To achieve the 2-3 per cent target range, the Reserve Bank of Australia has been increasing the cash rate month after month since May of this year, putting added pressure on variable mortgage owners. These borrowers not only need to deal with the rising cost of living, but steady increases to their interest repayments. Unfortunately, wage growth cannot keep up and could force some households into a situation where a fire sale of their home is their only option. Hopefully with the right strategy of saving money and managing expenses now, that scenario could be avoided.

First thing’s first, start thinking about it and plan early. There are varying opinions and predictions of where interest rates will go, but in the end no one is sure. Even if your finances can comfortably pay off your mortgage and current lifestyle at present, it may be prudent to prepare for further rises by taking action sooner rather than later. 

Take a look at short-term and long-term financial plans and see if adjustments need to be made. It could mean delaying a home improvement project, or staying home for the holidays instead of travelling. Perhaps searching for a second income or taking on more hours at work may even be an option.

Streamlining your mortgage is one way to maximise your finances in tight times. Interest rates may be rising all across the board but it is still worth checking if you’re getting the best deal for your situation. There may be a lender that can offer you a lower interest rate, or added features such as an offset account or redraw facility that can benefit you in the long-run. Do your own research and find one that would suit your needs, or ask a mortgage specialist to help you.

A home loan is often the biggest liability on an average Aussie’s personal balance sheet, but there could be other smaller debts that could be piling on the expenses. Systematically work through any credit card debts, car loans or personal loans that you may have. It may be more economical to clear out a single debt than chipping away at multiple debts at once, as long as you can avoid any late payment fees.

The Federal budget forecasted energy prices in Australia to rise 20% nationally in late 2022 and by a further 30% in 2023-24. The Treasury noted that domestic gas prices remain more than double their average before Russia’s invasion of Ukraine. What can be done to mitigate the drain on your money? Here are a few simple ways.

• Switch to energy efficient LED light bulbs
• Use smaller appliances
• Sleep in the same room if possible to save on air conditioning costs
• Use public transport
• Carpool to share fuel costs

In an age where subscriptions dominate our daily lives, cutting down on a few of these non-essential expenses can make a big difference. With an abundance of options: Netflix, Kayo, Stan, Spotify, Apple Music, Amazon Prime, Disney+, Spotify & Apple music, it would be silly to try and collect them all, yet some households come close. There is too much content to digest, so just choose one or two!

We can’t end the article without mention of a budget! Understanding your cash inflows, planning your cash outflows and sticking to it is a proven strategy that works. Use some free apps, use an excel spreadsheet, or use a pen and paper, there is no one way to do it. Ensure your income exceeds your expenses and find ways within it where you can cut back. Importantly, don’t forget to set aside money for savings, an emergency fund and future investments.

Purchasing property and paying off the loan is not always easy, but is likely to be worth the investment. Incorporate some of these cost-cutting strategies into your life and turn it into habit.

Any advice provided is general in nature and should be considered in line with your financial situation, needs and objectives.