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Top six tips for getting your finances under control in 2013

1. Know your starting point:

If you're serious about getting your finances in order you need to lay all of your 'cards' on the table - know your starting point. Open every single financial statement-bank, credit card, and mortgage statements.

If you haven't already, sign up for online banking. The advantage of online banking is that your account is automatically credited or debited for each deposit and payment, making it easier to stay on track.

2. Budgeting:

Develop a budget or spending plan that actually works for you based on where you are right now. Don't go "cold turkey" if you know that won't work for you. Instead, try to gradually reduce spending in critical areas.

Often people decide to suddenly cut costs in the New Year, but this can actually backfire in the long term because it increases the chances of big financial splurges.

3. Control your credit, don't let it control you:

Make this the year you tackle that credit card debt! Every time you pay off a card with a 15 per cent interest rate, you get a 15 per cent return on your money. There are many providers that offer a low of zero per cent introductory offer for the first 6 to 12 months.

See if you can qualify for a balance transfer. If you can get a good deal, move your high-rate debt to that new card. Always pay the minimum due on each card, on time, every month. Whenever possible, pay more than the minimum repayment.

4. Saving Success:

It is always possible to save. Remember that the little things count. Change your mobile phone plan or get rid of the landline account unless you absolutely need it.

Reconsider Pay TV and cut back on utilities such as electricity - often the lights are left on when no one is in the room.

5. Know Your Credit Rating:

Get your credit rating by going to veda.com.au. If you have a poor credit rating, the two best ways to improve it are to pay your bills on time and push yourself to reduce your credit card balances.

A good credit rating gives you more flexibility to move between lenders and providers if a better deal is on offer.

In Australia, the main consumer credit reporting agency is Veda Advantage. Credit providers including lenders, banks and non-banks, as well as telecommunication and utility companies, all subscribe to Veda so that they can conduct a credit history check on potential borrowers and consumers.

Fix your credit rating today so that you don't have to worry about it tomorrow.

6. Mortgages:

Extra payments are effective at any time of the year but can be less painful after receiving a tax refund or bonus. Make them as often as you can to reduce the overall payoff time of the loan.

You could also consider refinancing your home loan. The main reason people refinance is to get a better deal on their home loan. This can improve the financial bottom line. You can then put the saved funds back into the home loan so it can be paid off faster.

 

Finance needs to be on our list of resolutions

HEIDI Armstrong, CEO of State Custodians Mortgage Company, says while many of us make new year resolutions, a focus on financial matters is rarely on the list.

"People often talk about getting a new job or losing weight or eating better food - but sorting out your finances gets pushed to the side," Ms Armstrong said.

"Many people are looking to improve their financial situation after the expensive holiday season and when they're confronted with their first bill of the year."

"We saw an increase in credit card applications in December - as well as a frenzy of shoppers in the post-Christmas sales.

"The New Year is a great opportunity for people to take control of managing their finances.

"Anyone serious about sticking to their 2013 financial resolutions needs to commit to a few basic rules," Ms Armstrong said.

Three of Ms Armstrong's tips include:

  • Transferring your credit card balance to a provider that offers a low of zero per cent introductory offer.
  • Using online banking to stay on track - this ensures that your account is automatically credited or debited for each deposit and payment.
  • Potentially refinancing your mortgage to a better interest rate or product.

Ms Armstrong has extensive experience in personal finance, securitised lending and the mortgage industry. After co-founding State Custodians in 2006, the Company has grown to become one of Australia's leading and most respected non-bank lenders.



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