It’s almost that time of year again

How quickly the year flies!  Soon it will be the last week of June which means we’re halfway through 2017. It’s a great time of year to take stock of the promises we made to ourselves when the year had just started.

Are we on track to achieve what we wanted for this year? Are we making a little progress at least? Or have we not started as yet?

It’s also at this time of year that our thoughts turn to the shape of our finances. Are they shiny and bright like a crisp new apple? Or have they gone a little ‘pear-shaped’?

It doesn’t seem to be easy to make ends meet at the moment – Money doesn’t seem to stretch as far at the supermarket; car, health and household insurances have gone up again; council rates are due to rise and of course – electricity and gas prices  are elevated at least once every year.

It seems like our wallets are being attacked from all sides – I guess you don’t need anyone to remind you how tough it is at the moment.

The 30th of June marks the end of the current financial year – the time when we gather together all our paperwork and receipts in preparation for filing our tax return. It’s traditionally the time when a lot of financial decisions are made or re-evaluated.

For every person and/or household that has an income now is the time to assess your money and how you’re managing. If you’ve fallen behind in your savings plan – then now is the time to make amends. If you’re falling behind in paying your bills when they’re due – then now is the time to organise or re-organise your budget.

If you don’t know how to get things started or back on track then call us!  The worst thing you can do is to leave things till they are beyond repair.

The end of the financial year doesn’t have to mean the end of your financial focus.

 

 

©   Carmel McCartin – Budget Bitch

And don’t forget – (The views expressed in this blog are the personal opinions of the author. Don’t rely on them to make financial decisions; you have to make up your own mind. If you don’t like the content – then either stop reading or send me an email)

Is it a good idea to access your super to use as a home deposit?

Before you get excited about the recent Government budget that suggests that first home buyers could access their superannuation as a deposit for a home, just take a breath and think about this…

I was reading an article by Tegan Taylor and Michael Janda and this is what I learned….

According to the Australian Bureau of Statistics (ABS) an average 25 to 34-year-old earns  around $75,000 a year.

That means the 9.5 per cent compulsory super contribution is $7,125 per annum, this is what the employer contributes for your retirement.

With the Government plan that you can divert three years of super contributions into a home deposit saving fund, as long as you match that with an equivalent amount of savings from your after-tax income you would then add another $7,125 per annum from post-tax income as the required co-contribution.

If that money is invested in a deposit account earning 3.2 per cent per annum, which are the higher three-year term deposit rates at the moment, then the average person in this target age group for first home buyers could probably save about $45,545 after three years.

All of this means that you’ll have a deposit of around $45,545. If you were hoping to live in Sydney, Melbourne, Darwin or Canberra and use that money as a 20% deposit, then you’ll be disappointed to know that there are no suburbs that have a place where you can do this.

If you’re prepared to spend 50 – 60 minutes travelling to the city then you will find some suburbs in Sydney or Melbourne where it’s possible to get a small house or apartment for a 10% down payment. Of course you will also have to pay the extra cost of lender mortgage insurance (which only protects the bank, not the borrower, from loss).

Adelaide, Perth, Brisbane and Hobart have some better options and are worth looking at if you live in those cities.

Foregoing a few years of super at the beginning of your career almost seems a sensible idea. However because of compound interest, losing three to five years’ worth of super early in your working life is the equivalent of losing seven to 12 years at the end of your career, according to Industry Super chief economist Stephen Anthony.

I guess if you’re prepared to work until you’re 70+ to catch up the money you spent at the start of your super fund, then maybe it’s a workable solution for you. Working that bit extra also means you’ll certainly be able to have your home loan paid off by the time you retire.

Whichever way you choose to get a deposit for a home of your own – you’ll still need a budget to make sure that you’re financially safe throughout your whole life as well as your working life.

 

 

 

©   Carmel McCartin – Budget Bitch

And don’t forget – (The views expressed in this blog are the personal opinions of the author. Don’t rely on them to make financial decisions; you have to make up your own mind. If you don’t like the content – then either stop reading or send me an email)

My mother taught me heaps…

May is the month that we celebrate Mothers’ Day. This year is the first time that my mother is no longer with us. Her passing in February has left a hole that will certainly take some filling.  I could never have known last year that this would be the last picture that would be taken of us together.

It’s a good time for all of us to reflect on how our lives have been shaped as a result of our mothers’ influence…

Our mothers are the first people we form a relationship with. And it’s with their love and care that we take our first steps, speak our first words, and learn how to become independent.

Mums are our very first teachers. They teach us about all sorts of things – how to play and how to read; how to share; to have a sense of humour; how to cook and how to manage our money.

The basic skills for becoming an adult come from these lessons. And it’s as adults that we can decide to accept or reject these principles, or to improve upon them so as to enhance our lives.

If it sometimes feels that they didn’t teach you enough in some areas, just remember that there probably wasn’t time to teach you everything that they know before you grew up and were gone.

Like mothers all over the world – your mother has done the best she could.

That’s why we love them!

 

 

©   Carmel McCartin – Budget Bitch

And don’t forget – (The views expressed in this blog are the personal opinions of the author. Don’t rely on them to make financial decisions; you have to make up your own mind. If you don’t like the content – then either stop reading or send me an email)

Getting into a home of your own

I don’t know about you, but I’m feeling quite bombarded by the media about the property market in Australia. It seems that every day there is a new report about  either the rising cost of houses; how hard it is to be a first-home-buyer or how good it could be to purchase an investment property.

According to a recent statement from Mortgage Choice chief executive officer John Flavell, “90.8% of first home buyers said getting into the property market was “hard”, with more than 30% labelling it “extremely hard”.

He went on to say -“This statistic, whilst startling, is not altogether surprising. One of the major hurdles facing first home buyers at the moment is saving a sufficient deposit.”

Different lending institutions have different requirements for deposits. Some will require a minimum of ten per cent, whilst others will allow only five per cent.  What that means is that if you wanted to purchase a property for $600,000 then you would need a minimum of $30,000 for a 5% deposit.

In the second quarter of 2016, full-time earnings in Australia averaged $78,832 a year, according to the Living in Australia survey. After deducting your tax and medicare obligations, you would have a take home amount of $60,088 approximately. Check this here

Now, if your ‘Must Haves’ are around $500 per week, (which totals $26,000 per year) you would be left with around $34,000 per year. That’s about $653 per week.

You know what my next question will be…. Where is that money going?

Before you start screaming about needing to pay rent, needing a holiday, updating the car or just plain having a good time – sit down and work out exactly where that money is going.

If you are currently renting, then you may find that your savings will be less that you might like. However, if you have moved back home to live with your parents so as to be able to save some money, then surely your deposit is growing steadily.

I get a bit cranky when I hear about the difficulties that First-Home-Buyers are facing.

There’s no argument that properties are more expensive than ever before but wages are also higher than in the past. Interest rates are the lowest they’ve ever been and there are government incentives in the form of grants and concessions for First-Home-Buyers.

When I read that 90% of first home buyers are finding it hard to buy a property, I say “if it was too easy to get, then it wouldn’t be worth having”. You only appreciate the value of something if you have worked hard to get it.

To my mind, it all comes down to priorities.

Do you want to ‘live the dream’ or live in your dream?

The first step in buying a house is asking yourself what is important to you. What are you prepared to give up to achieve your dream of owning a house of your own?

The second step is sorting out your budget to make sure you can save for your deposit.

 

 

 

©   Carmel McCartin – Budget Bitch

And don’t forget – (The views expressed in this blog are the personal opinions of the author. Don’t rely on them to make financial decisions; you have to make up your own mind. If you don’t like the content – then either stop reading or send me an email)

Lets talk about credit cards …

Imagine that you have a credit card with a debt of $10,000. We don’t need to examine the whys and wherefores of the amount, I’m sure you have your reasons for this debt.

Now, if you only paid the minimum monthly repayment on that credit card debt at 18% interest, then you would end up paying $26,332 of interest, plus the original $10,000 that you owed over 43 years. That just seems insane.

In 2016 the figures showed:

  • Australia’s credit card debt is more than $32 billion dollars
  • There’s an average credit card debt of $4,400 per cardholder
  • There are more than 16 million credit and charge card accounts in Australia

This makes me wonder – If I don’t have any credit card debt, then who has mine?

At the moment, many credit card interest rates have remained static. This is despite RBA cuts to the official cash rate and despite that the government is now flagging concerns about how long it takes to pay off credit card debt. What I’m now hearing is that many consumers are considering other options.

One of those options is to consolidate small amounts of debt into a personal loan.  This may not be as crazy as it sounds. Some personal loans have a much cheaper rate of interest (7.99% – with a comparison rate of 8.26%). This is more favourable than credit card interest rates of around 20% and like a credit card; interest is also calculated daily on the outstanding balance.

With a $10,000 personal loan at 8.26 per cent on a maximum seven year term, you would only pay $3,201 in interest on top of the $10,000 principal. That’s $23,000 less than the credit card repayments. Personal loans are generally required to be repaid over a fixed period of time.

Of course, if you do take up this option I would expect that you would cease to use your credit card. It just doesn’t makes sense to continue to use a credit card if you have only moved the debt to another form of loan and haven’t paid it off.

The other alternative and one that is preferable both before and after your debt is under control is to have a budget. By calculating your regular costs and income you can take away the stress that debt brings.

A budget doesn’t have to be restrictive. It is merely a way of learning how to live within, instead of without.

 

 

©   Carmel McCartin – Budget Bitch

And don’t forget – (The views expressed in this blog are the personal opinions of the author. Don’t rely on them to make financial decisions; you have to make up your own mind. If you don’t like the content – then either stop reading or send me an email)

 

6 easy hints to reduce your power bill

We all want to reduce our power costs. With so many demands these days from appliances, entertainment, and technology it can seem that our power bill just gets bigger and bigger.

Here are 6 Easy Ways to reduce your power costs and make a difference to your Energy Consumption:

Heating and Cooling Efficiently
The simple thing to remember is don’t over-cool or over-heat your home. A difference of just one degree can reduce energy consumption and greenhouse pollution by up to 10%. I’m told that 19 – 21 degrees is an inexpensive and comfortable temperature for your home, all year round.

Turn off stand-by appliances

When something is on standby, there is a small light that blinks at you. Standby power is the electricity consumed by an appliance when it’s not being used. This also includes chargers. Around 10% of Australian household electricity use goes directly on standby power.

I often tell the story of a client who wanted to improve his power bill by issuing the family with torches to be used after dinner. When I queried the cost of batteries, he told me that the torches were all rechargeable. Needless to say, his electricity bill was no less than before.

Solar Hot Water system

Heating water uses a lot of energy. Electric hot water systems are still very common in Australian homes. The cost of these accounts for nearly half of your electric bill. Whilst solar power is one of the cheapest forms of heating hot water, it is important to investigate the actual purchase and installation costs before you rush out to buy one.

Check out the new technology of Tesla – first reports are giving some astounding results for reduced power bills.

The electric kettle
The electric water kettle is one of the most energy hungry appliances you will find in your house. Use it wisely and only boil as much water as you need at the time.

Light bulbs
By now you should have replaced all your old common light bulbs with energy saving ones. This could save a lot of energy on a daily basis. There are many great lighting alternatives that are available on the market, including energy efficient down-lights

Make your fridge more efficient
Your refrigerator uses a lot of energy and the older it is, the higher the probability that it will be a big electricity eater. You don’t need a new fridge to cut your power bill or emissions. You can also save heaps of greenhouse gases by taking a few simple steps:
* turn off second fridge if half empty or not in use (save around $500 per year)
* open door as little as possible
* keep fridges and freezers in a cool, well ventilated spot
* ensure the coils are clean and well ventilated
* fix the door and seals so that they close properly

And don’t forget, factoring the weekly amount of your bill into your budget will ensure you don’t have ‘bill shock’ when it arrives.

 

 

©   Carmel McCartin – Budget Bitch

And don’t forget – (The views expressed in this blog are the personal opinions of the author. Don’t rely on them to make financial decisions; you have to make up your own mind. If you don’t like the content – then either stop reading or send me an email)

 

The rising cost of health funds is making me sick

In the past few days I received the annual notice from my health fund informing me that on the 1st April, my insurance premiums will be rising. There’s nothing new in that announcement – health fund premiums rise every year.

But this year I noticed something different…. This year, they have informed me that my benefits will be decreasing. Obviously, I decided to inspect these items more closely…

A general decrease overall was my observation and I expect I’ll just have to work around that. But the one major concern is the fact that I am currently only covered for one emergency ambulance trip per year. (as a single) Couples get two trips.

In NSW, the ambulance cover is included in your hospital cover through a health fund. If you don’t have hospital cover but would still like ambulance cover then you need to organise this through a health fund.

So I rang my health fund and clarified their position on this. Yes – I can have one emergency trip per year. Then I explained the reason for my concern …

I live in a regional area. If I was to have a heart attack, (for example) the ambulance would come and take me to the hospital. Yes, the consultant agreed that was my entitlement.

But what if I needed some urgent heart surgery that is not available in this area? I would then be transported by ambulance to the airport where I would be transported to a major city via Air Ambulance. The consultant then agreed that was two more trips and I would be liable to pay for them.

My health fund – Bupa – describes it as this –

Emergency ambulance transport can be costly, emergency air transport can exceed $5000 which is why you should take out appropriate cover. Bupa offers Emergency Only Ambulance Cover, from $37.30 a year, which gives you access to emergency ambulance transport services nationwide, but more importantly peace of mind.

Where has my peace of mind gone?

Well, I told the consultant that I would probably die because I couldn’t afford to get into the second and third ambulances. She said there was nothing she could do except offer me a more comprehensive cover at another cost to my already escalating premium.

That’s not good enough!

I already pay them a lot of money and much of their ‘benefits’ are of no good use to me. At my age, why would I even be considering fertility treatment, pregnancy or obstetric services? The whole ante/post natal services have never been relevant to me, yet I have still had to pay for them.

My budget can’t afford another price rise, and my budget can’t afford their decrease in benefits. It’s time to vote with my feet and find somewhere else a bit cheaper. In looking around I find there are funds that allow me to pick what I wish to be covered for and at what level and so I’m sure I’ll find a package that suits my current budget.

I’ve seen policies that are $70 cheaper than my current arrangement and which suit me better. That’s $840 per year!

And what I’ve also decided to do is to put the difference between what I’m currently paying and the new policy into a savings account. That way I know I’ll definitely be saving and will have some extra funds to cover any health emergencies that are not covered completely.

And you can be sure that my ambulance cover will be the most comprehensive that I can get.

 

 

©   Carmel McCartin – Budget Bitch

And don’t forget – (The views expressed in this blog are the personal opinions of the author. Don’t rely on them to make financial decisions; you have to make up your own mind. If you don’t like the content – then either stop reading or send me an email)

A budget is a living thing

This morning as I finally got the opportunity to sit down and write something, I realised how quickly my life has changed during this past month. With two dearly loved relatives passing away plus my personal home life moving to a different phase, I now find myself adapting to a new ‘normal’. (exactly what is normal is a subject for another time)

This all made me think of how often I explain to people that “the budget we make today won’t be the same as the budget we have in six months’ time.” This is because life changes and our budget needs to move with those changes; it needs to be flexible.

A budget is a living thing – It moves and it grows; it reduces and stays static. It attaches itself to our lifestyle and is a part of so many decisions that we make. It can make us cranky and irritable, but it can also make us laugh with joy.

There are times in our lives when major changes happen. Some of these are good and some are not so pleasant. It’s times like these when it can be easy to just throw the budget into a corner and justify spending large sums on ‘feel-good’ purchases.

My budget is about to change. Some of the current outgoings will be removed but there are others just waiting to take their place. I’ve struggled this month with the temptation to splurge on large rewards for having such a tough time.

So as I sit here on the last day of February 2017, I think back over the past few difficult weeks and I discover that my budget is still working.

*big sigh* – My budget is intact.

 

 

 

©   Carmel McCartin – Budget Bitch

And don’t forget – (The views expressed in this blog are the personal opinions of the author. Don’t rely on them to make financial decisions; you have to make up your own mind. If you don’t like the content – then either stop reading or send me an email)

When wages growth slows

Late last year, the ABS released some statistics on the movement of Average Weekly Earnings. See them here

It revealed, not unsurprisingly, that average weekly earnings grew by only 1.6% for the 12 months to November 2016. This compares to 2% when the last report was released in March 2016.

It’s a sobering thought that wages growth has effectively been stifled. While those whose earnings are in the lower spectrum, living is still a bit tough. But hopefully this also means that inflation is under control and spiralling prices will not be seen again for some time. We can but hope on this front.

When looking at this from a budgeting perspective, simplistically we can approach it from two angles.

If wages are not growing for us then we can either look at increasing our household income, through seeking additional work; or by a party that is not currently working seeking some active employment. On the other hand if our income is not increasing, we then need to look at reducing or eliminating some of our costs.

A good idea is to look at all your utilities and see where cost reductions are offered either from your own supplier or a competitor, provided you change the terms of your contract. It could just mean signing up for a fixed term with one particular supplier or agreeing to pay the bill on or before the due date. Both of these can provide significant percentage reductions in your overall bill that equates to hard dollar savings over time.

The message no matter what your circumstances,  is that it is never a bad time to review your budget. A simple exercise every 6 months will tell you straight away if you’re on track or not.

If we can assist you with your budget review, or even setting up your budget (if you don’t already have one in place), please contact us.

 

 

 

©   Mike Betts – Budget Bloke

And don’t forget – (The views expressed in this blog are the personal opinions of the author. Don’t rely on them to make financial decisions; you have to make up your own mind. If you don’t like the content – then either stop reading or send me an email)

Are you a wedding planner or a wedding spender?

A recent study highlighted the increasing costs that some of our young people incur when they get married. It also raised the question of the huge debts that many incur – just so that they can have a piece of paper saying they are now Mr and Mrs such and such.

This leads me to the question – Do we really need to spend heaps on weddings?

There are many ways to reduce or even eliminate many of these costs.

  • Do you really have to invite all of your closest (and distant) friends plus relatives for a free meal and drinks? Why can’t your guests pay their own way instead of giving you a wedding present? Think about it – most wedding presents these days double up on stuff you already own or something that someone else has already purchased for you.

 

  • Do you really need to have the “cast of extras” there? The workmates that you hardly know; the relatives you haven’t seen for years? Will they be upset if they don’t get an invite? Will you really notice if they are not there? If they were close to you, they’ll understand the reason if you explain it to them.

 

  • Many in the ‘wedding industry’ make their money just from having the word wedding prefixing everything they do. It really shouldn’t mean that the costs are far more than for ordinary occasions, but they often are. Unfortunately the word “wedding” usually equates to the sound of cash register bells continually ringing for many people. Try not mentioning the word wedding when ordering flowers or clothes…..it’s remarkable how the prices magically become cheaper.

 

  • Be very clear in your negotiations with your photographer. Find out upfront exactly what is included in your package, how many hours they need to be there, how many assistants they really require to work. Ask a friend with a clear eye and a steady hand to take shots at the reception and send the photographer home after the ceremony and formal pics are done.

 

  • Instead of complicating your wedding budget by wanting everything and not having enough money, try it this way: decide what is most important for you to enjoy the day and then find less expensive ways to have your dream wedding. In fact, if you think outside the square a little, then you will find that there are many ways to save money.

If you must have that special wedding that you have always dreamed of, nothing can substitute for having in place a robust budget well in advance of the happy day.

Congratulations if you have already planned the budget for the event. If not, make an appointment now with us to get things planned early.

 

 

©   Carmel McCartin – Budget Bitch

And don’t forget – (The views expressed in this blog are the personal opinions of the author. Don’t rely on them to make financial decisions; you have to make up your own mind. If you don’t like the content – then either stop reading or send me an email)

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