The new banking reform package may actually increase the interest rates for average borrower!

Look, I understand why so many people have such an issue with banks increasing interest rates particularly when you see them making such big profits. But it would be fantastic if we actually could bring less emotion and more sanity into some of this hype.

Firstly, I would much rather a healthy banking system that makes great profits, than be in the situation faced by most other countries around the world, such as Ireland (where their banking system has nearly collapsed), Iceland (where it did collapse), Greece (where it has to be bailed out), Portugal (under threat), Spain (under threat) and the US (just bad).

The impact of a non profitable banking system is severe, with pressure on a whole range of other 'taken for granted' government services as those governments have to cut pensions/reduce spending or increase taxes. Just look at the recent riots in London.

Most of the Australian banks actually 'lose money' on their home loans for the first few years, as they are unable to recover the real costs of their establishment. When you consider that many people re-finance every four years, it is difficult for banks to recover their costs, particularly when you consider that many of them pay brokers to set these loans up for them.

So any attempt to prevent banks from recovering these costs by imposing government restrictions may have the unwanted consequence of actually forcing rates up as they attempt to recover their profits accordingly.

So, rather than do that, the best solution is to educate customers on how they can actually 'lower' their mortgage interest rates by taking proactive action themselves. Stay tuned, I will be releasing soon a FREE GUIDE to help you do just that.

There is no such thing as the lowest interest rate!

Strange thing to say but absolutely true. Many customers when they go and see their bank or mortgage providor generally ask for the lowest or best interest rate they have. But any expert in banking and finance will tell you that there is no such thing. Why? Well it is because interest rates fluctuate according to either economic, market or individual banks requirements. So, while it may be cheaper today, it is the actual cost of the mortgage over its long term that really counts and no-one should or would ever guarantee it to be the cheapest for ever.

There has been plenty of times in recent history where one bank may be cheaper than another one for a certain period of time. But of course that changes due to the above reasons, so they generally don't stay the cheapest. The only way you can guarantee that you do the very best you can with your mortgage interest rate is to make sure your learn the best way to control it and lower it yourself. And yes, it can be done.

Obviously making sure the bank you deal with treats you fairly and gives you the best value for money on your mortgage is the key. Make sure you are only paying for what you need and always ask if they can do better. But don't fall for the cheapest home loan trick, as it actually cannot be guaranteed over time, which means it actually doesn't exist.

Financial Titanic –who is watching for the icebergs?

If you have ever watched the Titanic, you will know that despite being in Iceberg waters, the lookouts failed to spot the iceberg quickly enough. And so it seems in today’s financial world, where we are sailing in uncharted waters with a great ship (Australia’s economy) but where there is a very real risk of a looming second wave financial Tsunami, far worst than the first. Its not me saying this but a thought provoking documentary.

Do yourselves a favour and tune into the ABC’s Four Corners on Monday night at 830pm. It is a story about the greates financial crisis we may ever see, the one that is on the way, in this program called “Overdose’. This is a warning about why we should sail very carefully in these waters and be on the look-out for danger, financial danger that has a very real risk of causing enormous damage. Is it just scaremongering or is it real?

Straight forward common sense tells you that borrowing beyond your limits places you at financial risk. The banks know it and you know it. That is why they are so diligent about placing limits and conditions on what you can borrow and payback. Maybe it is just me but to BORROW outrageous sums of money by acquiring more debt, to get out of what is fundamentally a debt crisis (the GFC) seems incredibly niave and pretty stupid.

At some point, you have to pay it back. And if you can’t you may need to become bankrupt. The writing is on the wall with Greece, Iceland, perhaps Spain and even Ireland. In our country we are accruing $100 million dollars PER DAY!!!! We have very low interest rates, but very high debt. At the last count was we owed $1.57 per every $1.00 we earn. While you may think that it is the Government debt that it is responsible,but it is not! It is the private debt borrowed primarily by the banks to fund our property and consumer appetites that has created much of this. Every one of us is affected by this and everyone one of us can take some responsibility to help sail us through these uncharted waters.

You wont hear the governments telling you not to spend because without spending you don't get economic growth, or in other words a recession. But you can still spend PROVIDING that you spend the right way. Learn the right way, not the way others would like you to spend, so they can profit from you.

So BECOME DEBT FREE by LIVING DEBT FREE is the best way you can help and to spread the word to everyone you know. It is a time to budget properly, categorise our spending correctly, not overspend and to be prepared.The economic and social consequences of us getting this wrong are something we all would want to avoid.

Get educated, watch the Four Corners program and start to Live a Debt Free lifestyle as quickly as you can.

BEWARE of the SCAMS!

Even the most experienced person can find themselves being scammed by unscrupulous people so it is important that if it SMELLS BAD or if it seems too good to be true, it probably is. This happened to me recently, so I would like to share this little story with you.

I was selling a lovely Honda Shadow MotorBike through ebay and the standard classifieds. I was contacted my a potential buyer who said they would love to buy my bike (sight unseen..so first warning bells!). They then offered to pay the money upfront into my PayPal account (second warning bell). All the correspondence was via email and not normal phone lines (third warning bell). They sent me an email with links to a Western Union Bank account, so I could open up an account to help with transferring the shipping fee which they would also pay in full, as the bike was going to the UK.

Clearly this was a SCAM and I am not sure if it was a Phising email (so designed to get my bank account details) or it was Money Laundering. It doesn't matter. Apparantly, I have since found out that this type of scam is quite common and you need to be very very careful.

Interestingly enough, my credit card has had a transaction of $1.30 posted on it, since this time. Now this seems small and not worth bothering about but generally those who try to use your cards or bank account details TRY SMALL AMOUNTS FIRST and if they go through without any hassle, then they go for the money!!

The moral of this story is to be aware, check all your transactions regularly, even the small stuff and if you are not sure get the bank to check. NEVER give out your personal banking details and always check the websites you go into. My rule of thumb is to never use links on emails requiring financial information.

Finally, COVER UP your pin number at ATM's by holding your hand above the numbers you punch in so a camera situated above you can't read what you are doing. While banks have a duty of care to protect you, save yourself the hassle and aggravation.

Live Debt Free.