6. Offset Accounts
The key to successful property investing is always having your money working for you. In this short video we share how an offset account could help your money work harder.
All really successful property investors know you need to be able to manage your cash flow and one of the ways you can do that is by using offset accounts. Let's have a look at how we do that now.
If you've got a home loan over here, you're currently paying interest on that entire home loan because you don't have your savings account linked as an offset. On the contrary, when you do offset it over on the right-hand side, what you can see here is, you're only paying interest on the amount of the home loan that doesn't have a savings account attached to it.
Let's now just have a look at how that cash flow works in real life. You've got a house over here with a loan that's attached to it, and then you've got an offset account that's linked to that to be able to push down the amount of interest that you're paying on the loan. Every single dollar that you earn goes in there, from your income to your rent return as well, so that money's going in there to make sure your offset account is absolutely maximized at all times.
The next step that you put in place is to have an interest-free credit card attached as well. So every single time you spend a cent, it should be on that credit card. Your fuel, your groceries, your bottle of milk at the servo on the way home, whatever it is, every cent should be spent on that credit card to maximize the amount of money that you have in your offset account.
Then the real special tip after that is to make sure we don't pay any interest on our credit card over here, we set up a sweep up at the top there. So, on the designated day of every single month, that sweep enacts and grabs some cash from your offset account and pays off your credit card. That just means that every single cent is sitting in the right account, i.e. your offset account, that every day possible to maximize the amount of money that's sitting in your offset account and paying off your loan for you.
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