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11 ways to save 'thousands' a year

A lot of people hate banks but these people should think about hating themselves! You see, I know banks play hardball with us but so do a lot of businesses.

Power companies, health insurers, super funds, airlines and even Uber can hit us for a six with their charges. And what about lawyers, landlords, shopping centre owners, restaurants and rubbish removers? Who hasn’t been shocked at the costs associated with demolishing when doing some renovations?

And let’s not start thinking about what architects and builders charge you when you dream of a better home!

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-Being busy can cost you

Let’s face it, a big part of being ripped off is because we think we are too busy to do the homework that could save you thousands of dollars a year. This perceived busy life or laziness is really costly but you never see anyone in the media point the finger at you, except for me!

-Don’t be a patsy

Banks and other heavy price charging businesses get away with it because we let them. It’s up to you to stop being a part of the whinging class, which is encouraged by the mainstream media, and stop being treated like a patsy.

-Questions from a listener

This ‘outside the square’ thought occurred to me when I was answering a question from a listener on my Talking Lifestyle radio program called On The Money. The caller was asking how hard it was to refinance and should she use a mortgage broker? At least she was doing something unusual in that she was being objective and inquisitive about her money life. This contrasts with many of us who never take a hard look at what we spend, where we spend and whether we could be doing a whole lot better by searching for alternatives.

-My answers to the caller

I said this to the caller: why not try two or three mortgage brokers and then go back to your bank and if they won’t match the best deal you can get, then make the switch? There is a ‘BS’ story out there that switching is too hard. If you believe that, you’ll be ripped off by yourself for over 40 years of your working life.

Imagine this: if you’re losing $1,000 year because of your unwillingness to search for better deals, that could mean a $40,000 loss over 40 years of working. And that could be a loss over $200,000 if that potentially found money was channelled into super over those 40 years!

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-Smart people make money

You can’t blame banks for that money mistake, unless you believe in the tooth fairy and banks that want to make you rich and not their shareholders. Let me tell you what else I told my radio caller. I said Switzer Home Loans are one of the cheapest loans in the market at 3.98%, though there are cheaper ones, especially online. So if you’re paying 4% plus, then you’re hurting your bottom line.

-Understand the comparison rate

I also said to her that every borrower needs to know what comparison interest rate they are paying because lenders advertise one rate, say 3.89%, but they add in fees so the effective rate could be 4.2% (that’s called the comparison rate). This is basic stuff that all borrowers should know but I will bet you 9 out 10 don’t know what I’m talking about.

-You need to do the money leg work

Over the years in this column, I’ve shared with you the best super funds — both in terms of charges and performance — but I wonder how many people have cared to compare their super fund with the top 10 funds out there?

-Top 5 super funds

On a three-year basis these are the best five super funds:

  • Host Plus @10.3% p.a.
  • Australian Super @ 9.8% p.a.
  • Cbus Growth (Cbus MySuper) 9.76% p.a.
  • Catholic Super Balanced (MySuper) 9.46% p.a.
  • Sunsuper for Life – Balanced 9.39% p.a.

Sure we say you can’t rely on the past but these five funds have been great performers for even longer than three years. And none of them are super expensive funds.

-Don’t mention credit cards!

When it comes to credit cards, so many Aussies are paying 18%-21% on their credit cards but the likes of CUA now have an 11.9% card. I wonder how many people will rush to this card even with a 0% balance transfer for 13 months!

Imagine you had a balance of $5,000 on your credit card and your credit card rate is 20%. This could mean your effective interest bill could be $1,000 a year. However, if you switched, it would fall to $550, which would be a $450 saving!

-‘I fly flat’ is comfortable and smart

On the subject of being money smart, I recently interviewed Steve Hui of Iflyflat, which is pronounced as “I fly flat”.

His company targets businesses with turnover of $1 million or more and he gets them to use credit cards that give out maximum frequent flyer points. He then sources cheap business class flights using points.

He claims his business saves 30%-70% off business travel. Why wouldn’t anyone with a big travel bill look into this outfit?

-Credit cards can have a positive

He says even credit cards such as American Express, which might attract big charges from merchants, can more than make up for their relative expensiveness by delivering access to cheaper flights. He pointed out that these cards that offer 100,000 points for switching effectively give a ‘free’ trip to LA!

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-Here’s the point

If we invest some time and thinking into what money products we use, we could save ourselves a lot of money that then could be used for a better material life in the short term or a better level of wealth in the long term.

-Your wealth is in your hands

It’s your choice but you have to pull your finger out and get committed to your money-self and stop blaming banks and other high charging businesses for your economic predicament.

I’m not saying banks are innocents but I am saying that most of us are guilty of neglecting our own bottom lines.

I’ve always loved this self improvement war cry that: “If it’s to be, it’s up to me!”