Q: I have recently become a first-home owner. I have fixed the majority of my mortgage for a year, and borrowed $60,000 by way of flexible/revolving home loan — the same account I have my salary paid into.

I am disciplined at saving and fortunate to be in a well-paying profession, so I am planning to save a decent amount each fortnight in addition to making my mortgage payments (fixed and flexi).

To get the most out of my flexi loan I know I should be keeping that balance as low as possible (I also make all possible purchases on a credit card and pay off the balance when due). But I view my additional savings as separate, and don't want all my savings to be going towards my mortgage.

Should I take the money out of my flexi account and put it in my savings account once a month? With low deposit rates, I suspect there is an argument for keeping everything in my flexi loan account.

A: This is a classic case of psychology getting in the way of best money management.
For the benefit of others, with a flexible or revolving credit mortgage you have a bank account with a huge negative balance — the mortgage.

Then you put all your income into that account as quickly as possible, and pay all your bills on the payment due date. That keeps the negative balance somewhat smaller, so you pay interest on a lower amount.

You've set it up well, with your salary and credit card arrangements. And I can understand why you want to watch


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