From investing in an almond farm in Adelaide to spending too much on an (unseen) apartment in Queensland, I’ve made my fair share of mistakes with money. As the founder of online mortgage broker uno Home Loans, I now take great pride in helping other Australians save money on their mortgages. Here are four pieces of advice around money, based on some mistakes I could have avoided.
1. Be wary of investing in anything claiming to be ‘tax effective’
In my experience, tax effective is code for, ‘It’s going to lose some money but you’ll be able to deduct the tax’. The almond farm had very good tax deductions early on and I didn’t really understand the impact of that. What that meant was I was buying an asset that was effectively worth nothing at the point I bought it, but I was paying a lot for. And I was deriving a loss as a result.
Ultimately, the expectation was that the asset would start to become worth more but it didn’t. It was growing poorly. What I should have been doing is buying an asset that appreciated, not looking for a tax deduction. In hindsight, I should have bought property. That’s not to say, don’t do anything in a tax effective way. But, when you’re thinking of investing your money, invest in things that make money as opposed to trying to avoid tax.
2. Don’t buy property unless you’ve run the numbers and understood them
When I bought my property in Queensland, I thought, ‘It’s in a good spot, there’s an airport nearby but it’s not on the flight path’: fundamentally logical ideas. But I never ran the numbers on the property. What will it cost? What will the rent be? What will the purchase costs be? What does it need to appreciate? What if interest rates go up? When will this thing make money? I didn’t properly investigate it.
You need to have crunched the numbers and understand if this property is going to provide you with a return (income and/or capital) or not. I would now build an excel model. There are calculators online, but a calculator is only good if you’re knowledgeable about what to put into it. A good adviser, like the ones we have working at uno, can do that for you.
3. If you can’t afford principal and interest on your property – now or ever – you can’t afford to buy
With that same Queensland property, I sustained the ownership of the property by paying interest on it and I masked the fact that I actually couldn’t afford to ultimately pay down its debt. I didn’t have the cash flow to sustain it. The bank doesn’t want you to be interest only forever; eventually, they want you to pay it off so they can get their money back. But more than that, when you only pay the interest, it’s about two-thirds of the cost of payment. The principal only increases. You ultimately do better by owning things outright and not having to pay any rent to the bank. When you run the numbers, you should do it using principal and interest. If you can’t afford principal and interest, you can’t afford the property, so don’t buy it. It’s high stress and high risk and its standing too close to the wind.
4. Don’t confuse disposable income with financial competency
I had the good fortune of being on a reasonable salary in my early twenties. I had no mortgage, no children, no school fees. I had no debt to pay off. I literally had nothing other than my rent to pay. I never experienced a lack of money and, as a result, I never developed good financial habits. It took moving to the US and living off around $18,000 a year in one of the most expensive cities in the world to actually learn how to manage my money.
Ironically, I moved to San Francisco to start a company called Planwise! When people come out of university and start earning good money, they’re often getting taxis everywhere and getting dry cleaners to wash their clothes and eating out four times a week … if they’re earning good money they won’t notice that because they pay their rent and energy bills. But they’re kidding themselves if they think they’re developing good financial habits. You develop good financial habits either through parents who force you to do it or when circumstance forces you to do it. I was terrible with money but I didn’t know it because I was earning enough money to not be impacted by it.
It takes a few minutes to stay on top of what you’re spending every week because there are countless apps around now that make it easy for you (my favourite is frollo.us). You have no excuse now not to be better with money day-to-day; it only takes a matter of minutes a few times a week. It also only takes a few minutes to see if you could be on a better mortgage with uno. So, if you have one of those, I’m sure we can help you there too.
Vincent Turner is the Founder and Chief Innovation Officer at uno Home Loans, the online mortgage broker. Looking for a new home loan? What used to take days with banks and brokers can how be done in less than 10 minutes – from your laptop or mobile phone. Visit www.unohomeloans.com.au
It’s important to note that the information we give here is general in nature – no matter how helpful or relatable you find our articles. Even if it seems like we’re writing about you, it’s not personal or financial advice. That’s why you should always ask a professional before making any life-changing decisions.
This post is a collaboration between Get Money Wise and Electricity Monster
According to data from Carbon + Energy Markets MarkIntell, us Aussies pay the highest electricity prices in the world. Crazy right?!
If you are like me it is one of the larger bills you receive each quarter. So I thought I’d take up the challenge to see how I could save on my electricity bill over the next quarter.
What sparked the change
As most readers will know, we moved out of Sydney last year to purchase our family home mortgage free. While I love the space that our new 4 bedroom home gives us, I have noticed a big difference in being able to heat and cool the place. Especially when compared to our 2 bedder in Sydney.
So when the winter electricity bill arrived in the mail it was a bit of a shock to see the dollar figure. I work from home now so it was natural to expect a little increase in our bill, as I was using my laptop and sometimes a heater and light throughout the day. Obviously not needed when I was trotting off to my corporate job back in the city.
With the move to self-employment and with a fluctuating income, I’ve needed to ensure we have a tighter rein on our expenses. So I’ve gone back to basics and rediscovered the how to save on our electricity bill. I thought some of my readers would be interested in what I’ve done to get our costs under control.
Top tips for how to save on your electricity bill
Switch off the lights
Coming into spring and with daylight savings about to start here in New South Wales, we have the chance to take advantage of as much natural light as possible. When we do need to use the lights I’ve become much more conscious of turning them off when we leave the room.
Compare your electricity options
I’ve always researched each year the best deal on my insurances but never really made the time to think about whether I could get a better deal on my electricity bill.
I went searching for a site that could help find me a better deal and find a way to help me in comparing electricity options. On my search, I discovered Electricity Monster.
I didn’t want to have to spend hours on end researching each individual energy provider so I was pleased to find an easy to use website that made the process really simple for me.
It’s not like we are comparing cooking chocolate to Lindt Belgian chocolate. Electricity is electricity, so I want the best deal I can get.
The way Electricity Monster works is you will be matched up with one of their brokers who gets to the bottom of what your current electricity tariff is. They then match you up with the best rate and take care of the changeover for you.
Could not have been easier to do and the service is 100% free.
Unplug unused appliances
I’ve always been pretty lazy and never bother with this in the past but I’ve started turning off appliances when they aren’t being used. It was actually pretty shocking how many things I had plugged in and had power going to them but I hadn’t touched them in months. While it’s only a little thing over time it all adds up.
Hang out the washing
Popping the kids’ clothes in the dryer is an easy habit to get into. Particularly during the colder winter months. But I’ve made an effort to hang out clothes now to dry naturally. I read it saves about a dollar each time by not using the dryer so again it all adds up to more money staying in my pocket.
Consider going solar
Producing your own energy from the sun by installing solar panels can still be a worthwhile investment. Despite the drop in the rebate from the Government, it’s worth doing the math to see if it’s worth it for you in the long run.
Trap the heat in
With our large house, during winter it was freezing a lot of the time. So I went old school like my parents used to and go those door snakes for the doors to try and keep the heat inside.
Closing the curtains also seems to help keep the heat in after we turned the heater on just to warm the space.
Opt for energy smart new appliances
When purchasing a new appliance such as a fridge, air conditioner, washing machine or dishwasher, check the energy star rating. You’ll save money, in the long run, choosing an appliance with a higher star rating.
Ensure your home is well-insulated
A well-insulated home helps to keep warm air in during winter and keeps cool air in the house during summer. Helping to reduce your dependence on the need for air conditioning and heating.
Be mindful of air conditioning use
With summer coming up we have a few pedestal fans we can use before using the air conditioner. The average fan costs less than 1 cent per hour to run. Whereas the smallest air conditioner will cost about 12 cents per hour so it makes a big difference.
Make smart choices with lighting
We replaced standard incandescent bulbs with energy-efficient ones. The offer the same amount of light, but just use less energy so it’s a no-brainer really.
Can you add anything to the list? How do you save on your electricity bills?
F.O.M.O and F.O.N.G.O – two little acronyms that can have a big impact on your money-related decisions. Whether you’re getting into the stock market, investing in cryptocurrency, throwing cash behind a start-up or buying/selling property, fear can play a big part in your decision-making process.
Fear is something that can really hold you back BUT a little fear can also keep you on your toes and alert you to potential dangers that you should steer clear of. Let’s take a look at the two main types of fear that can affect your money and how you can harness them for good (and when you should stick them at the back of your sock drawer).
F.O.M.O (Fear of Missing Out)
We’ve all been there – feeling that sense of panic that you’re about to miss an opportunity that other people seem to be taking advantage of. This can happen whether you’re standing at an auction, reading about crypto or watching bounces and dips in the share market. Your senses are heightened, which is good because it may be an opportunity you can jump on –the problem is, a lot of emotion can overlay your decisions in this sort of situation and that can cloud your judgment.
There is nothing wrong with taking a risk – risk often comes with reward – but you need to know your tolerance for it and know how you should respond when your emotions test your resolve. Every investor needs to know their budget, how much risk they’re comfortable with and how that affects the decisions they make. Every investor also needs a strategy and to be clear on their goals – are you in it for the long term or the short term? Is this money you can afford to lose or are these essential savings?
Nobody wants to buy at the top of the market or sell as something’s bottoming out –having a strategy and understanding longer-term trends can help avoid this, rather than following emotional impulses and getting caught up in the herd mentality. Don’t feel compelled to follow others when it comes to your money – if you have a plan (and you should) then stick to it.
F.O.N.G.O (Fear of Not Getting Out)
This type of fear is ultimately related to fearing loss and feeling trapped in a money situation that you won’t be able to get out of. When markets get the jitters, it often doesn’t take much – a few panicked investors and a newspaper article or two – for fear to spread like wildfire.
Again, it really comes back to your situation and your goals and that’s what you need to remind yourself. Put the panic aside, and assess what’s happening with logic and strategy. Cutting your losses is not necessarily a bad thing if that’s what suits your current needs.
However, if time permits, often the best thing you can do is take the pressure off and hold on until the inevitable recovery. Market cycles are just part of the money world and making hasty decisions is not usually a good idea, especially when you consider that markets go up three out of every four years. It’s better to focus on your longer-term plan and try to ignore the short-term gains and losses going on in the markets around you.
Sure, fear of getting stuck in an unfavourable investment makes sense – but should you not also fear the regret and loss that comes with making a rash decision? That’s why the best thing you can do is take fear out of the equation.
So remember, if fear strikes:
• Keep your eyes on your own goals and your longer-term strategy.
• Acknowledge it and use it as an opportunity to review your investment using logic and reason and make sure you’re still doing the best thing for your situation.
• Remember the market moves in cycles – it always has and always will. Depending on the asset class, those cycles can be months or years (or even hours if you’re watching the crypto market!). Know that if you’re feeling the pressure of time and can’t make a comfortable, fear-free decision, then you’re probably better off not making any moves and riding the next wave of the cycle.
• Make sure you’re diversified. Putting your investment eggs into different baskets is a smart way to spread risk (higher or lower) to suit your own situation and will help you ride market cycles with more confidence.
By Pat Garrett
Pat is the CEO and co-founder of robo-advisor Six Park, which uses technology to lower costs and allow people to invest more easily than was previously possible. Six Park was founded in 2014 with the goal of disrupting the Australian financial services industry. Six Park’s Investment Advisory Committee is made up of Six Park co-founder Brian Watson, formal Federal Finance Minister Lindsay Tanner and the founding General Manager of Australia’s Future Fund, Paul Costello. This advisory committee is active in overseeing Six Park’s investment strategy.
To celebrate Mother’s Day this weekend I’m excited to share with you this guest blog from Kirsty Lamont from Mozo all about money wisdom from Aussie Mums.
There’s more than a little bit of truth to the age-old adage; Mum knows best. Whether it be some soulful counselling after your first heartbreak or much-needed guidance when you first move out of home, mums are usually there to give us a tidbit of tried and tested wisdom, and that’s certainly the case when it comes to managing our money.
So with Mother’s Day upon us, I quizzed the staff over here at Mozo about some of the most sage money advice their Mums have given them over the years.
“Spend more to waste less”
The handful of fashionistas in our office relayed some thoughtful maternal advice about the value of buying high-quality clothing over fast fashion. “Spend more to waste less” was the shopping philosophy one mother passed down to her daughter. The idea that buying one quality piece of clothing like a classic cut designer winter coat that will last season after season rather than several cheaper items that will land in the donation pile after a few months, has been proven to be economical in the long run and is also a lot more environmentally savvy.
Another staffer pointed out that their mother really hammered home to them that you should be using your credit card for the right reasons. They were told that if you are going to be paying back any kind of interest on an item, especially clothing, then you better make sure that it was worth the higher cost.
“Buy experiences, not things”
For a separate corner of the Mozo office, mum’s money advice wasn’t to focus on buying material items at all, instead, it was to spend your precious pennies on experiences like weekends away with friends or doing something fun like a pasta-making class.
Undoubtedly one of the most common pieces of advice was to make the most of your youth and to spend money travelling, whether that be a hiking-heavy trip across South America or a sunny summer away in Europe. And while everyone has to stump up for holiday essentials like flights, accommodation and travel insurance, according to the mums that have been there done that, it’s those money-can’t-buy experiences you get by straying off the tourist track and discovering something new that sticks with you long after the trip has ended, not how much you paid for it in the first place.
“From little things, big things grow”
Just as we’re taught as a child to brush our teeth morning and night, not eat too much junk food and get eight hours of sleep each evening, one person in the Mozo team was taught from a young age that every little bit of money they can put away helps in the long run. Ironically, that person bought their first house at 25!
So whether it’s stuffing your shrapnel into a coin jar at the end of each day, putting it under the mattress, or automatically topping up a high-interest savings account each payday, the key isn’t how much you’re putting away, it’s how often you are doing it and for how long.
“Spend money on what really makes you happy”
This particular piece of advice is easier said than done, especially when you are staring down a one-day-only 50% off sale, but mums are serious advocates of spending money on the things that make us happy. We’ve all made regret purchases in our time, so mum’s advice is more about taking stock and not giving into every impulse buy that comes your way.
Spending money on time-saving services like a cleaner or buying lunch during the workweek rather than putting in the hours of meal prep on the weekend is totally fine, so long as it’s making you happier and by doing it you’re not falling into debt.
Kirsty Lamont is a money expert and director at financial comparison website mozo.com.au. She is passionate about helping people make better, more informed choices about their finances.
You may have noticed there has not been a lot of new posts on the site lately. I’ve been busy working away on writing for my clients as part of my copywriting business so sadly I don’t get to post as often as I’d like here. So I’ve reached out to some of my online buddies who are also a part of the financial independence and money blogging community who have been kind enough to offer a guest post for us.
I am most excited to introduce you to Mr 3000 who blogs over at 3000 days. He is a new Aussie blogger on the scene and only just starting out on his journey to financial independence so I think he’s a great person to follow and see how it can be done from the start.
Over to you Mr 3000.
Let’s be honest, having the goal of first paying off your home (or having enough passive income to cover your rent) and then saving $1 million or more for retirement is a daunting task when starting out. It can actually seem an impossible task when the goal is to do this before your 60’s.
What if there was a strategy, where you could reach your life goals sooner rather than later, get back some time, reduce your stress levels and still have $1+ million dollars at retirement and own your home…introducing the concept of lean financial independence (LEAN FI).
What does retirement look like for you? Do you dream of laying on the couch watching TV? Pottering around in the garden? Sipping cocktails by the pool? All of these things are great for a 3 week holiday, however, what if that is all you had to do for the next 30+ years, would you be fulfilled? Also, would you be able to maintain your health during these early retirement years?
A US study by Cornell University published in December 2017 analysed US Census figures and the results reveal a clear correlation between premature death and premature retirement. The link is particularly stark amongst men, who have a 20 percent higher mortality risk if they retire at 62 years of age instead of 65 years onwards. Now, these results could be linked to many factors, however, my bet would be that as humans we need to maintain a purpose in life, to feel needed and to feel like we are contributing to the world in some way. That is where the concept of LEAN FI comes in.
In a nutshell, our definition of LEAN FI is having a significant savings/investment portfolio in place and only requiring enough income to cover all of your expenses such as housing, food, utilities, transport and general living expenses. Imagine how empowering this would be…..you could make a career change, work part-time, freelance, take extra time off to travel, pursue your passions and generally design your life, however, you would like. This is what Mrs 3000 and I strive for in our 3000 days to financial independence…..to have a life where we get to choose its overall design!
So how do you get to LEAN FI?
Pay down and eliminate all consumer debt such credit cards, personal loans and car loans – high interest bearing loan balances are not wanted on this journey.
Pay off your mortgage (or have enough passive income to cover your rent) – as this is most likely your biggest expense.
Avoid lifestyle creep – once you have points 1 & 2 covered, you will have all this spare cash, beware of lifestyle creep and keep your spending in check. Remember your LEAN FI goals.
Save and invest – with all of your extra cash, you should be saving and investing at least 30% – 80% of your net income.
Work out your LEAN FI target – Hopefully, by now you have managed to grow your savings into a sizeable investment portfolio. Create a LEAN FI target based on the life you design.
What sacrifices will I have to make I hear you ask?
Yes, obviously there is no reckless spending at least while you are paying down your debt and building your investment portfolio, however, after that, you can go a little bit crazy if you want to. Remember your goal here is LEAN FI and taking back control of your life. So whatever money saving strategies or extra income earning efforts will only benefit the end result and allow you to better design the life you want.
So how do these benefits sound?
A paid off house within 8 years
A $427k investment portfolio after 15 years
A $1.1mil+ investment portfolio by the traditional retirement age of 65….
Plus whatever you have in superannuation
The best part is, depending on your circumstances, this can all be achieved 15 years or less.
So let’s work through a LEAN FI case study:
A couple who are 30 years old, first home buyers with a $335,000 mortgage at 4% interest. Combined income of $130,000 before tax (earned equally), which is $102,000 after tax approximately. They have cut their lifestyle expenses down to $45,000 per annum which allows them to pay $50,000 off their house each year or add this to an investment portfolio (modest 5% returns). They save $7,000 per annum in an emergency fund (not counted) to cover shock bills and put towards modest car upgrades every 5-10 years. They want to be at LEAN FI within 15 years. So let’s see how they go:
Investment Return %
Investment Return $
Note, the interest and return calculations have been kept as very simple calculations for the purpose of this article.
So the results as promised:
A paid off house within 8 years, a $427,000 investment portfolio after 15 years and a $1.1 million investment portfolio by the standard retirement age of 65 and LEAN FI within 15 years. You will note there are no savings listed after 15 years, this is totally up to you depending on how much or how little you choose to work. That is the beauty of this strategy, design your life as you wish.
Now the exciting part…..calculate how much you need to live off and design your LEAN FI life!
Say you need $45k – $50k per annum to maintain a comfortable lifestyle, have a yearly holiday and generally live a nice life. How much paid work do you need to undertake to cover your everyday expenses? So let’s go crazy and design your life! Will you take 6 months off each year to travel? Will you work part-time? Will you start a business? Will you do some volunteer work? Will you start a charity? The opportunities are endless and most importantly, you are in control of your life!
You can now see that with some mindful spending habits, a focus on eliminating debt and saving money, LEAN FI is a great option for those not necessarily looking to retire early. Within a fairly short time frame, you will have the power to structure your life how you wish and still have the million dollar retirement.
LEAN FI is the best of both worlds in our opinion, as it creates balance and allows you the freedom to do what you want in life. We are well on our way to LEAN FI, so why don’t you also take the steps to get started on your own LEAN FI journey today.
Note from Cath: So it turns out I’ve achieved LEAN FI already. We did it in less than 12 years. We have the paid off house and our investment properties are already worth over a million and will be fully paid off before age 60. We do still need to cover our living costs but that means I could start my own business which has been something I am so glad I was able to do.
Australians’ use of debt finance is ranked one of the highest in the world, with our use of home loans, car loans and personal loans ever increasing as the cost of living heads north. As borrowers seek affordable finance options, an emerging finance trend we’ve seen over the past couple of years has been the rise of peer-to-peer (P2P) lending.
P2P lending removes the need for an orthodox lender, such as a bank, and instead connects investors and borrowers via an intermediary lending marketplace. Some common P2P platforms include RateSetter, SocietyOne and Marketlend.
Investors include both individuals and companies who invest their money with a company such as those listed above and generate profits by charging a fee (and interest) to both lenders and borrowers.
So how does it actually work?
Well, a borrower’s eligibility for a loan is assessed by the provider and based on the borrower’s credit and employment history. This will determine their individual interest rate. Borrowers then repay their loans through the lending platform, which in turn passes the repayments onto the investors.
P2P lending is capturing the existing marketplace for personal finance solutions with high yields being the main drawcard for investors, but there are also unique benefits for borrowers:
Competitive interest rates
Borrowers can typically secure interest rates lower than those offered by traditional banks. This gives borrowers the opportunity to access funds at a competitive interest rate which means they reduce their interest costs over the life of the loan. While interest rates are tailored to each borrower individually, P2P rates can range from around 7% to 27% based on the applicant’s credit history and serviceability potential.
Efficient (and online) application process
P2P lending offers a speedy alternative to navigating the paperwork and procedural headaches the banks encompass. As everything is performed online, the entire transaction and application process is much faster than traditional lending methods.
The cost savings that can be generated by facilitating a lending transaction entirely online lowers the fees and charges associated with accessing finance. The absence of physical banks, managers and shareholders minimises the fees charged to users of P2P lending.
However, there are numerous things to check before investing in or borrowing from a P2P provider. You should check that the organisation is correctly registered and licensed, and you should also review their policies and their terms and conditions to ensure you are not signing up to something that you’ll later regret.
P2P lending is making waves in the finance industry and is a trend we’re likely to see more of throughout 2018. For savvy borrowers looking for low interest rates, an efficient application process and fewer fees, P2P lending can be an innovative and cost-effective option for many Australians.
Have you invested in peer to peer lending? I haven’t but I have it on my list of things to consider once my income is a bit more regular in my new business.
Welcome to my fourth quarterly update which details my net worth and cash flow as at the end of December 2017 as well as the goals I have set for myself for the next quarter. I’m a bit behind schedule on getting this out due to all the recent changes in moving and settling into our new home.
If mine is the first personal finance blog you have come across firstly I am super humbled by that and secondly you might be thinking this is kind of strange putting the info out there for the world to see.
However, it is a fairly regular occurrence with bloggers to either track their net worth or report their monthly income. For example, J.Money over at Budgets are Sexy has been tracking his net worth for over nine years now and so have a bunch of other bloggers that you can check out in the Rockstar Blog Directory.
I debated whether I should post this or not as I was not sure about how the information would be received, particular here in Australia where ‘tall poppy syndrome’ can mean anyone who seems to be doing ok can be shot down in a hurry.
But my view is that if you have come to my site which is about becoming financially independent in order to retire early then you must be a little bit open-minded and willing to discuss what can be a taboo subject.
Why I decided to go public
The reason why I think so many other bloggers have felt comfortable sharing their net worth is that they want to show you that early retirement is an achievable goal and not just some pie in the sky idea that you can only dream about.
It also helps to highlight that the wealth that you see in movies or magazines is in reality not how most people that reach financial independence actually live.
So for me, I decided to go public for a couple of reasons.
To keep me accountable.
To help me to stay motivated and see my progress over time
To know there is an end in sight to the daily grind of my day job
So what is net worth anyway?
The simplest way to work out your net worth is to add up the value of your assets and then subtract the amount of your liabilities.
So examples of assets are things like how much any property or cars you own are worth, the size of your share/stock portfolio, how much savings you have in the bank and the value of your Superannuation (retirement savings).
Then your liabilities are those things that you owe so this can include mortgages, personal and car loans and credit cards.
The juicy details – my net worth figure
Total Assets – $1,982,777
This is down by a considerable $577,394 from last quarter. This is due to the fact that in this quarter the sale of our principal place of residence settled so the value of that is no longer included. Of course our liabilities reduced as well due to paying out the loan on the property.
As I mentioned back in March our portfolio was very heavily skewed in property. So our plans to have a more balanced portfolio is slowly making some progress..
Our new principal place of residence value is included in this figure. Some people choose not to add it but I personally still see our mortgage free home as an asset.
Total Liabilities – $826,483
In previous reports, our liabilities figure has been on the scary side. And while it is still a meaty number it has been great watching the figure come down after selling one of our investment properties.
The loans on our remaining two investment properties are fully covered by the rental returns we earn meaning no money needs to come out of our pocket to fund these loans.
So that leads us to the all-important number.
NET WORTH – $1,156,294
Our net worth is down from last quarter by around $33,000. This is due to needing to pay stamp duty on the purchase of our new home as well as covering legal fees, removalists and everything else that comes along with a big move.
A lot of our net worth over the years has come down to making some smart decisions in terms of the properties we purchased.
The prices in Sydney went nuts recently so that is a lot to do with it. But we made some large sacrifices to make the purchases we did. And we chose dual income properties to help make it easier to hold the properties.
If we had that net worth and no liabilities it would be a pretty sweet position to be in and I could be joining the early retirees as I type this. We could sell everything, like in a campervan and retire tomorrow.
But since we have two young daughters we would prefer to have a family home for them. So it is a great feeling to know that we have our family home mortgage free to offer us that security.
Kick-Starting Some Goals
My goal last quarter was to pick up some regular retainer clients for my freelance copywriter business. I am pleased to say that I was able to achieve this. Which gave me some security in knowing I had at least $3,000 coming in each month.
This quarter I have two main goals. The first one is for this blog and I would like to consistently post at least once a fortnight. I know a lot of bloggers out there post 2 or 3 times a week but right now paid work needs to take priority and I have two little girls that deserve my attention too.
My second goal is to earn consistently more than $5,000 a month from my copywriting business. This is enough to ensure we are covering our day to day expenses and bills.
Do you track your goals? I would love to hear what you have planned for the next few months or if you have met any net worth milestones recently?
This might seem like a bit of a strange topic given we are looking to retire early and a major part of that involves saving money not spending it. But hear me out.
Spending money on “stuff” in general usually just adds a lot of clutter to our lives. But there is one circumstance where spending a little more money can pay off and make you happier? Have you guessed it yet?
It’s time. Spending money to save time pays off.
There was a study where people were given $40 to spend either on stuff or on a service that helped them to save time. The findings were that there were more feelings of satisfaction after the time-saving purchase than when they bought new stuff.
You might think that hiring a cleaner or paying someone to mow your loans is a bit lazy. But what if I told you it was actually one of the most productive things you could do? It allows you to free up your time and energy to devote to your most important goals.
And that’s the clincher right there. If you free up your time by outsourcing a service then you want to make sure the reason you have done it does, in fact, increase your happiness or free up your time for more profitable endeavours.
So why do so many people still not do it?
Of the survey respondents, only 50% actually choose to spend money to buy time and only 28% spend it outsourcing tasks that they do not like.
The main barrier to buying time is that people often feel guilty about paying someone else to complete a task that they could do themselves if they had the inclination.
The online world has made it easy for us to book our own travel, have our banking at our fingertips so taking this away and allowing someone else to help is becoming less familiar to us.
But as the saying goes you can always make more money, but you can’t make more time.
So outsourcing particular tasks can really pay off.
Ways I have spent money to save time
Help with saving on bills
Every year when the bills roll in I tell myself I will shop around and find the best deal. I am pretty good at calling up my bank and getting a better interest rate. And here in NSW, I will always get the best deal on my green slip as there is a handy calculator to get the best deal. But things like comprehensive car insurance, energy bills, mobile and internet plans and health insurance I am far more likely to let them roll over.
I know from experience working in partnership marketing that those comparison sites you see advertised time and again are not always going to show the best offers as they only feature companies that pay them for the privilege of advertising on the site.
But I am pleased to say I have found a great solution to help me get all this sorted. The Spending Hacker Concierge personally helped me find the best deals for my individual circumstance.
Yes it cost me a little bit for them to find the best deal for me. But I know with the number of hours I have in the day if I didn’t go down this path I would have just ended up checking about three different options and going with the best of those.
When we purchased one of our investment properties it was over an hour away from where we lived. We did not fancy spending the next however many months going to open houses and having no weekends to ourselves.
We also did not know the area that well. So investing in a buyers agent to help find us a property meant we only needed to head out one day to look at places. Plus they were able to negotiate a much better sale price than what we thought we could of, so the fee basically paid for itself from the start.
Getting groceries home-delivered
Taking two kids to the supermarket and doing a grocery shop can be an absolute headache. While most of the time I will try and head to Aldi and then duck into Coles for some extras without the kids when work is really busy home-delivery of groceries helps a lot.
Not only does it mean I have everything conveniently delivered to me. It stops the incidental purchases and the nag of the kids wanting to get more food.
Hired a cleaner
When you were selling our house in Sydney keeping it tidy with two kids under four for the open houses was a challenge in itself.
So spending $40 a week to get everything looking spic and span before an open house was the best investment we could have made.
This is not to say spending money frivolously on convenience foods and the like is a way to make you happy or reach your financial goals. But it is important to consider the times when outsourcing really is the best option for you based on knowing your strengths and weaknesses.
What have you spent money on to have more time? Did it make your life easier and you felt happier?
The average Aussie credit card debt after Christmas is $1,666 with a whopping 82% of people taking up to 6 months to pay it off and 18% taking even longer!
If you are stressing out leading up to Christmas and aren’t sure how to go about having a fabulous time and not getting credit card hangover, look no further. 6 Aussie bloggers tell how they celebrate Christmas in a frugal and fun way. Whether it is traditional family time, fabulously frugal food, or neat savings ideas to take the stress out of your holiday season –you’ll find some great reading here.
Check out ‘Christmas around Australia’ posts from;
Growing up I always loved Christmas time. My dad headed up the social club for the organisation he worked for at the time and one of his tasks was to arrange the Christmas party for the company.
It was a HUGE company so there was heaps of coordinating to do. Me and my two sisters over a few after-school sessions would have a production line going in the lounge room making up lolly bags for hundreds of kids.
Our reward used to be that any spare presents that were ordered for all of the kids that went to the Christmas party would be up for grabs for us kiddies.
There was often lots of negotiation between me and my sisters as to who got spare present. But I always remember my childhood years as Christmas being a happy time.
Another great memory was visiting a suburb near us where all of the houses had Christmas lights up. We used to make a night of it and walk around the suburb and finish off the night with an ice-cream in the park.
Ever since then my love-affair with Christmas lights has been strong.
For a few years there between living at home and having kids of my own, Christmas lost its magic a little bit. But now that I have two little girls the magic is well and truly back in our house.
Christmas in our new home
As I mentioned in my last post, we have just moved and bought a new family home. So we are excited to create new Christmas memories in our home.
I know the outset of this post mentioned about how to have a frugal and fun Christmas. But I have a confession to make. I don’t think that I actually am that frugal when it comes to Christmas.
With presents for the girls and their nephew, a new Christmas tree, some Christmas lights and food for Christmas Day still to be purchased. We will likely spend about $1,000.
But I feel ok with this. Some people would be happy to spend that on a holiday or a new TV, but for me I feel pretty comfortable in spending that on Christmas. As it really is my favourite time of year and I know we are creating memories for our family. Plus the gifts we have purchased are designed to last many many years.
In saying that though, we won’t be going into extra debt to fund our Christmas purchases. They have been budgeted for so I can feel comfortable spending the money without too much worry.
And I think that is the key right there. You need to create your own definition of what a frugal and fun Christmas looks like for you.
For us, it will be spending time with my family who is coming up from Sydney to see us. And showing them the best that the mid-North Coast of NSW has to offer.
We will be spending more money than some, but in saying that I do have some top tips for how we are keeping the budget in check.
How to avoid a Christmas debt hangover
We do not do presents for the adults in the family, only the kids. If you did want to do presents for the adults than something like a Secret Santa or Kris Kringle where you just buy for one person can work out as a great frugal option.
Did you know that according to OzHarvest 30% of all food in Australia is thrown out?! With Christmas being a time where we tend to overindulge, stop and have a think about whether you really need six different salads and eight different desserts on Christmas Day. And only purchase what you will consume.
Save for Christmas throughout the year. As you would save in a bills account or save up for a large purchase you can also do the same for Christmas. Putting aside even just $20 a week in a Christmas account we have you covered for $1,000 come next Christmas.
When buying gifts for kids try and keep in mind the 4 gift option and get them, something they want, something they need, something to read, and something to wear. That way you are getting practical gifts as well as something fun.
Focus more on being present not buying presents. Taking the kids to sing Christmas carols, driving around the neighbourhood to check out the best Christmas lights, watching holiday-themed movies, and making decorations are all things you can do that bring the family together during the festive period.
Don’t forget to check the other awesome bloggers who are sharing how they celebrate Christmas around Australia;
You may have noticed I have not been posting much lately. As I mentioned in my last quarterly update we recently sold our home in Sydney.
Since that time that place has settled, we have moved up to the Mid North Coast of New South Wales where my husband grew up. Whilst we have been staying with family for the past month or so I am excited to say that as of a week or so ago we moved into our very own family home – mortgage free!
So between packing and moving as well as taking my freelance marketing business full time, unfortunately, I have had little time to get online and give the blog the love it deserves.
I thought I would share on the blog today a couple of contributing factors on how we were able to become mortgage free in our thirties.
I know for some people this can be seen as a dumb move, as there is possibly better ways our money could have worked for us. But to not have a $3500 monthly payment hanging over our heads and being able to explore working for myself. No return on investment can top that.
Reading a lot of investing info
I spent a lot of time in my early twenties reading finance related books as well as purchasing every edition of property investing magazines and frequenting a property online forum. So by the time I was ready to purchase our first property when I was 26 I knew a lot about what we were looking for. And how to structure our loans for future investing.
Not taking no for an answer
When me and my husband bought our first place I was on a low graduate level wage and he was on a part-time chef’s wage.
The traditional banks would not look at us, so we needed to go to a mutual bank that offered us a forty year loan term.
We knew we had been saving more than the repayment amount each month and had factored in a buffer on rates going up to know that we could afford the repayments.
Choosing dual income properties
As we grew our portfolio two of the properties in our portfolio where dual income. One was an investment property that had a granny flat which made the property cash flow positive from the beginning.
The other was our principal place of residence which was separated into two separate dwellings. Upstairs and downstairs.
Whilst it was a bit cosy living where we did once we had two kids, the benefits of having someone contribute to our mortgage helped us to put us in our current position.
Finding the right mortgage broker
I had worked in marketing in banks and credit unions so, in the beginning, I did not think I would ever use a mortgage broker. But when we started growing our portfolio with a property each year our serviceability started to get a little tricky.
We found a mortgage broker who specialised in loans for property investors from a recommendation from the online property forum I frequented back in the day.
They were not even in the same state as us, but we have now done about five loans through them and I will never go directly to the bank again.
Moving out of Sydney
Now this one is the biggie. If we had sold up all of our properties and just kept our principal place of residence where we where living in Sydney we could have just about had one paid of property there. But any future income would be gone.
So instead decided to keep a foothold in Sydney with our two remaining investment properties, which pay for themselves. In the worse case scenario, they will be paid off fully by the time we are between 55 and 60 years old and will provide around $40,000 income a year after expenses.
And then we purchased a home in Coffs Harbour where my husband grew up. The property is all ours and not the banks!
In the past, we had never considered moving here as the job situation is pretty bad. But these days there is quite a hub of freelance workers and startups here that I am discovering since joining a co-working space.
So far I have been able to pick up enough copywriting work to keep us afloat and if a few things pan out as I think they will next year I will be able to work about 30 hours a week to cover our families expenses.
It has not been an easy road to reach our mortgage-free status. We sacrificed lots of nights out, new technology, overseas holidays and making the decision to move out of Sydney.
But so far the leap has been paying off.
What sacrifices would you make to become mortgage free?