Wednesday 21 December 2011

McDonalds pulls the plug on free access to Maths Online

I think that I had previously posted that Maths Online is a great study tool for secondary students (or advanced year 5/6 students) and how it was great that McDonalds was sponsoring access to it for all Australian students...

Well, the SMH had an article today revealing that McDonalds had decided to wind back its sponsorship, so that from next year only McDonalds employees will get free access (available while on their MeTime breaks!).

I think this is a poor decision by McDonalds, and I sent them a comment today (via their website feeback form) telling them as much.

As you can see below, their response wasn't very satisfactory, especially in light of the TV ad campaign they had previously run trumpeting the expansion of their sponsorship to make Maths Online available free to all Australian students (without any mention of a time limit)...

"We look to fund projects that support our employees and compliment the skills they learn at McDonald's by supporting their studies at school. When we decided to finance the program for all secondary students, it was always for a three year period and that's now come to an end. We have been pleased to be able to support such a great initiative.

We are still providing the service to our 85,000+ employees, so if you have a family member who works at McDonald's they will be able to access it through the internal MeTime website."

Hopefully if enough customers complain about this decision McDonalds may change their mind.

Otherwise I'll have to save up the annual fee by cutting out my occasional meal at McDonalds ;)

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Monday 5 December 2011

Finally, a High Distinction

My uni results for last semester came out this morning, and I finally got an HD. 'Galactic Astronomy and Cosmology' (aka GAC) was probably the most difficult of the subjects I've completed so far towards my Master of Astronomy degree, so I was a little surprised to get an HD. Looks like none of the other MAstron students found this subject any easier than I did.

I recently came across the blog of Rick Boozman, a 58-year-old retired software developer who recently completed his MAstron from JCU (with nearly straight HDs!), was awarded the University Medal, and is now working on his PhD in astrophysics. Its reassuring to see another mature age student has successfully progressed from the JCU Mastron degree to a PhD, although my results aren't quite up to his standard ;)

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Friday 4 November 2011

Wealth - compare global, act personal

The Credit Suisse Research Institute brought out their second annual 'Global Wealth Report' last month (link to free pdf here). It makes interesting reading, although its a bit depressing as it shows that my personal wealth accumulation has been badly underperforming both global and Australian benchmarks since the GFC. That can probably be accounted for by comparing my distribution of financial and real assets and debt load compared with the national average, as shown below:

This shows that although my financial:real asset ratio is similar to the national average for Australian adults (I hold about 4x the average amount of financial assets and 3x the average amount of real assets ie. property), I have much higher debt levels - 8x the national average (via property mortgages and using leverage for my financial asset investments). Overall, my net worth is 2.3x the average for Australian adults, but that is rather disappointing given my age, qualifications, and even my salary. With such high levels of gearing, my wealth accumulation strategy relies on a return to long-term trend rates of asset appreciation sooner rather than later. Otherwise, the servicing costs on carrying a large amount of debt at a time when asset prices remain flat will mean my wealth continues to stagnate until I'm eventually forced to reduce my gearing levels as I approach retirement.

ps. I haven't updated my net worth figures for the past two months - partly because I was busy doing our tax returns and a back-log of uni assignments, but also because falling Sydney property prices and a declining stock market meant that the results were bound to be disappointing. I'll probably get the figures up to date next week, once my uni exam is out of the way.

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Monday 5 September 2011

New Worth Update: August 2011

A fourth month of declining net worth. My geared stock portfolio dropped further into negative equity, which meant that our SMSF also had a bad month, as it is mostly invested in the stock market (via Vanguard High Growth Fund and some ASX200 CFDs (IQ)).

The valuations for our Sydney properties also dropped slightly, but so far Sydney property prices are holding up slightly better than in other Australian capital cities.

Assets___________$ Amount______$ Diff_____% Diff 
Stocks_*_________-$52,589____-$11,377______n/a % 
Retirement_______$347,483____-$13,817____-3.82 % 
Properties_______$975,738_______-$533____-0.05 % 

Debts____________$ Amount_____$ Diff_____% Diff 
Home Mortgage(s)_$359,614______-$455_____-0.13 % 

Net Worth________$910,748____-$25,272____-2.70 %
* the Stocks figure is portfolio value - margin loans. As my portfolio value (and margin loan debt) is around $500,000 relatively small movements in the stock market produce huge percentage swings in the net value of my stock portfolio each month.

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Monday 8 August 2011

Net Worth Update: July 2011

Unfortunately July turned out to be as dismal as May and June. So, if you want any more detailed commentary, just have a look at the May entry again.

My geared stock portfolio dropped further into negative equity, and so far it looks like next months report will be even worse.

Our SMSF also had a bad month, as it is mostly invested in the Vanguard High Growth Fund and some ASX200 CFDs (IQ) which are below our entry price. The next month will be even worse, with the CFD investment getting a margin call today, so I had to transfer some more cash from the SMSF bank account into the SMSF Comsec account.

In addition, this month the valuations for our Sydney properties dropped further, and it looks like property prices in Sydney will remain subdued for a while.

Assets___________$ Amount______$ Diff_____% Diff 
Stocks_*_________-$41,482____-$10,189______n/a % 
Retirement_______$361,300_____-$7,993____-2.16 % 
Properties_______$976,271_____-$7,510____-0.76 % 

Debts____________$ Amount_____$ Diff_____% Diff 
Home Mortgage(s)_$360,069______-$102_____-0.03 % 

Net Worth________$936,020____-$25,589____-2.66 %
* the Stocks figure is portfolio value - margin loans. As my portfolio value (and margin loan debt) is around $500,000 relatively small movements in the stock market produce huge percentage swings in the net value of my stock portfolio each month.

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Friday 5 August 2011

Some uni 'honours'

JCU must have recently completed some processing of last year's overall results, because in addition to finally receiving a 'Letter of Commendation' (for getting a GPA>=6.0 in 2010), I also got an invitation to join 'Golden Key International Honour Society' for a once-off fee of A$95 (I also paid an extra $19.95 for a GK lapel pin). Apparently the invite was sent via a mailing list provided by JCU of students with a result 'in the top 15%'.

The $115 I paid to Golden Key might be money down the drain - aside from not getting any benefit from the on-campus social activities (as I'm studying via distance education) I'm also not young enough to make use of the professional development or career assistance benefits. From various forum posts it seems that Golden Key is also treated with great scepticism by some students - with doubts raised about how much of the funds raised from membership fees actually goes back to members via services and scholarships, compared to the amount being used for 'admin' and paying salary to the executive officers of this "non-profit" organisation. But I'll be happy enough if I just receive my membership certificate and pin without any hassles. But the fact that the links to the most recent annual report and other regional reports are broken doesn't fill me with confidence about this organisation.

Anyway, I've wasted more than $100 on other silly expenses over the years, and at least this will give me something to put in the 'Awards and Honours' section of my application to enrol in the doctorate program at the end of next year ;)

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Wednesday 13 July 2011

Picking a High School for DS1

The NSW selective high school entry test results came out last week, and DS1 had scored well enough to be offered a place at his second choice selective high school. That selective school has very good academic results (in the top 10 HSC results for the state last year - comparable to his first selective HS choice, and also Sydney Grammar private school, which he'd also applied to). As the school he got into is only a short direct school bus trip from where we live and has good facilities, we've decided to enrol DS1 there. Sydney Grammar had phoned late last week to offer DS1 an "interview" for a place (based on his entry and scholarship test scores), but as he wasn't being offered a scholarship ("at this stage" - whatever that means), I decided it wasn't worth him even going for an interview. We can't really afford to send him to Sydney Grammar paying full fees for six years. Especially as DS2 would also be likely qualify for entry later on. Paying 12 lots of $25K annual school fees (plus incidental expenses), doesn't seem great value compared to the "free" education available from the local selective high school. Even if money was no object (or if DS1 had been offered a half-scholarship), the extra couple of hours travel time required every day would make the selective high school an attractive alternative to Sydney Grammar. The $25K pa not spent on school fees will mean I can continue making salary sacrifice contributions into my superannuation account, and so I'll be in a much better position to fund post-graduate studies overseas by DS1 and DS2 in ten years time. Or else the money could provide a home deposit for each of the boys, or provide them with start-up funds if they want to go into business for themselves.

I'm now trying to strike the right balance between letting DS1 relax and enjoy the rest of Yr6 (now that the entry tests are all out of the way), and getting him to still do a little bit of extracurricular study so he still has good study habits when he starts high school...

I ordered a copy of 'How to Be a High School Superstar' by Cal Newport, as I've found all his blog posts about uni study techniques and time management very practical. Hopefully DS1 will read through this book and find some tips on how to better organise his study time in High School. The one thing his primary school teachers keep reporting is that he could be better organised.

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Tuesday 12 July 2011

Another Term, Another D

Uni results for Semester 1 came out last week and I managed to get another Distinction in my MAstron coursework. I was hoping I might finally get an HD, but didn't realistically expect it as for two of my tutorial assignments I only scored 6/10 and 7/10, and the final exam included a few questions where I wasn't confident I had the correct answer. As the exam paper took about 14 hours to complete, I didn't have enough time to double check all the calculation questions, and some of my essay-style answers could have done with further consideration and a re-write.
Also, as there were only about a dozen students taking this subject, the university's policy on grade distribution made it tough to score an HD. With only one HD probably given out, you have to top the course to get one. My GPA of 6.0 is still pretty good, but not good enough for a university medal (which requires at least a 6.5 GPA, meaning I'd have to get an HD for ALL of the remaining three subjects - two of which are a literature review and a small "research" project, where the chances of getting an HD may be affected by what research project topic I am allocated).

The course is certainly interesting and fun though, so hopefully I can manage at least D's for all the remaining subjects, which hopefully will be sufficient to get accepted into the Doctor of Astronomy course in 2014.

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Monday 11 July 2011

Someone hijacked my old email account and sent spam!


I noticed some odd spam email I received that seemed to be coming from one of my old, unused email accounts (an account I just keep open in case I want to refer to an old email from years ago). I logged into that account to check what was going on, and, sure enough, the "sent" folder has a record of spam emails being sent out. Fortunately it appears there were only a few spams sent every day or so, and the account is so old that most of the addresses in contacts list are probably no longer active.

Anyhow, I've changed the password so hopefully that will prevent any further use of the account by the mystery spammer. I suppose I was lucky that the account had security questions set up, which may have prevented the account password being changed by whoever/whatever was using the account to sent spam.

Anyone else had this problem with one of their public email accounts being hacked?

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Net Worth Update: June 2011

Unfortunately June turned out to be as dismal as May. So, if you want any more detailed commentary, just read last months entry again ;(

Another bad month for my stock portfolio, with my geared stock portfolio dropping further into negative equity. However, this was due to annual interest pre-payments being capitalised more than the valuations of the stock investments changing much.

Our SMSF also had a bad month, as it is mostly invested in the Vanguard High Growth Fund and some ASX200 CFDs (IQ) which are back down to our entry price.

In addition, this month the valuations for our Sydney properties dropped slightly, finally getting in step with the national property market which has been dropping over the past year.

Overall my net worth is below the level it was at the start of 2011, despite saving over $2,000 each month (mostly into my superannuation account via salary sacrifice). It's not much fun paying interest on real estate mortgages and margin loans when valuations are dropping each month.

The only little ray of sunshine was that the combination of large amounts of tax-deductible interest on my property and stock market investment loans to offset rental income and dividends, and still having net capital losses from the GFC period to offset any small capital gains I made when selling some shares, meant that I got nearly all of the PAYG tax I paid last year refunded#. At least I have enough spare cash sitting in my credit union account to pay the monthly investment loan interest that hasn't been prepaid for the coming year.

(# before anyone comments that I should apply for a tax variation to avoid paying income tax which I simply get back without any interest at the end of the financial year, the reason I don't do so is because I'm never entirely sure if I'll liquidate some assets during the year which result in a capital gains tax liability. I don't want to end up paying penalty tax for having underestimated my taxable income when I apply for a variation).

Assets___________$ Amount______$ Diff_____% Diff 
Stocks_*_________-$31,293_____-$9,633______n/a % 
Retirement_______$369,293_____-$6,881____-1.83 % 
Properties_______$983,780_____-$3,751____-0.38 % 

Debts____________$ Amount_____$ Diff_____% Diff 
Home Mortgage(s)_$360,171______ -$88_____-0.02 % 

Net Worth________$961,609____-$20,176____-2.01 %
* the Stocks figure is portfolio value - margin loans. As my portfolio value (and margin loan debt) is around $500,000 relatively small movements in the stock market produce huge percentage swings in the net value of my stock portfolio each month.

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Saturday 11 June 2011

Net Worth Update: May 2011

A bad month for stock investments, with my geared stock portfolio dropping into negative equity. One of my biggest single holdings is a listed private equity fund (IPE), which is trading well below it's supposed NAV, and is worth less than half what I paid for it pre-GFC. With the Aussie economy in the doldrums everywhere except the mining sector, I don't think this investment will "come good" any time soon.

Our SMSF also had a bad month, as it is mostly invested in the Vanguard High Growth Fund (with a large domestic and international (mainly US) share exposure) and also some ASX200 CFDs (IQ) which are back down to our entry price. I bought another 3 of these CFDs last week, in the hope that this is a temporary market correction and we'll see a return to growth in the Australian economy once the Queensland natural disasters impact on the GDP washes through this quarter, which should see some market confidence later in 2011. With the mining boom and very low unemployment levels being sustained for several years now, one would expect market confidence to return at some stage - probably just when most investors have given up and decided stock market returns will remain poor.

Fortunately the valuations for our Sydney properties continue to rise, contrary to the national property market this year, and some areas of weakness in the Sydney market.

Overall my net worth is back down to the level seen at the start of 2011.

Assets___________$ Amount______$ Diff_____% Diff 
Stocks_*_________-$21,661____-$38,326______n/a % 
Retirement_______$376,174________$894_____0.24 % 
Properties_______$987,531_____$17,035_____1.76 % 

Debts____________$ Amount_____$ Diff_____% Diff 
Home Mortgage(s)_$360,295______-$140_____-0.04 % 

Net Worth________$981,786____-$20,256____-2.02 %
* the Stocks figure is portfolio value - margin loans. As my portfolio value (and margin loan debt) is around $500,000 relatively small movements in the stock market produce huge percentage swings in the net value of my stock portfolio each month.

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Monday 23 May 2011

Cashflow 101 - a great game for the price

I've never been a great fan of Robert Kiyosaki, aside from some of the advice presented in "Rich Dad, Poor Dad" seeming a bit dubious, I find it a bit "rich" for someone who, by their own admission, was a serial-failure at business and investing until his late 40s, to claim to be an expert on investing and finance. (Especially as I'm not sure how well his "borrow heavily and invest in real estate" strategy has played out since the GFC and US real estate crash). However, when I saw a mint-condition set of the board game "Cashflow 101" being thrown out I was interested enough to check out the contents (everything present and correct - only a couple of the playing sheets had been filled in. Obviously the original owners of this game didn't play it more than once or twice).

After all, aside from "Monopoly" there aren't too many payable games that are related to investing and personal finance. And ever since I found out that my old copy of the PC game "Jones in the fast lane" wouldn't run on any of our current crop of home computers, I've been keeping an eye out for a suitable family game that might teach the kids something about personal finance and investing - and still be enjoyable to play.

We played our first game of "Cashflow 101" today - DS2 had been pestering me to play if since I brought the game home last week and he saw the cute mouse on the cover and the mice and cheese playing tokens and piles of play money. The game rules are quite involved once you get going - and every time for buy or sell investments you have to adjust a whole lot of figures on the playing sheets. But the boys enjoyed playing, and liked getting money every couple of turns when they landed on a "pay day" square. Their groans every time they landed on a "doo-dads" square and had to spend "hard-earned" cash on a stereo or a new set of tyres makes me think the game might even be a little-bit educational (aside from the copious amounts of mental arithmetic practice updating their "accounts" sheet each turn.

Some of the game-play features are understandably less than realistic (it would be too hard to vary the frequency of getting laid off work based on the "career" of each player - but having a teacher, an engineer and a lawyer all loosing the jobs with the same regularity didn't seem very realistic). The stock market trades also seem very biased towards highly speculative "trading" rather than a diversified, dividend producing share market portfolio. But the main gripes I have with the game playing it only once are a) it takes way longer to play than indicated - we spent around 5 hours playing it before giving up when the first player made it into the "fast lane", and b) some of the rules seem unclear eg. when you buy a house that has a positive cashflow, do you simply add the positive amount to your total cashflow? or do you add the positive cashflow and also have to deduct the 10% interest charged on the mortgage?

However, overall the game was quite a lot of fun to play, and provided there is some intelligent discussion of the investments and financial decisions being made (eg. don't invest in 6% CDs when you still have an outstanding credit card debt costing 10% per month!) it can also be an "educational" play activity for the kids to participate in with their parents. I wouldn't rush out to buy the game for $80 or so from, but for $0 it was a bargain.

For our next game I'll be sticking a set of the blank "financial statements" into clear sleeves so we can write the figures using white-board markers for easy updating.

ps. If you're tempted to pay good money for this game, I'd recommend looking into the e-version, as the manual updating of the financial statements is the most boring, error-prone and time-wasting "feature" of the game.

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Saturday 21 May 2011

The cost of Procrastination and Politeness

Last year my Aunt died unexpectedly, and my mother found out that under German inheritance law she needed to sign a form disclaiming her automatic right to half of her sister's estate, so it could all pass on to my Uncle. She was happy enough to do so, and my Uncle informed her (in a phone call) that he was going to leave "everything" to her, as he had no close blood relatives.

Then last month my Uncle died suddenly soon after returning from a holiday, and my parents had to travel to Germany to make his funeral arrangements, and check through his paperwork. It turned out that he must have never gotten around to writing his will. My mother had never reminded him to put his intentions down in writing (she probably didn't want to bring up this morbid topic during their occasional telephone conversations). So, my mother won't inherit any of his estate - instead it will remain in probate for three years in case any long lost cousin turns up, and then it will all go to "the state".

It seems rather sad that the end result of my Uncle not following up his telephone promise and actually writing down his intentions, and my mother's hesitancy to "follow up" and check that he eventually made out his will, means that his estate will not be distributed as he had intended. Fortunately there isn't a huge amount of money involved (the town-house is worth around $250,000 and there are three used cars, furniture etc. plus whatever he had in his bank account), and there would have been around 50% tax on any inheritance my mother had received, but it still would have been a nice lump sum for a self-funded retired couple in their late 70s to receive.

Goes to show the importance of not "putting off" important tasks that won't really require much effort to complete. And that even though it may be an uncomfortable topic to discuss with elderly relatives, it's important that any intentions regarding bequests are properly documented.

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Sunday 15 May 2011

New Phones arrived

Our two new Samsung B2710 phones arrived unexpectedly on Friday - fortunately DW was having a day off work to take DS1 to see his eczema specialist, so she was at home to sign for the delivery.

I was initially informed by Three the week before (via an SMS) that my order for a pair of new Samsung B2710s to replace our old phones had been cancelled as it was out of stock, then I was told the next day (when I called customer service) that this model "might" be restocked and our order was actually "on hold" unless I chose to cancel it or change to a different model, and I should check for an update the next day. When I phoned again a week ago I was then told that the Samsung B2710 was going to be restocked but that I'd have to phone again in two weeks to check on availability... only to have the new phones delivered a week later!

I installed my old SIM card in one of the new Samsung B2710s on Friday (and gave my old Sony Ericsson G502 to DS1 to use with his new $1/mo TPG SIM) and have a favourable first impression. The handset is only a few mm large than our old phone, but seems a lot more "chunky" due to the larger keypad and rubberised casing which I like (but DW isn't too keen on). It weighs about the same as the old phone, which DW likes.

A test of the GPS outside on Friday night gave an accurate report of our Latitude and Longitude and didn't take long to get a fix, so that feature will come in handy when bush walking or setting up my telescope on field trips. The built-in LED torch is actually bright enough to be useful when camping, but I may have to make a red plastic cover so I can also use it when doing astronomy. As I haven't got a data plan on my current $14/mo phone plan I haven't tried using Google maps yet. I might subscribe to the Three casual data plan - it doesn't cost anything to add it to my plan, but casual data use costs a hefty $2/MB! I might be OK for checking the occasional map while walking around town - I don't need it for in-car use as I have a car GPS.

Walking around town on Saturday I started playing around with the phones pedometer app, and it actually was very accurate in recording my steps and might be a useful addition to my diet and exercise program.

The auto-lock feature for the keypad works well (stopping unintended key presses making accidental phone calls to "000" - which the old Sony Ericsson tended to make, even when its keypad was in "locked" mode) although it would be nice to be able to increase the amount of inactive time before the auto-lock feature kicks in. So far I can turn this feature on and off, but haven't worked out how to change the default time delay of around 5 seconds.

The built-in ring tones provided a sufficient range of choices (although I might try to find a Dr Who theme tune if I get very bored one day), and the alarm sound at maximum volume was sufficient to wake me up from the next room without any problem.

One feature that seems to be missing is report of the battery charge. I was used to having a short-cut key press setup to display the % charge remaining, but the new phone only seems to provide battery charge information very approximately via the 5-bar battery icon showing on the phones display.

A quick test of the camera function provided a reasonable snapshot of the stained glass window in the QVB, adequate results for a 2MP phone camera. It will be a handy standby for capturing unexpected family "moments", but for planned photography a phone camera is unlikely to ever replace my digital SLR and bad full of lenses no matter how many MP it has,

I might buy one of the 16MB "mini-SD" cards that this model can accommodate. That way I can make use of the voice dictation app for recoding study notes for my MAstron coursework, and also use the phone as a replacement for an MP3 player.

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Friday 6 May 2011

Time to upgrade our mobile phones

The two-year contract period on our Three mobile phone account ended last month, which is perfect timing because DWs phone was no longer able to charge her battery (due to some orange juice from DS1 sipper cup leaking in her handbag). So, we had to keep swapping batteries between our two Sony Ericsson G502 phones in order to keep both batteries charged up. It was a real hassle because every time the batteries were swapped over we had to reset the date and time on our phones, otherwise our alarms wouldn't go off at the correct times.

The old phone:

So, I decided to upgrade both our phones, but stick with the same shared-spend $14/mo each plan. Most of the available upgrade models are iPhones or similar touch phones, but at $5-$20/mo extra over 24 months for each phone I don't want to spend $120-$480 just to have something "cool" for making my phone calls (if I want to take photos I use my digital SLR camera, and for apps and internet I use my laptop, not a phone). These phones are also a larger form factor than I really want - the old "candy bar" style phone fits nicely into the side pocket of my "man purse" or jacket pocket. I considered a $0/mo upgrade to a Nokia phone very similar to the old Sony Ericssons, but in the end decided to splurge $2/mo each on upgrading to a pair a Samsung B2710s. These phones are similar to our old phones, but have the added benefit of being quite tough. They are waterproof rated to a depth of 1m for 30 mins, and drop rated to survive a fall from 2m. It was quite fun watching some "reviews" of this model on YouTube - basically people just had a ball showing that this model will still work OK after leaving the phone in a fish tank for half-an-hour, stirring hot chocolate with it, dropping it 2m off a fire escape, being driven over them by a snow mobile, or being chucked into a cement mixer for a while! Admittedly they didn't survive being shot with a rifle or being driven over with the metal tread ribs of a snow-groomer ;)

They also have a couple of features that may actually be useful in a mobile phone designed for users who sometimes take their phone hiking or skiing - the ubiquitous GPS and google maps, a built-in altimeter, pedometer, reasonable strength flashlight (not sure how quickly using that would drain the battery), and a digital compass. The lanyard hole also looks like this phone can be hung around you neck without destroying the eyelet the first time the phone gets caught on something.

I ordered the phone upgrades on Tuesday but then got an SMS two days later from the Three warehouse saying the order had been cancelled because this model was now out of stock. Several phone calls to the upgrade line over several days eventually confirmed that this model was going to be restocked, but that we'll have to wait for 2-3 weeks for the new phones to be delivered. Better late than never I suppose.

The new phone (it actually looks more old-fashioned  than our old Sony Ericsson model)

After unlocking my old Sony Ericsson from Three I bought a $1/mo "pay-as-you-go" SIM from TPG so I can give my "hand-me-down" mobile phone to DS1 to use when he travels to and from high school next year. The local call costs are reasonable (10c flag fall and 10c/min) for occasional use by DS1, and the upfront cost of $40 (an exorbitant $20 "SIM charge" and a $20 "deposit" to put the account into credit) wasn't too high. I've paid the initial $40 cost, and DS1 has agreed to pay me the $1/mo plan fee plus any $20 "top-up" charges that will be automatically billed whenever the TPG account balance drops below $5. As insurance against excessive charges I edited the plan settings online so his phone can't make or take international calls or SMS messages. I could also change the setting to disable outgoing domestic calls, but for the moment I'll trust DS1 to use the phone responsibly. It would have been nice if the settings could be varied by time-of-day, in which case I would have disabled making calls during school hours.

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Another Labor budget coming to 'redistribute' my wealth

The annual Federal budget for Australia will be announced next week. As usual some of the "nasties" are being leaked beforehand. One that will directly affect me is the proposed reduction in the "discount" applied to up-front payments of university HECS fees. As I always pay my fees in full up-front I usually pay only 80% of the "list price" for my courses. The discount is apparently going to be reduced to only 10% by the Labor government, since its believed that only "rich" students can afford to pay their HECS up-front and benefit from the discount.

At only 10% reduction for paying up-front its hardly worth it. I may as well let the HECS debt accumulate and use the money to pay off some of my other debts that are being charged 8%, 10% or more interest. HECS liabilities only increase by the CPI each year (around 3%), so its a relatively cheap loan.

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Net Worth Update: April 2011

Hardly any change in my net worth over the past month, with the small (-0.27%) decline in the estimated price of our real estate this month being offset by a slight rise in the stock market that boosted my geared stock market investments by a similar amount. But things aren't looking too rosy for the rest of 2011 - Australian property prices are slowly declining across the board, interest rates aren't dropping (and may rise if inflation takes off), and the economy is growing at below trend rates. So I can't see our property portfolio rising above the current valuation during the next financial year, and a 5%-10% drop is quite possible (hopefully not the larger drop some people have been expecting since the GFC). The Australian stock market also doesn't look very positive at the moment, so my share investments and superannuation account aren't likely to contribute much to my net worth in the short term.

As some of my 'capital guaranteed' hedge fund investments mature over the coming years I'll use the proceeds to reduce my margin and investment loans - it makes no sense to borrow to invest when interest rates are close to 10% pa and total investment returns are much less than this. Meanwhile I'll continue to save $25K pa via salary sacrifice and SGL contributions into superannuation, and any spare cashflow will be used to pay off some of our non-deductible home loan.

Assets___________$ Amount______$ Diff_____% Diff
Stocks_*__________$16,665______$2,775______n/a %
Retirement_______$375,280________$621_____0.17 %
Properties_______$970,496_____-$2,667____-0.27 %

Debts____________$ Amount_____$ Diff_____% Diff
Home Mortgage(s)_$360,399______-$503_____-0.14 %

Net Worth______$1,002,042______$1,232_____0.12 %
* the Stocks figure is portfolio value - margin loans. As my portfolio value (and margin loan debt) is around $500,000 relatively small movements in the stock market produce huge percentage swings in the net value of my stock portfolio each month.

My version of net worth calculation only includes major assets (including my home equity) and debts. Cars, boats etc. and household goods are not included. Monthly credit card balances are also not included as I pay my credit cards off in full each month. I also pay the uni HECS fees for my Master of Astronomy course as I go, so I don't have any outstanding uni HECS debt. I haven't allowed for any capital gains tax liability that would be incurred if I sold off our investment property, shares etc.

Note: some readers have asked why I include our home as part of our property portfolio, and therefore include it as part of our net worth. The simple answer is that technically "net worth" should include all assets - all debts, so leaving out the value of our home (and the outstanding mortgage balance) would be misleading. A slightly more complicated answer is that excluding the value of our house (because we have to live somewhere, so its not really a saleable asset) would make it hard to compare "home owner" net worth with all those people who are renters. If you excluded the home value, but still included the outstanding mortgage amount as debt it would be even more misleading. Finally, in my own case I'm supposedly going to inherit a house and farm in the country from my parents, so when I retire I probably could sell off the family home and not have to use the net proceeds to buy another property... If you want to exclude any equity in the family home from your calculations you are no longer calculating "net worth" but another commonly quoted figure sometimes called "net investible assets". Another complication is that in some countries (like Australia) most people have a "superannuation account" with a known current value which, but some people have a "defined benefit" account which will have a particular value once retirement age is reached, but might currently have a much lower "vested" value (for example, if they change employers before reaching retirement age). In other countries (eg. USA) the present value of social security seems to be a bit of a moveable feast, as it will be received as a pension rather than a lump sum, and the amount received may be affected by other factors (eg. wealth and other income when retired?).

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Saturday 2 April 2011

Net Worth Update: March 2011

A rise in the estimated price of our home this month increased my equity in our property portfolio by almost $16K this month, but the gain was offset by stock market decline affecting the values of our retirement account and geared stock market investments. The drop in my stock portfolio equity was also exacerbated by having to draw down on my portfolio loan account to fund a replacement water heater and stove cook-top during the month.

Property sales figures indicate our property valuations will have declined about $3K for next month, so the stock market will have to continue to rise during April if I'm to keep my net worth above the million dollar mark. Of course in USD terms this would look better, with the Aussie dollar reaching new highs against the greenback in the past week.

Australian property prices have weakened in most regions over the past few months, although so far Sydney home prices have been holding up. It seems likely that inflation and interest rates will rise over the next 1-2 years, while house prices will stagnate or drop 5%-10%. So, in real terms property is unlikely to make a contribution to my net worth for a couple of years.

In the next couple of days I'll have to decide whether to tender any of my BHP shares for their off-market buy-back. I'll have to look up the cost basis for my holding to work out how much I'd end up if I sold them on-market and paid capital gains tax. The buy-back comparison is hard to value as the final tender price isn't definite (although you can set a minimum price), the after-tax value also has to take into account the split of the buy-back price between capital return and fully-franked dividend components, and also the likelihood of the buy-back being scaled back. So even if I tendered all my BHP shares into the buy-back I'd end up only selling a portion.

Assets___________$ Amount______$ Diff_____% Diff 
Stocks_*__________$13,890____-$13,307______n/a % 
Retirement_______$374,659_____-$1,081____-0.29 % 
Properties_______$973,163_____$15,796_____1.67 % 

Debts____________$ Amount_____$ Diff_____% Diff 
Home Mortgage(s)_$360,902______-$150_____-0.04 % 

Net Worth______$1,000,809______$1,738_____0.17 %
* the Stocks figure is portfolio value - margin loans. As my portfolio value (and margin loan debt) is around $500,000 relatively small movements in the stock market produce huge percentage swings in the net value of my stock portfolio each month.

My version of net worth calculation only includes major assets (including my home equity) and debts. Cars, boats etc. and household goods are not included. Monthly credit card balances are also not included as I pay my credit cards off in full each month. I also pay the uni HECS fees for my Master of Astronomy course as I go, so I don't have any outstanding uni HECS debt. I haven't allowed for any capital gains tax liability that would be incurred if I sold off our investment property, shares etc.

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Thursday 17 March 2011

Is $7 million enough wealth?

A article in the SMH titled 'A million dollars ain't what it used to be.' stated that in a recent survey more than four out of 10 American millionaires said that they do not feel rich. Out of more than 1000 millionaires (having at least $US1 million in investable assets, excluding any real estate or retirement accounts - the average age of respondents was 56-years-old with a mean of $US3.5 million of investable assets), 42% said they did not feel wealthy. This was a slight increase since 2009 when 46 per cent did not feel wealthy.

Personally, I felt quite 'wealthy' when the stock market was doing well in 2007 and my net worth was around $1.2m. Even though most of that was tied up in real estate and my retirement account, (so I wasn't a millionaire according to the measure used in this US survey), it was still sufficient for me to be confident about my financial future and to be considering early retirement. Of course, all that changed with the GFC (I'm now planning on working until 67 if my health holds up and I don't get laid off before then), and I'm now 'comfortable but cautious' rather than optimistic.

However, I'll concede that $1.2m wasn't enough to make me feel 'rich' - our family vacation to Europe involved staying in a campervan, not 5-star hotels, and after briefly considering building a new house we decided there was no way we could afford to do so (so we'll be staying in our 50+ year old house until at last retirement age). However, if I'd had $1m of investable assets in addition to our real estate and retirement savings I probably would have started thinking of myself as rich. I suspect the reason such a large percentage of US millionaires don't consider themselves rich is that their viewpoint is formed by comparing themselves to the 'super-rich'. After all, with 55% of US wealth being controlled by only 5% of the population, there more than enough billionaires available for comparison if you want to make yourself uphappy trying to keep up with the Joneses.

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Sunday 13 March 2011

Too many tests, too little evaluation?

DS1 will be sitting the official Department of Education selective high schools tests on Thursday morning. Then, on the following Saturday, he will be sitting a similar test ($20cost ) for the local (non-selective) public high school in order to be considered for their 'gifted and talented' class in Year 7 (1st form) next year. He will also be sitting a similar test ($60 cost) a few weeks later for the '7X' (Year 7 extension) class at a nearby public high school (which has a good academic record, similar to mid-range selective high schools).

Then, after the school holiday, he has an 'entry test' to sit for Sydney Grammar private high school, as well as another test (~$80) for a chance at a scholarship.

While I can see that standardised testing is required to 'rank' students applying for selective high schools, extension/G&T classes, or private school entry and scholarships, there seems to be a huge amount of redundancy when a student has to sit a handful of extremely similar tests within a month or so. The cost and waste of time hardly seems justified when practically all these students will have sat the DET selective high schools test, so the official 'score' provided from that test (which incorprates a school assessment component based on the Year 5 Naplan test results) could easily be used by the other local public high school for their sorting of extension/G&T class applicants and also those students that seek entry and/or scholarships for private secondary schooling.

Aside for the cost and time involved with all this testing, there also seems that there will be little useful feedback as an end product. Despite there being up to four test papers (in English/comprehension, mathematical ability, general ability ('IQ'), and creative writing) for each of the five tests DS1 will sit, for most of these tests the only feedback will be a single 'test score' number and the offer of a place or scholarship based on the test result.

Surely such a large amount of testing could provide some useful feedback and evaluation of each student's areas of strength and weakness? At least then a comparison of the results from the five different tests would indicate how accurately the tests reflected the true abilities of the student, and aid in designing a customised education plan.

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Saturday 5 March 2011

Net Worth Update: February 2011

As I suspected might happen, I spoke too soon about being a "millionaire" again. After breaking through the million dollar barrier earlier in the month, the middle East troubles and spike in the oil price made the Australian stock market drop enough to push my net worth below the megadollar in time for my end of month accounting.

However, it still looks like 2011 could be pretty kind to my NW - although Sydney house prices are so expensive that a drop in our real estate valuations can't be ruled out. Also, although the US economy looks like it may regain some confidence in 2011, that boost to our stock market could be counteracted by a slowing of Chinese economic growth if inflation problems cause their interest rates to take off.

My SMSF continues to grow, boosted by $25K pa from the combined effect of the SGL and salary sacrifice. On the other hand, we don't have any spare cashflow to pay off our mortgages, so my half of the debt in our property portfolio remains stuck around $361K.

Assets___________$ Amount______$ Diff_____% Diff 
Stocks_*__________$27,197______$4,399______n/a % 
Retirement_______$375,740_____$10,919_____2.99 % 
Properties_______$957,187______$2,121_____0.22 % 

Debts____________$ Amount_____$ Diff_____% Diff 
Home Mortgage(s)_$361,053_______-$46_____-0.67 % 

Net Worth________$999,071_____$17,485_____1.78 %
* the Stocks figure is portfolio value - margin loans. As my portfolio value (and margin loan debt) is around $500,000 relatively small movements in the stock market produce huge percentage swings in the net value of my stock portfolio each month.

My version of net worth calculation only includes major assets and debt.
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Saturday 19 February 2011

Home maintenance expenses - sometimes it really isn't worth repairing old equipment

On 19 Feb we suddenly found ourselves without any hot water (we have an electric 265L hot water tank that is heated "off peak" in the early hours each morning), so we had to call in a plumber to make repairs. I still thought of the tank as being fairly "new", as when we bought our house in 2003 it was only just out of the 5 year warranty period. The plumber replaced the heating element and thermostat ($85 each) and the repair bill was $300. At the time we decided not to buy a new water heater as the new tank would have been larger and would have cost extra for relocation, and I hadn't had a chance to compare models and costs. With a bit of luck the old tank might have lasted several more years.

Of course a week after the tank had been repaired the cover lifted off the base and expanded insulation started to poke out of the bottom - not a good sign as it often means that a leak has developed. Sure enough, this morning DW phoned me to say that the old tank had ruptured as was spraying out hot water. We decided on getting a slightly smaller tank (250L) that was able to fit in the same position as the old tank. The plumber also recommended replacing the old pressure relief and 'Dua' valve at the same time, so the total cost for the new water heater was $1363.50

The tank has a 5 year warranty, which means it will probably last 7-10 years before it has to be replaced. By that time off-peak electricity will probably have been phased out, so we'll be looking at either a heat pump or solar hot water system next time.

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Fishtank update - end of week 1

Well, all four neon tetras we had bought had died after the first two days. I've never had much luck with keeping neon tetras, so next month I'll just add one ramirezi dwarf cichlid and possibly one kuhli loach, rather than replacing the neon tetras. The siamese fighting fish appears to be thriving, as does the pearl gourami. I might buy a second pearl gourami when the tank is well established. The bristlenose catfish is also fine, although I've only seen him twice in the past week.

I was originally intending to buy some glass (ghost) catfish, but they don't fare well is less than ideal water conditions, so it's probably not worth the risk. I was also considering adding a few male guppies, but as I've previously had problems with them nipping the colourful tails of other fish (such as siamese ff), I think I'll also give them a miss.

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Monday 14 February 2011

First fish tank fatality

I did a fish count when I turned on the tank light after getting home from work and found one dead neon tetra and only two live ones. I can't find the fourth neon tetra, so I assume the body is wedged someone amongst the bogwood, plants and gravel. The Siamese fighting fish looks happy enough, and after searching for a while I spotted the pearl gourami dozing in a cavern under the bogwood. He eventually woke up with the light turned on, and was eating flake food with gusty, so he/she also seems OK for the moment. The tiny bristlenose pleco can't be seen, but I only spotted him by luck yesterday when the tank was clearer, so he's probably just hiding underneath some of the bogwood.

The filter outlets weren't flowing when I got home, so I removed the extra activated charcoal I'd put into the filter tray as I suspect the white filter wool pressing against the drip tube holes had made them clog up sooner than normal. I also did a 10% water change, and will change another 10% every day for the first week until the tank 'cycles' and starts to clear.

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Fish - the pet you have when you can't really have a pet

Due to various family members suffering from allergies, asthma and/or eczema, our household has been pretty much a pet-free zone up to now. We previously had a couple of attempts at keeping a Siamese fighting fish in a small bowl, but it was a short-lived (ahem) experiment both times. However, as I had successfully kept (and bred) tropical fish as a youngster myself, I still wanted to set up a small aquarium so DS1 could learn a bit of aquatic chemistry and have a bit of responsibility for the care and maintenance of a "pet".

I'd bought a small (32L) tank at Aldi a year ago, and finally got around to setting it up in our remodelled lounge room/library this weekend. The tank came with a power-head filter and light built in to the cover, as well as a bag of gravel, a net, some plastic plants and a 'decorative' fake rock. As I still had some nice bog wood pieces and wood tank stand in storage, I only had to buy a 55W heater, an air pump and air "wand" to be able to setup the aquarium.

I filled the tank and added water ager yesterday, and the pH and temperature were OK today (although the tannin from the bog wood had made the aquarium water an interesting tea-colour. I've since added some extra activated charcoal to the filter tray). So I ignored my own good advice (to let the tank "settle in" for a week before adding some plants, and two weeks before adding any fish) and went out and bought some fish today:

1 Siamese fighting fish ($9.74), 4 neon tetra ($2.50 each), 1 bristle nose catfish ($12.50), 1 pearl gourami ($9.50).

That could easily end up being $41.74 flushed down the toilet (literally), but if these fish do survive the next couple of weeks it will at least mean that less risk of introducing diseases to the tank each time I add additional fish to the established aquarium. Not that this size tank can take much more livestock - even with the 90cm long air wand putting out an impressive blanket of air bubbles, I can only reasonably plan on adding a couple of glow-light tetras and one ramirez dwarf cichlid later on.

We'll find out over the next few weeks how this "experiment" turns out.

ps. I called the blood-red Siamese fighting fish "Valentino" and told DW that since tomorrow is the 14th it can be her Valentine's Day present. She wasn't overly impressed ;)

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Saturday 12 February 2011

Capital punishment wastes capital

I've never been a supporter of capital punishment, mostly because the legal system does occasionally get it wrong (and while you can pay compensation to someone who has been incorrectly incarcerated for years, the state can't "make things right" when it turns out they executed the wrong person), but also because I can't see that the principal of national "self defence" that could be used to justify the state killing people in acts of war can really be extended to executing convicted criminals rather than just incarcerating them for life in order to protect society.

But I had thought that execution was obviously cheaper than maintaining a prisoner in jail for the rest of their natural life. Apparently that isn't the case though - according to an article in today's SMH, it costs around $3 million per execution, while life imprisonment "only" costs around $1m. It seems sad that some US states may move to eliminate the death penalty for fiscal reasons, when instances of the wrong person getting executed for a crime had failed to see the practice banned.

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Friday 11 February 2011

I'm a millionaire (again)

For the past few months I haven't been tracking my investment account balances daily, but since I have a day off work today and the Aussie share market has been doing well for the past couple of weeks I decided to look up the current figures. According to my "net worth" spreadsheet the bottom line using yesterday's close of business figures was $1.006 million.

I'm a millionaire! Again.

Last time my net worth was over AUD$1m was back in 2007. This time around it's also US$1m due to the strong Aussie dollar, so I suppose in that sense I'm even more of a 'millionaire' than last time around. But, given the massive hit my net worth took 'during the GFC' (putting it in the past tense seems to be tempting fate), it doesn't feel "real" this time around. Of course, with inflation and what-not, being a "millionaire" isn't quite the same thing as it was in the era of The Great Gatsby.

Depending on how the market goes for the rest of February, I might still be a millionaire in my 'official' end of months figures and have it appear in my NetWorthIQ graph ;)

There's still a long way to go to get back to my peak net worth, even further to go in "real" terms (adjusting for inflation), and I doubt I'll ever be quite as well off as I was back in '07, given how much closer to retirement age I am now. Then again, there's always the $20m lotto draw coming up on Saturday...

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Tuesday 1 February 2011

Net Worth Update: January 2011

The Australian stock market had declined slightly by the end of this month, so my equity in my geared stock portfolio decreased by around $4,000. However, our property valuations rose a bit during the month, and we also made a small repayment of mortgage principal during January, which improved our real estate portfolio equity. Some employer contributions were deposited into my SMSF account during the month. Overall my net worth figure increased by about $10K (~1%). With the USD remaining close to parity with the Aussie dollar, my NW is pretty much the same in terms of USD or AUD.

Depending on where the stock market and Sydney real estate market go during the remainder of 2011, I may soon be a "millionaire" once more. The question will then be whether my NW continues to increase, or if another financial crisis develops and marks down my investments again.

Assets___________$ Amount______$ Diff_____% Diff 
Stocks_*__________$22,798_____-$3,920______n/a % 
Retirement_______$364,820______$6,142_____1.71 % 
Properties_______$955,066______$5,364_____0.56 % 

Debts____________$ Amount_____$ Diff_____% Diff 
Home Mortgage(s)_$361,098_____-$2,424_____-0.67 % 

Net Worth________$981,586_____$10,010_____1.03 %
* the Stocks figure is portfolio value - margin loans. As my portfolio value (and margin loan debt) is around $500,000 relatively small movements in the stock market produce huge percentage swings in the net value of my stock portfolio each month.
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Tuesday 25 January 2011

Cheap breakfast cereal and a free cricket cap

Coles currently has 750g packets of weet-bix on special for $2.09. I checked the unit price (28c per 100g) and it really is a lot cheaper than the regular price, even compared to the bigger 1.3kg packs (around 55c per 100g). I bought four packs as there is also a special offer from Sanitarium for a "free" baggy green cricket cap at the moment. The first 20,000 people to complete an online entry with four codes (printed inside each box lid) receive a cricket cap at no cost. After I entered the codes and filled in the online application I received an immediate confirmation that I would be sent a cap (well, DS1 will end up getting it to wear), so they can't have reached the 20,000 cap limit yet ;)

DS1 should like the cap, as he has previously expressed an interest in playing cricket (he tried out for the school cricket team last year, but didn't get selected as he's never actually played any cricket!). Maybe he'll put it on and actually practice a bit with the bat and stump set I bought he last year ;)

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Going Solar

Our solar power panels were finally installed by NuEnergy last week. The installation only took a couple of hours, and the panels on top of our garage roof aren't even visible from the street. We now have to get the feed-in meters installed by the EnergyAustralia contractor so we can get paid for the power being generated. There was some mucking about regarding one of the authorisation numbers - when DW phoned the meter installation contractor he said we would need to get a "CEC" before he could order the meter, but after a few more phone calls to EnergyAustralia they confirmed we had already made all the necessary arrangements when we placed the order last October. It's just as well, as otherwise we would be paid at the new (much lower) feed-in tariff for the next couple of years.

Hopefully now that the meter has been ordered the contractor will make an appointment to install it in the next couple of weeks, and we can start earning some money from "green energy" to pay for the (subsidised) cost of the PV system.

ps. I phoned our insurance company and increased our building insurance by the full value of the PV system (around $13,000). If we get hit by one of the massive hail storms Sydney sometimes experiences, we would have to pay full price to replace the PV system, not the $3,000 or so it cost this time around.

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Sunday 23 January 2011

Public or Private High School? - a question of fees, fees and more fees

2011 will be a big year for DS1 - he's in the final year of Primary School (Year 6 in the NSW system) and will be sitting the selective high schools test and private high schools selection and scholarship tests over the next couple of months. Fortunately there is a good local public High School available (the one I attended), so it won't be a major drama if he doesn't get a place in one of the four selective high schools he nominated on his selective high school test application. I've also had him on the "waiting list" for Sydney Grammar School (one of the state's best private high schools) since he was one year old, but he may not get a spot as a) those who have been attending the Sydney Grammar Prep School for the seven years of primary education get automatic entry, b) sons of "old boys" and those with siblings already attending get higher priority than those on the "waiting list" to enter in Year 7. In any event, with the high annual fees (At AUD$22941 per annum (for Forms I - VI, non-boarding), the tuition fees are among the highest of any secondary day school in the country) DS1 would have to do very well on the scholarship test and win one of the dozen or so available scholarships for us to be able to afford sending him there for six years of secondary education (especially as DS2 is also on the Sydney Grammar waiting list, so would probably also attend Sydney Grammar if DS1 went there).

An article in today's SMH states that private school fees have risen 100% over the past ten years. So I have to wonder if it would really be worth spending the large amounts of money required to send DS1 and DS2 to private school anyhow. Sydney Grammar was originally established as a "feeder school" for Sydney University, but nowadays there is no problem getting a place at Sydney Uni if you get a good enough mark in the Higher School Certificate exams in Year 12. And, depending on your field of study, one of the other universities in Sydney woulde be a better choice (eg. NSW, UTS, or Macquarie). And if DS1 doesn't do well on the HSC there's always UWS ;) . These days the high school you attended doesn't have any direct influence on university entrance, and I suspect a private school education has also lost a lot of the career benefits the "old boys network" used to have in the past (similar to how membership of the Masons used to open more doors in the past). There seem to be a lot of "old boys" that ended up with fairly mediocre middle management careers despite the benefits of attending private school for six years - and in those cases the money spent on fees would probably have been better spent on setting the children up in their own business after completing uni.

So, although it would be nice for DS1 to win a half (or full) scholarship and be able to attend Sydney Grammar, I don't think he would be significantly better off than if he is able to attend a selective high school. Academically, he might even be get more benefit from selective high school than private school. If he does well on the upcoming tests and has the choice of either a half-scholarship to Sydney Grammar or entry to one of the better selective high schools, we'll probably choose selective high school due to the cost of private school. On the other hand, if we were choosing between a half-scholarship for Sydney Grammar or attending his fourth choice Selective High School, we'd probably try to scrape together the funds to send him to Sydney Grammar. In reality, DS1 will most likely end up attending the local non-selective public High School. He didn't do well enough on the "Opportunity Class" (years 5-6 of Primary School) test two years ago to win an OC place (I did), so, although there are slightly more Selective High School places available than OC places, he may not have the opportunity to attend either private school or selective High School.

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Sunday 16 January 2011

10 challenges that face Australia (and the world) - but what about the elephant in the room?

An interesting article in the SMH by Kevin Rudd (our ex-PM) lists what he considers to be the ten great global shifts and challenges facing Australia. Aside from being a bit too self-congratulatory about what a 'you beaut' job the Australian Labor party is doing at running the country, I think the big problem with this article is that is totally ignores the underlying problem that has created most of these issues - global overpopulation.

There was a brief flurry of attention in the 1960s when the 'club of rome' came out with the "Limits to Growth", but the ZPG movement didn't really go anywhere, except in the case of China's draconian one-child policy. In the 80s and 90s constantly dropping commodity prices seemed to contradict the view that there were any limits to growth, but this century it appears that rising commodity prices, peak oil, water shortages, rising food prices and the increasing impacts of natural disasters (due to more people living in affected areas) have confirmed that there are limits to sustainable growth, and we are rapidly reaching them (or have passed them in some aspects eg. rate of carbon dioxide production). Yet there is little attention paid to reducing rates of population growth (eg. India, South American, Africa) in regions that would benefit from having less people to support - instead more attention is being directed to perceived problems of aging populations in the parts of the developed world that have achieved ZPG (or NPG). There was a brief public discussion of what population limits Australia should aim for over the coming decades (stimulated by recent upward adjustment in population projections out to 2050), but that too has gone very quiet recently - with politicians realising that it would be much more challenging to maintain economic growth without the automatic stimulus of a constantly growing population.

Surely restricting population growth by taking active measures to encourage a maximum of two children per couple globally is the most cost-effective, painless means to solve many of the challenges facing the world?

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Saturday 15 January 2011

I hate paying for my toys when I can't even use them

The annual registration renewal notice for my Scat Hovercraft ($56.50) just arrived, along with a reminder notice for the registration of my boat ($92.50). I wouldn't mind paying these annual registration fees if I was able to actually use the boat and hovercraft, but for the past five years they've both been sitting up at my parent's lakeside farmlet gathering dust (and probably need a major overall by now). Hopefully this year my parents will finally renovate the farmhouse and I'll be able to take DS1 and DS2 up there during the school holidays to play with my "toys".

(my boat is a slightly older model than this one)


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Wednesday 12 January 2011

A Belated attempt to KISS

When the markets were booming it seemed to make sense having three separate margin loan accounts, plus other broker accounts for training US stocks, options and CFDs with Commsec. Post-GFC the principle of KISS (Keep It Simple, Stupid!) has a lot going for it. So I continue to slowly rationalise my stock and fund portfolio...

Today I sold off my holding of IANG [IAG FINANCE (NZ) LTD] as I'd made a reasonable gain and there were little prospects of further price appreciation with the stock trading around $104 for what is basically a company debenture with a face value of $100. Although the yield is fairly attractive it didn't make sense to keep owning this stock when I'm paying almost 10% margin interest. I also put in an order to sell off the last of my direct US share investments (220 shares of Microsoft), as the potential gains aren't worth the paperwork hassles and account keeping fees of having a US trading account through Commsec. As soon as the trade settles and I transfer the balance of the account back to Australia I close this account down. Again, the dividends flowing from this stock were negligible, so I'm better off using the proceeds to reduce my Australian margin loan balances a bit. I'll also sell of the two varieties of Westfield stock (that resulted from the recent Westfield demerger). I'd also like to get rid of the tiny tranche of AEJ [ALINTA ENERGY GROUP] shares I ended up holding when one of the Babcock & Brown funds was wound up, but the cost of the share trade would be more than the proceeds! So I'll have to wait until I get an offer for some free stock trades from Commsec.

After this pruning is finished, my stock and fund investment portfolio (outside of superannuation) will be:

The total value is around $450,000 which will be about the same as the total outstanding loan amounts (including the $235,000 HELOC used to fund some of the investments that have 0% margin value). As the overall interest rate is about 8%, the total return (dividends plus any capital gains) isn't likely to produce much net return. At best, it produces a modest tax benefit by deferring current income tax (as the amount by which the tax deductible margin loan interest exceeds the dividend income is deductible against my salary income) and creating a long-term capital gain tax liability, with long-term capital gains being taxed at half my marginal income tax rate. The potential benefits hardly outweigh the amount of complication added to my tax returns, so as soon as the OMIP and Macquarie equinox funds reach their maturity date (when their capital guarantees kick in and I can get my initial investment back!) I'll use the proceeds to pay off some of the margin loans rather than reinvest.

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Tuesday 11 January 2011

Amazing flash flooding in Queensland

It's been raining a LOT this summer, due to the 'la Nana' effect in the Pacific ocean between Australia and South America (the opposite effect, 'el Nino' regularly causes droughts here). But in the past week Queensland has been getting additional heavy rainfall which, with the ground already saturated, is causing flash flooding. Even parts of the capital city, Brisbane, are now under threat.

One amateur video available from the Sydney Morning Herald website is amazing - the swollen creek has a flash flood that washes away parked cars within minutes. I think the person who rescued his 4WD was a bit daft though - I would rather have let my car wash away than risk being swept away myself.

So far there are ten confirmed dead, and about 78 missing. With more rain expected over the next couple of days...

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Do you like the new colour scheme?

I felt the black scheme was too hard to read, so I've chosen this new scheme (with astronomical background). Use the "rate this post" tool to give it a score from 1 to 5 ;)

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Monday 10 January 2011

Annoying 'test' transaction on my credit card account

I was checking the 1/1/2011 opening balance of my credit card account online when I noticed that an odd 'purchase authorisation' transaction for 10c had been processed on the 4th. I'd read somewhere that crooks will often make such a small transaction using stolen credit card details, and if the transactions gets processed without any problems they will then make large purchases a few days later. It seemed especially odd as the transaction was visible in the online transaction listing, but was missing from the electronic monthly statement that included transactions up to the 7th.

So, this morning I phoned the bank to check what the transaction was for. After being on hold for ten minutes before getting through to a customer service rep, I then had to wait another five minutes for her to find out that the transaction was 'probably' a test transaction done by FlyBuys. Apparently before they processed my recent request to 'redeem' some rewards points for a $100 credit onto my credit card account, FlyBuys made the test transaction to check that the CC account details I'd provided were valid. This 'test' transaction should be reversed off my account eventually. All in all, a total waste of my time.

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Making progress

I feel I had a fairly productive weekend - I started assembling the six 'cube' bookcases I bought from Aldi 18 months ago, and so far things are going OK (the first two packs went together easily and the finished product looks even better than I expected). Next weekend I'll need to assemble and then cut in half two of the remaining bookcases, so that the resulting 'L-shaped' bookcases can fit either side of a large, teak carved panel that is the feature piece of our lounge room. I visited the local hardware 'superstore' today to buy the few planks of DAR lumber I'll need for installing the wood carving and putting ends onto the four half-bookcases, a small tin of varnish/stain, a paint brush, some removable picture hooks and an el-cheapo jig-saw for cutting the bookcases... total cost just under $150! The timber was quite expensive considering it was only cheap plantation pine (and full of knots), whereas the jig-saw for less than $20 was a bargain. I paid the hardware store $4 to have the timber cut up into the required lengths as I'm not sure exactly where my circular saw has gone. I'll varnish the raw pine pieces after work this week and should be able to assemble, cut-down and install the corner book cases around the teak carving next weekend. That will leave one more weekend to finish off the project while DS1 is still visiting my parent's farm.

I've made progress with a couple of my other goals - sticking to my diet (lost 2kg in the first week - mostly water I expect), and also making it down to the air pistol range yesterday and shooting a decent score (533/600). Not quite 'A grade' (540), but close enough considering I hadn't done any target practice for nearly 12 months.

I also finished off my 'final' draft of the application for an AAO student fellowship position and sent it to my MAstron lecturer at JCU for some review.

All in all, decent progress on 3 of my 12 goals. I've decided to change on of my goals though - after installing Quicken 2008 on my 'new' laptop on Friday, today when I launched Quicken a message popped up saying that it had been previously installed on a different computer (my old desktop), so I'd have to phone the Quicken support (toll charge) number to be able to use it on my new PC. Instead I've uninstalled Quicken and decided to track my expenses using an excel spreadsheet this year. It's much easier to keep a spreadsheet on my USB stick so I can update it at home or at work than try entering everything in Quicken at home, and Quicken was over-kill for my needs this year anyhow.

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Thursday 6 January 2011

Goals, New Year Resolutions, and other fantasies

I don't think I even bothered doing a post about my goals last year, but looking back at my 2009 post I can see that I still haven't achieved several of my main goals, so here they are again for 2011, plus a few new ones:

    HEALTH: 1) Lose weight and 2) exercise more:

After losing a few kg when I was sick last year, I put it all on again. So I still have to lose about 20kg to have a healthy BMI, and ideally I should lose 25-30 kg. I also want to achieve at least 3.2 METS of exercise 3x a week - preferably every day. This week I've lost 1 kg by sticking to my 'standard' diet since the 3rd, and exercising 3 days (avg. 2.25 METS).

My 'standard' diet (at the moment) is:

100g apricot halves in juice
125g tub of mandarin segments in syrup (drained)
1/2 of 420g tin of pineapple pieces in juice
1 glass grapefruit juice

420g tin of baked beans
2 slices hi-fibre bread

100g meat (skinless chicken breast, fillet steak, pork fillet or tin of tuna slices in spring water)
150g frozen vegs (eg. peas, carrots, broccoli, corn)
2 slices bread, or 100g boiled rice, or 2 medium roast or boiled potatoes.

1 apple
1 banana
1 orange, or 100g grapes

I also consume about 1-2 2L bottles of diet coke each day, which I'd like to reduce. I'll try replacing one of the bottles of coke with a bottle of filtered water flavoured with 1 soluble aspirin. I should also switch to 'no added salt' baked beans, as the normal baked beans contain around 1000mg of Sodium (salt). I suspect I might be sodium-sensitive, so restricting my sodium intake to under 2,000 mg/day might let me reduce my blood pressure medication once I lose some weight.

Overall, this 'standard' diet provides around 1,800 kcals/day which would result in around 0.75 kg/week weight loss initially. As my weight reduces my maintenance calorie requirement will decrease, so this diet would be sufficient for me to maintain a healthy weight of around 70-75 kg in the long term.

This diet plan also provides high dietary fibre (~40-50g/day), low fat (~5% of daily cals), and about 80-100 g protein. As I also take some vitamin supplements it should be reasonably healthy over the long term, being similar to a moderate level of CRAN (Calorie Restriction with Adequate Nutrition) which some animal studies suggest could help maximise life span. If nothing else, the weight loss would provide immediate health benefits!

    BUDGET: 3) Track my expenses using Quicken to help stick to my budget:

I start each year setting up a new Quicken file but then not keeping it up to date. It used to be easy (before I got married and had kids), but I'll try to find the time this year. So far so good, although I haven't yet entered all my stock holdings and purchase details (which would make tax time a lot easier).

I seemed to have a higher than expected CC bill almost every month last year, so this year I'll try to stick more closely to my budget.

    SAVINGS: 4) Save and 5) Pay off some debt

My retirement (superannuation) savings are on 'autopilot' (my employer SGL amount and salary sacrifice get automatically deducted from my pay each fortnight), and the home loan and margin loan interest payments don't vary much from one month to the next, so this shouldn't be too hard. One of our home loan mortgage accounts is due to revert to variable interest this year, but the rate increase should be offset by the recent increase in rental income from our investment property. On the other hand, everything is currently on 'interest only' and we didn't manage to pay off much of the loan principal last year.
So, another goal for this year is to reduce my total investment debt balance by $12,000 this year. I'll calculate my investment loan balances as at 1/1 in the next post and calculate them each month when I do my Net Worth post.


6) Keep my job! ;) (And maybe get a pay rise that's more than the inflation rate this year?)

    STUDY: 7) Get Distinction (or better) for my MAstron subjects

I'm enrolled in another two subjects for my Masters of Astronomy course this year. I'm aiming for a High Distinction in one or both of these subjects. I won't include getting a student fellowship at the AAO as a goal, as realistically it's a very long shot, and the outcome is pretty much out of my control.


8) Attend the target range often enough to keep my shooter's licence. I should also setup my 'SCATT' computerised training system at home so I can do some 'dry fire' target practice and get back up to A-grade standard.

I haven't had any success using my CCD camera with DS1's small telescope (can't bring the image into focus), so I want to 9) install a permanent pier for my 10" telescope in the back yard and get started on differential photometry and astrometry of minor planets (asteroids) this year.

10) Build a new base board for my old HO railway setup, so DS1 and DS2 can have some fun with all the model railway stuff I have packed away in our garage.

11) Finish landscaping around our swimming pool.

12) Renovate our lounge room/library and setup the aquarium I bought last year.


So, an even dozen goals for this year. Maybe tracking progress towards them each month will help achieve them?

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Monday 3 January 2011

Net Worth Update: December 2010

The stock market posted some solid gains this month, so both my geared stock portfolio and retirement savings account increased by around $10,000. Our property valuations also rose a bit during the month, so my overall net worth figure increased by about $28K (~3%). As the USD had dropped below parity with the Aussie dollar by the end of 2010, my NW is slightly more in USD terms than the AUD amounts shown here and on NetWorthIQ.
My "stretch" goal for 2010 was to break the A$1M net worth again (last seen in 2007). I didn't quite regain that milestone but it is looking very "do-able" from here. For 2011 the Australian economy looks to continue growing, unless the Chinese "economic miracle" falters. But with almost "full" employment in Australia we are likely to see the RBA increase the cash rate several times during 2011 unless we get negative GDP quarterly figures. A rate hike would make Australian real estate even more unaffordable for first home buyers and put downward pressure of real estate prices, so I expect our real estate portfolio won't repeat the healthy gains seen in 2010. We may even see a price decrease in real terms (ie. adjusted for inflation).
Assets___________$ Amount______$ Diff_____% Diff 
Stocks_*__________$26,717_____$10,226______n/a % 
Retirement_______$358,678_____$11,110_____3.20 % 
Properties_______$949,702______$6,945_____0.74 % 

Debts____________$ Amount_____$ Diff_____% Diff 
Home Mortgage(s)_$363,552_________$81_____0.02 % 

Net Worth________$971,576_____$28,200_____2.99 %
* the Stocks figure is portfolio value - margin loans. As my portfolio value (and margin loan debt) is around $500,000 relatively small movements in the stock market produce huge percentage swings in the net value of my stock portfolio each month.
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