How to save on telephone costs

I remember back in the early days of the "mobile" telephone when the handset was the size of a brick and the battery pack was a separate, even larger brick that took all night to charge up and then only lasted a couple of hours on standby. In those days I was a volunteer for the State Emergency Service and the "duty officer" had the dubious honour of lugging this "mobile" phone around with him or her all weekend.

Times have sure changed since then, with current mobile phone models that fit in your pocket lasting a week between charges, and let you browse the web etc. The other thing that has changed a lot is the cost of using a mobile phone. It's common to get a current model phone for "free" when you sign up for a mobile phone contract - DW and I got two phones (of the same model so that we can exchange batteries, chargers etc) for free under a 12 month contract at $14 a month per phone, with $14 worth of included calls. The included call balance is shared between the two phones, so we can run up a combined phone bill of $28 in calls each month without paying anything above the basic plan rate. As we don't make that many calls, we haven't ever exceeded our included call limit in a month.

In comparison, our landline costs us $32 a month just for the line rental - any calls are extra. In the near future we will dump the landline and just use our mobile phones for all our calls.

If you're looking around for the best possible cell phone plans and phones, have a look at Wirefly. They even have some free cell phones available, and family plans from all major service providers including cingular, T-mobile, verizon, sprint and nextel. You can get two free phones with a family plan. Family cell phone plans (also known as shared plans) can be great value for a single household or family compared to using an individual cell phone plan. A family plans mean all your talk time minutes are pooled for common use, so you'll need to have an idea of the total talk time required for all members of your family.


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Land Tax Sux

One of our myriad state taxes is land tax. It's not that I hate land taxes per se, it's just that the state government keeps changing the rules, making it impossible to budget or plan for this tax. For example, our past bills (with no change in the properties we own and pay land tax on) have been:

Year    Tax Due   Taxable      Exempt *      Tax Rate
                  Land Value   Land Value    Formula

2001    $695.00   $240,000.00 not provided   $100
                                             + 1.7c per $1 over $205,000 threshold

2002    $848.00   $264,000.00 not provided   $100
                                             + 1.7c per $1 over $220,000 threshold

2003    $814.00   $303,000.00 not provided   $100
                                             + 1.7c per $1 over $261,000 threshold

2004    $372.00   $333,000.00 not provided   $100 
                                             + 1.7c per $1 over $317,000 threshold

2005  $1,332.00   $333,000.00 not provided   0.4c per $1 up to $400K,
                                             0.6c per $1 on next $100K,
                                             1.4c per $1 above $500K

2006      $0.00   $349,000.00  not provided  $100 
                                             + 1.7c per $1 over $352,000 threshold

2007    $451.30   $372,667.00  $407,000.00   $100
                                             + 1.7c per $1 over $353,000 threshold

* Land used for principal place of residence (ie. our home) is tax exempt

Apart from a short lived attempt to remove the tax threshold (which was repealed after one year due to all the "small" landholders who just had a tiny tax bill due on the land associated with a investment apartment), the rate has been fairly constant but the thresholds were adjusted based on average state property values, whereas land values in Sydney tend to change more erratically, and outpace the threshold increase over time. The government reintroduced the old tax rates and threshold for 2006, but didn't index the threshold in 2006, which has brought our one investment property back over the threshold.

Due to sudden jumps in land valuations under the old method of reviewing land values every 3-4 years, a new method has been introduced that provides a valuation each year, and averages the past three years valuations to smooth out any tax increases.

Year   Property #1   Property #2
       Valuation     Valuation *
2005   $333,000.00   $387,000.00
2006   $349,000.00   $406,000.00
2007   $436,000.00   $428,000.00
Avg:   $372,667.00   $407,000.00

At least this allows me to make a rough guess of what the land tax bill will be for the next two years, assuming
a) rates stay same and threshold goes up 5%pa
b) land valuation only goes up 5%pa for the next 2 years (due to the property slump)

Estimated Values and averages:

Year   Property #1   Property #2
       Valuation     Valuation *
2006   $349,000.00   $406,000.00
2007   $436,000.00   $428,000.00
2008   $458,000.00   $449,000.00
Avg:   $414,333.00   $427,667.00

2007   $436,000.00   $428,000.00
2008   $458,000.00   $449,000.00
2009   $481,000.00   $471,000.00
Avg:   $458,333.00   $449,333.00

My estimates for 2008 and 2009 are therefore:

Year    Tax Due   Taxable      Exempt *      Tax Rate
                  Land Value   Land Value    Formula

2008    $836.67   $414,333.00  $427,667.00   $100
                                             + 1.7c per $1 over $371,000 threshold

2009  $1,261.67   $458,333.00  $449,333.00   $100
                                             + 1.7c per $1 over $390,000 threshold

We'll see if this comes anywhere close to the actual bills. As there is a state election due next year I wouldn't be surprised if the rules are changed again!

Net Worth Update: Jan 07

The past month provided more good gains in my stock portfolio and retirement account, offset only slightly by a small drop in the valuations of my real estate assets:
* Average property prices were slightly down, dropping my property equity by $4,146 or 0.58%. We also had to redraw $3,500 from our home loan prepayments to meet our repayments as DW is on maternity leave and not earning any income at the moment.
* My stock portfolio equity went up another $19,568 (5.50%) this month and my retirement account also increased significantly, although it was boosted a bit by some extra contributions being deposited by my employer this month - up by $12,561 to $324,598 (up 4.03%).

My Networth as at 31 Jan now totals $1,058,372 (AUD), an overall increase of 2.48% for the month.

As discussed in a previous post, I'm looking into either buying Index Put options to protect against significant losses if the market drops, or else selling off some of my stocks to repay my margin loans and eliminate my gearing while the market is at the current high level. I'm leaning towards the Put Options idea as I don't want to realise capital gains this financial year, and most of my margin loans have had the interest prepaid until 30th June, so I should keep my investments until then (and keep my fingers crossed that the market goes up a bit more until then).

It's Raining Credit

Now that the holiday season is over everyone must be back at work over at the credit card companies - they've started sending out offers to increase my credit limits. Yesterday I received an offer to increase the credit limit on one of the CCs I used for a 0% balance transfer for the past 6 months, from $6500 to $9750. And then today I received an offer from Citibank to increase my line of credit limit from $35K to $45K. I'll accept both these credit limit increases as it doesn't hurt to have more credit available (except when applying for a home loan, where they count all the available credit limits as if you had borrowed that amount). But I won't be using any the CC as I have another one for my day-to-day purchases which I pay off in full each month. I may use the Citibank line of credit account at the end of the financial year to prepay a year's margin loan interest (to get an immediate tax deduction on the interest), and then pay off this balance over the following few months.