Paying off the mortgage is electrician Paul Buhagiar's number one money priority. Last year he scrimped and saved to pay off $26,000 his loan and this year he plans to pay off even more.
"I hate being in debt," he says.
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"I've always been pretty good with money. I want to pay off the mortgage so I can travel and not worry about things."
Buhagiar, who is single, earns $97,000 after tax and funnels as much as he can into paying off his home in Brooklyn, Melbourne.
It's taken discipline and a few more nights spent at home, he says.
"I've been a bit bad lately, but I try to make my lunches every day and if I do go out for dinner, I don't go too hard and try to eat cheapish meals.
"As boring as it is, you have to sometimes stay at home and chuck some movies on because you just can't do everything.
"I was supposed to go out to dinner the other night after boxing, but I cancelled. My mate was like, 'Why aren't we going out for dinner, don't you have $15?'. But I was like 'Nah'.
"I know that sounds tight and I'm not a tightarse, but I'd spent enough on food that week and it all starts adding up."
Buhagiar paid $12,000 in the first year of his mortgage in 2014, sometimes making minimum repayments. But last year he decided to refinance and make larger repayments to cut back the life of his loan.
To achieve his goal of paying off the mortgage quickly he set up automatic payments on his phone and gym bills to avoid any overdue fees. Most importantly, he stuck to a strict $300 weekly budget.
"It's not easy and the start of the year is hard because all the insurance bills come out at the same time, but I generally try to pay off $2000 a month," he says.
This year the 34-year-old plans to travel to Vietnam in June and hopes to soon purchase an investment property.
A new year means new goals, new challenges and new money. It also brings everyone a new chance to get their financial goals right.
Any new financial plan – whether it be ramping up savings, slashing debt or diversifying investments – needs close scrutiny of incomings and outgoings. A fresh inspection of the finances could uncover new ways to make deeper inroads into money goals.
Start your financial health check by setting clearly defined short and long-term goals, says Scott Parry, chief executive at Crown Wealth Management.
"They need to be specific, measurable, trackable and you need to reward yourself," he says.
"Identify the financial triggers or checkpoints that you want to reach, and reward yourself with an experience that you can truly appreciate because you've earned it."
To kick off your plan, write down your goals and keep them realistic, Parry says.
"Goals that aren't written down are just dreams – by writing a goal down, you make a commitment to yourself," he says.
"Your plan needs to take your current lifestyle and your goals into account, so that you stay motivated."
Not being accountable to goals or linking them to outcomes are common flaws of financial roadmaps. Parry recommends creating a visual representation of where you are, where you want to be and how you plan to get there.
Setting a budget that works
Short-term goals need to be stepping stones that will help you achieve your long-term goals. Budgeting is the key to both.
But even the most ambitious savers neglect this simple step, says financial adviser Scott Haywood.
"Everyone hates it – you're not alone," he says.
"Don't think you're different because you don't want to do a budget."
Take the obvious figures into account – earnings, tax, mortgage or rent payments, credit card expenses and essential bills such as electricity, water and rates.
To drill down to the finer details of your budget, Haywood advises scrutinising spending patterns.
"Get your last three credit card statements and put them on a table in front of you and say, 'How am I spending my money?'," he says.
"Sometimes when doing a budget you need to go backwards to go forwards. "Rather than start from scratch, look at what you've done in the past three or four months and then you can move forwards."
Simple money moves can save you thousands in the long run. Negotiating a better deal on car and house insurance should be a permanent fixture in your calendar along with shopping around for a competitive rate on your home loan.
Consolidating debt after Christmas
Tightening the purse strings can be hardest after splurging at Christmas. Australians spent an estimated $46.8 billion in the six weeks before Christmas and are predicted to spend a further $16.8 billion in the four weeks after Boxing Day, according to the Australian Retailers Association.
Kyra Pritchard from financial solutions company Debt Cutter says many consumers lose control of their spending at Christmas.
"Many people are just managing and then Christmas comes and they spend and say I'll deal with it later," she says.
"Things usually get tough around February because people want to use their credit cards to get kids back to school to pay for books."
For those in financial strife, Pritchard recommends contacting creditors to arrange hardship payment plans and lenders to request a payment holiday. These measures require a statement of financial position, including pay slips, a list of assets and liabilities, as well as a budget.
Consolidating debts by rolling credit card debt into a mortgage is an option for those trying to avoid high credit card fees, Pritchard says.
"Rolling debt into a home loan means the interest is a lot less than a credit card, so if you've got enough equity in your home then definitely refinance," she says.
"You can split your loan so $5000 or $10,000 is in one pocket and home loan is in another. Best thing is to use an offset account because it will pay down debt even quicker."
Just make sure that you make additional deposits to pay down the debt quickly, rather than spreading it over the lifespan of your mortgage.
Super over the mortgage
While Buhagiar has made tremendous progress on his mortgage, this is not the only way to get ahead.
Financial adviser Scott Haywood says salary sacrifice into superannuation is critical and not just those of us nearing retirement.
"I would put salary sacrificing into super above putting money into the mortgage," says Haywood. "We need to become self-funded in retirement and how you do that is by contributing to super."
In Buhagiar's case, he has paid down his mortgage to a level where his accommodation costs are lower than market rents. This frees him up to diversify his cash and make salary sacrifices into super, Haywood says.
"Now he can look at increasing his superannuation contributions because they're only taxed at 15c [in the dollar]," he says.
"It's about diversifying his money rather than just being in a reduced debt environment.
"So rather than putting all of your eggs in one basket with the mortgage, you're putting some money into super, which is taxed concessionally and some into the mortgage in a low interest rate environment."
Still Buhagiar is looking forward to the day he is mortgage-free, which his financial planner has projected will happen in six years' time.
"Everything going well, it will be awesome. Bloody oath," Buhagiar says.
Keeping New Year's resolutions
Saving more and spending less is high on the 2016 must-do list. Behind getting fit and healthy, it's the most popular New Year's resolution for Australians.
According to a survey of more than 1000 Australians by finder.com.au, 54 per cent put health and fitness at the top of their resolutions, followed by 12 per cent who set money goals.
Conventional advice on sticking to your New Year's promises is to make yourself accountable by telling someone and writing them down. And research backs this up.
A study by psychology professor Dr Gail Matthews at the Dominican University of California found in a group of 267 participants, those who sent weekly updates to a friend were 33 per cent more likely to achieve their goals.
Technology has put goal setting at our fingertips, keeping even the most time-poor people answerable to their resolutions.
Apps such as Level Money and PocketSmith track cash flow and provide projections about future savings.
Then there's Promise or Pay, a web-based platform by Australian entrepreneur Jay Boolkin.
Promise or Pay users publicly share their goals and pledge to donate their money to charity if they don't follow through. Friends are also encouraged to donate to the charity if the goal is successfully met – so either way, the charity wins. Current promises on the site include not eating fast food and meditating.
Sharing goals with others at the same time as giving to charity is enough to incentivise people, Boolkin says.
"I decided to combine accountability of publicly announcing a personal goal and the phenomenon of loss aversion, which basically says that people have a propensity to avoid losses over the desire to acquire gains," he says.
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