In the next few short paragraphs I’ll share with you one of the most powerful forces in finance working against you.
A little trick-a-roo clever lenders have in place to make the Term Loans they sell (spread over a term of years with a set repayment schedule) just that liiiiiittle bit more profitable.
Because just a little bit from a lot of people helps Australia’s major banks rake in a tidy $35bn or more each year.
Here’s what happens…
At the end of the month, you make the repayment, then…
The very next day, interest from the previous month is charged.
It’s really very simple.
So instead of charging the interest for the month and then you pay – like any normal type of service, this little sleight-of-hand trick ADDS the previous month’s interest AFTER you pay, so they maximise the number of days interest is calculated on the principle, PLUS whatever interest is accrued.
Not much you can do about that I’m afraid, however…
Nearly every time I have a Client in the office for a Property and Finance Strategy Session we find vital leaks that we get plugged right there on the spot…
$20k in the travel account…
$50k in the kids account…
Pay going into the current or debit account and sitting idle for a week or two or three…
Idle money, like idle time and idle, inane conversations is wasteful.
And like your wise ol’ grandma used to say, “waste not, want not”.
ALL undeployed, unused, or idle money has gotta be in either the loan account itself, or the offset account. There is no other smarter place for it to be.
If broker-hater Scott Pape (we get paid too much for working 70-hour weeks, apparently, but at least I write my own emails) has got you all bucketed up and you need need need multiple accounts, speak to me about making sure they are all offset accounts.
Stop me before we go off on a tangent about the wallet-emptying lazy-money habits so many people have picked up that I love pointing out and fixing, usually on the spot.
Just remember every night a snap-shot of your loan balance is taken and interest is calculated. Every night, while you’re sleeping…
So whatever you do, keep your loan balance as low as you can for as long as you can.
Do something about it right now… pull your finger out and take action.
In every single one of the 7 Strategy Sessions I took last week, we saved more than three times the cost of the session (currently discounted to just $299 plus gst) with a few easy tweaks that I spotted, right there in the session.
These aren’t open to everyone so start by booking a FREE 10-minute Introductory Finance Call HERE<< and find out if you qualify. $54.80 value, very limited places available.
Cheers,
Brodie Brown
BH Brown Mortgage Brokers