Finance Q&A - July

Our financial guru Cat is once again with us this month. Cat has the ability to help with all those things to do with money, savings, home loans and all the kinds of things most of us wish we were more interested in or knew more about but just don't have the time to look into or quite frankly hate the thought of.

So if you have a question for Cat, send it into enquiry@femail.com.au. When sending in your question please put "financial question" in the subject line.

Hello Cat,

I have recently separated and need some advice on how to handle my finances before I get into debt problems. Please could you advise me who the best person is to discuss this matter.

Thank You.

Hkth40

Hello!

First of all I'm sorry about your separation. Having been through this myself I know it's a frightening and confusing time for you, and my heart goes out to you.

First thing you need to do is make sure you are aware of exactly what you have and have not got. Contact your bank and order statements on everything, so you know exactly what your starting point is. There's no point making plans only to find that your balance is actually less than you thought.

The one most important thing to do is sit down and make a budget - make sure you have enough set aside every pay to cover the basics - electricity, rent/mortgage, gas, water etc. and then see what is left over - but don't forget to eat too! If it appears that the expenses will be higher than your income, then you will need to work out some other options - I know it sounds pretty heartless, but now is the time to be practical. Would you be comfortable having a flat/house mate to help out with the bills, is there anything on the budget you could cut back on (e.g. Clothes, make up etc)

Are you living in the same house? What were the cost of the bills before and are they likely to remain the same? For example, if the water bill was usually $200 for example, it will probably be lower in future if there's now only one person using it - but don't forget that the next bill will still be close to the usual figure before there is much difference. Are you going to be sharing a house - i.e. - having a border or moving into a shared house/flat yourself? The changes to the costs of the house will need to be taken into account.

You should also, if possible, investigate amalgamating any debts you may have. It is much easier (and cheaper) to pay one lot of repayments than a few. If you have a personal loan, credit card and even a home loan, you should speak to your bank about consolidating your debts. This is especially relevant if it's a home loan, as you may be able to include other debts onto your home, at much cheaper rates,

The best thing to help you out is planning -
1. Establish exactly where you are at the moment.
2. Work out a budget - and stick to it!
3 Evaluate your options if expenses are higher than your income - e.g. house mate etc.
4. Investigate options for any debt amalgamation that may be available.

A financial planner will be a good point to start, and will be able to point you in the right direction. It may also be a good idea to talk with a solicitor to make sure you know your rights - especially if there's children involved.

Most importantly, be good to yourself. Now is a time that you need a little comfort, and don't forget the support of your friends. All the best.

Hi Cat

Can you help me please. I want to get a credit card but I am not sure if I earn enough money. I pay rent and I also have a small loan for a car. I'd really like to get one. I earn $32,000 p/a.

Can you give me some advice please.

Thanks
Sally

Hi Sally,

Generally speaking the banks don't just look at your amount of income, they look at your total financial situation. Looking at your income alone, you would most likely qualify, however, other aspects are taken into consideration.

Things to consider are:
- Income
- Other debts you may have and the repayments on those
- Accounts and savings you have in place
- Have you been knocked back for a loan or credit card before? If so, this may be a factor in assessing your application.
- They also look at job security - how long you have been in your current job may influence their decision, but that is taken into context with the rest of your situation.

On your side of things, you also need to assess why you want a credit card - will you be using it only in emergency? Are you fairly good at sticking to budgets or do you tend to splurge a bit.

A good way to approach it is to apply for a card with a minimum limit - usually about $500. Once you have had your card for a while and are able to assess how you have handled it, then you could look at increasing the limit if need be. For example, if you find yourself going up to the limit fairly often, and only making minimum repayments, perhaps it's better to maintain the credit card limit to the minimum, to ensure the cycle doesn't "blow out"

I hope this has been of some help to you - happy shopping!

Remember: If you have a question you'd like to ask of our financial consultant and guru Cat, send it in today to enquiry@femail.com.au

Cat is a representative of Winchcombe Carson Financial Planning.