Money Matters – Fran’s Perspective

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By Fran White

There’s Death and Taxes and then there’s Money – another certainty of life is that money will have an impact on it.

We Baby Boomers will have to manage money for more years than any prior generation as we outlive old life expectancies, and this includes a lot of years still to come (hopefully!)

As a fairly typical Baby Boomer, the blueprint I had was a hard-working dad whose aim was to pay off the family home and live out his retirement, with mum, comfortably on his company pension. My dad succeeded, he worked for a company with a great pension scheme, retired early and lived comfortably to his standards for more than 25 years till he departed this world. Read more

15 Movies About Money to Watch This Holiday

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By Lacey Filipich BEng(Hons) MAICD Cert Gov (NFP)

Money and movies: two of my favourite things. I was reminded of this when I found myself glued to SBS when ‘Margin Call’ was on, even though I had to hold my eyelids open.

Films about money and the people who covet it are fascinating to me. It’s an addiction, even more so than reading (and I read around 100 books a year). I’m hanging out to watch ‘The Big Short’.

So here it is, my list of money movies worth watching. If the heat is getting to you, put on the air con and pop one of these on your chosen device. You can claim it’s educational 🙂 Read more

Book Review: Money Master the Game by Tony Robbins

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When asked what books about finance I recommend, my response ten years ago was:

They’re still my go-to books for self-education on finance and I haven’t seen anyone do better on those topics yet. Reading those books has been pivotal in my investing life.

In recent years I’ve added to my list:

Then, in late 2014, Tony Robbins released ‘Money: Master the Game’. I immediately preordered the book, wondering if it would become another financial ‘Bible’. Read more

Talking Money with Young Children

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‘I want this one.’

My 2.5-year-old daughter was pointing to a plastic stool with Winnie the Pooh on the front of it. Price: $14.

Next to it was an identical stool – same size, shape, colour, everything – but instead of Winnie the Pooh, it had a grey star and ‘I’m a star’ written on it. Price: $5.

With my first thought, I mentally cursed the store, then marketing people everywhere. They did this on purpose.

With my second thought, I reflected that my daughter is like a sponge. She is being subconsciously programmed by whatever I do or say till she’s seven, and maybe beyond. I better do and say the right thing here.

By this point, one second has passed. My daughter has picked up the Winnie the Pooh stool and is headed for the check out. I grab the $5 version and follow her.

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Ask and ye shall receive

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By Lacey Filipich BEng(Hons) MAICD Cert Gov (NFP)

‘Thanks for seeing me without an appointment.
I’ve received offers of 3.99% variable on my loans from three other banks.
I’d like you to match that.’

‘The other gas company has offered me a 20% discount for the next year if I switch to them.
What can you offer me to keep me as your customer?’

‘I see these vacuum cleaner bags are $27.95 per box.
Can you do a better price for me please?’

These are real sentences uttered in the last month. I spoke the first and third, a colleague of my husband spoke the second. In all three cases, it resulted in a discount – not always the requested amount, but a discount nonetheless.

When I tell people that I asked for these discounts, I get a variety of responses:

  • Noses wrinkled in distaste at the thought of asking for a discount (how low-class).
  • Smug looks of the ‘I already get a great deal so I don’t need a discount’ variety.
  • Blank looks of the ‘I didn’t know you could do that’ variety.
  • Blank looks of the ‘why would you bother’ variety.

I’ve met only a few fellow discount-seeking kindred spirits in my time. I ponder why that is.

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Money Mindset: Ask the right question

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By Lacey Filipich BEng(Hons) MAICD Cert Gov (NFP)

When talking to people about their financial goals, a common question they seem to ask themselves (and me, and I assume their financial planner) is:

How much money do I need to retire?

It’s an interesting question, but it’s not the right question. Read more

Money School at the WACSSO Conference

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Being a family-run business that wants to connect with – and create value for – families, we were thrilled to participate in the WACSSO Annual Conference on 22 and 23 August, 2015 Read more

Correction, Recession or Depression?

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By Lacey Filipich BEng(Hons) MAICD Cert Gov (NFP)

It’s official – China is not indestructible. The 8%+ growth machine has faltered, sending shock waves around the globe. In our own backyard, we’ve seen a sharp decline in the stock market then a small recovery (today anyway). The Australian dollar has plummeted causing widespread happiness for our nation’s export businesses, and my ASX Sharegame portfolio has gone to pot.

So is this the start of Global Financial Crisis version 2.0 (GFC v2.0), or just a to-be-expected blip in the heartbeat of finance?

And whatever the answer, what should investors be doing right now? Read more

Five steps to getting the most from your tax return

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By Lacey Filipich BEng(Hons) MAICD Cert Gov (NFP)

Next year I’ll be clocking up my 20th as a submitter of tax returns. That’s twice as long as my relationship with the father of my children – a looooong time in my book.

Over nearly two decades, I’ve seen the methods of submission change: when I first started, you had to lodge via a form that you posted to the Australian Tax Office (ATO). FY15 will be my seventh online submission via eTax, which has evolved and improved significantly since my first experience with it in FY08. I’ve also seen the rules change over time: health care levies have been introduced, medical claim limits have dwindled away and superannuation limits and levies have changed considerably to name but a few.

You can take this lesson from my experiences: tax is not static.

Every year there are new advances in how we submit, and changes (sometimes subtle, sometimes not-so-subtle) in what we can and should claim. It doesn’t do to be complacent about your tax return because you could be missing key opportunities to maximize how much you get back… or minimize how much you pay, whichever way you prefer to look at it. It’s also not mandatory to get an accountant to do it for you. Most people can handle their own tax returns if they want to, especially with the increased efficiency of the online system these days.

Through all this, one thing remains certain: you’ll be submitting a tax return. Why not make the most of the experience? Read more

Credit cards: friend or foe?

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By Lacey Filipich BEng(Hons) MAICD Cert Gov (NFP)

Ah, those little pieces of plastic. I dimly remember a time in my childhood when there was a paper system for credit cards that involved taking an imprint with what looked and sounded like a machine designed to take off the fingers of unsuspecting shop assistants. Now you just wave them nonchalantly and walk out the door. In fact, you don’t even have to bother taking them out of your wallet – you can just use the virtual wallet on your phone if you so choose.

So easy. So tempting. So dangerous.

Now don’t get me wrong. The credit card is not, in itself, dangerous. It won’t leap out of your wallet and bite you. It cannot bankrupt you without your instruction.

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The Road to Struggle Street

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By Lacey Filipich BEng(Hons) MAICD

Like nearly one million other Australians, I sat transfixed in front of the television on Wednesday 6 May watching the first episode of the three-part SBS documentary ‘Struggle Street’. Leaving aside claims that it was not a fair representation of life in Mt Druitt and was simply headline-grabbing ‘poverty porn’, it was a glimpse into the lives of some people doing it tough. Very tough.

Despite all the press to the contrary, this documentary can do good. It is very tangible reminder of the one in seven Australians living below the poverty line. Looking at the ACOSS report, they’re easy to write off as numbers. After watching this documentary, they have faces and stories. Are there really millions of Australians so consumed with the daily battle of survival? I wish it weren’t so, but perhaps it is.

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A ‘Good time to borrow’?

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By Lacey Filipich BEng(Hons) MAICD

On Tuesday, the Reserve Bank dropped the official interest rate to 2% – an all-time low. On Wednesday, Joe Hockey sent out the message: now is a good time to borrow.

But is it really?

There’s no doubt it would be great for the Australian economy in the short-term if we all went out today and got a loan. Joe would certainly sleep better. More money means more spending, which stimulates employment and a bunch of other wonderful things we’ve taken for granted in this 20+ year period of growth.

It’s just not sustainable.

Australia has the highest rate of household debt vs. Gross Domestic Product (GDP) in the world. Since the Global Financial Crisis (GFC), we’ve continued to borrow instead of paying down debt – individuals and governments alike. We are still living beyond our means. Eventually, this debt has to come down, or at least stop growing at such a rate. We’re just delaying the inevitable by increasing our debt, and setting ourselves up for a bigger fall.

It is irresponsible for Joe Hockey to make a blanket statement like ‘go out and borrow’. Shame on you, Treasurer. Unfortunately this isn’t all that surprising from the man who recently proposed we should use superannuation to buy our homes.

Perhaps Joe could have said it better if he expanded the statement:

‘Now is a great time to borrow
if you can afford it and you’re borrowing for assets.’

An asset is something that puts money in your pocket. It is NEVER a good time to borrow for liabilities – those things that take money out of your pocket. Things like cars, computers and holidays are not what smart people spend their credit on… unless they’re beating their interest charges with solid, consistent investment returns.

Most importantly: now, more than ever, it is important to take your personal financial position into account before taking on more debt. Australia’s economy is in transition. The mining investment boom is over. Taking on debt in this environment is only a good idea if you can afford it, just in case you’re the unlucky recipient of a redundancy or simple firing. Think carefully before leaping.

That’s two strikes, Joe. If you were my personal financial advisor, I’d be firing you.

We teach adults how to get on top of their finances so they can stop work sooner and stop losing sleep over money. Part of that is, of course, teaching them how to get into the situations you’ve just read about in the first place. If that sounds good to you, check out our course on Achieving Financial Independence.

You may also like to check out our Facebook page, where we share articles and video tips. Given you’re reading about bankruptcy, you may be interested in reading our tips on credit cards, avoiding the Struggle Street trap, and some wonderful free and cheap financial education resources you can access, including people to talk to for advice.

For those in debt and not quite at the stage of bankruptcy, we also have a free course called ‘Get out of debt fast’. You’ll find it on our homepage.

The Potential Perils of Paid Financial Advice

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By Lacey Filipich BEng(Hons) MAICD

In my professional past, I spent a lot of time flying into mining sites for a substantial fee to tell management teams two things:

  • Your only targets should be Safety, Volume and Cost. The rest is window dressing.
  • Stop doing most of what you’re doing. Just do a few things, do them properly, and be relentless in your de-prioritisation of the distracting crap.

The KPI targets and the contents of the not-to-do lists vary, but the concept is essentially the same everywhere. We have too many targets and too much to do, so we lose sight of the important stuff. It’s part of the human condition.

In my advice to their bosses, I add a third point: the management team bonuses should be delayed by two years. Why? Because they should not reap the rewards of meeting their targets until it can be shown that those results are sustainable and they did not cause long term damage by making poor decisions. Paying them in the same quarter or year as they achieve the targets means they have an incentive to rape and pillage with little thought to the future. It may not be the most significant incentive and it raises uncomfortable issues of trust and integrity, but it’s there.

So what the hell has that got to do with the Senate inquiry into the poor financial advice some of our biggest banks have been giving their clients? Read more

Super and your home do not mix

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By Lacey Filipich BEng(Hons) MAICD

When I saw Joe Hockey on the news in March suggesting that superannuation (super) may one day be available to help First Home Buyers get into the property market, my jaw dropped. Could it be possible that our country’s most senior financial decision maker has such a limited understanding of the purpose of super? Or was this simply an off-the-cuff comment aimed at taking the population’s temperature on this issue?

Though it would still make me unhappy, as it’s an irresponsible way to poll opinions, I hope it’s the latter. If it’s the former and Hockey’s understanding of super and what constitutes an asset is that dismal, quite frankly we’re up the creek with no paddle. Read more

Tips for first time property buyers

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By Lacey Filipich BEng(Hons) MAICD

Having bought a property in my teens, I am asked time and again by students and those early in their career how they can do it too. To those aspiring young property magnates, I say: bravo! Thinking about wealth creation in your teens and twenties is fabulous. It’s bound to put you in better stead than those that only wake up to it later in life. That you’re asking the question makes you one in a hundred.

Congratulations done. Now the hard part… Read more

Australia’s financial future and what it means for you

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By Lacey Filipich BEng(Hons) MAICD

The 2015 Intergenerational Report (‘The Report’) was published on 5 March 2015. It’s a predictive exercise: based on today, where will we (Australia) be in 40 years? Assumptions abound and of course you can spend a lot of time on whether those assumptions are reasonable or not, but it’s far more interesting to consider the implications for those of us who still plan to be around in 2055. So what did The Report find?

Findings of interest for those interested in money

The following figures are based on Commonwealth of Australia data, taken from the 2015 Intergenerational Report.

1. We will live longer, healthier lives

A child born in 2015 can expect to live to their early 90’s whereas a child born 40 years later may expect to live to their mid 90’s. Read more

Building a future one property at a time

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When I opened the interview with Erica by explaining I wanted to blog about her experiences building homes, I said she’d built a lot. Her response was, ‘Oh, I don’t know about that.’

She’s built 18 houses in her life.

Call me crazy, but that’s my definition of ‘a lot’ for someone who’s not a professional builder.

After so many houses, building might seem old hat. However, you can hear Erica’s enthusiasm for real estate in her voice. She referred to it as a hobby. Even though she’s built her last house – the one she and her husband Tony will retire to eventually – Erica still advocates building as an excellent way to make profit in real estate.

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The Debt Fairy

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By Lacey Filipich BEng(Hons) MAICD

Imagine you’re a low-income earner and you’re in debt. Your debt is high enough proportional to your wage that you’re effectively bankrupt, and hence can’t even access your bank accounts. You have no savings and no property. You’re probably relying on your family and friends to feed and clothe you, or whatever meagre amount is left over from your pay after debt deductions. Or perhaps you rely on government welfare. Sounds rather miserable, doesn’t it.

Now, imagine a magic fairy came along and offered to wipe out all your debt. You could access your bank accounts again and keep all your salary (after tax). Sounds pretty damn good, doesn’t it.

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Selling investment property | %%sitename%%

Should you sell your investment property?

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Author’s note: This article on selling investment property is by far our most popular – probably because it’s comprehensive and comes complete with formulae – but at over 5,000 words it’s longer than an average book chapter. So, here’s the summary of what you’ll find in this article so you can decide if it’s what you’re after:

  • Five sensible reasons to sell (to reduce interest on your home; poor performance; better asset available; it was once your home; losing sleep over it).
  • Five reasons that it may be better to hold (it’s a recent purchase; solid performance; high potential for growth; it’s key in your strategy; no mortgage on your home).
  • Full worked calculations based on the scenario of having a home mortgage and an investment property (three worked options: keep both; sell investment and swing profits to home mortgage; sell investment and use profits to buy another property).

At the end of the article, you’ll find instructions for obtaining an Excel spreadsheet that does all the calculations covered in the article and lets you run scenarios for your personal situation.

 

Recently, I was asked on two occasions in a single day for my thoughts on whether or not my friends should sell their respective investment properties. When I mentioned being asked the same question twice that day at dinner in the evening, a third friend said ‘Yeah, I’ve been wanting to ask you the same question about my property.’ I’ve been pondering why so many people were thinking about selling their investment properties around then.

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Working out your financial goals

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By Lacey Filipich, BEng(Hons), MAICD

Setting financial goals can be exciting for some, nauseating for others and downright offensive for a few amongst us. As with most things in life, setting goals is an important first step in getting what you want. The goal is only the first step – you then have to go out and make that goal a reality through work – but without the goal you’re at risk of waking up one day and finding you’re not happy with your circumstances. Regardless of how you feel about money it’s worth having a goal in mind… even if that goal is to never think about money.

How you manage your money is heavily values-based. If you prefer to avoid risk and you value your independence, you’ll have a completely different approach from a person who’s happy to take a lot of risk with someone else’s money if the potential rewards are great enough. There are no hard and fast rules… actually I lie. There’s one rule: don’t spend more than you earn. Everything else is negotiable. So, where to start?

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