2015 New Year’s Financial Resolutions

  1. Track your spending – Unless you know where your money is going your can’t plan or change anything. A small notepad will do the job, however there many apps that will do the same job. Once a week right down your expenses in different categories. You may be very surprised where your money is going.
  2. Do a budget – now you know where your money goes you’re in a position to do a budget. Don’t go crazy with cut backs. Save a little the first month and go from there
  3. Be prepared for a blow-out. It’s easy to be hard on yourself when your budget gets blown out of the water. The most important thing to do is reflect and re-focus.
  4. Pay yourself first – resolve to put some money, say $50 somewhere you can’t touch. Yes even if you have debt. It will build your confidence in your abilities and helps with motivation.
  5. Cut up your credit cards. You cannot pay off a credit card that is in use. And now that Christmas is over, who wants credit anyway?
  6. Sell your crap and pay down your debt. This both generates income to pay down your debt and shows the folly of previous spending.
  7. Deli-slice your bills – contact your electricity company, gas company, council, water company, department of transport and get weekly or fortnightly direct debits coming out of your accounts instead of quarterly or annual bills. It doesn’t change the amount but it smooths it out and makes it unbelievably easier to manage.

Little known things affecting your credit

There are many different things that affect your chances of getting credit. Most of these are well known. Factors such as affordability, defaults, judgements and insolvency are the main factors but there are other lesser known factors that banks take into account.

  • The frequency of credit applications
    • Applying for a lot of credit over a relatively short period of time tends to indicate financial stress or imprudence.
  • The type of credit applied for
    • Banks tend to regard applications with non-major banks negatively. Payday loans, renting or leasing home appliances and interest free deals fall into this category.
  • Debts repaid
    • If you have had a loan in the past, banks like to see that it was paid off. Rolling loans into new loans and frequently accessing home equity is not well regarded.
  • The suburb you live in
    • Banks have good data on the riskiness of individuals based on their suburbs. Living in a good working class suburb with high levels of home ownership may be better than a prestigious address where big mortgages put people under large financial stress.
  • Changing jobs frequently
    • Banks value stability. Staying with the same employer is a good indicator of stability.
  • Moving frequently
    • Not being settled makes banks nervous. People well rooted in a community tend to have good support networks and are therefore less risky.

Amazing Affordable Clutter Free Gifts

I almost dread Christmas.  Don’t get me wrong, I quite enjoy the time I spend with my family and loved ones and I definitely enjoy the time off work.  It’s the vast quantities of stuff that fills my home that irritates me.  I already have too much stuff but my family seems determined to ratchet up my sense of claustrophobia by buying me more stuff, worse than that it’s sentimental stuff that I can’t throw out for fear of offending someone.  Recent research shows that stuff doesn’t make you happy.  If you’re going to spend money and the goal is to make people happy you’re better off buying them an experience. With that in mind here is my list of affordable clutter-free gifts

  • A Mix Tape
    • Make an album for your favourite person. Extra points if you drop in important songs from your time together. Other ideas include telling a story with the songs.
  • A Babysitting Voucher
    • Got a friend or relative with kids? Give them a night out on the town with a Babysitting Voucher. You’ll be a star if it’s a sleep over. Also you get to spend awesome time with your Grandchild/Niece/Nephew.
  • A Cleaning Voucher
    • Not everyone hates cleaning but for most people they would rather do something else. A voucher to clean a bathroom would be well received.
  • Massage Coupon
    • A massage voucher for your spouse is always a good idea. Go all out towels, candles a 1hr timer.
  • A Class
    • Do a cooking class, gardening, a second language class together. Learning stuff is a great way to make memories
  • A Car Wash/Detail
    • Who doesn’t like it when their car sparkles and smells like new? Detailing a car is all about the, well, details. Clean under seats, in the doors jams, everywhere.
  • Pet Sitting
    • Dog Kennels and Catteries are expensive and drive up the cost of having a holiday. Be an awesome relative by looking after someone’s pets.
  • Cookie/Pancake Mixes
    • Get some jars and mix all the dry ingredients for cookies or pancakes. Make some cool labels and you’ve got a memorable and delicious gift.
  • Frozen Gourmet Meals
    • For the time poor this is an amazing gift. No “lean cuisines’ for this favourite relative.
  • A “Special Day” Voucher
    • This is a great gift for kids. I still remember special days, days that have names like “Museum and Ice Cream Day” and “Dream World – Car Sickness Day”
  • A Short Story
    • Another great one for kids. Kids love stories about themselves. You could even get an artist on Odesk, or Fiverr to illustrate it for not that much.
  • Homemade Treats
    • Jars of jam from my Mother-In-aw and chutney from my Grandmother-In-Law are particularly well regarded in my house. Jars of biscuits are also a winner. Throw a decorative label on it and look out Martha Stuart.
  • Homebrew
    • Enjoy a tipple? Brew a home-made beverage. A snazzy label goes a long way. Again Fiverr will get you a cheap custom label.

How Annie Got Debt Free

Can you tell me about your background?

I migrated to Australia with my husband and 2 children in 1986, leaving a country in revolution and war. My debt was the result of unwise investment and an accident which happened to my son.

What was life like when you were in debt?

I was getting all these calls from debt collectors and it was making my life really hard. I was stressed all the time and jumped every time the telephone ringing.

I had no life. I could not have a good night’s sleep. I did not dare to spend money.

What was it like working with Debt Mediators?

Debt Mediators was the best organisation I dealt with, always very quick with my enquiries and always provided any help possible.

How long did it take you to get debt free? How did you stay motivated?

5 years, it was not always easy BUT there were never any regrets after deciding to be debt free.

My motivation was that in the end of 5 years I will be free of all my debts. What more motivation is better than that?

What advice would you give to people with large amounts of debt?

If you are in large amount of debt, go ahead take the first step towards a debt free life and feel FREE..

Have no doubt or fear.

What mistakes do you see others making with their money?

Spending money they can’t afford and applying for different cards and loans without thinking.

Not paying their debts on time.… I learned this lesson the hard way.

What is life like now you’re debt free?

You cannot imagine the relief a person feels, it’s just a heavy weight lifting off your shoulders.

Do you have any final words of wisdom for the readers?

If you can’t buy something without a credit card then you can’t afford to have one.

Fix the Car or Buy a New One?

Your car is starting to get on a bit and you had a couple of things that have been repaired. It’s time to sell it and get another one. It will be cheaper to buy a new one rather than fix any expensive repairs. Right? While this is generally the rational for replacing a car, it doesn’t generally hold true. In fact, the best way to keep your money where it belongs, in your wallet, is to keep your car as long as possible.

A well-serviced petrol engine will go 300,000 km or more, and a diesel engine can go 500,000 km, without major repairs. The longer you drive it, the more you save. You’ll save in depreciation, interest and insurance.

Let’s say we’re going to sell our ten-year-old Toyota Camry and buy a new 2014 Toyota Camry. We sold the 10-year-old Camry privately for $6,000 (Red Book Value).

Depreciation

Depreciation is the decline of your car’s value. Cars, on average, depreciate about 14% per year in the first 3 years and then 6% per year after that. A brand new Toyota Camry costs $27,000. Depreciation for the first 3 years will cost $9826.80 vs $1016.50 for your existing car.

Total depreciation savings by keeping the existing car is $8,810.30.

Interest

If you borrowed $21,000 to buy the Camry, then the interest in the first 12 months, at 10%, will be $5,296.13 for 3 years.

Total interest savings by keeping the existing car is $5,296.13.

Insurance

The insurance premium will go from $442 to $536 for the new car, reflecting a higher replacement cost for the new vehicle.

Total insurance savings by keeping the existing car is $282.

Total savings by keeping your existing car = $14,388.43

So when do you buy a new car?

If you need to get a loan to buy the new car, then your repair costs on your current car need to be more than $14,388 over 3 years before it’s cheaper to buy that new car. This doesn’t include regular service costs. If you are going to use cash to buy the new car, then your repairs need to be more than $9,092 over 3 years before it’s cheaper to buy that new car.

A lot needs to go wrong with your car before you’ll spend that kind of money. If you’re worried about it, discuss with your mechanic what is likely to go wrong and how much it will cost.

The longer you can drag out the use of your car, the better. Depreciation and interest are financial killers. They’re silent killers too. If you had to pay your depreciation bill every quarter like your electricity bill, I’m certain that less people would buy new cars.