Minimise spend on depreciating assets
Purchasing depreciating assets will impact your success with Money Management.
The most expensive depreciating asset most people purchase is a car, unless you’re super rich and you can also afford a private jet or yacht!
The value of your car can reduce rapidly. Further, a car loan debt can have significant ramifications on your borrowing capacity due to the shorter loan terms for car finance. This means that choosing to upgrade a car can have the following impacts:
- A reduction in monthly cash flow and borrowing capacity if you have a car loan.
- A reduction in your cash savings buffer if you purchase the car partly/outright.
- Ownership of an asset that loses value.
If Property Planning is your primary focus for wealth accumulation, you should:
- Think twice about how much you spend on your car and other depreciating assets.
- Discuss any proposed car purchases with your Strategic Mortgage Broker and/or Property Planner, so you can understand the implications on your property and investment strategy.
As you begin to maintain a habit of spending less than your budget, you’ll move to a great position of feeling in control of your finances and be able to decide whether you can increase the amount of investing you do, and or if you can trim your spending further. If so, you should reward yourself!
The Property Planner’s money tip – Reduce landfill and increase your wealth
Environment Victoria states that the vast majority of items we purchase end up as landfill within six weeks. Keep that in mind when you’re shopping and take a pause prior to making an impulse buy. Ask yourself, ‘Do I really need it?’
The power of saving $5 a day when combined with compound interest:
Amount deposited over 40 years = $73,000
Total interest earnt = $159,119
$5 per day x 365 days x 40 years x 5 per cent return = $232,119
You have tripled your money!
“Compound interest is the eighth wonder of the world. He (or she!) who understands it, earns it…he who doesn’t…pays it.” – Albert Einstein
Contact us today to book in a free confidential property planning, strategic mortgage broking, money management or property select meeting.