Start planning NOW for your future lifestyle!

In a recent survey 48% of our respondents told us they have an investment property! That’s music to a finance specialist’s ears – it’s satisfying to hear those people have a financial strategy that could lead to a more comfortable retirement.

However, 66% of respondents also said they are worried about not having enough money in retirement. This is a concern for many of us as almost 80% of Australians over 65 receive the aged pension. For 66% of those retirees the pension is their main source of income. Coincidence?

So have YOU started thinking about retirement? It is NEVER too early to start planning for retirement – but it can certainly be too late.

Where do you start?

And when should you start? Firstly, you need to focus on the lifestyle you want in retirement and then how you plan on getting there financially.

What if your plan changes?

That’s fine. You can make goal adjustments along the way. In fact, a retirement plan shouldn’t be a ‘set and forget’ strategy. Chances are your imagined needs in your 20’s may look quite different by the time you reach your 50’s.

How much do you need?

A good starting point is to calculate how much you need to provide for comfortable retirement years.

For most of us this means being able to pay bills without financial stress, the odd holiday, maintain a house and car and an occasional indulgence. You will generally require 60-80% of your pre-retirement income to lead the type
of active lifestyle you probably desire IF you have paid off your mortgage. It was previously assumed the first ten years of retirement would be our most active and costly. With longer life spans and a possible increase in health or mobility issues as we age our later years could end up costing more.

What should a plan include?

There is no ‘one size fits all’ plan for future financial stability. If you are in your 20’s and plan to retire at 65 your options may be more diverse than if you’re approaching 50.


Many Baby Boomers will outlive their superannuation savings. While younger generations will have more time to maximise super balances at retirement they may also have significant HECS debts. This was generally not an issue for previous generations.

As you approach your retirement years, salary sacrifice,
a transition to retirement strategy or property investment through a self managed super fund (SMSF) could help build your superannuation balance. But do not make these decisions without talking to your financial planner.

Property investment

Property has long been considered a proven road to personal wealth, yet only around 20% of Australians successfully invest in property outside the family home. There may be more than one way to get your foot on the property ladder:

Save a deposit – Budget and stick to a savings plan. Gen Y’s living at home should maximise the opportunity to save and invest. Increase your savings each time you receive a pay rise.

Ask your parents to help – There are several ways parents might help their children into their first property including a cash gift/loan or acting as guarantor. There are also new mortgage products such as a family pledge or family guarantee. If you have elderly parents perhaps they can contribute some of your inheritance now to help you get ahead?

Use rent as a savings plan – A continuous rental history of 12 months may be taken into account when assessing your ability to service a loan so keep those receipts.

Co-ownership – Perhaps explore investing with family or friends? But be warned – do it properly and get a loan agreement in place first.

Already a home owner? Access the deposit for your NEXT property by using the equity in your current home or property.

See – there ARE options!

The earlier you start planning for retirement the greater your chance of living the comfortable future lifestyle most of us desire.

Is it possible to get ahead financially while still enjoying life?

Getting ahead financially doesn’t have to be a choice between living life to the fullest right now or being tied down in your own home with a huge mortgage.

Did you know you could possibly get your foot in the door of the investment property market without having to save for a huge deposit? The tax man and your tenant’s rent could help you pay off your investment loan.

You may only need to be a little more disciplined with your budget and finances, and before you know it you could be sitting on a nice little investment property – a property that is making you money until you are ready to buy your dream home.

Have you heard of the saying ‘making money while you sleep’?
Well it could happen!

Yes you can buy an investment as your first property!

Buying a small house or apartment in a low cost area and renting it out can be a good way to build some equity over the next few years. You could even do it again and then eventually buy your own place in an area where you want to live.

It is a strategy appealing to many young Australians. While their lifestyle and work commitments are flexible, so too can be their living habits.

You can buy an investment property in another suburb, city or even state while you keep renting in an area that’s convenient and where you prefer to live. Even staying at home for a while longer can be attractive while you purchase your first
investment property.

Home ownership is a goal for most of us but it can seem out of reach when you are struggling to save a 20% deposit. However, property ownership MAY be realistic if you consider starting out with an investment property.

How it works

• Lending institutions include a percentage of the expected rent from your tenants as part of the income towards servicing your investment loan (so you can probably borrow more than you could if purchasing a home).

• Loans for 90% (or higher) of the property value are available for property investors, meaning you don’t need to have such a big lump sum available. This may require you to only fund the legal costs, stamp duty and lenders’ mortgage insurance (often around 4-5% of the purchase price) in addition to your
small deposit. When you talk to us we can calculate this figure for you and work out your most suitable options.

• Investors have typically used interest only loans making mortgage payments much lower – allowing you to gain equity while minimising cash outflow in a medium to longer term capital growth strategy. However lenders have
introduced restrictions on interest only loans over the past year so it’s worth having a chat to us about this.

• Negative gearing tax benefits are available in cases where the costs of your borrowing to invest are greater than your income from the property. This means a rebate from the tax man. Way to go!

But you don’t want to miss out on the First Home Owner Grant?

The First Home Owner Grant (FHOG) is a national scheme funded by the states and territories and administered under their own legislation. Changes to the FHOG took effect from 1 July 2017 – some states and territories provide additional grants and subsidies under certain conditions. In some states you need to live in the property first to qualify for the FHOG so this may rule out the FHOG as a future option if you elect to go ahead with an investment property strategy.

This is a reasonable concern. Ultimately, you need to weigh up whether being in the property market could be better than not being in it. You may find that the capital growth you could experience over time is well in excess of the FHOG.

Alternatively you could focus on the potential for capital gain and rental income to help you start building wealth now. You could find that by investing this way you will be ready to buy your own dream home sooner. With possible additional tax advantages you might even get back more than the amount of the grant! You should seek advice from your accountant to confirm your individual tax position.

On the other hand, in some states if you purchase an investment property first and have never occupied it, you may still qualify for your FHOG later on. We suggest you visit to see if it applies to you. If that’s too
confusing, we encourage you to call our office for a chat.

Debt got you down?

In January 2018 there were over 16.7 million credit cards in
Australia and 70.19% of us have a credit card1. In addition:

• Australian households have the fourth highest debt levels in the world after Denmark, The Netherlands and Norway.

• The ratio of average household debt to income has almost tripled since 1988 from 64% to 199.7% of annual disposable income.

• Average debt levels are $4,181 per person for credit card balances and $18,409 for car loans.

So what does this mean for the ‘average’ Australian?

Did you know if you are a prospective home buyer and have ‘average’ levels of accumulated debt it could affect your borrowing power by almost $100,000?

With the median Australian house price at $818,4164 what impact might this have on your home ownership dreams?

Perhaps ask yourself these questions…

• Is your debt growing faster than your assets?
• Are you concerned about your debt situation?
• Are you struggling to make your monthly repayments?
• Does it always seem like your bills amount to more than your wages?

If you answered yes to one or more of these questions, then
perhaps it’s time to look at a solution for your debt situation
NOW – before it’s too late.

Why do so many of us have debt problems?

Some people fail to recognise that using credit to purchase items for use TODAY means they are spending their future earnings before they have even received them.

In the past lenders offered credit cards, with pre-approved limits, without thoroughly checking credit histories or capacity to repay. With debt levels on the rise the government is currently reviewing credit card rules – there is a push for lenders to assess suitability based on a consumer’s ability to repay within a reasonable period.

How have times changed? In the past we saved up or used the lay-by method, ie we used money we already HAVE for items we wanted. Now, as an ‘instant gratification’ society with an abundance of credit at our finger tips we are tempted to use it without considering future consequences. Little wonder many people experience high levels of debt.

What are the first signs of trouble?

• You think it is unlikely you will be able to repay your existing debt with your foreseeable future income.

• You have multiple credit cards.

• You are no longer paying the full balance of your debt each month – you just pay the minimum amount.

• You arranged for more credit cards (or a personal loan) to help pay off the other cards.

• You added a store card(s) because there was no room left on the credit cards….

Eventually your repayments start to approach – or even exceed – your income.

What is the solution?

We all know that good budgeting and discretionary spending discipline is the real answer, but sometimes it doesn’t matter how well you budget there’s just not enough money to make ends meet.

One solution (and this is NOT for everyone) may be debt consolidation.

For some of us it may be too late for budgeting because the debt level is already greater than your income and there is nothing that can be done. In this instance, debt consolidation may be an option for you.

What is debt consolidation?

This is when you take multiple debts (where the majority of the debt has a much higher interest rate) and consolidate the debt into one loan with a lower average interest rate. Generally most people opt for refinancing against their home (using existing equity) as it has the lowest interest rate. For example, your home loan rate may be 5.0% or even lower as opposed to a personal loan that might be 10.95% or higher (definitely lower than most credit cards).

How can we help?

1. If your debt levels are a concern and you think you
may be experiencing the first signs of trouble CALL US
NOW before it is too late. We don’t judge. We are here
to help.

2. Ask us for our debt consolidation spreadsheet
to see how much we can potentially save you each
month to go towards the payment of your debt.
You may be surprised.

3. Even if you are managing your current debt, it never
hurts to review your finances to see how your cash
flow can be impacted favourably.

4. If you have friends or family who you think could
benefit from reading this article, please forward it
to them.

Planning a single retirement?

A 2017 report found that about 52% of people aged between 25 and 64 can expect a ‘comfortable retirement’. On the flip side
that leaves over 47% of us (or 5.1 million people) unlikely to have enough put aside to live comfortably in our retirement years.

However, the story it tells for single people is even more disturbing with claims that only 22% of single women and 31% of single men can expect a comfortable retirement.

What is ‘comfortable’?

In 2017 the superannuation balance required for a comfortable retirement was estimated at $640,000 for a couple and $545,000 for singles. This figure assumes the retiree(s) will draw down all their capital and receive a partial age pension.

Based on 2016 figures the average superannuation balance for a woman at retirement is $231,000. For men it is $454,000 – still significantly short of the required threshold. You can see why singles, particularly women, may find retirement more financially challenging than others!

Is the age pension important?

The answer? VERY. Without it, only 20% of couples, 17% of single males and 9% of single females could afford a comfortable retirement. As our policy makers struggle with the costs of supporting both present and future ageing populations, what will happen to the age pension? A heavy reliance on the pension may be to your disadvantage.

Of course prior to compulsory super guarantee contributions, people expected that retirement meant living on the pension. So what has changed?

We are:
• Living longer – with women on average living longer than men.
• Healthier and therefore more active.

Longevity and good health have created a ‘new vision’ of our retirement lifestyles.

Retirement ‘risk’ factors…

Lower super balances are certainly a risk for single women. The imbalance between women and men is usually due to factors such as lower incomes, time out of the workforce caring for families and part time work.

Renters will need more retirement savings to cover the cost of rent. A female retiree may also be paying rent for longer.

Divorce after 50. Divorce at any age can set you back financially but the older you are the less time you have to replace what was lost in the division of assets. This can significantly impact a previously well planned retirement.

Financial goals

If you’re building your retirement nest egg on a single income and making financial decisions solo the following tips may help:
Become financially confident. Educate yourself about finances. Know what assets and liabilities you have and plan for your future goals. Having goals helps you make better financial decisions.
Manage your debt. Spiralling debt can derail your financial goals. If debt becomes a problem take action to get back on track sooner rather than later. Don’t be embarrassed – ask us how!
Learn about investing. You don’t need a lot of money to invest. Consider starting small and add to your investments over time.
Boost your super. Consider making extra super contributions such as salary sacrifice. Seek advice from your accountant and financial planner first.

Think you are too young to worry?

You may think you don’t need to worry yet. However with advances in medical technology it is predicted younger
generations will live even longer than baby boomers.

They should also have the benefit of a lifetime of super contributions to boost retirement balances. But did you know the
Australian government recently passed a law that will delay the introduction of the 12% super guarantee until July 20254? That’s 7 years later than the date set out in previous laws! Who knows if it will change again?

Planning is the key

Whether you are a couple, single, male or female the question is: will your super balance be enough in retirement? If the current generation is any guide – probably not.

The Value of Mortgage Broking

Mortgage brokers drive competition and reduce prices

• The mortgage broker channel works for all Australians by driving competition, which helps to make interest rates more competitive for everyone. It has contributed to a fall in lenders’ net interest margins of more than three percentage points in the past 30 years.

• Mortgage brokers bring competition to the mortgage industry by improving access to lenders that are not major banks or their affiliates. The share for these lenders increased from 21.4 per cent in 2013 to 27.9 per cent in the past four years.

• The average mortgage broker has access to 34 lenders and uses an average of 10 lenders on their panel, bringing more choice to Australian home buyers.

• Without mortgage brokers, smaller lenders would need to expand their branch footprint across Australia with an additional 118 branches each – on average – to maintain their current market share.

Australians love their mortgage brokers

• More than 90 per cent of mortgage broker customers are happy with their mortgage broker.

• More than 70 per cent of mortgage brokers’ business comes from existing customers.

• Mortgage brokers arrange more than half of all home loans each year, and this number continues to grow.

The broker channel helps those who need it most

• Three in 10 mortgages arranged by mortgage brokers are in rural and regional areas, improving access to home lending for rural and regional Australians – in locations where there may be few or no bank branches.

• Mortgage brokers help first-home buyers enter the housing market. Around 23 per cent of broker customers are first-home buyers and the ABS estimated that FHB’s accounted for around 18% of all housing finance in November 2017.

Mortgage broking supports Australian jobs

• The mortgage broking industry contributes $2.9 billion to the Australian economy each year and supports more than 27,100 (full-time equivalent) jobs.

Mortgage brokers are industry experts

• Mortgage brokers have an average of 13.8 years of industry experience helping Australians finance their homes.

• 64 per cent of brokers have education and training above and beyond their required broker-related qualifications:

  • 36 per cent have another diploma or certificate qualification.
  • 40 per cent have an advanced diploma or bachelor’s degree.
  • 24 per cent have post graduate qualifications.

Mortgage brokers are everyday Australians

• Brokers that are sole traders earn an average income after costs and before tax of $86,417.

Findings from Deloitte Access Economics report, The Value of Mortgage Broking

The real world……Life after GRADUATION

Congratulations! There you are in your cap and gown, degree in hand. This is what you’ve been working towards these past few years. So… what’s next?

Completing tertiary study can be both the most exciting AND daunting time of a graduate’s life. Some may head off for poststudy travel (read our article about ‘debt lag’!) but for most, graduation marks the transition to their chosen career and first step into the ‘real world’.

Getting started

Finding a job will be top of mind for most graduates. The first challenge could be expectations vs the reality of the job market, however a 2016 student survey found:

  • 70% of graduates agreed it was more important to feel fulfilled at work than earn lots of money.
  • 64% were willing to make sacrifices in their personal life to develop their career, and
  • 66% expected to work 41 hours or more per week in their first professional role to get ahead.

It seems the future of our workforce is in good hands!

Becoming independent

This is also a time when some young adults move out of home. Perhaps you need to relocate for a job or it’s simply time for independence? Regardless of the reason, learning to be responsible for our own finances and expenses for the first time in our life can be confronting.

It’s important to plan, budget and consider all costs you will incur BEFORE you move,

  • Will you live alone or share? Your weekly rental limit will determine the location and property type.
  • One off costs such as rental bond (usually 4 weeks rent), rent in advance (usually 2 weeks rent), removalist, connection fees for phone, internet, utilities plus furniture, linen, kitchenware, household supplies etc.
  • Ongoing costs such as rent, gas, electricity and water bills, food, entertainment, transport and/or car costs and home contents insurance.

If you have an informal arrangement in a share house there are usually no real legal ties. If you sign a lease there are binding legal and financial obligations. If you are sub-letting under your lease YOU are responsible for the care and upkeep of the property. Make sure you understand what you’re signing.

How to manage AND get ahead

What are the ‘golden rules’ to help you manage your money AND protect your financial future?

1.Create a budget and live by it

Try to divide your salary into 50% for essentials, 30% for lifestyle and 20% for savings. If you can’t manage to live AND save perhaps revise your plans?

2. Avoid ‘dumb’ debt

Credit and store cards can lead to a financial disaster. If you have a credit card ensure you are disciplined about usage and repayments.

3. Protect your credit rating

Pay your bills on time – that means BEFORE the bill is due – not at the 2nd final notice! Poor financial habits could affect your ability to qualify for a home loan.

4. Don’t ignore superannuation

It’s wise to understand NOW the role super could play in your future. It should be part of your financial planning from your 20s – not your 40s.

Remember your student loan…

This can be the ‘elephant in the room’ for students, so what are the facts? Compulsory repayments through your tax return are required when your income exceeds a minimum repayment threshold. You can also make voluntary payments at any time. Student loan repayments should be factored into your long term financial planning.

As of January 2016, if you have moved overseas your repayment obligations will remain the same as if you are living in Australia.

Protecting your future

Living life on a single income could leave you open to one critical risk you may not have considered. How would you afford your lifestyle if something happens to you and you cannot work? How do you protect the income you are now dependent on?

We don’t think about anything going wrong when we’re young and healthy so if you would like to understand how to protect your income we’re always here for a chat. If you have graduating friends who could benefit from this article ask us for a copy to send on to them!

Buying property with other people: Mine, yours or ours?

When people buy property together, particularly if it’s with a partner or spouse, they often register the title in both people’s names – especially if they’re going to live in the property.

But other arrangements are possible, several friends might opt to own individual shares in a property, for example, or a couple might choose to have only one of their names on an investment property title. The following information provides you with a good starting point to help you on your way. Also tax legislation and other Australian laws governing property ownership and investment are complex, so seek proper legal and financial advice before entering into any arrangement.

Joint-ownership titles

The two main types of joint-ownership titles in Australia are joint tenancy and tenancy in common.

Joint tenants own the whole property together. If one of them dies, ownership passes to the surviving tenant or tenants, you can’t sell or transfer your ‘share’ in a joint tenancy. This is the most common arrangement when a couple owns a family home.

Tenants in common own individual shares in a property, and those shares do not have to be equal. Shares in a common tenancy can be transferred to someone else. When one tenant dies, their shares pass to their heirs if they have a will.

Legal liabilities

Tenancy in common is a useful arrangement when a group of people want to buy property together. Each tenant can own a share proportionate to how much money they’ve contributed, and can sell or otherwise dispose of their share as they wish (unless the tenants have entered into a prior agreement that prohibits this).

Tenants in common can take out individual loans to finance the purchase of their share of a property, with each tenant repaying their own loan. However, tenants in common are “jointly and severally” responsible for all the loans – if one tenant falls behind in their payments, the other tenants are responsible for those payments. You should also be aware that a lender could force the sale of the property to recover money owed by one tenant.

One person’s name on the title

When you’re buying an investment property with a spouse or partner, there could be tax and other advantages to putting the title in only one person’s name. Capital gains tax is payable when you sell a property that is not your family home, such as an investment property. Tax on capital gains is calculated as part of your annual income in the year the gain is realised. If the property is in the name of the partner who has low or no income, less tax could be payable than if the income from the capital gain was shared with the partner with a higher income.

Future borrowing

If you already have an investment property, a lender will take into account both the income from the property and the loan you’ve taken out to buy it when assessing how much they can lend you. If you own a share in a property as tenant in common, a lender will count the whole debt on the property as your liability – not just your share of it. This could in turn decrease the amount of money they’re willing to lend you.

Holiday home or good investment? Can it be both?

Australians LOVE a holiday and while overseas travel is high on the list for many of us we are also blessed with an abundance of fabulous holiday destinations in our own backyard.
For some of us, when we find a piece of paradise on home turf the lure of our own holiday hideaway is strong. Be honest! Have you ever checked out real estate prices at your favourite holiday spot?

Have you ever wondered if a holiday home is a good investment? Glad you asked – that’s a really good question…

So what do you need to consider?

Q. Is it business or pleasure?

We generally buy lifestyle assets for pleasure – think nice cars, boats etc. On the other hand we usually buy financial assets, such as property, with a view to an eventual profit. Even if you never intend to sell your family home it’s generally purchased with an expectation of capital gain.
If you purchase a holiday home purely for your own lifestyle pleasure (and you can manage the holding costs of the property over time) that’s great. However, typically
a holiday home is not something you would consider as your first investment –
or maybe even your second or third – so seeking good advice is critical. It pays to consider ALL aspects of such a buy.

Q. What should you consider?

Some positive aspects of owning a holiday home may include:

  • Rent-free holidays for you, family or friends any time you like.
  • Potential profit from holiday rentals to others.
  • Even if you don’t make a profit, rental income may offset holding costs such as maintenance, loan repayments, management fees, insurance and rates.
  • Possible tax advantages.
  • Possible capital growth over time.

Some people may buy a holiday home earlier in life with a view to retiring there in the future.

Of course as with any investment it pays to consider the possible pitfalls as well. We certainly know of many cases where clients have made a purchase in the throes of holiday euphoria only to regret it further down the track.

Q. What could possibly go wrong?

Key considerations before proceeding with such a purchase include:

  • Value for money. How often will you use it? If you go there one weekend per month and three weeks at Christmas (ie 43 days pa) it may be cheaper to go and pay normal rates. As of July 2017 travel expenses related to an investment property are also no longer deductible.
  •  Security. You may only ‘check’ on a holiday home a few times a year so there could be security issues with an unoccupied property. As a result insurance can often be higher. Make sure you have a local property manager.
  • Potential income vs reality. Will you rent it to others? When, how often and what is the potential income? How many other holiday lettings are in the area? How does your property compare? Would you forgo personal use in peak season to maximise rental income?
  • Holding costs. Ongoing costs include your loan repayments, rates, insurance and maintenance plus possible costs of property management and advertising. You could use local management or manage it yourself. Without a local managing agent how will you manage access to the property, cleaning and post-letting inspections?
  • Capital gains potential. Carefully research property trends – you usually won’t see capital gains like those with a city property. Also holiday homes can be difficult to sell. By their very nature holiday areas usually lack characteristics that underpin a good investment such as infrastructure, arterial roads, hospitals, schools and employment opportunities.
  • Beware of freeloaders! Managing the expectations of friends and family can be a tricky area. Best to set the ground rules right from the beginning.

The golden rule? If investment potential is part of your plan then it pays to be cautious of a property purchase driven by your heart rather than your head.

If you are thinking of purchasing a holiday home please contact us for a chat first. We can help you explore all the financial implications for your individual circumstances and long term financial goals.

Coffee Addiction! Can it be tamed?

Coffee is an essential part of daily life for many of us with caffeine often referred to as ‘the world’s most popular drug’. You only have to look around at the explosion of cafés and coffee trucks over the past 20 years to gauge its popularity. If you’re a traveller you will know coffee in Australia is some of the best in the world and our baristas are often seen as world leading in their profession.

Many of us wouldn’t get through a work day without coffee! Take a moment to look around your workplace and see how many coffee cups, energy drinks and chocolate bars you can find. A lot? So what is caffeine and why do many of us find ourselves wanting it on a daily basis?

Caffeine is a ‘psychoactive stimulant drug’ and is naturally found in the leaves, seed and fruits of over 60 plants worldwide. The most common sources in our diet are coffee, tea leaves, cola and energy drinks. Caffeine can also be produced synthetically and added to food, beverages, supplements and medications.

How much is too much?

One shot of espresso coffee in a cappuccino or latte equates to approximately 100mg of caffeine. The average Australian drinks two cups of coffee per day. While this is a healthy quantity and is enough to keep a person energised and feeling alert for the day, the problem is that most people who work in an office tend to consume more caffeine than the average Australian.

Why do we become addicted?

If you have coffee regularly over time your body becomes used to having caffeine in the system. If we then cut it out your body misses the caffeine and you start to show symptoms of withdrawal. At this point we usually race out for a coffee hit! And so the vicious cycle continues….

As well as being addictive, coffee consumption has become a very social habit. How often do we invite someone to catch up for a coffee?

Once the addiction has taken hold we begin to run the risk of burning out, crashing or getting what is commonly called ‘the afternoon slump’ at around 2pm or 3pm.

How does it affect us?

The reason people who consume considerable amounts of caffeine end up being more tired and having less energy than everyone else is due to two very important, very small glands in the body: the adrenal glands.

These little glands are responsible for producing adrenaline. And what gets pumped around the body every time we consume caffeine? You guessed it – adrenaline! If you push these little glands too far they will eventually run dry, and it is at this point where you will begin to burn out or become fatigued.

To make things worse, it’s not only caffeine that can strain your adrenal glands. Several other factors such as lack of sleep, high sugar intake and high levels of stress can leave you without anything left in the tank.

So, how do we protect ourselves from abusing our adrenal glands and burning out?

The simple answer is to consume the right type of caffeine, in the right amount and at the right time and gradually reduce your consumption.
• Try real brewed espresso – it contains natural caffeine, minerals and antioxidants.
• Don’t add extra sugar – it excretes too much adrenaline.
• Try to limit your caffeine intake to the morning – this will get you going and help you focus, and it will definitely not interfere with your sleep at night.

Are you suffering from DEBT LAG?

Aussies are a nation of international travellers. In fact, during 2016 a record breaking 10 million residents left Australia to travel overseas on a short term basis. That’s 41 out of every 100 of us!

We often hear people say “no matter where you travel overseas you’ll run into an Australian”. You can see why!

Of course, the travel bug comes at a cost. Unless you have unlimited funds the more you plan, budget, save and pay towards your trip BEFORE you travel the better off you will be AFTER your holiday.

Nobody wants their dream trip to become a travel debt nightmare. Jet lag we expect – but ‘debt’ lag should be avoided at all costs!

The potential cost of debt lag

A 2016 travel report claimed Gen Y is the biggest spending generation with a holiday spend of $11 billion pa.

Gen Y is also our new generation of property buyers so it could come as quite a shock to some if their last overseas holiday continues to impact their future financial plans long after their plane lands!

All lenders assess your debt, repayment history and credit report during the home loan application process. A large travel balance could impact both your credit score and ultimately your ability to be approved for a home loan.

If you are a current homeowner you don’t want to find yourself drowning in holiday debt or experiencing an unexpected shift in interest rates that leaves you struggling to meet your repayments.

How do you AVOID debt lag?

Here are our top tips:

• Planning is the key. Create a holiday savings plan well ahead of your travel date. Look for early bird discounts.
• Avoid peak season. Travelling during the off-peak season may deliver extra savings.
• Research exchange rates. If rates are favourable against the $AUD then load currencies on a travel card BEFORE you leave.
• Consider ALL possible costs. It’s often the expenses you did NOT anticipate that sink your budget.

Managing debt lag

How can you pay off debt sooner? For one possible option check out Liz and David’s story…

There are a number of ways to manage credit card debt. Paying minimum repayments over a number of years is certainly not one of them.

Contact us for a chat and we can help explore a debt management solution for your individual circumstances.

Whether you are an existing property owner or a potential FUTURE property owner, managing credit card debt will help protect your financial future.

Disneyland almost broke the bank!

Liz and David always dreamed of taking the kids to Disneyland so when their eldest son started Year 6 they decided it was time to bite the bullet and go!

They HAD planned to get on top of their mortgage and then save for a trip. They reviewed their budget and decided if they cut some expenses they could pay for the trip with their credit card and manage the repayments. They estimated the trip would cost $8,000-$9,000.

The first setback was when their hot water heater blew up a week before they left! THAT was an expense they had not planned for. After arriving at Disneyland it soon became clear their 3 day pass wasn’t long enough so they added extra days. Transport was another cost that caught them unprepared.

Liz was also blown away by the cost of food at Disneyland… AND the shopping! Who knew you could buy the kids their annual clothing allowance in America SO MUCH cheaper than Australia? They arrived home from their trip of a lifetime with a $12,186 credit card balance!

Liz and David knew they had to rethink their plan. They chatted to their broker and consolidated their debt into their home loan to take advantage of the lower rate. Then they added their planned repayments (plus any extra they could afford) onto their mortgage to clear the debt as quickly as possible.

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