Just because they appear more affluent doesn’t mean that they are – they could be living off plastic with no savings for all you know! Focus on your own goals and savings.

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