How To Manage Money And Debt During COVID-19
There’s no doubt about it … we’re living in unprecedented times.
Regardless of race, gender, socioeconomic status and the myriad of other factors that determine who we are, coronavirus affects us all.
It’s a world-wide problem and it’s going to take a worldwide approach to conquer this enemy.
Whilst the battle is raging, our lives will undoubtedly be affected.
To help you navigate these unchartered waters have a look at ways to manage money and debt…
Watch Your Focus
Some people will experience anxiousness and fear as they read the headlines and listen to the media sound bites that dominate the horizons.
Others will feel the financial impacts this dreaded virus has brought about. This is especially so when businesses close and incomes are reduced.
Whilst these emotions are natural, they can lead us to be reactive and making flawed decisions.
To ensure you don’t fall prey to financial sub-optimal short-circuit decision making, try to defocus on all the bad news that’s being aired.
Acknowledge how you feel and then reach out to an expert who can help you deal with your financial affairs. We are definitely equipped to talk ‘finances’ over with you.
Review Your Income And Expenses
Now is the time to look at what you earn and where your coin goes. Some people’s incomes will be affected.
Their incomes may even stop. Unfortunately, this doesn’t mean bills cease.
If you’re in this boat or if you think there’s a possibility your income could drop in the coming weeks, be proactive.
Make adjustments to your spending where you can and ensure you don’t worry about this on your own.
Talk to us as we’ve got the knowledge to help you manage in these trying times.
Get Rid of The Credit Card And Consumer Debts
Now more than ever, you need to be smart with money and that means being smart with debt.
An option may be to consolidate all your debts into your home loan. Why?
Because the interest you pay on a home loan debt is much lower than what you pay on consumer and credit card debt which means you’ll be improving your cash flow position if you take up this suggestion.
Let me give you a quick example of how we’ve helped clients achieve this:
Let’s assume that you have a 30-year term $300,000 principal and Interest home loan where you’re charged 3.20% per annum.
Your monthly repayments are around $1,300.
You also have a $5,000 credit card debt where you’re paying interest at 11.99% which see your monthly minimum payment around the $150 mark.
Now if you were to consolidate your credit card debt of $5,000 into your home loan your monthly home loan repayments would increase by just $20 per month.
That means you’d be cutting your monthly expenses by $130.
Whilst this suggestion means you’ll get an immediate cash flow benefit, you do need to be aware of the drawback attached to this method – you could end up paying a whole lot more interest if you don’t focus your efforts in eliminating the extra debt entirely by making payments in the future.
Still … the method helps you get through right now and gives you time to address the full repayment of the debt in the future.
Review And Refinance Home Loan
Even if you don’t need to consolidate all your debts into your existing home loan, you should be asking yourself if your current loan arrangements serve you well.
Recently, interest rates have significantly dropped and now could be an excellent time to look at refinancing.
We already know that if you have a home loan plus transactional account where you pay goes into – we have a solution that could save you thousands! And that’s just the beginning.
It costs you nothing to talk to us and explore these suggestions and if it results in more coin in your pocket, that’s a real bonus to you.
The best antidote to fear is action, but it has to be informed action that benefits you.
So, after reading this article, don’t fall prey to being an ostrich and burying your head in the sand if you have difficulties or being a rabbit and running from your situation.
We’re here to help you through.
Remember, energy flows where focus goes so focus on improving your financial position now.
You’ll thank us in the long run – promise!
Key To Australia Finance Manager
+61 7 5574 1331