If your feet are in an oven and your head is in the freezer, on average you probably feel quite comfortable. That’s the problem with averages. And it is a problem worth remembering when it comes to the task ahead of the RBA as they try to bring inflation down.
As interest rates continue to rise unabated, many of our clients are finding that things are getting tight. They are wondering what to do. Well, the first step for many people is to see if you can reduce that rate of interest.
If you have a debt, you are probably making repayments. Each repayment you make is probably divided into two parts: interest and principal. Indeed, technically, you are only actually making a repayment if your regular payment includes an amount that reduces the principal of your debt.
Many people have debt. Not as many people realise that, if you have debt of any kind, then every dollar you spend is another dollar you have borrowed. That’s how debt works.
Interest rates are in the news and they will stay there for a while yet. So, now is a great time to think about how you are managing your debt. Over the next few weeks, we want to provide some fundamental advice that will help you or someone you love best manage their debts.
You probably already know that making extra payments on a loan can save you money. But few people realise just how much. A relatively small change today can help you save large amounts in the future. Put another way, your small change today can create big changes in the future.
Last week, for the third month in a row, the Reserve Bank of Australia hiked its target cash rate. The target rate is now 1.35%, up from the all-time low rate of 0.1% that it had been at since November 2020. So, what is the target cash rate? And why does it matter?
Inflation is starting to bite, and people on income support, such as aged pensioners, have not had their benefits adjust yet. This has many of our clients thinking about how best to cover the rising cost of living. Happily, the Commonwealth is here to help.
Last week we discussed how the Governor of the Reserve Bank Phillip Lowe recently recommended that home borrowers ensure that they have a ‘buffer’ against the time when interest rates inevitably rise. Interest rate buffers are not the only type of buffer in good financial planning. Buffers are used in many areas, but the need for buffers always comes from the same source: understanding that the way things are now is not likely to be the way things are in the future.
Last week, the Governor of the Reserve Bank Phillip Lowe gave a speech at the National Press Club. As is the tradition, at the end of his set speech, he was asked questions from the floor. One question stood out among the many.