A rate reduction was the right decision to help our struggling households and assist the ailing non-mining sectors of the economy. I reckon many people are getting a bit tired of Wayne Swan telling everybody how fantastically Australia is doing when so many workers and employers are facing the toughest trading conditions in 20 years.
Now the global economy is facing many headwinds which could lead to more cuts in the coming months, and I could spend a long time talking about the dangers ahead: the sovereign-debt fiasco in Europe, a hard landing in China, a double-dip recession or depression in the US, to name just a few.
But I will focus instead on joining in the Reserve Bank in spreading a bit of cheer and helping give you all an early Christmas present: money for nothing. (More from David Koch: Banks Unfair Treatment Of The Self-Employed)
Just as the Reserve Bank is able to save you around $50 a month on a $300,000 home loan, I am going to show you how you can compound these savings with just a couple of phone calls or few minutes on a website – and it could literally save you thousands of dollars a year.
Add the extra cash to your mortgage repayments and the benefits get proportionately bigger and bigger.
Reclaim your commissions
This is the easiest of my suggestions to implement but could quite easily be the most lucrative.
There are numerous commission-rebating services around now but the first was Yourshare, an innovative company which refunds most of your trailing commission on your investments and insurance products each year. (More from David Koch: High Yielding Shares)
According to CEO Sally Farrow, the typical family receives $1700 a year in commission rebates – that's three times the saving provided by this month's interest rate cut!
The huge rebates come from all kinds of financial products but your mortgage is the biggest. Typical trail commission on mortgages is 0.20 per cent, which, on a $350,000 home loan equates to $700 a year. That's cash that your mortgage broker would usually pocket for doing nothing. (More from David Koch: The Negative Gearing Dilemma)
Then there's your superannuation fund. Trail commissions here average 0.5 per cent, meaning $500 a year going begging unless you claim it yourself. The list goes on, with trail commissions payable on everything from home and contents cover to life assurance, critical illness to car insurance.
Yourshare will take half of the trail commission it collects on your behalf up to a maximum of $295 a year. After it has received that amount, you get 100 per cent of all other trail fees, which can add up to thousands.
All you have to do is visit their website or call them, fill in a form authorising Yourshare to act as your agent, and that's it. The cash will start flowing. (More from David Koch: Fixed interest)
Now, I understand many people like their financial planners and feel loyal towards them. But trail commission is paid to financial planners to cover the costs of them "reviewing" your circumstances each year and keeping your finances in shape. If you think your planner is doing a good job in this respect and want him to continue receiving the cash, fine. But I can tell you that most planners do little or nothing to earn this ongoing fee and it remains one of the biggest rorts in the financial services industry.
Sure, planners and mortgage brokers earn their "up front" fee through the time and effort they spend on establishing your investments or home loan, but the annual payments made to them after that are money for nothing, literally. So I encourage you to claim it as your own and do not let it land in the pockets of somebody who is doing nothing to deserve it.
Most commissions will be abolished from next year, but only on products taken out from July 2012 onwards, so trail commission already being paid will continue to be paid. Failure to claim this money yourself is literally throwing cash down the drain. (More from David Koch: Financial Meltdown)
Switch your utility provider
This is another no brainer, although it seems like a hassle. Now that Australia's financial and utilities markets are more open to scrutiny, we have an increasing number of helpful comparison sites that can steer us to the cheapest providers for many of our every-day financial needs.
Now, unfortunately, car insurance comparison sites aren't really up and running yet because our biggest insurers are simply refusing to say how much they will charge, making comparison impossible.
That stance can't last and before long we will all be benefitting from cheaper car insurance throur a more transparent market. (More from David Koch: Official Inflation Figures Misleading)
But one area you can do some easy research is utilities, particularly electricity, which has really been causing a lot of pain over the past couple of years.
According to Goswitch.com.au, a leading energy comparison site, around 90 per cent of households can save up to $400 a year nationally on electricity, although this varies from state to state. In Victoria savings can be $500 a year and in NSW about $300.
As far as the hassle of switching is concerned, Goswitch offers a service over-the-phone switching service, which takes five minutes and will have you switched onto a better value tariff in seven days. Simply call 1300 107074. Goswitch.com.au gets a kickback from whichever power company it recommends, but since every kickback is the same size, they remain an impartial service.
Apathy costs Australian consumers billions of dollars each year. But here's just two ways you can claim some of that back.
