Christmas is usually a time of extra spending, between all of the gifts, functions, food and travel, so it can be all too tempting to charge a little Christmas cheer to your credit card. However, help is at hand: if you’re keen to avoid waking up with a hectic credit card hangover in the new year, follow these tips...
Tip 1: Make a list and check it twice
Ever wandered into a shop with a specific purpose, and then walked out an hour later with four bags full of goodies you never knew you wanted? Part of it is psychological: once you’ve picked up one item and committed to the purchase, you know you have to go through the “hassle” of paying, so you’re more likely to throw in a couple of impulse items on the way to the register. Resist the urge and stick with your list; you’ll feel so much lighter for it.
Tip 2: Pay with fantastic plastic – the other kind
There’s a slight thrill that goes with paying by credit card: you get to walk away with your new goods and you don’t have to hand over any cash, so the whole transaction almost feels like you’re using play money. Paying with cash, on the other hand, is a much more realistic experience. You immediately experience the repercussions of your purchase – ie, less money in your wallet – which gives you a clearer picture of your spending habits.
Tip 3: Lower your credit limit
Do you have a high credit card limit, or an extra credit card that you keep “in case of emergencies”? At Christmas time we tend to get a little busy and stressed, so it can become harder to distinguish between “emergency purchase” and “cocktail dress that would be perfect for my work Christmas party!”. Consider chopping the credit limits right down to the bare minimum so you can avoid temptation. If you don’t have it, you can’t spend it.
Tip 4: Avoid store cards
Around the silly season, many department stores offer interest-free promotions so you can do all your Christmas shopping under a “buy now, pay later” scheme. The catch? Store cards typically have higher interest rates than standard credit cards once the interest-free period comes to an end: in some cases, rates can go as high as 29%.
Tip 5: Be creative with gifts
Rather than spending hundreds or thousands of dollars on countless Christmas presents, organise a “Secret Santa” program with your friends or family, so that each person only has to buy one present. Alternatively, give the gift of time or favours: some ideas might include car washes, hair cuts, babysitting, home repairs, home cooking, gardening or cleaning.
Tuesday, December 15, 2009
Super funds to get simpler
Australian workers will have their superannuation guarantee payments from their employer sent to new, no-frills, low fee, default super funds under a plan outlined by the federal government’s superannuation system review.
The review proposes that the superannuation industry be overhauled because most people do not take an active interest in their superannuation. Super funds currently cost too much and provide too many investment options to provide low cost super to most people who do not take an interest in their super.
About 90% of workers are currently being placed in default funds chosen by their employer or as prescribed in industrial awards.
The review proposes that the superannuation industry be overhauled because most people do not take an active interest in their superannuation. Super funds currently cost too much and provide too many investment options to provide low cost super to most people who do not take an interest in their super.
About 90% of workers are currently being placed in default funds chosen by their employer or as prescribed in industrial awards.
Wednesday, December 9, 2009
Tips for coping with interest rate rises
With the interest rate rises of recent times, it is timely to reflect on how to make some adjustments to compensate. Here are some tips to reduce the household expenses without affecting your lifestyle.
Insurance
Having your insurance for the car and the household with the same provider can earn you a discount.
It is also always a good idea to shop around each year to check that you are still getting the best and cheapest coverage. Changing the excess and restricting the drivers to people aged over 25 can also make a difference.
For health insurance, again you should assess the level of cover as well as your provider. For example, there may be extras you are paying for that you never use.
You can also speak to one of the financial advisors at Intellichoice about finding you an insurance policy that suits your needs and circumstances. They will do all the research and legwork for you and find you an insurance policy that is best for you.
Petrol
Buy petrol on a Tuesday. According to the ACCC, petrol is usually cheapest on
Tuesdays in Australia’s metropolitan cities, except for Perth, where it is cheapest on Mondays.
Grocery Shopping
Reduce the number of trips to the grocery store to once every week or fortnight and stick to a reasonable budget each time. Also make a shopping list before you go to the supermarket and this will help you to avoid impulse buying. Meal planning also helps you focus on the things you really need.
Store displays
Do not assume that the in-store displays, particularly at the end of the aisles and at the checkout are on special – compare their price with the same items that are not being promoted. Look up and down the shelves. Note that the more expensive items tend to be right in the line of sight, while cheaper or supermarket-own brands tend to be located on the higher or lower shelves.
No-name brands
Try no-name/generic and supermarket-own brands for staples, like sugar, salt and flour – they tend to be hard to pick from branded equivalents.
Treats and snacks
Buy treats and snacks in the supermarket instead of going to the convenience store.
Telecommunications
Telstra and Optus provide discounts if you have three or more telecommunication accounts with them.
VOIP
Voice Over Internet Protocol is quickly becoming a popular alternative for your home phone. It uses the internet to drastically reduce call costs.
Electricity/Gas
If you consolidate your gas and electricity to the one provider you can receive a 5% discount. Some providers also offer a ‘switching discount’ such as $50 off your first bill.
Think about installing a solar hot water system. Whilst the initial outlay (approx $3,500-$4,500) is more than your standard system, both the Federal and some State governments offer rebates, which can take $1,000-$2,000 off the cost.
Depending on your home’s location and water consumption, this could reduce your water heating costs by up to 80%.
BYO lunch
BYO lunch. If you bring your own lunch to work three to four times a week, you could save over $500 per year
Personal loans & Credit cards
Personal loans and the rates on offer can be renegotiated, especially on cars. For example, if you have a loan on your car that was arranged by the dealer you could be paying 5-8% more interest than necessary – so it is recommended that you shop around.
Credit card rates can also range from 9.95% to 18.99% and it is usually membership reward schemes, cash advances and other offers that bump up the rate. Work out what you really want from your credit card and change it to a lower rate card where possible.
If you have a few personal loans or credit card debts, we recommend that you speak with a financial advisor from Intellichoice about consolidating all your debts into one - you may end up paying a lower interest rate and save money at the same time.
All of these suggestions will have little or no impact on your lifestyle. However, taken together, the savings can be significant and can more than offset the recent interest rate rises.
Insurance
Having your insurance for the car and the household with the same provider can earn you a discount.
It is also always a good idea to shop around each year to check that you are still getting the best and cheapest coverage. Changing the excess and restricting the drivers to people aged over 25 can also make a difference.
For health insurance, again you should assess the level of cover as well as your provider. For example, there may be extras you are paying for that you never use.
You can also speak to one of the financial advisors at Intellichoice about finding you an insurance policy that suits your needs and circumstances. They will do all the research and legwork for you and find you an insurance policy that is best for you.
Petrol
Buy petrol on a Tuesday. According to the ACCC, petrol is usually cheapest on
Tuesdays in Australia’s metropolitan cities, except for Perth, where it is cheapest on Mondays.
Grocery Shopping
Reduce the number of trips to the grocery store to once every week or fortnight and stick to a reasonable budget each time. Also make a shopping list before you go to the supermarket and this will help you to avoid impulse buying. Meal planning also helps you focus on the things you really need.
Store displays
Do not assume that the in-store displays, particularly at the end of the aisles and at the checkout are on special – compare their price with the same items that are not being promoted. Look up and down the shelves. Note that the more expensive items tend to be right in the line of sight, while cheaper or supermarket-own brands tend to be located on the higher or lower shelves.
No-name brands
Try no-name/generic and supermarket-own brands for staples, like sugar, salt and flour – they tend to be hard to pick from branded equivalents.
Treats and snacks
Buy treats and snacks in the supermarket instead of going to the convenience store.
Telecommunications
Telstra and Optus provide discounts if you have three or more telecommunication accounts with them.
VOIP
Voice Over Internet Protocol is quickly becoming a popular alternative for your home phone. It uses the internet to drastically reduce call costs.
Electricity/Gas
If you consolidate your gas and electricity to the one provider you can receive a 5% discount. Some providers also offer a ‘switching discount’ such as $50 off your first bill.
Think about installing a solar hot water system. Whilst the initial outlay (approx $3,500-$4,500) is more than your standard system, both the Federal and some State governments offer rebates, which can take $1,000-$2,000 off the cost.
Depending on your home’s location and water consumption, this could reduce your water heating costs by up to 80%.
BYO lunch
BYO lunch. If you bring your own lunch to work three to four times a week, you could save over $500 per year
Personal loans & Credit cards
Personal loans and the rates on offer can be renegotiated, especially on cars. For example, if you have a loan on your car that was arranged by the dealer you could be paying 5-8% more interest than necessary – so it is recommended that you shop around.
Credit card rates can also range from 9.95% to 18.99% and it is usually membership reward schemes, cash advances and other offers that bump up the rate. Work out what you really want from your credit card and change it to a lower rate card where possible.
If you have a few personal loans or credit card debts, we recommend that you speak with a financial advisor from Intellichoice about consolidating all your debts into one - you may end up paying a lower interest rate and save money at the same time.
All of these suggestions will have little or no impact on your lifestyle. However, taken together, the savings can be significant and can more than offset the recent interest rate rises.
Tuesday, December 8, 2009
Wealthy investors look to expand their property portfolio
Confidence in the real estate sector is returning among high-net-worth individuals according to new survey from Barclays Wealth.
According to the Barclays Wealth survey, over the next two years, 35% of respondents said they plan to increase the proportion of their portfolios dedicated to real estate, excluding their primary residences.
The average allocation to real estate among respondents was 28% internationally and 23% in the US. Investors in nine out of ten countries expect to increase their allocation to real estate by 1% to 4% over the next two years, raising the global average allocation to 30%.
Investors who plan to increase their real estate stakes believe that the asset class holds better long-term prospects than other more complex financial instruments, which many blame for igniting the financial crisis. Additionally, thanks to the recent turmoil in nearly all real estate markets around the world, investors believe there are many bargains to be had in the property sector.
According to the report, investors are less enthusiastic about commercial real estate, due to rising unemployment rates worldwide, but 45% of respondents believe there are significant opportunities in residential markets, although tight credit markets are inhibiting their ability to take advantage.
The survey found that more than three-quarters of respondents predominantly invest in their domestic market. However, when asked what other markets are attractive to them right now, the US ranked number one, followed by China, the U.K and India, in that order. US real estate is particularly appealing because of recent price declines, the falling dollar and long-term positive prospects for the US economy.
The report, commissioned by Barclays Wealth and written by the Economist Intelligence Unit (EIU), was based on a survey of more than 2000 individuals in 10 countries with over $800,000 in investable assets.
According to the Barclays Wealth survey, over the next two years, 35% of respondents said they plan to increase the proportion of their portfolios dedicated to real estate, excluding their primary residences.
The average allocation to real estate among respondents was 28% internationally and 23% in the US. Investors in nine out of ten countries expect to increase their allocation to real estate by 1% to 4% over the next two years, raising the global average allocation to 30%.
Investors who plan to increase their real estate stakes believe that the asset class holds better long-term prospects than other more complex financial instruments, which many blame for igniting the financial crisis. Additionally, thanks to the recent turmoil in nearly all real estate markets around the world, investors believe there are many bargains to be had in the property sector.
According to the report, investors are less enthusiastic about commercial real estate, due to rising unemployment rates worldwide, but 45% of respondents believe there are significant opportunities in residential markets, although tight credit markets are inhibiting their ability to take advantage.
The survey found that more than three-quarters of respondents predominantly invest in their domestic market. However, when asked what other markets are attractive to them right now, the US ranked number one, followed by China, the U.K and India, in that order. US real estate is particularly appealing because of recent price declines, the falling dollar and long-term positive prospects for the US economy.
The report, commissioned by Barclays Wealth and written by the Economist Intelligence Unit (EIU), was based on a survey of more than 2000 individuals in 10 countries with over $800,000 in investable assets.
Monday, December 7, 2009
Plan for Christmas debt now
Credit card debts are expected to soar in the next few weeks as consumers stock up for Christmas. Financial counsellors warn that February is often a month of misery for many as they try to deal with debts racked up over the summer.
Debt ratings agency Veda Advantage recommends that consumers set a spending limit and stick to it. “We are not saying don’t use your credit card, that is what they are there for, to spread out lumpy purchases like Christmas – but plan your repayments before you go out and spend the money.”
We have also included some tips to help you save money during Christmas, yet keeping it fun for the whole family.
Make it fun
Christmas shopping shouldn't be a chore. Variations of gift exchanging include:
Homemade gifts demonstrate caring, creativity and passion.
Debt ratings agency Veda Advantage recommends that consumers set a spending limit and stick to it. “We are not saying don’t use your credit card, that is what they are there for, to spread out lumpy purchases like Christmas – but plan your repayments before you go out and spend the money.”
We have also included some tips to help you save money during Christmas, yet keeping it fun for the whole family.
Make it fun
Christmas shopping shouldn't be a chore. Variations of gift exchanging include:
- Secret Santa - If you have a group that’s keen on the idea, Secret Santa can be a fun and inexpensive way to participate in the holiday season on a minimal budget
- Gift Themes - Choose a theme — travel, computers, food, whatever — and encourage everyone in the group to base their gifts around it
- Draw names - This is an excellent way to cut down costs while still participating in a gift exchange. You can draw another person’s name from a hat and give this person a nice gift. This is similar to secret santa
Homemade gifts demonstrate caring, creativity and passion.
- A hand-assembled collection of gourmet salts, complete with written description of each.
- Biscuits, cakes, muffins
- Art. (Do you dabble in photography? A framed print of your nephew is a great gift for your sister-in-law.)
- Home-made jams and jellies
- Hampers for example a cheese and wine hamper, or a hamper made up of someone's favourite foods including chocolates, fudge, shortbread and jams
- Send postcards or a letter instead ofChristmas cards
- Save your children’s (or grandchildren’s) holiday crafts and artwork from school each year and use the artwork as Christmas decorations for around the house or on the Christmas tree
- Cuting up old Christmas cards can make wonderful gift tags too
Tuesday, December 1, 2009
Australian pensioners to face poverty
New research has shown that Australians have only saved enough money to last just three or four years into retirement. This lack of wealth creation looks set to have many Australians facing the unenviable situation of experiencing a life of poverty in their old age.
Not only is the average Australian working less and living longer, but they are also not doing enough to provide for themselves in retirement – approximately 85% of men and 92% of women are now expected to live 20 years beyond the age of 65.
The recently released report from AMP also states that almost 60% of men are leaving the workforce before reaching the age of 65. Due to these circumstances, AMP has called on the government to raise the super guarantee (SG) from 9% to 12%.
Australians have very high retirement expectations but are not saving enough to even afford a comfortable retirement let alone one that meets their expectations.
Research has found that the savings of those retirees currently aged 65 and over - an average of $107,500 for men and $81,600 for women - are only enough to last three years for women and four years for men. According to AMP, those that retire on average earnings would need $40,475 each, per year, for a comfortable retirement.
This shows that people need to take charge of their future financial security.
If you would like to find out more about planning for retirement and how you can create wealth in a safe way, speak to one of the financial advisors at Intellichoice.
Not only is the average Australian working less and living longer, but they are also not doing enough to provide for themselves in retirement – approximately 85% of men and 92% of women are now expected to live 20 years beyond the age of 65.
The recently released report from AMP also states that almost 60% of men are leaving the workforce before reaching the age of 65. Due to these circumstances, AMP has called on the government to raise the super guarantee (SG) from 9% to 12%.
Australians have very high retirement expectations but are not saving enough to even afford a comfortable retirement let alone one that meets their expectations.
Research has found that the savings of those retirees currently aged 65 and over - an average of $107,500 for men and $81,600 for women - are only enough to last three years for women and four years for men. According to AMP, those that retire on average earnings would need $40,475 each, per year, for a comfortable retirement.
This shows that people need to take charge of their future financial security.
If you would like to find out more about planning for retirement and how you can create wealth in a safe way, speak to one of the financial advisors at Intellichoice.
Monday, November 30, 2009
Super cap stimulates property interest
According to Archicentre, the building advisory service of the Australian Institute of Architects, the Federal Government's move to cap superannuation contributions at $50,000 has stimulated interest in renovation and investment in negatively geared property.
In the latest Archicentre Consumer Sentiment Poll of over seven hundred respondents, approximatley 72% of respondents said they would be putting their extra funds into property. Approximately 40% said they would invest in renovation of their own home, while 32% said they would invest in a negatively geared property. Approximately 28% said they would use their extra funds by investing in shares.
Michael Cooper, Tasmanian State Manager of Archicentre said that with many Australians planning to top up their superannuation with equity in the family home or investment properties, the current rising house prices will have a significant impact on the lifestyles of hundreds of thousands of Australians.
The added bonus for people investing in the family home is that once completed and sold it is not subject to capital gains tax and they can enjoy the new renovations."
Mr Cooper said whilst this is a time of opportunity, people renovating their homes need to ensure they do their homework in relation to renovation and design to ensure they are in fact adding value.
"People purchasing an investment property can run into financial difficulty if they do not carry out a thorough inspection of the property", he warned.
"Last year, one out of three homes which underwent the independent pre-purchase inspection by Archicentre had faults which required attention allowing prospective buyers to factor in the costs of repair before making a bid.
"People who buy a 'lemon' are often confronted with unplanned borrowings to fix problems such as plumbing, wiring, rising damp and roof problems which can run to tens of thousands of dollars of extra funds cutting directly into the level of the superannuation returns."
According to Mr Cooper, the best defence against the loss of value in the family home as a superannuation asset is to get a professional, independent assessment of the property before purchasing and of any renovation before commencing.
For more information on how we can help you build your wealth through safe investments and still lead a comfortable retirement, speak to one of the financial advisors at Intellichoice.
In the latest Archicentre Consumer Sentiment Poll of over seven hundred respondents, approximatley 72% of respondents said they would be putting their extra funds into property. Approximately 40% said they would invest in renovation of their own home, while 32% said they would invest in a negatively geared property. Approximately 28% said they would use their extra funds by investing in shares.
Michael Cooper, Tasmanian State Manager of Archicentre said that with many Australians planning to top up their superannuation with equity in the family home or investment properties, the current rising house prices will have a significant impact on the lifestyles of hundreds of thousands of Australians.
The added bonus for people investing in the family home is that once completed and sold it is not subject to capital gains tax and they can enjoy the new renovations."
Mr Cooper said whilst this is a time of opportunity, people renovating their homes need to ensure they do their homework in relation to renovation and design to ensure they are in fact adding value.
"People purchasing an investment property can run into financial difficulty if they do not carry out a thorough inspection of the property", he warned.
"Last year, one out of three homes which underwent the independent pre-purchase inspection by Archicentre had faults which required attention allowing prospective buyers to factor in the costs of repair before making a bid.
"People who buy a 'lemon' are often confronted with unplanned borrowings to fix problems such as plumbing, wiring, rising damp and roof problems which can run to tens of thousands of dollars of extra funds cutting directly into the level of the superannuation returns."
According to Mr Cooper, the best defence against the loss of value in the family home as a superannuation asset is to get a professional, independent assessment of the property before purchasing and of any renovation before commencing.
For more information on how we can help you build your wealth through safe investments and still lead a comfortable retirement, speak to one of the financial advisors at Intellichoice.
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