26 September 2023

Clean up your finances: Four ways to get an extra $1,033 a month

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Nicole Pedersen-McKinnon* shares her top tips on cutting expenses.

Sure it’s October, but five months into an interest-rate hike-cycle, there’s rarely been a better time for spring cleaning your finances.

And that is doubly the case when one could save you more than $1,000 a month.

Here are the four areas you could find the most money from a tidy up, starting with the big one.

Cleanup one: Overhaul your home expense

The price of everything has gone up but that’s driving the big one for us all higher – the mortgage.

If you have the average $600,000 mortgage, interest rate hikes since May are costing you an extra $700 per month.

That’s 225 basis points of them.

But here’s the thing: lenders are giving discounts in secret of as much as 241 basis points.

Yep, that wipes the hikes.

Get on the phone to your lender now and demand a discount – you might need to make serious noises about leaving if they don’t comply.

But if they don’t, you always have the option to actually leave.

The cheapest quality loan in the market right now charges only 3.59 per cent.

Cleanup two: Price check your protection

This is possibly the next-biggest chunk of your income – your insurances.

But the fact is there is fierce competition in this area… that could more than combat the price increases.

Start with your home and contents, which has likely spiked 15 per cent post floods.

A new provider could well offer a better deal – by a typical $100 a month – and also come with an introductory discount to ease the hip pocket pain further.

The good news is that flood definitions have been standardised now.

Regardless, you need to make sure the coverage is identical.

Ditto with car insurance, bearing in mind that a cheaper ‘market value’ basis (rather than ‘agreed value’) might be a more attractive option than it used to be with secondhand car prices so high.

But some of the biggest savings are likely found in your other insurances: health, life and total and permanent disability, and income protection.

Again, you want like-for-like.

You can check your so-called risk insurances with a Google search.

There is an excellent and independent comparison site for health insurance, called private health.gov.au.

Even on this one premium, you could likely shave $100 off a month.

Look particularly at not-for-profit funds.

Cleanup three: Shine a light on energy

In terms of the area that consumes the most of your cash, energy is probably up there.

Yes, prices have gone up due to supply issues and demand over winter.

But it’s very possible your provider is still charging over-the-odds

There are, once more, government-funded places to check.

These are energymadeeasy.gov.au and in Victoria compare.energy.vic.gov.au.

How much could you save? On average, in the vicinity of $1,000 a year or $83 a month.

Cleanup four: Interrogate your telco

Today, we run our lives via data and our phones.

But are you aware of just how many providers are now racing for your business?

Bundled or unbundled deals from smaller operators or outfits that white-label the large ones, could offer you massive savings.

The biggest economising opportunities are available if you BYO your handset.

In the vicinity of $50 a month.

Jump on comparison whistleout.com.au to play with the combinations and permutations.

And that brings us to a possible saving from a purge of $1,033 a month.

Or more than $12,000 a year.

For spick and speck finances that beat spikes on prices, don’t just clean up but clear out.

*Nicole Pedersen-McKinnon is a financial educator and commentator, and the author of How to get mortgage-free like me.

This article first appeared at au.finance.yahoo.com.

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