Is debt ruling your life?

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Is debt ruling your life?

 debt-managementStudent debts, credit cards and personal loans can be a source of unnecessary stress and prevent you from enjoying other things in life.

Clearing your debts doesn’t have to be hard work. With the right advice, it’s possible to get your finances on track sooner than you think. Which means you can get back to living the good life, guilt free.

 Here are some tips to help you get out of debt.

Plan your budget

Achieving your goal of being debt free doesn’t have to be daunting; a good way to start is with a budget. Try to keep a diary of your expenses and your spending. This will enable you to track where your money is going and how much spare cash you can use to attack your debt.

Pay extra

Try paying more than the minimum off your debts. Whether it’s personal loans or credit cards, paying the minimum will hardly make a dent as you will only be paying off the interest.

Prioritise

Prioritise all your debts by the interest rate you are paying. Try to get the balance down on high interest debts first, as paying these off first will save you a bit more money. The money you save in interest, you can then use to pay off your lower priority debts. This will get you to your debt free goal that little bit faster.

Consolidate

Consolidate all your higher interest debts into one lower interest debt. This could be in the form of a low interest rate credit card or a personal loan. This strategy will also reduce your interest repayments.

Ensure you have the right card

There is no need for anyone to be paying 20 per cent interest on their credit cards. Due to the increased level of competition in the credit card space, many lenders are offering much lower interest rates and deals.

 When doing your research, make sure you read the fine print, as cards offering low or zero interest rates on balance transfers, do so for a limited time only whereas other cards might offer a low interest rate for the life of the transfer.

Become card free

Once you have selected a low interest rate card to transfer your balance, make sure you don’t use that card for any new purchases until you have paid off the full amount from the initial transfer. The best way to do that is the old fashioned way – cut your card up and throw it away!

Take the first step

If you’re having difficulties repaying your debt, take the first step and speak to your lender. If you’re open and honest about your financial difficulties with your lender, you will probably find they are open to review your repayments and look at other solutions to help you out.

Speak to a professional

If you feel that you are in over your head and struggling with your finances, speak to a financial planner for help with a financial strategy that can get you back on track.


Source | IOOF

Happy New Financial Year!

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 happy-new-year-2013-39[1]Everyone thinks about change and making resolutions when the calendar year ends but what about the financial year end?

 The new financial year is a perfect time to make some resolutions to improve your financial health. If you create simple and easy-to-follow resolutions you will be more likely to succeed.

 

To start, you can ask yourself the following questions:

 •         What do I really want to change?

 •         What are the benefits of making changes?

 •         What steps do I need to take to make changes?

 •         What will stop me from making positive changes?

 •         Are my changes realistic and long term?

 This article lists some simple, easy-to implement resolutions you could take on for the new financial year.

 

Keep your receipts

The most common reason people don’t take advantage of tax deductions when they file their tax return is simply because they don’t keep receipts. While keeping receipts for big ticket items is necessary, you don’t always need a receipt for the smaller items such as stationery and books.

 

Create a budget

Achieving your financial goals doesn’t have to be daunting; a good way to start is with a budget. Try to keep a diary for your expenses and your spending. This will enable you to track where your money is going and how much spare cash you can use to either attack your debt or build investments.

 

Cut your spending

Look at cutting unnecessary expenses. This could be as easy as making your lunch or coffee at home, cutting out optional extras such as lottery tickets or taking public transport instead of driving.

 

Pay extra

Try paying more than the minimum off your debts. Whether it’s personal loans or credit cards, paying the minimum will hardly make a dent as you will only be paying off the interest.

 

Increase your savings

Set aside a little bit of extra money each day, week or month. If you can save just $10 a day, you will have an extra $3,650 at the end of the year. You can talk to your employer about getting it automatically deducted from your pay – if you don’t see it you are less likely to miss it.

 

Contribute to your super

Think of the long term and your lifestyle when you retire. One way to increase your retirement savings is through salary sacrificing some of your pre-tax salary.

 

This will not only help to increase your super savings but could also reduce the amount of tax you pay.

 

Seek professional advice

Your financial adviser will help you keep to your resolutions and make sure your financial strategy is appropriate for the year ahead.

Source | IOOF

Why insure

Why you need life insurance

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Why insure

Do I really need insurance?

 

Most of us do not hesitate to insure our car, house and other possessions. However, we often neglect to insure the most valuable asset, ourselves and our partners.

 

 

Did you know?

  • 50,000 Australians have heart attacks every year
  • One third of women and a quarter of all men will suffer cancer at some stage in their lifetime – over 60% of whom will live for longer than five years after diagnosis
  • 43,000 people died from cancer in 2010
  • 70% of small business people are doing business without income protection (even though it’s tax deductible)
  • Over 1600 people die on Australian roads every year, the majority of whom are aged between 26 – 59 years
  • There is a one in three chance you will need to be off work for three months due to illness or injury before you turn 65

How would your life change if you had a sporting or work injury or if you were diagnosed with cancer?

Have you ever thought how you would pay your medical cost or keep up with the day to day bills?  Not having insurance can erode your savings or worst still result in a financial crisis.

Generally, there are two types of life insurance products; Lump Sum payments and monthly income streams.

Lump Sum:

  • Term Life cover: can provide a lump sum payment in the event of death or terminal illness.
  • Total and Permanent Disability cover: can provide a lump sum payment if sickness or injury leaves you totally and permanently disabled.
  • Trauma cover: can provide you with a lump sum payment in the event you suffer a serious medical condition (such as cancer, stroke or heart attack).

Monthly income stream:

  • Income Protection cover: can provide a monthly income stream to help you meet your financial commitments if you are unable to work due to sickness or injury.

Around 6.3 million Australians are protected by life insurance policies, with claims in excess of $1 billion being paid by life insurers annually.

Life insurance can be the safety-net to your financial well-being.  In times of need, life insurance can assist with your day to day financial commitments (mortgage repayments, living expenses), which will give you time for your emotional and physical recovery and most importantly, enable you to spend time with your loved ones.

Save Faster!

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Get your savings moving faster

SaveFasterSooner or later, most of us find ourselves thinking seriously about our long term personal goals and how we are going to achieve them. Perhaps you have already started to save, but have found that credit card and other bills undermine your plans.

 

 

Whatever your issue, here are some quick steps to get your savings moving faster:

  1. Take a hard look at your bills and see how you have been spending your money. Then work out where you can cut down.
  2. Identify your medium to long term personal goals.
  3. Make a realistic but firm budget to help you determine your savings capacity then stick to it.
  4. Have part of your salary regularly deducted from your account and transferred to a high interest savings account.
  5. Contact your financial adviser who will assess your individual needs.

Once you have considered the previous steps to increase your savings, you might want to consider investing in a managed fund. Purchasing units in a managed fund will spread your money across a variety of investments. Your money is pooled with many other investors, so you can invest in assets that you may not be able to as an individual.

Different managed funds specialise in different areas, such as shares (Australian and/or international), property, fixed interest investments and cash, or a combination of these via a diversified fund. Investing in shares within a managed fund may also provide tax benefits. You will need an initial investment of at least $1,000 to get started. If you save just $200 per month in a managed fund earning 7% per annum, within five years your investment would grow to $14,800 and within 10 years you would have around $32,332.

Despite the volatility sharemarkets around the world have experienced, it’s important to remember that markets are cyclical and shares are a long-term investment. Eventually shares will regain their value, but in the meantime opportunities may arise.

Your financial adviser can help you clarify your personal and investment goals and advise you on the full range of investments – shares, managed funds, listed property trusts and fixed interest. After recommending the investments that would best meet your needs, your adviser can help you implement your investment strategy and keep it under review.

Wealth Health Checklist

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Wealth-CheckAre you keeping your finances healthy by doing the right thing at the right time? Taking the best action at the optimum time can be crucial to your financial future.

 

 

Accumulators (aged 25–45)

Start a monthly investment plan

  • ‘Pay yourself first’ rather than create unrealistic budgets.
  • Salary sacrifice into super while other financial obligations are low and stop when current needs are more important.
  • Use any pay rises to fund your regular savings.
  • Be clear about what you’re saving for and the best structure and investment options for that.

Control debt

  • Reduce unnecessary spending.
  • Pay off the credit card, it’s probably costing you more than 15% pa interest.
  • Consider consolidating credit card debt into a personal loan and potentially paying less interest. If you do this, resist the temptation to accumulate more debt into your credit card.

Check out the government co-contribution

  • If eligible you could get up to $500 added to your super for free every year.

Consider using a mortgage offset account

  • This could reduce your loan interest while giving you access to the cash if you need it.
  • Make sure you have sufficient death, disability and income protection insurance.

 Builders/Pre-retirees (aged 45–65)

Stay cash flow positive

  • Live within your means.
  • Reduce the mortgage and other non-deductible debt such as credit cards and personal loans. This may free up cash flow for other investment opportunities.
  • Consider part-time work for a non-working spouse.

Increase contributions to super

  • At age 50, the concessional (pre-tax) contribution cap is $25,000.
  • Consider transferring non-super assets to super. You’ll need to take into account any capital gains tax on the transfer and the super rules covering what assets you can transfer.

Split income where possible to save tax

  • Consider investing money in the name of the spouse who pays the lowest tax.
  • Consider splitting super contributions between spouses. Up to 85% of concessional contributions within the contribution cap, including Super Guarantee and salary sacrifice contributions, can be split.

Look into a pre-retirement pension if you’re aged 55 or more

  • Consider salary sacrificing, and drawing down regular income from your super to replace the lost income – this saves tax and builds your super without affecting your cash flow.
  • Make sure you have sufficient death, disability and income protection insurance. Also consider taking out trauma insurance.

Retirees (aged 65+)

Ensure you don’t run out of money

  • Understand your plan for spending in retirement – set a budget for essential expenses and additional lifestyle expenses and how you’ll fund each.
  • Ask yourself if you’ve invested your assets too conservatively – maintaining and growing your capital today can help you provide the income you’ll need in the future.
  • Consider whether you need to downsize your home.
  • Investigate how your income and assets affect your Centrelink benefits. Simple changes can help ensure that you maximise your total income.
  • Consider setting up investments to help grandchildren with education costs, a deposit on their first home or an investment nest egg. You’ll need to include this in your retirement spending or estate plan.
  • Think about aged care now. When the time comes, decisions often have to be made very quickly, so plan ahead for which care options you’d like to use and how they’ll be paid for.

Review your estate plan

  • Consider a Non-Lapsing Death Benefit Nomination for your super or a reversionary beneficiary for your pension.

Ensure your Wills and enduring power are in order.