January 19th, 2022 by

Lessons from The Budget Master – Michael.

My brother is retiring this year. He will be 48 years of age. He paid his first home off, at the age of 35. I am so proud of him.

I asked him to share his top tips, on how he was able to do this.

I have always been frugal with money. I have always tried to save my pennies.

When shopping for groceries, I am the master of locating the cheapest brand on the shelf.

You can save a lot of money in the next key areas I will highlight. It might take a little bit of work but its worth it.

Here are my 5 easy tips to saving money:

Insurance (Home)

No one likes paying for insurance. These are the bills we are all reluctant to pay every year. So why not get it as cheap as possible.

Shop around every time you get a renewal for your insurance, especially if the premium has increase by 10% on the prior year.

Many insurance companies offer a cheaper introductory premium for new customers.

Think about increasing the excess to bring down the premiums.

After 25 years of paying over $20,000 in home insurance, I have never made a claim.

Insurance (Car)

For your car insurance, shop around every year or if you renewal has gone up 10% or more. I have never found that loyalty programs, are financially beneficial, and worth hanging around for with the same insurance provider.

For car insurance, I like to make my excess around the $500-$700 because you never know when you will be in an accident

I usually add the Windscreen with no excess cover too, so I am not paying $700 – $1000 for a new one, if I get a bad chip or crack.

Home Loans (Best rate)

This is where you can potentially save hundreds of thousands of dollars. Always do a health check, every 12 months on your home loan. Don’t wait for the broker to come knocking.

Are you getting the best rate or close to it, are you getting the flexibility you need, to pay it down, as soon as possible.

I suggest using a good Mortgage Broker, They will find you the best deal and will guide you through the paperwork.

Some banks also offer money cashback at settlement. This can be worth a little effort. I just recently refinance and received a $5000 back bonus, as well as receiving the best rate on the market (Easy Peasy)

Home Loans (Offset)

The day I discovered the magic of the ‘offset account’ I was in love. If used to its full potential, it can be the most powerful tool to saving big money on your home loan.

In short an offset is an account, attached to your home loan account.
Money in this account, offsets the balance of your home loan. With an offset account in play, you will be paying interest on your mortgage balance, but minus your balance of your Offset Account)

I like to use my Offset, as my everyday bank account. I have all income pumped into the offset, so I am paying the least interest possible every month.

Credit Cards

Another way to save big is to use someone else’s money for 55 days by using a credit card for you everyday expenses.

I like to use my card for all living expenses (Shopping, Bills, Haircuts etc) and at the end of the 55 days, pay the card off in full, so you don’t pay any interest on the card (But you have to be not tempted to go on a shopping spending spree each month) you need to be able to afford paying it off in full every 55 days.

By using the banks money for free (if you don’t pay any interest) this money stays on the Mortgage for an extra 55 days, so that you pay less interest every month.

I also like to set up an automatic sweep payment of the credit card out of the offset, so I don’t miss a payment and get caught paying 20% credit card interest.

Small changes lead to big outcomes, if repeated regularly.

This information is, general in nature and for information purposes only. It is important to do your own analysis, based on your own personal circumstances, before making any financial decisions. We do not know you personal financial details and we suggest you consult with a financial adviser for your own specific financial needs, regarding any information that you find on this website.

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