Goodbye Renting
Page 9
charge.
If the credit card is managed well, it can be a great asset.
My husband and I have just planned on a return trip to Europe. Our
airfares were covered by the accrued credit card Frequent Flyer points
(less tax and charges). We didn’t pay for the airfares and we didn’t pay
interest on the card, which means we have used FREE money!
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Your credit card can be a real asset and a wonderful concept if used to
its full advantage, but unfortunately most people do not.
It always amazes me why so many people have so
many credit cars. How do they keep it all in check?
Don’t get more and more credit
I recently received an application from some prospecting
tenants which required a 100-point check. This meant I
needed several pieces of identification. They were a young
couple in their twenties and to my surprise they had five
credit cards each, all from different financiers. Their incomes
were relatively average and the cars they drove were being
paid off on personal loans.
I wondered how this could happen. But the fact is that credit
cards and consumer loans are too easily accessed and
readily available. People are now dispersing their future
earnings long before they have earned it! Scary thought.
It is all too easy to let it go just once and not be particularly
bothered by the few extra dollars you might have to pay
initially on interest because you forgot to pay at the time, but
this is also a dangerous path to travel because the interest
can accumulate and completely blow out until you’re at a
stage when you can only afford to pay the interest and not the
total amount. That’s when the credit card becomes enemy
number one!
It is critical that you accumulate enough money to pay that credit
card bill on or before it is due!
But I digress…
When you are working towards getting into your own home, credit
card discipline can play a substantial role to your financial growth.
The trick is to still be aware of budgetary constraints when
purchasing.
Just because everything is bought with the credit card doesn’t mean
that you need not consider the cost of items. It is still very important to
buy within your budget and when things are on sale. Don’t forget to tally
your expenses to ensure you don’t over-extend your credit card limit.
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Fly buys
If you haven’t already applied for a Fly Buys card may I suggest you
get one.
I’m not one for promoting a company or service unless it has the
ability to help its consumers rather than just take, take, take, but in this
case it is a concept that can provide you with Free Money if you work it
to your advantage!
•
Yes, it does take quite a few points to actually get something.
•
Yes, it does mean another card to add to your already over-
loaded purse or wallet but it is worth the hassle if you use it to its
full advantage.
Two main things to remember with your Fly Buys card are to present
it when purchasing it at every opportunity and to make sure you cash in
your accrued points before they expire!
If you don’t cash or trade in your points by the appointed timeframe
you can lose some valuable points that you can’t get back.
However, if you keep them in check you can accrue enough to trade
for items catalogued, such as a new hand-held phone. I, on the other
hand prefer to trade them for shopping vouchers to whatever value I can
get. I usually use the $20, $50 or $100 shopping vouchers as money put
aside for festive breaks. There are times when it has really helped with
putting food on the table.
Now, even if you think you would never accrue enough points to get
anything, consider applying for one anyway. What have you got to lose?
Even if you aren’t necessarily in a position to purchase big in order to
accrue what you may think are worthwhile points, you are disciplining
and preparing yourself for a more positive financial future and you
might just be surprised how your points add up in your day-to-day
purchases. Believe me, when you do get your own property you will be
surprised at the number of avenues for using your card and you will
therefore accrue loads of additional points.
CAUTION: Whatever you do, don’t spend for the sake of earning
consumer reward points. This is not a lesson extolling the virtue of
spending money in order to gain a freebie. This is about when you need
to purchase only and then getting a ‘kick-back’ from the necessary
spending.
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The baby bonus
More FREE money!
The Baby Bonus is a payment from the Tax Office
which you may be entitled to if you had a baby or gained
responsibility of child within a certain timeframe. The
amount and requirements vary in different countries, but
the payment is usually paid either by instalments over a
few years or in one lump sum. In Australia, the Baby
Bonus is not means-tested so anyone of any income can
access it. The amount of money changes in line with the Consumer Price
Index in March and September of each year. At the time of writing this
the lump sum payment is $4,133.00 and in the case of multiple births it
attracts this amount for each child. By mid 2008, the Baby Bonus will
increase to $5,000.
When I was working in community services one of my positions
involved supporting homeless and at-risk young people, in particular
young pregnant women. Most of these young, disadvantaged women had
endured a great deal of hardship, abuse, poverty and neglect. Without
money management education or life skills experience, they were
handed a windfall of thousands of dollars by the government following
the birth of their baby.
I can’t tell you how much money I watched frittered away on the
latest fashion trends, designer baby prams and high-tech mobile phones.
Boyfriends who vanished during the months of pregnancy seemed to
reappear from nowhere to enjoy the benefits of new hubcaps and sound
systems for their cars. Miraculously, the boyfriend’s seemed to
disappear again when the money had all but dried up.
Within weeks, these young women would come back for my
assistance with shelter, nappies and food parcels. This is not a criticism
of all young women receiving the Baby Bonus, but in this instance these
young women (often teenagers) didn’t know any differently. It is,
however, a defect in the system that has not insisted on some education
and guidelines on how it should be spent. After all, this is supposed to be
about the welfare of the child. I guess what I am also trying to illustrate
is that without the education of financial arrangement the money that
could provide a positive financial future is often reduced to nothing.
On the flip side… the Baby Bonus is a sizable amount of money that
you haven’t had to earn. Sure, you may have had to stop working for a
anyway? Wouldn’t you have taken your finances into consideration
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before planning a pregnancy? Even if the
pregnancy wasn’t planned, you will still need to get
by as every women in every country in the world
does when they have a baby and don’t get a Baby
Bonus at the end. Furthermore, many women in
past generations weren’t on the receiving end of such benevolence by the
government so how did they get by without it? The fact is, they did.
Now, really think about this one! What do you really want for that
precious baby you are bringing into this world? Is it having the best baby
clothes, nicest nursery, the most comfortable baby capsule and
ergonomically designed pusher?
I must inform you that these are all short-term, money-sucking,
image-conscious material wants that have absolutely no benefit to your
child’s future needs.
Babies are babies for a very short time as opposed to the length of
time they are school children with much higher demands. The
importance at this stage is on their safety and wellbeing and the items
you choose need to have these things in mind first and foremost, but they
need not be NEW!
Before you think about blowing the budget on the elegant timber cot
with the elaborate trim and beautifully quilted Manchester, consider the
length of time the baby will be in it compared to the bed they will
probably sleep in for the next fifteen years.
Now consider buying sturdy secondhand furnishings, renting the
car baby-capsule (from an approved dealer) and using cloth nappies
to save expenditure (and the planet), then putting that Baby Bonus
into a money management fund, fixed term account or other
investment plan. Let that money accrue compound interest or
dividends for your child’s future, when they will really need it. Give
them a start in life you may not have had because no one showed
you how to make your money grow.
Or:
You could use that money towards purchasing your first home. Don’t
feel guilty about this because if you’re like any parent who wants the
best for their child, you can’t go past putting that money into a secure,
financially accumulating asset - a home for them.
Again, this is FREE money. So - what are you going to do with it,
blow it on something that makes you look to the outside world like you
have the best for your baby, then get short-term satisfaction with little or
no return? Or use that money and make it grow so that you give your
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child a long-term future?
(At the completion of this book, the Australian Government had
begun discussions on the installation of means-testing for the Baby
Bonus).
Singapore Baby Bonus
Because the absence of babies in Singapore created such a shortage
the country was facing a scarcity, the government had to act to
encourage people to procreate. Monetary incentives were introduced
which increase substantially with each child. For example; when you
have one child you get $3,000 in cash paid out in four instalments, but
with each child the incentive improves. With the second child you not
only get the cash bonus but both parents can share a tax rebate of
$10,000, a Child Development Account (savings account) is opened and
whatever amount you save the government will match up to $6,000. By
the fourth child the bonus is doubled as is the tax rebate with a $1,200
matching deposit.
Canadian Education Savings Grant
This is a financial incentive for parents to save for their child’s
education. The Canadian Government pays a grant directly into a child’s
Registered Education Savings Plan (RESP). The amount of the grant is
based on a family’s income but provides at least 20 cents for every dollar
in the first $2,000. As long as the child is a Canadian resident, is aged up
to 17 years and the money goes into the RESP with their name as
beneficiary, they are eligible.
Free water
Ok, I know that water is a precious commodity, and if you’ve had
water bills like I have, you’re also aware that water isn’t all that free.
What’s more it isn’t likely to give you free money either.
But I can’t let this one go when it comes to actually saving money.
Bottled water - why, oh why, are we all paying for bottled water,
when we have perfectly good water coming out of our taps? If you
worked out how much you actually paid for bottled water, you might
think twice when complaining about the cost of fuel. Bottled water on
average is $2.50 per 500mls, which equates to $5.00 per litre!
When did water (which we can access for nothing) become as
expensive as a bottle of wine? Boy! Did someone strike gold when they
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come up with this concept or what?
You may argue that the water you get out of a bottle is purified,
without additives and much more hygienic to drink and that may be
true… then again it may not. Have you ever actually looked at what is
written on the label of bottled water? Some of the ingredients indicate
high levels of salt and other preservatives.
And what guarantee do you have that it is more hygienic, purified or
for that matter better for you than the water from a tap? What proof is
there that the liquid gold you’re paying for in a bottle is any better for
you than the water that comes from a dam?
Incidentally, babies are not supposed to drink bottled water either,
unless it has been boiled, which is just the same as tap water. There is a
pretty good indication that something ain’t right here!
The only benefit I can see in purchasing bottled water is the
convenience of being able to access water when you need it, but what a
huge price we are all paying for that convenience.
In fact Australians spend as much as $123 million on bottled water
each year (www.choice.com.au)
Bottled water wasn’t readily available (like it is now), until the late
1980s, and surprisingly, people managed to survive on water from the
tap before that. Of course people had to remember to take flasks and
plastic containers filled with water with them when they went to school
or work, but I don’t recall people actually suffering major illnesses when
tap water was all they had to choose from. This may be due to the fact
that tap water has had to comply with strict standards for a very long
time. It still does.
Why don’t we leave the house with our own flask filled with water
and fill it up whenever we need to?
Is this another one of those cons of the late 20th and 21st century that
future generations are going to laugh at?
If you think you can’t save up any money and can’t work out why,
maybe you’ve been brainwashed into buying something that’s readily
available and free, like water. So think about taking your own water with
you wherever you go and stop spending money on something that is
already free!
It�
�s time to cut back on stuff you don’t really think about… and
think about stuff that cuts back on your bills.
Think about… the electricity that doesn’t need to be used each and
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every day. Don’t leave ceiling fans going when you’re out or the
computer running all day if you aren’t using it. Air-conditioning and
dryers are expensive to run so only use when you absolutely have to and
be mindful of the length of time they are on.
Review your mobile and/or internet plans. Can you use a less
expensive provider or one that offers incentive freebies without the
added cost of added elsewhere? Again there are many service providers
to choose from it just takes time and effort to check them out and if it
saves money to get you closer to your own home then it is worth it.
Health insurers and all other insurance can be a hassle to change, but
if you can find one that provides a similar service with more competitive
rates then change over. Now brokers can assist you with getting the best
insurance for your individual needs and that also means your budget!
Cut back on take away food, I know this seems so obvious to many,
but I’m not just talking about the fast food chains. Every time you go out
for coffee and buy cake, a sandwich, a juice or soft drink from a
machine, you are handing over income at an inflated cost. Think about
taking something to eat and drink with you wherever you go.
Use your shopper docket incentives to the max. They often provide
freebies or reduction in cost for services and items that help. These
include petrol, video hire, two for one deals, cheaper car servicing and
more. Every little bit does count.
Stop withdrawing from the ‘hole in the wall’ (ATM machine) each
and every time you need cash. You need to reduce fees and charges so
plan in advance, give yourself a weekly budget to spend and take out
that amount with one withdrawal to last the entire week.
Don’t purchase food, confectionery and cigarettes from the service
stations, cinemas, theme parks, city kiosks and bus/train stations. The
prices have been highly inflated to cover other costs and they are costs
passed onto you.
Be prepared and plan for coming expenses like school camps, higher
electric bills during winter/summer, car registration, uniforms, haircuts,