Low Income Super Contribution

nestegg

Could you use a couple more eggs in your super nest?

You may have heard some minor buzz about government funded super to the value of $500, we thought we would pull together the basic facts to give you an idea about who and how you can access the contribution.

WHAT IS IT?

The Low Income Super Contribution (LISC) is a super payment by the government of up to $500 per financial year aimed at helping low income earners save for their retirement.

From July 1, the LISC is 14% of the concessional contributions (or before tax contributions) that you, or your employer on your behalf, makes.

AM I ELIGIBLE?

If your situation satisfies the following requirements, you are eligible for the low income super contribution:

  • You have concessional contributions for the year made to a complying super fund
  • Your adjusted taxable income does not exceed $37,000 (if you are required to lodge a tax return)
  • You are not a holder of a temporary resident visa (New Zealand citizens in Australia do not hold a temporary resident visa and , as such, are eligible for the payment)
  • 10% or more of your total income is derived from business of employment
  • The amount payable is $20 or more

If you do lodge a tax return the government will use the information to work out your eligibility for a LISC.

If you do not lodge a tax return you don’t have to do anything as the government will use alternate information that they have collected to work out your eligibility, however, this second process can take up to 14 months to complete.

If you want to find out more about your super and what contributions you can receive, below are some hot links to help you navigate:

Super Co-Contribution Information 

Concessional (before-tax) Contributions

Income Tests: An Overview 

Your How To Guide For Lodging A Tax Return

How long are you really going to be in debt?

Presently it could take up to 11 years at the least, to pay off a standard Credit Card Debt …

Credit Card Balances

Australians owe 38 billion dollars on their credit card. The average person owes $4900 and paying back the minimum can mean it takes 11 years to pay off your debt. With much of that being interest.

Have you sat down and worked out how long you’ll be in debt?

While many debts like car loans and home loans have a fixed term on them, credit card debt is one of those areas where people tend to focus on making the minimum payment without thinking about how long it will take to pay off the card.

Often, it’s a lot longer than you think.

A few things you can do to speed it up are:

  • Don’t just pay the minimum – repay whatever else you can afford to.
  • Don’t use your credit card for new purchases. Only pay with your savings.
  • Automate your credit card repayments so there’s no temptation to ever forget or skip one.
  • Pay off your highest interest rate cards first and shop around for ‘balance transfer’ offers from other credit card providers.

If the debt is too high, think about entering a debt agreement or other private arrangement with your lender to help you cope with the repayments.

However it’s not just credit cards that keep people trapped in debt. New car loans, loans on TVs and furniture, student loans, mortgages and holiday loans can leave many us stuck in a long pattern of debt.

It’s just important for us all to switch from focusing on those minimum monthly payments to realising how long we’ll really be in debt for – and whether it’s worth it for the things we’re getting.

The Biggest Financial Mistakes People Make

mistakes

Let’s talk about some of the biggest financial mistakes people make. These are some of the main reasons why people end up  getting into serious trouble or need to go bankrupt.

Signing up for joint debts

People in couples often sign up for joint debts and if the relationship breaks up and one member of the couple decides they don’t want to pay – that’s going to be a problem for the other.

Not having an emergency fund

Life is way too surprising to go without an emergency stash of cash. The unexpected will eventually happen with your health, car or home and you need to be able to handle it.

Not having a Plan B in case the main bread winner is incapacitated.

The main earner needs to be covered by income protection insurance or life insurance. Too many people find themselves at rock bottom by not doing this, yet cover can start from just a few dollars a week.

“You only live once” becomes an excuse to spend wildly

Even if we only do live once, there are a couple of ways to react to that. We can create a life rich in friendships, adventures and spontaneous moments or we can buy the latest and greatest of everything. Unfortunately, many people who get themselves in serious financial trouble get there by buying a stack of consumer goods with loans that spiral out of control.

Purchases are financed through debt, rather than saving

As a general rule, only use debt to buy assets that increase in value over time, such as a home. For most other purchases, only buy when you’ve saved enough to do so, whether it’s new furniture, a vehicle, or the latest plasma TV.

What do you think are some of the biggest financial mistakes people make?

The Impact Of Debt on Your Relationship

Have you hidden debts from your partner? Or have they hidden debts from you?

debtcouple

The NY Times had a story recently of a young couple in the where she thought she had around $100,000 in student loan debt and told her fiancé about it before they got too serious. Unfortunately, she was too scared to check the paperwork and just kept paying off the minimum. When she finally did crunch the numbers it turned out to be $170,000 and her partner walked out on their engagement within 3 days of finding out.

I guess we all walk into a relationship with some debts, but when are we supposed to reveal the total figure?

On the first date, the third, when we reach 2nd base?

There’s no easy answer but leaving it till the engagement probably is too late.

That’s the thing about debt though. It’s normally such a private topic, you can sometimes feel like it’s no one else’s business.

But since it’s going to affect things like how many kids you can have, whether one person can stay at home, the kind of holidays you can take as a couple…it’s worth talking about it early so you both know what’s ahead.

It’s not a romantic talk, but it could help save you relationship and even bring you closer together. According to Ruth Hayden, author of “For Richer, Not Poorer: The Money Book for Couples” the best approach to dealing with one partners debt is to tackle it together.

You should work out what you really owe, how you’re going to pay it back and what sacrifices you’ll need to make as a couple.

Government Pushing Banks to Offer More Debt Solution Options

There has been widespread perception by many Australians that they’re being gouged by the major banks. The familiar refrain is that the banks are quick to raise interest rates when the Reserve Bank raises the cash rate, but painfully slow to lower their rates when the Reserve Bank lowers its rates. The banks have argued that their overseas funding costs have risen and have been slowly trying to create an understanding that what the Reserve Bank does is only one factor in their decision. The recent decision by Westpac and ANZ to raise their mortgage interest rates after the Reserve had kept its rates steady is part of this attempt.