One of the guys in the office just returned from a Macca’s run and so now I’m sitting at my desk enjoying a chocolate sundae, with my headphones on listening to Ministry of Sound Classics (Disc 3) and analysing broadband data usage patterns by rate plan.
Life is good.
Last week I decided to email my bank about my so called ‘variable’ loan only going up, and never coming down, even though savings and home loan rates have dropped. *cough*StGeorge*cough*
Their home loans go down overnight after (or even in anticipation of) an interest rate drop from the Federal Reserve as do their online savings accounts, yet their personal loans and credit cards have stayed as high as ever.
They had no such hesitation to put them up 5 times in the last year as interest rates went up.
I must have written a decent email, as I had a call from their customer relations area on Friday. This was to thank me for my feedback and advise she was going to have someone look into my situation and see what they could do for me. I didn't think much more of that over the weekend and assumed I wouldn't hear anything.
So it was a pleasant surprise to have just had a call from the person she said would call me and he’s offered me a 1.5% interest rate drop, which will drop my minimum payment by $72 a month. It’s still variable, and if the rate ends up dropping below the new rate I’ll still get those reductions.
I won’t be changing my new payment of $1000 a month, it just means that for no extra effort on my part I’ll be able to pay an extra $864 a year off my loan, plus save at least an additional $300 a year in interest.
It pays to be a squeaky wheel, especially in a competitive banking environment.
Debts
Savings
Total: -$51,754
Debt reduced from last month: +$615
Debt reduced from Sep 2007: +$5,018
Not a huge change this month, but I’m OK with that as I had a lots of bills come in that needed to be paid, I managed to pay them without dipping into my emergency fund, and factoring in the monthly interest I’m paying it’s still a win to have the total go down.
Not all the balance transfers had been processed as of today, I’m still waiting on the balance of Credit Card 1 to go over to Credit Card 2, and then I’ll have my new snowball in place.
My personal loan is now under $20,000 which is great, and now I’ll be throwing $1,000 at it every month from now on (it’s got the highest interest rate of all of my debts), that should see larger debt reductions each month ongoing.
My focus card is now Card 2, so any extra snowball or snowflake money will be going on to that card from now on.
I also managed to add another $250 to my travel fund, as I’m looking to go in May 2009; I really need to get cracking on building up that fund now. Especially considering the exchange rate, Aussie dollars to pounds Sterling is never a pretty exchange, but it’s even worse at the moment.
Roll on payday.
I'd looking to expand the blogs I read on a daily/weekly basis, as the last week or so I've been so hungry for online readin that I've been coming back to an empty feed reader. It's the busiest time of the year at work, so reading about something other than my own life when I can is a great way to relax.
Gentle readers, I'd love to know your must read blogs, so I can add them if I'm not already reading them. Let me know in the comments, and please include your own too if you have one.
They don't have to be personal finance related, I'm interested in pretty much everything!
The Australian government's recent first home grant policy change is shameful. Don’t get me wrong, this isn't entirely sour grapes as I’m not in a position to take it up myself, it’s simply a short sighted, bad idea.
For the non-Aussies, the government announced they will double the first home buyers grant from $7000 to $14,000 between now and June 30 2009. First home buyers get a further $7000 for new build houses.
This will only encourage those who can not afford it to take on excessive debt and invest in an asset that is fundamentally overvalued here in Australia. At the same time property owners and investors who hold significant equity in their homes following years of above average returns are given a free ticket to exit the property market before it really starts to fall. It’s well known that the grant isn't actually for first home buyers; it’s actually a bonus for those selling to first home buyers.
Property values at 7-8 times annual income are unsustainable and need to fall. Other countries who had over inflated property markets are currently falling back to averages around 3-4 times income, so why is Australia an exception?
The government is trying to engineer the fall in Australia to be more extended and less severe than other nations like the US & UK, but by doing this all they are doing is passing the losses from those that can afford it and who are sitting on large equity in the properties, and passing it on to the young and so called future engine of the Australian economy who can almost certainly not afford it.
Why isn't the government actively trying to promote people to save some money? Their original proposal of First Home Saver Accounts is still an excellent idea, so why did they all of a sudden change their minds and promote people to skip saving and go straight for their first home?
In 4 years time when people have proven they can save some money and house prices have fallen they will be in a perfect position to buy a house and pay for it over the long term. The banks must have a bug in their ear as they’d rather make money handing out loans, rather than pay interest on savings.
So that’s still the path I’m going to take. Save my money, live within my means and buy a home when I can afford to do so. It seems crazy that I earn as much as I do and can’t affords to buy a home on my own, but that’s the way it is here at the moment.
The process of trying to spend and borrow our way out of every economic hiccup is destined for failure. We can not keep increasing debt levels happily ever after, I know this even without a mortgage, my original debt load was exactly the amount I’d need for a house deposit, and I feel this keenly.
At some point of this financial crisis we’ll all have to take some pain, and I’m glad I started peeling off the band aid in September 2007.
