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& My money

A flexible solution to the bumps of Christmas spending

Flexible solution to the bumps of Christmas spending

If, like Santa, you're making a list and checking it twice, you're certainly not alone at this time of year.

As the countdown to Christmas ramps up, many of us are consumed with the pleasure and pain of Christmas shopping, putting together festive menus and organising facelifts for our homes before we entertain family and friends. And of course there's also the matter of balancing the Christmas budget.

According to Roy Morgan’s annual Christmas retail sales forecasts, conducted in conjunction with the Australian Retailers Association (ARA), Australians will spend nearly $51.5 billion in only 46 days, across retail stores from November 9 to December 24. Their forecast represents a 2.9% increase against the equivalent Christmas trading period last year. 

So if your expenses are causing your Christmas spirit to wane, there might be no need to resort to increasing  your credit card limit or incurring additional costs through "buy now, pay later schemes".  The flexibility of a home loan redraw facility could be at your fingertips to smooth the bumps.

If you're one of the financially savvy Aussies who have been making fortnightly repayments or extra lump sum repayments to your home loan, then you may have available redraw funds in your home loan which are often a more economical source of cash and incur a lower interest rate charge.

It's well known that by getting into the habit of making additional home loan repayments, you can ultimately reduce the term of your loan and the amount of interest you pay over the course of the loan. These additional repayments can provide a buffer should you need to access these funds for urgent or seasonal expenses like Christmas in the future. And while redrawing funds might negate the benefits of having made these additional payments, the flexibility that it can offer could make it very worthwhile.

If a redraw option isn't available to you this year, the New Year might be the perfect time to get into the habit of squirreling away some extra repayments here and there to give you the opportunity to redraw in the future.

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