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5 painless ways to tackle the rising cost of living (and rate rises)

·5-min read
Compilation image of money in back pocket and happy, carefree couple walking with their dog
Australia's cost of living is soaring, with more challenges ahead. (Source: Getty)

This is part two of a two-part series on how to fight the cost-of-living spike. In part one, we looked at the first five ‘stinge-spired’ ways to slash your costs in the face of rises in the price of everything. In part two of Nicole’s inflation fight back, she details the final – potentially far more powerful – five.

Rates have risen 75 basis points in two months – lifting the monthly repayments on a $500,000 mortgage by almost $200 – and the forecasts are for more to come.

Last week, in part one, we looked at how to slash your costs by using less petrol, spending less at the supermarket, cutting kid (and family) costs, spending less on clothes and getting selective on live streaming.

You can really think of all the above as what I call stinge-spiration.

And today, we look at the win-spiration - the more painless and potentially powerful ways to put more money back in your pocket.

Read more from Nicole Pedersen-McKinnon:

Here are my top five tips, counting down to the very most cost-effective.

Win-spiration tip 5: Slash your power usage

One of the driving factors behind the inflation spike, beside – yep – driving, is power. While there may be little you can do about this in an energy crisis that the government is urgently scrambling to fix (your provider may even close because they can no longer honour your prices), there are still ways to contain your usage.

For the temperature drop, hot water bottles and electric blankets use far less power than most heaters. It’s then typically the clothes dryer and dishwasher that are the biggest energy suckers. Can you forgo the dryer altogether, now that the sun may be out?

And if you have solar, run the dishwasher during the day to significantly save. Then there is the old ‘turn-appliances-off-at-the-wall’ trick. It works.

In fact, simply becoming a new customer is usually the secret to serious savings.

Win-spiration tip 4: Flick your phone provider

In fact, flick not just your phone provider but also your internet and tablet supplier.

Here, I like the comparison website whistleout… just be sure to check the un-sponsored companies for the real best deals.

You can play – in the one spot – with whether a bundle for the above is best or it’s better to divide and cost conquer.

Either way, it is almost always cheaper to DIY your device or buy it outright, rather than pay it off over time.

Win-spiration tip 3: Interrogate your insurers

Did you know you may well be paying over-the-odds on everything from your home and contents and car insurance to your life and income protection insurance?

Finding the cheaper deals may take a little digging here but financial comparison websites are here to help. Try looking at canstar, finder or mozo to help.

Just be sure, with all product comparison services, to search for and check or uncheck what I call the bias button: the tick box or some such that means the providers that pay are given priority in display.

Product-wise you also need to be really careful you are getting like-for-like and don’t compromise your cover – good insurance is imperative.

Win-spiration tip 2: Hone your health insurance

This type of insurance requires its very own category.

This is an industry under pressure as many people in a budget squeeze decide it’s simply too expensive.

But there are two things to note.

Firstly, if you earn over $90,000 as a single or $180,000 as a couple and don’t have private health, you pay a penalty called the Medicare Levy Surcharge. This could instead pay for actual hospital cover.

Secondly can you afford not to have it? I credit it with saving my life.

Check out the excellent and independent privatehealth.gov.au to see how an existing policy stacks up, bearing in mind that baked into it may be loyalty benefits that are not worth losing by moving.

A smarter savings move here may be to use the extras to ‘pay’ the whole premiums.

For example, you could get;

  • Free dental cleans and checks twice a year for all family members

  • A contribution, say $200, towards kids’ swimming lessons each year

  • Gym membership. (If you have a body niggle or former injury and a doctor signs a form saying it is medically necessary)

  • Subsidised exercise physiology may be available for rehabilitation if you are at all injured

  • Remedial massage part-payments.

Even without private health, a GP could give you an ‘enhanced care plan’ for five cut-price visits a year to a specialist such as a physiotherapist or chiropractor, speech therapist or podiatrist.

Thanks to the challenging COVID conditions, more visits are also available to a psychologist.

Could you massage your medical costs to make them far cheaper?

Win-spiration tip 1: Refinance

This is the real money-maker, or money-saver.

Today, the savings on refinancing a $500,000, 25-year home loan are running at circa-$700 a month.

That’s $700 back in your pocket.

And that’s because a pandemic price war means the differential between the ‘big four’ major banks’ variable rates and the most competitive quality rates on the market is way more than two percentage points.

And it will likely stay as large too as lenders simply pass through the exact extent of RBA rate rises.

In fact, you could give yourself 10 immediate rate cuts simply by ditching and switching.

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, Twitter and Instagram.

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