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Thursday, 25 July 2013

Free money redux

It's been a long while between drinks, but I suddenly received a cold call from Citibank offering me a cheque for a loan of up to 80% of my Redicredit limit ($60,000) for four months at 0% interest rate, with no fees of charges for this 'balance transfer'. Several years ago such 'balance transfer' offers at 0% interest for 6 months or even 12 months were common, and it was great fun taking the offered funds and investing them in a high interest bearing online savings account for the period of the loan. Such 'credit card arbitrage' was a good way of earning hundreds of dollars income from OPM (Other People's Money). However, the credit card companies eventually woke up to the fact that some people were taking advantage of them (which must have been a surprise turn-around for them!), and they introduced either a flat 'transfer fee' or a minimal interest rate (compared to their normal exorbitant rate of ~18%), which made the proceeds hardly worth the time and effort involved.

But this latest off from Citibank is apparently fee-free, and, provided I pay back the borrowed funds on time, there will be no interest to pay. So I've accepted a loan of $40,000 and when the cheque arrives I'll use the funds to reduce the balance of my St George 'portfolio loan' for about four months (which will save me 5.59% pa interest). Allowing 7-10 days for the funds to arrive, and repaying the loan a week before the 'due date', the interest saved over about 3 months should amount to about $560.

Subscribe to Enough Wealth. Copyright 2006-2013

Wednesday, 24 July 2013

Consolidating my superannuation

Now that we are about to sell our investment property and pay off most of the mortgage on our home, it seems superflous to keep paying $160 a month for a $400,000 life insurance (Death and TPD) policy from my old BT Employer Superannuation Fund account. I'll retain my loss of income insurance policy, but if I die the balance of my SMSF account should be sufficient to look after my wife and kids. In any event at the current rate of life insurance premiums my BT Fund would have been tapped out in a couple of years anyhow, so I decided to rollover the balance (~$4,800) into my SMSF while there's still some money sitting there.

The process of closing my BT account and rolling over the funds into our SMSF was very straighforward. I simply downloaded the ATO 'Request to Transfer whole balance of superannuation benefits between funds' form from the eSuperfund website, filled in my personal details (name, address, DOB and TFN), the details (fund name, account number, ABN, and SPIN) of my BT account (the 'from' fund), and filled in the details for the 'to' account (fund name, member number, ABN of my SMSF). Recent legislative changes now require proof of identity to be included with rollover requests, so I simply had to drop in to my nearest Westpac Bank branch to have my licence copied and certified, and sent with the form to BT (they are a subsidiary of Westpac).

My finances are slowly being simplified over time, and having only one superannuation account is another step along that path.

Subscribe to Enough Wealth. Copyright 2006-2013

Wednesday, 17 July 2013

Pay 'rise' 2013-14

My boss went around handing out the annual pay review letters today. Unless you get a promotion, the company's policy for the past decade or so has been to only give out a 'rise' equivalent to the CPI ('consumer price index' aka inflation rate), which this time around was 2.25%. A plot of my salary vs. the actual CPI figures published by the Australian Bureau of Statistics shows that the company has 'rounded down' the adjustment on several occasions, resulting in my pay actually dropping about 3% in real terms over the past decade or so. But this time the CPI adjustment was slightly higher than the official inflation rate for the past year.

If I was feeling adventurous I'd show my boss the plot of my salary vs. the Average Weekly Ordinary Time Earnings (AWOTE), which shows my salary package has dropped about 10% compared to average wages since my last promotion. However, since I don't want to have to try looking for a new job now that I'm in my 50s if I can possible avoid it, I'm relatively happy for my pay to only keep up with the cost of living. I was even pleasantly surprised that the company didn't try to offset the 0.25% legislated increase in the Superannuation Guarantee Levy (to 9.25%) with a reduction in the quanta of CPI increment.

Since I haven't had an 'annual' performance review for several years, my boss also took the opportunity to spend a couple of minutes saying what a great job I was doing - so at least it doesn't look like I'm about to get sacked.

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Sunday, 14 July 2013

Data reduction or digging a fish pond? (When in doubt, procrastinate)

I should be spending today doing data reduction on the first set observation data for my PhD research. But as I can't even get the 'right' answer for the example data set that came with the software, there's no point trying to process my data until I can work out what is going wrong! So instead I've started digging the hole for a fish pond we want to install in our back yard. When in doubt, procrastinate!

There's a paved area in our back yard that ends up sitting under a couple of cm of water for about a week after every period of heavy rainfall, and some of the cement pavers are badly cracked and need replacing. So rather than spend money on installing grated drains and re-paving a large area, I decided to just rearrange the existing pavers and use the space left by the broken pavers to install a Koi pond (about 3m x 1m x 35cm deep). The bedrock is fairly flat and about 35cm below ground level, so I'm simply digging out the soil and will cement in some 20x20 cm pavers ($1.60 each) (standing upright) to form the edges of the pond. A black plastic 6m x 4m pond liner ($169) should stop any groundwater seeping into the pond, and I'll install some ag pipe and gravel along the back of the pond to direct the run-off into a nearby existing drain ( although the lack of any significant slope will make this 'interesting' to get right).

Conveniently there's a wholesale Koi 'fish farm' only a few km from our house, so we visited there yesterday to see what's available. DW and the kids were very impressed by the large, colourful Koi (some costing $350 or $475 each!). Fortunately the fish farm also sell small, young Koi for only $6 each (or 10 for $50), which is what I'll buy when our pond in finished. Apparently it will only take 5-6 years for these to grow to the size of the $300+ Koi (assuming they don't die or getting eaten by birds or cats!), although I doubt they'll be as colourful or valuable as the 'show' Koi on display. I don't want to spend too much money on this 'project', so instead of spending around $1,000 on an external pump and separate filter with UV treatment, I'll just buy a cheap ($120) submersible pump/fountain with a replaceable sponge filter bloke ($6). From past experience saving money on the pump will mean having to be very careful not to overfeed the fish, and having the siphon some waste off the bottom of the pond every few months.

 
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Thursday, 4 July 2013

Better too little and too late than not at all

My parents (aged 78 and 81) finally got around to filling in a Centrelink application for a (partial) aged pension. I think they were pleasantly surprised to find that they are entitled to a combined Australia pension of about $10K a year, and therefore also some other pensioner benefits such as subsidised medications. Which just makes me wonder how many years ago their assets and income first got below the relevant thresholds to qualify for a part pension. I'm sure they have missed out on several thousand dollars worth of pension payments by simply assuming they were too 'wealthy' to get any pension payment, but at least they finally made the effort to apply! Although they may not have qualified for a part-pension five or ten years ago, by going through the application process they would have found out exactly how much above the threshold they were, and they would have obtained the pension as soon as they became eligible. Ah well, better late than never.

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Tuesday, 2 July 2013

Net Worth Update: June 2013

The past month was fairly flat overall, with a substantial dip in the stock market mid-month only partially reversed by the month's end. My retirement account was adversely affected, with the market decline offsetting the benefit of three month's worth of employer contributions (SGL and salary sacrifice) being deposited during June. Our property investments showed a slight gain during the month, but in the next couple of months our investment property should be sold, which will result in my net worth taking a hit of around $140,000 due to selling fee ($14K), the sale price being about 7% below my 'estimate' of its value ($60K), and the capital gains tax liability resulting from the sale ($68K). So my NW figure will be dropping back below the $1m mark in a couple of month's time, and unless the stock market performs brilliantly, I don't expect to be a 'millionaire' again until 2015 or thereabouts.

Assets$ Amount $ Diff% Diff
Stocks *$10,448$1,451n/a
Retirement$496,360-$248-0.05%
Properties$880,501$5,2390.60%
Debts$ Amount $ Diff% Diff
Home Mortgage(s)$363,103-$134-0.04%
Net Worth$1,024,206$6,5750.65%
* the Stocks figure is portfolio value - margin loans

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