I was wondering what the Reserve Bank of Australia's (RBA's) tagline could be.

I think I've nailed it with the image on this post ;)For those who missed it, the image shows a tagline under RBA's name, saying:

'The beatings will continue until morale improves.'

...because that's how a 0.25 per cent rate rise feels in the face of 7.8 per cent inflation, slower than desired wage growth and the hangover of COVID/Ukraine war/flood-induced supply delays.

It's especially poignant after yesterday's kerfuffle with Kerrie Boylett telling young people they just need to sacrifice more if they want to own a house (cue eye-roll).

I went live on ABC Radio Perth's Drive program on Monday 30 January to talk about what 7.8 per cent inflation means, and particularly what people with mortgages can be thinking about.

Now seems like a good time to share the main points Jo Trilling and I covered:

Regarding debt

I'm yet to see a commercial bank not pass on a rate rise, so buckle up folks. If a mortgage is on your mind:

• If you're thinking of taking on a new mortgage: do your calcs on a 7 to 8 per cent interest rate, because that's 'normal' over a 30-year mortgage.

• If you've got an existing mortgage: it's time to ask your bank for an interest rate reduction. It's the quickest way to save yourself $20k with your clothes on and dignity intact. If your bank won't deal and you're willing, it's worth shopping around.

At the end of this article, you'll find a list of all the mortgage-related content I've written for online articles and blogs on this topic. It includes scripts for negotiating lower interest rates, comparisons of offset vs redraw and explanations of why interest rates go up. Hope it's helpful :)

Regarding rising living costs

If you're worried about 'cozzie livs', you're not alone. It's been brutal and we're not seeing signs of abatement yet. If that's you:

• A rising income is the best protection. It’s time to ask for a pay rise if you haven’t had one for a while. There's an 'ask for more' script in my book, pages 174 to 175.

• Look for any wasteful spending and do what you can to reduce it. 'Wasteful' means it doesn't fill a basic need in an economical manner OR it's not bringing you contentment/happiness proportional to the amount spent.

• Build that buffer fund. If you are able, try to put some extra cash aside into that buffer fund so you’re not forced into debt if there’s a surprise bill.

• If you're in distress: check out financial counsellors at National Debt Helpline, Centrelink’s Financial Information Service and options like Smith Family’s program. Remember your IQ drops by 13 points when under financial stress, so it’s an excellent time to ask for help

Regarding saving

Among us walk people who are still managing to spend less than they earn despite rising mortgages and living costs. If that's you:

• Hunt for the best interest rate. There’s a loyalty tax for just staying where you are.

• If you have an offset account, often the maths suggests you’re better off offsetting your mortgage than just chucking the cash in a different savings account. Depends on your rate - if your mortgage rate is higher than the interest you’d earn on savings, definitely (especially if it’s your home, as interest is not tax deductible there and is guaranteed).

• An interest rate of 4.5 per cent against inflation of 7.8 per cent means your buying power is going backwards by 3.3 per cent, and that’s before we take out any fees and taxes paid on the interest earned. So although it’s tempting to leave it all in cash, you have to acknowledge it’s going backwards. Still, that might be good if there’s a recession - and who knows if/when that’ll happen?

• Remember too: the government's $250k bank guarantee is per authorised deposit taking institution, per person. Still, if the banks collapse, we’ll all have bigger problems to worry about.

In case you like charts

Here's a couple showing the relationship between inflation and the RBA's cash target rate, including the point in 2016 when they crossed over (i.e. inflation went higher than interest rates and stayed there):

The mortgage back catalogue

Here's a bunch of articles I've written related to mortgages over the years - hope you find them helpful :)

• Home loans: Is fixed or variable the best option? (Kidspot)

• Is now the time to finally fix your mortgage rate? (Kidspot)

• The simple change to your mortgage that could save your family big bucks (Kidspot)

• Expert tells how to prepare for rising interest rates and avoid mortgage stress (Kidspot)

• Should I pay off my mortgage or make extra superannuation contributions? (Blog)

• Interview on inflation from 2021 (ABC Radio Perth)

• Should I Be Saving for a House in High School? (Student Edge)

• Gazumping, lenders mortgage insurance and all the other things I learned the hard way in buying my first home (ABC Everyday)

• How to get your mortgage interest rate dropped (Blog)

• Should I pay down my mortgage or use an offset account? (Blog)

• Should you make more than the minimum repayment on your debts? (Blog)

• Can today’s teens break into the property market? (Blog)

• Tips for first time property buyers (Blog)

• Selling property: a cautionary tale (Blog)

About Money School

If you’re new here, welcome! Delighted to have you 😁

This is the blog for Money School, an Australian financial education company.

The main site is at https://www.moneyschool.org.au, but I keep our articles over here on beehiiv.

Everything on the main site and this blog is for educational purposes only. I’m not a financial adviser, nor do I play one on Netflix. I aim to help you learn about money so you can ‘choose your own adventure’.

Money School was co-founded in 2010 by me (Lacey Filipich) and my mother, Fran White. Money School offers workshops, online courses and have an international award-winning book, published with Penguin Life in 2020.

I’m also a regular media commentator on all things personal finance. If you’ve got 16 minutes to spare, you might like to check out my TEDx talk (over 1m views!) on financial independence and mini-retirements.