- January 18, 2011
- Posted by: admin
- Category: Budget, Financial goals, Wealth
These simple steps could help you make 2011 very prosperous.
Step one is to get control of your cash. The best way to do this is with a budget. This will show how much you earn, and how much you can afford to spend. For more information or assistance with this contact us a Formula 1 Finance.
If budgets haven’t worked for you in the past, adopt a ‘pay yourself first’ strategy. It’s surprisingly simple. Just transfer part of your pay to your home loan account before you have time to spend it.
Step two – sweat the small stuff. A few takeaways each week or a daily latte – it all adds up. A daily cappuccino for instance may seem harmless enough. But it costs around $15 each working week or about $750 annually.
Give up the takeaway coffee and use the money to make extra repayments on your home loan. On a mortgage of $300,000 giving up the daily latte could see you save up to $30,017 in long term interest charges and be mortgage free almost two years ahead of schedule (assumes a rate of 7.0%). www.formula1finance.com.au/extra-repayment-calculator.html to see how much you could save by making extra repayments on your home loan.
Step three is to get serious about credit card debt. If your budget’s tight, aim to make small additional repayments each month. Or take advantage of a balance transfer deal to whittle away the card balance sooner.
If you have a small card debt, opt for a zero interest deal. Most of these last for six months, however you can find cards with a low introductory rate that extends over a longer period, up to two years. These are particularly suitable if you have a larger credit card debt to transfer. A key thing to remember though – don’t slacken off with your card repayments, and always try to pay back much more than the minimum monthly repayment.
Be aware too, if you can’t pay off the balance transferred in the low or zero rate period, could you face very high interest charges – over 20% annually in some cases.
Next, step four – boost your super. There are plenty of ways to increase your retirement nest egg and you’ll be glad you did when the time comes to hang up your work boots.
Talk to your employer about salary sacrifice, namely, transferring part of your before-tax wage or salary to your super fund rather than taking the money as cash in hand.
Or, if you earn between $31,920 and under $60,920, make a personal super contribution from your own pocket. It could see the government lend a helping hand through the co-contributions scheme.
Finally, step five – don’t just build wealth, protect it. Review your insurance cover to check that it’s adequate, appropriate and competitively priced.
The internet has made it quick and easy to compare insurance premiums. Arranging your cover online can also mean securing discounts on premiums of 10%.