Seven things we changed in our own house
My wife and I have a baby on the way. I spent a weekend going through our own position instead of reading forecasts. None of this is clever. It is the boring work that decides how a family handles a year like the one coming.
I look at other people's money all day. It is a different thing when it is your own, with a kid on the way and one income coming into the house.
So here is the actual list, in the order we did it, with what to do about each one if you want to copy it. Work through it yourself. If you get stuck on one, that is what I am here for.
Went through every line of spending
Subscriptions we had forgotten about. Utilities that had crept up. Insurance on autopilot that had never been re shopped.
One rule though. Everyone overpays for something. Mine is the quiet ten minutes with a coffee before anyone needs anything, and I am not cutting that. Find yours and keep it, because a budget you hate is a budget you quit by February.
Cashed out equity while the valuation held
Valuations are softening. We took ours out while the number was still good, set up interest only with the funds sitting in offset.
Parked and unused, it costs close to nothing. A very large, very cheap credit card that is already approved. We would rather have it there and not need it than need it and find the bank has repriced both the house and our borrowing capacity at the same time.
Kept two to three months liquid
Separate to the equity, and not touched.
The equity is for the big stuff. The cash is for groceries, rego and the week the car decides it has had enough.
Let the card do the work
Everything we can sits in offset. Fixed expenses go on the credit card and get paid off in full before any interest hits.
It is not a trick, it just keeps our money working a few weeks longer. It only works if the card gets cleared every single month. If there is any chance it will not, skip this one.
Stress tested ourselves, not the market
The question was not "should we fix". It was "are we still fine if this keeps going".
Everyone's number is different. The point is to know yours before you need it, rather than finding out on a Tuesday afternoon.
Looked at the other side of the ledger
We spent as long on how to bring more in as we did on what to cut.
Cutting has a floor. Earning does not. It is the less comfortable conversation and it is usually the more useful one.
Got serious about consumer debt
Car loans, personal loans and cards sit at rates no mortgage comes close to.
Here is the bit most people get wrong. The warning you hear is that stretching a five year debt over thirty years costs you more interest overall, and that is true. So do not do that. Take the thirty year term, then make the repayments at the five year rate. Same payoff date, much lower rate, and your borrowing capacity stays intact for whatever you want to do next.
37.4%
That is how much of the average Australian household's income now goes to the mortgage. The highest share since the late 1980s.
They are right that rates hit 17% back then, and they did it tough. But the rate on its own tells you nothing. What matters is how much of the pay packet walks out the door. Different number, same kitchen table.
Eleven files from the last few weeks
The same work, done for other people. Four debts cleared in one approval, a bank that said there was no equity left, a family told they had to sell first. Each one has the part worth knowing underneath it, and there is a free tool there to check your own numbers.
See the eleven
Two of these need a lender
The rest you can do yourself. These two you can't.
Equity and consumer debt are the two that move the needle most, and both of them need someone on the other end who knows which lender does what. That is the bit I do.
Thirty minutes on the phone and you will know exactly where you stand. Your numbers written down, no obligation to do anything with them.
- ✓What your place is worth now and what equity you could actually get out
- ✓Where your rate sits against what is being written this week
- ✓What your repayment looks like if rates keep moving
- ✓Whether rolling consumer debt in makes sense for you, or does not
There is another rate decision in December, and every one of them takes something off what you are allowed to do. The thing that is possible for you today might not be on the table in February. Nobody tells you when that door closes. You find out when you ask.
Book a free callNot ready for that? Send me a message with where you got stuck. If the answer is that you are fine where you are, I will tell you that too, and it costs you nothing to hear it.
Anthony Fontana, Director, Más Que Finance