Money, By Bess

Don't squash a recovery, guys...

2009-06-17T15:37:00.002+10:00

Don't let me scare my readers when I mention the words rising interest rates.

That's probably not going to happen until the end of next year when unemployment stops rising. We're in the middle of a welcome breather for those who need to borrow money to invest or buy property, thanks to the GEC (Global Economic Crisis), even if the banks aren't all that happy about lending for either purpose at the moment!

Anyway, Ross Gittins at SMH has something to say about the Commonwealth Bank's rate rise yesterday: these are skittish times, and don't scare the investors away by sending the message that rates are about to head up any time soon.

Flu Rage and the necessary "Sickie"

2009-06-09T14:01:00.003+10:00

Today's article about Flu Rage prompts me to recall stories of my childhood (and the present, now that I have my own child!), and gives a cautionary financial tale to those who are both employers and employees.

My mother is a singer and a singing teacher, and her voice is her life. If she can't speak or sing to teach or perform, then she has no income.

Thus it has long been a rule that if you have a cold or flu, or something communicable, you - dear student - had to stay home and not come to lessons until you were better. For me, as my mother's daughter, it meant trying not to expose myself to people who could pass such diseases on to me. After several attempts at sending uninterested me to swimming carnivals (only to have me come back with laryngitis, which Mum invariably caught), I was banned from ever attending them again whilst at school.

I didn't mind... I hated sport with a vengeance anyway.

But seriously, it's true that you are being inconsiderate when you (for fear of losing your job or not being able to keep up with the workload on your return) make the decision to come to work instead of staying at home in bed and getting well.

Look at it this way:

In my mother's case, she would lose the price of a lesson from one student for one week. If that student came along and gave her their cold though, she would be unable to teach for a week or even two weeks. That's not just one student's fee. It's twenty. Times two if it's for two weeks!

Similarly, your time off may cost your employer a day or three in sick leave. But your staying at work will cost them for far longer in lost productivity (because the length of time you are feeling under-the-weather will extend for a week or three by pushing on). Hell, it will cost even more if you push it too far. I have a friend whose client died from pushing on with the same daily regimen (including gym classes) while suffering from an influenza virus. He had a heart attack after three days from the stress on his system!

Add to that the lost productivity you create by giving your disease to everyone around you, and you well deserve to be told off for coming in to work. How many people can you infect in a fully air-conditioned building? Just about everyone, potentially. That's weeks and weeks of lost productivity and cost to your boss. I have seen fifty percent of a workforce in one of my workplaces over the years out for a total of eight weeks because it just kept going around and around and around...

My erstwhile employer is similarly strict with us staff (as am I, as office manager, in any of the positions of "command" I have held). If you're sick, you don't come in. Long as it takes. Get better and keep it to yourself.

So, employees, do the right thing and stay home if you are sick. That's why the sick leave system is there!

To the employers out there who make staff feel bad for taking time off when they are ill, back off a bit. Get a grip.

Sure, get a medical certificate from your sick staff member by all means, but you'll have a LOT more to complain about financially if 50%+ of your staff are off for weeks on end because you made one person stay share the "joy".

Sweping tax reforms for starters?

2009-05-01T10:32:00.002+10:00

Well, it's something we've been waiting for since the GST came in, but somehow the states of Australia have steadfasty refused to give up their hold on Stamp Duty for things like cars and property.

This morning's article on News.Com.au makes it look like that's going to change, now that Victoria, for a start, has submitted an application to the Federal tax review to suggest that they abolish it in return for a cut of income tax.

This could work.

Economists have said that they think it would increase government revenue by $4 Billion a year because it would free up the stamp duty money people try to avoid spending to be used for investments and other economic stimulation elsewhere.

If they have to start somewhere, then this is definitely the place...

I believe the comment here is: "Well DUH!"

2009-04-24T15:57:00.002+10:00

Yeah, I know, I haven't had much time to post to my blog of late, and I apologise, but we have been planning a trip (and making that trip) to the Andamooka Opal fields in South Australia (of which more later). Subsequently, haven't really been near a computer or an internet connection for some of the last little while!

Anyway, saw this article on News.com.au yesterday and had to say "Well DUH..."

Of course it's going to take ages for the crisis to cool down. And I think it may take as much as ten years (as long as it took for Japan during their own recent recession) to come out of it all properly. It sounds corny, but my 94-year-old Grandma who went through the Great Depression said it would happen again just before she passed on Christmas Day in 2007. And she tended to be right about things like that.

Hopefully, the present scramble to produce results worldwide will continue and push us to make the major environmental and economical changes and reforms that we need to make to get us through the next century, let alone beyond...

When is it smart to pay your HECS debt down?

2009-03-05T08:00:00.000+11:00

This is a bit of an old article from the Sydney Morning Herald, but I stumbled across it today while checking some payroll matters for staff at work, and it's very useful to know.

If you have a HECS debt, then there are ways, and times, to pay it off, that are more sensible and cost effective than others. Be careful that you don't fall into a trap of borrowing to pay it off, for instance (it will cost you more than it would if you stuck to the indexed rate). Pay off your mortgage first if you can. It's better to pay 2% of your salary once you reach the threshold (currently over $41,000 per year in the 2008-09 tax year) than hold back on getting your home or other things.

Anyway, it's probably better to read what the author man says. Here.

Raking some of those insurance/superannuation/managed fund fees back.

2009-03-04T16:32:00.004+11:00

Well, here's a useful little tip for those of you who care about all the mysterious fees you're paying to fund managers, Super and otherwise...

Did you know that in your first year in an insurance plan, the fees you pay can be as much as 130% of the annual premium? That's extreme, but they can typically run between 10-30% each year. Then when it comes to super funds and managed funds, there are residual commission trails of between 0.5% and 1.7%. So over time (especially when we are talking Super!) this can add up to tens of thousands of dollars paid to someone you'll never talk to again, so you won't actually be getting customer service either.

Now an Australian company I just heard about, Your Share is helping you to get most of this money right back in your pocket, in the form of an annual cheque. And you don't have to change funds to do it either. They simply cover you for the funds that you're already a part of.

They make their money by taking between 30-50% of the trailing fee they get back for administration. But you get the whole initial commission is all yours to keep, and can amount to a hefty cheque! They also guarantee to better any other rebate service out there.

So, I've just signed myself up. Go download their forms (at the "Get Your Cash Back Now" button at the bottom left), and see what you can get back!

Thank you, PM Gordon Brown

2009-02-24T11:00:00.002+11:00

Further to my post earlier about the banks in Australia being greedy bastards (yep, I've made up my mind: they are!), Britain's PM Gordon Brown just confirmed my sentiment by saying that in the banking system of the future, the banks should be the servants and not the masters of society as a whole.

Hear Hear! Here...

Australia's Interest Rates too high?

2009-02-24T10:49:00.002+11:00

Just been reading this article in SMH about how the RBA governor doesn't think our interest rates will go lower than 2.25%.

Not sure how I feel about that. On the one hand I realise that the strength of our banks is probably what is keeping Australia out of the financial mire that is the rest of the world right now. OTOH, our banks are the most profitable in the world... and you have top ask where they are getting all that money from, and I think the answer is us: their customers.

Which sucks. We're paying higher rates of interest on everything than the USA, the UK, Japan... and just about everywhere else. We're also paying exorbitant fees for everything from monthly account keeping fees (something that doesn't happen in the USA at all), overdrafts ($35 if you accidentally go over by $1... gimme a break!), and ATMs (about to get worse by some accounts in recent weeks).

Anyway, have a read. Tell me what you think...

I want to build an Albatross.

2009-02-19T16:33:00.000+11:00

I just discovered Seth Godin,

You'll probably laugh (because you already know about him), but I did. And he's right in this blog post about Building an Albatross

Albatrosses take a while to get off the ground, but once they do, they fly and fly. Having been through the trauma of building a business that has to publicise and get stuck on the treadmill of working like crazy for too little reward, an albatross is what I want to be next.

I'll happily stick to my day-job in the knowledge that all the while, in my spare time, I'm working on the foundations of my own albatross. It might take me six months, a year, or three years, but I will have my passive income too!

Have a read, and you'll get the general drift.

Do you want to know a Secret?

2009-02-18T08:54:00.003+11:00

I've been working with an amazing book called "The Secret" for about 18 months now.

When I say "working", it's not that it's entirely an easy thing. You've probably seen it on bookshelves, and you might even have bought and read it (or been given it) but not everybody lets its message sink into their being and truly works with the truths of it's teaching: about the Universal Law of Attraction.

Now that Law can be applied to health, personal life, or to the topic of this blog: Money. And really, it's not all guff. This is a "secret" that has been known by some of the greatest minds ever produced by the human race. And it works.

I think the reason I need to tell you all about it now rather than earlier, is that I finally think I have the proof that it's working (although I've trusted that it was all along).

The Clincher for me was all to do with 5c. Yep. 5c.

For the last month, either myself or my husband (also working with the Secret), and usually both have picked up 5c coins on the street. Daily.

I'm not joking!

Of course, that's not the only thing that's happened, but I think it's the most significant, strangely. More than the early raise Karl got, or my surprise at Centrelink's not reefing a ton of family allowance of us when I got my own. More, even than the fact that we can finally, honestly, say that we are on the road to being debt-free.

But the 5c pieces are VERY significant. They're proof (well, I think, positively) that all of this is because The Secret really works. How? you ask...

Because I have come to expect them.

That's right. You expect cheques in the mail, you get. You put it out there that you are going to receive a large sum of money soon, and you will receive. It really, really works! Of course, you don't expect money in particular for nothing (although you might win the Lotto!). You still need to be taking positive action in your life to bring these things in. You need to keep your mind and options open to new ideas, constantly, and take action on them. But if you take positive action and truly expect a positive result, then you will, evenutally, get it.

It comes faster and faster. I'm now turning to expect bigger coins in my path. 10c or even $1. The 5c pieces are now my daily reminder that all the work we have done in the past couple of years is actually paying off.

Not going to pay off. Is actually paying off already.

Let's see how it goes? You guys go check out the book, and I'll keep you posted!

Free Investing Information

2008-11-13T12:24:00.003+11:00

I hear so many people say "I don't have the money to start investing, and I wouldn't know where to start...", and then I think back to my start, and realise that I thought to same thing.

I bought a few books on property investing while I was still at university, just because they looked interesting (yes, they actually did! These were not dry investing books - check out my book list!), but it wasn't until we were absolutely on skids that I really got stuck in and started to learn in earnest.

The fact is that even though you don't have any money to start investing in anything at all, there are still many, many free resources out there to help you.

Start at the library.

I know... dull boring it might seem, and yet you've probably spent hours in bookshops trying to decide which one you can afford to buy this week/fortnight/month, and then getting out the credit card and getting into more debt, right? DON'T DO THAT! There's absolutely no need.

Just go to the library. And then check in the catalogues for all the books you've drooled over in the bookshop, and see if they've got anything else. If they don't have what you want, see if there's an alternative, borrow that, and/or ask at the front counter for them to get in the ones you're really after. I did that for Losing My Virginity (Richard Branson), Rich Dad, Poor Dad & Cashflow Quadrant (Robert Kiyosaki), and while waiting for them to come in didn't provide the instant gratification of walking into a shop and buying something, I actually found that when they did arrive, they came into my life at the right time for me to read them and get the most out of them.

Karma is like that, strangely, even if you don't believe in it. :)

So it's okay not to have the money to start investing. In fact, it's probably better that way:

For a start, you're not going to try and jump in the deep end with every penny of your savings and lose it all first try. You don't have anything to try with!

Taking the money-free time I have been given has actually turned me into a more sophisticated investor. So I didn't have the "been there, done that" experience. But I was able to learn from other people's mistakes that I read about, or heard in conversations. I became a sponge. And I soaked in all the information, learning more in a weekend than I did in good chunks of my university degree!

And there are other ways to get free information too: find local investing groups like The Investors Club (membership and meetings are free, and they operate worldwide) so you can get their newsletters and talk to their members. Sit in on their short classes in your area. Listen. Learn.

I fell over the 21st Century Academy when I was desperate for information, hunting the web for anything that might give me some ideas, or some answers. They sent me their Free DVD, and a few weeks later were kind enough to invite me along to one of their weekend seminars on property investing. Feeling like I should be a bit cautious (because these guys actually charge a fair bit for their courses), I rather cheekily asked if I could bring my Dad along as well, figuring he was another sensible ear to help me listen. They agreed.

We went along, met a lot of wonderful people who were genuinely doing very well out of all they were learning in the course, and we walked away, once again, having learned more in a weekend about planning for our futures than we had learned in at least the previous ten years. In Dad's case, it was in his entire 60 years! What a great experience!

So, don't you dare give up and say "I can't..." or "I don't have..."

Since I walked into my local library, joined these free clubs, and took up 21st Century Academy on their offers, I have learned. I have grown. I know where I want to go and I have been helped in working out a plan to get me there.

And strangely enough, somehow that learning has brought me to being able to DO the things I wanted to do a whole lot faster than I ever would have been able if I had simply waited around for the magic amount of money to come along.

So start. It really is free investing information.

Seize the day!

2008-11-06T11:52:00.002+11:00

Well, here's a thing: I broke my foot on Sunday!

Funnily enough I'm not all that upset about it either.

Sure, I'll miss our daughter (who is being cared for by my parents for most of the next four weeks while I get off the crutches), and I'm slightly peeved that my husband's work won't give him sensible time off, like Mondays, so we can have time with Cara, but there is an upside:

The time I would have spent faffing about, doing housework and gardening and mundane stuff, in between looking after a lively toddler, now has to be spent sitting down, and that means I am probably going to spend it in front of the computer.

What better time to act on my business plans and start dropping things into my new web sites?

See, there really is an upside! I hope to be able to tell you at the end of the month that I'm not only making inroads into building sites, but also managing to make some income from it too. Stay tuned.

It's my birthday and I'll buy if I want to...

2008-10-24T09:20:00.006+11:00

Robert Kiyosaki, you have a lot to answer for, telling me serious things on my birthday!

I probably have a lot to answer for reading "Rich Dad, Poor Dad" on my birthday too...

Seriously, great, GREAT book.

I think the problem is that the concept of paying myself first (building my asset column and keeping it there, working hard for me) is starting to sink in, even though our income is really rather, well...crap, right now.

I understand Mr Kiyosaki's point of being disciplined about this, but when your child care rebate came as a surprise on the same (wet) day that your apprenticed husband's shoes develop holes, along with the collapse of his last pair of trousers and the death of his last t-shirt and apron (acid - bane of every jeweller's wife), and you start to think "Save or combat-shop at the local outlet centre?", it's a bit of a problem.

It can also be depressing knowing that you need to be disciplined on your birthday (no going out for me this weekend), and when the first birthday party (and costumed one) you've been invited to in years happens to be next week and you don't have the right kind of stash, or time, to make that Steampunk outfit you've always dreamed of.

Yep, I'm human too! And I really am at the start of that journey I talked about, and wanting to share what I am learning along the way.

This may be a bit of a bitch-fest, but I think it has a moral somewhere that's worth sharing... Just bear with me while I find it.

Just as I win the battle with the telcos (Brilliant! I saved $50 per fortnight off our phone/mobile/internet bills!), and am staring at a $140 per fortnight surplus in our budget, I get the idea that I really need to pay myself first.

i.e. start that savings plan, no matter whether our clothes are falling off, or the house needs repairs. I think I finally grok that I really shouldn't wait until my big grand business plan starts to bring in the dosh to put some money into savings and leave it there to grow until I can get those investments I want.

I suppose $90 would be a start...

***k it.

I want some fun.

It's my birthday dammit.

I guess this goes back to the Better Value Proposition I talked about way back at the start. I need to decide whether making myself that costume (and probably getting to add it to my portfolio) is going to be worth more than the $60 I need to spend on fabric to get the job done.

Solving the unsolvable dilemma. We're all allowed to have our bad days.

Free Round the World Tickets

2008-10-16T10:54:00.003+11:00

Doesn't sound possible, does it?

Well, if you're selling your house, it is.

Someone my husband used to know sold his million dollar house on the Gold Coast. As an experiment, he put all the money he made onto his Frequent Flyer linked VISA card. Then he used that money to buy the next house.

Frequent Flyer points accrue on all purchases (you might have to check that this works if your card is in credit - i.e. has your own money on it), so he ended up with $1M worth of Frequent Flyer points.

This translated into about 20 Round World tickets!

Enough to keep the whole family's wanderlust sated for a few years, in fact!

Karmic Pigeonholing

2008-08-28T13:13:00.005+10:00

I've been honing this money management technique for a little while now, and if done properly, it can really work.

I like to call it "Karmic Pigeonholing". It comes into play even more when you are in a bit of debt (or a lot) and you still have a lot of things to get done in other areas of your life. It's my way of making sure that everything, and everyone, gets the appropriate amount of financial attention, while reducing at least some of the guilt that goes with being in that kind of mess. In some ways, if used appropriately, it can mean debts get seen to faster.

You're probably wondering what the hell I'm talking about, but I'll try to explain, because it can really help.

When you have a bunch of debts and expenses you need to prioritise them one way or another. You might owe some suppliers from your business money, or the dentist might not have been paid for that emergency treatment when you were dead broke... If you're like me, you might have been lucky enough to talk them into helping you out and letting you pay it off in stages, even if those stages are $20 per fortnight! You may also have to think about ongoing expenses, like maintenance on your house.

Of course, the rules of Karma say you need to keep your word, and even if you don't believe in Karma, your wonderful, clever, gentle dentist probably won't treat you (or trust you) again until you have paid off the original debt. And if you're lucky enough to have a dentist like that, you don't want to annoy him!

But there are also other important things, like maintaining your house. I don't mean spending a ton of money on renovating it or doing it up (although oddly enough, this may help, if you see my post on "A Better Value Proposition" - it's all part of a great big juggling act when you are struggling to make ends meet!). I mean that there's not much point in paying all your debts to the detriment of replacing things like gutters on your house, if the house is going to fall down around your ears and make the whole situation even worse!

So how do you deal with debts and expenses in so many different areas?

You can't simply create a linear list of debts to pay off in order... that won't work very well (it'll work a bit, but not effectively enough!). You've got things vying for your attention in several different areas at the same time.

The best thing to do in this case (I've found) is to create a group of lists, then pigeonhole them together with the money you can allocate to paying those lists off.

Huh?

Okay, the examples I've given come from particular groups - business debt, personal debt, home maintenance... but you can have more. Three's not unreasonable though. You need to keep a fourth category for those evil Credit Cards because you're paying interest on those, so you'll have to work on those no matter what.

I'm going to digress slightly here because it's relevant: Have you heard of the debt reduction method where you work out how much you owe on all your credit cards, how long it will take to pay each off, and then you allocate the largest amount you can afford to pay off the quickest debt to reduce (balanced with the highest interest rate - you have to choose), then add that total amount to the next one up the list when it's gone and the next and the next until you're paying all your allocated debt reduction money to one credit card/bill and pay it off faster and faster? If you haven't it's very worthwhile to help you create a plan to get out of debt. The people at We Buy Homes have an online version of this.

Okay, imagine the credit card theory applied to all the debts you owe. Naturally you may have to agree a minimum amount per week/fortnight/month to pay the amount down (and you may have to track it yourself too), but the idea is you work out which debts are the smallest/most pressing in each category, and work to pay each one off in turn with extra as the money becomes available.

In cases where you don't have to pay interest on a debt, the best method I've found to reduce your stress level is to knock off the little debts first wherever possible. You'll feel like you're getting somewhere much faster, and that's because you will be. As long as you're keeping your bigger creditors happy some way (even if it's a minimum payment), they're fine until you remove the stress of the twenty (!) people nagging you to pay up every week.

That alone makes for better Karma because you're not thinking about *all* the negative stuff that's happening to you all the time, therefore you're not drawing more negative stuff to you. Ever read The Secret? Perhaps you should. It changed my whole outlook!

But what about the "Pigeonholing" concept? This is what makes it extra useful. You might find you have different income streams coming into your life, or that you can create them.

Say you still had a bit of income coming in from that business (or lots, because it's still running okay, but you're in a bit of hot water...). Make it a rule that your business has to pay for the business's debts. If some of your own debts have somehow got caught up in that, separate them off into another pigeonhole - Personal.

In my case, I had to stop working my business the way I was because I wasn't able to run it all by myself when we had our daughter and my husband started his apprenticeship. This left a shortfall, but the difference came when I got a job three days a week. There was still a bit of money coming into the business, but I wasn't having to rely on it to survive any more. I had the money from my day job for that. If you have to make this choice, it really can be worth it, even though it's difficult to let go.

That meant that money from the day job covered food, roof over head, essentials like power, water, phone and internet (you can't leave that out if you're running a business from home in your spare time!), and a bit to handle the credit cards and personal expenses (Credit cards come first - always).

The business could now cover itself. In fact, the rule was, it had to. This can be another good thing - it stops you from getting lazy and forgetting about your business altogether. You have to think of ways to keep the money coming in somehow, and that can lead to more creativity (as long as it's legal!), and if you want to come back to it, that's an important thing.

I believe you can come out of a period of having to juggle a day job while rebuilding a business much stronger, because you learn to pare down to just the stuff that works and brings in the dosh.

But what to do about the personal expenses not covered by your day job? Or maintaining the house? Here's where you have to get creative. My goal is to have money to invest, so I want to get rid of debt fast and build savings.

Have a garage sale, use eBay, the Trading Post, take up selling Tupperware. Whatever it takes. Pigeonhole that money to cover whatever you need it to cover. It can take some slightly odd logic...

The Karma side of this bit comes in again when you choose where to put the money from the things you sell. In the garage sale, there were things that had been left to me by my grandma or given to me by my parents. They weren't hugely valuable or sentimental things, but there was a sense of what the "right" thing was to do with the money from them. I chose to put what I made from things like this towards maintenance on the house, or getting a piece of furniture that we really needed (like baby safety gates).

This made the money from things I had been given, and had at least a little care for, transform into something that was tangible that we would enjoy for years to come. It improved our standard of living just a little bit, even though it wasn't a lot of money, and it made us even more grateful for the things we had been given in the past, even if they weren't useful any more. We might not have had room to store them in our much smaller house, but they still had a contribution to it.

That can be a rule too (or make your own, whatever works for you) - that things given should not be used to be swallowed by the bank and their interest rates. They don't make much difference there in a real sense. It made us both feel better about letting them go, and got things done with less guilt about the money not going to the bank.

I know Grandma or Mum and Dad wouldn't have been happy to hear I sold the old kitchen table to pay off a credit card. So I wouldn't have been happy putting it there! Instead, the old kitchen table paid for part of our new kitchen (and if you'd seen the old one, which literally fell apart under us, you'd know why we had to prioritise replacing it at the same time as paying off debts!). We can think of those things every time we look at our kitchen, the new fence (that fell down too...), our new gutters - the gifts we were given continue to contribute to our future. They even add value to our house!

Other things in the garage sale? Costume stock from our business, fabrics, personal costumes, science fiction collections, baby items. We pigeonholed everything in that one day sale and in later auctions on eBay and sales rooms. Keep a note book of the items sold and the amount, putting them on the page that matches the appropriate "pigeonhole", then add it all up and divide the total at the end of the day by page.

Things Mum and Dad wanted sold ("You're having a garage sale? Great! Take this for us, would you?") - they got their money. The stock - paid business debts (not only that, it made a great excuse to advertise our garage sale to our past customers, who bought more than just stock!). Baby gear - bought baby bigger clothes and some books or educational toys more suited to her age at a time when we couldn't find it in our weekly budget.

Personal costumes were considered an investment in myself in the first place (since they were my showcase of my professional work, even though they didn't fit me any more) - so they paid for a course I needed to study to change jobs and improve my pay... That's something I might have deliberated for months over if I hadn't decided that money from a self-investment really should be rolled over into another investment in my education! It actually might have taken me longer to get that raise if I hadn't done it.

Science fiction collections were a mixed bag. The end decision with those was to use the money to finance the home improvements. Thinking about it, I probably could have spent the money better in the first place (but didn't really think about that when I was twelve or even 18 and silly...), but I got enjoyment out of them for a long time, so now was the time to get serious!

So, you see, Karmic Pigeonholing your money really can be a faster way to getting everything done faster, and more guilt-free. If you set down the rules, it makes it so much easier to decide.

It's about using the right money in the right place!

On Raises and the Art of Negotiation

2008-08-15T22:02:00.000+10:00

"No hide, no Christmas present" as my Granddad used to say, meaning that if you don't have the guts to ask, you simply won't get...

Believe it or not, this applies as much to asking for more money as it does to asking friends for a favour, or family for that much-desired gift.

Your boss is not a mindreader.

I'm not suggesting you march into your head-honcho's office first thing on Monday morning and ask for a raise!

What I am pointing out is that there are ways by which you can ask your boss for a raise without him feeling as though you're costing him more money. And if you approach it the right way, you might even do better.

Remember: I'm a mum. I've gone through the stress of not having any independent income during that time after our little one arrived, and I've gone through it while my husband was in the first stages of retraining - as an apprentice, which in any language means very low pay in the first year.

So I had to go back to work.

Casual seemed the most appropriate way to go until I realised that not only had my hours become quite regular and were actually 3 days per week, but that I'd also not really have enough to pay the bills during the two-week Christmas break my boss imposes every year...

Now, not everyone is as lucky as I am to have a boss like I do. I know this. But you shouldn't be too afraid to approach him or her with a proposal that won't do any harm.

In my case, I needed to go Permanent Part Time so that I could have some leave for holidays and for when I, or anyone in my family who needs me there, gets sick on occasion. The catch was that the resulting drop in pay (because you get more as a casual employee, supposedly to cover things like leave) meant I couldn't afford the childcare I needed to be able to come in to work!

Slightly tricky situation!

First I sent an the boss an email explaining that this problem had finally arisen (we'd discussed the possibility of it happening when I started, because he knows I have a young daughter), and that I was trying to work something out if that was alright by him.

Over the course of the following week, I did my research.

I checked government web sites about the NSW Award Wages (that's the minimums to be paid to any employee at their level).
I checked the definitions of employee levels for my field.
I looked at what I was doing in each of those levels and, much more importantly, I checked what I could be doing to assist my boss better by doing more in my job to help out.

Then I presented my boss with a brief but detailed analysis of the problem. I pointed out that the best way to go was still to go part time, but that it would leave me short. I then presented links to the relevant web pages (on the Award levels) and asked what he thought about their contents, pointed out that I could be doing more, and asked a three questions (expecting that I might only get a positive answer to one!).

Failing an actual raise, would you be willing to leave me at the pay rate I am (instead of dropping me to the Part Time Rate from the higher, Casual, rate?
What would you expect of me if you were to agree to this? Could I take on some marketing work (for example) to bring in more money?
Would you consider taking me on for an extra day per week to get the extra stuff done if it means you actually see money coming in as a result of the extra work you expect of me?

Funnily enough I got a positive response to the first two, which was a major triumph, with a "no" for the final question, but outright confirmation that my hours would get better if I started to show results.

See? If you're willing to go the extra mile, it can make a difference.

Be as frank as you feel able. Think hard about what talents you have to offer, and GO FOR IT!

Dry July, Pointless Habits, and Finding Your Dream Money

2008-07-29T21:53:00.003+10:00

Okay, let's get serious. Saving shouldn't always be about sacrifice, but do you have some vice that's costing you a ton of money?

Chances are, you have a habit that's, well, just a habit. Nothing you particularly glean enjoyment from. Just something you do because you do...

Today marks the end of Dry July. It's a movement started in Australia to raise money for the Prince of Wales Hospital Foundation, and is proudly supported by Adam Spencer of ABC Radio's 702AM, who's raised $19,251 for the charity.

But it's some of the conversations he's had about it on his radio show that have intrigued me. His listeners are competing to raise the most money, but they're also discovering the amount they're saving by staying off the booze!

These people are also realising how often they drink purely from habit. It's not something they set out to enjoy, but when they look at their social calendars, they realise how many of their upcoming events they would normally expect to be getting a little sloshed at, and they're marvelling at the thought of still going to them and staying sober!

"Alright, alright," you say "Stop evangelising already! You think we should all stop drinking and save the money instead."

Well, no.

Not really.

It's just a metaphor for the habits we've most of us get into. Buying something just out of habit isn't fulfilling unless you know you get tremendous enjoyment out of it. I have a friend who has a ritual meal every couple of weeks - she goes and buys herself a couple of crabs and settles in for a night enjoying her seafood. She feels much better for it, and it's a simple pleasure that makes her fortnight.

There are other more destructive habits which really can remove a vast quality of life from their habituants, and they don't even realise this until they give up. If they give up.

I suppose you think I'm going to get on my bandwagon here and bang on about how smoking is a filthy, smelly habit that will most likely kill you, and can harm those around you as well. Well, I'm going to pick smoking as my example of a habit, mostly nervous, yes. And I'll happily state all of the above as a firm belief and add that it's just as inconsiderate to kill those around you who are passively smoking your pollution. I don't want to hear you post nastiness here. I have a best friend whose life has been drastically shortened by his father smoking around him until he was ten years old. He has emphysema, and he's never smoked anything in his life.

But getting down from my bandwagon, I also know that a great many smokers would rather quit if they could, and have tried quite a few times to do so. You actually have my sympathy in that sense. I'm mainly using this as a great example of a quality of life being improved by the money that giving up such a habit can save. Maybe I can help:

Take some friends of ours: Habitual pack-a-day smokers, they were on welfare because one had an autoimmune disorder and the other was injured in a workplace accident. They also had four children, so it's not like there was a lot to go around. One day they decided they wanted to go to a big event, and they needed to save up for it, so they quit smoking. Suddenly they didn't know themselves - they could *do* things again - go out to movies, make things, learn new crafts. It gave them a whole new lease on life, and they wondered why they'd ever allowed themselves to go so long wasting their money on a meaningless habit. They're now some of the most vehement anti-smokers you'll meet!

Another friend allowed her local gym to keep taking money out of her account every month for over a year because she thought she'd get around to going in "one day", and it seemed too much effort to give them a call and cancel her subscription. Over $1000 later, she finally picked up the phone for a five minute, 20c call to cancel, and she's never looked back.

Do you have a habit you don't know why you're continuing? If you have a need to save money, take a look at all your weekly, monthly, and annual expenses, and work out which ones aren't really giving you very much value or enjoyment any more (and remember that enjoyment also means value quite a lot of the time!). Then work out how much you could save for something you really want and value from not simply spending that money out of habit.

It could be:

Alcohol

Newspapers (do you need the depressing news?)

Gym Subscriptions you don't use

Send me suggestions for this list!

If it's smoking (or even something similar), every time you think of having a cigarette, put the money for a pack in a tin... at the end of a month, shock yourself at how much you've saved, and reward yourself with a really nice treat. Then get down to putting that money away for that special something you've always dreamed of!

Best of luck finding your dream money!

The Power of the $2 Jar

2008-07-29T21:08:00.002+10:00

Call it the $2 Jar, the Piggy Bank for the shrapnel you have lying around in your pocket or purse, The Swear Box or the mattress stuffed full of cash... It might sound basic, but there's saving power in a jar in the cupboard for $2 coins.

It's also something that's saved a few budgets! I was minded of it this morning when, having spent our all our very tight budget for the fortnight, my little daughter woke up with a major case of conjunctivitis. I was at my parents' house so Mum could babysit for the day, and, quite aside from Cara's comfort, which was pretty low at that point, I needed her eyes to be better in time for daycare on Thursday so we could get by for another two weeks.

Never fear: Out came the tin from the back of the larder. The spot where Mum chucks all her excess coins when her purse gets too heavy. I've lost count of the number of times it's saved the day! I was able to dash out to the chemist, get the necessary bits, and get on to work without too much disruption to my day.

Driving in to work, I remembered the story of a man who went from living on the streets to owning a multinational company with the simple decision one day that he would save every $2 coin he got in a jar and put it into starting his own business. It truly was an inspiring story of how one simple change rippled out and changed a man's life completely. He wrote a book about it, but I can't seem to find it for sale anywhere now. (Does anyone know where to get it?)

I think the point of this story is, there are always little things you can do which, over time, can change a great deal. It doesn't really matter what you keep that jar or money box for, making the decision to put all your 5c pieces in it, or all or some of any denomination of coin, you can actually save a surprising amount - for Christmas gifts, an education fund, emergencies or for starting your own business.

I started a business once on nothing more than the $300 I'd put together with $2 coins in a money box, and my collection of hobby tools I'd gathered through my University years. It went on to do alright...

I also remember being horrified, many years ago, when my first boyfriend, who'd spent around five years collecting all his 5c pieces in an ice cream tub, decided he couldn't be bothered counting them or even taking them to the bank for counting by machine. He tossed the lot (which sort of describes the guy, really... ahh the benefit of 20/20 hindsight...) into the bin! I nearly had a heart attack. Just looking at the volume of the tub, there must've been between $50-$100 in there. Just dumped in a savings account, that could have earned some decent compound interest! Oh well. Some people have more money than sense...

Make a decision today: to start putting something away in a jar for a rainy day. Have a goal. What is it for? When can you open the jar to use it? Christmas? Birthdays?

It doesn't matter if they're the smallest denomination coins your country has. It will still make a difference.

A Better Value Proposition

2008-07-26T12:22:00.009+10:00

Y'know, some might say I have some really weird ideas about money...

Thing is, they're ideas that are ever-evolving, and they're ones that work for me. Maybe they'll work for you too. I can't tell. You'll have to decide for yourself and realise that these are *ideas* not advice, and therefore, DON'T SUE ME!

Here's a thing though: I had a conversation with a friend today, and it got me thinking about a few things, including a web site I was reading yesterday. It talked about a saving concept called "Value Proposition". It's when you make a decision to save or spend based on whether it's a better "Value Proposition" to do the one or the other.

Here's a personal example from our discussion this morning:

We have debts from our business, and we also recently bought a house.

I've figured out that the best thing for us to do will be to consolidate those debts onto our mortgage. Logical and normal enough thing to do, you might say, but this has a bit of a twist: the bank just told us our house needs to be worth around $10,000 more than its current valuation for us to cover the consolidation.

What to do? Well, I have around $1000 left over from a design job I've been doing, and I've been wondering what to do with it.

My first thought was to save it. In my high-interest online saver account, it'll make me around $8 per month... The other part of that plan was to use it to cover the instalments on a course I'm doing in money management and investing. Even at $200 per month (and with me trying to save the same out of my pay to reduce how fast and how much I withdraw, but having that $1000 there as a backup for when I need to use my pay to cover, say, the car being serviced one month), I'd still be getting something for my money...

Then the problem of the consolidation came up. Crap. What do I do?

Well, if you saw the pic of our house above, you'd understand that it's not very impressive from the outside. We've done a heap to the inside, and that's already added value, but it's not enough... soooo....

I did some calculations, and figured that if I spend my $1000 on jazzing up the outside of our house, it should give us enough boost to add $10,000 to its value. The whole 10% rule thing (which I'll talk about somewhere else later). For that, and with a bit of work, we could fix the garden up, probably the fence too and, surprisingly, afford to repaint our exterior in a colour scheme other than "boring". That will definitely boost the value!

"But why don't you just throw the $1000 at your debt and reduce that straight away?" asked my friend. "You'd save yourself a whole lot of extra work at the weekends" she added, pointing out that the project I've just worked on to make the money has already left me with a sore back and a bad cold. "You'd do better to take on some extra work at home," (since we have a baby and I can't get enough day care to go work full time) "...and use that to pay down your debts", she added.

I thought about this, and argued a big point:

The money I throw at my debts doesn't cover the bit that's actually about to cause a real problem. Not only that, consolidating the loans will actually save us something like $19000 in interest, and I'd rather not have to pay out extra money I don't need to. Thinking back to that web site and it's article, the best way to describe the idea of simply paying off the debt with the money was that it was a Bad Value Proposition.

When I got home and had a bit of a ponder over the washing up, I thought about what my friend said. Perhaps she could be right and I was missing something?

But on further examination, the proposition of putting all the money I earn from extra work onto the debts looks like and even worse proposition to me. With a little one who needs her Mum around some of the time, I need to work smarter, not harder, for my money!

I'd have to work another three days a week (that's six days total, folks) to even make an inroad into that debt. Of course there are other factors affecting that figure, but they're not important here.

Why not spend the money and a couple of weekends working, even with a cold, to get the benefit that will allow us to pay it all down a lot faster (this assuming that we continue to pay the same amount off per month as we are now, before we consolidate)? That's a Better Value Proposition (BVP)...

Plus, if you think about it, it's making the money work much harder for us if it's spent on improving our house, than if it goes to feed a money-hungry bank. How? Here it is in point form:

We already know it will probably add enough value to our house to allow us to consolidate our debts.

Remember the debt is already there, and it's going to cost us $19K in interest (money that's doing nothing but pay the bank for the "privilege" of borrowing about half that amount of money) at the rate we're going. So really, by spending $1000, we're gaining $19,000. Sound like a BVP now?

Because the debt is already there, were still gaining another $10,000 value on our house, because we're only moving the debt, not spending more. That's $29,000 of actual gain.

"But," you say, "you're adding to your mortgage...". Yes, that's right. But we're also going to continue to pay the same amount we were paying every month onto the mortgage as we were onto the credit cards. Given that we're saving $250 per month off actual interest repayments, we're actually paying that in as extra repayments. I went to one of the best mortgage calculators out there and added that in as a split fortnightly repayment of $125 over the life of the loan. It saved us a gobsmacking $150,400 in interest, and shortened the life of the mortgage by 9 years, 8 months.

So add that to the $29,000 we've already gained, and we're actually saving $179,400 over the life of our mortgage. I couldn't believe it!

Another interesting point is that if I'd gone the suggested route and put the money on the debts, I still would have had to find the money to fix up the house later on. Honestly, while the place isn't falling down around our ears, it still needs upkeep, and it's ready for paint, the garden fix, new gutters etc... I'd still have to find another $1000 to pay for the work I plan to do on the garden, and then the rest. This way, I'm getting my garden fixed and saving $179,400, just for spending $1000. Actually, I'm also saving that extra $1000 I'd have to have found, so make that $180,400!

Putting the credit cards into the home loan also frees up extra money we make later to either a) pay down the home loan even faster (saving incalculable amounts of money) or b) add value to the house by improving it or c) both!

And it mustn't be forgotten that a value proposition can also have an emotional and practical reason for being better value than simply paying one thing off. As if the argument wasn't good enough already, I get fivefold benefits personally:

I get to stop coming home to the truly depressing sight that is the front of my very practical and downright ugly/boring house... instead coming home to a view from my driveway that I can enjoy!
I get to spend a little more time exercising and out in the fresh air than I used to - both while working on the job of fixing the view, and maintaining the garden later.
I feel more inclined to spend leisure time outside because it's more inviting and...
It's safer, once the job is done, for our little daughter to be outside and playing in the garden, because part of the process is removing some dangerous plants and nasty-for-baby-to-play-with debris!
I get to spend more time with my daughter because I don't have to work nearly as hard to cover the repayments in the long term.

So, if I haven't managed to illustrate the sense of spending money instead of "saving" it (under certain circumstances), I don't know what will do it!

Remember to think carefully before you save or spend your money - you might find that the spend is a much Better Value Proposition than you thought!