Cost of living pressures – kill them
Cost of living pressures – kill them
In today's economy, many people are looking for ways to reduce their expenses and save money. One effective way to achieve this is by reducing the cost of living. By finding ways to cut expenses in different areas of your life, you can free up more money for savings or other important expenses. Fortunately, there are several practical steps you can take to lower your cost of living, from making small changes in your daily habits to larger lifestyle adjustments. Below, GBAC will explore some of the most effective ways to reduce the cost of living, so you can enjoy a better financial future.

Cheaper housing outside Global Cities may reduce your cost of living!

The media screams that house prices are exorbitant and at the same time talks of falling values affecting lenders. House prices just went skyward during the Covid. In Sydney and some other capitals the Big Business community and Government have contrived to turn cities into giant cash registers – “A Global City”, fit for making money out of but not such fun in which to pay off a house, breathe the air, drive in traffic or enjoy open spaces. There are magic alternatives. Go for a road trip around your state or territory.

Australian is full of beautiful cities and towns where jobs abound within the same travelling times from home as many Sydney workers experience daily now. Covid induced internet usage has shown that many jobs can be done more efficiently and cost-effectively from remote locations. Even before the internet or covid, GBAC advised businesses and farms all over Australia by phone and fax, negotiating directly with bankers by phone.

Houses inland come in at $1 million or more less than in Sydney, eg Parkes, Cowra, Young, Gundagai, Cootamundra. At 6% interest a person living in a home in these regional cities and towns can earn $60,000 less after tax a year ($75,000 before tax) to cover the interest on their lower home loan and another $33,000 to cover the principal loan repayments on their lower home loan over 30 years. That is, they can earn $100,000+ less, to enjoy the same standard of living. That provides a big saving in money and stress levels when trying to cope with the rising cost of living.

Standard or general loan terms and conditions

It pays well to read the “standard/general” terms referred to in the bank loan contract but not visible there. It is quite deceptive that in many cases the banks have broken their terms and conditions into two documents. One of relatively few pages simply refers to another document which is produced in book form and possibly given to the borrower or is filed somewhere that it can be found and read online. In both cases borrowers must sign that they have read and understood those second documents when in fact they usually have not done so. When a dispute arises and the bank forecloses, appoints Receivers and Managers to handle the property sale for them at an exorbitant fee in order to keep the bank name out of the press, the bits of the contract that a borrower has failed to read may come into play. It is not sufficient that the borrower’s lawyer understands the loan contract. The borrower needs to understand it too. The lawyer’s job is to translate from Legalese to English.

Who’s in trouble with the Big Bad Bank Rate Rise?

The media daily proclaims that thousands of borrowers in are in trouble as rates rise. Banks however say many of their customers are ahead with payments and they do not anticipate very many defaults to follow the rate rises. Who is right?

Regardless, banks make billions out of their loans, so they can afford to be generous in their treatment of low-income borrowers squeezed as rates rise and property values sink back, particularly when those borrowers have cut spending to the bone and prioritised their bank loans. Home values will rise over the years as the debt falls.

Borrowers can contact GBAC for alternative loan repayment terms to cope with the changed circumstances. With cooperation between banks and borrowers it would not be difficult to develop alternative loan repayment programs that would work well for both parties. Good treatment of young borrowers will be just as effective as TV marketing to keep them as long-term customers.

Westpac targets Nab small business customers

The current competitive market enables borrowers to play off Nab against Westpac. This is always the best way to borrow from deregulated banks. Put a healthy dose of competition into the market. You can learn more about the move by Westpac on smh.com.au.

Loyalty Tax

That is exactly what GBAC’s LoanApps do, only they do it better, by giving all the banks a chance to compete for the loan. Bank loyalty has gone out the window and banks in fact charge existing business and farm customers a higher rate of interest than new customers. The Loyalty Tax makes a laughing-stock of customers who stick to their old bank no matter what.

Business customers bargain hard to keep down their business input costs. Farmers bargain hard on the price of livestock and maybe cropping supplies, but their opportunity for that is limited. Rural stores tend to leave prices off their sale goods as a way to fool farmers into spending more. It is a bit embarrassing having picked up farm essentials and take them to the counter to ask the price and put them back when it seems like a lot more than it should be.

My plan was to go in with a list on the back of an envelope of what I wanted to buy and ask for the prices of everything on the list. Then I could decide what grade of iron post or wire I needed. I adopted the policy that I was not trying to fence the place for the benefit of my grandchildren. Chances are they would give farming a miss or change the paddock layout anyway. I bought gear to last my lifetime and then some.

We all want to support our local supplier, so it is not good buying from a major town a couple of hundred kilometres away. That sends the local bloke broke and out of business. Most banks have decided they don’t care about having a local branch anyway. That is why I like Bendigo Community Bank. But when a farmer is borrowing, they are usually talking about very serious money so making banks compete and sharpen their pencils is a profitable and productive exercise. Because GBAC is paid by the farmer at nothing like the rate a bank pays the broker, the bank will usually make far greater reductions in their charges.

LoanApps –a golden glow for borrowers

LoanApps are successful as selling stock in the yards and this is one way that you can significantly reduce your cost of living.

Business and farm borrowers sell their loan business to the bidder who charges the lowest price for the best, most suitable loan. GBAC revolutionised this industry with its Moneygram in 1987, the forerunner of the LoanApp. Greg Bloomfield’s goal was to get for bank customers some of the gigantic profits being made by the banks. In effect every borrower makes borrowing a profit-generating part of their business. The borrowers become like shareholders in in a “Reverse Banking” business and instead of receiving a dividend once a year they receive a dividend every month or quarter when they make a loan repayment of less than they would otherwise have been paying without the LoanApps.

Cost of Advice - get the best and reduce your cost of living

Jessica Irvine writing in a newspaper recently commented that costly financial advice doesn’t add up. But my life experience is that you mostly get what you pay for. I always bargain when I buy cars, but not when I get medical, legal or financial advice. I want the absolute best.

There is some financial advice that will come free. Boost profits, cut spending, boost income, save, don’t borrow except for long-term assets, don’t guarantee another’s debt unless prepared to pay it out. Plan with budgets and compare to actual.

But when it comes to advice on how to actually do those things successfully it will pay off handsomely to engage a consultant who has successfully done it before and knows how to do it with you. Plenty of people have the right idea. For most of them it remains that – just an idea. People who can do it, like GBAC, make their living by doing it and they don’t necessarily have people lined up all day every day to do it because it takes a bit of serious planning and strategy. But it builds wealth like you can’t believe. Rather than looking at free advice, it is better to compare the cost of the advice and the financial benefit it delivers. In the long run, a good strategy can reduce your overall cost of living. When I look to help someone buy a farm, home or business, as a rule I knock one third off the asking price and settle somewhere in between the two figures. When I pay for advice, I expect to gain around ten times what I pay.

Bank-free intergenerational transfers - an untapped strategy to combat cost of living pressures

GBAC has arranged a number of direct property transfers between older retiring farmers and new young farmers, without involving bank loans to accomplish it. It has not mattered whether or not the participants were in the same family. We have also arranged them interest-free!