Welcome to How Do They Afford That? The podcast that peaks into the financial lives of everyday Australians. I'm Michael Thompson. I'm a writer and the co host of the podcast Fear and Greed business news. As always, I'm with Canna Campbell, financial planner and founder of Sugar Mama TV, the financial literacy platform on YouTube and Instagram, podcasts like this, one, books, threads, TikTok everywhere. Basically, Hello Canna, good morning. There is a lot of excitement in the air at the moment. There is talk of interest rate cuts on the way, bring them on, and it's obviously great news if you've got a mortgage.

Welcome to How Do They Afford That? The podcast that peaks into the financial lives of everyday Australians. I'm Michael Thompson. I'm a writer and the co host of the podcast Fear and Greed business news. As always, I'm with Canna Campbell, financial planner and founder of Sugar Mama TV, the financial literacy platform on YouTube and Instagram, podcasts like this, one, books, threads, TikTok everywhere. Basically, Hello Canna, good morning. There is a lot of excitement in the air at the moment. There is talk of interest rate cuts on the way, bring them on, and it's obviously great news if you've got a mortgage.

Well, if you've got a mortgage and you're on a very poor rate, it's good news.

Well, if you've got a mortgage and you're on a very poor rate, it's good news.

Yeah. Indeed, today I wanted to go one step further though than just looking at the obvious benefit of a rate cut coming in. A rate cut can obviously save you a certain amount off your mortgage repayments every week or month, but can it help you get on top of your debts as well? Can you kind of turbo charge the benefits of a rate cut to really help you kind of get on top of your household finances. I'm setting you a very lofty goal for today's episode.

Yeah. Indeed, today I wanted to go one step further though than just looking at the obvious benefit of a rate cut coming in. A rate cut can obviously save you a certain amount off your mortgage repayments every week or month, but can it help you get on top of your debts as well? Can you kind of turbo charge the benefits of a rate cut to really help you kind of get on top of your household finances. I'm setting you a very lofty goal for today's episode.

Well, if we're going to be doing that, I'm going to answer those questions. We need to remind everyone that this is general advice only, of course, and obviously use all of our answers for educational purposes, and always go and get professional advice from a licensed financial planner. Because last what we talk about might be great for you. There might even be something that's even better, So use this as a guide only.

Well, if we're going to be doing that, I'm going to answer those questions. We need to remind everyone that this is general advice only, of course, and obviously use all of our answers for educational purposes, and always go and get professional advice from a licensed financial planner. Because last what we talk about might be great for you. There might even be something that's even better, So use this as a guide only.

Well, I like that. Let's get into it.

Well, I like that. Let's get into it.

Then.

Then.

How much of a difference can a twenty five basis point rate cut actually make to someone's mortgage repayments, because that's that's generally in most occasions, that is what the Reserve Bank moves by. It is a quarter of one percent.

How much of a difference can a twenty five basis point rate cut actually make to someone's mortgage repayments, because that's that's generally in most occasions, that is what the Reserve Bank moves by. It is a quarter of one percent.

Yes, so look it doesn't sound like much, but it actually can make a real difference. So the average homeland in Australia is around about six hundred and forty two thousand dollars and the average interest rate is around about six point twenty five. So you know, going off the back of the recent cut and say it's dropped down to say six percent per this is around one hundred dollars back in your pocket from the previous cut. So twelve hundred dollars a year, that's enough to help you rebuild your emergency money. Maybe you pay off some pesky credit card debt, start saving for a holiday, or just you know, put it back for some very much needed breathing space in your budget.

Yes, so look it doesn't sound like much, but it actually can make a real difference. So the average homeland in Australia is around about six hundred and forty two thousand dollars and the average interest rate is around about six point twenty five. So you know, going off the back of the recent cut and say it's dropped down to say six percent per this is around one hundred dollars back in your pocket from the previous cut. So twelve hundred dollars a year, that's enough to help you rebuild your emergency money. Maybe you pay off some pesky credit card debt, start saving for a holiday, or just you know, put it back for some very much needed breathing space in your budget.

Okay, so twelve hundred dollars thereabouts a year on a six hundred and forty two thousand dollars average homeline. I'm going to put you on the spot here, what is the smartest thing that you can do with that extra money? If you are juggling other debts as well, if your mortgage is not the only debt that your household is trying to service, all.

Okay, so twelve hundred dollars thereabouts a year on a six hundred and forty two thousand dollars average homeline. I'm going to put you on the spot here, what is the smartest thing that you can do with that extra money? If you are juggling other debts as well, if your mortgage is not the only debt that your household is trying to service, all.

Right, challenge towards the highest debt first is always the.

Right, challenge towards the highest debt first is always the.

Rule of thumb, as in the highest figure.

Rule of thumb, as in the highest figure.

Sorry, sorry my head, the highest interest rate debt first.

Sorry, sorry my head, the highest interest rate debt first.

Okay, So that would typically be your credit card.

Okay, So that would typically be your credit card.

Credit cards, personal loans, and then obviously it filters down to the mortgage. So you've got to think about it as like a financial bush fire. You want to put out the flames that are the hottest.

Credit cards, personal loans, and then obviously it filters down to the mortgage. So you've got to think about it as like a financial bush fire. You want to put out the flames that are the hottest.

You love your analogies, don't you.

You love your analogies, don't you.

I work very hard on myte making them as creative as possible, just to annoy you.

I work very hard on myte making them as creative as possible, just to annoy you.

It does feel like that is what your main motivation now is not actually illustration or education, just sheer annoyance.

It does feel like that is what your main motivation now is not actually illustration or education, just sheer annoyance.

You know, a home loan is average six percent, as I just said, you know, a credit card can be up to twenty two percent. So you know that is the one that you would pay off first, and that's obviously non deductible. It's often used to be just by stuff.

You know, a home loan is average six percent, as I just said, you know, a credit card can be up to twenty two percent. So you know that is the one that you would pay off first, and that's obviously non deductible. It's often used to be just by stuff.

Where does a personal loan kind of fit into that? I know that you mentioned them before, but interest rates on personal loans usually higher, substantially higher than a home loan.

Where does a personal loan kind of fit into that? I know that you mentioned them before, but interest rates on personal loans usually higher, substantially higher than a home loan.

So it depends whether it's secured or unsecured, but they can range anywhere between eight percent to twelve percent, sometimes even higher. It depends on the sort of circumstances and low dock loan and so forth.

So it depends whether it's secured or unsecured, but they can range anywhere between eight percent to twelve percent, sometimes even higher. It depends on the sort of circumstances and low dock loan and so forth.

Okay, so that means then if we've got a credit card, if we have a personal loan and a mortgage, you can actually just step back and do a fairly rational assessment looking at the three going which are the three is the highest interest rate and that is the one that you're going to target exactly Okay, how then do you actually make sure that that money, that twelve hundred dollars a year is going towards that and how do you avoid falling into the trap of lifestyle creep. All of a sudden, you've got this little bit of extra money, and I know, speaking from personal experience, how easy it is to find things to spend it on.

Okay, so that means then if we've got a credit card, if we have a personal loan and a mortgage, you can actually just step back and do a fairly rational assessment looking at the three going which are the three is the highest interest rate and that is the one that you're going to target exactly Okay, how then do you actually make sure that that money, that twelve hundred dollars a year is going towards that and how do you avoid falling into the trap of lifestyle creep. All of a sudden, you've got this little bit of extra money, and I know, speaking from personal experience, how easy it is to find things to spend it on.

All right, let's just put things back into perspective, because I have a moment of like immense I guess, admiration, and I feel really proud because we have as a country survived thirteen interest rate hikes. So if we've survived these and come through, you know clearly we were all very capable of managing our finances, and we actually already have quite a lot of self discipline involved, so we can really lock that win in. But what we need to do is obviously redirect these new found free up savings like one hundred dollars per month and actually put them towards one of our financial goals. So you know, you're paying off your mortgage, redirecting it to emergency money investing, maybe even boosting your super But the trick is get it out of your hot little hands before you get tempted to spend it. And what I highly recommend is trying to set up maybe set and forget automation plan. So, for example, instead of if your mortgage rate gets dropped and you've got a lower repayment, you set up an additional repayment of the equivalent savings so that you don't go and spend that money.

All right, let's just put things back into perspective, because I have a moment of like immense I guess, admiration, and I feel really proud because we have as a country survived thirteen interest rate hikes. So if we've survived these and come through, you know clearly we were all very capable of managing our finances, and we actually already have quite a lot of self discipline involved, so we can really lock that win in. But what we need to do is obviously redirect these new found free up savings like one hundred dollars per month and actually put them towards one of our financial goals. So you know, you're paying off your mortgage, redirecting it to emergency money investing, maybe even boosting your super But the trick is get it out of your hot little hands before you get tempted to spend it. And what I highly recommend is trying to set up maybe set and forget automation plan. So, for example, instead of if your mortgage rate gets dropped and you've got a lower repayment, you set up an additional repayment of the equivalent savings so that you don't go and spend that money.

So, to make it super simple, say that's one hundred dollars a month or twenty five dollars a week is being transferred automatically out of your pay or wherever it is that you would normally be using to pay off the mortgage. You are now transferring it into a separate savings account or offset account, or your account that you use to build up your investments or your superannuation.

So, to make it super simple, say that's one hundred dollars a month or twenty five dollars a week is being transferred automatically out of your pay or wherever it is that you would normally be using to pay off the mortgage. You are now transferring it into a separate savings account or offset account, or your account that you use to build up your investments or your superannuation.

Absolutely don't fall victim of this like oh, just one little splurge, or I'll just let it ride for the first month or two and then I'll go and adjust my budget and my automatic savings plans and investment plans. Get on it now before we become victim of that lifestyle creep.

Absolutely don't fall victim of this like oh, just one little splurge, or I'll just let it ride for the first month or two and then I'll go and adjust my budget and my automatic savings plans and investment plans. Get on it now before we become victim of that lifestyle creep.

Have you ever found yourself victim of lifestyle creep? Like I'm just curious, like you always you have an air of great discipline about you that you seem as though you would be very, very controlled with that. And we've talked in the past where we've had little kind of splurges here and there. But have you found yourself getting into this this almost this trap really of as your income increases, that all of a sudden you're expended to rises to meet it.

Have you ever found yourself victim of lifestyle creep? Like I'm just curious, like you always you have an air of great discipline about you that you seem as though you would be very, very controlled with that. And we've talked in the past where we've had little kind of splurges here and there. But have you found yourself getting into this this almost this trap really of as your income increases, that all of a sudden you're expended to rises to meet it.

Not really, because I have three kids that constantly want things and need things and are growing, and because we talk about money in our household, like we're pretty disciplined, and I kind of feel like I have enough. If I need something, I want something, and it's within the budget, it's acceptable, and it's not frivolous or spondorous. It's fine. But there are definitely times where I've taken the foot off the gas and I've had a blowout or a bit of a splurge. But then that kind of ticks that box, and then I want to go back to something that kicks me, I guess accountable and gives me purpose and direction. Again, Like I know that sounds so cheesy and daggy.

Not really, because I have three kids that constantly want things and need things and are growing, and because we talk about money in our household, like we're pretty disciplined, and I kind of feel like I have enough. If I need something, I want something, and it's within the budget, it's acceptable, and it's not frivolous or spondorous. It's fine. But there are definitely times where I've taken the foot off the gas and I've had a blowout or a bit of a splurge. But then that kind of ticks that box, and then I want to go back to something that kicks me, I guess accountable and gives me purpose and direction. Again, Like I know that sounds so cheesy and daggy.

But a little bit, but it's okay.

But a little bit, but it's okay.

My value system is stability and security, So I don't want to mess with that. But also, I do we do spend money on travel, and we do, you know, spend money on experiences as a family.

My value system is stability and security, So I don't want to mess with that. But also, I do we do spend money on travel, and we do, you know, spend money on experiences as a family.

Yeah, so it's not necessarily just kind of frivolous spending that is there because money has suddenly started coming in and your income has increased, but it is more spending with purpose.

Yeah, so it's not necessarily just kind of frivolous spending that is there because money has suddenly started coming in and your income has increased, but it is more spending with purpose.

Yeah, okay, sorry to disappoint.

Yeah, okay, sorry to disappoint.

I was really hoping for a something a bit juicy. Yeah, yeah, no, I really kind of started buying lots of shoes or something like that. I don't know.

I was really hoping for a something a bit juicy. Yeah, yeah, no, I really kind of started buying lots of shoes or something like that. I don't know.

I think there might be a bit of a complicated like childhood history thing there for me. Actually really yeah, not a money block, but it's something I'm very respectful not to catch a chickens swill a hatch, and you know, don't get too big fur en shoes.

I think there might be a bit of a complicated like childhood history thing there for me. Actually really yeah, not a money block, but it's something I'm very respectful not to catch a chickens swill a hatch, and you know, don't get too big fur en shoes.

Okay, all right, it's interesting and this is a topic of another another conversation all together, But isn't it interesting where some of our money habits come from? And maybe that is actually worth a conversation entirely on its own. Kind of the things that you carry over from your childhood that you don't even realize that have been kind of ingrained into you from the very beginning, and they can be good money habits, but they could easily be bad money habits as well, and they've kind of they were what you knew when you were growing up.

Okay, all right, it's interesting and this is a topic of another another conversation all together, But isn't it interesting where some of our money habits come from? And maybe that is actually worth a conversation entirely on its own. Kind of the things that you carry over from your childhood that you don't even realize that have been kind of ingrained into you from the very beginning, and they can be good money habits, but they could easily be bad money habits as well, and they've kind of they were what you knew when you were growing up.

Well, it's so funny you say this, because I'm actually reading Happy Money at the moment, which is, you know, a brilliant book by a Japanese author, and I've had a complete mental make of his name, but it's absolutely fantastic and he talks a lot about this. So we definitely need come back to this.

Well, it's so funny you say this, because I'm actually reading Happy Money at the moment, which is, you know, a brilliant book by a Japanese author, and I've had a complete mental make of his name, but it's absolutely fantastic and he talks a lot about this. So we definitely need come back to this.

Okay, But we are talking about mortgages, and we are talking about what to do when interest rates come down and what to do with that money. I want to talk to you about how you use it to get ahead on your mortgage and keeping your repayments at the same level, and a few other kind of debt repayment strategies that can all come into this. Really, I probably should have just gotten too that stuff before rather than asking your relevant questions, but I was curious. We'll take a quick break and come back in a moment. Cana. We are talking about interest rate cuts today and how to use an interest rate cut to really help get on top of your debts. I know that you said that we should focus on the debt that we have that has the highest interest rates, so your credit card, your personal loans, etc. But just how important is that If you can to keep paying the same amount on your mortgage as you were before the rate cut, so you can just leave your repayments at the same level, that's going to help you out.

Okay, But we are talking about mortgages, and we are talking about what to do when interest rates come down and what to do with that money. I want to talk to you about how you use it to get ahead on your mortgage and keeping your repayments at the same level, and a few other kind of debt repayment strategies that can all come into this. Really, I probably should have just gotten too that stuff before rather than asking your relevant questions, but I was curious. We'll take a quick break and come back in a moment. Cana. We are talking about interest rate cuts today and how to use an interest rate cut to really help get on top of your debts. I know that you said that we should focus on the debt that we have that has the highest interest rates, so your credit card, your personal loans, etc. But just how important is that If you can to keep paying the same amount on your mortgage as you were before the rate cut, so you can just leave your repayments at the same level, that's going to help you out.

All right, let me ask you this question back. Oh, no, do you think fifty eight thousand dollars is a lot of money?

All right, let me ask you this question back. Oh, no, do you think fifty eight thousand dollars is a lot of money?

Objectively? Yes?

Objectively? Yes?

It is?

It is?

Why?

Why?

All right, Well there's your answer. You know, if you can afford to maintain your payments, you know, as they are prior to this recent cut and future cuts, it's one of the smartest financial moves that you can make. So if we take that example of you know, the average Australian mortgage being around six hundred and forty two thousand dollars, if you maintain that mortgage payment as is, you will save up to fifty eight thousand dollars in interest over the life of the loan and up to two years off your mortgage term, so you'll be mortgage free two years sooner. Now, obviously everyone's numbers are going to vary depending on the size of your mortgage, the interest rate you're currently paying, future carts, future rises, and of course like how far into your mortgage you actually are, and you can plug everything into the Sugar Mamma calculator to see a figure for yourself as a guide. But I mean, this is a substantial savings if you can choose not to spend that one hundred dollars per month but actually keep going on your mortgage free journey, not even twenty five dollars a week if you think about it and we break it down, and if.

All right, Well there's your answer. You know, if you can afford to maintain your payments, you know, as they are prior to this recent cut and future cuts, it's one of the smartest financial moves that you can make. So if we take that example of you know, the average Australian mortgage being around six hundred and forty two thousand dollars, if you maintain that mortgage payment as is, you will save up to fifty eight thousand dollars in interest over the life of the loan and up to two years off your mortgage term, so you'll be mortgage free two years sooner. Now, obviously everyone's numbers are going to vary depending on the size of your mortgage, the interest rate you're currently paying, future carts, future rises, and of course like how far into your mortgage you actually are, and you can plug everything into the Sugar Mamma calculator to see a figure for yourself as a guide. But I mean, this is a substantial savings if you can choose not to spend that one hundred dollars per month but actually keep going on your mortgage free journey, not even twenty five dollars a week if you think about it and we break it down, and if.

You view it as money that you didn't have before, then you're not going to miss it, right exactly, And so obviously that would come into a play if you perhaps don't have a credit card debt that needs your attention, or you don't have a person alone that needs your attention. But it's a good thing to consider regardless, right.

You view it as money that you didn't have before, then you're not going to miss it, right exactly, And so obviously that would come into a play if you perhaps don't have a credit card debt that needs your attention, or you don't have a person alone that needs your attention. But it's a good thing to consider regardless, right.

And even if you can only meet halfway, that is like that is still something to be celebrated.

And even if you can only meet halfway, that is like that is still something to be celebrated.

It's still chipping away and it's going to help. That is staggering that you could pay it off two years.

It's still chipping away and it's going to help. That is staggering that you could pay it off two years.

Sooner, and that's just with a twenty five percent drop.

Sooner, and that's just with a twenty five percent drop.

Can imagine being at mortgage free two years earlier, So I.

Can imagine being at mortgage free two years earlier, So I.

Should say twenty five basis point drop, not twenty five percent drum. But it's huge. And think about two of your life to then bump up your super or to put money into investing, or to take an earlier retirement or travel overseas. That's huge.

Should say twenty five basis point drop, not twenty five percent drum. But it's huge. And think about two of your life to then bump up your super or to put money into investing, or to take an earlier retirement or travel overseas. That's huge.

Yeah, that certainly is. What about the other effects of a rate cut? Can you use it basically as a catalyst? If you've been someone who's been putting off money decisions, should you use a rate cut basically as the catalyst to reset your financial goals, reset your habits. If you're looking for an excuse right to get serious about your money, your rate cuts as good as any.

Yeah, that certainly is. What about the other effects of a rate cut? Can you use it basically as a catalyst? If you've been someone who's been putting off money decisions, should you use a rate cut basically as the catalyst to reset your financial goals, reset your habits. If you're looking for an excuse right to get serious about your money, your rate cuts as good as any.

Look, the best motivation should really come within, you know, reliant on the RBA to give you that kickup. The asked to look at your mortgage and your cash and your budget and your personal finances would have.

Look, the best motivation should really come within, you know, reliant on the RBA to give you that kickup. The asked to look at your mortgage and your cash and your budget and your personal finances would have.

To be one of the lamest things you've ever said. That motivation comes from within. No, no, wait for someone outside to say, get going. That's how I work.

To be one of the lamest things you've ever said. That motivation comes from within. No, no, wait for someone outside to say, get going. That's how I work.

See the listeners of how To theyre for that. We are doers, we are go getters. We do not sit on our fingers, will sit on a finger stick, got on my hands. Awkward to sit on our hands and just wait for things to happen. We make things happen.

See the listeners of how To theyre for that. We are doers, we are go getters. We do not sit on our fingers, will sit on a finger stick, got on my hands. Awkward to sit on our hands and just wait for things to happen. We make things happen.

Okay, okay, all right, So if a bard.

Okay, okay, all right, So if a bard.

With me here, hang and I'm feeling this element of hesitation from you.

With me here, hang and I'm feeling this element of hesitation from you.

Absolutely I would rather be motivated by myself, but as in by this desire to do better. But I'm also a realist, and I know that a lot of people go, you know what, I've got too many competing demands on my time.

Absolutely I would rather be motivated by myself, but as in by this desire to do better. But I'm also a realist, and I know that a lot of people go, you know what, I've got too many competing demands on my time.

Rest or procrastinator. Let's be honest.

Rest or procrastinator. Let's be honest.

Is there a difference? Not for me, there isn't. But in terms of though, this could still help, as if you've got if you need a catalyst, then the RBA cutting rates is a reasonable one.

Is there a difference? Not for me, there isn't. But in terms of though, this could still help, as if you've got if you need a catalyst, then the RBA cutting rates is a reasonable one.

Right.

Right.

Yes, that's all I wanted. I just wanted an acknowledgment from you.

Yes, that's all I wanted. I just wanted an acknowledgment from you.

Use this rate as a bit of a nudge to go and check your financial goals, run your numbers, and see what you're capable of achieving. But remember, at the end of the day, you are the dry of change, not some stranger in a gray suit in a boardroom looking at lots the pieces of paper and numbers and data.

Use this rate as a bit of a nudge to go and check your financial goals, run your numbers, and see what you're capable of achieving. But remember, at the end of the day, you are the dry of change, not some stranger in a gray suit in a boardroom looking at lots the pieces of paper and numbers and data.

Okay, no, that actually it does make sense you need to want to make changes, But I just like the idea of going, Okay, my mortgage repayment's going to come down. I'm going to this will be my first step. It is a small but meaningful step that I can take that is going to have a long term impact. And that step I'm going to take is not reducing my repayments. There we go. I am so happy I have ticked something off my list broader debt repayment strategies. Right, if we're looking at this bigger issue of how to use an interest rate cut to help get on top of your debts, are there any debt repayment strategies that are better, perhaps more cost effective when interest rates come down.

Okay, no, that actually it does make sense you need to want to make changes, But I just like the idea of going, Okay, my mortgage repayment's going to come down. I'm going to this will be my first step. It is a small but meaningful step that I can take that is going to have a long term impact. And that step I'm going to take is not reducing my repayments. There we go. I am so happy I have ticked something off my list broader debt repayment strategies. Right, if we're looking at this bigger issue of how to use an interest rate cut to help get on top of your debts, are there any debt repayment strategies that are better, perhaps more cost effective when interest rates come down.

Yes. So, as I mentioned, obviously, automation is your best friend. So you know, keeping the repayments at their highest level, don't let the just automatically drop them down. So you just mentioned that you're going to keep your mortgage repayment as is. Now do you know whether the bank will actually do that for you or do you have to contact them? Because some banks will actually reduce your payments automatically, some won'ty just to apply their lower interest rate but they keep them as is.

Yes. So, as I mentioned, obviously, automation is your best friend. So you know, keeping the repayments at their highest level, don't let the just automatically drop them down. So you just mentioned that you're going to keep your mortgage repayment as is. Now do you know whether the bank will actually do that for you or do you have to contact them? Because some banks will actually reduce your payments automatically, some won'ty just to apply their lower interest rate but they keep them as is.

No mine keeps it at the same amount unless you choose to lower it. They send you plenty of notifications to say, hey, if you want to lower it, you can, but we will leave it at the same amount for now, which I think is admirable.

No mine keeps it at the same amount unless you choose to lower it. They send you plenty of notifications to say, hey, if you want to lower it, you can, but we will leave it at the same amount for now, which I think is admirable.

Yes, interestingly, though, I want to keep ours as is. Ours were automatically reduced. So then I had to go log into my banking check everything and everyone should do this as well, to see how their interest rate cut was passed on and how to adjust your repayments or not and make that decision. So I then have to contact the bank or go and set up a manual automatic repayment plan on top of to take it back up to what it was.

Yes, interestingly, though, I want to keep ours as is. Ours were automatically reduced. So then I had to go log into my banking check everything and everyone should do this as well, to see how their interest rate cut was passed on and how to adjust your repayments or not and make that decision. So I then have to contact the bank or go and set up a manual automatic repayment plan on top of to take it back up to what it was.

It feels like that's not high risk, but that would be that's bad news for anyone with a money block. That's like, it's another step you have to do that can potentially get kind of pushed further down the road.

It feels like that's not high risk, but that would be that's bad news for anyone with a money block. That's like, it's another step you have to do that can potentially get kind of pushed further down the road.

Well, this is the problem with baring your head in the sand. Like a lot of people assume that you know your payments are either kept the same or reduced, and it's not until you you know six months later or five months later you're looking thinking how why am I still struggling, you know, whether we've had all these interest rate cuts that I'm still struggling to get through my pace? Likele h, why is my mortgage not going down as quickly as what it used to be. That's why we need to go and take a couple of minutes just to go and check these do this, I guess, mini financial life admin, to see how these interest rate cuts are being applied and what we need to do to make sure they're in alignment to our goals.

Well, this is the problem with baring your head in the sand. Like a lot of people assume that you know your payments are either kept the same or reduced, and it's not until you you know six months later or five months later you're looking thinking how why am I still struggling, you know, whether we've had all these interest rate cuts that I'm still struggling to get through my pace? Likele h, why is my mortgage not going down as quickly as what it used to be. That's why we need to go and take a couple of minutes just to go and check these do this, I guess, mini financial life admin, to see how these interest rate cuts are being applied and what we need to do to make sure they're in alignment to our goals.

Okay, so in terms of debt repayment strategies, we are talking about a check in actually making sure that if you want to continue paying the same amount that you are actually doing it. So a checking is kind of one. What about conser olidating debts? Does a rate cut make it more worthwhile to do that or is that not something that you should do because you are essentially just fighting debt with more debt.

Okay, so in terms of debt repayment strategies, we are talking about a check in actually making sure that if you want to continue paying the same amount that you are actually doing it. So a checking is kind of one. What about conser olidating debts? Does a rate cut make it more worthwhile to do that or is that not something that you should do because you are essentially just fighting debt with more debt.

We need to do a special episode on debt consolidation because it is can be a little bit complicated, and there is it can be a little bit of a trap as well. But to answer your question, yes, obviously there are a lower interest rate means you know, greater loan affordability, so your boring power improves and you're more likely to get you submit a more successful application. But you obviously need to remember you want to pay this debt off as quickly as possible. You know, consolidation isn't just a you know, fix it cure at all solution. It also works best if you're addressing your spending habits at the end of the day so that you don't go back into debt once you've paid it off.

We need to do a special episode on debt consolidation because it is can be a little bit complicated, and there is it can be a little bit of a trap as well. But to answer your question, yes, obviously there are a lower interest rate means you know, greater loan affordability, so your boring power improves and you're more likely to get you submit a more successful application. But you obviously need to remember you want to pay this debt off as quickly as possible. You know, consolidation isn't just a you know, fix it cure at all solution. It also works best if you're addressing your spending habits at the end of the day so that you don't go back into debt once you've paid it off.

Okay, I think in the end I can summarize this as there are some very simple priorities. When the Reserve Bank cuts interest rates, and assuming that your bank or your lender passes on that interest rate cut, that you are looking first at your highest interest rate debt. So whether that be your credit card or your personal loan or your mortgage, you're working in that order, and you're really aiming it at the highest debt first to put that extra money in try and pay that down if you are able to make the most of additional repayments on your home line, So keep your rate your repayments at the same level.

Okay, I think in the end I can summarize this as there are some very simple priorities. When the Reserve Bank cuts interest rates, and assuming that your bank or your lender passes on that interest rate cut, that you are looking first at your highest interest rate debt. So whether that be your credit card or your personal loan or your mortgage, you're working in that order, and you're really aiming it at the highest debt first to put that extra money in try and pay that down if you are able to make the most of additional repayments on your home line, So keep your rate your repayments at the same level.

Or as close as you possibly can after your budget.

Or as close as you possibly can after your budget.

Because that can actually shave months or years and thousands of dollars in interest payments off your mortgage, and.

Because that can actually shave months or years and thousands of dollars in interest payments off your mortgage, and.

That fifty eight thousand dollars figure assumes no further interest rate cuts. So I've actually been really conservative in the potential savings is actually quite possibly a lot more subject to see how much you alone is.

That fifty eight thousand dollars figure assumes no further interest rate cuts. So I've actually been really conservative in the potential savings is actually quite possibly a lot more subject to see how much you alone is.

Yeah. Absolutely, though in terms of other debt repayment strategies, there's nothing that leaps out at you in terms of consolidating debts as something that you should turn your attention to immediately, because if you were to combine everything into one big debt, you might be getting a slightly lower interest rate on that, but in the end you are still you still need discipline in order to focus your attention on that debt.

Yeah. Absolutely, though in terms of other debt repayment strategies, there's nothing that leaps out at you in terms of consolidating debts as something that you should turn your attention to immediately, because if you were to combine everything into one big debt, you might be getting a slightly lower interest rate on that, but in the end you are still you still need discipline in order to focus your attention on that debt.

And look, it depends what type of debt we're talking about consolidating. And this is why you need an experience mortgage broker to help you out but also help you stick to a new budget that actually prioritizes, you know, getting back on top of things again.

And look, it depends what type of debt we're talking about consolidating. And this is why you need an experience mortgage broker to help you out but also help you stick to a new budget that actually prioritizes, you know, getting back on top of things again.

Okay, I think we've covered this. What I hope now is that if you've listened to this, that you've at least got some ideas on what to do when that rate cut comes through. Because it is covered extensively within the media, you will see it on the news every night that the rate cut has come through, and then you will see the big announcements from it to the banks that they are passing it on. And this hopefully will give you a bit of a checklist as to what you do then so that it doesn't just get swallowed up by this lifestyle creep that I know, for one, would happen to me if I wasn't being deliberate about how I use that money.

Okay, I think we've covered this. What I hope now is that if you've listened to this, that you've at least got some ideas on what to do when that rate cut comes through. Because it is covered extensively within the media, you will see it on the news every night that the rate cut has come through, and then you will see the big announcements from it to the banks that they are passing it on. And this hopefully will give you a bit of a checklist as to what you do then so that it doesn't just get swallowed up by this lifestyle creep that I know, for one, would happen to me if I wasn't being deliberate about how I use that money.

I think the mantra for everyone listening to this episode is attention and intention. I like that. Thank you.

I think the mantra for everyone listening to this episode is attention and intention. I like that. Thank you.

It's a very positive way to finish.

It's a very positive way to finish.

I'm a very positive person.

I'm a very positive person.

Mostly yes, eighty percent of the time you are very positive. You seem to save the twenty percent of negative and angry for when the mics go off. Then it gets really, really scary.

Mostly yes, eighty percent of the time you are very positive. You seem to save the twenty percent of negative and angry for when the mics go off. Then it gets really, really scary.

Ranky Kuna comes out.

Ranky Kuna comes out.

No, I know never all right. If anybody wants more information from you, where do they find you?

No, I know never all right. If anybody wants more information from you, where do they find you?

The best place to get in contact with me is on Instagram, at sugar mom My TV and of course at Canna Campbell.

The best place to get in contact with me is on Instagram, at sugar mom My TV and of course at Canna Campbell.

Official, and you can hear me every day as well on Fear and Greed, daily business news for people who make their own decisions. Thank you for listening to how Do They Afford That? Remember to hit follow on the podcast. That is very important, and the best thing you can do is to tell somebody else, send them the link to this episode and spread the word about how today ford that. Thank you very much for your company. Join us again next week.

Official, and you can hear me every day as well on Fear and Greed, daily business news for people who make their own decisions. Thank you for listening to how Do They Afford That? Remember to hit follow on the podcast. That is very important, and the best thing you can do is to tell somebody else, send them the link to this episode and spread the word about how today ford that. Thank you very much for your company. Join us again next week.