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Personal budget analyser
The first step in taking back control of your spending is to take a snap shot of your current financial position.
Step 1 = Your nett worth
This first step will establish your net worth. This is done by listing all your assets (what you own - either fully owned or paying off) minus all your liabilities (what you owe).
Step 2 = Your cashflow
This section is simply a money IN less money OUT calculation. The expenditure sheet will allow you to list all your expenditure. A Cashflow Analysis tells a story and can give you clear indicators of where you can to take control of your money. There are only three “taking control” options.
These will either be -
- increase your income, (affording the lifestyle you may have already become accustomed to).
- reduce your spending or adjust your expenditure to reflect your income (living within your means)
- or all of these.
After completing the budget analyser you can also submit it to Finance Café for review and preparation for part two - doing a budget plan. This looks at what you can do to increase or redirect cashflow into priority areas and establish key lifestyle and savings goals.
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Consolidate personal credit debt
Personal credit in the form of store and bank credit cards, personal loans are handy for short term credit. But if these are let to run without paying out the debt each month then they can soon become a burden on your monthly cashflow. A smart alternative to manage credit is to consolidate personal credit debt into your existing mortgage. The interest rate on your home loan firstly is a lot cheaper and you can set up facilities such as an offset or redraw account to access your funds. You can even have a credit card attached to your home loan account at home loan interest rates which can void the need for a traditional unsecured credit card. Here’s an example -
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Credit Liabilities
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Repayments per month
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Assumptions
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Item
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Amount owed
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Current
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Proposed
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- Based on a 30 yr, P&I home loan of $121,000 at 7.32%.
- Personal loan interest rate of 12% over 5 years.
- Based on 3% of cc limit.
- Based on a 30 yr, P&I home loan of $150,600 at 7.32%.
per month saving
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Home loan
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$121,000
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$834 1
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$978 4
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Personal loan
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$14,700
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$327 2
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-
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Credit cards
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$9,500
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$285 3
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-
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Store card
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$5,000
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$150 3
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-
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Total
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$150,600
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$1,596
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$978
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Cashflow benefit
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$618
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