Not My Mother

So yesterday we had to fill up the car, as you do. We had a Coles shopping voucher so we went to the local Shell station (my research has shown that their discounted unleaded price is generally cheaper than elsewhere nearby). When I went in to pay the guy told me that in addition to the usual 4 cents per litre discount for the voucher, I could get a further 2 cents per litre off just by spending $2 instore. And he helpfully pointed out the chocolates and chewing gum as candidates for me to buy.

Look, it was the end of the day and I wasn’t up to spontaneous mental arithmetic. But I wasn’t sure it was a good deal and I certainly didn’t need any chocolate so I said no. I’d rather miss out on a bargain than agree to something that wasn’t one and be ripped off. Makes me feel less stupid, somehow.

Anyway, when I got back to the car I did the sums. We bought 45 litres of petrol, so the discount would have saved me a massive 90 cents. But to get the discount I had to spend $2 instore, so I’d end up $1.10 out of pocket. So, um, no thanks. I’d have to buy 100 litres of petrol to break even; are there any cars apart from the larger 4WDs that have tanks that large?

Obviously, if there was something I was going to buy anyway, then that would have been okay. But I rarely buy things at petrol stations unless it’s something I know has a fixed price like bags of ice or magazines, so they can’t mark it up.

I’m sure there are many people who aren’t bothered about paying an extra dollar or so for a bottle of milk for convenience of not having to stop again (but then why would they get excited about saving such a small amount?). But it made me wonder,  how many other people jump at the chance to buy stuff, just because they see “2 cent discount”, without thinking about it? It wasn’t so long ago I probably would have been one of them.

Would you buy something for the discount?

Attention Aussie readers: Via my pureprofile account I’ve discovered Quickflix is having a special offer of 2 months’ unlimited trial for $5 (their normal trial is just 14 days free, which I don’t think is long enough to be useful at all). For those who don’t know, Quickflix is an online DVD rental like netflix in the US and Lovefilm in the UK: you add a bunch of movies to your queue, they post some to you, you keep them as long as you want and when you’re done you post them back and they send you something else from your queue. There are no late fees, it’s all done on you having a maximum of 2 or 3 out at a time, although most of the plans do have a limit of how many you can rent in a month.

I was signed up to Lovefilm in the UK for a while and really liked it, but hadn’t bothered doing it here. For a start, it’s more expensive than it was there, plus Australia Post doesn’t have the next-day delivery times of the UK, so you’ll have more delays in getting your films. Also, the drawback is that while you can prioritize your DVDs, you are still at the mercy of what they have available so if you’re trying to watch a series you could be waiting for the next disk for a while. Or what if what you get sent doesn’t match your mood on the day? Bummer. So since we’ve not really been watching that many movies we’d been sticking to the local video shop instead. (And yes, I know you’re also limited by what your local video shop has, but ours always had dozens of copies of new releases and was reasonably cheap, so we were happy)

But we haven’t yet got around to finding a new local video shop, and $5 for two months was a bargain to try out their service. A bargain! So I signed us up and gave Dave the login details and by the looks of it we’ve just spent the last hour putting every single blu-ray DVD they have on our list. Currently our list goes: Tudors series 2, chick flick, chick flick, action, chick flick, action, action, chick flick, chick flick, chick flick… and everything Hayao Miyazaki has done tagged on the end. (I’m expecting Dave will reorder those chick flicks to their rightful place real soon!) I’ll be interested to see how they go, it seemed every newish release I put on the list was tagged as “long wait” (unlike the local video shop) – hopefully it isn’t too bad.

So anyway – if you’re interested and like watching DVDs, it might be a good thing to sign up for. The code you need is AMS_PUREPROFILE_2FOR5. Just remember to cancel your membership before the end of your 2-month trial if you’re not interested in continuing; I have a feeling they’ll stick you on their most expensive plan otherwise.

So yesterday the Reserve Bank of Australia raised the official interest rate by 25 basis points to 3.25%. Westpac has already responded by raising its home loan rates by 45 basis points, and there’s no reason to think the other banks won’t follow suit. And I’m a bit cross about it.

(For overseas readers, Australia hasn’t had the recession issues that the US and UK have. Our Prime Minister Kevin Rudd would tell you it’s due to the government’s fantabulous stimulous package, but mostly it’s because our banks were far more conservative and didn’t get that involved in the subprime mortgage market in the first place. Not that it wasn’t tight there for a while, global finance is all intertwined so banks and companies had to scrabble to fund debt and there were some layoffs, but nowhere near the levels you’ve had overseas. So our interest rate is higher, and that’s why the AUD is doing so well at the moment.)

The rate rise was expected, but I find the RBA’s strategy frustrating. They raise rates to rein in inflation, but it’s hard to believe they have much of a grasp of what’s going on. For a start, they were still raising the interest rate until late last year – last September it was 7.25% – despite the meltdown overseas and rumblings here. Their excuse was that inflation was too high – but the inflation figures are measured using things like higher oil prices, leading to higher fuel and grocery prices, and housing costs. All stuff we can’t control, and hardly things we can do without. So they raise the interest rate, leading to higher costs to fund mortgages, and then act all surprised when we end up having to spend more? Sheer genius. Gosh, better raise rates again, that’ll stop people spending so much on bread.

They finally started dropping the rate in October, because, who knew, things weren’t looking so good. Over the next six months it plunged to 3%, and you could hear the sighs of relief all over the country.  But at the same time Kevin Rudd started his stimulus package, whereby he gave cash handouts to low income earners to stimulate the economy because gosh, people got scared and stopped spending money at the shops! It’d be nice to think that money was being used to pay down debt or put aside for a rainy day but it’s not, it’s buying flatscreen TVs and playstations and funding holidays. And Krudd’s fine with that. Hey, it keeps the retailers happy. It probably has saved some jobs. But it’s also made the economy look better than it should and that’s alarming the RBA.

The thing is, they’re not giving anyone a chance to react to the new rates. They won’t even have the latest figures in yet, so they don’t know how last month’s rate rise has affected things yet. Chances are it hasn’t, yet. They’re still looking at the artificially inflated figures caused by the stimulus package. So yeah, raise the rates, but maybe don’t do it every fricking month, give people a chance to work out what their new budget looks like, hmm? Or, do it half a percent every time, but only do it once a quarter. At least then you’d have time to run the figures and see what’s what.

But the real problem is that the banks won’t just pass on this rise, they’ll increase it. Westpac’s already added another 20 basis points on, and the other banks are likely to follow suit. Westpac has claimed it’s due to the increased cost of funding, but it’s also to cover themselves for bad and doubtful debts. NAB alone made allowances for $2.3 billion for this purpose last financial year. They have to make it up somehow. And yes, that is completely down to the banks’ shady ethics and greed, and the demands of shareholders. But why do they have bad and doubtful debts in the first place? Because people and companies already can’t afford to service their loans. Isn’t that a sign that the economy is not doing great? Raising rates is not going to fix that!

So  yes, I’m frustrated about this. As a consumer, it hurts, and it makes everyone that little bit more nervous about what next year will bring. I don’t deny that rates are lower than normal at the moment, but so is the world economy. A better indication of what’s going on is house prices which aren’t going anywhere right now, despite the low rates and the first home buyer’s grant. If the RBA really wanted to slow down inflation maybe they should stop Krudd chucking money at Harvey Norman’s cash registers instead.

Thing is, I’m noticing most of the ones I’m finding aren’t anywhere in the same place as me. In general the blogs I’m finding fit into three categories:

• dealing with paying off consumer debt (credit cards, student loans, etc), and therefore being frugal
• being frugal, either for the sake of it due to personal philosophy, or by necessity
• aggressively saving to fund retirement, and therefore being frugal

None of these really fit me:

• I don’t have consumer debt anymore; I did once, quite a lot, but that’s in the past. I do have debt, but it’s all real-estate related, and while I’d love to pay off my personal (non-tax effective) mortgage, I’m not interested in making it my sole focus (it would also take a bloody long time).
• I do like to be frugal, but mostly I prefer to be smart with money to cut costs so we can indulge in what’s important to us. I am quite frugal in many ways, but some people would disagree because we’re buying a PVR soon and spent $150 on a dinner with friends last week.
• And I shudder away from the “saving for retirement” goal. To me, “saving for retirement” has (probably unfair) connotations of having no life now so I will be safe at 65. Also, the bloggers are mostly American and concentrating on socking money away on Roth IRAs and 401(k)s. Our comparable thing in Australia is superannuation and while it’s good I don’t like the idea of locking money away where I can’t reach it for another 30 years. What if something bad happens and we need it? What if a really good investment oppurtunity comes along?

So I’d rather think of it as “wealth building”, which means learning more about investing in shares and property and the occasional fund, and gives a lot more flexibility. But finding blogs which match my situation is difficult and even when I do most of the commenters are in the other groups and I don’t relate to them, or their comments miss the point and are frustrating.

Here are some of my current favorite financial blogs:

Get Rich Slowly: JD is pretty much in the same position as me, what he calls the ‘third stage’ of personal finance but a lot of his readers are not, so his blog tends to be geared more towards them. Plus he’s American, so a lot of the advice he does give isn’t really relevant to me. Which is a shame, because he has a lot to share.

Dog Ate My Finances: Dog’s doing really well, and I like reading about her personal journey, simply because she talks about it, ups and downs and all. The comments are often frustrating though, a lot of her readers seem jealous that she’s doing so well when they’re not–or have been rubbed the wrong way by one of her comments–and therefore want her to fail, or are members of the ultra-frugal set and can’t relate to someone who has a higher tolerance for risk than they do.

Wealth is Good: Finally someone who writes about investing and wealth growing in a smart, non-conservative way (not that I am a major risk-taker). I love it.

Fru-gal: a recent find, and an Aussie living in London! So I can relate. I also like that she has a mix of topics, from iphone apps to specific savings tips to general musings on money and life and how to fit them together.

What I need is some more PF blogs that are in my same stage. No, what I really need is some Australian personal finance blogs, preferably with relevant advice for our situation, but if not then just some good personal stories that I can relate to. Hey I’ll take any blog if it’s got a good personal story, non-Australian, non-financial, whatever.

Have you got any for me?

But now UBank’s got an account that looks worthwhile. UBank is part of NAB, and their interest rate is currently set to 5.46%pa with no minimum deposit – and that’s not an introductory offer. (You can see all the current Australian online savings account rates here at the Cannex website. )Plus a little birdy friend who knows these things has told me that UBank will be monitoring the major online savings accounts and will ensure that their rate always at least matches the highest available rate. I’m not sure they’re advertising that, but why wouldn’t they? Seems it would get more people to switch. (Update: they are advertising it, but it currently only runs until the end of the year. Bummer, that’s a little disappointing. Hopefully they’ll extend it further.)

So, if you’ve got some savings sitting out there and you’re keen to get the best rate you can without tying it up in term deposits, this sounds like a pretty good deal. I was going to set one of these up for myself – as a NAB customer it would be pretty simple, though internet banking - but we ended up setting up our new mortgages with 100% offset accounts, so we don’t really need a savings account because the offset accounts save us more interest than we’d earn. But that’s a topic for another post.