People tend to spend all the money available to them. Here's how to use that behavioural quirk to accelerate your debt repayment.

Parkinson's Law and Your Money

Cyril Northcote Parkinson observed that work expands to fill the time available. The same principle applies to money: people tend to spend all the money that's available to them. Get a pay rise? Your lifestyle adapts. More income means more spending, not more saving.

Smart borrowers can use this to their advantage.

The Hybrid Approach

Instead of depositing all your income into the offset account, split it. Work out how much you realistically need for living expenses each pay cycle, and have your payroll deposit that amount into the offset. The rest goes directly into the home loan as an extra repayment.

The money in your offset covers your day-to-day expenses and reduces the effective interest on your loan. The money in the home loan is a little more out-of-sight, out-of-mind — reducing the temptation to spend it on things you don't need.

For Couples: Supercharge It

If you have two incomes and can live on one salary, direct 100% of the second wage into the home loan. The first salary goes into the offset for daily expenses. The second salary hammers the debt directly.

Even if you can't live on one salary alone, splitting even a portion of the second income directly into the loan will make a significant difference over time.

Why This Works

Mathematically, it makes no difference whether money is in the offset or in redraw — the interest calculation is the same. But behaviourally, there's a massive difference. Money you can see in your transaction account has a habit of getting spent. Money locked away in your loan doesn't tempt you.

By deliberately limiting what's available to spend, you force yourself to live within a tighter budget while automatically accelerating your debt repayment.