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When we first embarked on our financial freedom journey, one of the things I wondered about was how it would affect our relationship. This is because, almost everything we did together as a date involved spending money. Whether it be going out for a nice dinner, buying freshly cut flowers, or other presents; treating each other involved spending a whole lot of money.

Spending money on nice things or experiences is an ingrained concept within our society. Marketing and advertising often tells us that our partner’s need red roses, diamond jewellery or an expensive holiday to feel loved.

However, this simply isn’t true. Stuff doesn’t make a relationship successful… Quality time, thoughtfulness and selflessness does. 

Here’s 7 ways you can treat your partner, and boost your relationship, in ways that cost little or no money.

Cooking nights

Cooking nights with your partner are a great way to spend time together and have fun. Now cooking night doesn’t mean one of you cooks and one of you cleans. The idea of a cooking night is to get inventive and try to make a new cuisine, together.

For your evening, pick a cuisine and go shopping for any extra ingredients you need. Then it’s time to kick off your night… Open a bottle of wine or a beer, pop some music on and start preparing your ingredients. Cook as necessary and sit down at the dinner table and eat together. It’s fun to discuss your creations and rate them together.

You never know… You may end up adding a new staple to your regular menu!

Volunteering together

Volunteering is a great way to spend time with your partner, whilst doing something great for others too. 

There are plenty of great charities out there to volunteer for as a couple. Late last year, I did a shift at Brisbane’s Fare Share headquarters; cooking meals for the needy from food saved from going to the tip.

The style of this program was perfect for a couples date and I highly recommend checking them out.

Growing flowers at home

There’s nothing quite like the colours and smells of freshly cut flowers to make a house a home. The only problem with flowers though, is that they can be very expensive!

Growing your own flowers can be a cheap and fairly easy alternative to buying flowers for your other half. In order to keep things fresh and fun, try arranging the flowers differently each time by including different fillers each time you cut and arrange a bunch. This will help ensure that you and your partner don’t get sick of having the same flowers around all the time.

Of course, it’s fine to buy a nice bunch of flowers occasionally, but home grown are a great regular option.

Run a bath

One of the best things you can do for your partner (especially if they are a busy stay-at-home parent) is to run them a bath and give them 30 minutes or so to themselves to just relax with some music, a glass of wine/beer, or a great book.

The relaxation your partner gets from having some peaceful time to themselves will no doubt make the heart grow fonder. The mere recognition that your partner works hard and deserves some “me” time can work wonders in a relationship.

Taking them for a cheap day out

Most cities and towns have a number of free activities or sites on offer. In Australia, most city museums and art galleries have free entry to most sections, with just a particular exhibition or two requiring an entry fee.

In Brisbane, for example, the Cultural Centre in South Brisbane contains the theatre, State library, museum and art galleries all in one. Both art galleries and the museum have free entry, with feature shows requiring payment only. This allows for a great day out for free.

Additionally, if you live in a city, keep your eye out for free music and comedy shows. In Brisbane, the Cultural Centre offers free music most Friday afternoons. Additionally, the Powerhouse has free comedy shows on Friday night’s.

If the arts aren’t your thing, or you live in a regional area, the outdoors are a great place for a day out. There are heaps of national parks and Council parks around that are great for a hike, a homemade picnic and some fresh air.

Getting out and about gives you the opportunity to engage with your partner away from any attention consuming mod-cons such as mobile phones and TV. As an added bonus, the fresh air and exercise is great for your physical and mental health as well!

Hire them some nice books from the library

If your partner is an avid reader and has a list of books they want to read that is as huge as Donald Trump’s ego, then hitting up your local library might be a great option.

If your partner is interested in particular topics, or a fan of certain authors, go pick up a few books on your way home from work and leave them on your dining table or somewhere else conspicuous.

Just letting your partner know that you pay attention to them and have been thoughtful goes a long way.

Be truly present in your interactions

As Grant Sabatier pointed out in his book Financial Freedom, “money is limitless, time is not”. Consequently, treating your partner through spending quality time with them is critical.

So many of us these days are so caught up in technology and social media that even when we are present with our partners, we’re not really present. It doesn’t matter what you’re doing with your partner, if your looking at your phone, you’re not wholeheartedly present.

If this is you, it’s time to switch off from the tech and switch on to your partner. When you’re at the dinner table, put your phone away and talk to your partner about their day instead.

If you eat dinner in front of the TV every night… Just stop. Nothing on TV is anywhere near as important as what’s right in front of you.

I’m sure that no one on their deathbed has ever said “I wish I used my phone more” or “I wish I watched more TV”… But, there has no doubt been many people who have wished they spent more time with their family, showed more love towards their children, or let their partner know more often just how much they loved and appreciated them. 

Conclusion

Being frugal does not inhibit your ability to make your partner feel special.

As outlined above, there are many ways you can treat your partner without spending much money at all. All you need is a little time, creativity and thoughtfulness… And you’re good to go!

Cheers, TFC.

The post How To Treat Your Partner Without Breaking The Bank appeared first on The Flawed Consumer.

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In 1893, New Zealand was the first Country to give women the right to vote. The suffrage movement finally had a win; and women’s voting rights, in developed countries, proceeded from that point.

From the Second World War onward, women started to enter the work force in large numbers. However, it was in the 1960’s, as the feminist movement took off, that women entered the workforce by choice rather than necessity.

In the early days, the roles for women remained gendered. Consequently, receptionists, nurses and teachers made up a substantial portion of the early roles women filled.

By the time I went to school, from 1992 to 2004, career choices and expectations were virtually the same for males and females. In fact, I think the army front-line was the last remaining gendered frontier, with front line service for women not being permitted until 2013 here in Australia.

Given this seeming equality, one could easily be excused for thinking that gender equality has been achieved in the workplace. However, is this really true? 

The Gender Pay Gap

The Workplace Gender Equality Agency (WGEA) collects annual data from agencies with 100 or more employees. WGEA collects data on pay, superannuation and bonuses/other additional payments.

WGEA calculates the annual gender pay gap, which is the difference between men’s and womens’ earnings, expressed as a percentage.

In the 2017-18 financial year, the base-salary gender pay gap was 16.2%. This means that women are earning an average of 16.2% less than men on base salary pay. However, once bonuses and other additional payments are factored in, the pay gap increases to 21.3%.

Why is there such a pay gap between men and women? Women take long breaks from work to look after others and are more likely to be part-time

The percentage of men and women primary care givers in Australia in 2017 was 5% to 95%. This means that for every man who took primary parental leave, 19 women took primary parental leave to care for children.

As Women are the primary care givers to children, a lot of women return from maternity leave to part-time work. Given the cost of childcare, dropping to part-time paid work is usually the most economical approach to being a working parent.

Women are also the primary caregivers for elderly family members. When a parent gets sick or becomes incapacitated, it is generally a female who drops everything to take care of them. In doing so, their career gets put on hold and so does earning and progression potential.

Women literally still get paid less for the same jobs as men

Despite the Workplace Relations Act 1996 (Cth) requiring equal pay for equal work amongst the genders, bias and discrimination in hiring and pay decisions still exists.

The age old concept of not hiring women in case they have children and take maternity leave still exists. So does the misogynistic idea that women simply aren’t as good as men in the workplace, particularly in positions of power.

A few years back during a Queensland State election, a colleague of mine overheard a man in line at a local polling booth saying to his son “I cant wait to vote this bitch out of office and back into the kitchen, where she belongs”. This perception is held by a very small minority of people these days… But, nonetheless, it still exists and does impact workplace hiring, promotion and bonus negotiation processes.

Why does it matter?

Australian Women, on average, currently retire with 40% less superannuation than men. As a result, only 1 in 10 women are currently retiring with enough superannuation to afford a comfortable retirement.

This means that despite all the hard work that women put into their careers and raising children, 9 out of 10 of them may struggle with poverty in retirement.

Furthermore, women live an average of four years longer than men (85 vs 81 years). Therefore, women actually require more superannuation/savings than men, not less.

What can you do to improve your situation? Demand higher pay

One of the best ways to improve your financial situation is to demand higher pay from your employer. If you believe you’re getting paid less for the same work as your male colleagues, set up a meeting with your boss to discuss the issue. Before you do this, be sure to do your research. Gather evidence that outlines the pay gap and why you deserve to be paid just as much as your coworkers. Then, wrap all of this up in a neat little package of how awesome you are and why it’s in your boss’ best interests to give you a raise.

Don’t believe you’ll have success, or need a little push? Check out this article for some inspiration!

Partner superannuation contributions

During maternity leave and other care-giving, arrange with your partner to contribute to your superannuation account during this period.

Not only will this help keep you both on an even superannuation trajectory, but partner contributions currently have a neat tax bonus. Partners who make a superannuation contribution of up to $3000 on behalf of their low income or non-working partners may be able to claim an 18% tax concession on the contributions.

Conclusion

Despite all the advances in gender equality, when it comes to pay, disparity still exists between men and women.

So, if you’re a man… Be an advocate for your partner, friend, sister and/or coworkers. Equal pay between the genders for equal work shouldn’t even be a question in the 21st Century. Additionally, if you plan to have children and your partner will be the primary caregiver, consider making superannuation contributions on your partner’s behalf during the period of care-giving… As outlined above, it’ll not only help your partner, but you may qualify for a neat 18% tax offset as a consequence.

And, if you’re a woman, stand up for yourself. Speak to your partner, boss and coworkers about any concerns you may have. Whether it be demanding equal pay for equal work or having your spouse contribute to your superannuation during time off work to raise kids; it’s time to close the gap!

Cheers, TFC.

The post Money May Not Have A Gender; But If You’re A Woman, You can Still Expect A Lot Less Of It appeared first on The Flawed Consumer.

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This is a guest post written by Christopher Tsiknas for LawPath. LawPath is Australia’s leading provider of online legal services for businesses and individuals, providing technology powered legal solutions at a fraction of the time, cost and complexity of the traditional system.

Generally speaking, Australians have an ‘out of sight, out of mind’ attitude towards superannuation and the management of their funds. Currently only 42% of the population are aware of their super fund balance, with young Australians further behind at 37%.

There are many different types of super funds and portfolios available. One of the lesser known options that is worth researching is a self managed super fund.

What is a SMSF?

A self managed super fund (SMSF) is an alternative superannuation option to industry or retail funds.

An SMSF differs from standard funds in that it allows you to be in complete control. This is in contrast to the traditional system of having someone manage your fund for you.

You can have up to four members in your SMSF, all of which must act as trustees. As a result, you will need to create a trust deed in order to establish a SMSF.

The Australian Taxation Office (ATO) is the government authority responsible for regulating these funds. They provide guidance for new SMSF users to help you understand your obligations and compliance requirements.

A SMSF gives you the chance to get on top of your super and have an influence on the way your retirement is funded. Below is a list of benefits that come with establishing a self managed super fund.

Control

As outlined above, one of the key advantages of a SMSF is the control it provides you. However, what does this exactly mean?

Being a member of a SMSF allows you to dictate the investment strategies. As a result, you are able to choose specifically where you want to invest your money instead of relying on the choices of a fund manager. By doing this, the performance of your investments won’t be reliant upon the ability of another individual.

Flexibility

In addition to being able to choose your own investments, you are also afforded a wider range of options with a SMSF. Mainstream retail and industry funds can restrict the investment options available to the strategies their company prefers. As a result, you may be missing out on the opportunity to maximise your super fund to its full potential.

Savings

Many of the large retail and industry funds can also be expensive and incorporate hidden fees. Self managed super funds can be competitive on these fees, and with the right amount of research savings can be made. Having members within your SMSF who are able to conduct the administrative and investment based work, will be especially beneficial. Typically, self managed funds with larger balances will be more cost effective and experience the most savings.  

Consolidation

With a SMSF allowing up to four members, you are able to combine each individual’s super assets together within the fund. This can provide multiple benefits given the size of the fund’s balance will substantially grow. With more money to play with, your fund will have access to greater investment opportunities. In addition, only one set of fees will apply which lowers the personal cost you incur.

Alternative Contributions

Having a self managed super fund affords you the unique option of transferring your personal assets into your fund. The standard personal contribution method in other funds would be via a transfer of money. A SMSF allows for contributions that are alternative to just straight cash. This is known as an “in specie” contribution.

ATO regulations set out what contributions can be accepted into your SMSF and who is allowed to make them. The advice of a super lawyer can be helpful if you’re unsure about the nature of these regulations.

Implications of a SMSF

Despite the benefits, there is still some risk involved, especially if you underestimate the complexities of a SMSF. It can be very easy to fall foul of the rules and in turn face unwanted penalties.

Sole purpose test

The main implication you will face with a SMSF is the requirement of compliance with taxation and superannuation laws. The governing legislation, known as the SIS Act, incorporates a sole purpose test that dictates what a SMSF can be used for. Individuals who opt for self managed funds must do so with the purpose of providing support to members once they retire. Additionally, this support can be provided to dependants if a member of the fund were to die. In order to be a member of a SMSF, you must comply with the sole purpose test.

Taxation

This compliance will also impact the way in which you will be taxed. The income of your self managed fund will typically be taxed at a rate of 15%. However, in order to be applicable for this rate, you must be compliant with the relevant superannuation laws. Funds that do not comply, will be taxed at a higher rate. The ATO will assess the following components of your SMSF income:

  • Interest
  • Dividends
  • Rent
  • Employer/Personal Contributions
  • Net Capital Gains

The ATO also outlines investments that will fall outside the 15% rate. This commonly includes non-arms’ length income, which is taxed at the highest marginal rate.  If you are considering a SMSF, it is important to understand the importance of compliance and the potential impacts.

For example, lending money out of your SMSF to a member or relative will breach regulations. The ATO could then deem your fund non compliant, which will increase your tax rate and incur penalties.

Conclusion

Commonly, those who use a self-managed fund tend to be business owners or the self-employed. In addition, they often tend to have a general knowledge in investing or finance. However, as education around super funds continues to develop, self managing your retirement savings may be a feasible option for you (this is provided you are willing to conduct a significant amount of research to educate yourself on the topic to ensure compliance with the requirements).

TFC Disclaimer: Guest posts are posted in good faith. I cannot attest to the accuracy and originality of each article. If you have any concerns about the content, please contact the author of the article outlined above.

The post Benefits Of A Self Managed Super Fund appeared first on The Flawed Consumer.

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In January, I set 5 goals for the year as New Year Resolutions. I set goals for each of my four overarching principles: finance, knowledge, kindness and health.

We’ve now just entered the second quarter of the year, so here’s my progress so far with this year’s resolutions.

Finance goals

This year I set one primary finance goal… To get our standalone emergency fund up to 3 months of expenses, which is just under $15,000.

Given that we only had about 2.5 weeks worth of funds in the account, this wasn’t going to be an easy task. This is because my plan to increase our emergency fund to $15k was to happen in addition to our standard medium, long term and retirement savings accounts contributions.

Currently, our net income is pre-allocated in full to daily expenses (57%), medium and long term savings (29%), retirement savings (5%) and spending’s (9%). This means, that in order to grow our emergency account to $15k, we need to find the about $12k from other sources, such as pay rises, higher duties and side hustles.

Unfortunately, in the first quarter of the year, we’ve had a few things happen that have required us to dig into our existing emergency account.

Firstly, our washing machine died, so there went $900 for a new one. Secondly, my beloved smashed her phone, so there went $500 to fix that. Thirdly, our car battery died, so there went $200 as well.

Consequently, our emergency account has gone down $1600, or roughly half of what it was on January 1, in the first quarter.

As we’ve been paying money into this account throughout the quarter (as well as withdrawing from it!) we are almost back where we started. Going forward, we may need to review our plans and adjust some of our other savings plans to ensure we can get our emergency fund in good order by the end of the year.

1st quarter progress: Nil.

Knowledge

As I outlined in my new year resolution’s post, I have never been much of a reader. Other than textbooks for education purposes, books just simply haven’t been my thing.

Recently, I decided it was time introduce books into my life for recreation purposes. So, I set the goal of reading, or listening to, at least one book per month.

I am glad to report that I have just finished  my 9th book for the year. I have gone from not being a book person, to always having a book, or two, on the go.

1st quarter progress: Killing it!

Kindness

The kindness goal I set for myself this year was to get more involved with charities. When I set this goal, I wasn’t sure how I was going to achieve it. I just knew that I was feeling disconnected from my younger, more altruistic self and wanted to be better in this regard.

In the first few weeks of the year, I thought a lot about what I was going to do to achieve this goal. With our budget preallocated and strict, I knew that simply increasing our current regular financial donations wasn’t the solution.

Additionally, I also knew that my time was already very limited between work, this blog, other side hustles, and life in general. So, regular volunteering may not be the answer either.

As a result, I decided go start up a tuck shop in my workplace, and then donate the profits to charity. My tuck shop sells snacks and soft drinks to fellow employees on my floor, at a profit of around 100% per item.

The tuck shop has only been running for a few weeks and has had mixed results so far. The chips are selling well and I think they could be a viable option. However, the soft drinks are not only selling slower… But, there’s a thief amongst the ranks who keeps taking drinks and not paying for them (yep, arseholes can be found everywhere)!

Due to the ongoing theft issues, the viability of my charity efforts in this regard is being reduced.

Nonetheless, I have been able to increase my charity efforts through this project.

Quarter 1 progress: on track.

Health Drink less alcohol

At the beginning of the year, I set a goal to drink less alcohol, by restricting my intake to no more than 9 drinks per week. Holidays, friends visits, etc are excluded from this, but not getting drunk or a hangover are my goals for these occasions.

So far, I’ve done really well at sticking to this goal. I have failed twice, and have had 10 drinks during one week and 11 during another. But, otherwise, I’ve stuck to the 9 or less drinks.

Additionally, I have not had a hangover, nor been drunk (even on the big events) to date this year.

Quarter 1 progress: on track.

Do more muscle strengthening exercise

As I’ve spoken about previously, I am pretty active from a cardio perspective.  However, when it comes to strength exercises, I’m pretty useless.

As a result, I set myself the resolution to do 15 minutes of strength training 3 days per week and 15 mins of stretching exercises 2 times per week.

To date this year, I have barely done any muscle strengthening exercise. I have been a bit better with stretching; and have done yoga on and off, but not as part of a regular routine.

Quarter 1 progress. Miserable failure thus far. Improvement required!

Conclusion

Overall, my new years resolutions have been hit-and-miss thus far. Despite this, I’m not giving up! I’ll celebrate my first quarter wins and kick myself up the bum for my losses.

There are 9 months left of the year for New Year’s resolutions to be achieved… And it’s time to get moving!

Cheers, TFC.

The post 2019 New Year Resolution Progress: Quarter 1 appeared first on The Flawed Consumer.

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As you may be aware, my beloved and I’s Financial Independence journey commenced shortly after my 30th Birthday.

We had just returned from an overseas holiday celebration for my birthday, when I started to get anxious about our financial position. Our holiday had been lovely, but expensive (thanks in part to business class flights and hiring a Ford Mustang to drive around in); and we had put some of it on our credit card. So, I was a bit stressed and regretful.

Around this time I received a regular newsletter update from my investment app, Raiz, which included a link to an article on the FIRE movement. I read the article and a light bulb went off… And, from that moment on, my attitude towards money and consumerism has been different.

Shortly afterwards, I started this blog to keep myself accountable in my Financial Independence journey, and to try to help others from making the same debt-inducing mistakes I had made in my 20’s.

… Fast forward two years and I have just celebrated my 32nd Birthday. It was a lovely day, but I can guarantee there were no business class flights or Ford Mustangs!

So apart from this, what has changed in the last two years?

High interest debt

Two years ago, we had a car loan and a credit card debt. The car loan had $11,262 left on it at an interest rate of 10.29%. The credit card had $3987 left on it at an interest rate of 13.24%.

Paying off these debts before my 30th birthday wasn’t a priority. We were fine with just paying off the minimum payments on these debts and letting them run their natural courses.

However, once I figure out the true cost of these debts, and my views towards money changed, these debts had to go.

Two years later and both of these debts have been paid off. Our car loan was paid off two years early in June 2018. Our credit card was paid off in September 2018, with the account closed swiftly afterwards.

Mindful consumerism

During my late 20’s, if I wanted something and had the money to buy it, I would. As consequence, when I turned 30, I had a lot of stuff… And, bugger all savings.

Fast forward two years and things have changed a lot in this space. I am no longer willing to part with money unless I know it will bring me enough joy to be worth it.

One of the best ways I’ve discovered to control spending is to work out your hourly wage and then determine how many hours of work it will take for you to make the amount of money you’re thinking about spending. In doing so, you ask yourself “Is this really worth 5 hours of my time?”.

I’ve found that most of the time, the answer is no, and I therefore do not buy whatever it was I was looking at. But, when the answer is yes, I know spending the money is going to be worth it.

Letting go of “luxuries”

As I’ve spoken about previously, in my late 20’s, I had let Lifestyle Creep get the best of me and was progressively buying fancier/more expensive things.

Unfortunately, I was following the pattern of most people who earn more money… When the money coming in goes up, the money going out goes up too. This often occurs without us knowing it as we buy nicer versions of things (e.g. more expensive cheese, wine, furniture and cars).

However, as I’ve also spoken about before, usually those of us affected by Lifestyle Creep, can’t actually afford the creep at all and just end up in a lot of debt to “pay for” nice things. 

Over the last two years, I’ve broken this cycle through two major changes:

1. Bonus income

Any time I receive extra income from work on top of my base salary, I transfer it straight into one of our savings accounts. This means that I don’t get used to having extra money to spend and can therefore easily save it.

2. Perception of wealth

I’ve changed the way I perceive fancy things and now see most luxuries (except for craft beer, because it’s amazing) simply as corporate marketing trying to trick me into thinking I need something. Marketing that targets our insecurities is how corporations make a shit load of money.

I have been really good at sticking to both of the changes outlined above, however I do sometimes still find myself defaulting into my old ways and then have to focus really hard in order to figure out what’s going on.

For example, a few months back, we booked a trip to go and visit some friends across the country. Flights were going to be about $700 on sale, or $1300 if we couldn’t get them on sale. We had enough Frequent Flyer points to buy the flights outright. However, in my mind I still thought to myself that we should save the points for a Business Class upgrade sometime to treat ourselves, as points upgrades are better value.

Fortunately, after a little bit of prodding from my beloved, I realised that this was a hangover from my late 20’s perceptions of wealth and fancy shit… So, we used the points and let our savings continue to earn compound interest!

Learning to love saving

When we didn’t have much savings, we didn’t really value saving. Instead, we valued spending and the stuff and experiences that came with it.

However, once we commenced our Financial Independence journey, our attitude towards saving changed. Seeing the money build up and earn (or save) interest was rewarding. There’s nothing quite like making money from your money.

As a result, over the last two years we have learned to love saving. In fact, we’ve learned to love it so much that we really struggle to spend it now, even when we need to.

Seeing opportunities everywhere

Before starting our Financial Independence journey, when something broke, we would throw it away. When we bought new things, we would give away our old things or throw them away. Additionally, we would just pay standard pricing for everything.

However, these days, we are much more resourceful. You see, when you become more mindful of money, you become more resourceful too.

Consequently, I look for the potential in items I would have previously thrown away. When something breaks, I try to fix it. If something is too expensive to repair, I pull it apart and try to sell the parts. When we have stuff lying around that we don’t use, we try to sell it. If something that no longer serves a purpose as is can be used as something else, I up-cycle it.

Net Wealth

Two years ago, I didn’t even know what net wealth was. To me, wealth was demonstrated by what possessions people had and what lifestyle they lived.

However, as I recently pointed out, nice stuff is not an effective indicator of wealth at all. Due to the ready availability of credit, anyone can have lots of nice stuff, but not actually own any of it.

Consequently, our focus on financial wealth is now about net wealth. In doing so, we’ve paid off a bunch of debt, increased our savings substantially, and upped our superannuation contributions so that 17.5% of our gross remuneration is contributed to our retirement savings each year.

By making these changes, our net wealth has increased by 276% over the last two years, and is continuing to increase as we continually work to decrease debt and increase savings.

Hustling

Two years ago, I didn’t know what a side hustle was. Additionally, I didn’t see a need for a “second job”. However, these days, I have a spreadsheet with a list of my side hustles, including the costs and revenue of each hustle. 

There are a variety of little side hustles that I keep track of, including: selling our unwanted stuff, propagating plants, and this blog (by far the least financially lucrative side hustle, may I add)

Side hustles are just another extension of seeing opportunities everywhere. Once you shift your mind into an enterprising mindset, you figure out ways to not only save extra money, but make extra money too.

Conclusion

Two years ago, I had a financial epiphany. Since then, I’ve worked hard to change the way I perceive money and consumerism.

From cutting back on spending through frugal living, to negotiating better deals on utilities, to establishing side hustles; we’ve radically changed the way we live in order to secure a more financially free future for our family.

Over the last two years we’ve achieved a lot. However, there’s still much more to do on this financial journey. I look forward to the next two years and hope that you continue on this ride with me.

Cheers, TFC.

The post Two Years On From My Financial Epiphany, What Has Changed? appeared first on The Flawed Consumer.

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This is a guest post by James Pointon for Open Agent.

There are many reasons why you might be interested in becoming an Airbnb host. Whether you’re looking for more financial freedom or you want to meet new people from around the world, Airbnb is a great option for many Australians. You have the option of turning your house, granny flat, apartment or spare room into an Airbnb.

With thousands of Airbnb hosts in Australia, you might be wondering, how much money can you make from Airbnb? Of course, the earning potential will depend on a variety of factors such as property type, demand and location. We’ve crunched the numbers based on data from AirDNA to compare where you can earn the most across Australia’s capital cities.

1. Hobart, TAS
  • 1,211 active rentals
  • 830 active hosts
  • Average daily rate: $208
  • Occupancy rate: 77%
  • Monthly revenue: $3,740
  • Annual rental growth: 53%
  • 77% of rentals are entire homes

With an average monthly revenue of $3740 in Hobart over the past month, it beats the other capital cities by far. Hobart also has less active rentals compared to other capital cities with 1,211. However, at 77%, it has the highest occupancy rate. The high occupancy rate along with high average daily rate play a major role in the winning earning potential.

Hobart actually also has the lowest median house price compared to other capital cities in Australia. Currently, it sits at $470,000, tied with Adelaide. Hence, if you’re looking to buy an investment property to use for Airbnb, Hobart is a great location. There are also fewer Airbnb hosts to compete with, making it easier for you to stand out.

2. Sydney, NSW
  • 29,367 active rentals
  • 19,694 active hosts
  • Average daily rate: $230
  • Occupancy rate: 65%
  • Monthly revenue: $2,965
  • Annual rental growth: 35%
  • 64% of rentals are entire homes

Unsurprisingly, Sydney sits near the top of the list with an average monthly revenue of almost $3000. However, Sydney also has the highest number of active rentals as well as active hosts. This means that you will have to work harder to stand out from the crowd, especially since the occupancy rate is only 65%.

3. Melbourne, VIC
  • 22,361 active rentals
  • 12,932 active hosts
  • Average daily rate: $193
  • Occupancy rate: 67%
  • Monthly revenue: $2,939
  • Annual rental growth: 38%
  • 70% of rentals are entire homes

As another popular capital city, Melbourne follows closely behind Sydney with potential earnings also sitting close to $3000 a month. In fact, earnings from Airbnbs in Melbourne actually exceed those in Sydney depending on the month. The occupancy rate and annual rental growth are also similar in both capital cities, fluctuating back and forth.

4. Adelaide, SA
  • 3,550 active rentals
  • 2,471 active hosts
  • Average daily rate: $188
  • Occupancy rate: 67%
  • Monthly revenue: $2,886
  • Annual rental growth: 48%
  • 66% of rentals are entire homes

Adelaide comes in fourth with overall stable figures. Not too far away, the city of Mount Gambier has shown significant growth. There has been a 202% increase in bookings year-on-year. Though the average monthly revenue over the past month is lower at $2265, you might be interested in Mount Gambier for its growth if you’re considering SA.

5. Canberra, ACT
  • 1,108 active rentals
  • 778 active hosts
  • Average daily rate: $157
  • Occupancy rate: 72%
  • Monthly revenue: $2,614
  • Annual rental growth: 47%
  • 58% of rentals are entire homes

The capital city of Australia has one of the lowest numbers of active rentals and active hosts. With a similar daily rate and occupancy rate to Adelaide, you can be making a similar amount as well. The average monthly revenue for Canberra over the last month has been $2,614.

6. Perth, WA
  • 5,490 active rentals
  • 3,553 active hosts
  • Average daily rate: $140
  • Occupancy rate: 75%
  • Monthly revenue: $2,256
  • Annual rental growth: 28%
  • 64% of rentals are entire homes

Though Perth has the lowest percentage of annual rental growth at 28%, it also offers a stable occupancy rate of 75%. Since the occupancy rate is so high, you can be making around $2,256 a month despite Perth having the lowest average daily rate compared to the other capital cities in Australia.

7. Brisbane, QLD
  • 6,912 active rentals
  • 4,367 active hosts
  • Average daily rate: $150
  • Occupancy rate: 67%
  • Monthly revenue: $2,083
  • Annual rental growth: 45%
  • 59% of rentals are entire homes

Brisbane sits low on the list compared to other capital cities. However, the potential earnings for the nearby Gold Coast region are significantly higher, comparable to the likes of Hobart, Sydney and Melbourne. Hence, if you’re considering buying an investment property in Queensland that you can turn into an Airbnb, Gold Coast might be a better option.

On the other hand, the median house price in Brisbane is significantly lower than other areas in Australia. For instance, the median house price in Sydney is $925,000, whereas in Brisbane, it’s almost half the price at around $525,000. Therefore, though the monthly revenue with Airbnb may be lower compared to the Sydney, the barrier to entry is lower.

8. Darwin, NT
  • 415 active rentals
  • 305 active hosts
  • Average daily rate: $151
  • Occupancy rate: 60%
  • Monthly revenue: $1,596
  • Annual rental growth: 44%
  • 62% of rentals are entire homes

Though Darwin has the lowest potential monthly revenue, the amount can still make up a significant portion of your income. Plus, with Darwin having the least amount of active rentals and active hosts, it makes it easier for you to make your space stand out against other Airbnbs.

These numbers are definitely attractive, proving why so many people choose to make an income from Airbnb. However, it’s important to note that there are many other fees, taxes and regulations in Australia for short-term holiday letting that you’ll have to take into consideration.

If you have spare space that you make into an Airbnb, it can definitely make you a considerable side income in Australia. Many people even make a full-time income through Airbnb, especially if they have more than one listing. You might even consider Airbnb for your investment property over finding long-term tenants.

Guest author: James Pointon is a Commercial Manager at OpenAgent.com.au, an online agent comparison website helping Australians to sell, buy and own property.

TFC Disclaimer: Guest posts are posted in good faith. I cannot attest to the originality of each article. If you have any concerns about the content, please contact the author of the article outlined above.

The post How much can you earn from Airbnb in Australia? appeared first on The Flawed Consumer.

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You may have noticed that in addition to terms such as Financial Independence and Financial Freedom, something I refer to a lot is Net Wealth.

In this article, I’ll give you the run-down on what Net Wealth is and why it is the only type of financial wealth that matters.

What is Net Wealth?

Net Wealth is a similar concept to net income. With income, you have your gross income, or salary, which is say $65,000 a year. However, out of that, you have a tax obligation, including things such as HECs, of say $25,000. Consequently, your net income – which is what goes into your pocket – is $40,000.

Net Wealth works on the same premise. However, it relates to your assets and liabilities, rather than your gross salary and taxes.

In order to calculate your Net Wealth, the first step is to add up the current value of all of your assets (for tangible assets, their value is what you could sell them for today). Your assets include all of your possessions and cash reserves, such as your house, car, home contents and savings/investments.

Once you have your total assets figure worked out, you then need to figure out all of your liabilities. This includes any money that you owe, such as your mortgage, car loan, HECs debt, credit card, money you borrowed from Bob-the-barman for beer the other day, etc.

Once you have both figures, you simply subtract your total liabilities figure from your total assets figure… And, boom, that’s your current net wealth.

Here’s an example:

What’s the significance of your Net Wealth?

Net Wealth might not seem like such a big deal, but it is the best way to figure out your financial health.

A lot of people automatically assume that someone who appears, from outward expression, to be rich, is. However, this is quite often not true at all.

For example, let’s say you think your next door neighbour Joe is rich. You assume this because you know Joe earns $200,000 a year, has about $100,000 of home contents, drives a 2 year old BMW X3 worth $80,000 and has just spent $300,000 remodelling his house that he had already paid $700,000 for.

However, what you didn’t know about Joe is that he recently borrowed another $300,000 to pay for his renovations and therefore still owes $890,000 on his mortgage. Additionally, Joe owes $12,000 in HECs, $72,000 on his car and $13,000 on his credit card. He does have $275,000 in superannuation, but no savings, and no income protection insurance.

Joe’s Net Wealth:

Alternatively, you’ve always assumed that your other neighbour Vanessa, is not doing so well. Vanessa drives a 25 year old Nissan Pulsar worth about $1000 and has the smallest house on your street that you know is worth about $500,000. Additionally, you think she has about $40,000 in home contents.

However, what you didn’t know about Vanessa is that she has a job that pays $100,000 a year. Additionally, she only has $70,000 left on her mortgage and $8,000 left on her HECs debt. Furthermore, she owns her car outright, has $80,000 in savings and $250,000 in superannuation; and she doesn’t own a credit card or have income protection insurance.

Vanessa’s Net Wealth:

… So, which one of them is richer? Vanessa of course! If Vanessa lost her job tomorrow, she has an $80,000 savings buffer to keep her head above water until she finds another job. 

As a result, Vanessa would be able to survive without a job for over 2.5 years – if she needed to – before she would fall behind in her mortgage payments.

Alternatively, if Joe lost his job tomorrow… He’d be up shit creek without a paddle! This is because Joe’s weekly obligations are $1700 and he has no savings. Consequently, Joe would fall behind in his mortgage and car loan payments almost immediately. If he couldn’t find another job within a month or so, he would be at risk of losing both his house and his car… Which make up 74% of his assets.

This is why your net wealth is so important, because it defines what you actually own. Whereas assets that aren’t owned outright are always at risk of being taken away. 

Perceptions of wealth

One of the most frustrating aspects of Joe and Vanessa’s situations above, is how we perceive wealth. There is an ingrained concept within society that if you have fancy, expensive things then you must be wealthy. And, if you’re wealthy, then you must be successful. And, if you’re successful… You’re pretty much equivalent to whoever the modern day Fabio is.

However, this simply isn’t true. Banks often lend way more than people can afford. And, we Australians, are in debt up to our eye balls…

Between 1995 and 2015, average household debt in Australia rose from 104% to 212% according to the Organisation for Economic Co-operation and Development (OECD). This means that if your household is bringing in $100,000, it’s spending $212,000.

There are many reasons for this, including the fact that pay rises just aren’t keeping up with inflation in Australia anymore. However, the crux of it is that we are living well beyond our means; often in attempt to Keep Up With The Jones’. 

This premise is based on the perception that fancy stuff equals wealth… But, as demonstrated through the comparison of Joe and Vanessa above, this is not necessarily true.

Conclusion

If you’ve ever looked at someone with fancy stuff and found yourself feeling jealous or inadequate, then it’s time to take a deep breath and relax.

In our consumer-debt driven society, fancy stuff isn’t just for the wealthy. Credit is available to almost anyone, and usually in higher amounts than can be afforded. This means that a lot of people who outwardly express wealth through fancy stuff, are in huge amounts of debt and always at risk of losing the roof over their head.

Alternatively, being net wealthy and debt poor offers freedom, security and a sense of peace. This is because having high Net Wealth will help you to sail through the seas to the other side of life’s financial storms… With yourself and your boat soundly intact.

And, that’s why Net Wealth is the only kind of financial wealth that matters…

Cheers, TFC.

P.s. if you’re after a quick and easy way to calculate and track your net wealth, I have just the thing for you! Sign up to our newsletter and you’ll receive a Budgeting and Savings calculator, plus a monthly Net Wealth tracker for free!

The post Net Wealth Is The Only Kind Of Financial Wealth That Matters appeared first on The Flawed Consumer.

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Every so often, I have the privilege of guest posting or undertaking an interview on another Personal Finance site.

A while back, I did an interview for Personal Finance For Beginners’ Beginner To Blogger Interview Series. 

Below are a few snippets from this interview. Read on for the link to the full interview on Personal Finance For Beginners’ site.

“One of the mistakes I made that I regret is adjusting my lifestyle when I received pay increases (i.e. lifestyle creep). I should have figured out how to live on my entry-level job pay. Then, when I did receive a promotion, I should’ve automated the transfer of the extra money into my savings account so I never got used to having extra money to spend.”

“In the beginning, I was very strict about what we could and couldn’t do with our money, and wanted to save everything we had left after living expenses. This placed a lot of unnecessary stress on us and resulted in tension between us because I got stressed every time my beloved spent money.”

“We’ve developed hobbies which revolve around saving money such as home brewing beer, growing food in our garden, and spending time at the local library. These are hobbies that my beloved and I do together, so from a hobby perspective we are spending more time together and enjoying each other’s company more as well.”

“If you’re an introvert, put yourself out there and don’t second guess yourself. Extroverted people won’t hesitate to jump at opportunities and will get ahead of you because of it, regardless of whether they’re better at the job than you or not.”

“Before I buy anything now, I stop and think, “Do I really need this? Is there an alternative?”.If I decide I don’t need it, then 95% of the time, I don’t buy it. Before starting my personal finance cleanup journey, if I wanted it and had the money, I’d get it.”

Read The Full Interview Here.

Cheers, TFC.

The post I Guest Posted: Beginner to Blogger – Personal Finance For Beginners appeared first on The Flawed Consumer.

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On my daily commute a few weeks ago, I walked my usual 400 metres from the station to my workplace. Within the first 50 metres there was a man collecting money for the Salvation Army. About 80 metres further up the road there was a man collecting money for Motor Neurones Disease research. A further 20 metres up the road was a man selling The Big Issue, and a man a few metres from him trying to sign people up for regular donations to UNICEF. Then as I approached my building, a homeless man was selling hand carved wooden roses.

Over the course of the 400 metre walk I noticed something occur within me:

  • For the first man I felt the need to donate;
  • For the second man I felt the heartstrings pull and thought about donating;
  • For the third man I looked but didn’t think much about it;
  • For the fourth man I felt almost nothing; and
  • For the fifth man I felt nothing.

Now, my progression of feelings about each cause I came across are not a reflection of how I feel about each of these causes in general. In fact, in terms of causes I personally feel connected to, I probably would put my interests in the exact opposite order to how I felt about each cause on the day.

This strange phenomenom got me wondering about why I felt such apathy towards charity in this scenario…

Arithmetic of compassion

Research by Paul Slovic has demonstrated that my progression of feelings as outlined above is actually very normal. Furthermore, his research has shown that this phenomenon affects most of us. 

Switching off as a result of exposure to multiple people requiring help can be mainly attributed to a concept Slovic calls “psychic numbing”. This concept occurs when information received in the form of statistics and impersonal numbers fails to trigger an emotional response in us.

Exposure to more than one person or cause is all we need to “switch off”. After this, people become numbers and the emotive response to their needs numbs.

A well-known example of this concept is the civil war in Syria. In 2015, hundreds of thousands of people had died from the war… And, most of us didn’t even blink an eye. However, when the picture of the little boy washed up on a Turkish beach hit the news stands, suddenly we all cared about the Syrian war.

Seeing this innocent little boy wash up on a beach as a result of a failed mission to escape the war made all of our maternal and paternal instincts go into overdrive. As a consequence, donations to the cause went up by about 500% overnight.

This concept is well known by charity organisations and is why organisations such as World Vision offer sponsoring of children. This is because the feeling of helping one child in need invokes an emotive response and makes us feel like we’re really making a difference. Alternatively, an advertisement stating “150,000 children need your help”, doesn’t have the same effect, as we simply switch off from the message.

Conclusion

Now that you know about “psychic numbing” and the arithmetic of compassion (i.e anything more than 1 numbs your emotive response), you can try to trick your brain into not switching off from the causes and concerns you care about.

If you find yourself over exposed to people asking for help, you can try to consciously refocus your attention onto each individual and think about them as a person. 

Additionally, when it comes to atrocities such as civil wars or natural disasters, you could try to find one person or animal suffering from the issue to focus your attention on. This ensures connection to the cause and will help you stay focused on trying to make a difference, however you can.

Cheers, TFC.

The post Over Saturation Results In Apathy appeared first on The Flawed Consumer.

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This post may contain affiliate links.

In 2010, at the age of 24, Grant Sabatier woke up one morning and decided to check his bank account. With all of his accounts combined, he had $2.26 to his name. In that moment, he realised he needed to make some changes… Some big changes!

So, Grant threw himself into learning about all matters personal finance related. From budgeting, to investing, to side hustles; he read and read and read…

 

5 years later, Grant had amassed a net worth of over $1M. In his first book, Financial Freedom, Grant outlines how he achieved such a huge milestone in such a short timeframe; and how you can do it too.

 

Overview

Throughout the 14 chapters of the book, Grant covers topics such as the benefits and detriments of compound interest, living for free, launching profitable side hustles, and accelerating your wealth.

If your interested in investing, financial independence, early retirement… Or just simply being financially comfortable, then these three chapters are really worth studying:

  • Chapter 2: Time Is More Valuable Than Money – “Why You Can and Should “Retire” Early.
  • Chapter 6: Is It Worth It? – “11 Ways To Think About Money Before You Buy Anything”.
  • Chapter 12: More Than Enough – “How to Live Off Your Investments for the Rest of Your Life”.

 

My Favourite Parts Of Financial Freedom Compound Interest Is God And The Devil In One

Albert Einstein has been quoted as saying “compound interest is the eighth wonder of the world”… And, as Grant points out, there’s a reason for it!

 

Throughout Chapter 2, Grant outlines the importance of compound interest on securing your future lifestyle. In particular, he discusses the importance of maintaining the growth potential of your investments by not withdrawing from your principal, nor all of your returns.

 

As Grant outlines, if you invest $1,000,000, with an interest rate of 7%; after one year you’ll have $1,000,070. If you then withdraw $40,000 to live off, you’ll still have $1,000,030 to earn interest on and will therefore earn $72,100 in the second year, rather than $70,000 if you had withdrawn all of your returns from the first year.

 

Essentially, by only withdrawing a percentage of your returns each year, you’ll continue to grow your wealth despite withdrawing living costs.

 

Contrastingly, the impact of compound interest on your lost money is also huge. On page 225, Grant demonstrates the MASSIVE difference a fee of 0.04% vs 2.2% can have on your investment returns over a lifetime… You’ll be shocked, I’m sure!

Minimising The Impacts of Inflation

As a budding seeker of financial independence myself, understanding the impact of inflation on future living costs is of huge interest to me. However, you know what is even more exciting?! Minimising, or avoiding altogether, the impacts of inflation on your future lifestyle.

 

In the book, Grant discusses the impact of inflation on conventional retirement calculators and how the results make it seem like you’ll never be able to retire, due to inflation alone. However, what these conventional calculators don’t take into consideration is your ability to reduce the impact of inflation through future proofing yourself.

 

Inflation affects a lot of things in life such as the cost of housing, food and activities. For the most part, we can pretty much assume that these things will just keep getting more expensive in the future. Consequently, the money needed to live today will be different to that needed in 10, 20 or 40 years’ time.

Therefore, in order to ensure we can live comfortably in retirement in the future, we factor this into our retirement figures through making extra contributions to our retirement accounts and investing this money so that we can reap the rewards of compound interest.

 

However, as Grant raises, there are ways to minimise the impacts of inflation and therefore make retirement seem not so impossible after all. Owning your own home is a good place to start, as if you already own your own home, you’re future proofed from rising housing costs.

 

Self-sustainability is another way to help minimise the impact of inflation in the future. Learning to DIY a range of things from growing your own food, house maintenance and renovation, to building your own furniture will help to minimise the growing costs of goods and services in the future.

Key Takeaways Money is limitless, time is not:

Conventional retirement ideals are premised on the basis that money is scarce. Consequently, you work until your mid-60’s, or more, so you can afford to live out your remaining years not in poverty. As a result of the perception that money is scarce, most personal finance resources focus on cutting back and saving every penny you can.

However, in contrast to this traditional approach, Grant raises that money is only scarce if you don’t try to make more of it. Instead, Grant’s focus is on diversifying your income streams, getting paid the highest possible amount for your work and maximising compounding returns from a young age. By focusing on this instead, you free up time and are able to use that time to do the things you want, rather than the things you have to.

Focus Intensely and Learn To Say No:

One of the biggest struggles in anyone’s financial independence journey is learning to say no to situations which are detrimental to your journey.

Whether it’s after-work drinks with work colleagues or spending your weekends watching tv marathons with your partner; in order to succeed, you need to learn to say no. 

Learn To Chill As Hard As You Hustle:

One of the biggest problems people experience on the road to financial independence is burn out. However, you’re no good to anyone (including yourself and your bank account) when you’re burnt out.

Consequently, it’s critically important to look after your health by taking the time to relax and give yourself a break from hustling. Take this time regularly; and ensure you spend time doing things you love away from work or your side hustles.

Review

The content of Financial Freedom can be summarised by what Grant refers to as “The rules of the game”; namely: 

  1. spend less money; 
  2. make more money;
  3. minimise your taxes; and
  4. invest as much as you can.

However, the real joy of the book is not necessarily the information provided (which is golden, I must say), but is the simple, straight forward manner in which it is presented. Financial Freedom explains rather complex financial topics in a way that most people can easily understand; ensuring that Grant’s message can penetrate even the most financially illiterate of us.

The only downside of the book is that it is aimed at a US audience. This means that there are several chapters, which get into the specifics of retirement account types, taxation benefits and other schemes that are only applicable to US citizens, reducing its universal appeal.

However, despite this, If you’re seeking financial independence, Financial Freedom is a fantastic resource to get you started on your journey. It outlines the steps required to achieve financial independence, from start to finish, in just over 300 pages. It’s a read well worth the price tag… And, it might even change your life!

The Flawed Consumer review: Financial Freedom by Grant Sabatier 8/10.

 

Financial Freedom is available in Australia through online retailers such as Amazon and at book stores such as Dymocks from Tuesday 5 February 2019. 

 

Cheers, TFC.

The post Financial Freedom Book Review – A Proven Path To All The Money You Will Ever Need appeared first on The Flawed Consumer.

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