Sunday, September 29, 2013

Make Me Rich Please: Part 4 The Superannuation


Superannuation was one of the big focus area's for me coming out of our session with a financial planner. Mine is OK, but Husbands is pretty weak, and if we want to be in good shape for retirement, it definitely needs work.

Our key actions coming from our Statement Of Advise are:

-Update our binding nominations. Superannuation actually sits outside of your will, the company will pay out your insurance and balances to whoever is your binding nominee (barring disputes). And they'll make that payment relatively quickly. But without a binding nomination, the funds go to the estate, which can be a longer process for the money to end up where it needs to be.
Since Husband I want the proceeds to go to one another to alleviate what would be a stressful time of life, this was pretty clear cut.

Tip: Binding Nominations expire every 3 years! It must be updated regularly for it to be valid.

-Change Husbands superannuation over to a new fund. Our planner was able to guide us to a new fund that had lower insurance costs + fee's & has had a more positive performance over the last 5 years. In addition, the insurance benefits cover for a longer period, so god forbid we ever need to make a claim for unemployment or disability reasons, the payments will be higher.

-Restructure my own superannuation allocation. The way my funds were allocated are not suitable to my age or risk profile (as dictated by me). The new allocation is more in line, and should produce a higher return over time (although any investment in shares is unpredictable, and I know that).

-Increase our insurance cover for Life & TPD (total and permanent disability). We ideally want life cover that would allow the remaining spouse to cease work to care for our young children and possibly pay for some home help. Similarly, we want to ensure that payments in times of stress (TPD) are more than enough to support us.

-Make additional contributions to each of our funds. Our planner has directed us to contribute $500 EACH per month into our funds. This is the one we are not sure of. Although I realise our funds are not on track to have the balance needed for a potentially 25-30 year retirement (retire age 60, 65ish, possibly live to 95), this just seems like SO MUCH MONEY to lock away where we can't get it ($12,000 per year!). And I had no idea that we supposedly had so much disposable cash each month.

We will probably meet this one part way, with additional contributions, but not as much as suggested.

Superannuation is not sexy. It's not about today, so it's not that interesting. That's why it's easy to ignore. When was the last time you looked at the nitty gritty of your Super? Most funds have online access these days, why not take 5 minutes to jump on and see for yourself what kind of old age comforts you can expect.

Following the "Make Me Rich" series? Click here for more.

Friday, September 27, 2013

Absence Makes The Heart Grow Fonder


More than one person, including the subject matter herself, has commented on Madeleine's absence from the blog lately.

This is because she is 12.

12 is hard work. 12 is confusing, hormonal and temperamental. 12 knows everything and is willing to fight tooth and nail to prove, in fact, that despite 20 years more life experience, Mothers know crap all.

We think life has finally caught up with our 12 year old, and slapped her hard with some doses of reality. Going from only child for 10 years to having 2 baby siblings. Having mum be really sick for the last 3 years, with the last 12 months in hospital all the time, moving up in the world to high school, changing houses, twice in 2013 after a lifetime in the same house......reality.

And so we give her space to be 12. Space to learn, grow, mature, make mistakes, be obnoxious, love us, hate us, say no (oh that word comes so easily these days), remember how to say yes, and basically reinvent herself.

The control freak in me is dying, a slow, drawn out, and painful death. I can't manage this process for her, as she figures out who she is and where the new her fits into our family. I can, however, protect her from herself by not sharing the worst details on my blog. One day we will look back and I have a feeling the teenager fighting to be released will be appalled by her 12 year old antics. And so she doesn't need those antics to be a matter of public record, accessible by possible boyfriends, potential employer's, friends, teachers, family.

For now, absence will just have to make the heart grow fonder. 

Wednesday, September 25, 2013

My Preciousssssss

Today, out of nowhere, little Miss 2 year old Lorelei has turned into my very own Gollum.

I don't mean that she huddles in corners, hissing suspiciously at anyone that comes near while she protects her treasures - although she has actually been doing that for some time, especially if the "treasure" is something from my bedside table or handbag.

She came running to me today, flapping her little hands at the wrists.

"Look at my hands'ses!"

Hands'ses?

"And my eye'ses, and my ear'ses, and my finger'ses!"

Where this came from, I have no idea. She has been identifying body parts for a long time, and by their proper names. And when I tried to correct her, hard as it is to get a 2 year old to hear the difference between "hands" and "hands'ses", I found myself arguing for the next 20 minutes.

Only a crazy person argues with a 2 year old and expects to win. She won. Its hands'ses for as long as she wants to call them that.

Sunday, September 22, 2013

Make Me Rich Please: Part 3 Statement of Advice

We met up with our financial planner this week to receive the Statement of Advise he has prepared for us. It's huge. Seriously huge. But a massive chunk of it seems to be disclaimers and waffle talk so I will ignore a bunch of it for the purposes of this post.

I was expecting a session to go over the SOA only, and then be given the information to go away and act on myself. I knew I would need to employ a certain amount of discipline as well to ensure that I actually did anything I decided on. Sometimes I can be the worlds worst procrastinator when it comes to this stuff, so I had a feeling I was going to end up with a todo list and a bunch of blank forms I wouldn't be bothered filling out.

So you can imagine how thrilled I was to find that my planner had all the forms handy already, filled in with our details, so that anything we were sold on we could sign for immediately and he would take care of. Anything we wanted to think about we could take away with us.

My SOA dealt with the following:

Superannuation
Insurance
Investment
Debt Management
Estate Planning

In some cases we have taken his advice in full, in others we are taking part of the advice, and in one or two instances we have decided it is not suitable for us, at this time. We may reconsider down the track.

Some things we will definitely be doing, but they will have to wait until January, when I return to work full time. Right now I am part time, and we don't have lots of disposable income. There are a few things we can take care of straight away though. I will be sharing a break down of some of our actions and changes over my next few posts, as I get my head fully around everything. I can say we were very happy with the quality of information given the us, and the suggestions made. Everything seemed valid to our circumstances, and our planner was upfront about whether he would receive a commission on anything.

Have you ever thought of seeing a financial planner? I promise it's not nearly as intimidating as I thought it would be!

Following the "Make Me Rich" series? Read more here.

Tuesday, September 17, 2013

Puddles...and More Puddles


We are taking a bit of a dry run (or maybe I should call it a wet run) at toilet training. Lorelei is definitely keen to be out of a nappy but not quite so skilled yet at using the toilet.

After running around after her last week mopping up puddles and many of them, I wasn't surprised to see her yet again perched on her potty with a pair of damp knickers round her ankles. While she tried desperately to reverse time and put something in the potty, I had a look around the playroom for the expected puddle.

It was nowhere to be found.

Eventually I gave up figuring it must have been mini accident, and went and collected 1 year old Sebastian, who had noisily been letting me know for some time he required some attention. For a good reason.

When I picked him up I found myself clutching a soggy baby in a saggy terry towel onesie. He had done the hard work of cleaning for me, and expected to be changed into clean and dry clothes as part of my appreciation.


Poor kid. I'll need to be a little more on the ball with these puddles.

Monday, September 16, 2013

It's Costing Me HOW MUCH (!) To Work?

Today is Day 1 of working from home for me. And boy, can
I hear the crickets chirping.

I sat down this week to have a closer look at why we are not getting further ahead than I expected now that I'm back at work. I realised that there are so many work related expenses, that I considered trivial, that I didn't fully factor into my budget, thinking they would just be absorbed into the little allowance for random costs that I give myself.

I found that I am spending waaaay too much each week on "working costs". Some of those costs aren't even genuine, but they were stacking up to an expensive working week.
1. $9 parking each day. This one is fair enough, the only free parking is about 35 minutes speed walk from my work (there was a time when I actually would park there). These days that 35 minutes in the morning and afternoon is too valuable to give up, so I park in the cheapest parking I can source. 
2. $2 breakfast each day. I am a sucker for chunky toast, and even though I start each day resolved to not eat it, as soon as a bunch of people head out for a coffee run in the morning I quickly join them for the company as well as the toast.
3. Lunch. Our mornings are chaotic and crammed, with both Husband and I getting up at 5:30 and racing to have everything ready to go (x2 babies plus ourselves) by 6:30. He always ends up with lunch in his cooler bag, somehow I never do. So even though I know better, the better part of $10 flies away on local Thai, gourmet sandwiches, wraps, Subway, my options are endless.

And lets not forget the afternoon chocolate run to use up any gold coins left in my wallet on random $1 fundraising chocolates.

These are habits I had well stamped out before I went on Maternity leave (x2!), but a busy life has reintroduced them. Working 6 days a fortnight is costing $180+ out of my pay. Ouch!

What are my steps for reducing my "working" costs?

1. $27 in parking costs can be reduced to $9 by working from home. Just 2 days a week, and I'll spend my third day in the office to keep up with meetings and get some grownup time.
2. Instead of buying a cafe breakfast each morning, buying a $2 uncut loaf of bread from Coles each week will give me chunky toast each morning, including the work days I stay home. A $6 per week habit will become $2, and can be enjoyed even on days I don't need to work.
3. A $24 MINIMUM spend per week on lunch will be reduced to <$5 as I enjoy sandwiches at home. I will also be making sure I make a sandwich for myself on Friday to take to work. Even if it means staying up a little later to make it the night before.

I am committed now to reducing my "working" costs from $90+ per week, to $16 per week. There is probably an even bigger savings in petrol for working from home, but then I guess you have to offset an increase in my utilities too.

(Let's not forget my childcare costs, which thankfully are extremely reasonable thanks to a MIL who happily takes the kids x2 days per week, leaving me with only 1 day of care (x2 kids) to pay for. They get socialisation and lots of fun craft activities at daycare 1 day a week, time with family and cousins the other days.)

Hopefully once I have this under control we will start to see a bigger improvement in the money we are throwing at the things that are important to us. (Holidays, paying down the mortgage, activities with the kids).

Do you find that "working" expenses can easily reduce the benefit of earning an income? Or you've got these costs nailed?

Thursday, September 12, 2013

Put Your Big Girl Panties On

Literally.



This morning after I got Miss 2 year old Lorelei up to change her nappy, she waited till I took off her night nappy before jumping up and declaring "No Nappy!".

Who am I to argue?

That's a pretty good indicator that she's ready to give toilet training a whirl, so I excitedly ran and got some big girl panties to put on.

"No panties!"

Um. No panties? Ooookay. I can live with her running bare bum round the house for a few hours I guess. We had a little chat about using the toilet when she needed to do a wee, and I stationed the potty in the lounge room where we could get to it quickly. Except...

"No toilet!"

This one presents a little more of a problem, and I'm not entirely sure what to expect. at 9am, she has been having a marathon bladder holding session, and has yet to do her business since 6:30 this morning. I've been following her around, suspiciously looking for puddles, but haven't been able to find any.

I'm not sure what to expect today but I have a feeling I'm not going to be reporting that I smugly have one of those genius children who just click with their toilet training on day 1.

Wish me luck. And a lack of puddles.

Monday, September 9, 2013

2 Under 2, What To Do?

Sometimes they are too cute for words
2 under 2 wasn't in the life plan. When Lorelei was already 2 was when we planned to start trying again, however life (and an absence of birth control) took us in a different direction and when Lorelei was 8 months old I realised Sebastian would be joining us long before planned. Lorelei was just 15 months old when he was born.

Now that Seb is 1, it seemed a good time to stop and look behind us. 2 under 2 is hard. Anyone who says otherwise is one of those natural earth mothers that it all comes naturally too. I'm not one of them.

If you are considering your next child, and weren't sure whether a close age gap is for you, here is our perspective.
"This lap was all mine once". Bottle time
for Seb

Schlepping a newborn around when you have another little one barely walking is tricky. The older bub still needs to be picked up and cuddled too and seems to be at those age when trips and spills are most common. They also can't understand sometimes why you just have to hold their sibling as a priority.

Feeding time for infants requires advanced coordination if you do not want the contents of your Tupperware cupboard spread throughout the house while couch bound feeding. Infant feeds are often interrupted to rescue a climber or produce a snack for a starving tummy.

Infants need to be protected from curious siblings, wondering what happens when you nibble their finger, sit on them, or pick them up by the neck to relocate to a more convenient zone.

But 1 year on, we are also finally starting to reap the benefits.

Seb can finally get around and locate toys for himself, he doesn't have to put up with Lorelei stealing everything from him anymore.

He loves to follow her and play nearby, or with her, and she loves to make him laugh. He can yell loudly enough to get her moving when she sits on him, and takes great pleasure in grabbing her hair if she puts her head nearby.

They love to share food, and Lorelei is more than happy to sneak him the items that I don't think a 1 year old with only 2 teeth should be eating. He thinks this is fantastic.

She likes to blame him for some of her misdeeds and informs me in all seriousness that he has smeared banana all through the dollhouse. He can't stand yet kid.

I can see already that they will be very close, that the small age gap will forge a lilfelong friendship. I still think I would have preferred a bigger gap, simply for ease of parenting, but the benefits are becoming more obvious.

Aaargh, who will walk the plank today First Mate Sebastian?

Did you have a close gap and find it easy? Are you still thinking about how close you want your kids?

Wednesday, September 4, 2013

Make Me Rich Please: Part 2

A few weeks back I spoke about seeing a financial planner for the first time. And how nervous I was.

This is the first follow up post because I know many people are interested in the process, costs, and benefits of seeing a financial planner.

To start with, I chose a local AMP planner. My superannuation is with AMP, so I thought that there might be benefits, discounts, or even just ease of information sharing by choosing this person. But realistically, any planner from a company that you trust will do.

Source
To prepare for our session, I put together a detailed breakdown of our weekly, monthly, and annual budget. I included all expenses in this, from the expected bills that arrive, to the estimated amount of household and car maintenance, to a budget for wedding, birthday, Christmas, and incidental gifts.

I also pulled together all account numbers of every financial commitment we hold, and the finer details of those commitments.

For example:

Mortgage #1 with XYZ Finance Company. Started on 01/01/2003. Fixed for 5 years on Principal and Interest at 6.04%. Fixed rate period expires 01/06/2014, rolling to variable rate. Mortgage matures 01/01/2033.

Lastly I prepared a list of our short and long term lifestyle choices, as well as our long term financial goals. I didn't worry about being specific about the how, just the what.
Source
We'd love to maybe run
a cafe together in our
retirement.

Lifestyle Choices

1. Take x2 annual holidays within Australia of up to 1 week at a time.
2. Take x1 overseas holiday every 2 years.
3. Private education for each of our 3 children
4. Own home ownership is desirable, but not a necessity
5. Prefer to run x2 cars
6. Would like to semi retire in our 50's, and be able to run our own business without too much financial pressure to turn a profit.

Vague Financial Goals 

1. Build our superannuation, but not tie up significant amounts of wealth that cannot be touched until 60+.
2. Build a negatively geared investment property portfolio with an equal focus on growth (properties increasing in value) and returns. With an eye towards being able to reduce this portfolio in the future (10-15 years) and create a positively geared portfolio instead by paying down the remaining debt with the returns from the properties sold.
3. Gain some guidance on more diverse investment opportunities (shares?)
4. Ensure that a reasonable sum of money ($5-10,000) will be available to use in 10 years - when Lorelei and Sebastian are starting high school, Maddy is finishing university, I'd like to make that there is money for setting up x2 kids in high school, as well as spare cash for what may be the final year/s of Maddy being a dependant (1 final big family holiday maybe?)
5. Establish a will
6. Discuss the potential for setting up some protection for our assets - such a securing them in a trust.

My preparation paid off, as these were the conversations the planner wanted to have with me. Because Husband couldn't come to the appointment, it was good that we had talked all these things through before hand, and I could answer all the questions. After spending 2.5 hours going over our profile and goals with the planner, I had a very small amount of homework to produce a few details I hadn't thought to bring.

My planner will now go away and look deeper into the details of our finances. We signed authorities giving our superannuation companies permission to provide full information, and he will now prepare me a Statement of Advice. This Statement will cover a number of area's, superannuation, investing, insurance, estate planning etc etc.

This is where it gets sticky for some people. My planner has quoted me, upfront, $1,500 for the advice he will give me. I was prepared for this, and I feel it is a fair amount to pay for the professional guidance I will be getting which will hopefully enable me to improve my financial situation over and above that cost. That $1,500 will NOT pay for my planner to take any other action. He will not change my super on my behalf, establish a trust, create a will etc. If I want him to take any action for me, there will be another fee structure (possibly fee per service, possibly a % based fee). So before considering getting financial advice, you need to be prepared to place a value on that advice. I will pay $1,500 just to be told what a professional thinks I should do with my money.

The unexpected news, was that I don't need to pay that $1,500 upfront. I can elect to pay it directly from my superannuation, which will also, in some convoluted, only vaguely understood way, gain me a 15% tax benefit. (I think because I would have paid 15% on that amount when it was eventually withdrawn as an income in retirement, but I won't pay that tax if I use it for advice). So I am not dipping into my savings to pay the fee, it will instead come from one of the assets that I hope to improve with the advice!

One final thing: although I don't need this particular support, I was interested to hear that my planner has also had many clients whose debt position far outweighed their asset position (whether through divorce, poor financial decisions, legal actions etc). His service in this instance has been to support them navigate through the debt minefield till they eventually come out the other side and move back to asset building. So if you just plain old need help, this is another avenue to consider.

I will write again once I get my Statement of Advice, and hopefully anyone who wasn't sure about whether seeing a planner could help their circumstances, will have a better idea.

Want to read more about the "Make Me Rich" series? Click here ;)