09 Aug

sing hallelujah

… Because we have finally put in the tax returns for the last two years. And, the accountant estimates that altogether we should receive an $18,000 refund.

Woohoo!

Has that inspired us me to complete the tax return for the year just gone, or even sign and send back the forms so we can get these ones processed? Of course not. Well, okay, the forms are going back today, with only a week or so’s delay. (We had to remember to print them out at work because our printer is out of ink. What, you say I can buy more ink? You have blown my tiny mind.)

What it has done is prompted me to start thinking about filing and storing documents to make this whole process easier. The main holdup for this whole thing has been collating the documentation: do we have it, do I need to download online statements, where the heck are all the receipts for things we did to the rental property? And, of all these health-related receipts which ones do I actually need to keep?  The original delay back in 2010 was because I couldn’t find the receipt for a Java programming course I did at TAFE. It cost $400 and was tax deductable, but I couldn’t find it, so I just kept looking. Eventually I worked out that I could just let it go but then momentum was lost.

I’ve been doing an online workshop called Organise Your Paper Clutter over at Simplify101, and it was brilliant. I totally recommend it. Slowly I’m developing systems for corralling paper as it goes in, working out what needs something done and what I need to keep for reference, and actually getting through the backlog. I’ve still got heaps to do, but I’m getting there. Slowly. (And it’s FUN.) At the start of the workshop you had to say what your goals were and I didn’t really have any, apart from “no more piles of paper everywhere”. Now I can say that what I really want is to be able to put my hand in a drawer (or on a computer mouse) in July and be able to pull out everything we need for tax time, without too much pain. And to be able to do the same with any important piece of paper, really. And no more piles of paper everywhere, too.

I haven’t got any answers for how to do that yet, but as I keep filing my backlog and also get around to doing this year’s returns, hopefully something will take shape. And I will tell you!

02 Jul

picking up the pennies

Our finances and I, we’ve been on a break for almost 18 months. It started in February last year when I took over the finances of Dave’s sister and her partner for a little while. I was trying to get the hang of working full time again and still dealing with sleepless nights and the time-suck that is a baby, and I just didn’t have time to do both theirs and ours, so ours started to slip. Then around that time Dave started muttering about feeling too constrained and never being able to buy anything. I’d been uber-frugal whilst on maternity leave, stressing about any non-essential purchase and indeed many of the essential ones too, and he was sick of it. So I decided it wasn’t worth the bother, why not just relax for a bit, let it go?

And it was so freeing. If we wanted to buy something, we did. Dave did projects in the back garden, refinishing the decking and turfing a handkerchief-sized bit, and I didn’t blink or say that putting down seed would be cheaper, and it was so nice not to worry about it. It was like a little holiday. We didn’t go crazy, but we did spend a couple of hundred dollars putting together some customised Besta shelving in the play room, and when we went up to the King Valley for what is now becoming our annual expedition I didn’t stress about going over our wine budget.

(Well, okay, maybe I did a little, but then I’d open one of the products of that trip and everything would seem ok.)

So it was really nice. But lately, I’ve been thinking I’ve had enough of the holiday. I miss my spreadsheets, I miss knowing exactly what’s going in and coming out, I want to impose some order on our spending. I miss the feeling of achievement I had when I was paying down debt and while I’m not going to focus on that (our only debt is mortgage related and too big to feel like we’re making the same sort of progress) I can declutter our spending and make sure we’re spending wisely. I’m fairly sure there are a lot of areas where we’re frittering money away unnecessarily and I’m itching to stop it.

Yesterday marked the start of the new financial year and that seems like the perfect time to start afresh. Actually, I originally wanted to start afresh back at the beginning of this CALENDAR year, but I procrastinated on it so  long I decided to abandon reposition my goal. Ahem. See, I was trying to catch up with the account tracking but procrastinating because I was MONTHS behind and filling in all those transactions into MS-Money isn’t exactly fun, you know? Then at one point I tried to archive off a past year’s stuff without doing a backup first (I KNOW) and my file got corrupted and trying to unpick whatever the heck went wrong was HARD. So I bought stuff on eBay instead. But time inched along and my love for a fresh start finally won out.

Why didn’t I just draw a line under wherever I am and start again? Because I run an envelope-type system and I wanted to know what’s in each bucket. There might be $20,000 in the accounts, but a lot of that is emergency fund or extra mortgage repayments (we have an offset account, so money we’re likely to want to use again stays there rather than getting put on the mortgage itself). Then I had an AHA! moment. All I really care about is how much is in those two buffers; the rest I usually zero out (taking any excess or topping them up if they’ve gone over) at the start of the financial year anyway. So who cares what’s in them now?  Suddenly the catching up process got a whole lot easier. I exported the account transactions to a spreadsheet, assigned broad categories to each (mostly they hit ‘misc’) entered a few bulk transactions in MS Money et voila we are caught up.

Phew! Made it!

Okay, so I don’t have the individual transaction data in the file but it’s available on the bank statements if I need them and let’s face it, how accurate was it likely to be anyway?

So now I’m ready for a completely fresh start. I want to start tracking everything closely again and do a full review of all areas of spending to  make sure we’ve got the best deals on utilities and insurances and the like, and also work out why the heck our average monthly spending is about $4000-$5000. I want to create better reports and filing systems so tax time is a lot less painful. Then there’s bigger things, like creating wills and life insurance and setting up a self-managed super fund. And, paying off that mortgage. It’s all pretty exciting and it makes my little spreadsheet-loving heart glow.

Have you taken a break from tracking finances (or calories, or anything) and then gone back? How was it? Does anyone procrastinate about stuff  like this as much as I do?

20 Jan

Profligate?

The other day Living Almost Large wrote about a friend of hers who was planning to return to work because she didn’t think their family income, at $130,000, was enough. She thought they needed $200,000 to live comfortably. LAL was surprised (quite fairly, IMO) that $130,000 was not enough for a good lifestyle, and wondered if any amount of money would really make this lady happy, or if she’d just keep experiencing lifestyle inflation and wanting more than what she had.

I wrote a comment that basically said that between us Dave and I make more than the magic number (even with me going part time in a few weeks we’ll still have around $200k a year pretax) and that when we did our budget we wondered how people lived on less, since I felt we were fairly frugal. I’ve been thinking about it though, and probably that’s not the case. We are careful with money in many areas and we definitely live within our means, but we still have a fair amount of discretionary spending. I would say we are “living comfortably within our means”, but our means happen to be quite large.

(Before I go on, we have to remember that I’m in Australia. Things cost a lot more in Australia than they do in the US – despite our currencies hovering around parity – plus our interest and tax rates are all different. So it’s not that meaningful to compare direct numbers, but I’m hoping this gives you an idea.)

I’ve always run a tight budget – well, when I wasn’t digging myself into a huge pile of debt. I basically run the envelope system, where every week I put aside money into each “budget bucket”. As well as the ones for necessary expenses for groceries, bills, mortgage, insurance, our investment properties etc etc etc, I also put money aside for things like entertainment, things for the house, and our own personal spending. There’s usually at least a couple of hundred dollars left over each pay (which is fortnightly), and that used to be used to pay extra off our home loan, but at the moment I’m putting it aside to pay for some expensive renovations we’ve got coming up this year. I generally revisit the budget in December and June; some buckets will have underspent, others will be in the red, so I “sweep” the money around to balance it up, and readjust the fortnightly numbers to reflect this.

So the fact that we have several hundred dollars leftover at the end of each pay period makes me feel that we’re doing okay. Sounds fair, right? But it’s that discretionary spending that’s got me thinking. When we bought our current house I was listing out our finances for the bank and I was shocked at the total amount. I’d never totted up all those individual buckets before, or converted them into monthly amounts. It was a seriously big number, and we were happily spending it. I cut all of them back after that, but still, they’re there.

I wish that finances weren’t such a taboo topic because it’s so hard to work out if you’re doing okay compared to your peers. (And the measure against your peers, not people on lots more or lots less money, is what I think is important.) For example, in our group of friends there are two families where the woman hasn’t worked for a few years (one was on maternity leave for 18 months, the other is – now that her maternity leave is finished – at uni studying to be a midwife). They both are pretty spendy, buying designer kids’ clothes from the states, scrapbooking and Tupperware, going on trips up to Sydney or out to dinner. I always felt bad because we couldn’t afford to do that, and wondered why we couldn’t manage as well as them. Sure, they’ve had their houses for over 5 years now so their mortgages are much smaller than ours, but we earn more; shouldn’t we be better off? But then they both separately told me that they’ve been going backwards on their mortgages all this time. (If you’re ahead here or have equity, you can redraw or suspend payments.) The one at uni is actually haemorrhaging at least $20,000 a year. I was shocked. Not because of the going backwards – uni was expensive, and we used savings when I was on maternity leave—but because even while this is happening she’s still buying those damn scrapbooking supplies.

Her husband said something interesting to Dave. He said, “We could just work really hard and pay off the mortgage, but we could be dead tomorrow. I want us to have a life too.” And after thinking about it, I agree…

 (IF you are living within your means. They are definitely NOT, so the gym membership and the buying of the fancy kids clothes should stop NOW.)

…We could cut everything way back, not buy wine, not spend money on the house, but why should we? We work hard for this money. Well, okay, we are employed for many hours for this money. We should enjoy it. So, as long as we’re overpaying the mortgages (by about $12,000 a year at current rates), have good investments gaining value, and never carry credit card debt, I’m okay.  We’re moving forward I can’t deny that I’d love it if we didn’t need my salary at all and there is room to cut back on some of our non-discretionary costs, but I’m comfortable with where we are.

There’s so much more to say on the subject, so many different directions this discussion goes in, but I’ll leave that for another day. Meanwhile, what are your thoughts? Also, I don’t mind going into more detail because I find other people’s finances interesting but are you interested in knowing more about our situation or do you really truly not care?

01 Jul

spending slip-up

I’ve started helping Dave’s mum and sister with their budgets so they can learn to be better with their money. I love budgets, working out the spending plan and keeping to it, and especially paying down debt, but I hate bossing people and telling them what to do, so it’s slow going. Which is annoying because our budget isn’t that interesting at the moment. Anyway, as part of that, we all started keeping a spending diary. I bought them little notebooks where they can jot down everything they spend. It’ll help work out exactly how much they spend on each sort of budget area, but mostly it’s to try to keep them mindful of the “little” cash purchases, the ones you don’t really think about. I want them to realise that yes, that hot chocolate, or that crappy toy or that cute little outfit for their darling niece (ahem) is only $3 or $5 or $15, but the money has to come from somewhere in your budget. And also $3 or $5 or $15 might not be much in isolation but um, have you noticed how often you’re buying one of those and look what heppens if you add it all up?

So it’s all about mindfulness and just starting to work out where that $50 you took out 3 days ago has gone. I started keeping a spending diary too for moral support and to be a good example, so it’s a bit ironic that suddenly I’ve gone on a bit of a spending bender. It’s not a lot, just things like $40 at Kmart on some organisational things (a coat rack, a new foam underlay for my ironing board, a laundry basket) that I’ve been wanting for ages and make me feel happy and organised, and they all come out of my budget, but if you look through my notebook it looks like I’m spending on fripperies. Plus I keep forgetting to write stuff down. I suppose it goes to show it’s a habit that takes time for anyone to get into but I don’t like spending money willy nilly!

Anyway, my worst spending was when I was up in Ballarat. I took my laptop along with the idea that I’d get to do some writing up there (hah!) and I also took my little USB keyfob thingy that gives me 3G internet connectivity. Except once I connected up and started surfing it told me I didn’t have enough data to continue, because Ballarat is not in a 3G area, it’s only 2G, and to connect to that I needed to buy a separate block of “roaming” data, which cost $7.50. Not much, right? So I did, and wasted a happy half hour or so checking people’s Facebook statuses and stuff.

But here’s the thing. It was *only* $7.50, but it expires in a month. I’m not likely to be back in Ballarat in that time, and I don’t go anywhere anymore that I need the connectivity. (It’s true that our house is annoyingly in some sort of 3G dead area so I could use it here, but our home network works fine.) I was only in Ballarat for two days, I could have gone without internet for that time. Wasn’t getting away from everything one of the reasons I went up? Plus my phone has (annoying, clunky) internet connectivity so if I really wanted to check my email I could have done it on that.

So I’m a bit annoyed at myself. Yes, it’s only $7.50 and I used to spend more than that on lunch every day, so in the scheme of things it’s not much. It’s just annoying that I made this sort of beginner’s slip-up and it’s going to expire without being used. Plus, right now I only give myself $25 a week spending money, so there’s a huge chunk taken out of what I was saving up for more organisation stuff, or maybe even some jeans that fit.

On the other hand, I was at my Aunt’s house and when I was sitting on the floor playing with Bianca I noticed that on her shelf she has 20 DVDs (I counted) and every single one of them is of Andre Rieu. Every single one! Now, maybe she keeps her other DVDs somewhere else, but how is there even that many ways to look at that man?

17 Feb

Sorting out maternity leave options

We are very blessed, here in Australia, with the ability to take extended maternity leave. We have the right to take up to a year without risk of losing our position, and some (most? many? mine anyway) employers may extend that to 2 years if you request it. They even – shock! – let the father take paternity leave for the same period, although the rule usually is you can’t both be off at the same time. None of that enjoying time off as a family business, thank you very much.

So I’ve been spending the last couple of months deciphering the policies of both of our employers, trying to work out what we can do. It’s not helped that neither of our jobs has a visible HR presence anymore. There’s got to be someone, outside of the outsourced helplines*, but neither of our “people leaders” (bosses) could give us any names. So we do our best to follow the procedures, and convince our bosses that we’re doing what we need. All fun.

So anyway, this is what I’ve discovered for our situation:

  • we don’t qualify for the Baby Bonus, or any governmental child assistance. No surprise there, Comrade Rudd’s policies are well known.
  • both employers say we can have up to 52 weeks parental leave. Dave’s says we can overlap and be off at the same time, but mine does not (apart from a week after the birth) so no overlapping it is.
  • when I go back to work, I have the option to request “parental part time” work; that is, to switch to part time for one or more periods up to when the baby is school aged. It means I have extra flexibility but don’t have to permanently switch to part time. But, my employer does not have to approve it and I do not necessarily get to stay the same grade as I am now, whereas if I return as full time, my grade and position must stay the same.
  • I get 12 weeks paid leave, which I can take as 24 weeks at half pay. This is better for tax, so I’ll be doing it that way. (This is not standard across all companies in Australia, but I know many do it.)
  • even better, Dave can also take 12 weeks fully paid parental leave, as long as I have gone back to work and he is the primary carer. (This is absolutely not standard, so they must be applauded for getting at least one thing right in a sea of wrong.) All he needs is a letter from my employer saying I will be returning to work when he is on leave.

 

I want Dave to be able to take the time to be with the baby if he can, so many men don’t get that chance and anyway, it’s free paid holiday (as far as he thinks, anyway), so why not? Good lord, if they offer it, take what you can. So it seemed pretty simple to say I’d take the first 40 weeks (with 24 paid at half pay and 16 unpaid), and then return in December as parental part time, while Dave did the final 12 weeks.

But we hit a snag: in Dave’s policy there’s no definition of what “primary carer” means. Is it enough for me to have returned to work part time, or must I be full time? What if I’d returned for 3 days/week, proportionally that makes Dave the primary carer. Finally Dave tracked down an HR person (in Australia) who said, no, it meant full time. Dave pointed out it didn’t SAY that and she said it didn’t matter, that’s how she would interpret it and that’s what counted. Which… okay. This is what they do at his work. You’d think it’d be easier to write a watertight policy, but no.

The problem with this is it’s not clear if my work will let me come back full time and then switch to part time after 3 months. In which case, bugger. We need a new plan. Luckily, our policies are a bit better written and say I can request it at any time. I just may not get it. That was also when I discovered I wouldn’t necessarily get to be the same grade or position. Okay, that’s a whole new layer of things to worry about.

Finally I wrote my boss a rambly email about this, and the next day when he was in he sat down and sketched out a timeline of what I’d like to do. And he said he’d never had to deal with parental leave stuff in his short time as a team leader but if the policy said he could do it, he had no problem with it and he’d be able to plan around it as long as he knew it was coming.

I guess I’m really lucky that I have a boss who’s got kids and a wife who worked part time. And that he’s not a stickler for policy and things are pretty relaxed around here right now. And hopefully that I’m seen as a reasonably good resource.

So right now, all we’re waiting for is for him to write a letter saying that he is my line manager and that I’m coming back to work full time on 6th December, so Dave can request his parental leave for the end of the year. Then once I’m back we start the process to switch to parental part time.

On the one hand, I’m a little disappointed about coming back full time rather than part time. I’m worried that all my carefully crafted routines will go out the window when Dave’s in charge of the little one. Which is silly because, these routines? They don’t even exist yet. Who’s to say I’ll get them done anyway when there’s so many infomercials to watch every day?

On the other hand, it will be nice to effectively get a little extra cash injection from us both being on full-time pay for those 12 weeks. It will make up for any shortfall we’ll have while I’m not working. And, who knows? Maybe Dave will love not-working so much it will help get him more on board with my frugality push!

Who knew it would be so difficult to sort all this out? I know I should be grateful that my work is so flexible, and I am really. But at the same time I feel like I’m trying to line up two pieces of snaky hose without holding either of them still, and I could really do with someone saying to me definitively, “Yes, that works. We agree we’ll do it that way.” Because even though there’s no reason to think they wouldn’t agree, I’m still a little bit nervous about it.

* (Yes, both our employers have outsourced most HR functions overseas. And no, I don’t blame the workers there for not being able to interpret the finer points of the policy for us. It’s tempting, but that’s not what they’ve been employed to do. When companies do this, they do it to move the grunt work, the data entry, the fixing of easy problems, and the workers have specific procedures and targets judged by metrics and are absolutely NOT encouraged to think creatively. They don’t know the business enough or get paid enough to make the calls. (Neither, for that matter, did the grunts who did the same job here before it was outsourced.) It was done in an area which I have to work with regularly and I don’t deny it has its frustrations for everyone involved but please let’s not get sidetracked into debating offshoring jobs. The invisible HR people we both needed to talk to are still in Australia.)

 

 

10 Feb

Water bill shock

So I got our first water bill for the new house and our average daily usage is up to 457 litres. What does this mean, you ask? Well, we’re in a drought here with water restrictions, and we are asked to keep our daily usage under 155 litres per person. So for us, that means 310 litres/day. I don’t have our old bills in front of me right now but I’m pretty sure in the last place we were managing about 260 litres/day. So not only are we averaging a whole extra person, we’re almost 200 litres/day over what we used to use.

That can’t be right, can it?

I’ve been trying to work out what’s changed and really our use of water is no different. (It will be, soon, when I go on maternity leave. Eek!) But, this house is about 20 years old while the last one was only about 6 and built with different standards and with newer, more efficient appliances. I think a lot of it can come down to that:

  • the toilets in the last house were water efficient, while these ones… aren’t. They do at least have a half-flush option, but it seriously uses more water than the previous toilets’ full flush.
  • evaporative cooling: 18 months ago we installed a system in the last house which only used 10 litres of water per session and didn’t dump it until an hour after you turned it off, in case you changed your mind. Old systems are much less efficient and also dump the water regularly while running. I’m not sure how old the system is in this house, but it’s not new, and it’s been a hot summer.
  • we have an automatic watering system that comes on at midnight for 15 minutes, twice a week. This is new to us and might need to go.

Other than that, we’re using the washing machine, dishwasher and showers the same as we used to. So can all of this really add up to an extra 200 litres usage per day? It’s hard to believe. So I guess that also leaves leaks in the system, and errors in the bill. We have just been given a new water meter, maybe something went wrong there. It’s all stuff to investigate.

We do have the option of making changes like installing newer toilets and hooking the automatic sprinklers to the water tank. There are companies around that can come and do an assessment of your home and suggest ways you can improve the energy efficiency, for example by changing insulation or windows, or installing solar hot water systems or panels. A friend recently had this done and it’s something I’ve been meaning to do. The Australian government also has a Green Loans program where you can borrow up to $10,000 interest free over four years to help fund the changes. We should qualify for that, assuming it doesn’t run out of money soon.

Ah, the joys of owning a slightly older home. On top of this I want to get an electrician in to do an inspection and a few odd jobs, as it turns out we don’t have a trip switch on the fuse box and the spa may not be connected properly. Plus we’ve got some vines heading into the roof space, with possibly some damage there. These are all just little nagging maintenance issues that are annoying and I don’t know how much they’ll cost to sort out, which is a bit stressful right about now.

I suppose this is where some people would start the argument for renting instead of owning, but I wouldn’t want to go back to renting. Right now we’re in a home that we love, where we can change anything we want and are not at the mercy of shonky landlords. No one cares if we put up a shelf or paint a room or let the garden go. We can fix our wireless internet problems (the house is very long, and the wireless range doesn’t cover the whole of it) by wiring everything up instead. All of this adds up to a lot of freedom. Besides, I like nesting and making a home, and I like the idea of being able to change things we don’t like and improve them. We can see ourselves being happy in this house for 10 years or more, so the idea that we can make it just the home we want is pretty exciting. Is it the absolute best frugal financial decision? Probably not, but it makes us happy and it matters to us. We can be extra frugal in other areas instead.

Anyway, if we were renting this house we’d still have to pay the water bill, and we wouldn’t be able to do anything about it :-) I guess I’ve just got another fun home project on my list now. You know, in all my upcoming spare time.

05 Feb

Emergency fund progress and thoughts

In happier news (I am feeling happier), we’re doing really well on one of my goals for the year, which was to get our emergency fund to $20k. I’ve finished balancing the accounts for January and we’re already up over $17k. This was massively helped by a lump sum from end of year bonuses of $9500, but even after that we’re doing really well.

I’ve been thinking about it though, and I’ve decided to pause the “emergency fund” at $15k for now. This is mostly a mental thing. Bytta at 151 Days Off recently wrote about whether you should have a cash reserve or an emergency fund. She says labelling it an “emergency fund” would “plant in your mind how 1001 disastrous events could unfold in your life, hence unwittingly or subconsciously attracting them”. Instead she suggests calling it a “cash reserve” as it has business connotations of a fund to cover expenses beyond the usual expenses, and is also open to being used for new opportunities.

I’ve been thinking about it and I think she’s right. Also, I have a mental block about using the emergency fund – it has to be a real emergency before I’d want to tap into it, and I’d hate to see that number go down. The thing is we’ve got a lot of unknown expenses possibly coming up this year, some of which include:

  • we don’t really know how much the baby’s birth will cost. We’ll be out of pocket at least $800 for the hospital stay (that’s our excess/deductible), and it’s possible there’ll be some further bills related to the obstetrician that are not yet budgetted for.
  • we need to switch cars soon, selling Dave’s beloved RX-8 and getting a used Volkswagon Passat wagon instead. From the prices on carsales.com.au we think we can pretty much do a direct switch but I’m prepared for a couple of thousand dollars extra needed there.
  • I get maternity leave paid at 50% of my salary for 24 weeks and we can live quite comfortably in that, but that leaves at least 16 weeks where I’ll not be bringing in an income. (We’re hoping Dave can take paid parental leave for the last 12 weeks.) We need some cash reserves to cover that time.

See, none of those are emergencies, so I would have a really hard time paying for them out of the emergency fund, plus how not-fun will it be to see the numbers going down! So instead, our excess funds are now divided into 3 branches:

Emergency Fund
As discussed, this is for the real emergencies and is currently capped at $15k. I’m glad we have that there.
 
Extra Mortgage Repayments
Most of our mortgages are variable rate, which leads to some uncertainty on budgetting. So, I make a repayment buffer by budgetting the payments as if the mortgages are all at 8%, which is a reasonable forecast for say two years from now. But the mortgages are currently only at 5.74%, so the 2.26% difference in payments is put into this bucket. This gives my budget a nice buffer, and also, if rates rise up high enough that we can’t cover the payments with our budget, I can dip into these funds. I can’t see that happening at least for a couple of years, and we’ll have no problems by then.

I could actually pay it directly off our mortgages and redraw it later if needed, but there are some Australian taxation issues which make this less than ideal, so instead it stays in our bank account which has a 100% offset against the mortgage. (This is quite interesting for Aussies, so I’ll talk more about this another day.)

I’ve been doing this since we settled on the mortgages at the end of October, and there’s about $2,600 in this fund already.

Cash Reserves

This is where the “unassigned” portion of our salary now goes, ie what’s left over at the end of the pay cycle when we’ve budgetted for everything and any unexpected expenditures have been paid. Currently we’ve got a healthy $1500 per fortnight unassigned but at the end of this month it’ll go down to more like $400 when my pay is halved for maternity leave.I’ve only just started this bucket since the emergency fund is complete so it’s not got anything in it yet. Actually, it’s at -$400 because we withdrew $1000 to open an investment account (which is something else Bytta talked about and again, I’ll say more about soon). This is maybe what other people call their emergency fund, and where all those unexpected expenses I listed above will come from. Hopefully we’ll have enough to cover our needs and the time when I’m not earning, plus we’re due a fairly good tax refund when we get around to filing, but if not then I have the option of cashing out some long service leave which will cover us fine.

(To be honest, the only reason this is separate from the extra mortgage repayments is that I like to see where each bit of money is coming from separately. It feels tidy, but they’re all there to be used if necessary.)

So that’s it. My cash buffer: Real Emergency Fund, Extra Mortgage Repayments, and then our Cash Reserves. I’m feeling really good about this, it’s only a few months since we bought our latest house on the spur of the moment and I had quite a bit of anxiety about how we’d manage with the baby, and yet so far it’s working out fine and I’m feeling comfortable about the rest of the year.

That doesn’t mean I’m letting Dave buy any more gadgets though!

30 Dec

Mansion or ghetto? Or something in between?

I’ve been thinking a bit about Dog’s situation over at Dog Ate My Finances. She lives in a crappy rental property that she hates, but she can’t afford the kind of house she wants, and she doesn’t want to buy a “generic townhouse” that she’d have to sell in a few years time. And she seems to have a mental block on upgrading to a different rental property – I think she sees it as dead money. So she’s talked herself back into staying where they are, even though the apartment is old and doesn’t fit her needs, and her cars keep getting broken into. She doesn’t see any other option — or more accurately, she’s written them all off.

It reminded me of our situation when we moved back to Australia. We were looking to return in December 2007, just in time for Christmas. At the time the rental market in Melbourne was going crazy; there were news reports that for any property that came up you’d have 50 couples swarming the place and there were rental auctions going on. It was mad. We had friends looking at the time and they said it was true.

Now, as it happened, my work moved me to London, so they were organising moving me back, and as part of that we’d get 4 weeks’ accommodation in a serviced apartment when we arrived. But what we didn’t get was any assistance to find a place to live (unlike when I arrived in London; I guess you’re expected to know your home town yourself). It was all down to us. How would we manage to find a place that was available within those 4 weeks? Also, we wanted to buy a house, but that would mean trying to line up the end of leases with the purchase – and with the market as it was, no one needed to take on a short term lease.

So it made sense to buy before we got back. The only thing was, the kind of property that we wanted was a larger house maybe 30-40 years old, which needed some work. And it’s really hard to judge that over the internet. We tried sending family round to look at a few places, but it didn’t work. They didn’t understand what we were looking for, so they’d come back and say “Oh my god no, there is bright red shagpile carpet everywhere, run!” Well, I don’t know about you, but I like bright red shagpile, and maybe the rest of the house was okay. But the point was, buying a house you’d be happy to live in is a completely subjective matter. It depends too much on gut feel and instinct, you can’t trust it to other people, and they don’t want you to either, in case they get it wrong and you end up hating them as well as the house.

But you know what is easier? Buying an investment property. Then it comes down to cold facts: is it close to transport? Does it have a garage? Is it low maintenance inside and out, with enough bedrooms and bathrooms for your target market? We decided that we wanted an investment property eventually, so why not buy it first? We wouldn’t have to LOVE it, it just had to be good enough for us to live in for maybe a year while we looked for the house we really wanted.

So we looked, and within a couple of weeks had found something that met our needs exactly. Better yet, it was in a largish development of similar properties so we could see what they’d been going for. So we bought it. Settlement was in December, a week before we got back in the country. Perfect.

As it happened we loved the house, which was good because it soon became clear that we’d been a little unrealistic about being able to buy a second house within a year. (It took us TWO years to get to that position.) Now, we live in the second house and rent out the first one. And we love the second house.

So this is what I think Dog should do – stop thinking about it in terms of a Mansion or Nothing. Buy the generic townhouse, but with an eye to it being a good investment down the track. It’s a reasonable compromise, if you do the research and are smart about what you get. And the mortgage would be a lot less than the mansion’s, and it wouldn’t be the dead money renting something else would be.

Disclaimer: I don’t live in the US, so I’m not completely familiar with the ins and outs of purchasing properties there. But Dog’s already been approved for a modest sized mortgage, and people are still buying properties. It doesn’t matter what she intends to do with the property a few years down the track, she’s planning to live in it now.

 

29 Dec

Christmas dividend joy, and stuff

I was just catching up on the mail and we had some dividend statements for the company I work for (and where Dave also used to work). It turns out we have 102 more shares than I thought we did. On the one hand, woohoo! That’s another $2700 or so in our net worth. But on the other, how embarrassing! It doesn’t really matter because they just sit there, but I’m embarrassed that I am so gung ho on budgetting and spreadsheets and can balance our accounts down to the cent, but I lose track of shares and have no real idea what our superannuation is doing. Really, it’s a mess. I have lots of work to do in the coming year to get us sorted out.

Still, it’s a lovely surprise, even if my statement says I’ve got unpresented cheques (unlikely, since I’ve always had direct deposits done), and that Dave’s dividends are supposed to go to the account that he closed a couple of months ago. Oops.

*

Christmas was a great success. Everyone had a lovely time (or at least lied and said they did), and I got by with the minimum of screaming matches with my mum. We got some lovely pressies too. My favorite was the complete boxed set of Friends DVDs from Dave. When we lived in London Friends was on about 4 times a day on various channels, and during my 2004 Summer of Despair before I met him, I got in the habit of watching every single showing. So after that it was a joke that Friends was always on. But here, it isn’t! So he bought me the DVDs so I can watch them while nursing the baby, and I cried because really, he is the most thoughtful person. I got him a book on forbidden Lego models and half a Crumpler bag for work (the other half was his family Kris Kringle gift) and he was happy too.

Mum stayed with us from Christmas Eve through to Sunday when we drove her back to my home town, and it was mostly okay. Our relationship is… frustrating, is the best word I can come up with to describe it. Frustrating, for many different reasons and for faults on both our sides. Remind me to tell you about it sometime. It’s hard to explain without giving you the full story but the full story would probably take up the whole internet so it will have to wait. Anyway, we had a few issues on Christmas day, but afterwards we were mostly okay and Saturday was actually successful. And then she went home :-)

Yesterday (Monday) was Boxing Day holiday here and we went to see Avatar in 3D, which I thought was absolutely brilliant, and then we went to Myer and bought a Dyson handheld vacuum cleaner. I have been lusting after one of these for ages, we really need one because of the budgie and the new baby and I just don’t want to have to haul the big vacuum out every day. It has a power head! Myer only had it 15% off, but we also had a bunch of reward gift cards that have been hanging around for months, so we ended up getting it for $200 instead of $349. And I thought that was absolutely brilliant as well.

And then Dave’s sister and her boyfriend came over and we had a BBQ and played a couple of games of Ticket to Ride until midnight, and now I’m exhausted and I don’t want to see a single other person for a week at least.

I hope your weekend was as successful!

 

24 Dec

2010 goals

A lot of my blogs have been setting their goals for next year, so I’ve been trying to come up with mine. It’s hard because I have no idea how next year will go. I could say that about every one of the last 6 years, but this one will definitely be different. I’ll become a mother. I’ll be moving to a part-time salary, and although I’ve worked out a tentative budget that shows we can do things quite comfortably, I have no idea how out of pocket we’ll end up with the birth, or how much the baby will cost (although Mum’s gone a bit mad buying stuff and friends have been very generous, so that helps out.) Hell, I have no idea at all what being a mother will do to me or my life, so it really is all up in the air right now.

I’ve not really tried setting goals before. Resolutions, sure, I make a billion of those, and promptly forget them. One year I had 13. How many did I achieve? Your guess is as good as mine. So for the last few years I’ve not bothered making them. Best to avoid the sense of failure. But I can see the point of setting goals, especially financial ones, otherwise you drip through the year with no focus. But how to do it? Goals should be achievable and measurable and everything else that makes them SMART. Also, I don’t want to have a goal for each aspect of my life (too much to focus on), but neither do I want just one financial one (an area that IS measurable) that I’ll get obsessive about, I’m obsessive enough about that already. So what to do?

I was talking to Dave about it and he gently pointed out that I am a knucklehead and next year WILL have one main focus, and it won’t be finances. We are becoming parents, everything is going to change. Thus, 2010’s goal should be to adjust to parenthood.

Spend the first three months preparing for the baby, then recover from the birth and adjust to being a mother. Look, I have no idea how I’ll go with that, other than it will change everything for ever (thanks, friends with helpful comments). I’ll probably be overwhelmed by it all and I’ll likely get postnatal depression. So he says I need to forget everything else and concentrate on that, get settled into being mum, get healthy and well, get our routines going and so on. And he’s right. I know he’s right. It’s really important and it doesn’t come at all naturally to me, I need to give it all my focus.

But I’ll need some sub-projects to keep me going, right? You know, for when it all that parenting gets too easy? So here are a few more I came up with.

Finance

  1. Get emergency fund up to $20,000.My ultimate goal is $30,000 (6 months full expenses including mortgages for rental properties), but I’ll aim for $20,000 by the end of next year. It is currently sitting at $9,500, so we can comfortably make $20k by adding about $1000 a month.
  2. Work out exact financial position. I’m embarrassed to say I don’t really know where we stand at the moment. I’ve lost track of how many shares we have (we get some as part of our end of year bonuses, usually held in trust for a year or more, and I’ve not kept the records of what’s vested and what’s not, up to date), and some of our old superannuation funds have old addresses so I haven’t got up to date statements from them. Plus, Dave tends to be a bit slack with some stuff like managing the account for paying one of the investment mortgages, which makes it hard for me to know how the budget’s going, so I’d rather just get it all under my control.

    This one also means making sure we’ve got everything covered that we should, like life insurance and wills, and to start getting educated on our superannuation options.

  3. Grow net worth by $50,000. Again, I don’t know what the current year will bring so I don’t know how realistic I’m being, but if we include superannuation contributions (as we must) this should be easily achievable. It will be hard to definitely assess our success because a lot would depend on property valuations and I can’t see us paying for new ones again next year, but we’ll do what we can. For the record, I did some sums and I estimate our current net worth as being somewhere around the $490-500,000 mark, so $50k would be a nice round 10% increase. (See why I need the exact financial position? $500k would be such a nice milestone to hit and I don’t know if we’ve made it yet!)

Organisation – get home life in order

This one ties into the main goal of adjusting to parenthood, and just getting our lives working smoothly so things don’t fall apart when I go back to work. One of my most common freakouts is that I don’t feel like I’m coping now, so how will I manage when there’s a baby to wrangle as well? So this is all about setting up routines and systems, like meal plans and filling the freezer so we have food, and getting housework and admin down to a quick art. It bugs me that I always have a big list of things hanging over my head that should be done, so I want to make a concerted effort to work through them all and get them sorted out once and for all.

(And before you point and laugh at me for thinking I can do that with a baby around, she won’t be here for a few months yet and hopefully will sleep a lot at first. I could be kidding myself, but leave me my illusions for now, okay?)

Health and wellbeing

Dave says he wants to get down to 85kg (um, about 187lb) by the end of the year. He’s 6 feet tall with a chunky muscular build anda bit of a belly and probably weighs about 104kg (229lb) at the moment. I can’t imagine him that light but he thinks he can do it, and it will help with his cycling. I was 85.9kg (189lb) when we got married and am 94kg (207lb) right now, so I figure I’ll target that too. Ideally I’d like to get under 76kg (168lb) which would get me out of the obese range for my height, but I honestly don’t know how I’ll go. I’d rather have a modest goal I have a hope of achieving than something I don’t believe I can do.

Really though, I’d just like to finish the year feeling fitter and healthier, with better food and exercise habits and a body that doesn’t hurt. This will be part of establishing our new routines. Details still to be worked out.

So that’s it. Of course I’m most interested in the financial ones right now because I’m comfortable in that area. I’m actually quite excited about what next year will bring,

What do you think of these goals? What are your goals for the coming year?