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Interest rates are on the rise – with experts saying this will continue into next year – and most Australians are tightening their purse strings. So is now really the time for a holiday?
You may not think it’s possible, but with the right saving strategy you can continue to pay off your mortgage while putting aside money for a much-needed break.
Planning for a holiday is just as good for your mental health as actually getting away.
If you’ve made additional repayments on your home loan, you may be able to access these funds through a redraw facility.
Setting a budget from the outset is the best way to fund your holiday while still being able to take care of mortgage repayments.
What you need to know about the current economy
While it’s true that the cost of living is up – recent government data shows a 23.4% increase in the relative price of goods and services over the past decade – holidays should still be on your agenda.
Not only is getting away from the daily grind good for your mental wellbeing, research shows that just planning for a holiday has mental health benefits.
There’s no need to splurge on expensive overseas holidays. You can save money and still have an amazing time with a staycation to see the local sites, or a budget camping trip.
You also don’t have to take the same number of holidays as when interest rates were at historic lows. Balance your priorities and stay within your means.
Be aware: While taking a break from time to time can support your mental wellbeing, it shouldn’t come at the detriment of missing home loan repayments. Make sure you are prioritising your mortgage so that you aren’t hit with late fees, a default on the loan, or worse.
What you can do to save smarter
There are many ways you can continue to pay off your mortgage while saving for a holiday. It just means you may have to change your priorities around what you spend your money on.
If you find it difficult to actively save, open a separate savings account and set up automatic deposits every pay cycle. Even $20 a week will turn into more than $1,000 over the course of a year.
Take a closer look at your home loan structure. If it has a redraw facility, you may be able to access additional repayments you’ve built up over the life of the loan.
Start implementing sensible budgeting practices. Cut out the takeaway dinners, buy cheaper groceries from your fruit and veg store, unsubscribe from services you don’t need, and be strict with yourself about saving – it’ll pay off when you’re finally on holiday!
The bottom line
Even if your regular savings deposits are a little smaller thanks to interest rate rises, you can still make your holiday special.
Plan for the holiday you can afford. There’s no point going into debt for one trip away, so what don’t you need? Trade five-star accommodation for a cheaper room that’s still close to all the activities you want. Or take a road trip rather than flying to your destination.
Set a budget from the outset and stick to it. If you plan for your holiday several months in advance, you may even be able to lock in your dates at a time when there are special deals on flights and accommodation.
Get the whole family involved in planning. You could even allocate a portion of the holiday budget to different family members, and get everyone to come up with fun things to do that will be enjoyable, memorable and inexpensive.
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Financial Disclaimer:
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
