How to be debt free

Destroy: Don’t spend more on your plastic money than you can repay in a given month! If you don’t trust yourself, destroy all your plastic money – such as clothing shop cards – and then plan to settle your existing debt.

Build: Draw up a budget – an excellent way to see how much you need to spend, and on what. By itemizing expenses you come to terms with what you are actually spending your money on and can determine whether you should really be spending your money in this way – are these necessities or luxuries?

Be strict; include all those chocolate bars and coffees that you believe are essential to get you through the day.

Streamline: Try to cut back on what you’re spending – eliminate the waste and, instead, put that extra money into clearing your debt.

Focus: Target one debt at a time and start with your smallest debt on which you’re paying non-tax-deductible interest. This way you will feel the rewards of your labour quicker. Imagine opening your clothing account bill and it shows a zero balance! The money you are no longer paying on your store card can now be used to target your next debt and so on – like a dominoes effect, they will all fall down!

How to afford your new car

Save don’t borrow: First of all, make sure that you’ve eliminated – or at least cut down – other debt. Start to save so that you have a healthy deposit which will reduce the amount you have to borrow and finance.

The plan: Calculate how much you can afford to repay each month and save that amount each month for a year. By then you would have saved a 20% deposit on your new car. On a $30,000 car, a 20% deposit will save you $120 a month in instalments and $7,360 in interest over 5 years. If you can’t find the money to save, you can’t afford the car.

Running costs: When assessing how much you can afford each month remember to include insurance, petrol and maintenance costs. How to become a home owner

Saving your deposit: You are going to need a deposit – so start saving! Consider investment options such as managed funds, but make sure you understand what you’re getting and that it’s value for money.

Get credit healthy: Remember: to get finance, the bank is going to do a full credit assessment on you. This means you have to have a clean credit record and do not already have too much other debt. The ability to pay the loan is important – the more debt you have the less disposable income you will have to be able to repay the loan. So keep debt to a minimum. This will place you in a better position to get finance for those purchases few of us can afford to pay for in cash – a home and a car.

Shop around: Make sure that you shop around when it comes to the mortgage provider – the lower the interest rate the less that you pay over the loan period. If you are able to pay in more (even if it is just a little more) than the required instalment you can reduce the loan term and save money in the long run. If you pay in 10% extra a month you reduce your 25 year home loan to less than 20 years – and save about a quarter of the interest!

Protection: Once you have your home remember to protect it – your dependants need a roof over their heads irrespective of what may happen. Ensure that you have life cover in place should you die prematurely, before the mortgage has been settled.

How to become a millionaire

Buy a lotto ticket, play the horses…… or if you truly wish to become a millionaire …plan, save and make your savings work for you. If you think it is impossible consider this: if you invest $1,000 per month in an investment generating a 10% return a year you would be a millionaire in less than 23 years!

Have a plan: People generally do not become millionaires by accident – it requires planning, foresight and insight – so, find yourself a credible financial adviser to partner you on the journey and to assist you with making the dream a reality. There are a huge number of savings vehicles on the market, with a range of benefits (including tax benefits) and costs associated with them so you need an expert to advise you to ensure that you make the right decisions which will enable you to meet your goal sooner rather than later.

Beat inflation: Money in the bank is not going to do it over the long term. Also, the sooner you start the more likely your dream will be achieved – the power of compound interest is truly remarkable.

Save through tax: Consider tax efficient savings vehicles – do not underestimate the benefit of superannuation, in terms of which you may get a tax deduction on the contributions you make, and in addition a reduced tax bill is levied on the growth – which makes it a real win.

Preserve: If you should change jobs make sure that you keep control of your super benefits and transfer them to a fund over which you have control – the money stays as part of your investment strategy and because of the nature of retirement funds with the benefits are not being freely accessible you are prevented from squandering the money!

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