How to manage debt during COVID-19

It’s easy to think you’ll never get ahead when you have mounting bills to pay, on a reduced or lost income and limited savings, all because of a pandemic that no one saw coming.

But, it can be done.

Take confidence in knowing that with determination, understanding the support options available to you and having a realistic plan, debt and bills can be managed.

In this article, we’ll address six steps that could help to get you back on track with managing your debt during COVID-19.

1.    Understand how much you owe

The first step is to add up all of your debt, to get a clear picture of what you owe.

While laying all your cards out on the table can be extremely confronting, especially if you’ve never done it before, it’s a critical step to see the bigger picture of your financial situation.

2.    Keep track of your expenses and income

The next step is to work out how much you can afford to pay to cover your debts.

Having a clear picture about what you earn versus what you spend, can highlight areas where you may be able to pull back spending. Whatever income you’re able to save can then be allocated towards your debt. There are budget planners and phone apps you can use to track your spending. Alternatively, you can simply download your bank statements and keep a record of your receipts. Make sure to include everything from your necessities like rent or mortgage, utilities and transport to what you spend on non-essentials like entertainment.

3.    Investigate the support options available to you

Depending on your situation, there are a number of ways you can get financial assistance to deal with the impact of COVID-19.

Financial and banking institutions

Some banks are now allowing customers to defer their mortgage repayments temporarily, in addition to refunding late fees and interest for credit card payments.

It’s important to remember that while this option might help with your short-term cash flow, interest will continue to be charged to your outstanding loan amount – meaning more interest could be payable over the term of the loan. It’s also worth checking with your bank to ensure these offers apply to you.

Government response packages

The Federal Government is supporting individuals and families affected by COVID-19 through a range of measures, including:

Read MLC articles for more detail about these measures and if they apply to you.

4.    Develop a plan to manage debt

Now that you’ve identified how much you owe and the financial assistance available to you, the next step is to develop a plan.

Having a debt management plan in place that’s realistic to follow, can help you manage your debt to achieve your goals. But remember to keep a long-term view. You want to ensure that this isn’t a just a temporary fix, otherwise the problems could kick up again.

Set priorities

If you have more than one outstanding debt, consider working out how much you can repay on each, based on the minimum repayment owing.

Alternatively, if you’re able to repay more than the minimum, look at prioritising your debts. You’ll need to think about things such as the type of debt you have -for example, an investment loan, or personal debt – and how much is owing.

For example, if you only have personal debt, you may choose to prioritise repaying debts with the highest interest rate first, given these will be costing you the most to keep them around longer.

At the end of the day, the approach you take is a personal one but it’s important to have a plan and stick to it. And that could mean making other changes.

5.    Set aside a savings fund for emergencies

Whilst you can never prepare for events like COVID-19, there are things you can do to ensure when these types of situations arise, you’re able to get through them.

One approach may be to set up a savings fund for emergencies, where you transfer a small amount of your income to a high interest savings account on a weekly, fortnightly, or monthly basis. This will then provide a financial safety net which you can draw on when you really need it.

6.    Seek professional support

Managing debt is not something that comes easily to most people, so sometimes speaking to a professional can help put your mind at ease.

A financial adviser will assess your situation and provide you with a manageable repayment plan, which may see you pay your debt off faster.

Bottom line: the most important thing to remember is that you can get ahead with managing your debt during COVID-19, but it will require some changes and reprioritisation. Use the various resources and support available to you and stick to a plan. You can do it!

We’re here to help, contact Dev Sarker at 1300 717 136 today.

Article source:  https://www.mlc.com.au/personal/blog/2020/06/manage-debt-during-covid-19

How to manage finances in a relationship

Couples can reach their shared goals by keeping their finances healthy.

Here are some tips on managing finances with your partner.

 

If you would like to enquire about whether BlueRocke can be of help to you, please click here.

 

 

Money Mistakes

Nobody likes making mistakes, especially when there’s money on the line.

Avoid expensive mistakes. Make the right decision for your financial future today.

Contact Dev Sarker on 1300 717 136!

How do your gift giving habits compare?

Source: moneyandlife.com.au

Have you ever thought about how much you spend on gifts throughout the year?

Did you know Australians spend nearly $20 billion a year on gifts? That’s about $1,200 each per year or $100 a month. New research* reveals other truly fascinating insights into how we think, buy, plan and spend our money on those we love the most. It also delves into how young people are desiring gifts that will last longer and that 4 in 5 young Australians would like to receive the gift of time with a financial planner.

Read the research to find out how you measure up to the rest of Australia and learn about the benefits of financial planning so that you too can budget, plan and spend without debt or regret.

Download research report

For more information on financial planning, call us for an appointment on 1300 71 71 36.

Five tips for looking after your large household’s finances

Take the pain out of managing your family’s finances.

Taking care of household finances can be taxing, especially if you have a big family. But with proper planning and budgeting, there’s no need to stress.

Here are some tips to help you effectively manage your household finances.

1. Examine your finances

Sitting down as a family and figuring out how much money is coming in and going out may help you gauge the state of your family’s finances. A clear picture of your household income and expenses could set you up to manage your cashflow better.

2. Rein in spending

Keeping expenses under control can be tough in a large household. But if you’re spending as much as or more than you’re earning, you might want to consider limiting your family’s discretionary costs by buying only what you can afford.

3. Set financial goals

Setting financial goals as a family may help you work towards future aspirations instead of simply meeting current expenses. Whether it’s buying a bigger house or going on a dream holiday, having a financial goal may help your family set priorities and stay on track financially.

4. Keep a budget

Keeping track of spending may help you to better manage your family’s finances. By working with a professional financial adviser, you could create a budget that factors in not only income and expenses, but also your financial obligations.

5. Build up emergency and retirement funds

Unplanned expenses such as unforeseen medical bills can put a dent in family finances. By growing your emergency fund to cover six months’ worth of expenses, you may be better positioned to handle unexpected events.

While it’s easy to neglect your own financial future when providing for your family, saving for retirement should not take second place. Keep in mind that the earlier you start saving, the better chance you have to grow a sufficient nest egg.

Working with an adviser

Managing finances for a big family need not be a painful exercise. By working alongside a financial adviser to keep track of your spending, and discussing money matters and setting financial goals as a family, handling household finances is a task you can achieve.

Contact BlueRocke on 1 300 71 71 36 today.

Successful Investor Secrets

The investment world can change dramatically from one month to the next. But these secrets of successful investors never go out of style.

Successful investing can be one of your biggest allies in the quest for long-term financial security. Unfortunately, unsuccessful investing can leave you wishing you’d kept your money in the bank.

So what are the secrets to making your investments achieve what you want them to achieve?
Here are some of the tactics used by successful investors around the world.

1. Start with a plan

Smart investors don’t just look for ‘good’ investments. They look for investments that will help them achieve specific goals.

You may be seeking a return above that available on cash or term deposits. In this case there are other investments such as shares and fixed income, which may be expected to generate higher returns than cash over the long term, however, they are also more volatile, so investors need to consider both the risk and return components of their portfolio.

2. Diversify widely

One of the main goals of investing may be to ensure you have a mix of assets that are likely to perform well at different times – helping you survive any downturn in a specific market or industry sector.

While many Australian investors are heavily exposed to Australian shares, a well-diversified portfolio will generally hold assets in each of the major asset classes (e.g. Australian and international shares, property, fixed income and cash).

3. Watch your costs

It’s easy to get fixated on the returns your investments can generate. But successful investors always keep track of, and seek to minimise, the fees and taxes associated with owning them.

A ‘buy and hold’ strategy can help you avoid transaction costs like brokerage, or buy and sell spreads from managed funds. It can also help you reduce capital gains tax, which generally decreases by 50% when you’ve held an asset for over 12 months.

4. Market Timing Risks

Attempting to time the market can be both difficult and dangerous to your portfolio. Market timing risks missing periods of strong performance, which can adversely impact a portfolio. Morningstar recently conducted a review of investment returns over 20 years, and determined that by being fully invested, investors generated a return of 8.7% p.a. However, the same investment that missed the top 10 returning days would have returned 6.1% p.a.

Despite periods of significant volatility on a daily basis, over the long term, investments in assets such as Australian Shares have generated strong returns.

5. Don’t panic

When share markets retreat (which they inevitably do), smart investors don’t hit the panic button and sell long-term investments based on short term volatility – this is made easier by following Step 1 “Start with a Plan”.

Instead, if you continue to invest during a market downturn, you may be able to buy high-quality investments at a lower price than you could if you waited for markets to recover.

Following the GFC, when the stock market bottomed in early 2009, many investors sold out of equities and held large proportions of cash in their portfolios. The opportunity cost of this decision has meant that some investors have missed a significant rally over the past decade.

6. Protect your assets

Even a carefully constructed investment strategy can come unstuck if you need access to your money in an emergency.

A smart strategy is to ensure you maintain a sizeable cash reserve, and put in place appropriate insurance such as income, TPD and life insurance. Having appropriate insurances in place can help prevent the need for a ‘fire sale’ of your investments if you suffer a serious illness or accident.

Tip: Income protection typically replaces up to 75% of your income if you can’t work due to an illness or accident.