Money
Win-spired ways to ease the financial squeeze in 2025
Following these tips to ease the squeeze, Nicole Pedersen-McKinnon found an extra $6,452 in this year alone… how much can you boost your bottom line by?
By Nicole Pedersen-McKinnon
Being curtailed by the cost of living is so 2024.
In 2025, it’s all about regaining control and re-positioning… possibly ready for rate cuts.
Here’s how you could substantially boost your bottom line this year – I’ve calculated savings of up to $6,452...
Ease the squeeze 1: ‘Massage’ your mortgage for significant savings
As you head for retirement, the race is on to clear your mortgage (or is it?).
And do you know what? If you make just a couple of smart moves today, you are much more likely to do it.
At maybe the very top of the interest rate cycle, the average big bank variable mortgage rate is now 7.15 percent, says data house Mozo.
Meanwhile, the cheapest comparable, quality loan is only 5.89 pe cent (this is from Police Credit Union – which is open to the public – with its Low Rate Home Loan Special Offer with an offset account).
So if you simply ditch and switch your home loan from 7.15 percent to that benchmark 5.89 percent rate, you’ll slash the interest you pay by 126 basis points.
And as rates – hopefully – fall, those savings should ratchet up.
Let’s assume mortgage interest rates will decrease in lock step with the Reserve Bank – based on current cutting forecasts, you could be paying 100 points less again within a year.
Average annual saving: With a fairly typical $400,000 mortgage, moving to a rate of 5.89 percent would instantly put $316 a month back in your pocket – your minimum monthly repayment would fall from $2,866 to $2,550.
That’s $3,792 this year.
Which is phenomenal.
But here’s the thing: you could make this count a whole lot more by doing a thing I call “up stumps” but still “stump up”.
In other words, get that market-beating deal but just keep paying the same (if you can manage without the extra money, of course).
Continuing to pay that extra $316 to your mortgage – remembering this is not a cent more than you have already been paying – over time will save you $88,760 and shave 6 years off your mortgage.
More of Nicole’s hot tips: Pay off your mortgage in the next 7 years
Ease the squeeze 2: ‘Drive’ your personal loan to a big discount
Let’s continue in that same savings vein…. according to Mozo, the average 3-year secured personal loan is currently above 10 percent.
But did you know you could get one for as cheap as 6 percent (Illawarra Credit Union offers that rate)?
Average annual saving: Let’s assume you have a pretty standard $30,000 loan for a car.
Snaring that top deal will save you $55 a month – you drop from paying $968 to $913.
That’s $660 a year and in the quest to get on top of your expenses in 2025 – it’s not nothing.
Ease the squeeze 3: Secure a cut-price credit card
If you carry over a credit card balance (I will get into how to stop doing this in the very next step), then you may well be haemorrhaging money.
The average credit card interest rate is a scandal and it’s barely budged in decades.
It mattered not that there was a global financial crisis; it mattered not a jot that there was a massive pandemic panic.
It’s stayed broadly the same regardless, says Mozo… at roughly 18 percent.
That is a huge penalty to pay for past spending. So it’s great news that you could be parting with as little as 7.49 percent on any balance you carry over (with G&C Mutual Bank’s Low Rate Credit Card).
Average annual saving: We’ll assume your outstanding balance is a pretty typical $4000. The interest on that each year at the average 18 percent is $720.
This drops significantly if you move to a card charging just 7.49 percent: by more than half ($420) to $300.
Now, if times are tight, you may only be making the minimum monthly repayment.
This dramatically compounds the interest rate effect… at the minimum repayment and an 18 percent rate, this debt would ultimately cost you $9,862 in interest.
It would also take you almost 31 years to clear. Luckily, there is an even smarter way…
Ease the squeeze 4: Ditch your card debt for ‘free’
Let’s talk about the possibility of discharging any credit card debt. It is entirely possible to rescue this side of your ‘balance sheet’ with what is called a balance transfer credit card.
Such cards offer limited-time deals where you pay low or no interest. This gives you a wonderful window of opportunity to clear your debt once and for all, without any of your repayments being wasted on interest.
At the moment, you can even get a balance transfer credit card for 30 months (with ANZ’s Balance Transfer Visa Card).
Why would any institution offer a product that is so generous?
For 2 key reasons.
Firstly, the whole idea is to lure new customers – you will only qualify if your debt is currently with a different institution/institutions.
Secondly, there is some financially ‘funky’ stuff in the fineprint, but the traps are easily avoided by people in the know.
Trap No. 1 is new spending – don’t use these cards for any new spending as the interest rate will be through the roof.
Trap No. 2 is if you still have debt left at the end of the interest-free period – at this point, this will also switch to a punitive interest rate, called a ‘revert rate’.
But provided you stick these cards in a drawer and never use them, and either clear the balance or close the account at the end of the interest-free period (you could potentially switch to a new 0 percent rate card with a different institution), this may be your ticket to credit-card freedom.
Average annual saving: With a 0 percent rate, your interest obviously falls to $0… so on $4,000, you are potentially saving that $720 from Ease the Squeeze 3, each and every year of your balance transfer deal.
But the biggest monetary advantage comes if you use the card as a tool to permanently kick your debt – you’d potentially save that full $9862 in interest over 31 years, mentioned earlier.
How? It’s as easy – but yes, also difficult – as dividing your existing balance by the number of interest-free months, say 30, and thinking about whether you could pay off this much every month.
Might it be possible to redeploy the money you have saved with the above strategies, to quash your credit card debt?
Ease the squeeze 5: Use cashback to drop your every cost
If you haven’t yet caught on to the financial phenomenon that is cashback, it’s high time.
A cashback card like the Citro card will rebate money back to you when you spend online and in-store with partner brands.
With money back available from hundreds of Aussie merchants, if you’re not signed up and using your card, you’re missing out on big savings. Plus, you can opt to put your cashback straight into your super, which you know I’m always going to be onboard with (here are more of my top ways to boost your super).
Average annual saving: I use cashback apps to buy gift cards (including grocery gift cards for my family’s food), most of our clothes, accommodation when we travel and more.
I always check if there is a deal going and I often wait to purchase until that deal is ‘boosted’. For example, the rebate on travel sometimes goes as high as 15 percent.
Last year through cashbacks – importantly, from spending nothing more than I needed or intended – I made a bonus $1,580. I highly recommend you get on board!
Feature image: iStock/Orbon Alija
This article reflects the opinions and experiences of the author and does not necessarily reflect the views of Citro. It contains general information only. It is not financial advice and is not intended to influence readers’ decisions about any financial products or investments. Readers’ personal circumstances have not been taken into account and they should always seek their own professional financial and taxation advice that takes into account their financial circumstances, objectives and needs.
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