YESTERDAY, I made a cool $2,025.
And I didn’t do a single thing to make it happen!
Instead, the Reserve Bank of Australia did all the work for me. On Tuesday afternoon they announced they’d slashed the nation’s official cash by a quarter of a per cent, bringing it down to 2.25%.
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Provided the banks pass on this full rate cute – and they really have no reason not to, with the Big 4 banks having posted profits of almost $30 billion dollars last year – then mortgage and credit card interest rates are set to reduce as well.
I did some calculations and worked out that in our household, if our bank oh-so-generously passes on the full cut, our home loans will cost us $2,000 less per year.
Homeowners all across Australia will be in a similar situation. The challenge is to figure out how to crystalise those savings…
You see, it sounds great on paper to be saving $2k per year on your mortgage interest expenses, but the reality is we probably won’t bank the savings.
In my own situation, the $160 or so that we’ll now save per month will likely be absorbed into other bills, expenses and everyday spending.
It’s like petrol prices – they’ve dropped drastically in the last few months. Before Christmas, it would set me back $75 to fill up. But I actually topped up my tank and got change from a $50 last week, something that hasn’t happened in around a decade.
Factor in one tank of fuel every 10 days or so, and with petrol prices hovering around $1, I’m currently saving around $75 a month. That’s close to $1,000 annually.
But will my household actually become $1,000 richer?
Unless I take $25 out of my wallet every time I fill up my tank and pop the cash into a secret hiding place, it’s unlikely I’ll enjoy the spoils of my petrol savings.
Actually, scratch that – I’ve had an idea.
I’m going to pick up one of those un-openable metal money tins. If I can remember, I’ll stash a $20 note in the tin every time I put petrol in my car, and I might just come out ahead.
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