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The 12 Commandments of Good Money Management

Ask anyone and their dog for finance advice and you’re bound to wind up with something useful.

But what about personal finance advice from one of Australia’s top financial advisers?

Heart Financial Advisers Principal Financial Adviser Stu Varidel has revealed his 12 no nonsense cornerstone finance secrets, many of which has been formed by his many year in his Practice.

1. Treat Credit Cards with Caution

Aussies love credit cards – but the interest rates of 20% plus is very high. Never ever get a cash advance unless it’s an absolute emergency and always pay by the due date. Sure the 20% sounds a rip-off, but don’t forget that credit card debt is not secured by your house and at least the high rate provides that extra incentive to pay by the due date.

2. Be ready for Rainy Days

Life doesn’t always turn out as we expect. A rainy day could come in the form of illness or injury, higher mortgage repayments, a job loss, or an unexpected expense. This means not taking all the debt offered to you, trying to stay ahead of your payments and making sure that when you draw down your loan you can withstand at least a 3% rise in home loan interest rates.

3. Interest rates can go up

It has been a long time since interest rates were raised back in November 2010. But don’t be fooled by the recent history of falling or low rates. My view is that an increase in rates is only around the corner. If history is anything to go by the interest rate cycle will eventually trend up. The key to take out here is to make sure you can afford higher interest payments in the future!

4. Shop around

Why do we tend to shop around to save $5 on a new toaster but not for financial services?

Don’t be shy to ask for a better deal whether for your mortgage, insurance, banking, superannuation, etc. The financial services sector is extremely competitive – they’re all vying for your business. And if you’ve been loyal to a service for a long time but they’ve hiked fees and charges, give them a call “to ask what gives”. We have often done this for our clients and saved them significant sums!

5. Don’t Take on more Debt than you can Handle

Debt is good, up to a point – but you can have too much of it. Always make sure that you don’t take on so much debt that it may force you to sell all your investments just at the time you should be adding to them, or worse still, potentially send you bust.

As a rough guide when debt servicing costs exceed 30 per cent of your income then maybe you have too much debt – but this solely on your individual depends on your income and expenses.

6. Use your mortgage for long term Debts

Credit cards are not for long term debt, but your mortgage is. Because it’s secured by your house, mortgage rates are low compared to other borrowing rates – at around 4% for most. If your debt takes longer to pay off than your credit card due date, consolidate it with your mortgage to reduce the amount of interest you’re paying.

7. Invest

To build your wealth, take advantage of compound interest and assets that provide high returns over long periods of time. Make the most of it you have to start as early as possible. Just to illustrate how your wealth can grow over time, $1 invested into Australian shares in 1990 would now be worth $526K! $1 in Australian bonds and Australian cash would be worth $885 and $237 respectively.

8. What goes up does comes down

People expect the share market to be volatile, but not the property market. Property prices will always be smoother than share prices because it’s not traded daily and so is not subject to daily swings in sentiment. History tells home prices do go down as well as up. We’re going through a property market fall right now – so allow for the fact that asset prices go down as well as up, even with a booming population and economy.

9. See the Big Picture

While we might undergo major economic crashes, such as the GFC, every so often, we always recover. We have seen it all before even though the details may differ. The trick is to allow for periodic sharp falls in your investment strategy and when they do happen remind yourself that we have seen it all before and the market will find a base and resume its long-term rising trend.

10. Know Risk Profile

If you find out the market has wiped 20% off the value of your investments, how will you respond? If your response is likely to be: ‘I don’t like it, but this sometimes happens in markets and history tells me that if I stick to my strategy, I will see a recovery in time’, then no problem. If your response might be: ‘I can’t sleep at night because of this, get me out of here’, then maybe you should rethink your strategy as you will just end up selling at market bottoms and buying tops. Moral of the story is: match your investment strategy with your risk tolerance.

11. Millennials, use ‘Mum and Dad Bank’

Millennials are being shut out of the housing market thanks to the mid-1990s boom, but the current home price correction could be turning the tide. In the meantime, AMP Capital’s top economist has some tips for millennials living with their baby boomer parents. First, stay at home with Mum and Dad as long as you can and use the cheap rent to get a foothold in the property market via a property investment. Second, consider leaning on your parents for help with a deposit. Just don’t tell my kids this!

13. There’s no Such Thing as “Free”

This one is simple. If something looks too good to be true (whether it’s ultra-low fees or interest rates or investment products claiming ultra-high returns & low risk), then it probably is and it’s best to stay away.


This information is current as at 21/11/18. This article has been prepared by Heart1Stop, a social media brand owned by Heart Mortgage Services and Heart Financial Advisers. The information contained in this article is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The views expressed here are not those of Heart1stop, Heart Mortgage Services, Heart Financial Advisers, shareholders, directors or staff and associated contractors and business associates. This article has been prepared without taking into account any person’s objectives, financial situation or needs. Because of this, you should, before acting on any information contained in this article, consider its appropriateness, having regard to your objectives, financial situation or needs. Any taxation information contained in this article is a general statement and should only be used as a guide. It does not constitute taxation advice and is based on current laws and their interpretation. Each individual’s situation may differ, and you should seek independent professional taxation advice on any taxation matters. While the information contained in this article may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date. It is not the intention of Heart1Stop or Heart Mortgage Services and Heart Financial Advisers that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. To the maximum extent permitted by law: no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up to date or fit for any purpose; and no party of Heart1Stop or associated entities as mentioned is in any way liable to you (including for negligence) in respect of any reliance upon such information. This article may also contain links to websites operated by third parties ("Third Parties") who are not related to Heart1Stop. These links are provided for convenience only and do not represent any endorsement or approval by us.

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