Payday lenders begone!

I’m sure that many people have often heard me say – “I’d rather teach you how to budget properly than refer you to a payday lender”. And the reason that I say this is because too many times I see people who have been caught in a never-ending cycle of high interest loans that are no sooner repaid than they need to borrow again.

Wikipedia defines this practice as – “A payday loan (also called a payday advance, salary loan, payroll loan, small dollar loan, short term, or cash advance loan) is a small, short-term unsecured loan, “regardless of whether repayment of loans is linked to a borrower’s payday.”

Basically, the process involves a lender providing a short-term unsecured loan which is to be repaid at the borrower’s next payday.

In many cases these loans can carry fees that equate to annual interest rates of up to and more than 300 per cent. That’s a lot of extra money, for such a short term.

Oftentimes, it can seem too, that no sooner have you paid out this loan and its large interest fee on payday, than you’re running short again and so you need another loan. It can quickly become a vicious cycle.

If you’re in the habit of spending every cent that you earn, every week, then an unexpected or abnormally high bill can put your wallet under enormous pressure.

 If your credit limit is stretched to the maximum limits, and your family and friends are all broke – then where do you get the money from?

Just when you’re feeling desperate about your finances and looking for help on the internet, up pops an advertisement from an ‘instant saviour’ – the payday lending company.

You know the ones I mean – they advertise heavily on your television and across the internet. They have catchy names and advertising slogans; rabbits that lend money quickly or promises of getting your debt under control.

Well now Google has decided to ban these ads from their internet reach. You can read more about this here

Of course, the obvious solution is to not use these loan-makers. And I’m sure you’ll say that desperate times call for desperate actions. But seriously – it’s like throwing a punctured life-raft to a drowning person. No sooner does he scramble aboard, only to find himself sinking again in a very short space of time.

People who have a proper working budget will find that they are able to weather a financial storm much better than those who are unprepared.

If you don’t have a budget, then you know what to do – call me!

 

 

 

©   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)

Budgeting for the future

From time to time I get asked about superannuation, investments and retirement funds.

Now this is not what Budget Bitch does. We just do budgets – planning of budgets; budget coaching and budgeting workshops. We write about budgeting, and we talk about budgeting. To put it simply – Our focus is just budgets.

However planning for the future is something that everybody needs to consider, particularly when organising a budget.

On Thursday 7th July – the ASFA (Association of Superannuation Funds of Australia) along with Money Magazine launched a campaign called SUPER BOOSTER DAY.

They state that only 7% of working Australians are currently making extra contributions towards their superannuation plan. What this means is that only 20% of Australians will be able to retire comfortably. The other 80% will need to rely totally on the government aged pension to fund their living expenses once they finish work.

And like it or not – there will come a day when we need to stop working.

It’s a scary thought.

Super Booster Day is a great idea to get working Australians to start thinking about putting aside some extra money now so as to be able to save tens of thousands of dollars later in life.

For many people this can seem all too hard. They tell me that their budget is too tight, or they don’t know what else they can do to can arrange some money to be put away for their future.

Perhaps some of these ideas could help you to save some money which will translate to thousands of dollars in later years –

  • One less glass of wine at the pub each week and you could boost your future wealth by over $364 each year
  • An extra meal at home each week and you could be putting away $1040 each year towards your retirement
  • Just one less beer at the pub each week could boost your future savings by over $260 per year
  • Reducing your Pay TV subscription by $20 per month will contribute $240 per year to your retirement. (Do you really watch all those channels every day?)

Just these simple suggestions alone could help to contribute almost $2,000 per year to your retirement fund.

Of course, it all comes down to making your future a priority in your budget. If you need some help with this – please give me a call.

You can make your Super Booster pledge today at http://www.superboosterday.com.au/ by September 15.

 

 

©   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)

 

Are you ready for this?

How quickly the year flies! Already it’s the first week of June and we are almost halfway through 2016. 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; the cost of living seems to be continually rising and of course – electricity prices have risen again this 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. It is the time of year 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 have fallen behind in your savings plan – then now is the time to make amends. If you are falling behind in paying your bills when they are 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 very 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)

How do you retire without struggling for money?

You’ve no doubt heard from a few financial commentators about the benefits of a ‘reverse mortgage’. And you’ve also possibly heard that “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.

 

(c) 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)

Superstores can help with your budget

Living in a regional area, it sometimes feels that the city-dwellers have a greater advantage when it comes to shopping and supermarket prices.

On a recent trip to Melbourne, I was able to take some time to visit one of the newest contenders into the Aussie supermarket world – Costco.

My friend has been singing the praises of this store for many years. She has family in the UK and when she visits there she always includes a trip to Costco.

From the outside, I was impressed – it’s big, and has warehouse proportions. Walking in through the carpark, I also noticed that the trollies have been upsized to match.

You cannot enter without a member and only members are able to purchase anything. With an annual membership fee of $60, I was keen to just be a visitor. (Business memberships are $55 and you must provide proof of your business identity)

From the moment I stepped through the doors I was like Alice in Wonderland. With so many things to look at and seemingly fantastic prices we spent two hours inside the store.

It seems that you can buy almost anything you want – from electrical goods and jewellery, to office requirements and perishable items for the pantry.

Everything is big, and many of the household items come in bulk order packets. Twenty dollars for forty-eight toilet rolls is definitely a good price but I face a dilemma of where to store them. I asked myself the same storage question for the all well-priced bulk laundry and pantry items.

In many cases, the bulk buy would mean that I could buy one item and receive one for free (compared to the prices I usually pay at the supermarket). The same ratios applied if the packaged item was in three – pay for two and get one free.

Buying in bulk is a great idea and by taking advantage of almost wholesale prices you have an opportunity to keep your weekly shopping bill to a minimum.

Of course, where to store the excess items can be something of a dilemma (as it is for me) as can having the extra money for the initial purchases when you buy in bulk.

Once you have made your bulk purchases your weekly shopping cost should decrease. Or will it? How many people will continue to spend the same amount of money each time they go to the supermarket despite the amount of items in their pantry or cupboards?

A visit to this type of superstore can definitely be great for your budget. You must however, always remember to shop in your pantry and make a list of what is needed before heading out to the supermarket.

 

 

©   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)

 

Don’t read this – unless you have a spending weakness

Everybody has a weakness. Sometimes it is obvious, and other times it is not. But it is there – a weakness for something; a weakness that no matter how much we try, it makes us give in and spend money on it.

Mine is books. I cannot help myself, I just love them. All sorts of books; all titles; and all shape and sizes. I’ve always had this weakness and it has taken me a long time to get it under some semblance of control.

Not so long ago I had an appointment at the post office. When that had finished and I was leaving, a cluster of books on the shelf caught my eye. Stopping to look at them, I realised that I didn’t covet these titles. But I did stop to wonder who I knew that would appreciate them as a gift. No name came to mind, so the books were put back on the shelf.

The next stop was a large department store. I needed some deodorant. And there, right next to the personal hygiene aisle was a display of books. I looked around, wondering if they had somehow wandered away from the book section. But no, they were there to tempt me.

I stepped around them and rushed to get my deodorant but I found my eyes being drawn back to the titles. Then I crossed to another department pretending to myself that I was interested in buying a lipstick. Really, I was just moving closer so that I could see what book titles were available for such a ridiculously cheap price.

I was quite determined not to buy one – but then I found myself scrabbling in the bottom of my handbag for whatever loose change I had hiding in there. Was it luck or was it pre-destined – but there lurking in the darkest corner was $4. It was just enough money to buy one.

I couldn’t help myself. I had to get one. Will I read it? You betcha! It’s not a title that I have read before, even though it was written twenty years ago.

Will I keep it? Yes – it will become part of my collection, along with all the other books that I have gathered over the years.

It is my weakness. I cannot help but look at all the books on my shelves and shudder when I see how much money I have spent on them. Buying books is not a regular part of my family budget, and if I succumbed, it could blow the budget every week. As a compromise, I have allocated a small amount each week which allows me a new book every month.

It seems that nobody is perfect – we all have a penchant for something.

What’s yours?

 

 

 

©   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)

 

Now more than ever

Over the past few weeks, the Australian Tax Office has released some interesting figures about wages and  aries.

Would it surprise you to know that the average wage or salary income in 2013-14 was $56,690?  Of course, these figures coming from the ATO are indicative of taxable income. I’m sure many of you are thinking ‘I earn more than that’.

These figures didn’t surprise me too much – lots of our customers are in or not far from that category. But what amazes me is that so many people appear to be living a lifestyle that possibly costs way more than that figure.

With the average monthly mortgage repayment being $1800 and average rents costing similar amounts, there doesn’t seem to be a lot left over for the household bills and lifestyle choices.

(In 2011, the average Australian household with a mortgage paid $1800 a month in mortgage repayments. It appears that rents were of a similar cost. ABS figures)

To the mortgage/rental costs you must also add the cost of car or personal loans as well as any other debt that you may have. Household utilities, insurances and communication costs must also be totaled into the must-have list. Once you also add family costs such as childcare or education to the demands on the weekly income, you can understand why I get a little twitchy about the seemingly over-the-top lifestyles.

It is not always possible to increase your taxable income. Your dream job and income may require more qualifications. Or the availability of those positions may be severely limited.

Out of interest, the report also showed that the five highest earning professions were anaesthetists ($331,867), specialist physicians ($279,022), financial dealers ($233,639) and judicial and other legal professionals ($204,255).

Where you live may also determine your cost of living. The ATO reported that the highest taxable incomes, averaging $200,015, were found in the Sydney postcode of 2027. The second-highest average taxable incomes of $167,407 were in the Melbourne postcode of 3142.  However, living in those suburbs will not necessarily increase your income and you may find that your household costs are actually higher.

It doesn’t really matter where you live or how much income you have, you just have to make the money you earn stretch as far as possible. My golden rule here is that “you can have anything that you want IF you can afford to pay for it”.

With these income statistics, I am sure that you will agree that now more than ever, it is important to ensure that you have a good working budget.

 

 

©   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)

 

It’s time to change your supermarket habits

If the Macquarie dictionary defines the word habit as “a constant tendency to act in a certain way” then I guess in lots of ways we are all creatures of habit in many areas of our life.

But have you ever stopped and really thought about your own practices? Why you do what you do when you do it?

Take for example the regular grocery shopping expedition. How many of us go to the same place, on the same day of the week at roughly the same time? And then once we’re there, take a trolley and start at the same aisle and go the same route to get roughly the same purchases as the time before?

Of course, that probably means we also spend the same amount of money each time.

Don’t you just hate it when the supermarket decides to shake things up a bit and change the aisles around? No longer is the toothpaste in the same place and the bread has changed places with the cereal. It can be downright confusing and certainly makes this chore less than enjoyable.

But have you ever stopped to wonder why they do this? Do you think it’s all about getting you to actually ‘see’ what they have for sale, in the hope that you will buy more. Do you think that they’re also trying to shake up a few habits?

Have you ever noticed how the things they’d really like you to buy are at your eye-level? And the things that they’d like your kids to pester you to buy are at the junior ‘shoppers’ eye-level. It’s part of their marketing strategy but if you look above or below these levels you’re sure to find lots of other bargain priced goods.

For so many of us, the whole ‘hunting and gathering’ of food for our families is based on habit. And rather than trying to change too many habits all in one day let me ask this question – do you really have to buy your food supplies at the same time every week?

Now, lots of times I hear the cry – “there’ll be nothing in the house to eat”. But I am yet to find a house where the cupboards really do look as bare as that infamous Mrs. Hubbard from that old nursery tale. There is always something in there – even if it is just an old tin of chick-peas left over from the school fete.

I met a well-organised family who has a weekly menu and shopping list prepared every week. Not only does this cut down the impulse buying at the supermarket but it also means that there’s not a lot of stuff lurking in the pantry that will never be eaten. Well, that’s the theory anyway. However, even in this well managed kitchen we were able to find enough cans and tins to make dinner for a couple of nights.

So if you moved your grocery shopping to a different day and a different time what do you think might happen? Would a great hole appear in the freezer cabinet and suck you right inside, never to be seen again?

If you were to go a day later each time, do you suppose you’d think about what you needed to buy?

Supermarket shopping doesn’t have to be a deep and meaningful experience. But if we give a little more thought to the whys and wherefores of what we’re spending our money on, I’m sure we’ll find that the whole excursion has just become a huge habit that is eating into our budgets.

 

©   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)

 

Inexpensive ideas for the holidays

This year, the end of March brings Easter celebrations and also the start of school holidays.

For those of you who are a little short on cash and in need of some inexpensive entertainment to keep your family amused during the school holidays — let me help with just a few ideas:

~  A picnic in the park doesn’t cost much, just some sandwiches and drinks, with perhaps a Frisbee or a bat and ball for amusement;

~    A visit to the library — there are heaps of great things to do there. I’m not going to tell you what they are, go find out for yourself;

~   If you can’t afford the cheap cinema prices on Tuesdays, hire a DVD and snuggle up on the couch;

~  Kite-flying is great on a windy day. You can make them yourself and spend even less money;

~   Board games are a great investment and a lot of fun;

~   Rent toys instead of buying them, or join a toy library;

~  Go to the beach — one of the most wonderfully entertaining places in the world is absolutely free. You can get almost the same buzz from sitting on a river bank or a lake;

~  Plan a meal, invite your friends over and ask them not only to not only bring some of the ingredients, but ask them to help with the cooking as well. It’s a very social activity, and can be loads of fun. (Barbecues and salads in summer, one-pot meals in winter); and,

~   Organise a hand-me-down party with your friends and set a theme — kids’ clothes, kids’ toys, household goods (this is a party-plan with a difference).

 

So you see, you don’t need a lot of money to have a good time.

The reality is that you don’t need very much money at all and I’m sure that you could come up with at least another 10 good ideas that won’t cost a lot of money.

And besides let’s face it; much of the time “having a good time” is just a state of mind.

 

 

©   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 really a reward?

At least once a year, it’s important to check that you are paying the right amount for all your must-haves. This includes not only your utilities but also bank fees and insurances.

Recently my bank informed me that from May this year, they would be increasing the fee for my credit card. Actually, they are doubling the fee.

It would be fairly obvious that the question I get asked a LOT is – Do I need a credit card or not?

Anyone who knows me would understand that I am not against credit cards; because sometimes in extreme emergencies the available funds can ease the stress of covering the cost of that emergency. They’ll also tell you that my Golden Rule is – “pay off the balance every month”. By doing that, you are then able to keep your budget under control.

I have a ‘rewards’ credit card. That means the bank awards two points for every dollar that I spend by using my credit card. When I have accumulated enough points, I am able to exchange them for something that I would like. They call it a reward.

Now, I have written much about these so-called reward cards and I often wonder just who is being rewarded. Currently, I am able to claim a toaster after accumulating a bit more than 20,000 points, which means I have spent $13,333. That’s hilarious when you think that I can buy the same toaster for $85.

Up until now, I have exchanged my reward points for frequent flyer points, which have contributed to flights to various cities around Australia. Even though the ratio of frequent flyer points is 1 point for every 2 points I earn from my bank – I still figure it to be more beneficial than saving an exorbitant amount for a toaster.

If I was to use these reward points for a flight from my home town to Sydney, I would need to have accumulated between 20,000 and 35,000 points for a simple one-way fare. That’s $10,000 – $17,000 I need to spend on my credit card before I can claim an air-fare. I fly to Sydney often, and pay an average of $165 for a one-way ticket.

With the hike in the user-fee now imminent, I decided to look a little more closely at the so-called rewards for using this card.

What I’ve realized is that I only receive around 2,000 points each year which are credited to my frequent flyer account. A flight from my home base to Sydney needs around 8,000 frequent flyer points. That means – I’m getting a free flight from my credit card rewards program every four years. And that’s only a one-way ticket.

If I was to put aside the $40+ increase in my card fee and save it for the same flight, it would still take me around four years to attain that free flight.

For me, the answer is obvious – stuff the fancy advertising and gimmicks, I don’t need a rewards program credit card.

I then did some research and found that I can still have a credit card with some great features for a very reasonable $30 per year.

Changing over my credit card was easy even though the bank was keen to sell me some other product to make up for the money they will no longer be getting from me. They didn’t get very far.

 As I said before – it really is important to keep an eye on the cost of things that you either need or use every day. Not only does this help to know where your money is going but it also keeps your budget in tip-top order.

 

 

 

©   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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