Is it getting hot in here? Australian families are starting to feel the heat and it’s not the approaching summer weather that’s making things uncomfortable – it’s the latest interest rate rise. It’s no surprise that banks are already passing the rise on to their customers – interest rate predictions indicated that they wouldn’t take long to increase their rates - but some major banks are hiking their home mortgage interest rates up by more than the official increase and what that adds up to is a lot of Australian families sweating over how they’re going to incorporate this latest rise into already-stretched budgets. A recent survey by the Mortgage and Finance Association of Australia revealed that over 50 per cent of respondents were already sacrificing a range of everyday expenses to compensate for the costs of increasing interest rates, and a lot of families may soon feel like they’re running out of options.

But fortunately, there are things you can do to take the heat out of this latest rise, starting with these three basic steps that will help you free up some much-needed cash to help cover those extra repayments.

Groceries can be one of a family’s biggest expenses – but they’re also one of the easiest to reduce! Being prepared and knowing what your family’s going to eat – and what you’ll need to prepare everything – can dramatically reduce your grocery bills. Start by planning weekly menus, including all meals and snacks, for the whole family, then ‘shop’ at home first to use what you’ve already got. Using cheap and plentiful in-season fruits and vegetables will help you to reduce costs without sacrificing flavour or value, and if you design menus that make the most of leftovers you’ll be able to avoid takeaway temptation when time is tight – which will be better for your health and your wallet! If you’ve got kids who are so hard to fill up that you’d think they had hollow legs, use rice, pasta, potatoes and fresh fruit and vegies to slow their appetites down, and have a think about baking your own goodies so they can still enjoy special treats.

There’s nothing like being organised to help save money, and this is absolutely true when it comes to shopping! Making a list will stop you from doubling up on things you already have, and can also stop you from succumbing to those impulse buys that seem to jump out and beg you to buy them! You can boost your savings even more by using catalogues to follow weekly ‘loss leaders’, finding out what day your local supermarket marks down its perishables, giving non-branded items a go and checking out the top and bottom shelves, where cheaper items are often located. Keep track of everything as you go by bringing a calculator along so you know how much you’re spending, and if you find you’re having trouble sticking to your budget, only take a set amount of cash with you – you can’t spend money you don’t have with you!

Find out everything there is to know about your mortgage – depending on what type of mortgage you have, you can save a small fortune over the life of your loan just by changing the way you make your repayments, so look at whether making weekly payments rather than monthly ones will be effective. It’s could also be worth looking at refinancing to make sure you’re getting the best interest rate, but always approach your lender first to see what they’re willing to do to keep your business – you never know if you don’t ask! Switching to a ‘no frills’ loan or looking at options with a redraw or offset facility so your entire account balance reduces the balance of your loan each day can also make a huge difference to your finances … but only get this type of loan if you’re very disciplined, because overspending can cause trouble. Just make sure that the costs of changing your mortgage won’t outweigh the benefits, do your homework and check out interest rate comparison calculators online, and always get professional advice before making any decisions.

Of course, these steps are just the beginning. To really fine-tune your finances, you should take a look at our 30 Day Challenge program, which is designed to help families save up to $30 000 in 30 days … and that kind of money would help almost any family keep its cool in the face of the interest rate increase!

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