When Interest Rates Rise, How Do You Clip Your Spending?
Recently I received a letter from my home loan lender informing me that due to the increase costs of their funding, I too would be seeing a rate rise on my home loan. Fair enough, that’s how it works and all – though it made me wonder how I will scavenge together an extra $100 per month (a bit less, though $100 is a nice figure to work with) to pay for it?
I don’t want to sacrifice anything major in my lifestyle, nor do I want to be short for my next repayment – so how can I make some easy savings to afford the new rate rise?
I have come up with three (3) options that should get me an extra $100 easily:
My mobile phone spending
I purchased the iPhone 3G when it first came out with Optus. I was literally so excited about the iPhone I pre-ordered and nervously awaited for my phone to be delivered. I thought it would have numerous benefits suddenly being able to check my email and browse the internet from my phone.
I was quite wrong with this. Not only did the constant connection to the net cause me to be constantly checking work emails and be overly stressed, it also made me sign up for a bigger plan than I actually needed because of the idea of needing ‘more data’.
Everyone seems to think they need over 1GB of data per month, I assumed I would need 3GB!
I checked my phone the other day and realized in owning the phone for over 2.5 years, I have used a total of 2GB of data that whole time. As you can see, my calculation on what I needed were incorrect.
My saving tactic?
Last month I reduced my phone bill from the $89 cap to the $49 cap. A saving of $40. Just got my bill now and realized that even on the $49 cap I am still way under the usage requirements, meaning I could probably save more money.
At lunch today I intend to switch my Optus Cap to an Optus Pre-paid sim card. I figure that way I can buy $50 worth of credit, if I don’t use it – I can roll it over to the next month. A solid way to save an extra $25 perhaps.
Saved: $64 per month if I go to pre-paid.
Bring my lunch more frequently VS buying lunch at work
I have always purchased my lunch at work. I must just be too lazy or something as even when I bring my lunch, I often get caught up with the team wanting to go down the road for something to eat.
On average I will spend $20 on food and drink throughout the day. This really quickly adds up over the course of the month.
My saving tactic?
Bring lunch for 2 of the working days per week.
Assuming there is 20 working days in a month (roughly) – that means I will bring food from home 8 days per month.
Saved: $160 per month (less costs of cheap food from home)
Opting to walk more instead of transport
The cost of petrol is high, yet often we never consider just walking a kilometer to the shops when we have a car just waiting outside.
My saving tactic?
I figure if I start to walk more, whether it be to the local shops, video store, even work some days (about 1.5 hours though!) I will be able to save a bucket load of money.
I spend around $50 per month on petrol currently, give or take 20%.
Saved: Atleast $30 per month
So how much will I have extra in my pocket per month?
- $64 from my mobile cost cutting.
- $160 from taking my own food.
- $30 from walking more, getting healthy and leaving the car at home.
- Total: $254 per month
Now I can pay my rate rise and even a bit more!
Now that I have an extra $254 per month, I intend to not only comfortably afford my rate rise – I also intend to pay extra towards my mortgage of $154 per month.
This will significantly reduce the amount we owe on our mortgage over the course of 12 months and the life of the loan. Read about how such extra repayments can really help your mortgage here.
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