Much has been made of federal budget’s tax relief measures. But don’t wait around for them like a chump. They could be pocket-change compared to what you could save from getting your own budget in order.
Depending on who wins the next election, you could have up to $530 (Coalition) or $928 (Labor) extra money to pay off your mortgage each year, thanks to proposed changes to the low-income tax offset.
But instead of waiting around for the federal budget tax cuts to come to you, create a personal budget of your own.
Not only will you get to reap the benefits straight away, but the extra amount you’ll be able to put towards your mortgage will be much, much more than $40 to $80 a month.
Here’s how to create your own personal budget in four extremely simple steps using ASIC’s MoneySmart budget planner.
Step 1: Calculate your income
This is the easiest step. Have a look at your pay slips or bank statements to see how much is going into your account on an average month. Make sure you include any rent you might be earning, or interest on savings. Don’t include the income that never makes it into your bank account, like PAYG and super.
Step 2: Work out your expenses
This is slightly more complicated, as expenses change month to month. To work this out, check your bank statements, bills and receipts to see how much you’re spending on things like rent, groceries, transport, medical expenses, utilities, clothing and your mortgage. Remember to include payments you only make once or twice a year, like car registration or insurance, and average them out.
Step 3: Crunch the figures
Once you’ve entered your income and expenses the next part is simple. The calculator will crunch the figures and help you work out how much you have left over to put towards paying off your mortgage sooner. Try starting at 5% and then find an additional 0.5% to 1% in savings each month thereafter until you reach 10%.
Step 4: Track your progress
Each month take stock of where you’re at by reviewing your bank accounts and seeing where you could make further cuts – or perhaps where you had a little slip up.
Now, the average Australian wage is $84,000 before tax, according to the Australian Bureau of Statistics.
If you’re taking home $5,500 of that after tax each month, then paying an extra 10% towards your mortgage each month is an additional $550.
That much extra money each month can reduce your mortgage interest fees by about $100,000 and shave seven years off your mortgage (assuming a $500,000 mortgage over 25 years).
That’s much more than either Labor or the Coalition could ever promise you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Important notice for subscribers. Please don’t forget to copy this page’s URL address into the canonical URL section on your post. Also, ensure the Meta robots index is set to ‘index’.
Downloadable pictures of varying shapes and e-newsletter template located here.
Social media teaser. Instead of waiting around forever for the federal budget tax cuts to come to you, create a personal budget of your own to help pay off your mortgage sooner.
E-newsletter recommendations.
Suggested MailChimp subject line: Don’t wait around forever for the federal budget tax cuts to come to you
Suggested MailChimp preview text: Create a personal budget of your own.