Budgets Made Simple
The major conversation topic in lending at the moment is assessment of expenses.
In among other factors, the MAJOR factor behind the current slowdown in lending volume, is the predominant focus on your expenses and the trawling (oops .. ultra-close examination) of all of your bank accounts over the last 90 days at time of application.
This is catching people by surprise and causing otherwise sound applications to be either declined or reducing the amount borrowed.
How should we respond to this? Short of offering an unhelpful opinion that has no impact on policy. I can offer you something that I think has two real benefits to you.
I have written an expense tracking tool – which aligns exactly with what lenders are tracking and has the added benefit of helping you keep an eye on your expenses too.
If you spend more than you earn you that’s called a Budget Deficit. It looks like a credit card debt! Every month money disappears to pay the interest before you can buy food.
If you spend less than you earn then you have savings and that’s called a Budget Surplus. Whether it is in the lead up to applying for a loan, or just to run your life this is the Budget space we need to get to.
Let’s face it – couldn’t we all benefit by being more aware of what we spend and where we spend it?
This is designed to help you AND also prepare us for a loan application one day, so I want you to discuss this with me – just Ask Alan.
We will tailor the spreadsheet just for you while ensuring that we still match what lenders are looking for.
I hope you find this a valuable addition to your financial lives.
Instructions for use:
In the outlined boxes fill in ONLY ONE box for each line – use whichever box best fits how you think.
Example : electricity $440 per quarter (that’s when the bill comes in – so fill in the Quarter box)
Example : petrol $50 per week (because you fill up weekly – so fill in the Week box)
If you are renting – fill that in as “other” in the Basic Housing Expenses
If you have a rental property and receive rental income – Ask Alan for the specialised version I have written for investors.