3 Little Pigs and the Big Bad Banks


And so it begins…

The rate rises that we have all been warned about for the last few years have begun. Not from the Reserve Bank, but from the Lenders themselves. Regardless of what penalties and outcomes may be imposed from the Royal Commission into the Banking Sector, the Big Bad Wolves of the Banking industry still have the ability to raise interest rates as they see fit…

You can take action, but how…



House of Straw

If your budget resembles a house of straw, very thin walls between you and the dangers of the outside world, you must act now to avoid the impending breeze from the Big Bad Wolf.

Review your budget, and begin to add a cushion to ready yourself to pay your mortgage like you have received a one percent increase on your current interest rate.

Add this money to your mortgage, to your offset or to a savings account – keep the funds somewhere that is difficult for you to access.  The idea is to get used to living on less, before you HAVE to live on less.

If you do not have enough funds to cover this type of increase, then you need to either increase your income, or decrease your expenses.



House of Sticks

If your budget resembles a house made of sticks, somewhat organised but not everything lines up neatly, then now is the perfect time to straighten up. Make sure every line on the budget is looked into to ensure you are getting the most bang for your buck.

Arguably, increased interest rates can lead to increases in other lines of your budget. If you are a renter, the landlord may be reviewing the rent and need to increase to compensate as insurance against the Big Bad Wolf.



House of Bricks

This little piggy was always known as the smart one. Taking care of the other little piggy’s when their houses could not withstand the storm the wolf brought.

Talk to your friends and family about being prepared for interest rate rises. This will make sure that the people you care about, do not all end up blown away by the increases, and are financially prepared – so they don’t end up under your roof.



In a nutshell…

For most of us, the home mortgage or rent payments are the largest one line in our budgets. Small changes in interest rates can make big changes on your bottom line. Get yourself ready and increase the mortgage or rent line of your budget to prepare for any increases in interest rates.

At worst, you have already learned how to live on less when interest rates increase.

At best, you are building a nice little pot of boiling money on the fireplace for any wolves that may want to climb down your chimney.



 – Karen Patterson