Managing your money with a mortgage

Having a mortgage is a big financial commitment, but that doesn't have to mean that you live on a shoestring budget; you just have to be smarter about how you manage your money. Here are a few tips on how you can give yourself a little more spending money while paying for your mortgage.

Pay bills at the last minute

This may sound like strange advice, but you should pay your bills just before the due date, rather than weeks in advance. The reason for this is because the money you have in your bank account gains interest every day, therefore paying just before the due date rather than weeks in advance means you have generated a few extra dollars in your account. It may only be a small amount, but every bit helps when you are paying for a mortgage.

Synchronise your repayments

While leaving your bills unpaid until a couple of days before the due date affords you extra dollars in your bank account, it also requires you to budget your finances and set aside that money for bill repayments. For many people, this can be difficult, particularly if the time between your pay day and your due date is significant - you may be tempted to spend all that money on something else.

One way to avoid doing this is aligning your bills to be paid the week after your salary is deposited. For example, if you get paid on the 15th of every month, try contacting your bank, phone, water, electricity and/or insurance providers and see if they are willing to change your monthly repayments to occur the week after the 15th. This gives you leeway of a few days if there is a delay in the processing of your pay, and only a few days for all that money to be in your account before you have to pay your bills. This prevents overspending as you have paid all your required bills for the month and allows you to have a realistic view of how much you have left for the rest of the month for other expenses.

Bundle your bills

While you are rearranging your payment dates, it may be a good idea to see if you can bundle your bills. Large companies usually offer a range of services to do so, and when packaged together there can be big savings. For example, if you have private health insurance, companies such as Medibank and HCF also offer a ten per cent discount on health insurance for pets.

Another common bundle is combining your various subscription bills - Telstra offers customers a ten per cent discount if they choose to combine their home, internet and pay television plans. Other bundles include home, contents and car insurance; and gas and electricity, all of which can also save you the hassle of paying individual bills each month and help you keep track of your expenses better.

Top up your home loan

If you still need to borrow money for a big ticket item such as a car, home renovation or other essential goods and services, even after budgeting to the best of your ability, consider topping up your home loan. This is an alternative option to increasing your credit card limit, applying for a new credit card or using car finance.

Car finance interest rates are usually around ten per cent, and similarly credit card interest rates can range from 11 per cent to as high as 22 per cent, as compared to home loans, which offer interest rates around the 7 per cent mark. This can provide you with a less expensive financing option if need be, but it is important to remember that all forms of credit come with a basic level of risk. It is important to determine your ability to pay off these commitments before increasing your credit appetite, or risk incurring debts or impacting your personal credit history.

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