A financial health check is worth it for everyone
Doing a ‘financial health check’ is something we hear a lot about, but who has the time to actually sit down and do a thorough review of their credit cards, home loan, superannuation and insurance? While it certainly sounds like hard work, it can mean substantial savings and this is important if you are looking to save for a first property, or pay off your current property faster.
To prove that a financial health check can work, I decided to take the plunge and see what this could mean for my own finances.
First things first, I made time to go into my bank and sit down with the mortgage banker to discuss the health of my loans. I was surprised to learn that there were good savings to be made with little effort.
The process can be frustrating and time consuming over the phone, but once I gave up on the phone queue and walked into the bank and asked the question, it was only a matter of pressing a few buttons.
For example, by switching from monthly to weekly repayments, I found I could save $80,803 over the life of the loan. By paying both interest and principle, I was able to ask for a lower interest rate. The difference was 0.8%, which works out to be a $4488 per year savings.
There are more savings I could have made, however this will involve a new application, property valuations and a 2016/2017 tax return. But once that is all done, I will be returning to discuss more yearly savings with the bank.
My mortgage banker recommended ringing or visiting every six months to review the mortgage terms.
Then I moved onto my health fund and property insurances.
I looked over my property and health insurances and called the companies to simply ask how I could reduce my premiums. This resulted in annual savings of $515.20 on health insurance and nearly $1000 for the property insurances. In the book, Barefoot Investor the author Scott Pape gives great examples of dialogue/questions you can use when making the calls.
Have you ever heard of the “lazy tax” (watch this great youtube clip from ABC ‘Checkout’)? Thanks to the ABC ‘Checkout’ program, it has been proven that reviewing your various insurance products (home, car, health) regularly and approaching your providers for a better deal can really pay off.
Taking the time to make sure you are getting the best deal on all your financial products could mean you are investing in your future. Two good reads on this subject are Barefoot Investor by Scott Pape and a new release Mortgage Free by Heidi Farrelly.
What can you do to speed up your savings? Are there opportunities to reduce your interest bill by cutting up some credit cards, or to consolidate accounts to save on bank fees? Do you have multiple super accounts, insurance policies and mortgages that you haven’t reviewed for years?
The old saying ‘take care of the pennies, and the pounds will look after themselves’ is true for all of us looking to save for a home deposit and/or pay off mortgages.
If you would like to chat to Rebecca about her experience of a financial health check, she is happy to help.