DS1 is on school holiday for the next two weeks. I booked him in to a "bridge building" course which will be run next Monday and Tuesday afternoon at the NSW University by their GERRIC (Gifted Education Research Resource and Information Centre) department. The course only runs for a total of 6 hours, and costs over $100, but could be money well spent if it stimulates DS1 to do well at school. I'm not even sure if DS1 is "gifted" as such - he started independent reading when he was just turned 4 and is doing well in his reading and math as school even though he's one of the youngest in his class. But on the other hand we had an "assessment" done by a phsychologist at GERRIC when he was three (when he'd started reading), but at that age he was very shy and didn't assess as particularly exceptional. I'd get him assessed again (now that he's older and more confident with strangers), but at $500 an assessment it's too much money to waste. Anyhow, it can't hurt to expose him to a group of kids his age that are gifted - it may motivate him to excel. And if nothing else, spending a couple of afternoons designing and building model bridges sounds like fun.
Copyright Enough Wealth 2007
Saturday, 30 June 2007
Debt Help
The most common problem facing people wanting to build up their wealth is debt. Debt is a funny old thing, a bit like food. Many people start out accumulating "bad" debt for consumer items such as cars, living expenses or holidays which don't provide any boost to your net wealth. This debt is a bit like eating chocolate cake or icecream - it gives instant gratification, and is OK in small doses, but can easily get out of hand and be bad for your health (or wealth).
There can also be "OK" debt accumulated in the early years, used to finance an education or buy a business suit. While the interest on this debt is a drain on your finances, at least the money has gone towards something that will (hopefully) increase you earning potential and provide increased income in the future. This is a bit like eating your fruit and vegies each day - it isn't always great fun, but it's good for you.
The third type of debt is "good" debt, where the debt is used to make an investment with a overall ROI greater than the interest costs. While you can increase you net worth simply by paying off all your debts and then saving to invest, it's usuaully a worthwhile strategy to make use of other people's money to invest. For example, borrowing money from a bank to buy a rental property, margin loans to increase the size and diversification of your stock portfolio, borrowing to grow your business. Of course such "good" debt can easily turn "bad" if the investment doesn't work out, or you take on too much risk and can't survive the inevitable ups and downs of investing.
If you have debt to eliminate there are many strategies that can be employed. DebtHelp.com has information about online debt consolidation which will inform you about such things as student loan consolidations, debt counseling services, home equity loan and so forth. Each of these techniques can be useful in specific situations, but many of them can also be dangerous if used carelessly or aren't suited to your personality. For example, debt consolidation can provide relief from multiple creditors and simplifies your multiple payments into a single payment. And it can often save some interest cost by getting a rate on the consolidated debt that is lower than some of your individual CC debts. However, the can be traps with high fees and charges. Also, some people will use debt consolidation or a home equity loan to pay off their CC debt, but then rack up more charges on their CCs and end up in a worse situation as before.
Anyhow, DebtHelp.com has a large amount of useful information on the site, just be careful to shop around and compare the costs of any debt solution you consider undertaking.
Copyright Enough Wealth 2007
There can also be "OK" debt accumulated in the early years, used to finance an education or buy a business suit. While the interest on this debt is a drain on your finances, at least the money has gone towards something that will (hopefully) increase you earning potential and provide increased income in the future. This is a bit like eating your fruit and vegies each day - it isn't always great fun, but it's good for you.
The third type of debt is "good" debt, where the debt is used to make an investment with a overall ROI greater than the interest costs. While you can increase you net worth simply by paying off all your debts and then saving to invest, it's usuaully a worthwhile strategy to make use of other people's money to invest. For example, borrowing money from a bank to buy a rental property, margin loans to increase the size and diversification of your stock portfolio, borrowing to grow your business. Of course such "good" debt can easily turn "bad" if the investment doesn't work out, or you take on too much risk and can't survive the inevitable ups and downs of investing.
If you have debt to eliminate there are many strategies that can be employed. DebtHelp.com has information about online debt consolidation which will inform you about such things as student loan consolidations, debt counseling services, home equity loan and so forth. Each of these techniques can be useful in specific situations, but many of them can also be dangerous if used carelessly or aren't suited to your personality. For example, debt consolidation can provide relief from multiple creditors and simplifies your multiple payments into a single payment. And it can often save some interest cost by getting a rate on the consolidated debt that is lower than some of your individual CC debts. However, the can be traps with high fees and charges. Also, some people will use debt consolidation or a home equity loan to pay off their CC debt, but then rack up more charges on their CCs and end up in a worse situation as before.
Anyhow, DebtHelp.com has a large amount of useful information on the site, just be careful to shop around and compare the costs of any debt solution you consider undertaking.
Copyright Enough Wealth 2007
Tax Reduction - Part 4
The next large deduction item on our annual tax return is the expenses for our rental property. As it is owned in joint names with DW, we work out the total deductible expenses using the ATOs worksheet for rental properties, and divide each item in half to include on each of our personal tax returns (Australia doesn't have joint filing, although many government benefits such as Family Tax Benefit are based on the combined income of couples). The deductions for rental properties are fairly standard, such as interest on the mortgage loan (make sure you don't include any amount of your payments that is actually principal repayment), cost of repairs, council rates, land tax, water rates and insurance. Some other expenses associated with purchasing a rental property (such as solicitors fees, loan stamp duty etc) are deductible for the first five years after purchase, with 1/5 of the total expense being claimed each year.
If you only had the property available for rent for part of the year (either bought it during the tax year, or had the property off the market for part of the year) you can only claim a pro-rata fraction of the expenses. The ATO also takes a dim view of claims for expenses where the property wasn't really available for earning a rental income. An example would be where a holiday property is used by the owner during the peak rental season.
Another trap to watch out for is claiming deductions for repairs that are actually improvements. Improvements can't be claimed as an expense, but are taken into account as part of the cost base of the property when you eventually work out capital gains when the property is sold.
Copyright Enough Wealth 2007
If you only had the property available for rent for part of the year (either bought it during the tax year, or had the property off the market for part of the year) you can only claim a pro-rata fraction of the expenses. The ATO also takes a dim view of claims for expenses where the property wasn't really available for earning a rental income. An example would be where a holiday property is used by the owner during the peak rental season.
Another trap to watch out for is claiming deductions for repairs that are actually improvements. Improvements can't be claimed as an expense, but are taken into account as part of the cost base of the property when you eventually work out capital gains when the property is sold.
Copyright Enough Wealth 2007
American Express $250 Bonus
Hustler Money Blog has a post about a Credit card bonus offer from American Express for 25,000 Rewards points after first purchase with a new American Express Business Gold card. I can't qualify for this offer as I'm not is the US (and I already have an Amex Gold card which I just use to pay my monthly health insurance, and keep for use when I travel overseas), but it seems quite generous. You can exchange the 25,000 points for a round-trip airline ticket anywhere in the U.S or $250 rewards gift certificate. They're also waiving the normal annual fee for the first year. It's a limited time offer, so if you're interested you should apply right away.
Copyright Enough Wealth 2007
Copyright Enough Wealth 2007
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