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Archive for July, 2015

The Birthday Present Dilemma

July 31st, 2015 at 11:57 am

I recently posted about cutting down my working hours to 3 days as a teacher. The rubber has really hit the road now and we need to make some tough calls in relation to our budgets.
One massive cost that appears on the budget is presents. I worked out that just in my family alone there are 39 birthdays, mother’s day, father’s day and Christmas presents to be bought. Our family figured out that roughly $40-$50 per gift seemed about right.
Add to this friend’s birthdays, engagements, weddings, christenings, sympathy gifts, thank you gifts and $2,500 to $3,000 seems like a reasonable annual estimate. This is no longer sustainable for us as a family nor is it an effective use of our money.
Does this conversation ever happen to you?
You: “Hey. I realise your birthday is coming up and I’d like to get you something. What would you like?”
Them: “Umm… I’m not sure.”
You: “A shirt, DVD, book, CD, shorts?”
Them: “Hmmm. How about cash or a gift card at XYZ store?”
You: “Okay.” [Sigh]
Cash and gift cards, while useful just seem incredibly impersonal and our finances cannot sustain that amount per present anymore. It also doesn’t allow to use wisdom and research in your gift giving. I love buying an expensive gift on sale and wowing the person with something that might actually be useful to them.
First step I’m thinking will be to lower the amount spent per gift. I’m happy to eat humble pie and say “We have allocated most of our income towards investments. We have cut down our hours to spend more time with our family and we love you, but, we may need to be more creative with our gift giving.”
I think we will next think about giving gifts that build the relationship and affirm the person. The amount of times I’ve scratched something meaningless on a card and whacked $50 in the envelope is innumerable.
Perhaps a better gift and a more affordable one would be something that we have invested time into creating. Pinterest here I come! Another potential idea will be to invite the person to dinner, or take them out somewhere special. Quality time instead of dollars.
If you have any ideas for what you do, I’d love to hear them.

Four Kids Freak Out!

July 29th, 2015 at 01:28 pm

Hayley and I have one month till the birth of our beautiful baby girl and I have recently resigned from one of my work places, thereby kissing farewell to 2 days salary. The craziness continues.
In the past 6 months we have purchased an investment property of around $400,000 and placed an additional $140,000 in a managed investment. We have almost paid off our home but used the equity in our home to finance the loans.
The rental property we purchased came with a delightful tenant (since evicted) who enjoyed avoiding rent payments, boxing holes in doors and taking various illegal substances. In the past month and budgeting ahead into next month, the property has required around $11,000 in repairs and upkeep to make it tenable again.
It gets better, the 3 days of employment that I do have is as a teacher, which is not renowned as being one of the highest earning jobs.
Why in God’s great earth did we decide as a family to drop down to 3 days a week? I’ll give you a few reasons:
1. To spend more family time together. I’d rather live frugally and have time with my kids during these formative years.
2. It gives me a chance to put my money where my mouth is and see if I can save and invest successfully enough to subsist, or better yet, thrive!
3. We have saved and saved for years and know we can do it! Years of budgets proves it even if the knees are a little wobbly.
I realise this might seem silly to some. As I said, we have saved for years though and would have a debt to equity ratio of approximately 1.5.
I have elected to reinvest the returns from the managed fund which is nearly $11,000 in net profits since the beginning of the year.
My wife also earn $8,000 as an editor and we have no personal loans, credit card debt or car loans.
In addition to this we are paying principal and interest off of our remaining home loan and envisage paying off an additional $10,000. We’ll see in a year’s time if this is achievable.
I do have a fall back, I can get contract work as an emergency teacher if the situation becomes dire.
Please if you are going to comment I’d appreciate keeping it positive and I’d love hear any well wishes. I’ll certainly be reading SavingAdvice.com a lot more carefully.

Einstein, Tony Robbins and Compound Interest

July 23rd, 2015 at 11:30 am

Albert Einstein wrote that “Compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t, pays it!”
This post is all about a reference to a book written by Tony Robbins entitled Money: Master The Game. Now I’m going to start this post with an admission- I have not read this book!
I am an avid reader (or should it be listener) ever since I discovered the Audible collection of audiobooks. Previously, I would average 4 or 5 books a year. Now it is 3-4 books per month.
I am passionate about savings and investments, and generally read specifically around these topics. One book that came across my radar recently was this one by Tony Robbins. It sounded quite different from his other material and right in my field of interest. Unfortunately, there is no audio version yet on Audible. Being money conscious I am reluctant to ever pay more than $15 per book. Unfortunately it tipped the scales at $25 US dollars, which I hesitate to calculate in Aussie dollars at the moment.
Long story short, I found the PDF book supplement free on Audible oddly enough considering I can’t even find the book there.
The link is http://download.audible.com/product_related_docs/BK_SANS_006899.pdf if you would like to read the supplement.
Let me cut to the chase. There is a lot of fascinating diagrams and tables about funds, 401K contribution limits, average household expenditure and other stuff which didn’t make sense as I didn’t have the book.
Of the greatest interest to me, and possibly to you is the power of continuous saving and the effects of compounding mentioned on page 15.
The very top row stated that if you saved $5 per day, over 50 years and earned 10% per annum compound interest, you would have saved… [drumroll please]… $2,598,659 dollars!
I find that amazing! What a great lesson to teach our children.
As a personal reflection, this has made me value each day’s savings and to keep saving consistently. While I don’t want to forsake every enjoyment today for when I’m 80, I can forgo the daily latté to be financially free.
I’m really looking forward to reading/hearing the book. Hurry up Audible!

What's Your Net Worth?

July 22nd, 2015 at 12:57 pm

What Is Your Net Worth?


Money in, money out, a transfer here, automatic debit there. Sometimes we almost need a full time accountant just to keep track on all the comings and the goings of our hard earned dollars. The more accounts and investments you have, the easier it can be for money to float around in the ether. You know you work hard, you haven’t bought a Harley in the past month so you must be getting further ahead right?

Sometimes we can all feel lost in a crowd when it comes to our finances. It is no good guessing that you are on track. One thing I can wholeheartedly encourage everyone to do, if you haven’t already done so is to KNOW YOUR NET WORTH. It is imperative to your financial growth!

It is very hard to aim at something without having measured increments to gauge your progress. Imagine asking your basketball coach about who won the game and getting a response like “You got some in. They got some in. I think you won?”

There is a fabulous saying: What gets measured, gets managed. You know those charity telethons with those humongous goals to raise $10 million for the hospital upgrade? There is always a scale that denotes the amount donated. Why? Because psychologically we are instantly excited and motivated when we see dollar figures ticking over and momentum being gained.

Your savings journey is no different. Know as accurately as possible your net worth. Write it down, monitor it and manage your financial growth. If you drop behind in a month, note down why and take steps to mitigate any future losses.

The calculation of net worth is super simple:
Assets minus Liabilities (Money owing and taxes) = Net Worth

Calculate the values of your assets as a best estimate. Personally, I don’t tend to calculate motor vehicles as they sink like a stone in value over the years (unless it is a historical vehicle).
The way to work out the value of your home and investments is to spend 30 minutes scanning sold properties on the internet. Compare apples with apples. Stocks are easily by checking on the internet too.

You may even find it helpful to calculate 3 prices:
- An ‘I wish’ price
- A ‘Sounds About Right’ price, and a
- ‘No Way’ price.

From that point I would always choose the middle price. The process above might look unnecessary as you could just start with a ‘Sounds Right’ price. The challenge is that we aren’t always quite so objective when it comes to the appraisal of our beloved family home.

Now that you have a plausible valuation, take away any loans and debts. To be even more accurate I like to calculate the tax owing on any potential profits made.

The next step is to write your net worth down on a piece of paper that you won’t lose, a document or a spreadsheet. I use a spreadsheet because I calculate my debts again at end of each month with a fine tooth comb.

Watch your net worth carefully and celebrate each saving milestone that you make. Maybe you can plan a little celebration with your family each time you save an additional thousand. Associate pleasure with saving and you will be guaranteed to form good habits for your financial future.

Return Of The Scooter!

July 19th, 2015 at 11:47 am

I have now owned multiple two and even three wheeled forms of transportation. In a budgetary sense they have been brought about a huge saving for me when I rode them exclusively for three consecutive years. 3-4 litres per 100 kilometres travelled. Around $382 for registration (still expensive). And with self-servicing, around $4 in oil to complete a home-job oil change. What’s not to love? When I sold them, I would also estimate that I lost no more than 10% for a year of use. What fabulously slow depreciation!

My latest set of wheels is a Yamaha BeeWee YW100 that I bought with 5,000 kays on the clock for $725. I’ve got to get it fixed, resprayed and registered. All up I envisage around $950 to get it on the road and looking nice.

In the same week I received the registration for my old faithful Rav 4 with over 320,000 kilometres. I would estimate it would now be worth around $500 yet the registration is a ridiculously high $718! I am again pondering returning to a two wheeled commuter as the costs of servicing for a car, the registration and the insurance can be outrageous for such an old, but faithful clunker.

My passion for scooters came about after a trip to Japan and Europe. Those things are everywhere with people easily zipping around.

The location I currently live in is highly conducive to scooter commutes. A gentle 19 kilometre ride through the Yarra Valley has never once brought about anything close to a near miss. Would I ride in the suburbs or city? Probably not. The odds are not really in my favour.
Just comparing the two in a rough tally:

Scooter Car
Value $950 $500
Annual Servicing $4 $345
Registration $382 $718
Insurance $295(Comp.) $266(3rd Party)
Petrol (5k km) $210 approx. $700 approx.
Total Expenses $1841 $2529

$688 is an okay saving to having a scooter. But as you can see there is a large an advantage to having a cheap vehicle with such low annual outgoings and zero depreciation (it’s at an all time low). This year, however, I do have a few upkeeps on the horizon to keep the Rav 4 roadworthy such as tyres, a new headlight and the windscreen. These would easily add another $950 to the cost of the car.

There are advantages to having a car but I tend to travel to work alone, and out and about in the family car. I do love commuting by scooter. At the moment, the minus 3 degree morning requires quality motorcycle apparel to stop from freezing up.

The savings are minimal but still worth it given the table above. Where a scooter really comes into its own is when you have a high value vehicle that is rapidly depreciating.

Owning a newish vehicle haemorrhages money each year. Read the Drive article below for more information.

http://www.drive.com.au/motor-news/biggest-losers-20110506-1ean8.html

Lesson Learned From The Chinese Bamboo Tree

July 16th, 2015 at 12:18 pm

Have you ever heard about the amazing Chinese bamboo tree? If not, keep reading. There’s a lot we can learn from this plant in relation to budgeting and investing.

The Chinese bamboo tree is impressive! Over 90 feet of towering greenery above you. But do you know what it takes to make it grow?

In your first year of growing a Chinese bamboo tree you plant it, lovingly water it, fertilise it, carefully remove the weeds surrounding it, and… nothing happens. Year two the same process and… again, not so much as a tiny bit of green bursting through the ground. Year three and four is frustratingly more of the same. At this point, most would think something had gone wrong and would probably be tempted to plant something else in its place.

But in year five something incredible happens. Green life begins to burst through the soil. Not gradually either, but at an astonishing rate, 90 feet in just five weeks! Isn’t that amazing? You could practically pull out a deck chair and witness a transformation before your eyes.

5 financial lessons from the Chinese bamboo tree:

#1- Plant a Chinese bamboo tree. This is sometimes easier said than done but you need to ‘plant a tree’ (or invest) in something that will produce great growth. It might be a savings goal, prospective business, property or other form of investment. Write a plan about what your 90 foot tree will look like, plan what it needs to help it grow and what daily contributions you need to make to ensure its success.

#2- Consistency is the key. Set a goal and pursue it relentlessly. Keep ‘watering’ by saving and investing with that goal at the forefront of your mind. Before you go to bed each night plan one step that you will take to get you closer to achieving that goal.

#3- Have faith that your ‘tree’ will grow. You might be saving, saving, saving while your friends are borrowing and buying, living the high life. Don’t get frustrated! Bad debt is just that. Save and invest towards good assets that will earn income for you. The goal is not to pull the seed out of the ground now, but rather to allow it to grow. If you are doubtful that your investment/savings ‘tree’ will grow, seek the counsel of financial advisor of some sort. You should feel confident in the seed you’ve planted.

#4- Plant other trees. One tree is great but you could help others more in the world by having other trees planted. Once you know how to plant one, plant another or teach someone else.

#5- Enjoy the planting process. Savings and investment is not meant to be like sucking on a lemon most of your life so you can eat cake in your final years. What kind of a life is that? Enjoy the process along the way. When you save more than you spend, you feel liberated. When you invest in something that grows while you sleep, you feel empowered. And when you can help others along the way, you feel purposeful, proud and free!

The Challenge Of Digital Currency

July 16th, 2015 at 02:39 am

We live in a digital age. Numbers are constantly changing in our accounts. Up, down. Fifty-three cents credit, ten dollars out, a thousand dollars gone in the blink of an eye.

Think back to when you were younger. Remember that collection of coins you used to have in your piggy bank? How did you spend your money? What kind of considerations did you have to go through to manage your money? Were you a saver or did you blow your money straight away? Either way, those coins and notes meant a lot to you and you knew they were in a finite supply.

It is so incredibly easy to simply tap your card, swipe it in a machine, or use your phones or computers to move large sums of money around in an instant. The problem with this is that we become disassociated with the value of money. Think about buying a $1200 laptop. Which is easier- handing over a card or handing over cash?

Here’s 3 money saving tips that will make your dollars go further!

#1 Pay in cash.

Yes, I realise that cards allow you to get points, interest free terms for 30 days, maybe special shopping credits. Don’t be deluded into thinking that these are a gratuity. Banks know you spend more when you use your card and the massive interest rates on credit cards outweigh any benefits.

#2 Put aside an allocated weekly amount at the start of each week.

Having the weekly budget in cash ensures that you don’t put on hold your savings goals. Put it in a safe place away from kleptomaniacs.

#3 Keep an weekly ledger.

A weekly ledger is a recording of all the ins and outs of your financial transactions. Write down each and everything you spend. Some might be big items like vehicle registrations, insurance items etcetera that should be factored into your annual budget. The weekly spends like a $5 coffee, take away pizza, groceries and so on should be recorded on your budget. If you do need to pay for a bill or move money online, make sure you record it on your budget and take the money out of your weekly cash.

Remember- the reason you are saving money is for the purposes of investing in your financial future. A dollar invested can have a massive compounding effect.

The Times They Are A Changin'

July 15th, 2015 at 03:29 am

Today I was reflecting on the famous Bob Dylan song ‘The times they are a changin’ when I was asked to make numerous changes to a new rental property that we have acquired. The building was built in the 1970s and hasn’t been renovated since.

Old tiling that has stood the test of time, solid double brick walls, plasterboard that was more than 10 millimetres thick. Things seem to be made to last, until now that is, where I am requested to modernise the appearance and update the fittings.

One of the alterations that the property manager has advised I change is the hot water unit. It is a 50 litre unit which the plumber estimates will only disperse enough hot water to last a person five minutes. Oddly enough this is an apartment that has been built to house 3 and possibly 4 people. My question is how have the occupants spent the past 45 years showering in the past?

The hot water unit at my house contains around 300 litres. I have worked out that it costs around about $12 a week the heat. We often run out of water as the kids like a morning shower and sometimes an evening bath. When we travelled around the world for 4 months we rented out our house for a year. In our absence the tenants requested a high-flow showerhead to replace the frugal water saving feature. Now the unit gushes out water to whoever can twist a tap.

I remember as a child having a 30 cm television with 4 channels. Now my own children watch a 60 inch unit and have access to 20 or more. I fondly recall our once a year family outing to an All-You-Can-Eat restaurant where each family member felt nauseous because we consumed so much. Maybe you can remember waiting for almost a year or more for a movie to arrive from on video tape?

It amazes me that most family units only 3 or 4 decades ago were content to live in 10 square homes. Nowadays people in Australia and other Western nations aspire to have homes of 25 squares or more. There is no way we would put up with a 50 litre hot water unit in such an establishment. We can no longer stand freeze-dried coffee anymore and need expensive machines to disperse water through freshly roasted beans.

Where am I going with this post you might ask? The title was ‘The times they are a changin’. The above reflections might not be representative of you whatsoever, so please don’t take offence. I think, however, you would agree that you know plenty of people in society where this post paints an accurate portrayal. Possibly it shows the root cause for the bad debt that many have incurred? When I moved into a new home with Hayley as a couple of young twenties, we turned down numerous offers of furniture and white goods as it wouldn’t look modern enough for our tastes. Out came the credit card and in came the lesson it taught us about debt.

Indeed that little hot water unit inspired a lot of thought about how much has changed. We seem to have so much compared to previous generations yet still desire more. We seem to have an insatiable appetite for the latest and the greatest. While we definitely have a higher comparative standard of living, I believe we need to celebrate what we have. There is nothing wrong with investments or acquiring assets, but we all need to remember to show gratitude for the blessings that each of us have.

The Saving Power Of 3 Quotes

July 15th, 2015 at 01:26 am

This post is not rocket science and it is not revolutionary in the slightest. It is something we all know we should do, but don't. It has the potential to save us thousands throughout our lifetime but we often cannot be bothered.
It is the power of getting 3 quotes.

By getting 3 quotes for insurance, phone, internet, utilities and services you know you are paying the best amount. You have the ability to save yourselves hundreds and possibly thousands each year.

I would encourage everyone to do this annually as I regularly find that bills tend to go up each year because of inflation, higher overheads [insert other improbable excuse].

Recently I reevaluated my electricity provider against other companies. I did this only a year ago. I was able to save $272 just by checking the rates against an old bill.

$272 is not chump change either and it has a cumulative effect when you get fresh quotes for your health, car and home insurance. You should also check your gas and phone bills.

Keep a record of what you were paying prior and then record how much you've saved. I believe even the most stringent saver could save at least an additional half a grand just by putting in an hour worth of effort each year.

Let us know how much you were able to save in the comments section or if you have other great ways to easily recheck an old quote.

Save Fuel- Ride A Scooter!

July 14th, 2015 at 02:04 am

One of the biggest expenses that most people tend to complain about is the fluctuation of fuel prices. There is a perception that petrol prices have a larger impact on us than they do. Yes, it costs money to keep the car running. Yes, transportation of food and resources cost more.

According to the government Money Smart resource, the average adult single spends $20 on fuel and utilities yet $24 a week on alcohol.

Having said that, you can really carve up the weekly expenses by getting rid of the car and riding a scooter. Registration is substantially cheaper as is insurance. I was a scooter commuter for around 3 years. I began my riding career on a cruiser, then a GSXR 750 (not for the faint hearted!) before progressing to a scooter. It began with a trip to Japan and Europe. Scooters are everywhere. Fast, zippy, cheap and easy to park and repair.

When I came back I became enamored by them. I bought an SYM 150VS with only 200 k's on the clock for $2200. I found it safe, fun and... humbling. No bikers would give me the head nod anymore but I was always laughing when it came to the pump. $6 a fill up with an average of around $3 per 100 kilometres. It was an easy service too. Around $4 in oil and a 15 minute job. I had to change the tyre once which was a whopping $60. Dead cheap!

It wasn't long before I sold the sports bike and the car, saved a truckload of cash and began my scooter commutes. It was something I looked forward to each day and a boring commute was suddenly made exciting.

The downside is that you must have safety gear! This is an added cost of around $200 or more. Riders are also up to 35 times more likely to have an accident. It also is not much fun riding along on a minus 2 degree morning or when there is torrential rain. I also need to state that I live in a semi rural town where my commute was along dual carriageway roads. If I were to have an accident, it would have been most likely my fault.

Thankfully, over the 3 years I rode, I did not have a single near miss. I've had friends who were not so lucky however. Ride conservatively is my advice and weigh up the risks.

Another great aspect of purchasing a scooter is that there is next to no depreciation if you buy well. I've only ever lost 10% at the most after owning them for years.

Source: https://www.moneysmart.gov.au/managing-your-money/budgeting/spending/australian-spending-habits

Do You Need A Credit Card?

July 13th, 2015 at 05:51 am

Do you need a credit card?

No. No you don't. Cut the thing up now!

I am an ex-owner of multiple credit cards. To be honest, I don't really remember actively seeking them out. They found me!

As a young twenty something who had gone through a few rough financial patches the idea of a piece of plastic that could 'bail me out' if an unexpected event occurred seemed like a sensible idea. The paperwork was practically non-existent. All I had to do was sign on the dotted line and I had 3 credit cards within the week.

I had envisaged using the card only in situations like I needed an emergency spleen transplant. Plus they had all these amazing points that would save me money. What's not to love? In 3 years if I spent lots on the cards I could have enough points to fly to Sydney.

They also waived the $110 fee x 2 (for my wife and I) and the $88 fee on the other card for the first year.

It got better. They even gave me 55 days interest free. If I was super clever and paid off the credit card at the 54th day, I would be one clever cookie.

The problem was that I did use it. Not a lot at first, but little by little. I also forgot to pay it back by the 54th day. It was hard to remember what product you purchased when too. We were also building and there was a lot of other costs associated. Putting it on the card earned us points. Subtle, subtle poor money management began to creep in.

At the end of two years we had nearly $25,000 on our credit cards at 18% per annum.

We eventually sold the house and moved somewhere more affordable. We cut up the cards and realised the hidden curse in a credit card.

So what do we use now you ask? Debit cards.

Debit cards have the exact same features as credit cards and you can use them exactly the same. There are no points though, but no fees either. No interest expense, but a small interest amount is earned.

The only catch, if you can call it a catch, is that you can only spend what you have earned.

This is budgeting 101. Only spend what you earn. This is the key to improving your savings potential.

I understand that some people could potentially use them to their advantage and capitalise on the incentives, BUT... the banks are banking on you losing out.

The average American owes $15,706 on their credit cards!

Source: https://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/

Cut them up!

Pack Your Own Lunch

July 12th, 2015 at 12:29 pm

How do you spend your lunch hour?

Lining up in a cafeteria queue? Combing the streets for food?

Or are you the type of person who brings your own lunch that you prepared the night before?

In a budgetary sense, the obvious choice should be to take your own lunch to work. In some ways you miss out on the mystery of having a different meal prepared for you each day, but the savings are huge.

I would imagine, for simplicities sake that most people would spend on average around $10 on lunch. If you buy a $2 salad or some other bargain like that then keep going, you are on to something good! Most people, however, would say that $10 might even be a little on the conservative end.

The maths looks like this:

$10 per day x 5 working days in a week x 48 working weeks = $2,400 per year.

Want to hear something crazy? Doing this over a 45 year working life equates to $108,000 of after-tax, hard earned income!

This one simple change could potentially pay off your home loan.

A few important considerations however is that you should still occasionally go out with your peers on occasion. Don’t be a Neville Nofriends (apologies if your name is Neville).

The other factor is to consider though, is that if you were to do this every day, it would lose that special feeling. Things done repetitively can quickly lose their sense of excitement.

One way to physically see the change is to put the money you save each week in a jar. After a month, count it out and bank it. The financial momentum you gain will make the change you made seem worth it.

Affordable Family Holidays

July 11th, 2015 at 11:13 am

You have one opportunity as a parent to raise your children well and to give them a childhood that they love and cherish. Ask a person what they’ve been up to and they will usually identify the work they have been doing, any noteworthy events such as marriages or births and then talk about the places they have travelled to.

Travelling can be an incredibly expensive cost on the family budget.

I know people who save and save and save their entire lives and never travelled. It was a luxury they could not afford. Instead their house was filled with spare coin jars, adorned in 70’s furniture and they wore each t-shirt till each thread finally evaporated. When they retired I observed the wallets suddenly loosen. Their dreams could now finally be realised! Two weeks on a spectacular cruise down the Rhine River and a hefty $20,000 for the privilege. If that was their notion of travel, I can completely understand why it took so long for them to save.

Travel does not need to be like that. You do not need to forsake travel because you have children.

My parents raised me well on a diet of travel. By the time I was 20 I had been to nearly 50 countries. I, in turn, have always been determined to give my kids the same experience. Don’t let budgeting spoil an opportunity to go on a holiday with your kids. Who wants to miss out on those amazing years because of money?

But what kind of travel is reasonable?

When I was a young traveller I used to live on the smell of an oily rag. Eating a can of cold stew, sleeping on benches and walking EVERYWHERE! It gave me a great perspective of how others lived and eroded the fear I had of not having enough. Would I suggest this standard of living for a group of family travellers? No way!

How do you then travel on a budget?

Here are 5 tips that might make your dreams a reality:

#1 Consider a road trip instead of a plane flight

Recently we decided on a road trip instead of a flight. It was an 18 hour drive there and back, but would have cost over $1200 as we booked late. We worked out that it would have been a 1 hour trip to the airport, 3 hours early check in, 2 ½ hour flight, 30 minute check out, 30 minutes to car rental, 1 hour later at hotel. We figured that the cost of the flights, parking, plus the car rental for the sake of 9 ½ hours was not a price we were willing to pay. Instead we drove and had a lot more family time as we stopped along the way.

#2 Focus on the experience

Dollars spent to not necessarily equate to a better experience. Spending $500 on a fancy hotel that you check into at 2pm, then depart from to explore around, sleep in and then vacate at 10am is a sure way to blow your money fast. My wife and I travelled around with our 2 year old daughter for 4 months and had a budget of no more than $100 Aussie dollar per night. Believe me, this was more than enough.

#3 Avoid overpriced attractions

I’ve always found that some of the real big tourist attractions where big money was spent, often left me feeling disappointed. Paying a huge amount as an entrance fee for each member of the family can sometimes be better spent. You won’t be able to brag about saying “Oh yeah, I saw that!” as it pops up on a travel show. Instead you will be able to talk about the experience you had with the people you met and the natural beauty you saw along the way.

#4 Eat where the locals eat

When you visit a hotel, ask the person at the front desk where they would recommend to eat. They will often suggest various fancy restaurants because that is what they think you would want to hear. Ask again and say that you want places where they would eat. This should take you to places that you otherwise might not have found. Places filled with locals, great food and fabulous prices. Much better than some starchy tourist restaurant!

#5 Plan and book early

The earlier you book, the cheaper the prices usually are. Plan your trip well in advance and book things early.

Never skimp on the things that matter most. Family holidays are a something you and your children will treasure forever. They don’t need to break the bank. Spend your travelling money wisely and you will have memories that will last forever.

Negotiating A Cheaper Price With Tradespeople

July 10th, 2015 at 12:41 pm

$8,000! That was what one tradesperson estimated to retile the bathrooms in our extremely modest home. Just to give you an idea of the size that he was working with, it was less than 15 square metres. Understandably he did not receive my business.

My next port of call was to visit a tiling store to explain that I knew what constituted a reasonable price and wanted a tradesperson they would highly recommend who would give a fair quote. They gave me the name of Chris.

Chris was the epitome of professionalism. He was well mannered, clean, tidy, well organised and quoted me less than half of the previous quoted price.

First lesson- Get two quotes as a minimum and go by recommendations.

The second story involves having a repair person from Bosch visit our house for a call out. The water was not being drained. I carefully examined the washing machine and could hear water going in but it was failing to go out. I googled the model number and examined the faults that others had experienced. I ascertained that it was most likely a defect with the outlet house. Later that day my wife rang the service technician. He laughed at my diagnosis and said it wouldn’t be a hose. Upon inspecting the machine for a while he concluded that it was in fact the outlet hose and only charged the $150 call out fee, the hose was gratis!

Second lesson- Do your own research using that marvellous contraption called the internet!

The third story is back from when we built our home out in the country. We had a few outrageous quotes for getting over 150 metres of cabling laid, even up to $15,000. I picked up on a bit of the lingo along the way. By the fourth quote I could say with certainty the exact type of cabling needed and detail the specific measurements required. I mentioned the contacts I had formed with the power company, had an excavator arranged to dig the hole to the exact depth, laid all the necessary conduit in preparation and sealed it accordingly.

Consequently I paid a fraction of the price due to the time that I had saved the electrician in managing the third party tradespeople.

Third lesson- To save money it helps to be proactive. Do your part and get a discount.

The fourth example is not so much a story, but more my experience in negotiating a reasonable rate with tradespeople. I have found you can get a much better overall price when you clarify their hourly rate from the outset. Most people are poor estimators of time. Ask 10 people how many hours it would take to paint a given room. Estimations will vary widely.

When you negotiate an hourly rate you show that you expect accountability from the tradesperson. Most would generally estimate more as a safety buffer when they quote you, so an hourly rate is not only fair for everyone, but usually works in your favour.

Fourth lesson- Negotiate an hourly rate to get a cheaper outcome.

Creating a 'Buyer's Lag'

July 10th, 2015 at 11:03 am

Ever walked past a shop, seen a bargain in a catalogue, found the deal of a lifetime on eBay and thought ‘I have to buy it!’? The fact of the matter is that there are so many purchases we make that are not premeditated in the slightest.

Marketers know this only too well and exploit it as much as possible. Think about your typical trip to the store where you have just 3 items on the list. You are made of steel if you can make it past the half price chocolate and the buy one get one free soft drinks.

With smaller items it perhaps doesn’t matter too much and won’t exactly break the bank. Larger items however, can have a devastating effect on your budget and long term financial goals. Sometimes we get eBay alerts or an email from an online store and are tempted by the option of purchasing a bargain just in case it disappears forever.
Let’s face it, we get a rush of endorphin when we buy. It makes us feel good. But how do we control ourselves?

I have a solution. Introduce a ‘Buyer’s Lag’ into each sizeable purchase.

A Buyer’s Lag is a time that you decide upon before you make a purchase that involves a prescribed amount of money.

An example of this might be to write down that that you would not make a purchase greater than $50 without writing in a diary and waiting a fortnight. Yes, you might lose the deal. Yes, a fortnight is also a long time, but by being disciplined you will save money and only make purchases that you really need.

You may even like to introduce an accountability partner that you have to call to discuss your prospective purchases with. Hayley and I are quite serious about budgeting and know to run our purchases by each other. The Buyer’s Lag adds in another layer of protection and gives you time to think carefully about whether you truly need the item that you desire.

Decluttering- Part II

July 9th, 2015 at 11:48 am

Okay, the last post I made was all about decluttering. At this point I will confess that I am at heart a minimalist. I love my toys, but would be equally happy bumming around in my one pair of jeans and a couple of t-shirts.

When I was a child, at two points in my life, I sold off or gave away all but 3 possessions. I am fascinated by the concept of minimalism and think we would enjoy life a lot more if we had less and spent less.

Confession over. My belief is that less gives you the opportunity to experience more. I am a huge fan of Kirsten Dirksen and her alternate living YouTube channel. If minimalism and being happy with less appeals to you, I encourage you to check out her channel if you haven’t already.

Here are a few short decluttering tips as promised.
* Shed- Dispose of chemicals, old paint, old tiles/bricks, equipment etcetera that you will never use again. There is often a lot of junk in a typical shed that are stored for ‘maybe’ moments. Chuck it. Chances are that you’ll forget it was even there when the time comes to use it.
* Kitchen- How many spare plates and bowls do you own? Got 30 forks? How many salad servers? Cull your excess platters, utensils and appliances. You will have so much additional space in your cupboards as a consequence. But don’t stop there! Go through your pantry. Throw out that 10 year old spice which has needs a chisel to loosen.
* Vanity units- If it’s hard and crusty, dump it. As you throw it out work out the approximate value of the disposed goods. This is meant to be a shameful task and will stop you spending $20 on that latest fad skin care cream that is extracted from rare, high altitude Himalayan mud.
Kid’s Rooms- Why hang on to boxes upon boxes of baby clothes? Sort them into genders and sizes. eBay them as bulk lots or sell them separately if you have the time and patience. Alternately, just donate them. The amount of toys that most kids have nowadays is insane. Based on my own family, I know for a fact that 50% can easily be given away or on sold. The best way, but the slowest, is to remove everything from their rooms and only put back what will be used again in the future.
* Garage- Do you have old bikes you’d never use, car parts, tools that have been replaced with superior items? Photograph your unwanted goods and post on Gumtree, Craig’s List or eBay.
Study- Scan important paperwork and begin to develop a digital file system. Burn or shred banking records older than the government taxation requirement. Dispose or give away the 3 staplers and 30 pens you might have. Don’t keep that old 486 computer with a VGA monitor that sits in the corner.
* Book Shelf- This is up to you. Some people would prefer to lose an eye than dispose of a single book. I am an avid reader and felt this burden when I had to shift countless books as we moved homes. Consider reader PDF files, eBooks or even listen to the text on Audible (my personal favourite). I have now read (listened to) over 45 books in the past 4 months thanks to the brilliance of the Audible program.

I know I said I am a minimalist at heart at the beginning of this post. I will also confess that there is an element of me that loves to learn a new hobby and skill. Currently I am enamoured by kayak fishing and longboarding and am keen to someday learn how to paraglide. These items take up space and cost a reasonable sum of money.

You can’t do it all, but you are also risk becoming quite a boring person if you do nothing of interest. My advice is to limit your passions and try to do things that include others. The more family members or friends you can incorporate into your hobby, the more chance you will do it with greater frequency and share the enjoyment.

By decluttering and keeping your treasures to a minimum, you value what you have and think carefully about your purchases.

Decluttering- Part I, Get Liberated!

July 9th, 2015 at 11:43 am

How would you feel if you were told you had to move house next week?

Aside from the potential nerves you might experience about moving somewhere new, how would you feel about packing and moving all of your belongings?

For most of us living in developed nations, we would feel utterly overwhelmed and fearful by such a situation.

Over the last century, manufacturing has become comparatively cheaper. We can buy a lot more things with a lot less money (relative to the inflationary factor). Think about the toys you had as a kid and compare them with that of a child of today. Contrast this with what your grandparents used to have when they were children.

The average house size has more than doubled since the 1950’s while the average family size has progressively decreased. The business of extensions, sheds, storage facilities is a huge and booming business. We have so much stuff nowadays and we need a place to store it.

When you declutter, you gain a new perspective over each and every item that you purchase. You spend less time looking after your ‘stuff’, more time enjoying what you have, and you don’t spend time wishing you had more things.

Here are 3 tips to help you declutter:

#1 Wardrobe- Sift through your wardrobe and take out all the clothes you would never wear again. Next do another sift with the filter ‘Would you wear it today?’ I understand that there are seasons and we can change sizes at times, but… with all that taken into account, would you wear it again? Some items might be considered high value jackets. eBay or Gumtree might give you a few extra dollars for those if you wanted. Otherwise take those items to the nearest thrift store to donate.

#2 High Value Items- What do you really use and what is just sitting there collecting dust? Some items we have sitting around have cost us a huge amount of money yet we cling to them while they devalue and decay. Caravans, motorbikes, unused furniture, boats, musical instruments, appliances, kayaks, televisions, computers, even an unnecessary car. You may not want to part with them, but think of the dollars you will retrieve and the space that will be cleared.

#3 Paperwork, cards, souvenirs, memories- Don’t clear out what is really precious but consider doing a cull on what mementos are excessive. When Hayley and I were first married I had instantly inherited boxes of trinkets and souvenirs. Just to give you a taste of the items she had collected, boxes of roller skating trophies, stuffed toys and even a container of cat fur from her deceased childhood pet. Gross! Most things you can just get rid of, some you should keep and others you should photograph and then say goodbye to. It might not save you money, but it will save you space. With saved space, who knows? Maybe you could live in a smaller dwelling?

If you apply some of these tips, hopefully you’ll have a few extra dollars in your pocket, you’ll save money with your new formed spending habits, you’ll feel liberated of possessions and your home will be neater.

Many, many more tips to come so stay tuned!

To Gym Or Not To Gym?

July 8th, 2015 at 01:27 am

We live in an age of unprecedented levels of fitness. I would argue that the developed world’s health levels are quite polarised- The uber fit and those who are sacrificing years of their life for the consequences of their lifestyle habits.

The fitness industry is gigantic with gyms and personal trainers residing on almost every street corner. Nowadays we look for ways to correct anything short of a six pack. With all this pressure, it is no wonder we turn to gyms to give us a helping hand.

But some of these expenses have a tendency of adding up. Gym fees of $800 per annum are considered cheap, personal training sessions of $30 for 30 minutes and expensive supplements to keep your nutrition up to scratch. It gets even more expensive if you decide to do it with your spouse.

Just to clarify, I think faith, fitness and relationships supersede any quest for financial wealth. Agree or disagree with that statement. If a gym membership will add years to your life then who could possibly put a price on that?

I would like to offer an alternative however. Could you exercise at home? Think of the travel time saved, the expense and the flexibility.

I have been a home trainer now for years. I was a gym guy but moved way out into a country town an hour from my gym. I purchased around $6,000 in fabulous gym equipment which was well used. Once we moved to a smaller home and had a few kids, we found we needed to reacquire space. I sold off most of the gym equipment except the bare essentials.

What were those essentials?

Power Tower
24kg kettlebell (thanks to Tim Ferriss’s ‘The 4 Hour Body’)
And that’s it!

There are so many body weight exercises that you can do to give you a well-rounded physique. Body weight exercises work on so many stabilising muscles rather than isolated muscles. I would highly recommend reading ‘You Are Your Own Gym’ by Mark Lauren.

The time you could save and money is nothing to be snuffed at. You do need to have incredible discipline though. If you feel you need people motivating you, the pressure of eyes staring, a workout schedule that is combed over by a trainer, then perhaps stick with your gym.

Public Vs. Private Health Insurance

July 8th, 2015 at 01:25 am

We have private health insurance and have had it for the past few years. It costs us approximately $3500 after the government rebate. We barely ever make use of it aside from when my wife has another amazing child. Even when we do have another child, we still need to outlay nearly $3000 for the obstetrician so it is not exactly cheap.

Australia has an incredibly public health system. There is obviously huge improvements that could be made, but by global standards, we rank pretty high.

Now you know by now that I love to save, so why on earth would I choose to pay for private health insurance? The answer- If my wife is having a baby, she gets to choose where she has it and who her obstetrician is.

To be honest I’m not entirely sure we will keep the health insurance once our family size has met its quota. It is a sizeable cost each month. We did use the hospital cover once when my wife had severe pneumonia. She had spent an agonising week going back and forth between doctors who prescribed her various medicines and told her to come back again in a few days. This went on until she could endure no more and we paid the $300 to be seen by the hospital. In this situation, private health was invaluable.

A few pros for private health insurance:

You can sometimes select your doctors.
You usually receive a private room.
It could be argued that you receive a higher standard of care with doctors and nurses checking on your welfare more regularly.
You get the care you need when you need it.
A few cons for private health insurance:

It is expensive.
You still need to pay for extras.
The difference between public and private might not be worthwhile.
Either way, the choice is yours. I have witnessed a few friends needing surgery who had to wait a long, long time as they kept receiving phone calls notifying them that they had been bumped down the list.

One alternative to most forms of insurance is to pool the money you would have paid into an interest earning account. When you need the money, you just redraw it from the pool. For example 3 years of my health insurance would equate to $10,500 of available funds.

See which method works best for you and the ones you love, which method helps you sleep the most soundly and which bears the least mental cost.

Haircuts- The Long And The Short Of It

July 8th, 2015 at 01:23 am

Here’s a real simple solution to save you money- Try cutting your own hair!

Some of you instantly hear alarm bells at this post and will see visions of yourself with shaved bald patches at the side, a mullet at the back and a sea of people pointing and whispering about the hack job you did to yourself.

I have been cutting my own hair for years. At first it wasn’t to save money, but more for convenience. I have a slight OCD tendency which prompts me to freak out at random points because my hair is too long at the sides. I don’t know when this freak out will occur exactly, but once it takes hold I am doomed to be irritated by this 7 millimetre protrusion above my ears until it is trimmed. My wife has learned to live with this deformity in my character and is accustomed to hearing the clippers going at erratic times throughout the day.

I used to love going to an upmarket hairdresser that knew me by name, never kept me waiting, had my favourite magazines on hand and served me lattés as I reclined in the massaging chair. That was about 10 years ago now. Back then it cost me $35 and would only look good for a fortnight. If I had continued at this pace of haircuts it would now have amounted to $9100 over 10 years! That’s a huge amount you could save!

When I moved to the country the drive began to seem ridiculous and I began cutting my own hair with a $40 pair of clippers. I don’t do anything too fancy but my technique involves interchanging between 4 comb lengths.

I would say that there is nothing complex about cutting your own hair. Try watching an hour of YouTube videos and be conservative in the lengths you cut at first. It may even be worthwhile to train up a family member or friend so you can help each other out. Hayley checks the back of my head for me but it can be easy enough for you to do yourself.

You then just vacuum it up, jump straight in the shower and you are done in a third the time it would take you to get to the hairdresser and back.

For those who don’t like your God-given hair colour, you can successfully dye your own hair too with a little practise. Hayley did try to train me but has now succeeded in doing it solo after a few of my bad attempts.

At the end of the day it is just hair. Some of you love the experience and the $9100 (approx.) is a therapy that keeps you sane. Others may have gasped at the sheer amount that could be saved and will be immediately running for the Remington’s.