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Over and above …

Well, today we hit $16,165 in our home deposit account and in so doing, we jumped over the end of our savings ticker ($15,000). This was always a bit of an artificial goal because we want to save way more than this, but it is still a bit of a milestone for me.

I look back and smile on the old days. I don’t think I’d ever had even $2000 in my bank account before I started paying down debts, and any time I did, it went somewhere the very same day. And I usually still owed someone else the same amount or more.

So it is a red letter day for my husband and I.

So what are our plans? Well, I don’t think we are going to make it all the way to a 20% deposit before we buy. But I have recently talked to a finance company specialising in finance to professionals (ie doctors, vets), and they tell me that even without the 20% deposit, we will be eligible for a loan  without having to pay Lenders Mortgage Insurance. This potentially cuts about $7000 from the potential loan costs and is great news. It also means that the First Home Owners Grant of $14,000 can all go towards our deposit.

So with our $16,000 currently saved and that $14,000 grant, we essentially have a $30K deposit already.  If we can find another $15,000 cash and at least $2K for costs of buying, I’ll be pleased with our progress and ready to buy.

Let’s see how we might do that. The $14,000 grant reduces to $10,500 at the end of September, so that is our deadline for saving the rest of the deposit, getting the loan and signing a contract.

Already, we have $3000 stashed in an account that we had intended to use to buy some shares, and I had already planned to use overtime to save another $2K towards that. So all of that cash could instead go towards the deposit.

We also expect to get about $5000 back from overpaid tax and child care rebate at the end of this year, so that should also boost our deposit up.

By September, the natural progression of our house deposit saving will mean we have about $9000 more in the bank (at $1300/fortnight).

So the deposit will comprise:

Current savings: $16,000

Continued regular savings by September: $9,000

“Shares” money: $5,000

Tax refunds: $5000

First Home Owners Grant: $14,000

TOTAL: $49,000

(including $2-4K for buying costs).

Sounds pretty good!

  I really don’t want to touch our emergency fund account, so somehow I need to make sure that money is sacred NO MATTER WHAT!

By then it should be about $7,500 or so and will be a good amount to have ready as home owners. It will also be important to keep that money coming out so that we have $10,000 by the end of the year. Naturally, we will need a loan with an offset account that subtracts that amount off the overall amount owed for interest purposes.

I feel like doing one of those evil laughs – “mwah, hah, hah, hah! My master plan is finally coming together!”

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A good day

Well, thanks for all the feedback given our recent issue with the friend that didn’t pay up. I’m happy to report he has handed back $250 ($100 to go) and has finally apologised. He admitted he didn’t mean to take so long, and he hadn’t wanted to bring it up to us and apologise till he could bring over all of the money, instead of an excuse. Finally he realised he’d really messed up and decided that giving us most of the money was better than none at all. He declares he will bring the rest this week, and I do believe him. I was pretty annoyed for a while, but now am happy to say that he has shown himself to be honourable. Obviously this is a good thing for our friendship!

Anyway, the other news is that I had my fortnightly pay, my Aussie stimulus cheque ($900) and my child care rebate ($1460) all arrive in my account on the same day! A good day!

This means we have been able to:

1) make the voluntary retirement contribution of $1000 – this means at the end of the financial year the goverment will add $1200-$1500 to my retirement account! If I get the full amount, it will mean that over two years I will have added $2000 of my own money with a return of $5000 overall! This is probably especially important given how much my retirement fund dropped in value last year (at least 1/3, or about $10,000). It has helped offset some of that.

2) create a debit account of $2000 – this means there is $2000 at the ready for flights that need to be bought at short notice, or to buy appliances that have blown up suddenly (I don’t want to use the emergency fund for a new TV!). This is to pay for the stuff we would otherwise have placed on credit card and `paid back’. Now we will be paying ourselves back instead of a credit provider.

3) Remaining is about $2200 which has not been allocated. This was going to go towards a purchase of some shares, though it would probably be better used towards our home deposit. I do want to make it a regular thing each year to buy a share parcel, and part of me knows that if I don’t make it a priority some time, years will go by and we still won’t have done it. While I understand that we should maximise our home deposit, I also want to invest at some point and don’t think the two goals need to be exclusive. I also think this is a great time to buy shares and we might kick ourselves if we don’t jump in soon.

We could buy some blue chips like Woolworths or one of Australia’s big four banks. We know these are probably safe bets and are pretty much `on sale’ right now. I talked to my husband and he agrees we should go for it. Taking the plunge is kind of scary though. It’s so much easier to sit tight and do nothing!

Two years ago I could not have imagined dealing with issues as fun as these. I had never even considered what it might be like to not have to use a lump sum to pay off some kind of personal debt. Believe me, those who are working to pay off debt or who have recently done so, the benefits do eventually show themselves. Just work hard and get rid of it for good!

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A time to give

victorian-bushfires

One of the things I haven’t been proud of since we finished repaying debt is that we have not yet made a concerted effort to work out our charitable giving. While we were getting out of debt, I cut back on our giving because I knew we needed to help ourselves in order to get into a position where we could help others more in the future. But with our business and the change in our lifestyles, we hadn’t gotten around to this.

In the wake of the horrific Victorian bushfires, in which almost 200 Australians died, my husband and I decided we needed to get past our inertia and donate. Lots of Australians felt the same, with company and individual donations topping $100 million in a few days. For US readers, this is a huge amount in our nation of just 20 million people.

I didn’t give straight away as I don’t give `on credit’ anymore. But today we transferred $50. This is as much as we can afford right now, but I intend to get us a to a position where we are regularly giving 5% of our regular income away. Eventually I would like to make that 10% (once our emergency fund is a bit more secure perhaps).

I guess we need to talk about how best to deal with giving away this 5% in the future.  I hate that when you decide to give for a specific appeal, you get so much junk mail in the aftermath that it must inevitably cancel out the value of your original donation.

I wonder if there is some way this can be avoided. I’ll have to do some research, I guess.

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Sick of work

Is it OK to be just 5 weeks into your career and completely over it already? 🙂
Hopefully I’m just having a bad day…
On a good note, I got my fortnightly pay and officially have more money in an account than ever before in my life (not counting that fraction of a second when I’ve received the money ready to pay the seller when getting a car loan (just before I wrote the bank cheque as payment!).
Nuh-uh! This is our cash, baby!

I also have to see a financial adviser this week to learn about salary packaging. I will post with the details after my appointment on Monday.

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Aaargh! Finances in disarray!

I can’t stand it! I have more bills than cash coming in and most of them are one-off bills!

Academic gown hire!

Graduation ball tickets!

Frame for graduation certificate!

Shoes to go with grad dress!

Aaargh! I wish that elusive financial fairy godmother would make an appearance. In her absence, we’ll have to make do.

The path from debt freedom is a slippery slope, that’s for sure.

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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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Once I get started …

… you know I gots to keep postin’!

It just occurred to me that I’ve been really down about our financial position. I’ve just been feeling like we have such a long way to go till I’ll feel like I can relax at all.

Yet I just realised that we are closing in on $2000 in savings. It’s not great but it is a start.

Funnily enough though, it’s LESS than we had in savings around this time last year. This post is from August 30 2007, and in it I wrote all about how excited I am that we have $2500 in our account – `one-fifth of the way to our home deposit’. (We later cashed this money out to help get rid of debt.)

That post seems like a million years ago. Back then, we hadn’t factored in a real emergency fund. We also were only aiming for a 5 per cent deposit on a cheaper home. Now we are attempting to save our full 6-month emergency fund, plus a 20% down-payment on a more expensive house. It’s going to take us YEARS to do that.

So $2000 isn’t much. But it is a start. 

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