Yahoo Finance 3 ways to make $20,000 without leaving your house
You’re working harder but wages aren’t budging; the kids take up all your time; and the mortgage is eating not only your paypacket but also your diminishing savings.
Most Aussies aren’t aware that there are three simple solutions that could free up $18,000 to 38,000 a year, without any more sweat or debt, according to finance broker and property specialist Busy Martin.
Here are Martin’s three ways to save thousands a year and take a load off your shoulders:
1. Refinance your home loan
Sure, when you signed off on your home loan last year, you got a great deal, but that may not be the case anymore.
“Many home owners don’t realise that banks often incrementally increase their interest rates and fees or don’t pass on full rate reductions on existing home loans over time,” Martin said.
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Most borrowers who have had their home loan, credit card, car or personal loan for more than two years are paying anywhere between $400 and $1,200 more a month than they need to be, Martin said.
“By simply renegotiating and/or consolidating with your existing bank, or refinancing your home loan and restructuring your lending, it is easy to ‘earn’ the gross equivalent of an extra $7,000 to over $21,000 a year when an average marginal tax rate is applied.”
And the best news is: getting a cheaper deal on your home loan can be as easy as picking up the phone.
“What’s more, if you’re busy or confused by the process, just track down a good mortgage broker via www.pipa.asn.au/search and they will handle this process for you (at no out of pocket cost).”
2. Automate your savings
lp you save thousands more.
Martin points out that your money management can actually be automated, remote control, from your mobile phone.
What you’ll need is three interlinked accounts:
One offset account called ‘Freedom’, where the money held here will reduce the amount of interest charged on your home loan;
An ‘Essentials’ credit card;
A ‘Living’ debit card.
All your income should go to your Freedom offset account. Half of that should be directed to your essentials card to cover your regular bills, with another 30 per cent going to your ‘living’ debit card for your discretionary spending.
“Transfers and complete balance payments are all automated – just set and forget and you will never again pay a cent of high interest or late payment fees on your credit card while your income sits in your offset for longer,” said Martin.
“Better still, use a bank that offers multiple offset accounts against your home loan and just set up the same three freedom, essentials and living accounts.
“This ‘automatic saver system’ (helping get you off your A.S.S, as I like to say), combined with offset benefits and weekly loan repayments, means you have effectively earned yourself another $4,000 per year when the tax is grossed up.”
The beauty of this all is that you could easily set up all this from home as online banking becomes quicker and easier.
According to the property specialist, for an average home loan of $400,000 over 30 years, funnelling all your income into ‘Freedom’ offset accounts will see you save over $28,000.
Additionally, if you change your repayment to weekly instead of monthly, you’ll see another $52,000 in your pocket, he added.
3. Build an investment property
Splashing more money on an investment property won’t help your cash flow problems… right?
“While it seems counterintuitive, due to generous ongoing tax depreciation on new build homes, combined with clever structuring, it is not difficult to use lazy equity in your home to fund the construction of a $500,000 rental property that will keep between $7,500 and $13,000 a year of your hard earned salary in your pocket over the first 10 years,” explained Martin.
He also pointed out that the right property can be positive cash flow so that it doesn’t eat into your salary or lifestyle and you can channel tax savings to pay off your loans even earlier.
However, to do all of this, Martin said you’ll likely need some help along the way in the form of a mortgage broker, a PIPA-accredited property investment advisor, buyer’s agent, project manager, property manager, and an accountant.
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