Cut your costs: Everyday money hacks

Checklist for week 4

Estimated completion time: 10 mins

  1. Think of 3 ways you can cut down on your weekly expenses
  1. Choose 5 techniques (from the list below) to reduce your debt or cost of living
  1. Consider your debt consolidation options

If you can embrace your frugal side and start paying down and eliminating your debts, you’ll be well on the way to getting your finances back on track.

Step 1: Get out of debt sooner with these money-saving tips

Bad spending habits can be hard to break, but if you want to tackle your debt, it’s time to start making some smarter decisions about how you spend your money.

You’ll need to find ways to cut back your spending whenever possible, so here are some simple everyday money hacks to help you do exactly that. They won’t all apply to your situation, but pick the ones that do and start making simple short-term changes that could have long-term benefits.

Shopping hacks
    • Aim to buy about 80% of your groceries on sale or buy generic brands to reduce the cost.
    • Buy staples at cheaper supermarkets, such as Aldi. Establish a set monthly grocery budget.
    • Use a supermarket rewards program to earn points and money off petrol and groceries.
    • Try healthier and cheaper breakfast alternatives: cereals can be quite expensive. Opt for oatmeal, eggs or fruit and you might be surprised by the savings.
    • Make a meal plan so you know what groceries you need to buy in advance, rather than just picking up whatever looks good on the shelf.
    • Don’t buy bottled water – it’s much cheaper to get it straight from the tap.
    • Don’t go grocery shopping on an empty stomach – if you do, you’ll be more likely to fill your trolley with food you don’t actually need.
    • Set a spending limit with family for seasonal festivities such as Easter, Valentine’s Day and Christmas.
    • Shop online whenever possible. It’s often much cheaper and it comes right to your doorstep. Remember to look for coupon codes and vouchers that provide extra discounts.
    • Consider paying for everything with cash rather than a piece of plastic. This could help you understand the true value of your money.
    • Look for used first: visit shops such as St. Vincent De Paul or the Salvation Army first before going to retail shops.
Lifestyle hacks
    • Cancel any unnecessary luxury items: this includes magazine or newspaper subscriptions, manicures and pedicures, shopping sprees and holidays.
    • Organise your errands more efficiently to conserve petrol, or try to do all your errands in the one place.
    • Use online exercise videos or go for a run instead of paying for an expensive gym membership.
    • Similarly, use training videos to train your pets instead of attending pet schools.
    • If your parents live nearby, regularly visit them for dinner: this saves a meal out of your shopping budget and they look forward to your visits.
    • If your haircut is too expensive, find a less expensive stylist. You can also dye your hair at home rather than going to a salon.
    • Quit smoking. This probably isn’t the easiest way to save, but cigarettes are extremely costly. There are also plenty of health benefits if you quit.
    • Don’t buy books – borrow from your local library instead.
Home hacks
    • If no one ever uses the home phone anymore, get rid of it entirely.
    • Use a clothesline instead of a dryer to save on electricity costs.
    • Choose energy-efficient appliances and install energy-efficient lightbulbs.
Entertainment/eating out hacks
    • If you’re eating out, try to avoid ordering extra food. If you need to have entrees or desserts, try split this with the group.
    • Try to make your coffee at home or at work, rather than buying it each day.
    • Aim to cook a bigger dinner the night before so you can use leftovers for lunch.
    • Say “no” to hosting or attending social events where you’ll feel the pressure to spend.
    • Make kids’ lunches at home instead of giving them money for the tuckshop.
Transport hacks
    • Go with one car: many families have two cars, learn how to manage with one car or start carpooling with friends whenever possible.
    • Catch public transport whenever you can: if you drive to work into the CBD, catch public transport instead. There are no shortage of buses and trains during peak hour and you can probably save on parking.
    • Alternatively, try walking or riding to work if it’s close. You’ll be amazed what you save in public transport, petrol and parking.
    • Monitor petrol prices and fill up when they’re cheap.
    • Wash your own car instead of paying someone else to do it.
    • Check tyre pressure regularly, as tyres that aren’t inflated to the recommended PSI can have an effect on your car’s fuel efficiency.
Money and finance hacks
    • Make the switch: reshop your car, home, health and life insurance to see if you can bring down your premiums. We’ll show you exactly how to do this in Week 6.
    • Make more than the minimum repayment every month on whatever bills you have.
    • Consider a credit card balance transfer or shopping around for a savings account with a higher interest rate.
    • Set up an automatic savings plan – we’ll show you how to do this in Week 5.
For plenty more smart ways to save, check out our collection of money hacks.

Step 2: Consider your debt consolidation options

If you’ve got multiple debts spread across several financial products (personal loans, credit cards etc.), it’s important to prioritise those debts and pay down the ones that are accruing the most interest first.

However, it might also be a good idea to consider your debt consolidation options. Debt consolidation is when you take out another credit account, such as a loan or credit card, that combines your existing debts into one account. The aim of this is to reduce the amount of separate fees and interest you’re paying, and also to simplify things by allowing you to make one regular payment rather than managing multiple accounts.

Should I consolidate my debt?

There are several factors you should consider before consolidating your debt:

  • How much are your current monthly repayments? Work out exactly know how much you're currently paying to calculate whether the debt consolidation product will actually save you money.
  • How much are you paying in interest and fees? Check the interest rates and fees for all your accounts to ensure your new debt consolidation loan will provide a cost-effective alternative.
  • Are you eligible? Check the minimum eligibility criteria for the debt consolidation product you want – how likely is it that your application will be approved? Remember to consider your credit score and the lender’s minimum and maximum borrowing limits.
  • How much will it cost to exit your current credit accounts? Some personal loans charge a fee if you repay your loan early, so check to see whether you’ll still come out on top after paying this charge.

How to consolidate your debt

The options for consolidating your debt vary depending on the type and amount of debt you have:

Options for consolidating personal loan debt

  • Debt consolidation personal loan. This allows you to take out a new personal loan with a lower interest rate and fees than your current loans and transfer your debt across. However, you’ll need to make sure the new loan can be used for debt consolidation and that it allows you to borrow the amount you need.
  • Balance transfer credit card. Most credit card providers don’t allow you to balance transfer personal loan debt onto your credit card, but some (such as Virgin Money and Citi) do. This means you can apply for a new credit card with a higher limit than your current personal loan debt and then shift your debt onto the card. You'll pay a promotional 0% p.a. rate for a limited period, after which a standard rate (usually above 20% p.a.) will apply. As a result, you’ll need to be confident of repaying your debt within the promotional period before choosing this option.
  • Refinancing through your mortgage. You may also be able to extend your existing mortgage to include your personal loan debt. While this may seem like a cheaper option because of the low interest rates available on home loans, remember that loan terms can be up to 30 years so it could end up costing you much more in the long run.

Options for consolidating credit card debt

  • Balance transfer credit card. Balance transfer cards allow you to transfer your existing credit card debt onto a new card. You’ll then be able to access a promotional rate (usually 0% p.a.) for up to 26 months, before the card reverts to a much higher interest rate. Once again, paying off your debt before the revert rate takes effect is crucial.
  • Debt consolidation personal loan. These loans let you borrow a lump sum to cover your credit card debt, and then pay off the balance by making regular loan repayments for the term you select.

Debt consolidation options for people with bad credit

If you have bad credit, you may struggle to get approved for many debt consolidation products. However, there are still options available to you:

  • Part 9 Debt Agreement. This is an agreement between you and your creditors to pay a certain sum of money to your creditors that you can afford. If your creditors approve the agreement, your debts will stop accruing interest and creditors can't pursue you. However, a Part 9 Debt Agreement is an act of bankruptcy that remains on your credit report for five years, and you also run the risk of losing secured assets if you can’t keep up with your repayments.
  • Bad credit debt consolidation loan. Some lenders offer unsecured debt consolidation loans specifically designed for people with bad credit. They allow you to consolidate credit card and personal loan debt, but usually attract higher interest rates ordinary debt consolidation loans.

Debt consolidation could be the answer to your debt problems, but if you don’t know what you’re getting yourself into it could lead you into deeper financial trouble. Make sure you compare your options, do plenty of research and calculate whether you’ll be better off before deciding whether to consolidate your debt.

By the end of this week you should:

  • Have introduced some simple money hacks into your everyday life
  • Understand the ins and outs of debt consolidation loans and whether they could help you get out of debt

Once your debt is well and truly under control, you can turn your focus to growing what you’ve got.

Coming up next week...

Week 5 is all about earning extra income and making your money work harder for you, so don’t miss it!

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