In the lead up to the festive holidays most of us want to focus on buying great gifts, finalising travel plans and arranging catch ups with family and friends. We don’t want to be worrying about money, but with the US economy still struggling it makes that very difficult.
Keeping on top of financial commitments is often far from our minds in the weeks before Christmas. Instead of getting in over your head, craft ways for your mortgage to manage itself, such as reworking the budget so it suits today rather than yesterday and scheduling automatic payments for your home loan and other debts to be transferred as soon as your pay goes in.
This is particularly important if you’re travelling over the holidays and unable to regularly check in to your financial obligations. It is important for borrowers to keep their seasonal spending under control so they’re not in strife when reality bites.
Here are some suggestions for keeping on track.
Redo your budget for today and tomorrow
If you haven’t revisited and prepared your budget lately then do so now. You should be reassessing it regularly; once a year is nowhere near enough if you have a variable rate home loan. Yesterday’s budget landscape is different to today’s and tomorrow will bring more changes. Do you really know what your expenditure has been, is and will be over the next three months? What costs you can save on and what extra spending will arrive with Christmas festivities? A budget is there to be followed, so consider all possible holiday activities will bring then cost them in now.
Back to the future with loan repayments
Are you prepared for when interest rates start to rise again? We have no idea when this will happen, but it’s sensible to assume rates will be at least one percent higher tomorrow and set today’s budget in motion accordingly. If it takes two years for rates to move that far, then you’ve built up a fantastic financial buffer and provided yourself with peace of mind. If you can make even higher repayments, that’s great. It also pays to remember while extra funds sit in your loan account you’re reducing the interest on your loan and you may be able to access these funds should the need arise.
Let your lender do the remembering
Many lenders allow you to set automatic home loan and other debt repayments well into the future, so you don’t have to remember to transfer the dollars each time. The funds are simply transferred on the date you select (it’s a good idea to make this your pay day or the day after). The only thing left to action is increasing your repayment amount if you have a variable interest rate that increases.
So there you go, a little thought and planning now can save a whole lot of financial heartache later on.
