Debt the Halls

Christmas is a time when spending is on everyone’s mind and saving is far from it. You’ve got to find money for presents, the big lunch, pre-Christmas socialising and maybe even travel - it can get expensive.

Saving your pennies throughout the year is the ideal way to have extra cash by Christmas, but for the less organised, there are other ways to find extra money if you’ve left your run too late. It’s an excellent time to revisit your home loan and other debts to make sure your debt is structured the best way it can be.

Maybe you’re managing multiple payments or have a personal loan, credit card or store card you want to get off your mind. It’s easy to simplify your debts into one monthly repayment, which will help you save on rates and fees, by rolling all these debts into your home loan.

Interest rates on small debts are usually set quite high, which means that consolidating them into your loan should save you money in the long run. For example, if you purchased a car with a personal loan then you might be paying an interest rate as high as 19% p.a. However after consolidating, you could tie it to a much lower interest rate, even as low as 5% p.a. in the current environment.

After consolidating your debts, you can restructure your repayments to get debt-free sooner by raising them slightly or make them more frequently.
We’ve made a Christmas tips list (and checked it twice!)

  • Speak to your broker about consolidating smaller debts into your home loan and how this will impact your weekly repayments
  • If you consolidate your small debts, you should still aim to pay these off quicker. As an example, if you are going to refinance a car loan, plan to pay it off over five years (rather than 30 years)
  • Review your loan features with your broker so we can get rid of any features you don’t need
  • Make a list of people you are buying for and any present ideas before you hit the shops
  • Don’t get swayed into buying ‘presents’ for yourself, stick to your list
  • Look for presents with a special meaning rather than a dollar value, meaningful gifts will outlast the latest gadgets
  • Swap your credit card for a pre-loaded debit card to avoid temptation
  • If Christmas lunch is at your house don’t be shy about asking guests to bring their own drinks or a dish for the feast
  • For next year, set money aside throughout the year to save for Christmas spending.