Early start to Christmas shopping

I tend to buy several small Christmas presents for the boys throughout the year, as I come across 'bargains', plus one 'expensive' item. This year I decided to order an Elenco 750R snap circuits student training kit as a combined gift for both of the boys. The present won't come as huge surprise (unless they forget about between now and Christmas Eve) as I checked if they thought they'd like spending time using it before I placed the order. The kit has received some good reviews, and seems suitable for a wide age range - DS1 (13yo) can use it to learn about electrical circuit theory and test out circuits of his own design, while DS2 (7yo) can construct simple working devices by following the step-by-step instruction manual, in a manner similar to building a Lego model. As is usually the case, buying the product online from Amazon.com was a lot cheaper than getting it from a local distributor - the kit cost A$136.32, plus a hefty A$52.00 shipping and handling fee for delivery within a couple of weeks, making a total of A$188.82 delivered to my doorstep. Getting the same product from the Australian distributor would cost A$249.95, which includes the 10% local GST plus free delivery.

 

Hopefully the boys have lots of fun playing with this kit for years to come.

Subscribe to Enough Wealth. Copyright 2006-2013

New Worth Update: July 2013

The past month saw strength in the international and local stock markets give a substantial boost to the value of my retirement savings (SMSF) and geared stock portfolio.

However, the overall gain in net worth was substantially affected by writing down half the difference between my previous monthly estimated value for our investment property, and the agreed sale price. Settlement of the sale is due at the end of August, so next month the remaining impact to my net worth will be felt. However, it won't be apparent in the property figure as the sale proceeds will be split between paying off one of our mortgage accounts, paying off some of the 'portfolio loan' currently secured against both our property titles, and the balance sitting in a cash account. There will be a capital gains tax liability of around $60K created by the sale of our investment property, but as I use cash accounting for my finances this won't affect my net worth figure until the tax is due around March 2015.

Despite this partial write-down in the value of our investment property, my NW this month reached its highest level since May 2008. On the one hand it is nice to see the worst impact of the GFC on my NW has finally dissipated, but the down-side is that it has taken five years to do so. And considering I save about $50k pa the situation is still dire compared to where I would have been if I'd been invested 100% in cash and fixed interest investments since late 2007...

Assets	$ Amount	$ Diff	% Diff
Stocks *	$15,694	$5,246	n/a
Retirement	$523,216	$26,856	5.41%
Properties	$864,689	-$15,812	-1.80%
Debts	$ Amount	$ Diff	% Diff
Home Mortgage(s)	$363,014	-$89	-0.02%
Net Worth	$1,040,585	$16,379	1.60%

* the Stocks figure is portfolio value - margin loans

Subscribe to Enough Wealth. Copyright 2006-2013

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

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