Archive for Planning

Time for a new look

Well, I haven’t posted for a while, and to be honest, the reason is that I was bored. Not so much with saving and tracking our money, but with this site.

So a new look was in order – hopefully, that’ll clear out the cobwebs and hopefully you like it and it remains easy to read.

I’m back at work now and very focused on our goals at the moment, due in part to the imminent arrival of two cheques.

The first is the money coming to us from the stimulus package , which should total $900 each. This money has already been earmarked to create our `debit account’. Remember how one of my financial goals was to create an account that we would draw on (and repay!) instead of our credit card? I don’t want this account to handle emergencies. Instead it is for things that have to be paid for immediately, even if the cash for them is not yet in. Some recent examples included the money I had to outlay for travel for my last elective – the refund of $900 took three months to finally arrive. A similar example came when we decided to go on our houseboat trip. The stimulus cheques were paying for the trip, but as you have just heard, they are yet to arrive. Luckily, we have underspent lately and we managed to pay off the trip with money intended to start our debit account. In any case, I do feel we have fulfilled the intended aim of the stimulus cheques (by going on our houseboat adventure), even if it does look like we are actually squirelling the cheque itself away. I also hope to use some upcoming rostered overtime to bounce that $1800 up to $2000 neat. And that will mean another of our financial goals for 2009 is met. Here’s hoping all goes well!

The second cheque will come from child care rebate for the previous quarter (ending on march 31). That should come in the next few weeks and will total about $1300. We intend to use $1000 of this to put into superannuation, because this may be the last year I am eligible for the government co-contribution. I hope to be eligible for the top rate of $1500, but I guess we’ll see when the tax year is over. In any case, if we do this another 2009 financial goal will be met.

Then we will be in an interesting situation … I had said that in a perfect world we would put any more extra savings or lump sums towards 2 `secondary goals’ – $5000 worth of shares, and then a much-needed new-to-me car. But I wonder if I will feel able to do either of these in reality. We probably can expect at least $2500 at tax time (since I have only been working for half the year), plus about $1500 in rostered overtime for me in the coming couple of months. Should this money go towards a home deposit, instead of either of these `extra’ goals?

I feel like there might not be a better time to get into the sharemarket than now, but maybe we are better off meeting one goal at a time. Maybe it’s silly to try to buy stocks when all our money should go into maximising our house deposit … I guess I’ll know when the money is actually in our accounts. Until then, figuring out what to do with this money is a bit like counting your chickens before they’ve hatched!

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Ambitious financial goal for 2009

While I haven’t worked out the details for exactly where the money will go, the experience of revising my net worth chart this morning has informed me about what my overall goal is for next year.

I hope to boost our current net worth of $59,390 to over $100,000. That’s a massive increase, I know. But I think it’s achievable in a few ways:

1) Hopefully, we won’t see further retirement account drops, and if they do happen they won’t be so severe. Because of my aggressive portfolio type and the fact I am not working therefore not contributing so far this year, the value of my retirement went from around $27,000 to $19,000 and was only partially saved by the government co-contribution scheme her in Australia, which effectively added $2500 in after-tax money. If anything I hope our retirement accounts remain stable at the least.

2) We’re planning to effectively bank my whole income this year and then some. Since I’m supposed to earn $57,000 (and this could be as much as $70,000) gross, the after-tax portion should be applied to savings and the like.

So you see, it should be achievable as long as we use discipline. I am looking forward to the next phase of our lives.

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Time to get serious

It occurred to me yesterday that I keep waiting till we have two incomes to worry about the saving thing. Despite my best efforts, I never seem to be able to save 10% of our income … usually because there’s always `one more thing’ I have to make sure is paid for (to keep us from going into debt again).

While I know we’re in a better position than before, I feel we’re stuck again – instead of being stuck with near-limit credit balances, now we’re stuckat the point where our various commitments keep us just out of debt .. but only just. What would I be doing if I still was paying $170 a week on our credit card like I used to? How would I manage it?

The reality is, I think we have lost our way a bit. I am letting our various expenses creep up because I don’t have the debt, which used to drive me forward. Even though I really want to get savings happening, if I know I have lots of expenses coming up, I always pay them first to ensure we don’t go into debt. But there is always going to be another expense around the corner, and maybe we have to start learning to keep that 10% out of the picture. If that first 10 per cent was already gone, we couldn’t let the expenses creep up either … or we’d go into debt.

This debt and money thing is so psychological ….!

Anyway, while we were away, we lent somebody close to us $740. We really couldn’t afford it and it probably wasn’t the best financial move, but we agreed that we would do it because we believed in the person. However, we made it clear to ourselves that we could not expect to get the money back.

Well, this week the person turned up with the first $450 of what they owed us. It was a very nice surprise. Given the number of expenses we have upcoming, my first inclination is to apply that money to help pay for those upcoming expenses.

But I’ve changed my mind. We are putting that money in our emergency fund. We didn’t expect it back, so it’s `found money’. If we don’t want to go into debt, we’re still going to have to work as hard as we were before this person turned up with the cash.

Forgive me, I think I’m going into a new phase of thinking about how our money should be used, and as usual, it means a lot of soul-searching and thought. ANd you get to read about it whether you want to or not!

My biggest desire is that when that first full-time paycheque arrives in January, I don’t want to use it to pay off bills from graduation or anything else. That first paycheck has to be like all the others coming after it – applied to our emergency fund and house deposit account. If we don’t start that way, I fear we will continue on the wrong track with this. Let’s hope we can do this.

So, the plus side? $450 is going back in our e-fund. The negative side? Almost $1600 of non-recurring bills in the next month, not counting fun stuff like a graduation dress!

How are we going to pay for this?
– cutting down my phone package (which I never adequately use anyway)

– cutting back our cable package (which we share with my father-in-law)

– cutting down my internet package (now I’m not a student, I’m not using it as much)

– food budget savings

– doing a some shifts at my old job (if they’ll have me)

– getting my hubby’s tax return in (will trigger some rebates that will pump up our cash)

I guess we’ll see how we go in a months’ time!

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Guests are gone … and focus is back on budgeting

Well, we’ve had visitors for 5 nights, which has affected my ability to keep track of my money and blogging. The baby’s cot was set up in my office, so it’s hard to get a second to log on and do my thing, between the sleeps and the feeds etc!

It was great to have my friends here, and even better they didn’t want to party hard because they had their little one to worry about. So it was all about seeing each other and hanging out at home – better for the bank balance too!

Their visit was also good because it was the friend whose baby we had intended to fly south to see – it was one of my financial goals for 2008. However, it wasn’t going to be achieved because we had too many other things to do (ie 9 weeks elective in another town) and there was unlikely to be any cash left to get there. So it was lucky that they had occasion to come up here – it allowed us to see the baby, give them somewhere to stay for free and meant we didn’t have to spring for plane tickets! A win-win situation for everyone!

This couple are among our best friends but it is worth sharing that they are in a completely different financial situation to us, mostly because of good financial sense and also because of some family circumstances. In the past, it has been hard sometimes to hear about their good financial fortune, which allowed them to pay off their first home within a year of buying it, invest in a second investment property, live in very cheap military accommodation while reaping income from both properties, buy some stocks, buy 2 late model cars and a large trailer boat with cash, and apparently have so much wage income that they `had to see someone about what to do with it all’. The green-eyed monster came out on my part a couple of times, I’ll admit!

But they have had bad luck too – it took them more than 2 years to fall pregnant, which was hard because they were used to everything coming easily to them. And some of this cash they had came from an inheritance from a parent, who died relatively young. So you see, I would never trade that experience for the financial advantages it brought. Money is not everything.

Anyway, we are looking like having a turn-around in our own financial position in the next few months, and the important thing is to make the most of it. That’s what we intend to do.

While my original goal was to have $5K in the EF by end of the year, right now I would be happy to just remain debt free and cover all the upcoming costs of my son’s birthday, Christmas, two car registration bills ($600) and medical registration ($420). If we can do all this and not be in debt in a months’ time, I’ll be happy. Now I have to figure out how!

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A new day dawns

OK, so our crazy spending is back in check – all credit cards now remain at zero and our emergency fund is intact. It really is time to get back in control of our finances – a new day dawns in our household as to how we handle our money.

I’ve realised that I’m good with `big picture’ saving but not the small-scale stuff. I let lots of little amounts of cash fall through our fingers. I don’t shop around the way I should and when I do, I don’t apply the savings to something meaningful. I’m hoping to move this blog in that direction – exploring the possibilities in respect to being more frugal – in coming posts. I also hope to meet our goal of $5000 in an emergency fund ASAP, and need to brainstorm about how best to do that.

Looking at all our accounts and analysing how best to manage this little spend-up made me realise that I’ve never really outlined our full financial position before. Maybe I was too shy. 🙂  However, I thought maybe it would be worthwhile to do this (for you and for me).

Here is our state of play:

  • $140 in everyday account (I can’t make myself call this a savings account!) – NEXT WEEKLY PAY IS ON FRIDAY, $140 remaining includes petrol and misc budget items.
  • $105 in billpaying account (cleaned out today to get our financial house back in order after our spend-up)
  • $88 in son’s managed fund account ($25/wk is sent here, $100/mth removed to his managed fund – current value of his investment is about $1600)
  • $1600 in our emergency fund
  • no credit card debt
  • no personal loans

Superannuation (retirement accounts):

MINE: $26,166  This is down $3K from last year because of the downturn in share markets. With my super company (like any other) you can allocate the kind of investments you want your accounts in. Last year I changed mine to High Growth (25%) and Growth (75%) on the advice of just about every personal finance book I’d ever read. That’s because I am so many years from retirement, so I can cope with a high exposure to the share market. The $3K drop this year is not unexpected and doesn’t worry me at all. The other thing is that last financial year I managed to find $1000 to make a voluntary contribution to my super (in Australia, your employer must make involuntary contributions on your behalf). As I’ve said previously, this means the Australian Government will throw in the maximum co-contribution of $1500 to my account because I was a low income earner last year. In some respects, it is good for me that the markets are down because when the government throws in that money, it will buy more units in the fund at a lower price.

PARTNER’S: About $40,000 We don’t track this online so this was the value in last year’s annual report that he received. I would have expected it to drop markedly over the year, however we recently heard from another employee that their fund was one of the few that maintained a small amount of growth in the past financial year. I won’t believe that till I see his statement but if so, it’s fantastic news.

STUDENT DEBT: $30,000 – As stated previously, this is interest free and paid back to the government once earnings reach a certain level. I will start paying it back at about $50/week with my salary next year. I don’t consider this to be a significant debt as it would be last on any priority list to make extra payments on. Louise at Eliminate My Debt (another Aussie) put it well when she described HECS as more like a tax on Aussies who went to uni. If I came into some extra money, I would put it towards a home deposit or other investment before I considered paying this off.

If I get really brave, in the next few days I might post our weekly income and spending allocations. Let’s see whether I am really ready! 🙂

So that’s our financial state of play. It’s not great, given that apart from our cars and furniture, we don’t own anything. But given that I just completed eight years of university and am about to start work as a doctor, I guess my earning potential is going to go up quickly (though not as fast as many would think!).

Our priorities remain a home deposit and emergency fund. I am opening it up to the universe to provide any opportunities to speed up our achievement of these goals!

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Tax time – I love it

In Australia our financial year runs from July 1 to June 30, so this is the time we start pulling all our paperwork out to submit our returns. I love tax time, probably because my tax is uncomplicated and I have almost always received a return.  By the way, we don’t pay state taxes _ well, only in a `user pays’ kind of way (eg speeding tickets and nature park levies) _ so there’s only the one set of federal taxes to worry about filing here.

Guess what? This will be the first year my return will go on actual savings! I have absolutely no consumer item in mind for the cash I’m due to get back. To give you some back story on this, ALL of my returns that I can ever remember receiving have gone on part-payments to a credit card or towards buying a consumer item. Yup, all of them. Often it would be both in one, ie a consumer item I’d charged to a credit card in readiness for my tax refund (to pay back when it arrived). Talk about stupid …

Anyway, I just did my taxes and lodged the return online, and the estimate for my return was a total of $1358.65! Hallelujah! (*I’m happy dancing right now …*)

Since our first goal as a debt-free family is to get our emergency fund up to $5000 by the end of the year, it looks like we are well on our way to meeting the challenge!

I should get the funds from the tax return in my account within 14 days. Added to that, we have about $350-$400 STILL owed by the university for the tutoring I did AND I should be able to put at least $300 away from our salary within 14 days (I did take the night off last Friday so I’m not getting as much in my pay packet as usual).

All of this means we could have a $2000 emergency fund on the go within weeks!

It feels like everything is starting to work out …

I am a happy woman!

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My current financial goals

OK, so back just before 2007 ended I published a list of financial goals for the year.

These underwent a lot of alterations in the early months of the year, but in late February I settled on these goals. They looked a bit shaky when it seemed more likely that we would leave our current home, but with things looking pretty good in that respect these days, this is the current list, and where we are with each (listed in order of priority):

Goal 1: Pay off car debt: Currently $6495 owed. If I can keep up our current repayment level, on track to pay this off on or about the 1st anniversary of this blog (early July)! That will make us consumer debt free!

Goal 2: Boost EF to $5000: Currently $1017 in situ, I expect to use tax/family payment rebates (about $2000) plus some of my child care rebate to add nearly $4000 in total. This is unlikely to be achieved till about mid-September.

Goal 3: Pay for our joint party: My 30th birthday snuck by in the past week or so (ha!), and my hubby has a similar big one coming up, so we are celebrating together. $1000 should cover some champagne for the toasts, plus food etc.  We are having the party in the backyard, so we are keeping costs down, but there are lots of guests, many from interstate (meaning it’s a big deal). To come up with the money, we will suspend car payments for 2 weeks (or 3 if necessary) just before the big event.

Goal 4: Contribute $500 to a relative’s birthday function: Thi is something we committed to a long time ago, and something we really want to do. My tutoring work at the university should pay for this outright without affecting our weekly budgets.

Goal 5: Fly south to see a friend’s baby: This is budgeted to cost $3000. Between the remainder of my child care rebate ($1500) and the money projected to be incoming from the sale of our health insurer ($2000 – see previous post), this might be covered without affecting weekly budgets.

Goal 6: Graduation expenses: Between the grad ball, gown hire, getting a dress to wear and general celebrations (plus I’m unlikely to do any casual work that week), I think this will cost at least $1000. I will budget for it from weekly surplus funds (all debt will be paid off by then).

Goal 7: Buy my next car outright. Though my husband’s car will be paid off, mine is in such a poor state that I think I am best off saving to buy a relatively recent Corolla, then keep it for as long as possible. In Australia, an ’06 model might be obtainable for $15,000 (after all on-road costs). When I crunch the numbers, I end up about $9000 short on this goal (having met all previous goals). I could just extend this goal into 2009, but I feel that by then I’ll be working full-time, I’ll need a good car and our focus then really needs to be on a house deposit. So I am just going to leave this goal sitting here, and see what comes up over the year. Anything could happen to make this more achievable. Case in point: my previous post about the funds fom my health insurer!

As you can see, a lot of my goals are not based around getting into a better financial position – not in so many words, anyway. I think it’s important to use your budget to continue to live life a little. For me, this means paying strict attention to where the dollars go, in order to ensure they go where they are most needed and/or wanted.

Do you have any financial goals for the year?

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