Page 25 - Smart Money

Smart Money

techniques like that we can help with. Struggling to get ahead can see
people end up in situations where they are looking at bankruptcy, partner
loans, losing their houses, or having their cars or motorbikes repossessed.

How are you going to save for a deposit when you don’t even
know how to? When you take on too much debt, when you buy
too many things, you are never going to be able to save for a
home.

If you have lots of liabilities, all your spare money goes to paying the
liabilities instead of saving for a home. That is why you need that separate
bank account. If you have got a home, you might not be paying down
the loan because it is interest only, and instead of just doing that for 12
months, it goes on for five years. Then in five years’ time you haven’t
actually paid anything off it, because it is an interest only loan instead
of principal plus interest. You wonder why you can’t find any money for
a holiday or other bits and pieces, but it is because you have spent it all
already. With an interest only loan, you are not going to get ahead.
We often see people taking advice from the wrong people. For example,
a mate has told them to open an account in their business name. But
that is not genuine savings. You need to talk to a professional who can
steer you in the right direction, rather than take wrong information from
people who don’t actually know how the banking system works, or from
people who have been there and done that.

Case Study

One of my clients is struggling a little bit with money, but he has two
properties, both with a little bit of redraw in each of them. He has been
told that he can take the redraw from property B and put it into property
A and not have to pay any money; his interest rate or repayments won’t
go up on Property B. So he thought that all his problems were going to
be solved because he was going to take his money from one property
and put it into the other property and reduce his repayments.

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