Reserve Cuts Interest Rate By 0.25% First Cut In 7 Years!
What a great start to spring!
Not only has the Reserve cut official interest rates for the first time in almost 7 years, but
· lenders are already gearing up to reduce their home loan rates by 0.25% or more and
· most economists are tipping another cut in the near future.
But you know what, I was thinking about how the cuts will be a welcome relief to most borrowers when it suddenly hit me that for a lot of you, you’ll never have had a reduction before and probably don’t know what happens now.
So first off, expect a letter from your lender in the next week or two. It will be just like the letters that you’ve been getting over the last couple of years but ‘hooray’ this one will be about rates going down.
But unlike when rates go up, most lenders do not actually reduce your repayments when interest rates come down.
So what to do?
Well if you can afford to keep paying at the old rate then you should do nothing.
Continuing to pay your loan off at the higher rate will reduce both how long it takes to pay off your loan and the amount of interest that you have to pay.
On a $300,000 loan over 30 years a reduction in interest rate of 0.25% is about $55 a month (depending on the exact interest rate you have).
Now let’s say you’ve had that loan for 5 years and your interest rate is now 8.75%. If you keep making the extra payment of $55 a month then you will take 1 year and 10 months off the loan term AND $AVE $38,125 in interest. Now that’s worth thinking about!
But I also know that with the way everything else is costing more these days, that for some of you any reductions in repayments will be a welcome relief.
So once you get your notification letter, contact your lender and request that they reduce your payments in line with the reduced interest rate.
So there you go. That’s what happens when rates go down. AND the best part is that this time you have a real choice about what to do.
Thursday, September 4, 2008
Work Life Balance
It may seem strange to write to do a business tip in a blog about home loans and buying real estate.
But here's my thinking.
When we buy a home it's not just about shelter. A piece of canvas strung between two trees will give us shelter. it's more about taking care of those that we love and providing a safe haven for our family to grow up in and our friends to visit.
You could say, it's really all about lifestyle.
Now more and more I hear people complain that their work life balance is too heavily geared to work or business. The other common complaint is about being time poor......
So what I thought I would do is add posts about simple things you can do that will help you tip the scales back the other way and at the same time be more productive, make more money and not work any harder or longer.
So let me know what you think.
Today's post is about working out your time value.
Time Value:
Question: What is your time worth? Most employees and business owners (regardless of size) don’t know the answer to this question.
If you don’t know you cannot value your time and no one else will value your time either. In fact it is impossible to be as successful as you could be if you don’t know what your time is worth.
What’s more you will not earn it because you haven’t told your mind that this is what it has to achieve.
Let’s work it out.
Say you want to earn $100K a year.
You have 4 weeks holiday a year and with public holidays and sick days you lose another two weeks.
So you work 46 weeks a year.
Say you work 5 days a week and an average 8 hour day less an hour for lunch and coffee breaks. So that’s now 7 hours a day.
So you work 46 x 5 x 7 = 1610 hours per year
Divide $100K by 1610 = $62.11 per hour or $434.55 per day. This is how much your time is worth in this example.
But hang on a second let’s just think about all the things that you do in a day. Are all of those activities high impact or high income producing activities? No way but here is where it gets really interesting:
Say you managed 2 hours per day on high impact and income producing activities. (Don't kid yourself even CEO's of fortune 500 companies find it hard to actually do 1 hour a day on high impact/income generating activity).
But for our example let's say you do manage 2 hours a day.
OK that being the case, you now only work 46 x 5 x 2= 460 hours per year. Which means that your hourly time value is now $217.39.
If you increase just 1 hour per week on the high impact / income producing activities you would earn an extra $10k per year that’s a 10% increase for 1 hour per week!
If you managed 1 extra hour per day on high impact / income producing activity that would equal an extra $50K per year or a 50% increase.
So how can you get an extra hour a day without working harder or longer? You can’t get it with time management. You cannot increase the minutes per day, BUT you can get it with event management and time blocking.
More on event management and time blocking later in the week.
But here's my thinking.
When we buy a home it's not just about shelter. A piece of canvas strung between two trees will give us shelter. it's more about taking care of those that we love and providing a safe haven for our family to grow up in and our friends to visit.
You could say, it's really all about lifestyle.
Now more and more I hear people complain that their work life balance is too heavily geared to work or business. The other common complaint is about being time poor......
So what I thought I would do is add posts about simple things you can do that will help you tip the scales back the other way and at the same time be more productive, make more money and not work any harder or longer.
So let me know what you think.
Today's post is about working out your time value.
Time Value:
Question: What is your time worth? Most employees and business owners (regardless of size) don’t know the answer to this question.
If you don’t know you cannot value your time and no one else will value your time either. In fact it is impossible to be as successful as you could be if you don’t know what your time is worth.
What’s more you will not earn it because you haven’t told your mind that this is what it has to achieve.
Let’s work it out.
Say you want to earn $100K a year.
You have 4 weeks holiday a year and with public holidays and sick days you lose another two weeks.
So you work 46 weeks a year.
Say you work 5 days a week and an average 8 hour day less an hour for lunch and coffee breaks. So that’s now 7 hours a day.
So you work 46 x 5 x 7 = 1610 hours per year
Divide $100K by 1610 = $62.11 per hour or $434.55 per day. This is how much your time is worth in this example.
But hang on a second let’s just think about all the things that you do in a day. Are all of those activities high impact or high income producing activities? No way but here is where it gets really interesting:
Say you managed 2 hours per day on high impact and income producing activities. (Don't kid yourself even CEO's of fortune 500 companies find it hard to actually do 1 hour a day on high impact/income generating activity).
But for our example let's say you do manage 2 hours a day.
OK that being the case, you now only work 46 x 5 x 2= 460 hours per year. Which means that your hourly time value is now $217.39.
If you increase just 1 hour per week on the high impact / income producing activities you would earn an extra $10k per year that’s a 10% increase for 1 hour per week!
If you managed 1 extra hour per day on high impact / income producing activity that would equal an extra $50K per year or a 50% increase.
So how can you get an extra hour a day without working harder or longer? You can’t get it with time management. You cannot increase the minutes per day, BUT you can get it with event management and time blocking.
More on event management and time blocking later in the week.
Friday, July 6, 2007
Changes in home statistics + Costello speech
An interesting article was published in the AGE showing some of the changes that are occuring in Australian households and their homes. See it at :
Wealth builds on the home frontThe Age - Melbourne,Victoria,AustraliaThe RBA recently pointed out that around 3 per cent of household income is now spent on interest payments on investor housing loans, compared to 1 per cent ...
On the same link you can also see what the treasurer had to say to the Australia-Israel Chamber of Commerce.
Wealth builds on the home frontThe Age - Melbourne,Victoria,AustraliaThe RBA recently pointed out that around 3 per cent of household income is now spent on interest payments on investor housing loans, compared to 1 per cent ...
On the same link you can also see what the treasurer had to say to the Australia-Israel Chamber of Commerce.
What's happening after the reserve bank left interest rates on hold?
Interesting article from the Real Estate Institue
Housing market keeps boomingAdvertiser Adelaide - Adelaide,South Australia,AustraliaTHE HOUSING market will remain strong following the announcement that interest rates remain unchanged, the Real Estate Institute of South Australia says. ...
Housing market keeps boomingAdvertiser Adelaide - Adelaide,South Australia,AustraliaTHE HOUSING market will remain strong following the announcement that interest rates remain unchanged, the Real Estate Institute of South Australia says. ...
Latest on real estate news
Interesting article summarising current rental and purchase market
Are real estate ads 'house' porn?ABC Regional Online - AustraliaCan the same be said for those glossy real estate mags and newspapers - are they 'housing porn' by exposing your mind only to the fantasy of purchasing? ...
Are real estate ads 'house' porn?ABC Regional Online - AustraliaCan the same be said for those glossy real estate mags and newspapers - are they 'housing porn' by exposing your mind only to the fantasy of purchasing? ...
Thursday, July 5, 2007
Free DIY Video
Just came across a really helpful website with lots of tips and plans. Some things you have to pay for (and no I'm not an affiliate or paid for this tip) but there are lots of free tips and some amazing free tips on video. go to http://www.mitre10.com.au/DIY-Central/ Mitre 10 is an Australian hadware store. has anyone come across other great sites like this?
Wednesday, July 4, 2007
News on some latest trends in Real Estate
If your a home owner or investor then here are two articles that should be of interest to you.
Landlords rely on managersAdvertiser Adelaide - Adelaide,South Australia,AustraliaTIME-POOR real estate investors are using property managers in greater numbers than ever before. Census figures show that last year, 50.5 per cent of all ...
Fewer Aussie homes owned outrightyourMortgage.com.au - AustraliaGraham Joyce, president Real Estate Institute of Australia (REIA), said: "Some effort has been made by some state governments to address affordability ...
Landlords rely on managersAdvertiser Adelaide - Adelaide,South Australia,AustraliaTIME-POOR real estate investors are using property managers in greater numbers than ever before. Census figures show that last year, 50.5 per cent of all ...
Fewer Aussie homes owned outrightyourMortgage.com.au - AustraliaGraham Joyce, president Real Estate Institute of Australia (REIA), said: "Some effort has been made by some state governments to address affordability ...
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