Handling the Interest Rate Increase

Introduction

Interest rate rise has been predicted to increase this year due to high inflation. It is only a matter of time before it happens. Although the variable-rate still remains relatively low, fixed-rate has increased from 1.89 to 3.5%

How to ease the pain during a rate increase?

Record Budget

The answer to this is very simple you need to do the horrendous task of budgeting. I know this sounds cliché, but once you start, a lot of the feedback that we received is that a lot of people are quite surprised by the number of things that have been spent.

Start recording your income as this will give you an indication of your cash flow. If you don’t have a regular income coming in, work out the average over the year.

Identify Expenses

The next thing is to identify your expenses and record them, this will show you how much you are spending on. Expenses to list down such as, fixed expenses such as rent or utilities, debt expenses such as your credit card, mortgage and entertainment or discretionary expenses such as uber eat, dining out, etc.

Review your expenses

For your debt expenses, find out if there are cheaper options available such as having your mortgage reviewed by your local finance broker for any cheaper interest rates or doing a credit card transfer for a lower interest rate. Cut down any discretionary expenses, or entertainment expenses that are not needed.

Lastly set your spending limit and set yourself a saving goal, and make sure you have at least 3 months of savings of buffer.

I hope you guys have found this short article simple and useful.