Budgeting experts reveal how to manage 2023’s predicted interest rate rises

As Aussies prepare for yet more mortgage pain, two of the nation’s leading bill-busting experts offer ten tips on how to slash costs.

It’s the grim prediction that will have cash-strapped Australians bracing for yet more cost of living pain.

Leading economist Phil O’Donaghoe, of the Deutsche Bank, has told the Daily Telegraph he believes Australia will be hit with another four interest rate rises up until August to reach 4.1 per cent.

His worrying comments come ahead of the RBA’s first meeting of the year where it is widely expected they will increase the cash rate again.

Adele Martin is a multi-award winning certified financial planner. Picture: Supplied

As Aussies prepare for another massive increase in mortgage repayments, two of the nation’s leading bill-busting experts have offered tips on how to save thousands despite the price hikes.

One Big Switch campaign director Joel Gibson, author of Easy Money and Kill Bills!, and financial planner Adele Martin, founder of My Money Buddy and The Savings Squad podcast, reveal the key steps Aussies can take to take the sting out of the rate rises.

One Big Switch director and author Joel Gibson. Picture: Tim Hunter.

1. SHOP AROUND

Joel Gibson: “You can still save thousands in some cases by moving to a cheaper lender.

“The lowest advertised variable rate is currently with Hume Bank at 3.99 per cent for two years. Rates have rocketed up by more than double since this time last year, but it still pays to shop around.

“The difference between a 4 per cent rate and a 5 per cent rate, for example, is about $376/month or $4500/year on the average mortgage.”

2. GET UP TO $5000 CASHBACK FOR REFINANCING

JG: “With millions of borrowers coming off low fixed rates, there’s a refinance war on between the banks. Aussies broke our record for refinancing loans in November last year.

“Some lenders are offering $3000, $4000 or even $5000 cashback for re-financiers. Check out uBank, HSBC, ANZ and St George for example.

“But do make sure the rate is low too as cashback only comes in the first year — the rate lasts for the full loan.”

Philip Lowe, governor of the Reserve Bank of Australia. Picture: Getty Images

3. SLASHING FOOD BILLS

Adele Martin: “Embrace the slow cooker because you can use cheaper cuts of meat. Plus there are always leftovers that you can put in the freezer so on those nights when you don’t have time to cook you can reach for these instead of expensive takeaway.

“Other ways to cut your food bill are to buy fruit and vegetables in season. Apps like Box Divvy are great as they also connect you direct to farmer.

“Rather then buying individual packet food for school lunches, buy in bulk and divide using reusable containers or bags. Making your snacks can also save you money and can be healthier as you know what’s in it.”

4. BUYING SECOND-HAND OR BORROW

AM: “Before you add something to your cart, ask yourself if you can buy it second-hand. Or, if you’re only oing to use it once, can you borrow or rent it?

“Places like Facebook marketplace or buy sell and swap groups can be great for school uniforms, a formal outfit, kids’ toys and prams.

“There are also sites like GlamCorner and The Volte where you can rent clothes — think of it like Spotify for clothes.

“Not only will it be better on your wallet, it’s also better for the environment.”

Ask a broker for advice. Picture: iStock.

5. USE A BROKER

JG: “Don’t feel you have to do it all yourself - around half of loans are arranged by brokers.

“Brokers know which loans you’re likely to get and which ones are a waste of your time.

“You can ask friends for a recommendation or use a platform such as Joust, which matches you with the broker that has the best deal for you.”

6. GO INTEREST-ONLY FOR A WHILE

JG: “If switching is not an option for you, it might be possible to go interest-only for while and hope that rates start to come back down.

“Bear in mind that an interest-only loan might have a higher rate so make sure you’re coming out ahead.

“Again, a broker can help if you want some advice.”

Write down your financial goals. Pictures Supplied

7. FRUGAL FEBRUARY

AM: “If your bank account is looking a bit sad after Christmas and New Year then picking something to cut back on in February can help get your spending back on track.

“For the month of February you pick one thing to give up or cut back on. Perhaps it’s buying coffee, takeaway, clothes, alcohol or magazines.

“To help you get motivated write down: what I am cutting back on, how it’s going to make me feel, how much I want to save and what I want to put it towards.”

8 REWARDS

AM: “Did you know you can earn cash back on online purchases?

“Places like ShopBack and Cashrewards give you money back when you shop online.

“With no set up or extra costs for you, it sounds too good to be true.

“But when you buy from an online store they pay ShopBack money —think of it like the store paying for marketing.

“Shopback keeps some of this cash and some they give to you. So it’s a win win.”

Talk to your bank if you’re experiencing hardship.

9. YOU’RE NOT TRAPPED

JG: “If you’re in real financial difficulty, talk to the bank about hardship assistance.

As they did for many borrowers during the pandemic, banks might allow you to ‘defer’ interest payments temporarily.

Of course, moving out is always an option - either by selling the property or renting it out and renting somewhere cheaper for yourself. Again - get some advice first.”

10. NEGOTIATE A BILL

AM: “If it’s been a while since you have looked at your bills then you may not be getting the best deal on things like your electricity, phone, insurance and mortgage.

“Often new customers are getting a much better deal than existing ones.

“But they don’t want to lose you as a customer so just by asking you often save money.

“But I find something that can get done at anytime generally gets done at no time. So I put a time in my calendar every one to two months and pick one bill to negotiate.

“And if you are stuck on how to ask or worried about what to say, if they say no then head to our Facebook community The Savings Squad — we have a free script on how to negotiate your bills.

“And know if you are struggling and things are feeling too much don’t be embarrassed to ask for help. Check out the moneysmart website for access to free financial counselling.”

Originally published as Budgeting experts reveal how to manage 2023’s predicted interest rate rises