If there’s one thing that frustrates me more and more the older I get, it’s money wasting. I’m talking about frittering away funds on things that can be avoided: parking tickets, speeding fines, credit card late fees.
The other thing that really erks me, partly because, like many people, I’ve become something of an eco warrior in recent years, is energy waste. My kids are terrible offenders. I’ll walk into a well-lit room at home with the TV blaring, only to find there’s no one in there. It’s a complete waste of electricity – and money that would be better spent elsewhere.
I’m the first person to shop around at the supermarket to make sure i’m getting the best price. If Yorkshire tea is on sale one week, I’ll buy Yorkshire tea. If its Twinings the next week, I’ll happily switch to Twinings. A friend of mine bought Vanish stain remover for years to keep his shirts white, only to discover the supermarket home brand actually works a helluva lot better – and costs a fraction of the price.
Whereas brand loyalty used to be huge, these days I think it’s fair to say we’re not as faithful as we used to be. We’ll happily swap Sultana Bran for Bran and Sultanas from Aldi if it’ll save us a couple of bucks; Mars bars for Titan bars. I loved it when the UK supermarkets brought out basket matching. They’d price match your goods with those from all the competitor supermarkets – your shampoo, cereal, soft drink etc. – and if your basket was found to be cheaper at the competitor, they’d knock the difference off your bill.
Families can’t afford to be brand loyal these days. The cost of living is high – electricity prices rose by a steep 72 per cent between 2003 and 2013, and have increased a further 50 per cent in the past five years. Gas prices have also steadily increased, leading many households to turn to solar and battery power in a bid to cut costs (and save the planet!).
The thing about loyalty is, it’s not always rewarded. As the chief executive of UNO Home Loans – an Active Home Loan Manager that brokers and helps you manage your home loan for the entire time you have a loan – we regularly come across people who are still on the same home loan they took out 10 or 20 years ago. Our research found one of the biggest drivers of household financial waste – up there with electricity and food waste – is home loan interest, which we found Australians are wasting an estimated $4.2 billion on each year.
Home loans are a great example of where brand loyalty is not always a good thing. For people who have been on the same loan for 5, 10 or 20 years, it’s likely a lot has happened in that time. The value of their property has probably increased, interest rates have definitely fluctuated, and there’s now a whole lot more lenders out there offering competitive rates on home loans.
Now I know plenty of people who keep regular checks on their electricity bill and who have no hesitation in switching providers. I have friends – probably more than those who are likely to admit it – who have been hit with a hefty speeding or parking fine. And did they change their behaviour? You bet.
Yet when it comes to what is most likely their largest outpouring of waste – interest on their home loan – they set and forget, because this is what people have been doing for years and years. Our research found 53 per cent of borrowers don’t know what their current interest rate is (so they don’t know if it’s any good or not) and 59 per cent of borrowers have never asked their lender or broker for a better rate since getting their loan.
At UNO, we’ve pioneered a way to save you money on your home loan. As an Active Home Loan Manager, we can find and broker the right home loan for your situation; monitor your existing loan and let you know whether it’s still the best rate available to you (even if you didn’t get it through us); help you renegotiate with your current bank or lender; and help you make the switch to a new bank or lender, if your current one won’t come to the party.
We recently helped a couple drop their interest rate from 3.75 to 3.33, cut their loan term from 20 years to 14 and save $117,600 over the life of the loan – by switching lenders and consolidating their debt. UNO was able to find them a better deal and will continue to monitor their loan and let them know the next time a better deal becomes available.
That couple can now spend their savings on something they really value. I’m all for spending money on items you know you’re going to appreciate – or experiences that create memories, like family holidays or a nice bottle of wine to celebrate a special occasion. For years I’ve coveted a swish pair of brogues, for example, and the other day I finally purchased them. Instead of having to replace my shoes every year, I now have a beautiful and sturdy pair of dress shoes that will last a lifetime.
It’s interesting how we place value on some things and not others. What do you waste money on and what do you value? I’d love to hear your thoughts. And in the meantime, check out UNO’s loanScoreTM tool – it’s like a health ceck for your home loan and only takes two minutes. It won’t stop you speeding or parking in a no parking zone, and it won’t stop your kids leaving the lights on, but it could save you a great deal of money.