You’re not imagining it — official statistics show it’s getting harder to earn more money. So, the best way to get ahead is to lower your expenses. Get more money in your pocket … there are banking, electricity and petrol savings to be had.
There’s a disturbing trend returning to the aisles: inflation. Grocery prices are rising at the fastest pace since 2009. The most recent Deutsche Bank supermarket inflation index showed a 6.8 per cent increase on a year earlier. Potential saving: $100 per $2000 worth of groceries
It’s time to talk
Banks are giving back. Hard to believe but true. Remember how they supersized rate rises and held back cuts during the GFC? Well now they are returning some of what they took. Selectively.
How do you get your share? Ask. If you have a variable-rate home loan and haven’t pushed your lender for a better deal in the past 12 months, it’s time you did. Big-bank standard variable rates are about 5.9 per cent. It used to be the case the biggest discount you could get off this was 0.7 per cent. But now, those that ask for a better deal are winning discounts of 0.9 or 1 percentage point.
Lenders are able to offer improved terms because funding costs have declined. And they are desperate to keep customers. Anyone who needs at least $250,000 and has a clean credit history should be able to get a rate of 5 per cent. You don’t have to endure the hassle of changing provider, just make your existing lender think you might walk.
Knocking off 0.3 percentage points will save you $228 a year for every $100,000 borrowed. Potential saving: $1092 annually on a $500,000 loan.
Big savings… Anyone who needs to borrow at least $250,000 and has a clean credit history should be able to get a home loan rate of 5 per cent.
This trend extends to electricity and gas companies. I have recently seen letters from a major energy provider, in which it offers 20 per cent off electricity and 17 per cent off gas to an existing customer to stop them leaving. That, in my experience, is unprecedented.
As with the home loan discounting, these sorts of savings are not advertised. You have to ask. Cutting a further 10 per cent of your energy bills could deliver sizeable benefits.
Potential saving: at least $200
Having a lend
In February 1997, CBA cut its variable home loan rate by 0.7 percentage points because it was bleeding customers to undercutting upstarts Aussie and RAMS, which used a new form of funding called “mortgage securitisation”.
Banks now face a similar threat from peer-to-peer lending in the $100 billion personal loan market. Those who are using P2P are already winners. If banks have to slash their rates to stay competitive, many more will benefit. The biggest local P2P lender is SocietyOne. It offers rates more than 4 percentage points better than the best of the big banks’ current unsecured personal loan offers. One of SocietyOne’s first customers was Leah Renwick, a finance broker and unabashed “rate shopper”.
Leading a revolution … Leah Renwick. Picture: Tara Croser. Source: News Corp Australia Ms Renwick believes P2P will be a “revolution”. News Corp Australia holds a small stake in SocietyOne.
Potential saving: $400 on a $10,000 personal loan.
Beat Big Oil
It used to be that motorists in Sydney, Melbourne, Brisbane and Adelaide could rely on one day of the week delivering discount petrol. However, the “petrol cycle” has become very difficult to predict. What to do? Take advantage of the fallout from the Australian Competition and Consumer Commission’s war with Big Oil.
The ACCC has taken most of the petrol retailers — and a data service called Informed Sources — to court alleging price coordination. In an (unsuccessful) effort to head off the ACCC legal action, Informed Sources reluctantly added to its Motormouth app the ability to determine not just when petrol is cheapest, but where. I now use this useful tool, priced at less than $3.
Money saver … the MotorMouth smartphone app’s service station search function showing significant price differences between outlets. Picture: Supplied. Source: Supplied The ACCC has estimated avoiding highs and buying lows can cut fuel costs by 10c/L.
Potential saving: $250 on $2500 annual spend