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DIY or Money Mentor?

DIY or Money Mentor?

If you’re a DIY kind of person, let me ask you this: Do you have the time to research all your investment and insurance options? Would you be able to look at your financial situation objectively? Could you crunch the numbers? Navigate tax laws? AND work your day job? 

Your Future Depends on the Now

Your Future Depends on the Now

Part 3 - How to Become an Investorgetic®. The secret to becoming a Millionaire Series

Focus on Financial Liberation: Introduction and Step 1 

Your retirement may seem like a distant dream; something to worry about later on. Yet what you do now – how much you earn, spend, save and invest – determines how much money you will have in retirement.

How much money you will need depends on the kind of lifestyle you want. Do you want a frugal retirement, living week to week on the pension? Or do you envision yourself debt free, living in comfort off your own savings and investments? 

It is never too early to transform into an Investorgetic™. You can start working towards a financially liberated retirement no matter what stage of your life you are in. But the fluctuating global economy complicates matters. What is financially relevant now might not be in 20 years’ time.

For example, the erosion of investor returns has caused major economic upheaval. The rate of return for cash investments nosedived from 7.5% in 1995 to 2.5% in 2015. This has had a huge impact on people’s quality of life in retirement.  

So, when the world is faced with an uncertain financial future, how can you plan for your retirement in 20 or 30 years? And how can you plan for another 20 years after that?

Create your wealth road map 

No one can guarantee what their future will be. But you can understand and manage the risks by creating your wealth road map. A wealth road map considers various financial

scenarios – good and bad – and uses the numbers to create a sound financial strategy bolstered by wise investments.

Your wealth road map is not a one-off assessment. At the very least, it needs re-evaluation yearly and whenever you experience a major change in your circumstances.

Improve your current financial position

Before you can start planning for the long term, you must take an honest look at your present financial situation. What needs improving? What bad habits need nipping in the bud? Address these now to avoid financial headaches later.

1.     Reduce your credit card debt

Do you have credit card debt and little or no assets, equity or savings? Even a small amount of debt can snowball over time and ruin your chances of saving enough for a self-funded retirement. You must pay off – or at least reduce – your credit card debt before you start investing. It may even be prudent to refinance your debt by increasing your home loan. By doing this, you can reduce the credit card interest you pay by two thirds. However, you would also need to rein in your spending. Otherwise, you could fall into a vicious cycle of refinancing your home loan every few years to pay off your continuing debt.

2.     Finalise the family home

If you are renovating, building, selling or upgrading the family home, this must be finalised before you commit to a long-term financial plan. You don’t want to take on a hastened investment that ends up costing you dearly because you were too preoccupied with small to medium-sized goals.

3.     Manage your budget

At some point in the future, you will need to pay off your investment debts. If you currently struggle to budget and save, chances are you’ll struggle in the future, too. Failing to live within your means places long-term strategies and investments in jeopardy. To invest and build your assets, you must first work out your expenses, commit yourself to a realistic budget and regularly save money from your disposable after-tax income.

4.     Manage your bank accounts

Effective banking practices allow you to control your household expenses and manage your financial goals. For example:

  • Have no more than one credit card or debit card. Use this card to pay all the household expenses. Ensure the limit is no more than $2000.
  • If you have a spouse or partner, ensure both incomes are paid into your home loan/offset account.
  • Create separate accounts for holiday savings, household budget, education and investment/property. Set up monthly or fortnightly direct debit payments into each account.
  • The investment/property account can be where any rental income goes in and property expenses go out. If you don’t have a property, you can use this account to save for your own home, investment property, shares or managed fund.
  • The education fund can be a savings account or another offset account split against the home loan (where the balance offsets the home mortgage and the interest is calculated on the net amount). This allows you to save for your children’s education while reducing the interest on your home loan. Use money in this account for school fees, uniforms and books, and save for future private school and/or university fees. 

5.     Your age and retirement goals

If you don’t allow yourself ample time to grow your wealth and assets, you may need to adjust your lifestyle at retirement. People who start planning in their 40s have a 20-year horizon to work with. This gives them a much better chance of achieving their retirement goals than someone who is in their 50s with limited assets. However, when there is a will, there is a way. It starts with an honest money conversation.  

Once you have improved your current financial situation, you can start looking at ways to invest your money.

Stay tuned next week for how you can make wise investment decisions based on your attitudes towards risk.

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Susan Wahhab —CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter— is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com  

Susan is the author of the transformational and practical book Money Intelligence®. Susan is passionate about helping people achieve financial liberation. At the age of six, she witnessed how her money-savvy mum (whom she calls the money manager) joined forces with her dad (whom she refers to as the money maker) to save the family business from bankruptcy and become financially free. Susan truly believes that people can become financially liberated by developing a healthy relationship with money. Buy the book in either printed copy or ebook and learn more about being money intelligent www.moneyintelligence.com.au

 

 

Don't let YOLO undermine your money goals

Don't let YOLO undermine your money goals

Part 1 of Investorgetic® Series - The secret to becoming a Millionaire

Are you someone who takes a "YOLO - you only live once” approach to money? It’s true that we should seize life with both hands and enjoy it as much as we can. But this is not an excuse to spend, spend, spend. If anything, it is more reason to take a long-term, responsible approach to your wealth.  

People are living for longer. If your idea of living life to the fullest is spending all your money on life’s luxuries, what happens if you live to 90 or older? Could you guarantee yourself a decent living for 30 years or more after retirement?

Consumerism has blinded us to the true sources of love, happiness and success. Advertising tells us we can find these things in products and services. We borrow to spend, and we spend to enjoy our lives. Most of us don’t even question this; it’s just what we do.  

Are you a Consumerholic? 

You may be thinking, “This isn’t me. I’m in control of my wealth and how I spend my money.”  

Maybe, maybe not. Look at the following list. You know you’re a Consumerholic when you:

  1. Feel the need to buy more clothes, bags, shoes and perfumes, despite having a cupboard full of these things (some of which you probably never wear).

  2. Live week to week and save none of your income.

  3. Spend more than you earn, accumulating personal credit card debt

  4. Pay for holidays and other luxuries with your credit card or home loan redraw, rather than saving for them.

  5. Believe a car is an investment.

  6. Ignore opportunities to invest (apart from paying off the mortgage).

  7. Are scared to borrow money to invest, yet have no issue with borrowing to consume, eg. for new furniture, overseas holidays.

So how do you score? Do any of these points ring true for you? If so, your spending habits need an overhaul. To build your wealth and retire in comfort, you need to change your spending habits and your mindset. You need to invest your money wisely. You need to become an Investorgetic®.

Find your inner investor

An Investorgetic® mindset is not about denying yourself enjoyment. It’s not about putting your life on hold and giving up all of life’s luxuries. Rather, it’s about living within your means – at every stage of your life.

So, how exactly is an Investorgetic® different to a Consumerholic? Typically, an Investorgetic®:

  1. Plans proactively for the long term.

  2. Ensures their daily actions are tied in with their long-term goals.

  3. Is careful with money. They plan, budget, save and live within their means.

  4. Focuses on income-producing asset investment.

  5. Saves money for emergencies and holidays.

  6. Puts money into an education fund for their children.

An Investorgetic® makes wise money choices that help them reach their financial goals. They get excited about investing – yes, such people exist!

They have a different approach to living life: they don’t rely on credit cards and they know the difference between necessary and unnecessary expenses. Every decision they make is pointed at building their long-term wealth.

But to know where to invest your money and what you want to get from your investments, you need to have a clear vision of what you want your financial future to be. Without a well-defined vision, nothing will change.

Stay tuned next week for Part 2 of the Investorgetic® Series on how you can articulate your Magna Vision.

 

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Susan Wahhab —CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter— is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com  

Susan is the author of the transformational and practical book Money Intelligence®. Susan is passionate about helping people achieve financial liberation. At the age of six, she witnessed how her money-savvy mum (whom she calls the money manager) joined forces with her dad (whom she refers to as the money maker) to save the family business from bankruptcy and become financially free. Susan truly believes that people can become financially liberated by developing a healthy relationship with money. Buy the book in either printed copy or ebook and learn more about being money intelligent www.moneyintelligence.com.au

 

 

From Consumerholic to Investorgetic®: Your Millionaire Path

From Consumerholic to Investorgetic®: Your Millionaire Path

New year, new opportunities to build your wealth

Forget New Year’s resolutions. If you want to make real financial change in your life, you need a strategy.

How many times have you made a resolution to lose weight, stop drinking, stress less and exercise more? We start off with the best of intentions, but without a solid plan, we quickly lose focus. Within a week or two, we resort to old habits. Nothing changes. It's the same when it comes to your finances. You cannot pay down your debts, build your wealth and achieve sustainable change without transforming your mindset and working from a strategy.

Take an honest look at your financial situation. Do you spend to live, or live to spend? We are a nation of Consumerholics: we rack up debt for things we don’t need and have lost sight of what is truly important.

How do we regain control of our money? How can we rediscover what truly matters?  

You must become an Investorgetic®

An Investorgetic® is someone who is passionate about building their wealth. They invest their money responsibly, are socially aware, put high value on their relationships and use their wealth and knowledge to help future generations.  Watch this short video for tips on what people are doing to become Investorgetic®:

If making ends meet is a struggle for you right now, this may seem unachievable. But it’s not. Anyone can become an Investorgetic®. It takes commitment, strategy and three fundamental elements:  

1.     Magna Vision

“Life should not be a series of busy nothings.” 

What do you want your life to be like? Be clear about your vision for the future. Let it light up every aspect of your life and form the basis of every decision. Where do you want to be in 30 years? Do you want to be debt-free, own your own home, have enough money so you can be self-funded at retirement? Think about the future of your children. Is it important to you to have enough money set aside so they can attend university? Remember, your mindset and the actions you take now pave the way for their own financial independence. Don’t let the next shiny, new thing make you lose focus of your vision. Every time you make a purchasing decision, ask yourself: will this help or hinder my chances of achieving my goals?

2.     Courage

“Be strong and courageous.”

I’ll be honest, letting go of your Consumerholic mindset isn’t easy. You’ll face many challenges along the way. It takes courage to embark on a journey of financial transformation. It’s natural to feel apprehensive and scared. They key is to remember your goals and not let fear impede your success and happiness. You deserve financial freedom. You deserve the life you want. Embrace this opportunity to change your life and muster the strength to deal with challenges as they come.

3.     Faith

“Ask and you shall receive. Seek and you shall find. Knock and it will be opened to you.”

The journey won’t always be easy. There’ll be times when you question yourself; times when it all seems so hard. The key is to have faith in the process. It will work. If you have a solid system in place and take a long-term approach, you will gain control of your finances. You’ll not only survive, but thrive.

Best of all, you don’t have to work out your new financial strategy alone.

Over the next 12 weeks, I will guide you through the steps you need to take to make the transformation from Consumerholic to Investorgetic®. Stay tuned for next week’s article on how an Investorgetic® mindset can revolutionise your finances.

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Susan Wahhab —CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter— is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com  

Susan is the author of the transformational and practical book Money Intelligence®. Susan is passionate about helping people achieve financial liberation. At the age of six, she witnessed how her money-savvy mum (whom she calls the money manager) joined forces with her dad (whom she refers to as the money maker) to save the family business from bankruptcy and become financially free. Susan truly believes that people can become financially liberated by developing a healthy relationship with money. Buy the book in either printed copy or ebook and learn more about being money intelligent www.moneyintelligence.com.au

Build your Wealth with Money Intelligence - Introduction to 7 Principles

Build your Wealth with Money Intelligence - Introduction to 7 Principles

The Pension reality check - its days are numbered                                                

Australia and western governments across the world are facing one of the biggest challenges in the history of humanity: the increasing numbers of older people living longer on the pension. There are currently over 3.3 million of 65-year-olds in Australia and 84% of them are receiving the pension. This number is expected to double to 6 million by 2040. As the numbers keep on climbing in the next 25 years, the government will not afford to pay the pension, the related health and care costs without affecting the economy and sacrificing the future needs of the younger generations. 

What can Australia (and western countries alike) do to weather the increasing budget deficits as more and more people retire without adequate retirement savings? My professional experience tells me that the middle class must plan for a future without the pension and get off the Consumerholic treadmill by increasing its Money Intelligence level. 

My personal experience of dealing with hundreds of people over the years and having thousands of conversations in my office tells me that thankfully there is a solution to this impending crisis. The solution lies in shifting from a mindset and culture of entitlement to one of self-determination. It is the power of the individual: You can make faster change than big governments stuck with red tape and politics and this will eventually make the difference to society.  I share my Magna Vision in my book Money Intelligence® - Anchored in Values. MY Magna Vision for Australia is to see an improvement in the numbers from 16% to 50% of those retiring in the next 25 years to become self-funded retirees. If you increase your Money Intelligence™ (MQ) level, you will be able to build your wealth and achieve financial liberation. 

How do you build your wealth?

Watch this Introductory 2 minute video and begin Now your journey towards financial independence

 

The book’s main message is that you are not born with a Money Intelligence gene. Money Intelligence is learn-able and anyone can improve their MQ to change one’s human condition.  I am asking each individual to liberate oneself from the physiological survival of the 9-5 daily grind—stuck with a mortgage and in need of a steady income—by becoming financially liberated. Then you can turn your attention to big-picture issues that this world needs to resolve—care about the environment, alleviate poverty, uphold freedom and pursue fairness.

In the book, I weave my parents' business story in Ramallah, Palestine throughout and share my clients' money journeys as I unveil my Money Intelligence® (MQ) model. I share the values and mindset principles behind the model with you, the reader to help you increase your MQ by:

1. Redefining the concept of “Financial Strategy” as I assert that you cannot afford to make financial mistakes based on flawed financial assumptions. At stake is your retirement plan. 

2. Proposing that Mindset is the basis for MQ: It is Mindset that determines the outcome and you need to understand your Money Mindset, explore your values, understand how your money beliefs determine your thoughts and consequently shape your destiny. I present you with 18 values and 48 money mindset principles that form the basis of the Money Intelligence model.

3. Calling for the Individual’s Financial Transformation to bring about social change by:

a) Shifting your mindset from Consumerholic to Investorgetic® —a term I coined to mean someone who is passionate about investing with a focus on your financial future. Learn how I get to identify sound and effective financial strategies and how I use those strategies to set the financial plan.

b) Adopting the Investment Philosophy of Enough: Say no to greed and quantify your “enough money number” to retire on.

c) Becoming a Money Anchor: The Money Anchor is someone who believes that contribution, empowerment and compassion are the values you need to adopt in order to support each other starting with family, then society and planet Earth. The Money Anchor knows that giving of their time, knowledge and money is their way of following their life calling of contribution, empowerment and compassion. Without becoming a Money Anchor, money making is meaningless. 

To find out how you can build your wealth with Money Intelligence, begin your journey now and download the first three chapters here: http://www.moneyintelligence.com.au/free-stuff/

Printed and ebook copy purchase is available on SHOPIFY. Special Christmas book sale is on now from 12th to 23rd December 2016. 

Blog image: The Olive Tree by Natalie Najjar. Part of body of artwork created and featured in Money Intelligence® book

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Susan Wahhab —CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter— is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com  

Susan is the author of the transformational and practical book Money Intelligence®. Susan is passionate about helping people achieve financial liberation. At the age of six, she witnessed how her money-savvy mum (whom she calls the money manager) joined forces with her dad (whom she refers to as the money maker) to save the family business from bankruptcy and become financially free. Susan truly believes that people can become financially liberated by developing a healthy relationship with money. Learn more about being money intelligent www.moneyintelligence.com.au

 

2036 AD: A future without the pension?

2036 AD: A future without the pension?

Christmas is a time to celebrate with friends and family. But as we rejoice and reflect on how lucky we are, the festive season can be an emotional and difficult time for those who struggle financially. 

Each week, 700 Australians celebrate their 65th birthday. This number will continue to increase as more baby boomers reach the golden age of retirement. About 84% of people aged 65+ end up receiving a part or full pension. For these people, everyday living becomes a struggle.

Our federal government has been increasing its borrowing every year for the past decade: from $59 billion in 2006 to $405 billion (and rising) in 2016. (For more information on this, visit: https://en.wikipedia.org/wiki/Australian_government_debt)

Previous governments have missed countless opportunities to change the precarious course we are now on. After conducting extensive research while writing Money Intelligence®, I am convinced that our children will be the ones to pay the ultimate price of this nation’s Consumerholic culture.

There is a limit to borrowing. My belief is that people – as well as the government – should only borrow to invest, not consume. This is a line that’s been blurred the past 30 years – a result of misguided YOLO (You Only Live Once) values!

Our government envisages 25% of retirees will be self-funded in the next 20 years (an increase from the current figure of 14% to 25%). But this isn’t enough. I have a vision that by the year 2036, 50% of retirees will become self-funded.

I have faith that my generation – Generation X – will wake up from the trance of our Consumerholic culture. They will find the courage to face the reality that there will be no pension in 20 years.

So how can you prepare for a future without the pension?

It starts with a promise. Make the promise to yourself that you will become part of the 50% who are self-funded in retirement. No pension, no struggle, no reverse mortgage.

I am not trying to sell you anything. You don’t have to come and see me. I ask you to simply start taking control of your financial future now. Start small by saving in your home loan offset account, even if it’s $50 a week. Salary sacrifice, even if it’s a mere $20 a week.    

You need to build your saving muscle slowly, and with time you will become addicted to it. Yes, that’s right – saving will become your addiction! I have heard it from so many clients – people who started by saving small amounts and gradually built these amounts over time. Now, they’re hooked!

So, before the year ends I ask you:

1. What will you do differently this Christmas to make sure you don’t pile on more credit card debt?

2. What’s your 2017 money plan? What’s your big vision for the next five years? 10 years?

3. What small changes can you make to begin your journey to a self-funded retirement?

Why wait for the new year to get started on your money plan? Act now by downloading your FREE e-book, 8 Ways to Outsmart the Banks – 32 pages of simple and effective money management tips. If you like my money intelligence philosophy, you're welcome to buy the book Money Intelligence® (MQ) and learn how to increase your MQ and take control of your money. Think of it as a Christmas gift to yourself! Get your copy here.

 

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Susan Wahhab —CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter—is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com  

Susan is the author of the transformational and practical book Money Intelligence®. Susan is passionate about helping people achieve financial liberation. At the age of six, she witnessed how her money-savvy mum (whom she calls the money manager) joined forces with her dad (whom she refers to as the money maker) to save the family business from bankruptcy and become financially free. Susan truly believes that people can become financially liberated by developing a healthy relationship with money. Learn more about being money intelligent www.moneyintelligence.com.au

The Future is Super and Super is the Future!

The Future is Super and Super is the Future!

Think you’ve got plenty of time to worry about retirement? Think again.

The Turnbull Government recently passed legislation to change the definition and the objective of the superannuation system: “To provide income in retirement to substitute or supplement the age pension.” For comprehensive reading visit Treasury website

What does this mean? Well, it means the pension will not be available for most middle-income Australians as it is replaced with the superannuation system.

So, if you are not saving at least 20% of your income, whether inside or outside of your super fund, you will not have enough money to retire on.

To survive, you will need to take drastic measures – such as a reverse mortgage. This is where you borrow against the home you spent 30 years paying off. Brilliant idea? No!

But it’s not all bad news. This Christmas, I come with good news!

To retire comfortably, you need to save 20% of your income. But you only need to start actively saving 10.5% of your income now.

You see, your employer/business already saves 9.5% of your income into your super fund. So, all you need to do is tweak your budget to find a further 10.5% of savings.

That 10.5% will tip you over the line from being a Consumerholic (someone who consumes as much as possible with no regard for their financial future) to an Investorgetic® (a term I coined to mean someone who thinks long term and is passionate about building their wealth). It is the difference between suffering in retirement and thriving.

Is it going to be hard to save 10.5%? No!

Truth be told, it will hurt a little in the beginning. But you’ll be surprised at how quickly saving becomes a habit!

You may be thinking: “How, Susan, how? I can barely make it to the month’s end!”

Here are 3 easy ways to start saving now:

1. Begin with Savings in Mind®: start by putting aside $50 a week. Place it into an interest-bearing account you aren’t allowed to touch. Add an extra $5/$10 a week, every second month, and see how quickly your savings grow. 

2. Work on your budget. Know what your monthly expenses are and manage your accounts on a monthly basis. 

3. And before you go Christmas shopping, make a gift list and don’t blow your budget!

Remember, if you want to become an Investorgetic®, download the first three chapters of my book Money Intelligence here: http://www.moneyintelligence.com.au/free-stuff/

Susan’s upcoming event on Money Intelligence – How to Take Control of Your money is on 7th December 2016 at The Grace Hotel. Here is the link to register on Eventbrite 

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Susan Wahhab —CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter— is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com  

Susan is the author of the transformational and practical book Money Intelligence®. Susan is passionate about helping people achieve financial liberation. At the age of six, she witnessed how her money-savvy mum (whom she calls the money manager) joined forces with her dad (whom she refers to as the money maker) to save the family business from bankruptcy and become financially free. Susan truly believes that people can become financially liberated by developing a healthy relationship with money. Learn more about being money intelligent www.moneyintelligence.com.au

 

8 Ways to Beat the Banks Series: Part 6 - Invest 20% and spend 80% of your income

8 Ways to Beat the Banks Series: Part 6 - Invest 20% and spend 80% of your income

In 1906, Italian economist Vilfredo Pareto observed that 80% of his country’s land and wealth belonged to just 20% of the population. To explain this unequal distribution, he created a mathematical formula – the Pareto Principle. Also known as the 80/20 Rule, the Pareto Principle means that 20% of something is responsible for 80% of the results. 

The Pareto Principle extends to our interpretation of how nature and the man-made world work. For example: 80% of a business’s sales are generated by 20% of its clients; 20% of staff cause 80% of a business’s problems; and 20% of staff provide 80% of production. Bearing in mind that the 80/20 formula is not set in stone, the ratio could be 70/30 or 90/10. But the theme is that the minority impacts the majority.

Pareto and your money

I have observed this principle in the way people manage their money. I have examined my clients’ budgets and can attest that it’s household expenses – the 20% – that get people into trouble. It’s not the mortgage; it’s not the recurring essential expenses such as electricity and rates that destabilise the household budget. It’s the spur-of-the-moment, emotional and non-essential purchases that undermine our finances – purchases such as takeaway meals, alcohol, entertainment and holidays. 

Imagine if you saved and invested this 20% of your income (9.5% super + 10% personal savings). You would be building your wealth for the long term.

We can see further examples of Pareto’s Principle negatively affecting our finances:

  • Most of us use only 20% to 30% of the clothes, shoes, jewellery, bags and make-up we own. The rest is worn only for special occasions, or perhaps too uncomfortable to wear at all, and remains idle in our cupboards. 
  • Most of the household items we own, such as towels, linen, cutlery, cups and pots, don’t get used. We find ourselves using the same towels and the same cutlery and plates. We leave “visitor sets” for when visitors show up, but 80% of the time they don’t. 
  • We leave 20% of our food and drinks, including milk and juices, in the fridge, unused, then throw them in the bin by week’s end. 
  • We keep unused food – such as tinned tuna, Spam, jam and Vegemite – in the pantry for months. We tell ourselves we’ll use these items to make a quick meal if we’re short for time, but we end up buying takeaway pizzas, burgers or Thai food. The tinned food ends up being thrown away months after expiry date.

Live by Pareto's 80/20 Principle

Wouldn’t it be life changing if you did a stock take of all the possessions in your cupboards and reviewed your inventory? Would you be surprised to find there are many items that have not been used for months, yet could still be used? 

How much money would you save if you committed to not buying any clothes, bags, shoes, jewellery, make-up, towels, cutlery, plates and bed sheets for a whole year? What would you do with the savings? 

Do you know how much you spend every year on building your inventory? It might be time you found out...

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Susan Wahhab is Founder and Managing Director of Accounting and Financial Services firm Winner Partnership Pty Ltd

Susan is author of the transformational book Money Intelligence® - Anchored in Values, is a CPA, SMSF Specialist and a leading Financial Strategist and Money Mentor.

Susan creates financially independent and confident women, turning fear into hope, insecurity into stability and dreams into action. With over 25 years experience in the financial industry, Susan equips women with the right tools, encouragement and guidance on how to become money intelligent.

 

Hands off my super!

In December 2014, David Murray, head of the Financial System Inquiry and former Commonwealth Bank CEO, presented his super report to the government. One of his recommendations was to ban self-managed super fund (SMSF) borrowing to buy property. (You can still smell the dirty tricks of the large super funds! They don't want to lose revenue with so many people withdrawing their super to set up their own SMSF).

Murray asserted in his report that SMSF borrowing increases risk in the financial system. The government is currently considering his recommendation.

I am sure you have read and watched the news regarding SMSF borrowing and property issues. The journalists, of course, have no idea how the system works. They studied journalism and communications at university – not accounting or finance! They are fed manufactured information by the financial system and PR companies that work for the big end of town.

I totally disagree with Murray and anyone who asserts that SMSF borrowing rules are risky and should change.

I am a passionate advocate of SMSF and property investments. When done correctly, as part of a well-planned investment strategy, I believe property in your SMSF will deliver long-term growth and security for your retirement. I have laboured over hundreds of intricate and comprehensive financial calculations for clients, who want to buy property and borrow in their SMSFs. I have always based these calculations on conservative figures (and worked out worst-case, best-case and neutral scenarios), and I can assure every client that the rent plus adequate super contributions will pay off the mortgage over a 20-year period. Many of my clients are paying off chunks of their mortgages and are five years ahead of paying their super loans.

I understand there are risks in investing. But there are also risks when people borrow to the max to buy their dream home – especially when banks are lending up to 95% of property values. Those buying their own homes could lose their jobs, too! Risk is part of life and we need to mitigate it. My risk analysis, financial strategy, property research, selection process and 20-year spreadsheet calculations ensure my clients make informed, intelligent financial decisions.

Remember, there is also risk in doing nothing and facing an impending retirement with not enough super.  

Further adding to risk mitigation, I believe banks are more prudent in their lending to SMSFs than to other structures, such as personal home loans and investment property loans under personal names. For example: 

1.    Banks do not lend more than 70% of the value of the property to ensure there is a buffer.

2.    When the banks work out how much they can lend you, they will base their calculations on the current interest rate + 2% (currently, the rate they use to work out if the SMSF can afford the property is between 7% – 8%).

3.    The banks will only take 80% of the market rent into their calculations, anticipating either a decrease in rent or the property being vacant at some point during the year.

4.    The banks will only take 85% of the super contributions that are usually deposited into your SMSF by your business/employer. They usually take into account the last financial year’s contributions. They work on real figures, not projections.

5.    The loan the banks offer you is a limited recourse loan. If anything goes wrong, the bank cannot take your other super-fund assets. The lender’s rights are limited to the property being secured.

I love property and I love having my own SMSF. It’s the right of every Australian to make their investment decisions with the help of an independent, trusted adviser. Some people might think it’s OK for them to have their super in a big super fund managed by the big boys. I don’t think it’s OK. I am not waiting for another global financial crisis when I retire in 15 years, and neither should you.

You must become your own money manager. I urge you to take control of your financial future and consider setting up your SMSF, if it's appropriate for your financial situation. Get informed, get educated, and focus your priorities on the future.