Mortgages Prompt Aussies to Save More

Australians who own homes and have mortgages are putting more money in savings accounts than they have in recent memory. As of mid-2013, the average Australian household had tripled its savings account over the previous two years. This information, which was made available through the ING Direct Financial Well-Being Index, may seem promising, but it also highlights the major gap between older Australians and their younger counterparts. After all, first home buyers are struggling more than ever to afford ever-increasing home prices, and many find it difficult – or even impossible – to save up deposits in the first place.

How Aussies are Saving More

The biggest driver behind the ballooning size of many Australian homeowners’ savings accounts can be traced back to the record-low interest rates that have favored the market in recent years. Indeed, rates continue to be low, and many homeowners are wisely taking the money they’d otherwise be sinking into interest and putting it in their savings accounts. At the time of the ING Direct report, the average savings account in Australia was just under $15,500. Low interest rates are definitely making it easier for Aussies to save, but another factor that shouldn’t be ignored is the inevitable rise in those rates. For many Aussies, building large savings accounts is more about having a buffer than anything else.

Homeownership Still Beyond Reach of Many Australians

While many homeowners around the country are amassing nice savings account balances, many others who don’t already own homes are finding it more and more difficult to make homeownership a reality. Unlike their home-owning counterparts, these Aussies often find it difficult or downright impossible to save up the money that’s needed to qualify for mortgages. Most need to put down anywhere from five percent to 20 percent to get their foot in the door, and the lackluster job market, escalating home prices and high unemployment rates are holding them back.

Saving Now is Wise

As nice as it is to have low interest rates for mortgages, it won’t last forever. In fact, many expect rates to creep up slowly but surely over the next 18 months. By saving what they can now, Aussie homeowners can soften the blow when their monthly repayments increase due to higher interest rates. Regardless of people’s reasons for saving, it’s never a bad idea. The bigger a household’s buffer is, and the more financially aware they are the less likely it is to run into trouble affording the mortgage.

Tips on How to Use Short Term Loans

Short term loans are available for people that need money fast in emergent situations. They are also for those that have poor credit and cannot obtain a traditional loan. Being responsible with the loan and paying them down or completely off quickly is the key to using the loans properly.

Repay it and Take the Financial Loss

Some short term loans, such as payday loans, require one single payment. Many consumers take out another loan after paying one off to put the money back into the bank for bills and household expenses. This is where the financial trap begins and it also begins a period of irresponsibility with finances in general. When you take out a short term loan, pay it off and cut back on unnecessary spending for a short period of time. You can read more on some of the sites that offer these services.

Do not take out Multiple Short Term Loans

There are limitations limitations on how many loans a person can have out at one single time. It is important to not partake in these limits. Take one and be done. Once you have multiple loans out it is difficult to repay them and carry the household finances. It becomes stressful and gets in the way of your quality of life and physical health.

Using strong will power, only take out one loan. No matter how broke you might be, don’t take out more than one loan at a time. Sell items that you don’t necessarily need instead.

Don’t Borrow More than Needed

In order to help you with the repayment process, don’t borrow more than you really need. The more you borrow in a short term loan, the more you repay due to interest. It will financially strap you to think that you should borrow a little more to have extra to help pay it back. It doesn’t work that way because your paycheck is still going to be the same.

Thousands of consumers abuse short term loans. It creates financial stress and often creates a much larger financial hole than what you started with. The vicious cycle is hard to break and having the discipline to rough it for a couple of weeks to recuperate from taking the loan is even harder. The loans are convenient and can be a saving grace in desperate times, but these loans should not be abused. Be grateful for the ability to get the loan to pay bills, keep utilities on and keep food on the table, but just take a single loan and pay it off.

7 Financial Mistakes and the Lessons I Learned

Everybody makes mistakes; the most important thing is that we learn something from them. If we don’t learn a lesson, then we will probably do it again. Without further ado, here are 7 of my financial mistakes I’ve made:

Financial Mistake #1

I went bankrupt when I was 20. Compared to what most people go bankrupt on (amount-wise), I feel like a dumb@ss now. It damaged my credit and haunted me for 10 years.

Lesson Learned: ALWAYS try to tackle debt before turning to bankruptcy.

Financial Mistake #2

Buying a $4,000 Tempurpedic bed. Did we really need such an extravagant bed? Nope. Personally, I don’t think it’s much better than our old bed (which we had for like 8 years). Now, my back hurts almost every morning and it’s freaky heavy.

Lesson Learned: More expensive doesn’t always mean something is better.

Financial Mistake #3

Gambling away $500 at a semi-local casino and then gambling away more on our last vacation to Lincoln City.

Lesson Learned: After going to Vegas, gambling other places is wasteful—you don’t even get free drinks. Also, maybe gambling isn’t the best form of entertainment.

Financial Mistake #4

Draining our savings (like 6 years ago) to pay off our debt. That just ended up being a really stupid idea, the debt soon returned and we were out of savings. We solved the debt problem but not the issues that created the debt in the first place.

Lesson Learned: Don’t use your savings to pay off debt. Take the time and work toward it for maximum realization and long-term success, because sometimes it’s good to feel the pain of debt.

Financial Mistake #5

Accepting my 1st car loan for 29-something percent when I was a teenager. WTF was I thinking; why didn’t I know that was bad?

Lesson Learned: Car loan people are out to get me and it’s important to truly understand how much loans will really end up costing you in the long run.

Financial Mistake #6

Buying a desktop computer at Dell and applying for credit with them. Yep, another 29-something percent APR (annual percentage rate), at least I’m consistent. Even though I was adding a little extra with each payment, it seemed to never affect the balance too much.

Lesson Learned: Retail credit can be a bad idea. Save up the cash if I really want something that badly.

Financial Mistake #7

Co-signing on a cellphone for a friend because they weren’t approved. This actually somehow added her and her dad onto my account. That b*tch had no intentions of paying the bill whatsoever, and ended up running my cellphone bill up to $1,500 in 6 weeks.

Lesson Learned: Don’t co-sign. If somebody can’t get approved for something themselves, there just might be a good reason. If you do it anyways, be prepared to pay it all and just consider it a gift.

 

What are some of you financial mistakes and the lessons you learned?