Your guide to being a tight ass in tough times

Most borrowers discover that they don’t have a salary problem, they have a spending problem!

  • October 10th, 2022
Most potential borrowers looking to finalise their borrowing capacity discover quite quickly that they don’t have a salary problem, they have a spending problem...that is, they spend all of their salary! Let’s face it, every single investor needs capital to work with, and you need to be financially ready to start investing. While not all property strategies require a lot of capital, it certainly helps and opens up your options. But not only do you need to have the funds available to invest, you also need to make sure your financial house is in order, have a good credit score, little or no bad debt, and a financial buffer. So if you want to get into your first (or next) investment property sooner rather than later, then you need to get into the habit of saving. Here’s how. But first, let’s get inspired…Don’t put your pride before your finances This one is a big one, so we’re covering it first – put your mouth where your money is. That’s right, you read it correctly. It’s not a typo. Put your mouth where your money is. It’s a well known truism that if you don’t ask, you don’t get…so don’t be afraid to haggle and ask for that discount! Of course, there are some circumstances where haggling just isn't an option (when you’re sitting in the dentist’s chair springs to mind), but on larger transactions retailers often have some discretion to reduce the price so they can close the sale. A simple strategy anyone can use (no matter how awkward they might feel about the concept in general) is to ask about price matching policies – where if you find a lower price with a competitor on the same product the business you’re speaking to may match the price, or even beat it. It literally pays to do your research (or a quick Google search). And if the retailer doesn’t have an official policy, at least it gently opens the door to conversation… For example, what sort of extras or inclusions could the seller offer instead of a discount? They might not be able to budge on price, but could be willing to throw in an upgrade or free delivery. Outside of that, you could simply ask "Is that your best price?" Just be polite, and positive…and be prepared to walk away if necessary (even if it’s not for too long or too far). It bears repeating here, don’t ask, don’t get. It’s all in the timing Be prepared to wait so you can time your purchase. End of the day, month, or financial year can be good times to buy, as is that first week after Christmas. Think about it from the salesperson’s perspective – do they have an eye on meeting their end of month sales targets? This one is particularly relevant when it comes to property! Developers often have pre-sales targets they need to meet before they can obtain finance to start construction. When the project is initially released to market not only will you have access to the pick of the bunch, you might be able to negotiate a lower price or better inclusions. After finance approval there’s less incentive for the developer to negotiate as they aren’t as concerned about obtaining financial backing. Spend your time, not your money Speaking of time, most people literally have no idea what they are spending, or where. It can be a daunting task to sit down and work this out, but when you do, you’ll be in charge of your financial situation. It just takes time. Once you understand exactly where your money is going, you can look for ways to reduce expenses. The little things really add up, so it’s important to look at exactly where you’re spending. Every. Single. Dollar. Small changes can make a big difference You’ll be surprised at how small changes can make a big difference. That $5 coffee you have every morning? If you make that at home instead, it will save you just over $1,800 a year. (I know. I don’t like thinking about that one either, let alone working it out properly. With a calculator). And that’s just ONE coffee a day. That’s a very big chunk of the average Australian monthly mortgage! Sadly, ignorance isn’t always bliss.Stop paying for services and subscriptions you don’t use! Just stop it! This one is remarkably obvious. And remarkably painful and inconvenient. We all know that signing up for that streaming service is all too easy ­– they design it that way. Deliberately. But we also know that you are almost certainly paying for access to services you don't even use! Same with gym memberships! Again, just take the time to complete a thorough review of all the subscriptions you're paying for and consider cancelling or downgrading those you're not using. Remember, you can always join up again later! Always be on the lookout for a better deal! Now that you’re making lists, take a look at the bills and recurring payments coming straight out of your bank account or off your credit cards – this includes your phone, internet, gas, water, electricity, loan repayments, rates, vehicle registration and insurances. When they’re due for renewal make sure you shop around for a better deal. And when it comes to your loans – it doesn’t cost anything to shop around for a better deal, whether that’s a personal or car loan, your home loan, or your credit cards. If it isn't a better deal you can just stick with what you have. Nothing ventured, nothing gained! It’s not all bad news and budgeting – just plan for the finer things in life Life is here to be enjoyed, so it’s important you don’t deprive yourself entirely of what makes you happy. If you really love clothes, or dining out, or your Uber delivery habit, try and include a special dinner or treat into your budget every fortnight. Remember, you can still do the things you love, just make sure you plan and forecast for it, instead of falling into the trap of reactive impulse buying.We live in a world of instant gratification – and that “I need it now” mindset is the reason so many Australians are in over their head in credit card debt. So stop purchasing goods you don’t actually need, at a price you really can’t afford. Instead of piling luxuries up on credit card debt, just plan ahead instead! Add up your annual holiday costs, tech treat spending, homeware expenses – whatever it is that you think you can’t live without – then divide it by twelve and add it to your monthly budget. This way you can still enjoy the things that make life worth living, without the lingering debt that comes with them. Retail therapy is a cashflow killer. If you’ve had a bad day at the office or you’re going through a break up, will that pair of shoes you can’t afford really help you feel better in the long run? (Hint, the correct answer here is “no”). The next time you’re struggling, instead of picking up the credit card, pick up the phone to friends and family instead!We’re all creatures of habit, and human behaviour shows that we spend what we have access to.However it can be difficult to shake off ingrained patterns of behaviour. The real key is to be aware of your triggers, habits and motivations, so you can start making informed choices and positive changes going forward. By being clear about how you’re spending your money, and keeping yourself on track, you really do have the power to transform your financial position. And if you need a hand with holding yourself to account and maintaining the motivation to achieve your goals, we’d love to help! Get started by booking in a complimentary one on one mentoring session with our professional property strategists. They can help you set your goals, put you in touch with our fast acting and property-focused partner network, and keep you on track when times are tough!


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