Welcome to the December issue of "Smart Money".

Christmas is traditionally the season of peace and goodwill rather than the mad, expensive orgy of gift buying that it has become. I hope that you are celebrating Christmas in a style that accords with your financial situation rather than going into debt to provide the biggest and best gifts for your family and friends.

However, if your financial situation is out of control and you don’t know where to turn, I can help you to take control of your money and your life. As a new service, I am offering a money makeover.

Why not start the new year by resolving to get out of debt and start the new year with a clean slate?

Season’s greeting for a very happy Christmas to all our readers and best wishes for a debt-free start to 2004.

Sheila Freeman

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Let us show you, step by step, how you can take back control of your money and your life!

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Australia’s combined credit card debt in June 2003 was $24.2 billion, i.e. $1,210 per person!*

This is a very scary statistic, when you consider that it includes children, adolescents and elderly people do not have credit cards, as well as those people who do hold credit cards but always pay their debts in full before incurring interest. It means that some Australians have incredibly high credit card debt.

Unfortunately, many of these same people will put all their Christmas expenses on their credit cards, thus increasing their debt even further.

* Source: John S. Croucher, Professor of Statistics, Macquarie University in ‘Numbercrunch’, Good Weekend, Nov. 15, 2003)

Borrowers can minimise the effect of the recent Reserve Bank rise in interest rates with the following tactics:

1. Make repayments more often.

This can be done in several ways:

• Reduce the term and cost of your loan by paying fortnightly rather than monthly instalments – this simple step means that you are effectively making 13 monthly repayments every year rather than 12. You will save $46,000 in interest on a $200,000 loan over 25 years at 6.82%.
• Pay off your loan in less time. You will save $50,400 in interest on a $200,000 loan repaid in 20 rather than 25 years at 6.82%.

2. Fixing rates on some or all of your home loan

Fixing the interest rate for a set period can offer protection against rate rises. Some lenders are offering fixed-rate loans at 6.49%, less than the big banks’ variable rate of 6.82%.

3. Re-financing

Check out the rates being offered by other lenders – you may find you can save money by taking out a new loan at a cheaper rate.

4. Choose an offset or all-in-one home loan

You could save up to 5% of the interest cost over the term of your loan by using your salary and savings to offset your home loan.

Every effort has been made to ensure that the information on this newsletter is accurate. However, the information is not intended as professional advice and the authors shall have neither liability nor responsibility to any person or entity with respect to any loss or damages arising from the information contained in this newsletter.

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Copyright 2003 Sheila Freeman Consulting