Barefoot Investor: How to get a better rate on your home loan
The RBA has announced a record low rate cut that is expected to stick around, which means it's the perfect time to shoot for a better rate on your loan, writes Barefoot Investor. Here’s how.
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So this year I’m playing the role of Santa and the elves.
Reason being, Mrs Claus is heavily pregnant, with an official due date of … Christmas Eve.
“What a wonderful Christmas present!” gush people who clearly don’t already have three kids under the age of seven.
(My crew are understandably a little suspicious of the ‘present’ Mummy has been carrying around in her sack.)
Ho! Ho! D’oh!
So here are three stocking-fillers I’m getting my kids which may provide some inspiration for the kids in your life.
The Famous Five
Every night I tuck the boys into bed and read them two chapters of Enid Blyton’s The Famous Five.
Honestly, it’s the best 30 minutes of my day, and easily the best thing I’ve done this year.
Now Enid Blyton may have typed these tales nearly 80 years ago, but her stories of adventure still nail it.
Better yet, there’s plenty of ’em: 21 Famous Five books, plus another 17 in the sister series The Secret Seven.
Soup and Baked Beans
My kids know that I made a major life change this year and now work in the community helping people who are stressed and broke.
They also know that many of my clients have kids … who often don’t have enough
food to eat.
And so the festive season throws up plenty of opportunities to expose your kids to the gift of giving — to charities like Foodbank, or even serving up Christmas lunch at a shelter.
Okay, so technically this isn’t a stocking-filler. (Can you imagine? Santa got me … a can of minestrone soup?)
Still, setting an example for your kids, showing them how to be humble and kind, is important … and never more so than on what for many is the loneliest day of the year.
Trees
Yes, trees.
Over the past few years I’ve literally become a ‘tree hugger’.
My kids and I plant a tree together and take a photo: it’s done and planted in 10 minutes flat.
My grandfather did it for me when I was a little kid; I vividly remember the fun of planting it with him and then quickly racing off to play with my toys (which are now buried in landfill).
My grandfather is long gone, but when I’m back home I make a point of visiting that tree. Every. Single. Time.
Okay, so let me level with you: Santa will also be bringing pink bicycles, nerf guns and spy sets.
Yet the truth is that these three stocking-fillers are as much for me as for the kids.
They’re what memories are made of.
Tread Your Own Path!
MORTGAGE WARS
LINDA ASKS: I just had to email you to say thank you and that I love your book.
I have just rung my bank and followed your script, and was able to get a 0.49 per cent discount on my home loan.
I am a single mum and have been so stressed, having recently lost my job.
This little win has given me a boost and I just needed to let you know I appreciate your advice.
BAREFOOT REPLIES: Sorry to hear about your job, but congrats for making the call!
And for any mortgage payers reading this, you need to follow Linda’s lead.
Today.
Here’s why: earlier this month the Reserve Bank of Australia cut the cash rate to a new record low of 0.1 per cent.
Even better, the RBA said rates are going to stay low … for at least the next three years.
You know what that tells me?
It tells me just how big a hole the economy is in, and how tough they expect the next few years will be.
Yet that’s a bit of a downer, so let’s focus on the upside.
It’s like the RBA has got the tequila out and is wearing one of those ridiculously oversized hats.
They’re telling us it’s time to part-ay … and hit our bank for a rate cut like it’s a piñata.
If you have a ‘3’ in front of your mortgage rate, it’s time to get out the lemon and salt: shoot for a rate that’s below 2.5 per cent.
There are some amazing fixed rates on offer (even below 2 per cent), but the old Barefoot rule is to only fix your rate if you’re struggling to put sausages on the table.
Everyone else should be reading the script from my book, getting a lower variable rate, and smashing their debt.
Olé!
BAREFOOT’S BITCOIN BUNGLE
BILL ASKS: How do you feel now that Bitcoin has become a part of many major fund managers’ strategies, and you completely missed it?
BAREFOOT REPLIES: Did I miss it? No, I’ve been talking about Bitcoin for years … I’ve watched it go up, then down, and now up again.
In fact, earlier this year I thought to myself, “with all this money printing going on, I bet Bitcoin will have a run”.
Did I invest in it? Nope.
Since then Bitcoin has soared. This week it hit a three-year high and is up a staggering 140 per cent this year.
So, how do I feel now? I can honestly tell you I don’t feel anything.
Being in the financial markets for 20-odd years, I’ve learned that there will always be someone getting richer faster than me. That’s part of the game.
I’ve also learned that life is simpler when I stick to what works for me: investing in large businesses that generate profits and pay dividends.
Still, there’s no denying that Bitcoin is going absolutely bonkers right now.
Surely that would make me want to invest?
Nope. I’m happy to sit and watch the rollercoaster from the sidelines and let the pro fund managers buy a ticket, and take a ride.
SWITCHED ON
JODIE ASKS: Just wanted to show you a pic of my son’s “spend” jar purchase.
He saved $300 to buy himself a Nintendo Switch Lite — by buying and selling stuff from the recycling centre (!) and using his pocket money.
Little did he know Mum and Dad had paid an extra $160 to buy the bigger version.
The kid nearly cried when he walked out of the shop holding it, and told us for about a week that he thought he was dreaming! A huge thankyou for your books and for helping us to be able to do things like this.
BAREFOOT REPLIES: That face! That is a life-changing moment right there: he’s worked hard, saved hard, and got the reward. (Psychologically, it’s the opposite of ‘buy now pay later’.)
You and I know it’s not really about the money — it’s about the behaviour, and the character traits it builds.
You Got This!
Pre-order The Barefoot Investor 2020 (The only money guide you’ll ever need) updated version now to make sure you get it before Christmas. John Wiley & Sons Australia, RRP $29.95.)
Information and opinions provided in this column are general in nature and have been prepared for educational purposes only. Always seek personal financial advice tailored to your specific needs before making financial and investment decisions.
If you have a money question, go to barefootinvestor.com and #askbarefoot.
Originally published as Barefoot Investor: How to get a better rate on your home loan
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