Australian consumers are getting better at managing credit card balances – New figures from the Reserve Bank of Australia reveal the nation’s credit card bill in January 2021 dropped by $7.38bn on the same month a year ago – however many borrowers still struggle with paying off the money they owe on ‘the plastic’.


Here is how you can pay your credit cards off faster, save money, get control of your finances, and reduce your money worries.


  1. Fix a personal budget for reducing your debt

If you only make the minimum repayments on your credit card, it can take more than 30 years to clear a $5,000 debt.  That will involve you paying more than $5,000 in interest over that time! That is a vast amount of interest on a debt that barely budges.

So, work out how much money you can afford to pay towards your credit card debts each month, and set up direct debits to pay that fixed amount. $200 per month to clear a $5,000 debt will take three years, not 30!


  1. Pay off the card debt with the highest interest first

You don’t have to spread your credit card repayments evenly. This point is very important – In your debt repayment budget, pay the minimum on each credit card except the one with the highest interest rate. Allocate the remainder of your budget to the reduction of that credit card debt. When you have paid that card off, close it down. You then have even more money to allocate to the repayment of your second-highest interest rate, and so on.


By tackling the higher rates in this way, you will massively reduce the amount of interest you pay and the time it takes to clear all your debts. This is a technique known as snowballing.


  1. Reduce your interest rates


You get the same result by reducing your interest rates. Transfer the balance of the existing card debt with the highest interest rate onto a 0% balance-transfer card if you can. You will be charged a small fee for this, but you won’t have to pay interest on the transferred debt for a set period. This means you pay less interest and clear your debt much faster. Make sure you close down the high interest rate card as soon as you transfer the balance to the 0.00% interest card.


  1. Cancel Payment Protection Insurance PPI

The insurance you buy with your credit cards to protect your payments in the event of accident, sickness or unemployment is vastly over-priced, adding maybe $400 a year to a $5,000 debt.

Cancel your payment protection insurance (PPI), so that you can pay off your debts faster. If you really feel you need the insurance, search the internet for a stand-alone insurance provider, which will be about 80% cheaper, and will likely have better terms.



  1. Clear your debts before saving?

The interest rates on savings accounts are much lower than credit-card interest rates – other than very special credit card deals. This means that you will be debt-free a lot more quickly if you clear your card debts before you save.

There is an argument for building a reserve of savings before you have cleared your credit cards as it helps you build a savings habit; however, the numbers don’t support that argument.  As a result, we advise that you should eliminate your credit card debt first.


  1. Limit your treats

If you spend a lot of money on clothes, restaurants, wine or whatever – start budgeting a sensible amount for these items. Once you’ve spent your budget for the week or month, the rule is: that is it till next time. Spend your money wisely and build up your willpower!


  1. Don’t miss payments

Missing payments on your credit cards can be unbelievably expensive. You may be slugged with a penalty fine and interest, you may lose your introductory cheap interest rates, and you run the risk of your tardiness being recorded on your personal credit record.

This could mean borrowing costs will be more expensive for you in future. Automate the process; set up direct debits from your bank account to pay your credit card payments every month.


  1. Budgeting

The only way that you are going to reduce your debts is when you accept you need a realistic weekly, monthly, and annual budget. It takes time to develop a budget that works, and it changes like your income and your needs.  But it is essential to keep at it. Once you’ve got it right, your debts will come down quickly.

See our top tips for preparing a successful budget here or speak to one of our financial advisers today. CONTACT US  

We all know that the New Year is the perfect time to review your finances and set new goals for the year ahead. In case you missed your planning session on the first day of January – here is another chance! This is a great time to get clear on what is going on with your finances.

If COVID-19 has taught us anything, it is that unforeseen emergencies occur, and without proper planning, your budget could fall apart should an emergency arise.

We have listed our Top Tips below:

  1. Conduct a ‘stocktake’ of your current position:

Over the Christmas and holiday period you can spend and splurge.  It is therefore vital to do a general ‘stocktake’ in the New Year to know exactly how you are tracking toward your financial goals.  Remember, It is much easier to get where you want to go when you already know where you are!

Tip:  Prepare a simple spreadsheet, list your assets and liabilities, and see what your equity position looks like.

  1. Pay down your non-deductible debt:

If possible, 10% to 15% of your income should go toward reducing your non-deductible debt. There are a few options for managing debt and it is worthwhile considering consolidating your debts.
The only way that you are going to reduce your debts and get clear on your saving goal is when you accept you need a realistic weekly, monthly, and annual budget. It takes time to develop a budget that works; and it changes along your income and your needs.  But it’s essential to keep at it. Once you have got it right, your debts will come down quickly.

Tip:  Clear your debts before saving While this takes some discipline, the interest rates on savings accounts are much lower than credit-card interest rates – other than very special card deals. This means that you’ll be debt-free a lot more quickly if you clear your card debts before you save.

There is of course an argument for a reserve of savings before you’ve cleared your credit cards as it helps you build a savings habit.  However, the numbers don’t support the argument, so we still advise you to eliminate your credit card debt first.

  1. Create a Budget:

The greater your understanding of your personal spending patterns the easier it is going to be for you to take a commanding role in the management of your money.

All businesses and practices have a clear understanding of income receipts including the sources of revenue and have a clear understanding of the expenses over the year.  The problem is, even in the cases where a business or practice budget exists, personal income and expenses can remain a mystery!  At the end of the year most people simply don’t know how much money they spent on clothing, on food, on utilities… no idea!

The pattern-breaker for this type of behaviour is as we have discussed to complete a personal budget.  It has nothing to do with changing your income and spending patterns; that will come later, it has everything to do with KNOWING where your money comes from, and where it goes to.

Prepare a personal budget and do it now.  If there are any numbers that you are not sure of, you can estimate or guess and go back and confirm later.  The main thing is to get a first run-through to get a personal profile and get a grasp of your finances.

By completing this exercise, you will immediately put yourself in an elite minority of people what can account for their own personal finances.

Tip:  Ask our team today for the Locumsgroup downloadable template budget

  1. Do a weekly check in with your accounts:

A great habit to get into is to allocate time in your diary each week and review your weekly expenses. You will gain a greater understanding as to your spending habits and ensure you are not spending on things that can’t be accounted for.

Tip:  When creating an annual financial plan, create quarterly milestones.  These will allow you to benchmark how you are tracking with your progress. If that doesn’t happen then readjust the plan, move the goal, or play catch-up.

  1. Create an internal dialogue with yourself:

Every time you go to make a purchase that is outside of your general expenses, ask yourself, “how does this fit in with my financial goals?” This is a great way to keep yourself accountable on ad hoc purchases that may come up and be a distraction.

Tip:  Be accountable to yourself for discretionary spending.

  1. Establish an emergency Fund:

If you haven’t already done so, it’s important to establish an emergency fund. It’s also worth adding in an estimated cost for emergency expenses such as to car repairs or a new hot water heater! It’s better to overestimate than underestimate, so be generous.

Tip: Your emergency fund should be at least 2 to 3 months’ worth of expenses (or access to credit for a similar amount). This fund may take a while to establish but will be worth it in the long haul.

At Locumsgroup, we assist in creating financial freedom for our clients. As part of that process, we will complete a personal budget for you, so you have a clear picture of your cash-flow profile. This will assist you in taking control of your financial life.

If you want to take the steps towards financial freedom, then contact us for a complimentary consultation.

  1. Don’t invest until you understand the numbers.
  2. Make sure the holding costs (rental income less outgoings) are manageable.
  3. Invest in locations with high population, employment, and mid to long term capital growth.
  4. Diversify across lenders to increase your borrowing capacity. Your goal is to own a large asset base.
  5. Buy and hold for seven to ten years. Few people grow wealthy by buying and selling continuously.
  6. The area must be close to key amenities such as schools and public transport and a sound long term rental history.
  7. Choose new or renovated properties to maximise savings and minimise the need for maintenance.
  8. Go cross-country. Diversify your property investments to protect your portfolio against markets with prolonged flat periods. Diversification works!
  9. Ensure you have a team of property investment specialists with appropriate research to support any investment decision that you make. A team that can provide ongoing support and education.
  10. Do not invest in holiday locations! Rent those ones, it will be less expensive!

Over the long term, property is recognised as a stable and reliable asset for wealth creation.  Property is a store-of-wealth asset.

Whether you are looking to buy your first investment property or add to your current portfolio, property is a popular way to invest money by many Australian investors.  One of the keys to property’s effectiveness as an investment is that owners tend to stay the course and don’t jump in and out of the asset based on whims and tips at barbecues!  This ensures that a property owner remains invested in highs and lows taking advantage of the long-term trend of real estate which is to increase in value.

Consider these important tips before your next investment:

  1. Crunch the numbers!

Whether you are looking raise your deposit and associated purchase costs by borrowing, using the equity in an existing property (either your home or another property asset), using cash reserves, or selling down other investments, it is important do your sums and understand your cash flow.

Owning an investment property can be expensive and there are always hidden costs, like Stamp Duty, Capital Gains Tax, Land tax, Strata fees etc that can throw out your initial calculations if not factored in correctly.

Our team at Locumsgroup can help with your investment plans. We will consider your situation and advise you on the most appropriate debt structure to obtain the most appropriate, tax-efficient borrowings.

  1. Choose the right property for the right price

First time investors make common mistakes such as acting on emotion and not on research; or buying a property of a style that would like to live in; or acting too quickly or too slowly.  Other errors include speculating, or not managing their cash-flow properly.  These are all the types of mistakes that can make the vision of building a property portfolio fall apart at the seams – right from the start.

It is critical you seek advice and invest in areas that have strong research that supports capital growth and future potential returns.  So do your research! You will need to find out what the benchmark is for other properties selling in the area of interest. Once you have a benchmark, you’ll be able to realise if your property is selling at the right price.

Another important factor to consider before purchasing your investment property is to ask the question: does the investment property suit the demographics of renters in the area?

  1. Your Property Manager is King

Find a good property manager to help take the pressure off you! They can help you manage your tenants, give advice on property law, your rights & responsibilities as a landlord and give you tips on how to get the best possible value for your property.

A good property manager can also take the hassle out of finding the right property tenants by doing the necessary reference checks and make sure they are paying their rent on time.

We do recommend, making regular inspections to visit your investment property and the good news is that you get to claim a percentage of Property Manager fees as a tax deduction.

  1. Make the property attractive to renters

The biggest tip is to paint your investment property. Never underestimate what a fresh coat of paint can do to the appearance of a property. Minor cosmetic changes can significantly increase interest in your investment property.

  1. Assemble your team of advisers.  

Ensure your debt is structured correctly and the anticipated cash inflows and cash outflows from the property are reasonable and fit into your current budget.

If Locumsgroup play a role in the process, we will assist you with advice regarding the structure of the transaction and your borrowings, and also if required advice on the tax effects of your investment choices and the preparation of your income tax returns.

The holiday season is almost upon us and after spending a good portion of the year couped up at home experiencing cabin fever, it’s now time to plan that well-deserved getaway. However, during a time of economic uncertainty, finding money to pay for that holiday can be challenging, and withdrawing money from the loan on your home may not be the way to go.

Let’s look at the pros and cons of redrawing on your home loan.

What is a redraw facility?

A redraw facility gives access to any extra repayments you may have made on certain types of loans. Commonly, these are home loans and personal loans, with account-holders able to withdraw some of the money already repaid as loan payments. The balance in a redraw facility consists of extra payments made towards paying off a loan, on top of the bank’s required minimum repayments.

Potential drawbacks

Having a good idea of how you might use a redraw facility is important. Depending on your circumstances, however, there may be drawbacks to using a redraw facility:

  • Fees. Some lenders may charge a fee for each redraw you seek to make.
  • Withdrawal restrictions. Limits might apply to how many redraws you can perform each year, or to how much money you can redraw at once. However, making it more difficult to redraw funds on a regular basis may not be such a bad thing if it deters you from redrawing too often, as this could potentially help you save money in the long run.
  • Ease of use. Despite withdrawal restrictions, some homeowners might still find it too convenient to have access to use a redraw facility. By withdrawing extra payments against your loan, you may reduce your long-term savings achieved.

Potential benefits of a redraw facility

Depending on your circumstances, there may be benefits to using a redraw facility:

  • Flexibility. Being able to redraw extra repayments on your home loan may be helpful, particularly in an emergency.
  • Compound interest. You would reduce the effect of compound interest on your repayments. With interest charged on your home loan likely to be higher than interest received from a cash savings account, more interest may be saved than would otherwise be earned in a savings account.
  • Long-term savings. Depending on your situation and how you use the redraw facility, you may pay less interest on your mortgage long-term.

So if you already have a redraw facility or are planning to apply for a loan with a redraw facility, it is worth checking with your lender to confirm the details of any restrictions, fees or other important terms and conditions that may apply to it.

Let us walk you through your options to help you find the right solution. Speak to one of our experts today.


It’s been a whirlwind of a year with many Australians impacted financially by COVID-19 which means this is going to be a Christmas like no other. While it is easy to understand why Christmas preparation and celebrations may not be top of mind for some, for others it’s the one good thing to look forward to in 2020. A time to celebrate with loved ones and spoil your family with presents.

However, this all comes at a cost.

The greater your understanding of your personal spending patterns the easier it is going to be for you to take a commanding role in the management of your money, especially at this time of the year. Personal income and expenses can remain a mystery if you’re not understanding how much money is being spent on clothing, presents, food, decorations… or anything for that matter.

The pattern-breaker for this type of behaviour is to complete a personal budget.  It has nothing to do with changing your income and spending patterns, that will come later, it has everything to do with knowing where your money comes from, and where it goes to.

Put yourself in the elite minority of people who can account for their own personal finances by following these six simple steps:

Gather all your paperwork

The first step of budgeting is collating all your paperwork – that includes your bank statements, credit card statements, pay slips, utility bills etc. If you’ve been fortunate to have all your paperwork neatly filed away in alphabetical/chronological order, then this task will be simple. On the other hand, if it’s in a disorganised pile don’t let the thought of sorting them out overwhelm you. It may not be the most exciting of tasks, but you’ll feel a great sense of relief once it’s done!

Get to grips with your spending habits

It can be very easy to lose track of what you’re spending your hard-earned money on. To help you understand your spending habits, set up a spending diary to record what you spend and where. This will enable you to categorise all your transactions, so you know exactly what you’re spending your money on. Don’t leave anything out, no matter how small – you’ll be surprised how the little things add up. It’s worth doing this for about a month to help you get a detailed picture.

Make a list

Once you’ve come to grips with your spending habits, the next step is to make a list of all your regular fixed outgoings and earnings. It’s a good idea to calculate this as an annual figure rather than monthly, because monthly figures can vary considerably. For example, you might be paying out for a holiday in one month or Christmas presents the next. Once you’ve worked this out, you can divide the result by 12 (months) or 52 (weeks) to calculate your weekly or monthly expenditure.

Emergency Expenses

It’s worth adding in an estimated cost for emergency expenses such as unexpected car repairs or a new hot water heater. It’s better to overestimate than underestimate, so be generous. And don’t forget about annual insurance policies, such as home insurance.

Cut down!

Are you spending more than you earn? If to your disbelief, the answer is yes, you’ll need to tackle this head on. To do this it’s worth examining your outgoings to see whether you can make any cutbacks. Perhaps you could reduce your discretionary spending or clothes purchases. It’s important to be realistic when you’re doing this – don’t set yourself an impossible task that you know you’ll never stick to.

Obviously, items such as utility bills will still need to be paid, but that doesn’t mean you can’t save money. Some companies provide discounts to customers if you pay your bill on time so make sure you check with them. Similarly, see if you can get a better broadband, mobile phone, or insurance deal.

If you’re lucky enough to have some spare cash at the end of each month, don’t leave your money sitting in your cheque account. Instead, move it to a savings account or pay off your credit card debt.

Finally, don’t forget that this is a fluid process

You should review your budget on a regular basis to make room for any changes in your outgoings or earnings. For example, if you receive a pay review, your rental income from your property assets increases, your landlord increases your rent, or your mortgage costs change. Reviewing your budget will help you to assess whether you’re on track with your finances.

If you need help understanding your finances and preparing a personal budget, speak to one of our financial advisers today.

What does exercise and diet have in common with managing debt and investment

Both require finding the right balance to get the best results.

Thinking of your body as a bank where you just deposit and withdraw calories neglects the fact that your overall health requires a much more holistic approach. Balancing both a nutritious diet and regular exercise will help you get the greatest results to look and feel your best.

Similarly, with your finances when looking to pay off debt or invest your money it also involves a much more holistic approach. Firstly, taking a close look at your overall financial situation is key. Observe and draw comparisons between what your debt is costing you and what you expect to make in return for your investments. If you can find the balance to do both, you will achieve the best results.

When deciding between debt repayment and investing, our financial advisers at Locumsgroup are here to help, here’s what you need to consider:


Just like everything else with your finances, deciding how to best use your money is all in the calculations. Take a look at your debt and calculate exactly how much it will cost you to pay it off. Be sure to include any interest, fees and penalties into these calculations. It’s important to get a clear picture of your debt so that you can make the best decision for your finances.

Next, take a look at your after-tax rate of return on any investments you may be considering. You will most likely need to pay taxes on your earnings, which could decrease your actual return, so keep that in mind.

Since the question is whether to repay debt or make an investment, you want to calculate the difference between three numbers: the cost of your debt (primarily interest charges) with this hypothetical additional payment, and the cost of your debt without any extra payments; and the potential return on the investments that you make with the savings.

You want to know if putting this pool of extra money into debt will save you more money than it could earn as an investment. That’s not the whole story, of course, but finding those three numbers will help provide an objective, numerical baseline for your decision.


If you’re carrying a lot of high-interest credit card balances, paying off these debts may be the better way to go for now. Paying off those debts will not only save you money (that you can later invest), it can also help improve your credit score. If you’ve been struggling to balance your finances because of debt payments and building strong credit is a priority for you, then debt repayment is definitely the smart option.

If your debt is manageable and your interest rates are low however, investing some of your funds might be a wise option. Especially, if those investments are part of a long-term savings plan and you manage your risk.

Before making the final decision though, it’s wise to make sure you have ample emergency funds set aside. When it comes to investing, the funds you set aside are sometimes difficult to access, at least for a period of time. If you have to withdraw those funds early, it may come with a penalty that could eat into your returns.


Once you have assessed your financial situation, consider finding balance to both pay down debt (especially the high-interest loans), and invest. This way you can achieve both goals at once yielding optimal results.

Remember, perhaps the key to personal wealth is: “spending less than you earn and using the surplus to pay down debt or make investments”.

If you need more help understanding how to tackle debt and manage your investments, speak to one of our financial advisers today.

Locumsgroup once again, are proud to sponsor the Harbord Devils Junior Cricket Club for the 2018/2019 season.

We hope our partnership helps the Harbord Devils hit the season for 6 !

Paul Ahearne, Managing Director of Locumsgroup speaking in Sydney at the Financial Intelligence Conference in August 2018, with Effie Zahos, financial commentator and editor of Money Magazine.

Key observations from the evening:
Accumulating capital over time: is a bit like running marathon: don’t leave it until the last quarter to make up your lost ground!
Secret of building wealth: earn more than you spend and spend the difference on buying investments and reducing debt!
Philosophy on investing: Trust the capital markets to price efficiently; always diversify
Best books on wealth:    A Random Walk Down Wall Street; Where Are All The Customers Yachts?; and Money, by Tony Robbins.