Saving for a new car

Are you saving up for a new car or car repairs, but you have a limited budget that you need to dip in from time to time in case of emergencies. The sheer convenience of having a car to go to work practically pays for itself. With a car you get to spend more time with your family and less time stuck in traffic and the occasional family trip would go by much smoother with your very own car. If you are single then you most definitely need a car. No pretty girl out there will even look at you without a nice set of wheels! (Just kidding - if a girl did go out with you just for your car the odds are that relationship is not going to be a keeper)

The problem is that you can’t buy a decent car without sacrificing your savings. The answer to your problems is an online savings account. Online savings account can come in term and high interest savings. The key is to allocate your money properly.

Allocate your money properly and you would be driving your new car in no time. Think of online savings account as individual piggy banks that have labels on it and has interest. I got this idea from my mom in law. She had tons of boxes covered in tape in her home that had labels on it like for grand daughter’s birthday party or for new set of teeth. She also had a box where that was also sealed but was easier to open in case of emergencies. I just applied that to online savings accounts.

Put a portion of your money in a term online savings account and let it grow fro a year or two. The term online savings account serves as the tightly sealed box. While you do that put a portion of your money in a high yield online savings account. . If you do this trick with online savings account and I promise you that you will be driving that new car in no time - you will also avoid going into debt with a personal loan.

Interest Rates May Fall But Hold Off On the Spending

It has been revealed by the Reserve Bank of Australia (RBA) that interest rates will fall by the end of the year and possibly as soon as September. This will provide much needed relief for mortgage holders. Interest rates were originally expected to stay steady until next year, but with a decrease in retail figures of 0.6% this has changed the market. It is likely the Reserve Bank will make a clear statement next week outlining what interest rate cuts can be expected. The RBA originally increased interest rates as a way to cut inflated consumer spending. Now with retail figures are the worst that have been seen for the past 6 years it seems that people’s spending has finally slowed down.

The average household with a mortgage of around $300,000 could be saving between $1,248 and $624 a year if a decrease of just quarter to half a percent is reached. At this stage it is still unclear if the banks will pass on the official rate cuts to the customers. It has also not yet been outlined how much rates will fall, at the moment it is tipped to be around a quarter to half a percent.

However financial experts are warning that people need to be wise with any savings made, as an increase in spending savings could spark another rise in interest rates in the future. A good strategy to get ahead at the moment would be to put away any available savings into a high interest savings account. With current relief at the petrol pump as a result of to the fall in crude oil prices and interest rates set to fall, people may now be in a position to save. This is a good opportunity for people to put away any extra money they are saving with a small decrease in petrol and interest rates headed the same way.

Offset Your Mortgage with a High Interest Savings Account

Using your savings account to reduce your mortgage is not only possible, but growing in popularity. This doesn’t mean taking all of your savings and making a lump payment on your mortgage loan. Your savings account stays right where it is. Just having the savings account is all you need.

Australian home loans are becoming easier to get and easier to manage because of a new thing called loan offsetting. The way it works is that you link your home mortgage to your savings account and the amount of your savings account offsets the interest on your mortgage. For example, if you have a home mortgage for $300,000 and have a savings account with $100,000 in it, you will only pay interest on $200,000 of your mortgage.

The higher your savings account grows, the more you can offset your mortgage interest. Financial experts recommend this approach to a faster mortgage payoff. They say that you should have a high interest savings account and put everything you can into it. Including the money you use for paying your bills and day to day spending. Even though you will be taking this money out of the savings account during the month, with the right high interest savings account you can earn interest for the time it is there.

There are many other types of mortgage programs available in Australia, and even more popping up every day it seems. The mortgage companies realize that it’s a tough housing market right now and they are doing everything they can to earn your business.

Offsetting your mortgage is only one advantage of keeping a high interest savings account. The other advantage, of course, is that as you earn interest your money continues to grow. Once your mortgage is paid off, the savings account will have quite a lot in it, and you could live on the home payment you are no longer making and leave your high interest savings to earn even more money for you.

Bringing Up The Savings Accounts to Bring Up Baby

Getting ready for a baby financially should actually start before getting ready for a baby physically, if you know what I mean. When a couple plans to have a child, they should also plan to afford a child. Research has shown that the cost of raising a child in Australia can be as high as $600,000. That’s for A child – one – singular. What if you want more than one child? Do you have to be rich? No, you don’t but you do have to start saving if you want to get through it unscathed.

Just as soon as you decide you want to have a child, take a look at your finances and make some adjustments. You will want to invest in some high interest savings and term deposit accounts. Yes, I said some. Put some money into a high interest savings for a year and then some into a term deposit for two years, then a high interest savings for three and term deposit for four. Spread it out over the years so that you can collect your money and the interest as you need it.

Typically the restrictions on a high interest savings account will be more lenient than that of a term deposit. This is why you should go every other year, just in case you need to get into one of them for an emergency. You won’t lose as much in penalties that way. Then why, you ask, wouldn’t you put all of the savings into a high interest savings account? Because, I answer, term deposits will give you a higher return rate.

Babies get more expensive as they get older. Teens are very costly. The money you put into a high interest savings or term deposit will grow with your child. When your teen needs more money, you will have it available. But when your teen wants (not needs) more money, tell him to get his own high interest savings account.

Rising interest rates good news for savers

When Australian mortgage rates go up, so it seems do the savings account interest rates. This may be bad for homeowners, but it’s great for savers and investors. Banks are feeling the crunch of the times and they are fighting for your business. The banks need your cash to build their own portfolios back up, and they are willing to pay for it. Term deposit rates and savings account interest rates are exceeding 8%.

Here’s the best part. You don’t have to deposit a huge amount of money anymore to get that high yield savings account. One bank is offering a 12 month deposit on $5,000 at 8.7%. This savings account used to require a $50,000 deposit. The banks know this isn’t going to do them any good if they just get one or two, but they realize that by offering the lower deposit amount more people will be able to take advantage of it. It only takes 10 of the lower deposits to match one of the higher.

So, what’s the catch? Well, here's the winner for you - in most cases there is no catch. The banks are offering these high rates as they need to boost their own cash reserves to fund lending during the credit crisis. In the case of a term deposit then they may require that you don’t touch your savings account for a full year or an agreed period of time. A couple of banks out there also have interest penalties for any month in which you make a withdrawal. Be sure to check into all of the restrictions when you open a high interest savings account. The higher the interest, the more restrictions there are likely to be.

To find the best savings account or term deposit account available, shop around. The savings account that looks like it has the best rates may not be just right for your financial situation. If you can put your money away for a year or more, look into term deposit accounts. The more you can deposit and the longer you can leave your money alone, the better rate you will get.

Savings hit an all time Low

Australians are now putting away less money as a proportion of their income according to alarming new figures. Many people surveyed did not have a savings account and had no cash reserves should they loose their job. With interest rates expected to go up before Christmas and a possible economic downturn on the horizon, it is now more important than ever to have a financial safety net.

A survey of 500 Australian adults has found over 50% do not have an interest earning savings account. This amount varies from state to state with people in Victoria leading the way with 53.1% and followed by NSW on 51.4%. Queenslanders were lagging behind with only 41.7% surveyed having a savings account according to research done by savings account comparison website www.high-interest-savings-account.com.au.

This information suggests that many people would not be prepared if they needed money to cover unexpected costs. With increasing food and petrol prices and another possible interest rate rise before the end of the year this is a very risky financial strategy. Another problem is that people are continuing to rely on debt to fund major purchases instead of benefiting from a high interest savings account to save up for the items they want. Many people are drawn in with interest free periods and then find it difficult to make the required repayments, particularly over the past 12 months since interest rates have now increased.

Other research into people’s spending and savings habits have also shown similar results. A poll of 400 Australian Facebook users aged 18-34 found that less than 40% have enough savings to survive more than a month at their current lifestyle if their income was to stop today.

The majority of people in the 18-34 years age group are living from pay-check to pay-check and spending most of their disposable income without saving for major purchases for a rainy day. Over 1/3 of people surveyed admitted to having no savings at all, with men being the worst savers. Only 43% of men in this age group had any form of savings. On the other hand there are a minority of dedicated savers with 20% saving they could survive for 6 months or more at their current lifestyle from their savings alone.

However, there is a silver lining for those wanting to build themselves a financial nest egg. Following the recent interest rate rises in Australia, savers can benefit from extremely competitive rates on high interest savings accounts (around 8.0%). Opening a saving account with only $750 at an interest rate of 8% and depositing $150 per fortnight would grow to over $25,000 in just 5 years, enough for a deposit for a house.

Now is an excellent time to start a high interest savings product with interest rates at their highest levels for years. In the current market it is possible to get a savings account rate of 8.0% or more. Considering the turmoil of world stock markets due to the credit crunch and spiralling oil prices a savings account offers a safe alternative.

Mortgage stress at record level

It has been revealed that over 1 million homes in Australia will experience mortgage stress by December. This dismal outlook comes at a time where many families are already under financial pressure with rising fuel prices and interest rates making mortgage repayments more difficult than ever.

The predictions of mortgage stress are being revealed as unemployment figures are set to rise in the next 6 months. There are a combination of factors including an increase in unemployment, escalating credit card debt and global factors such as the credit crunch, which are all contributing to mortgage stress.

A predicted rise of 0.5% in unemployment will equate to a loss of over 53,000 lost jobs before the end of the year. Australia’s small to medium sized businesses will be the hardest hit with declining sales and an increase in costs to blame. Businesses that have been facing declining sales and rising costs may be forced to cut costs such as labour. Approximately 45% of the people in the retail and hospitality industries are currently employed part-time, and it is these areas with the most pressure to reduce costs.

Credit card debt has also been spiraling out of control and many banks are still offering incentives such as zero balance transfers on credit cards to attract customers. However there are warning signs that Australian banks could be entering a loan loss cycle not seen in almost 20 years as a result of the credit crunch. Interest rate rises from the banks have been higher than the central bank movement and there have been some increases in fees, in areas such as loan applications.

One of the factors initiating the global credit crisis was banks in the United States moving away from zero balance transfer credit cards. The Commonwealth Bank credit cards are currently the only bank in Australia not to offer that type of credit card deal.