Tuesday, July 16, 2019


It is all too easy to rack up debt - credit cards, HECS, car loans - and may seem all to hard to pay it off. Debt can also have a big impact on how much money you can borrow for a home loan, so reducing your debt is essential when you set out to buy your first home.

Here are seven steps you can take towards minimsing your debt and moving into the property market. 

1. Work out how much you are spending

Create a spreadsheet and track your expenses for a month - record everything so you can see where your money is going. You may be spending much more than you think on some things, more than you can really afford. 

2. Decide where you can cut back

With a clear idea on how much you spend on each month, you can figure out how much you really need to spend and where you can cut back. That second coffee everyday could be costing you $20 a week, that's $1,000 a year! Buying your lunch rather than bringing it could cost you $2,500 a year. Buying one less bottle of wine a week could save you another $1,200 a year. With a bit of commitment, you can rein in your spending and have more money to repay debt. 

3. Make a budget

The only way to get on top of your credit cards is to stop using them. Make a budget for the money you need to spend each week or fortnight, based on how much money is coming in and what your necessary expenses are and stick to it. 

Calculate how much is left over after you have paid for the necessities, then figure out how much you want for discretionary spending and how much you can put towards repaying debt. Also, put money into a contingency fund to cover unexpected expenses such as car repairs that could bust your budget and cause you to reach for the credit card. 

4. Prioritise your debt

Work out how much money you actually owe on credit cards and loans - you may not realise how much it is. When you. know how much debt you are in, you can think more realistically about repaying it. 

You need to pay at least the minimum amount due on all credit cards each month to avoide going backwards and in soem cases being charged fees and penalties. But by paying only the minimum, you may never get the cards paid off, you need to pay more to make progress. 


  • paying high interest credit cards and loans first to save on interest
  • paying smaller debts first to give you the sense that you are getting ahead and that paying off debt is possible

5. Make a repayment plan

Armed with your budget and having worked out your debt priorities, you can plan which debts you will pay off over what period of time. Having a plan will increase your sense of control over your debt; sticking to it will increase your sense of achievement. 

6. Set goals and celebrate them

The thought of paying off all your debt may be daunting, so breaking it down into milestones will help you see the way ahead. Set goals such as paying off 10%, then paying off 25% and so on. 

Remember to celebrate each time you reach a milestone - buy yourself lunch or go to a movie as a small reward for your achievement. 

7. Stick to the plan and ride out the setbacks

Keep going wiht your repayment plan. If you miss a payment because of an unforeseen expense, stay positive. Avoid feeling demoralised or derailed by looking forward to the next debt milstone - you can get there!



The Royal Commission into Financial Services has dominated headlines since the final Hayne report was released earlier this month. But in its shadows, there's another important property issue that deservers our attention - and I think it's essential that people understand exactly what the consequences could be, before it's too late. 

With the federal election looming, Labor have confirmed that it will press forward with significant changes to the current negative gearing policy. 

Negative gearing is a tax benefit that allows landlords to deduct the cost of owning their investment property, against their own taxable income. If a property costs $800/week, and the rental income is $600/week, they are entitled to deduce the surplus $200 against their income tax. That $10,000 in annual deductions could see them receive a tax refund of around $3,000 - $4,500. 

Negative gearing was applied to housing as a way to incentivise investors to buy property, and therefore provide more housing for everyday Australians. Landlords, after all, provide housing for more than 1 million Australians - something the government benefits from, as it takes pressure off social housing. 

Labor's new policy states that investors will only be able to negatively gear brand new properties. If an investor buys a second-hand property, they are no longer able to claim any negative gearing deductions. 

The reasoning behind the policy change in to:

  • Drive more investments in brand new properties, and boost housing supply;
  • Put downward pressure on property prices and encourage affordability for first homebuyers;
  • Save the government billions of dollars in tax refunds. 

At face value, these sound like positives. The problem is, this policy fails to take into account the other impacts this policy decision will have. 

Impacts like: investors are likely to exit the property market if this is introduced. This will therefore diminish rental supply and drive up rents. It will not only make it harder for those who are renting to save a house deposit, but it will also push affordable rental homes to the outer suburbs, in newly developed areas, where investors are encouraged to buy due to the tax benefits of new properties. 

Translation: if you like living in an already quite expensive, more urban, established city location, well, you might have to enjoy it while it lasts, as these suburbs are set to become exclusive to the wealthy. 

In regards to downward pressure on property prices, this is already a factor at play due to natural cyclical pressures, Values are declining in our major capital cities, a trend that is forecast to continue for the foreseeable future. With the changes coming out of the Royal Commission about to transform the mortgage broking industry - and make it more expensive for everyday borrowers to get a loan, by way of a borrower-pays fee structure - slower demand for property is going to keep a lid on price growth. 

The Royal Commission is also stripping brokers of commissions and putting more money back in the banks' pocket, so they don't need another helping hand from the government in this respect! 

What can we do about it?

It's worth thinking long and hard abou thwo you want to vote for at this election, and the possible impact it could have on you. 

The latest Newspoll confirms that Labor remains ahead of the coalition, with an unchanged two-party preferred vote of 53047 per cent. If Labor gets into power, make no mistakes about it: property rents will go up. Landlords' access to negative gearing will be stripped. Everyone will have to pay a fee in order to get a mortgage, whether you go to a mortgage broker or direct to your bank. 

One way or another, it is going to cost you financially if you vote for a Labor government. 

That could be a very real possibility, however, so to any investors who are considering buying a property, I would suggest that you take action sooner rather than later. If negative gearing laws changed, existing investors are likely to be "grandfathered", which means their tax benefits will remain. 

Therefore, you have until the federal election to secure your next property and retain these benefits. If you are in the market to buy an investment property, feel ree to get in touch and see how we can help you!

The last couple of weeks have been a real shake up for the property and finance industry, and with Labor’s proposed changes, there could be even more turbulence ahead. I’ll aim to keep you updated as the situation evolves, and welcome any of my clients to contact me if you have any questions or concerns about the current state of play.

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Contact Details

Zippy Finance 

PO Box 3078
North Turramurra
NSW 2074

T 1300 855 022 

Louisa Sanghera is a credit representative (437236) of BLSSA Pty Ltd ACN 117 651 760.  Australian Credit Licence 391237. ABN 85 168 278 975.

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