OK on the 3rd of March the RBA put up interest rates by 0.25%. This leads to interesting questions. What does that mean for me? How much extra will it cost me? How can you accommodate for the extra payments in your household budget?
Well let’s look at it from 5 different home loan debt amounts.
On a $100,000 loan, your minimum repayments over 25 years will go up around $15.37 per month.
On a $200,000 loan, your minimum repayments will go up around $30.74 per month.
On a $300,000 loan, your minimum repayments will go up around $46.11 per month.
On a $400,000 loan, your minimum repayments will go up around $61.47 per month.
On a $500,000 loan, your minimum repayments will go up around $76.84 per month.
So there is no use complaining about the interest rate rise. We just need to deal with it in the best way possible. And the best way possible is to have a tight monthly home budget.
OK for the $100,000 loan and the $15.37 per month. Being the smallest rise this will be the easiest to digest. There are many different ways to include this in your monthly budget. Some quick ones off the top of my head include:
Giving up your morning coffee.
Stop buying bottled water.
Learn how to conserve energy in your household so you save $5 a month on electricity, gas and water.
Slow down when you drive your car. Stop being a lead foot.
Use petrol vouchers. They might add up to 3 or 4 dollars a month in savings towards the $15.
For the $200,000 home loan and the increase of $30. Some more drastic steps might be needed to make this payment.
Cancel your monthly or weekly lotto ticket. You’re never going to win anyway (Sorry!)
Avoid friends and social situations that cost money.
Start using refill ink in your home computer.
Cancel any magazine subscriptions.
Stop getting the daily newspaper. Read your information on the internet.
Find a cheaper hairdresser for your family. Just a $5 saving per member soon adds up.
For the $300,000 home loan and the increase of $46.
Stop buying that carton of beer. It’s good for your wallet and good for your health.
Cancel the gym membership. Start running in the park or at the beach.
Cut out the smokes.
Find someone at work to car pool with.
Stop going to the movies. Stay at home and enjoy DVDs at 20% of the cost.
For the $400,000 home loan and the increase of $61.
One night a month spend in watching TV, instead of going out to a restaurant
Any products you purchase over the value of $50 make sure you price match in other stores so that you get the best price.
Cancel your pay TV for good.
Get rid of your home phone and start รถยนต์มือสองเชียงใหม่ using mobile phones only (get a good cap plan – and use wisely).
Give up sports or hobbies that cost you money.
For the $500,000 home loan and the increase of $77.
Any of the above suggestions.
Get rid of the 2nd family car.
Cut down on gifts for other people. Don’t cut them out; just cut down on how much you spend on people outside of your household.
Sell an interest free product. For example if you are paying $80 each month for a plasma screen TV that you purchased interest free. Sell the TV. Pay out the interest free loan. Now you have a free $80 to use to pay off your home loan.
Stop giving to charity. It’s nice to give to charity each month. However desperate times call for desperate actions.
And last but not least. And this is a strange one. Stop saving for a rainy day. The number of people emailing me who are behind in their house payments yet still save $50, $100 or above a week to put into savings. Yes, we all must save. But not at the expense of paying debts and keeping the banks off our backs. Give up savings for a little while then when you can resume put some into your savings.