With less than seven weeks to Christmas, people should now be thinking about how they are going to manage their finances over the silly season. Statistics show that the Christmas period can be financially stressful for many people as financial prudence takes a back seat to the excesses of the ‘silly season’. Usually this means the credit cards get a serious workout purchasing lavish gifts for friends and family as well as excess spending on entertainment.
The excesses of the Christmas period usually rear their ugly head in January or February once the credit card bills come in and the next round of loan repayments fall due. Again statistics show that a higher rate of loans going into arrears and/or borrowers missing a loan repayment in the first couple of months each year.
So don’t add to the adverse debt statistics by taking the time now to plan your finances over the Christmas period and into the New Year.
If you are an investor and don’t think this applies to you because your tenant’s rent pays your mortgage, then think again. Investor’s still have similar risks if they are reliant on their tenants paying their rents on time. If your tenant spends too much over the Christmas period then they too may struggle to make their rent payments in the New Year which could then put the investor at risk of missing a mortgage repayment. Consequently, a prudent investor will always ensure they have enough surplus funds to meet one or two repayments on their investment loans in case the rent income doesn’t come in on time.
Mark Lewis is the Executive Chairman of Bernie Lewis
This article is for general information only. Since everyone's personal financial situation is different this article can't be taken as financial advice. If you would like to discuss this article further or how it could relate to your personal financial circumstances please give us a call on (08) 8300-8300 so we can discuss it with you in more detail.
