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How to save $7,000 in a lockdown financial clean-up

·5-min read
Aussie's savings have dwindled through lockdown. Source: Getty
Aussie's savings have dwindled through lockdown. Source: Getty

Are you feeling financially stretched? Or worse, financially stressed?

Then you’re not alone. A recent Canstar survey found 95 percent of Australians are. 

That’s nearly everyone.

And rising inflation and increased living costs are the main culprits.

But those essential household expenses? You’re probably paying over the odds for them. A recent Queensland University of Technology (QUT) and Heritage Bank study found that the collective wastage for our country is almost $12 billion a year.

Meanwhile, seven-in-10 Aussie households have noticed the cost of water, gas and electricity bills has increased in the last three years, says YouGov research.

Also read:

But one-in-four have never even compared utility bills and one-in-five have never changed suppliers.

So, what can be done to cut your so-called fixed costs? 

Here are three steps to clean your finances in lockdown.

Step 1: Get online and compare

It's not hard anymore. There are a multitude of websites across your every expense, to save you money.

Better still, they are all free.

All you need to do is immobilise what I call the ‘bias button’ to make sure you are getting the real best deal. The way the commercial versions of these sites often work is that they sign up the product providers, and somehow promote them over the rest of the market.

Utilities: energymadeeasy.gov.au is a fantastic way of finding out how you can slash your electricity and gas outlay.

In Sydney, the estimated potential saving for a family of four is $1400 a year.

In Victoria, go to compare.energy.vic.gov.au for the same sorts of savings.

The great thing about these sites is they are government-run so will display the true top-priced products.

Phone and internet: Here, I like whistle out. There are new, improved deals – particularly white-labelled ones – that could save you a pretty penny. Look at both bundling and unbundling and what is cheaper.

Health insurance: I’m including this in essentials, because in my recent experience health insurance is essential. And remember if you don’t have it and your income is above $90,000 for singles and $180,000 for couples and families, you will pay a penalty in the form of the Medicare Levy Surcharge.

You will quickly see the possible savings at the independent ombudsman of private health – there’s usually a difference of some $2,400 a year in the cheapest and dearest comprehensive policy for a family of four.

Step 2: Take up cashbacks

On this front there is welcome news, just released today.

The popular ING Orange Everyday account, will pay customers 1 percent cashback on all gas, water and electricity bills.

This has never happened before.

ING says Australian households are forking out an average of $5,472 a year – or $456 a month – on their utilities. That means you could save more than $50.

George Thompson, Head of Daily Banking at ING, said: “Utility bills are a pain point but shopping around for a better deal requires time, something many of us just don’t have."

“We’ve launched this cashback offer as a way to help our customers effortlessly save on their everyday living costs so they can get on with the things that matter most to them.”

The hundreds of thousands of customers will be notified this week and the cashbacks will start to flow from December.

Similarly, many providers also directly give pay-on-time discounts, and these can be significant. For example, Alinta Energy knocks off some 25 percent provided you hit the due date.

Google ‘pay-on-time discounts’ and see what you discover.

Step 3: Sort your financial life

Have a personal loan? It’s very likely you can slash hundreds of basis points from your interest rate by using a peer-to-peer lender. Examples include Society One, moneyplace, Plenti and Harmoney.

These online platforms work a bit like Uber in that they connect people with money to invest with people who want to borrow money, hence provide rates that are more competitive than banks.

But here’s where the big money is made: By virtue of the fact it is your biggest debt and probably expense, your mortgage is where you stand to save the most money.

While the average big 4 banks discounted interest rate is down at 3.2 percent, the cheapest loan with a real offset account is charging only 1.89 percent.

If you do just one thing in lockdown, it should be to refinance your mortgage; tens of thousands of Aussies are.

What would it mean to your bottom line? If you hold a $400,000, 25-year mortgage, you’ll receive an instant cash boost of $265 a month. That’s $3,180 a year.

So get off Amazon and The Iconic, and instead shop for a new mortgage on canstar, Mozo, RateCity or Finder.

There are also some 25 lenders offering cash backs of between $1000 and $5000… to give you an instant cash boost

So this clicking from your couch has the potential to rescue coronavirus-ravaged budgets.

And it’s far easier than cutting out coffee or wine.

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

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