Dear B.B.

What is your best tip for keeping the budget routine? I can’t count the number of times I set up a budget – sometimes on a spread-sheet; sometimes using the envelope system. I keep it on track for a bit then it all seems to dwindle and I get stuck again. Do you have a hot tip for slackers like me?

from K.H.

Response

In many ways, starting a budget is like starting a diet.

We have good intentions, but fall off the wagon soon after. If your budget is not workable then the fallout will come sooner. You have to understand that you can’t spend more than you earn. Remind yourself that it’s a change of lifestyle.

A kick in the pants from a Budget Bitch from time to time, also helps you stay on track.

Dear B.B.

We’re having an argument in our house.

My husband has recently inherited a small sum of money. He wants to clear our credit card debt and then put the leftover amount into a savings account.

I think it’s wrong to use that money to get out of debt. I’d like to put all of it into a high interest savings account. We never have anything in the bank, and it would be nice to see it earning some money for us.

from Anon

Response

It doesn’t make sense to have a large sum of money in your savings account if you owe a large amount on your credit card. Any interest you earn from the ‘savings’ money will be negated by the high interest you’re paying on the balance of your credit card.

I can understand that you feel guilty for using an inheritance to clear your debt but your husband is using a common-sense approach.

A sensible budget plan will help you to stop racking up debt. If you’ve been able to pay the interest on your credit card, then you should be able to add that amount to your new savings fund.

If you have a question you’d like answered then send it to: 

Helpme(at)BudgetBitch(dot)com(dot)au 

We apologise for the email address format – but it’s the only way we can stop those dirty, filty, rotten spammers from filling our inbox with unwanted spam

Dear B.B.

We currently have a taxable income below the MLS amount for the number of dependents we have, but still have private health cover (top hospital and extras family).

Do we really need private health if no MLS will be applied, and our medicare levy of 1.5% is significantly lower than our annual premiums?

From K.Mc 

Response

Your budget will be as individual as you are – because it’s all about priorities and what is important to you!

There’s no “Hard & Fast Budget Rule” about private health cover – if it’s important to you, then your budget must be adjusted to pay for it.

If your money is struggling to pay the costs – perhaps look at changing the level of cover.

Also, health funds are now paying for a diverse range of extras, many for ‘preventative’ measures. Exploring and using these possibilities will add a little more value to your private health cover.  I understand how you’re feeling – sometimes it feels like an unnecessary expense. You just have to weigh up what’s important to you and your family!

Dear B.B.

I’d love your advice on different money spending styles in a relationship.

We were meant to be camping at the moment, a nice cheap holiday. But my husband has managed to blow up my car by trying to install a 12v cable to the back. He is cranky at me because I wouldn’t then agree to driving 2 cars (we have 3 kids in carseats that don’t fit in our other car) to go on a holiday in a hotel for 3 days!! Apparently I have ruined his holidays.

‘Just put it on credit’ he says (grrr) Not to mention that fixing the car is going to cost well over what we saved for camping in the first place!! I know he doesn’t get much time off work, but I don’t want still to be paying for our 3 days away at Christmas!! HELP!!!

From M.H. 

Response

Compromise! Compromise! Compromise!

I’m sure he didn’t mean to blow up your car, just as you don’t mean to ‘ruin his holidays’. Spending time together is more important than where you do or don’t go. If money is tight – then pitch your tent in the back yard (yours or somebody else’s) and start communicating properly about why you’re doing all this, and how to make sure it never happens again.

Plan to start a ‘shit happens’ account so that there is less money stress in the future.

If you have a question you’d like answered then send it to: 

Helpme(at)BudgetBitch(dot)com(dot)au

We apologise for the email address format – but it’s the only way we can stop those dirty, filty, rotten spammers from filling our inbox with unwanted spam

Have you ever stood in a shop and watched while more than two people get served ahead of you? Did you wonder how on earth that happened?

Sometimes I think the whole ‘idea’ of ‘customer service’ is no more than just that – an idea. Because sometimes I think the people who are employed to serve customers may have only heard of the term and don’t have any notion on how to do that. 

Recently it happened to me so it’s no wonder that I was a bit ‘shirty’ by the time the salesperson got to me. And after observing the dress code of the people who were served ahead of me, I asked the obvious question – “if I was wearing a business suit, would you have served me faster?” The reply? – “those people have been waiting a while”.

Well, so had I – 15 minutes to be exact. And what’s more, I had watched ‘those people’ come into the shop while I waited my turn.

But this isn’t an isolated experience and it seems that too often these days we hear mutterings about the ‘lack of good service’.

A month ago I was looking for some hair accessories. I found one similar to what I wanted and took it from the shelf to examine it more closely. (I guess you do that when your eyesight dims because you’ve started to age) When the salesgirl asked if she could assist, I gave her a more specific description of what I wanted to buy.

Taking the item from my hand, she then put it back on the shelf as she told me that they didn’t stock the exact thing that I wanted.

Now, I was prepared to purchase that hair band. In fact, I had it in my hand and if the sales girl hadn’t stopped me, I would have just proceeded to the cash register and paid for it.

Obviously she didn’t want my custom. And when I explained that I had intended to buy, she looked at me blankly. She turned on her heel and left. And I did the same. No sale there!

So, right at this point in time you’d be waiting for my next line to start with “in my day…” but the cold hard fact is that there’s no such thing. ‘My day’ is now! And there’s such a myriad of things to choose from that it gets a little bit confusing. Surely we can’t be condemned for needing a little help in making a choice?

And isn’t that what ‘customer service’ is about? Helping the customer to make a decision to buy?

Of course, there are lots of sales assistants who don’t view the term ‘customer service’ as being like that of a servant. And they are more than willing to assist their customers in making an appropriate choice. In those cases they are highly skilled and well trained in the profession of making sales.

You see, these days with so many things to choose from, and so many places to buy them – it’s not always a price issue that will bring the customers back. It’s the level of customer service.

And the businesses that understand this simple rule – “forget about selling products and deliver service instead” will be well placed to weather any storm in the economy. 

So, because not everybody wants to wear a business suit to attract attention, I’ve decided to change the way I look when shopping and in need of service.

Next time I’ll go naked.

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)

In case you hadn’t noticed, the baby boomers have started to retire. By the time retirement comes they’re ‘supposed’ to have paid off their mortgages, and their debt, and have enough money saved to live comfortably for the rest of their lives.

But have they?

Unfortunately, for whatever reasons, too many of them have done too little of these actions. And they don’t want to admit they have failed, they don’t want to know… even today they bury their heads in the sand and don’t wish to face the reality that their bodies will wear out long before their mortgages are paid out and before their bank balances are large enough to stop working.

The next generations are turning up their noses at their older counterparts. And just like every generation before them – they say that they ‘will be different’ to their parents and grandparents. But will they?

Have things changed that much? What lessons have they been taught? What lessons have they learned? According to a recent survey by Rabobank it was found that almost in one in two baby boomers expect their cash to run out during retirement and almost 25% admitted that they had no savings. What sort of lesson is that!

It’s heartening to know that another survey by MasterCard shows that those aged 18-29 want to save more than any other age group.

To the Gen X and Gen Y people who think they won’t make the same mistakes as the Baby Boomers, let me ask you this –

• How much money do you have in the bank?

• How good are your savings?

• How much debt do you have?

• How many times have you gone without because you didn’t have the money?

• How many times have you saved and paid cash for something?

• Do you know how much money you need to run your household each week?

Here’s a tip -

 If you really want to be different – get yourself organised with a budget!

Carmel McCartin – Budget Bitch

Just so that you know – (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)

At the moment there seems to be quite a few financial commentators who are touting the benefits of a ‘reverse mortgage’. Accordingly they say “it’s a product with the potential to unlock the equity in your home, for people who are asset rich but cash poor”.

Let’s look at what a reverse mortgage is… 

Aimed directly at home owners who are over the age of 65, it’s an opportunity for the bank to give you a portion of money in return for the deeds of your home. You effectively re-mortgage your home, and the borrowings are capped at 20% of the value of your home.

Nothing needs to be repaid, however, until you either die or sell-up. The interest rate for this ‘loan’ is usually a little higher than home loan rates and starts building from day one. This generally means that the debt will more than double in 10 years.

It sounds like a great deal for people who want a share of luxuries in their retirement years. 

Having worked as a mortgage broker and organized a few of these loans, I’ve witnessed the smiles of pensioners who have taken this opportunity to use the equity in their home. For them, it’s meant that they can do some minor renovations to their home, take a holiday to an exotic location, or purchase a new car.

But, sadly, they usually return within two years – looking for more money. With the extra money gone, their life has reverted to a ‘struggle’ once again. The old age pension is merely just enough to cover the most basic of expenses and there is little spare for even small luxuries.

How do we stop this from happening?

It’s quite easy really – a simple household budget now (before you retire) can put some money into a savings account. That will help in the future. And for those who have already retired? A simple household budget will help take the ‘struggle’ out of meeting basic expenses and managing your money on a daily basis.

Of course, there are some instances where a ‘reverse mortgage’ might be appropriate, and there’s some great information available from the ASIC website. If you’re thinking this is something you’d like to investigate then it’s also very important that you get some advice suited to your own very personal circumstances by visiting a financial planner, accountant or financial advisor.

Carmel McCartin – Budget Bitch

Just so that you know – (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)

An excerpt from the book – ‘Money Tips from the Budget Bitch’

Don’t buy things “just in case”

I know so many people who do this. They buy extra food, extra soap, extra detergent, and extra pantyhose. The list is endless and they always tell me that they “bought it just in case”.

So, I ask – Just in case what? Is there going to be another world war that we haven’t heard about? Is rationing about to be re-introduced? Are all the supermarkets going to close down? Or is it just in case we have an empty cupboard that we don’t know what to put in it?

Look in your cupboard… does “just in case” mean that you have almost a case full of that item? 

Do have some emergency supplies of the essentials.

Make sure that ‘emergency’ doesn’t mean ‘over-abundance’.

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)

An excerpt from the book – “Money tips from the Budget Bitch”  

Don’t be afraid to say no

Many of us grew up when money seemed to be in short supply. In actual fact, our parents only bought things that they had the ‘cash’ for. Not a bad idea, but it always seemed (at the time) as if they were saying “no”.

Obviously, at the time, we felt a bit dejected that we couldn’t have everything that we’d have liked but we were clothed, educated and fed. Generally, it was a happy time in our lives.

Naturally, we all want the best for our children and we don’t want to deny them anything, but it is OK to say No.

After all, we didn’t grow up to be such deprived people, did we?

And the positive action for this…

Do stand in front of the mirror every day and repeat “I’m sorry; we can’t afford it right now”.

Say it 10 times every day until you’re comfortable that you can say ‘no’ without feeling guilty.

It’s ok to have a giggle when you’re doing this.

Carmel McCartin – Budget Bitch

Somebody asked me this question recently – “is it bad manners to discuss money with people?”

Now, I know there’s a school of thought that says one shouldn’t ever discuss ‘sex, religion or politics’. Sometimes it would seem that the topic of money is included in that as well because it’s a topic that people just don’t talk about. It’s almost like a ‘social taboo’ and therein lays one of the problems that face our society.

Because nobody ‘talks’ about money there are many people that base their opinions and sometimes facts on assumptions and perceptions.

Which brings me to another point – if I had a dollar for every time that I’ve heard the expression “I’ve got wealthy friends” then I’m sure I’d be wealthy too.

Sadly, the fact of the matter is that we just don’t ever discuss money – not with our families and certainly not amongst our friends. What this leads to is that many people have no commonsense financial literacy and are therefore easy prey for all sorts of unscrupulous ‘get-rich-quick’ money deals.

For some people, the only time they ever hear anybody discussing money (and how to make it etc) is when they’ve been roped into one of those ‘retire early’ type seminars run by ‘spruikers’. And then, because these fast talking types appear to make sense ( and they would if you’d never heard this type of sale-pitch before) the poor innocents get caught up and are led along like lambs to the slaughter. They lose their money, their pride and any hope of an open discussion about money is now gone! 

Like many people, growing up in a family where there was not a lot of money meant that if we ever discussed the topic, it was probably more along the lines of how to make it, rather than how to save it or even how to manage it.

When times were tough, (and that was most of the time) the easy answer to a request for something was ‘No, I don’t have any money’. As a child, we learned to accept that response and we also learned the value of rare treats. Money was something that didn’t get squandered.

But, we didn’t really discuss money. 

When was the last time you sat around at a bbq and seriously talked about your mortgage, or the level of your debt?  You probably haven’t and you probably can’t imagine ever doing that. And right now, there’s a part of me that suddenly feels that I’ve just got myself taken off the invitation lists of all the upcoming parties.

Of course, there’s always a time and a place for a ‘money discussion’ and there are a lot of social events where it’s certainly not really a good idea to initiate such a debate.

But if you don’t ever have this conversation – then how the hell are you going to learn anything about the topic?

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)

Recently, a young woman was bemoaning the fact that more than a year ago she had an approval for a 95% loan to buy a property priced around $400,000. But now that a larger deposit is required by the banks – she can’t afford to buy the home she wanted. 

She went on to say that she didn’t have that much saved and now would need to save more or scale back what she buys. 

In this case, the young woman wanted something she couldn’t afford and was honest enough to admit she hadn’t saved much. And there’s the problem! 

The government’s First Home Owners Scheme is helping young people get their first home and that’s commendable. So when the government is kind enough to give you $7,000 you don’t need to save much if your bank will lend you 95%! 

Do the maths – on a $400,000 purchase you would only need to come up with $13,000 if you get the First Home Owners Grant. (plus, you may also need to pay stamp duty) 

In this day and age that’s not a lot to have saved. Say it was saved over 10 years of a young person’s first years of working, that’s only $1300 a year, or $25 per week.

But wait, what are the repayments on a $380,000 loan? It’s around $28,000 a year over 25 years. So if you only saved $1300 a year it’s not hard to see that you’re going to have a little bit of trouble servicing 21 times that much…..for the next 25 years! 

Some years ago banks wanted their customers to have a ‘decent’ deposit, anything up to 25% was normal. The banks believed that demonstrated the saving capacity of the borrower which in turn would translate into their repayment capacity. 

That’s a pretty fair assumption, because if you can budget to save you can also budget to repay. But if you haven’t saved, well you may have some difficulty. 

Of course these figures are history now. The reality is harder as most lenders will only lend up to 90% of the purchase price. 

Whether you’re a first, second, third or fourth home buyer – if you don’t have a budget how can you afford to repay your home loan?

Carmel McCartin – Budget Bitch

Just so that you know – (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 young mother was telling me about ‘how much money she had saved’ when she was out on a recent shopping trip. It sounded great. She and a girlfriend had spent several hours in the shopping centre looking for bargains – and they’d found heaps…

The first shop they visited was a well-known clothing store that was having a 50% discount sale on all items. Both of them spent $120 on clothing which, if there hadn’t been a sale at the time they were shopping, would have cost $240. Happily, she told me that they’d been able to buy all the items they wanted for half of the usual price.

Then, they visited a shoe store that was also having a sale and each purchased a new pair of shoes for 25% off the usual price. Of course, no outfit is complete without the right accessories, so the next stop was at the jewellers where they also were offering 10% off all their earrings and bracelets.

By this time, they’d tried on everything they’d looked at, bought their ‘to-die-for’ items at ‘bargain prices’ and were ready for lunch. The local bistro was offering a special price for a glass of wine and a salad and it was the obvious choice for this pair of ‘money-saving queens’.

Of course, I was suitably impressed and asked just exactly how much they’d saved in dollar terms. With a pencil and paper she worked it out for me… $120 saved in the clothing store; $30 from the shoe shop and $12 at the jewellers. Add on the $7 saved on the lunch deal and it came to a grand total of $162 saved.

When I asked which bank account the money was going in to, my young friend looked puzzled. She didn’t understand what I meant. But maybe I didn’t understand what she meant. Because you see, when she told me that she’d saved a heap of money I believed that she’d been able to make all of these purchases and then put the money she’d saved into her savings account.

But that wasn’t the case at all. My friend had only managed to avoid paying the full price for her items. She hadn’t actually saved any money at all.

In fact, the advertising and marketing were so good in making her believe that she was saving money that she spent more than she would have if she’d put the first lot of “savings” into the bank. And all the time she was certain that she was ‘saving money’.

And therein lays a problem…

So many people believe that if they buy an item at a discounted price then they are saving money. But unless they put the actual monetary difference between the usual price and the discount price into a savings account, then they’re not saving anything. They’re just not paying full price.

I guess a lot of this has to do with terminology and the stories that we tell ourselves. With the help of todays’ clever marketing strategies, we can convince ourselves that if we pay $50 less for an item then we are saving money.

This is possibly the reason why todays’ society seems to equate the word saving to mean ‘discount’. And if the word discount means to reduce, then is it any wonder that our savings accounts are dwindling?

And that’s just another reason why our budgets are up the proverbial creek without a paddle!

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)