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Newsletter January 2011

Impeccable Finance NewsletterJANUARY 2011

David Ryan

Tel:+61 7 5500 3916
Fax:+61 7 3337 9827
Mob:0438 586 885

E-mail:Click Here
Website:Click Here

David Ryan has consistently been recognised as one of Queensland’s leading Mortgage Brokers with significant national recognition over the past 5 years. His finest achievement came in 2009 when he was acknowledged by the Mortgage & Finance Association of Australia as a finalist in their national excellence awards.

With 23 years experience in Banking, Home Lending and Financial Planning, David and his staff are well positioned to provide you with quality service and advice.

Do you have a retirement strategy in place that will allow you to enjoy a comfortable retirement and let you live the lifestyle you desire? Call David for an obligation free review of your retirement plans.

How long has it been since you reviewed your current finances? Call David to organise a new home loan, or to review your current home loan.

Budget for Success

Keen to save more and make a big dent in your mortgage?

By budgeting better, you can reach your goals sooner. Here is a guide to get your New Year started in the right direction.

1. Record your expenses

Carry a notebook around with you for a month and write down everything that you spend money on and the amount. Don’t forget daily coffees, magazines, eating out, etc. Record it all.

This will show you how much you’re spending and may prompt you to realise how much you spend on non-essential items.

2. Calculate your income and expenses

Calculate how much income you make after tax every month and write this figure down. There are a number of good budgeting tools available on the internet to help you easily track your expenses. If you can’t find one, just use a notepad.

Divide your expenses into those that are essential (for example, groceries, bills and transport costs) and those that are non essential (for example takeaway food, entertainment and indulgent purchases) and calculate how much these cost you each month. For example, if your quarterly electricity bill is usually $450, you will need to divide this figure by three to get monthly cost of $150.

When this is done, subtract your expenses from your monthly income. This will show you whether you are spending beyond your means or whether you have some cash to spare.

3. Change your spending habits

To free up some cash to make extra repayments on your home loan or achieve or financial goals, you will need to scrutinise how much you are spending and work towards reducing this amount.

The non-essential expenses column is the first place to start cutting back, If you are spending a lot on takeaway food, start eating at home more often and pack your lunch to take to work.

If your petrol costs are high, consider taking public transport or walking if possible. Perhaps you could invest in a bicycle so you save money and gain a health benefit at the same time.

4. Stick to your budget

Once you have allocated a budget to each of your expenses, stick to it. If you have budgeted to spend $60 a month on eating out, make sure you don’t spend any more.

It will take discipline, but by following your budget you could cut thousands of dollars interest off your loan and pay your mortgage off much sooner.

Savings Tips

Here are some savings tips to help you on your way:

  • Have an easy access cash account for everyday needs with a debit card attached

  • Save a fixed amount of money every pay in a separate account

  • Save your pay rises, bonuses or special payments or tax refund

  • Put your change into a savings jar at the end of each day

  • Pay your mortgage fortnightly and pay an extra 5-10 per cent on your mortgage every month

  • Budget a specific amount for leisure, mortgage repayments and personal expenses

  • Make extra superannuation contributions from your pre-tax salary otherwise known as salary sacrificing.

Time for Super

The average Australian spends 2,555 hours a year sleeping and around 910 hours a year watching television.

So shouldn’t we be spending more than half an hour a year thinking about our super?

When the average Australian sets out to buy a car, they may spend weeks weighing up their options. Buying a house sometimes takes months, or even years, of searching, planning and saving.

Even smaller financial purchases such as stereo, DVD player or computer take more than a couple of hours of shopping around.

And yet recent research revealed that the majority of people spend less than 30 minutes a year thinking about what is usually the biggest investment they have after their home - their super.

So what’s to think about?

Many people think of superannuation as a “set and forget” part of their lives - their employer sets it up and puts money into it on their behalf and it’s not something they have terribly much control over. However, this is something of a misconception.

Even though your employer contributes money to your fund, superannuation is still your savings for your retirement. You are still able to control things such as which investment option your money is invested in and how much you contribute yourself.

It’s therefore worth taking the time to find out about your options within your super fund and thinking about how you can make them work for you.

Are you in the right investment option?

Most funds offer different investment options so you can choose the one that most closely meets your needs and retirement objectives.

If you haven’t already made a choice then your money is normally invested in the default or balanced option.. This may turn out to be right for you, but you’ll need to spend some time finding out about it and comparing it with other options on offer before you decide.

To help make a considered decision, look at:

  • How comfortable you are with receiving returns that are different to what you expected

  • How long you have until retirement

  • Whether you need to see financial advice.

Once you are happy with the option you have selected, make a note to review it at least once a year to see if it still meets your needs.

Will you have enough?

That’s a big question. First you need to work out how much will be enough to live the life you want in retirement. Whether you’ll have that amount depends on how much super you have now, how much is being contributed to your account, the fees being charged, the returns on your super and how long you have until you retire.

There are calculators on many of the big funds’ websites that can help you to work this out.

How do you contribute more?

If you think that you won’t have enough, you can help make your super grow by adding to the contributions your employer makes. You can do this from before-tax income (salary sacrifice) or from after-tax income. A benefit of making after-tax contributions to your super is that, if you are eligible, the Government may give you a helping hand by making a co-contribution. To find out more about the co-contribution, visit www.ato.gov.au/super.

Do you have more than one super fund?

If you have more than one super fund, consider consolidating them all into one account. This can also help to grow your super because you’ll only be paying one set of fees and insurance premiums.

Before you go ahead check the exit fees, any extra benefits and the insurance arrangements of the funds you’ll be rolling out of. Sometimes the fees can be so high that it may be best to leave your money where it is. Also, your insurance arrangements may cease, or provide a different type of cover.

If you think you have more than one super account but you’re not sure how to track them down, try www.unclaimedsuper.com.au or the Tax Office’s SuperSeeker at www.ato.gov.au/super.

Do you have insurance through your super fund?

Chances are that, unless you specifically said no to insurance when you joined the fund, you will have at least minimum disability income protection and death insurance. But is it enough to meet your needs?

The first step is to find out what cover you have now and then think about whether the amount of benefit that may be paid would cover all the expenses you need it to. Although taking out insurance through you super fund is generally cheaper than purchasing it directly, keep in mind that the premiums for insurance through your super fund come out of your super account so increasing your premiums will impact on your super balance.

What other benefits does your fund offer?

Many superannuation funds offer access to other products and services, including financial products you can use long before you retire. These products may include low cost banking products, managed funds with no entry or exit fees, financial planning services and discount health insurance.

DISCLAIMER: This newsletter is provided for general information only. Please do not rely on this newsletter as a substitute for specific legal or financial advice. Before making any decisions you should consider your specific objectives, financial situation and needs.