Ways to cut back on household expenses after an interest rate hike

Interest rates jumped 25 basis points at the last MPC meeting in March, leaving the prime loan rate at 7.75%.

As the effects of this increase begin to begin, families are likely to have to find ways to cut back on expenses to pay off the higher debt repayments.

Rising fuel and food costs, as well as higher debt repayments as a result of the recent rise in interest rates, will certainly put pressure on household budgets.

While it may take some effort to cut household expenses, homeowners should always prioritize keeping up with their bond repayments to avoid the risk of the bank repossessing their home.

There are many options that can help homeowners reduce their monthly home expenses.

The simplest, but often least desirable, option is to cancel any unnecessary donations, for example, Netflix/ Spotify / iTunes / Game Pass / Showmax / DStv.

All of these small fee donations alone may not sound like much, but as a collective, these amounts can accumulate to far more than many homeowners realize.

Homeowners should also consider that, depending on the size of the home loan, canceling one of these subscription services may be sufficient to cover the increase in bond repayment due to the rise in the interest rate. .

According to BetterBond, a R1 million home loan taken over 20 years, the monthly installment increased by R153 after the March interest rate hike – which is close to the cost for many of these subscription services.

For those who do not have subscription services to cancel, homeowners may downgrade their mobile phone contracts or switch to pay – as – you – go options.

Those who do not work from home may also even consider downgrading their home internet connection.

There are also more sustainable options that homeowners might consider would be good for the planet and their pockets.

Find ways to lower your household grocery bill by creating a home vegetable patch where you can grow your own supplies.

This can help minimize the packaging waste that results from a trip to the grocery store.

Homeowners may also find ways to lower the electricity bill by practicing more responsible energy use practices, such as setting the geyser to a timer and unplug all electrical appliances when not in use.

The same goes for the water bill. Homeowners can lower costs by lowering their consumption. Examples include reusing gray water to water the garden and only do your laundry at full load.

There are also more complex options that homeowners could explore to reduce their household expenses, including shopping around for a cheaper life, a home and car insurance policy or a more affordable medical assistance policy.

Doing so may require a bit of research and paperwork, but it can take a few hundred pounds off your monthly installments and you may only have to cover the costs of the latest interest rate hike.

Even if homeowners are not yet able to reduce their spending it is always a good idea to review household spending and think about where you can cut back to save more space or pay off debt.

We are in the middle of an interest rate roaming cycle, so we are likely to see a further rise in interest rates throughout the year.

It is always best to be prepared and have some savings to fall back on if you are in a very difficult financial situation.

Those who do not have savings and are unable to cut back on expenses to keep up with the repayments on the house should speak to a real estate professional and explore the option of reducing or letting part of their home. rent on extra income. to get them through this challenging financial season.

Ways to cut back on household expenses after an interest rate hike Source link Ways to cut back on household expenses after an interest rate hike

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