Bal­anc­ing your bud­get is a pri­or­ity for most

Townsville Bulletin - - Investor -

RIS­ING in­ter­est rates a n d s k y r o c k e t i n g util­ity costs mean many peo­ple are hav­ing prob­lems bal­anc­ing their bud­get. A re­cent email is typ­i­cal: My wife and I have a $ 370,000 mort­gage on a house worth $ 500,000. We have credit card and other debts of $ 10,000 and are bat­tling to pay our bills. My wife is re­turn­ing to full time study and the fam­ily in­come will then re­duce to $ 4000 clear a month. The house would rent at $ 500 a week. Should we rent it out or try to keep it?

I pointed out it was im­por­tant to try to keep the prop­erty be­cause they would lose at least $ 50,000 if they sold it and then even­tu­ally bought an­other one. It’s rea­son­able to as­sume their in­come will in­crease again in the fu­ture when the wife re­turns to work so what they re­ally want is a strat­egy that will en­able them to get by for the next t wo years.

Ide­ally they should ne­go­ti­ate with t he lender to con­sol­i­date the per­sonal loans with the home loan and then have the to­tal loan on in­ter­est only, or at least at 30-year term, for the next three years. To­tal pay­ments would be $ 520 a week which they should be able to af­ford.

This is based on the premise they will chop up their credit cards and not take on any more per­sonal debt. Al­ter­na­tively they could put a ten­ant in the house and find cheap rent else­where.

Noel Whit­taker is a di­rec­tor of Whit­taker Mac­naught Pty Ltd. His ad­vice is gen­eral in na­ture and read­ers should seek their own pro­fes­sional ad­vice be­fore mak­ing any fi­nan­cial de­ci­sions. His email is noel. whit­taker@ whit­taker mac­naught. com. au

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