Budgeting tips to help reduce your Bills & Debt
Who should complete a budget?
Everybody will benefit from completing a budget – not just people who are struggling to pay their bills or having trouble making ends meet.
Why should I complete a budget?
Being in control of your finances leaves you one less thing to worry about and for most people finances are one of the biggest concerns, living payday to payday and in some cases robbing Peter to pay Paul.
Not sure what I mean by the last comment I’ll explain. This is when you are using one credit provider such as a credit card, overdraft or loan top up to cover other loan repayments or bills on a regular basis.
Completing a budget also helps you understand where the money you are earning is going. Once you understand where your money is going you are in a better position to change your habits.
Below is a link to our Instant Finance Budget form which you can complete to work out your monthly surplus income. Once completed this can be e-mailed to you.
Now that you have completed your budget we have some tips for you.
Things to think about when borrowing money!
These can be used for large purchases like buying a home. You can also use your mortgage for things like renovations, debt consolidation, buying a new car or travel which is great, but you need to be careful with the term you take the loan over.
Borrowing $30,000 on your mortgage to buy a car @ 4.59% over 25 years will give you monthly repayments of around $168 per month with a total interest charge of $20,485. The catch here is the interest rate is not guaranteed to stay at 4.59% for the whole 25 years. If it was to increase to 8% your total interest cost could increase to above $30,000 for the term of the loan.
If you are going to use your mortgage for these types of purchase’s you are better off taking the mortgage over a shorter term to clear the debt quickly and take advantage of the lower interest rate.
Finance companies and Banks offer a personal loan product which is a good option for short or long-term borrowing requirements. You get the benefit of a fixed interest rate, fixed term and you know at the time of signing what the loan is going to cost you.
You can use a personal loan for debt consolidation, travel, funeral, home renovations, car repairs, weddings and school fees and many other reasons.
In most cases, subject to responsible lending, fees, and a new loan agreement, it is possible to top-up your personal loan during the term if something urgent pops up.
For more information on this I suggest you visit our Personal Loan or Debt Consolidation pages.
These can be very handy, especially for overseas travel or larger household purchases as most cards offer no interest if you pay it off every month. Some of them come with some great rewards schemes also. You do need to be careful if you are not able to pay the card off every month as interest rates can range from 12-26%. They also do not have a fixed end date to repay the card so paying the minimum payment each month can drag on for years.
You can get store cards that offer interest-free deal’s and these are great but you do need to be careful again with the repayments as the minimum repayment will not necessarily repay the card before interest starts getting charged which can be up to 26%.
Pay day loans
They may seem good at the time and are quick and easy to get, but you need to have a plan on how you will repay the loan as these usually come with high interest and fees. Many people fall into the rob Peter to pay Paul trap with this type of borrowing.
Budgeting Tips #1: Make sure you choose the right borrowing option for you.
If you wish to discuss you options for a debt consolidation loan call us today on 0800 000 724 or Apply now
Power/Electricity & Gas
Electricity is something that every Kiwi home needs and the annual power prices can vary by up to $500 per year depending on the company you use. But don’t worry there is help available for you to use. Below are some handy links to websites that compare power prices around New Zealand:
Budgeting Tips #2: It is also important to check any customer satisfaction survey’s that have been completed to see how happy the customers are with the service provided.
Like electricity, most kiwi homes have the internet and this was used heavily during our recent lockdown. Again prices vary and savings can be made, but once again you get what you pay for so before just choosing the cheapest option you will need to check the customer satisfaction surveys. Some handy websites to compare the internet are below:
Budgeting Tips 3# Check how good the connections are in your area. You don’t want to be paying for a service that is below standard.
TV & Streaming
Like the internet, online streaming websites were used heavily in New Zealand during the lockdown and some of us signed up for more streaming services than we would like. Below are a couple of websites showing the paid and free streaming services available in New Zealand:
Sky tv is a good option if you want all of your tv, news, movies and sport all in one place, however this does come at a cost.
If you are upgrading your TV most Smart TV’s come with the streaming apps pre-loaded so you can have a look and see which.
Not upgrading your TV?
You can get a chrome cast for about $60 which enables you to play any program, movie, or sport on a device and then cast it on your TV. This is a great cost-effective way of getting streaming services without having to upgrade your TV. It does pay to check that your current TV is compatible with a Chrome Cast.
That’s all from us today. I hope this has given you something to think about and some useful budgeting tips on how to reduce your debt or where to check for the best deals!