Interest rates are rising as the Reserve Bank of Australia (RBA) looks to aggressively raise the official cash rate to help slow growing inflation.
For the average borrower, higher interest rates make it more difficult to meet mortgage payments and can erode household budgets.
If you are worried about rising interest rates
There are a number of steps you can take
to reduce your stress levels
Double-check your expenses
When costs go up, it's very important to take a close look at where your money is going and prioritize the expenses you really need.
Discretionary items or luxuries may be one area where you can cut back on spending. Simple examples, such as dining out or taking an expensive vacation, maybe something to consider cutting back on to save some money. The money saved from these cuts can be used in more important areas, such as your mortgage.
Creating a budget and sticking to it is usually the best way to ensure that your income exceeds your expenses each month.
Consolidate your debt
If you have many different debts with varying interest rates, it is worth considering consolidating your debts.
Consolidating debt means converting high-interest debt into a new loan with a lower interest rate. This can help you pay off your debt faster and deal with higher interest rates.
Refinancing
Another good option for those worried about higher interest repayments is to try to find a more competitive rate. Working with a Broker can help you compare your options and find different loan products that can potentially save you money.
The broker typically offers introductory offers with competitive rates and a selection of different home loan products that may be appropriate for your situation.
Seeking to downsize
If you are really concerned about higher interest rates and being able to manage your mortgage, then you may even want to consider downsizing your property.
By finding a less expensive home, you can reduce your mortgage payments to ensure it is more affordable.
Find alternative forms of income
Today, there are many ways to earn extra money. Taking on more work or side hustle may be an effective way to improve your financial situation.
Interest rates rise and fall over time, so when they are on the rise, it can be an opportunity to earn more income to help pay down debt.