Sunday, 10 December 2017

Tailspin and Epic Fail





Ha ha - well, what a disaster!

Back a couple of weeks ago I posted about my keenness to try a spend-nothing challenge here.  I had sincerely hoped that by spending nothing at all that this would assist in taming my inner spending demon (whom I nick-name Smaug) once and for all. How wrong was I.

As you all know, I still consider myself to be a recovering consumerist and whilst I have curbed this habit massively and consistently, I have nevertheless been recently searching for ways to kill off the last voices of that spend-demon within.  Hence the crack at me trying a no-spend challenge.




Instead of strangling the last bits of life out of that inner demon, I accidentally brought it to life again! Aargh! It was nearly as if my total eschewing of money and spending were the tipping point to bring Smaug out of the dungeon screaming and flapping with truly frightening power. This was totally unexpected and rather disheartening actually.

Now, don't get me wrong, I have the hugest respect and admiration for those folk who do no-spend weeks, months and years - but just like using cash, the spend-nothing challenge was not for me. Simply speaking, it made me feel worse, awakened emotions of deprivation, and triggered some old spend-a-holic habits.




So I'm back to my allowance every fortnight.  I guess my $40 personal allowance each fortnight is still pretty frugal in the grand scheme of things.

It is nice to share wins and uber-encouraging content with you all, but I think it is just as important to share failures too. It's called keeping it honest and real. I'm amongst friends anyway luckily.

So, did I give up too easily? ..... or was I wise to bail out? Your collective wisdom on this question would be great folks.


Take care and stay nice folks.

Mr HM




Tuesday, 5 December 2017

My Strongest Money Tip





Hi folks

As a recovering consumerist, the urge to spend is a deep-seated craving that I know will never go away. So, what is my most powerful weapon against mindless emotionally-fueled spending? Well here's the thing - it is not discipline, it is not will-power, it is not meditation, it is not giving it all to Mrs HM to manage, it is not a budget per se or indeed anything rational.

The answer for me is most definitely  - Automation.

Yep. Automation, with the very kind help of some banking technology.


Our friends the possums eating the veggie scraps on the back
verandah at night. I know they are a bit pesty, but.....cute.


So, I have realised that I spend the least when I touch money less frequently and when I do not have any money on me to actually spend.....spoken like a true 'holic. Thus I have stopped touching or interacting with my money for the most part and with great effect. I have automated every single necessary bill payment and savings transfer and I only have a small set amount on a separate card to mess with fortnightly (even that is off limits due to my recent spend-nothing challenge).


Corned beef hot from the slow cooker with white sauce
made from scratch.


How I Automate My Money

Immediately after my fortnightly salary drops into my bank accounts (usually in the wee hours of every Thursday fortnight) it gets allocated out as required via automatic deductions that I have set up via my internet banking or by direct debits - I touch nothing.

1. A set amount auto-transfers to my bills accounts (which has no card access)
2. Set average amounts get Bpay'd off to utility companies and the like from my bills account
3. Direct debits for other bills and expenses have been organised to all occur on that same Thursday
4. Savings and investment amounts get whisked off via automatic deductions to untouchable HIBA's and investment accounts
5. $40 goes to my personal spending key card to last me a fortnight (this is the only money I can justifiably access). This key card is a stand-alone account linked to no other sources of money. Once that $40 is gone, it's gone old chap! Uh huh.

So in any given fortnight, out of my entire senior manager's pay packet I only get to see and use $40 personally - even that small amount can sometimes light the fires of the inner demon spend-a-holic.


The local carols, youth concert and jazz evening in the park.


Automation means all my bills are paid in advance before I get them, investments and savings happen while I sleep, payday is a non-event and the evil Smaug lies undisturbed within my poor tired mind.

I think automating your money might be worth trying - even in part maybe?

I know the cash envelope system works brilliantly for many folks....but not for me.  I have given it a red-hot try and cash is like a nightmare for me.


Take care folks and stay nice

Mr HM (Phil)

Monday, 4 December 2017

Acorns



ACORNS



I joined Acorns some time ago, had a mess around with it and was annoyed that there was not a option to add funds fortnightly on auto-pilot in line with my fortnightly salary (automation of my finances is the only thing that truly works for me), so I stopped using Acorns.

News Flash - Acorns has recently added a fortnightly auto deduction capability, so for me this Robo-Investor is back on the radar big time. It is certainly one of the cheapest and easiest robo-investors to use  (at time of writing this article) in Australia.

However, I remain unimpressed with Acorns' round-up of spare change functionality. I personally account for every cent and simply cannot understand the concept of my account being debited for so-called loose change.  I do not have loose change per se and find this functionality (which is marketed very briskly by Acorns) messy. I do not use this function in Acorns, instead I simply invest a set amount each pay day via direct debit which I set up on the Acorns app.

What I do love about Acorns is that for under 0.6% total fee structure (for the amount I have invested) I can enter the stock market with just $5 and add any amount I want, big or small, whenever I want for no extra charge. There's no entry or exit fees and no spread fees. This is even cheaper and easier than an Australian Vanguard Retail Fund!

Word of warning though, the fee structure for small amounts is steep and I reckon getting your account to over $400 initially should be done very quickly as an initial milestone, and then, up over $1500 as a second important milestone to ensure fees are reasonable. In fairness however, Acorns goes to pains to explain their fee structure in their PDS (Product Disclosure Statement) and remembers to factor in the MER (Management Expense Ratio) of underlying ETF's (Exchange Traded Funds).

At the end of the day, I much prefer my money to be invested in the stock market via a portfolio of ETF's (which is exactly what Acorns does) than moldering in a bank account whose return is less than inflation. Pfft!

Acorns offers several diversified portfolios starting conservatively through to aggressive as well as a socially responsible portfolio too.  I have chosen the aggressive portfolio as I do not mind the fluctuations as the longer term result is what aligns with my investment plan.  Actually, I do not the think Acorns' aggressive portfolio is actually all that aggressive due to the percentage of bonds and fixed interest used (10% currently) which softens this portfolio back to High Growth I feel. Aggressive to me means 100% stocks and no bonds or fixed interest component. (Yeah, whatever)

The Acorns Aggressive Portfolio is made up of the following ETF's:

54% Large Australian companies (SPDR S&P/ASX 200 ETF)
23.5% Large Asian companies (ISHARES ASIA 50 ETF)
7.10% Large European companies (ISHARES EUROPE ETF)
5.4% Large USA companies (ISHARES CORE S&P 500 ETF)
4% Australian Corporate Bonds ETF
3% Australian Government Bonds ETF
3% Australian High Interest Cash ETF


I do not use Acorns for huge amounts, nor as a serious ex-superannuation investment platform. I use it as a better performing option to a HIBA (High Interest Bank account). To be specific, I use it for my ever growing 3-6 months of living expenses account ..... which some alternatively call their Mojo account whilst others call it their F-you money (tch tch), others refer to it as their self insurance account.  I have even heard of people using their Acorns account to save lumps sums of $10K before then investing this directly into LICs or ETF's.

I've put a couple of links though out the text to the important info about Acorns so you can do your own research (always do your own research or seek unbiased qualified advice) because I am not a qualified finance person. I simply write about personal finances to help break the stupid taboo of not  talking about money and to encourage others to get interested in wisely handling their own hard-earned money.

By the way, Acorns are paying me nothing to write all this.


Take care folks and stay nice

Mr HM (Phil)

Saturday, 2 December 2017

I'm Prepping For Next Christmas





Hi folks

Well, I've started prepping for next Christmas....yep, Christmas 2018.

This Christmas is already paid for in full and we have done it yet again credit card free! Woo hoo. (Thanks to all the wonderful encouragement from the frugal simple living community world wide).

So, we have already set the budget for Christmas 2018 and chunked it down to a fortnightly amount and the first installment has already been put aside from last Friday's pay packet into a high interest bearing online bank account .  It will not be touched until late November next year. I've automated this fortnightly installment so it just happens without my involvement - this is critical for me as a recovering consumerist.


Bake your own bread. At 50 cents
per loaf, what's not to like?


Once upon a time, not that many years ago, Christmas was a 100% credit card affair with some fun un-payable laybys thrown in and a couple of maxed-out overdrafts stirred in to that mix and most certainly an unpaid bill or two also just to add some spice to the season! Gosh, how far we've come since those days.

If you need to set aside (say) $1000 for Christmas .... then start this weekend and commit $20 a week and the $1000 will be yours by mid November next year. True story.

I am happy and relaxed, Christmas this year is paid for already - I am already enjoying the season the way it should be enjoyed.


Budgets save lives - it's true.



Take care folks and stay nice.

Mr HM

Monday, 27 November 2017

Investing For Income - A Lost Art?





Once upon a time, investing specifically for drawing an income was pretty much the standard way to invest in the stock market.  Things have changed however both with investor styles and how businesses deal with their profits. Nevertheless investing for income (return), while no longer 'sexy' is still an important investment approach.

We've all known or read about times past when widows lived comfortably off their Merrill Lynch accounts or similar - all down to a lifetime of investing by their late manager husbands/fathers (yes, back in the era of the single male breadwinner) who inevitably died of the then ubiquitous heart attack in their very early 60s. However, this returns-for-income investing approach seems to have gone out of vogue nowadays (the investing part I mean, not the heart attack part!).




These days, investing for pure growth rather than returns is much more in vogue ..... and for a long list of valid reasons that I will not delve into at all in this post. Day trading and stock growth watching over the last 30 years have certainly encouraged growth-investing too (just look at the news and see what it shows - that's right, growth and stock value fluctuation). Investing for growth is all very front-of-mind these days.

However, consider for a moment  the benefits of investing for income returns - as follows:

  • Dividends still pay despite stock value
  • Fluctuations in stock value are less important
  • Dividend franking (paid company tax) is highly desirable for personal tax purposes
  • Dividend reinvestment can be entered into 
  • 100% dividend franking (fully prepaid company tax) is achievable
  • Provides a regular income for those requiring it
  • Flexibility to either reinvest the dividends or take them as cash 
  • Allows your portfolio to be either growth or return focused (see previous point)



I personally have 1/2 my portfolio geared to income returns via dividends and deem this as the conservative and stable part of my portfolio (I'm not a believer in bonds as true long-term investments). Luckily, Australian companies pay much higher dividends on average to non-Australian companies thus making the dividend/return approach to investing very achievable for Australians. 

Now I am not a financial adviser, so definitely do your own research on the topic. I only write this to encourage you all to research and get interested in investing wisely the old fashioned way ..... at least in part.

Take care folks and stay nice

Mr HM (Phil)

Saturday, 25 November 2017

My Personal Spend Nothing Challenge





Hi Folks

I have been impressed over the years at some people's efforts with their personal spend-nothing challenges. So it is time for me to bite the bullet and challenge myself on this too. I think I am ready....ish.

I have decided to only challenge myself and not the family as I see myself as the most struggling of recovering consumerists within the family.  This challenge will help me overcome some more consumerist demons within.....I'm hoping. It just may build some self discipline muscle (!).

A full year spend-nothing challenge is way out of my realm of ability to tackle up front, so instead I am going to do it step by step. Here is the initial plan.


  1. One full week spending nothing
  2. One fortnight spending nothing
  3. One month spending nothing





After that, any longer stints will have to be discussed with my family as it will impact them unless they are aware. I have not told them about this initial set of challenges - I wonder if they will notice?

By spending nothing I mean - spending nothing on myself or any purchases outside normal bills and household expenses. Yes, I know, it is a fairly soft version - but horses for courses to start with you know!

I'll keep you all posted.  First one starts Monday!


Take care folks and stay nice.

Mr HM

Thursday, 23 November 2017

Exciting News - VANGUARD AUSTRALIA





Hi Folks

Three days ago Vanguard Australia launched a suite of new products. These products are a game changer for Australians in my opinion.

Check out this article from the Financial Standard



A beautiful 1940's dining room in an airBnB we stayed at recently


The new Vanguard suite has four Diversified Index ETF options:

  1. Vanguard Diversified Conservative (VDCO)
  2. Vanguard Diversified Balanced (VDBA)
  3. Vanguard Diversified Growth (VDGR) 
  4. Vanguard Diversified High Growth (VDHG)

Our US readers have had access to a long list of cheap US Vanguard offerings for many years now, however Vanguard's Australian arm are still growing and evolving. Generally speaking Vanguard are known as arguably the holy grail of investment companies world-wide and are committed to low costs and prudent investment policies.


Our airBnB 1940s bedroom - on the Hay Plains Australia


I have been looking at so many differing non-direct share/ETF options for investing outside of Superannuation including Robo Investors like Stockspot et al, Vanguard Australian Retail funds etc but the fees for these non-direct share/ETF investment products have been a little too much for my liking and thus I have defaulted to buying ETF's and LIC's directly which only incur the cost of the trade and the underlying MER (Management Expense Ratio - a fancy name for the inbuilt fee).

Whilst I may still stick with directly trading in ETFs and LICs (this is still the cheapest way), Vanguard Australia's introduction of these four new Diversified Index ETF's is a real game changer for those of us needing and wanting to invest but are too time/inclination poor (or even fearful)  to be mucking around building a portfolio. Choosing one of these four new options and investing regularly may just be the answer to the simplest way to build wealth outside of superannuation in Australia. Vanguard Australia has created a real game changer with these four new offerings.


A 1940s cabinet full of local jams, jellies and chutneys for sale


Theoretically I would choose the Vanguard Diversified High Growth (VDHG) option as the 90% growth appeals to my needs. 

Why?
  • At 0.27% MER (for every $1 million invested you would pay $2700 yearly) this is a reasonable and fair fee for its excellent inbuilt growth diversification strategy using both international and Australian securities. 
  • 90% growth assets and 10% income assets (potentially tax effective)
  • Australian Domiciled, so no annoying international W-BEN8-E forms - it is all done for you by the fund.
  • It's Vanguard - highly trustworthy company
  • A full portfolio in one easy aggressive growth product.
  • Offers DRP (Dividend Reinvestment Plan)
  • I suspect these ETF's are subsets of Vanguard Australia's Wholesale Diversified Funds of the same name. If so, then the return, stock holdings and structure of these funds are excellent.
For Australians, two of the barriers to getting into Vanguard's Diversified Funds were the $500,000 minimum entry into their equivalent wholesale funds or the 0.90% MER on their equivalent retail funds.  These four new offering have instantly removed those two barriers ....well done Vanguard!

The 1940's fireplace with all the proper period utensils


Here is the link to Vanguard Australia hereScroll to the bottom of the list and you will see them with "new" next to each offering. Also, Vanguard's write up here.

Of course I am not a qualified finance guy, so all this information has been for sharing and encouragement only and cannot be classified as financial advice. Do your own research! Oh, and I am NOT getting paid by Vanguard either.


Take care and stay nice

Mr HM (Phil)

1940's single twin beds
P.S. We recently stayed on the Hay Plains as we were travelling to Adelaide. We stayed in an air BnB all done out in 1940s style.  It was just wonderful.  I felt totally at home.  The post header picture is taken from Granite Island looking back along the jetty to Victor Harbor South Australia.



Wednesday, 22 November 2017

Superannuation - My Approach






Hi Folks

I thought I would share with you all my approach to Superannuation. Of course, I am not qualified or licensed in anything to do with finances, so do your own research before making any changes your end. My remarks are for encouragement only. If they spur anyone on to have a long hard look at their own superannuation scheme, its fees and its returns, then I will be very happy. You'll be bound to be simultaneously enlightened, bored and angered as you do your own research - I guarantee you of that!


All the photos in this post are from where Mrs HM
and I do our evening walk at sunset.


I have already mentioned some of my thoughts on Superannuation HERE - so I will not rehash these observations. Seeing as Australians are locked into toeing-the-line with this government legislated Superannuation set up, we may as well make the most of it.

Sharing my approach of how I'm making the most of my mandatory Superannuation contributions is what this post is about today. It is not financial advice, its just sharing.


Sunset at the breakwater



Who:
  • Hostplus Superannuation 
  • Choiceplus (Hostplus's back-end SMSF product)


Why:
  • Very low fees (once you hunt through all the investment offerings)
  • SMSF platform available (SMSF means Self Managed Super Fund)
  • Very cheap fees for their SMSF platform
  • Indexing option (a nod to Warren Buffet's investing advice)


What:
  • Indexed Balanced Option (Beware - different to their default Balanced option)
  • 75% Growth and 25% Defensive asset allocation
  • Growth Assets are a mix of Australian and International Shares (developed and emerging markets)
  • Defensive Assets are a mixture of fixed income and cash
and
  • Choiceplus SMSF platform
  • Direct investment into Australian shares (S&P/ASX 300 index)
  • Direct investment into ETF's (a good selection of both International and Australian)
  • Direct investment into LIC's (Licensed Investment Companies)  - a small reliable selection.
  • Direct investments into Term Deposits
  • Reasonable trading costs


 Fees - Hostplus:
  • $1.50 per week = $78 per year flat administration fee
  • Indexed Balanced - 0.07% of total holdings fee annually (Investment fee of 0.02% plus Indirect Cost Ration of 0.05% = 0.07%). This would equate to a yearly $700 fee per each $1 million invested.
IMPORTANT - if you were to just use the default Hostplus Balanced investment option, then the default fees would be 1.45% which would equate to a yearly fee of  $14,500 per each $1 million invested !! A massive difference in fees - and this is what happens to most people who have no interest in getting involved with their own Superannuation. Double check that info yourself however.


Fees - Choiceplus:
  • $15 per month = $180 per year flat fee.
IMPORTANT - if you were to set up your own SMSF or get a company or accountant to assist, then the fees could easily run into the $1000's per year.  In my humble opinion, Choiceplus is a great way to run a share trading SMSF as you do not have to worry about any reporting or taxation requirements - it is all done for you. However, Choiceplus does not accommodate for any physical investment into real estate, you are only allowed to trade the products listed and available within Choiceplus. Double check that info yourself however.



Returns @ EOFY for Hostplus Indexed Balanced Option:
  • 2017 - 10.3%
  • 2016 - 2.2%
  • 2015 - 10.8%
  • 2014 - 14.4%
  • 2013 - 18.7%


Investment Rationale:

Due to the rules within Hostplus and its SMSF platform (Choiceplus) I must hold 20% of my entire portfolio in the Indexed Balanced Option within Hostplus.  The remaining 80% I can use in the Choiceplus SMSF platform to trade with as I see fit.

Within Choiceplus SMSF, I can only hold a maximum of 20% of my portfolio in any single security. This means I need a minimum of 4 different securities within Choiceplus to satisfy this reasonable rule.  This is no bother to me however.

The six basic stocks that I currently hold in Choiceplus at similar $ amounts are:

AFIC
ARGO
VHY
VGS
VGAD
IVV

(click on the ticker symbol to take you to info about each)

As you can see I have a 50/50 split of Australian and international stocks. You will also notice that they all are Indexed ETF's or old-world LIC's (used before ETF's were invented). Half are dividend focused and the other half are growth focused. At this stage, prior to retirement I reinvest all dividends.

The major benefit of Superannuation is that only 15% tax is paid on investment earnings and pre-tax contributions (several limits/rules apply however). The other major benefit of Superannuation once in pension mode is that all earnings are tax and CGT (Capital Gains Tax) free. Having said that ..... many, many rules apply to both these major benefits (click the ASIC site for full details).

IMPORTANT - If you want to retire before your preservation age (my preservation age is 60 years old) then you will need to invest outside of Superannuation as all Superannuation funds are locked away till your preservation age. 


PDS:
  • PDS stands for Product Disclosure Statement.
  • Read every single word of any PDS's for your current Superannuation and any Superannuation you are considering moving to.  That are deeply boring documents yet also enlightening. 

Sand and rocks in a natural formation


So, again, I am not qualified in anything financial and I only share all this information to encourage others (Australians mainly in this case) to start looking seriously at their retirement Superannuation accounts. Potentially, you can save a motza in fees and have much more control over your obligatory government legislated contributions. If I can research and understand this stuff, anyone can!

Do your own research and obtain fair and unbiased professional advice if you need to. One of the very best resources of accurate free advice I know of is the ASIC site here.

Also, Hostplus are not paying me in any way for this post - I'm just openly sharing what I do and trying to break down taboos about talking about finances. Even though our particular dollar amounts etc are certainly our private business, we really are all in this together.


Looking back to the beach house



Take care folks and stay nice.

Mr HM (Phil)

P.S. The  figures and facts quoted in this post were taken from the Hostplus and Choiceplus PDS available at the time of writing this post. Please verify these for yourself.


Your Money Trinity






Hi dear folk

The triangle is of course the strongest geometrical structure known - three sides, three angles, immovable, yet each side and angle totally dependent on the other for its strength and effectiveness. Yet, remove one element and the strongest shape become 100% ineffective and weak.

The concepts of the triangle are used heavily in the realms of architecture and spirituality. The concept of the triangle is also vitally important in the world of personal finances.....or at least it should be.


Your Money Trinity

Our money trinity is simply this:



Wise Investments - Frugality - Earnings



Lets chat about all three elements, because, as we can see, each element also has three sides each too. If we understand even the simplest concepts of architectural engineering we will know that this shape is super strong and safe....push at it from any angle and it will not budge.

Please note that all three elements are of equal size and equal importance - keep that in mind as an underpinning principle.


Earnings

  1.  Earnings should never be static. Find ways to increase earnings little by little. I have found that putting my hand up at work to do things no one else wants to tackle gets me noticed - it has served me well over the years.
  2. Earnings should come from several streams. Having only one source of income is risky. Even if the other sources of income are smaller, that's OK - spreading income risk is the aim here.
  3. Don't fall for the "do what you love" idealism. Instead, do what you are good at - this will guarantee the best possible income and opportunities over time.



Frugality

  1. Find ways to continually reduce expenses. Shop specials, DIY, stockpile, use public transport, cook from scratch, turn off lights, choose free entertainment, stay-cation, sun-dry clothes etc. Make reducing expenses a game not a chore and involve the whole family.
  2. A dollar saved is much better than a dollar earned. A dollar earned is taxed whereas a dollar saved is not taxed. Also remember that every dollar you save must get banked/invested. It is not truly a saving till it is banked or invested
  3. Buy the best quality that you can afford. I would much prefer to buy a good quality gadget second hand with light usage than a cheap and cheerful gadget new. Do not confuse fashion with quality. Self-educate on what quality is in the product that we need before purchasing. The aim is to buy quality so it lasts and we only need to purchase once. Buying cheap and cheerful can often be a false economy.


Wise Investments

  1. Invest as early as possible as time is the biggest key to good investing. Encourage children to invest starting at their very first paycheck or even pocket money. Small amounts invested repeatedly over time benefit immensely from the 8th wonder of the world.....compound interest.
  2. Self-educate on investing. Understand the power and wisdom of index ETF investing, dividend investing, bond investing, dollar cost averaging, market fluctuations and buy-and-hold investments. Read all the copious and free information on the subject. You probably do NOT need to pay a financial adviser ever.
  3. Good investing is slow, boring and repetitive. If it is exciting, addictive and nerve-wracking, then we are doing it wrong. If it comes with a glossy brochure or snazzy website, then don't. Do not day trade. 

Most importantly - equal time and effort need to be given to each of these three elements. Focusing only on frugality will make us miserly and cheap. Focusing only on investing is impossible without something to invest. Focusing only on earning more and more money is just plain dodgy.

A perfectly balanced approach to Frugality, Investing Wisely and Earnings is the foundation of fiscal prudence and wisdom.


This strong trinity of concepts will ensure our finances are safe yet abundant.



Take care folks and stay nice.

Mr HM (Phil)

P.S. I just loved the grey sandstone rock carved into a beautiful pattern by the wind and the waves.  I took this post header picture at the breakwater where we do our evening walks.

Tuesday, 21 November 2017

Starting Over At Any Age





Hi Folks

Plenty of folk have to start over again for many and varied reasons and the older they are the harder it is - some just give up and sink into the quicksands of poverty.

The younger we are when we have to start over, the easier it is - time is on our side if we are younger. However, starting over older means we have lots of life experience and can be ruthless about our needs and wants based on real life wisdom.


I just had to add another food photo - we eat very well at our house.


So let's not muck around - here are the best budgets (IMHO) for starting over by age. The percentages quoted are those of our NET income.


If you are starting over in your 20's - here's your budget:

 1. 20% Extra Debt Payments 
 2. 60% All living expenses and commitments 
 3. 10% Emergency Fund
 4. 10% Spend on whatever you want

Once all debt is paid, then revert to this version of the budget

 1. 20% Invest in low cost index ETF's
 2. 60% All living expenses and commitments 
 3. 10% Big spend items
 4. 10% Spend on whatever you want



If you are starting over in your 30's -  here's your budget:

 1. 30% Extra Debt Payments 
 2. 55% All living expenses and commitments 
 3. 7.5% Emergency Fund
 4. 7.5% Spend on whatever you want

Once all debt is paid, then revert to this version of the budget

 1. 30% Invest in low cost index ETF's
 2. 55% All living expenses and commitments 
 3. 7.5% Big spend items
 4. 7.5% Spend on whatever you want



If you are starting over in your 40's  - here's your budget:

 1. 40% Extra Debt Payments 
 2. 50% All living expenses and commitments 
 3. 5% Emergency Fund
 4. 5% Spend on whatever you want

Once all debt is paid, then revert to this version of the budget

 1. 40% Invest in low cost index ETF's
 2. 50% All living expenses and commitments 
 3. 5% Big spend items
 4. 5% Spend on whatever you want



If you are starting over in your 50's or older - here's your budget:

 1. 50% Extra Debt Payments 
 2. 40% All living expenses and commitments 
 3. 5% Emergency Fund
 4. 5% Spend on whatever you want

Once all debt is paid, then revert to this version of the budget

 1. 50% Invest in low cost index ETF's
 2. 40% All living expenses and commitments 
 3. 5% Big spend items
 4. 5% Spend on whatever you want




Roses - a simple delight


Some of us will look at this, snort, roll our eyes and say it is impossible.  It is not impossible.  In fact there are a whole community of folk world-wide living happily and meaningfully on budgets just like these - go find them and be encouraged.

The longer we stay in injury time-out mode, the longer and harder it will be to start over. Release the past without judgement, wish it well, smile, shoulders back and then take action. You're in good company.

Do it now - talk about it later.


Take care folks and stay nice.

Mr HM (Phil)

Worthwhile Money Reads





Hi Folks

Here are some sites and blogs that I read regularly in regards to financial matters.  All of them are very focused on educating the reader on all things financial, be it saving those pennies right through to investing wisely. Whilst the details may not be specific to your home country, the principles are globally true and utterly relevant - enjoy.


Our Christmas tree went up last night - feeling happy.


In no particular order (just click on the heading)

The Mad Fientist

Strong Money Australia

The Barefoot Investor

Mr Money Mustache

The Simple Path To Wealth (I'm currently re-reading his excellent Stock Series)

Aussie Firebug

All About Balance

Think Save Retire . com


My new glasses - 1940's style (my favourite era)


The beauty of all these writers is that they are DOING what they are writing about.  They all generously share the bulk of their content freely and engage enthusiastically with their readers.

Enjoy!


Take care folks and stay nice

Mr HM (Phil)

Monday, 20 November 2017

Bubble 'n Squeak





Hi folks

I just love bubble and squeak made from left-overs from the previous night's lamb roast.  All those lovely leftover baked veggies and scraps of lamb all fried up together make the perfect breakfast. So, we were shopping in Aldi the other day and lo-and-behold ..... pre-packaged bubble and squeak for $3 something per packet!  What the?!

Bubble and squeak is one of the epitomes of frugal living at its finest and now it has been commercialised. Fancy that.  I'm not surprised really I guess. We are now expected to pay for prepackaged leftovers! The world is mad.

So in the spirit of spreading a better message, here are some food photos that have been cooked from scratch at our place lately - you know how I love food photos.


Fried southern chicken with peach salad

Waldorf salad

Crispy skin salmon, chicken skewer, quinoa salad
and asparagus. 


Cooking from scratch not only saves huge dollars out of the budget, it is also a act of love and care for those for whom we cook.


Take care folks and stay nice.

Mr HM


Saturday, 4 November 2017

An Elegantly Simple Investment Plan (Australia)





Hi folks

I have received a lot of comments and have also received plenty of emails enthusing about my investment musings here on Mr Home Maker. However, many of these comments and emails also express fear and paralysis about actually investing (AKA doing it as opposed to just talking about it!).

Again, I am not a financial adviser and the information I share now is purely for your encouragement in becoming more fiscally responsible. Absolutely do your own research and analysis please.


A Simple Elegant Investment Plan for Australians


  •   50% invested in old Australian Licensed Investment Companies like Argo and/or AFIC.
  •   50% invested in Vanguard MSCI Index International Shares ETF (VGS).

That's it folks - as simple and elegant as that. Uh huh.




Happy to answer any questions on why etc in the comments below for everyone's mutual benefit.


Take care folks and stay nice.

Mr HM (Phil)


Wednesday, 1 November 2017

Who's Behind These Products?






Hi folks!

Do you like the home made Arancini balls in the picture above? With a little patience, anything can be cooked from scratch at a fraction of the broughten price.

So anyway, here is a bit of a quiz:

Question: What do all the things on this list below have in common?


FaceBook
Ben and Jerrys (icecream)
H&R Block (tax agents)
Calvin Klein
Westfield shopping centres
Max Factor cosmetics
Goldman Sachs
SlimFast
TED talks
Valium 
Many generic pharmacy prescriptions
SodaStream
Stanley Black & Decker (power tools)
Dreamworks (movies)
Sandisk (usb memory sticks)
Max Brenner Chocolate
Power Ranger (action man toys)
Pentium and Celeron (computers)
Disney Company
Estée Lauder
Ralph Lauren
World Trade Centre (Sept 11)
Q-tips (cotton buds)
Levi (jeans)
Google
RSS (web feed)
20th Century Fox (movies)
Carnival Cruise Liners 
Hyatt Hotel
Four Seasons (resorts and hotels)
Cosco
U-Haul (removal rentals)
Jim Beam (whisky)
Visyboard (cardboard products)
Meriton (hotels/suites)
Bagels (as in bread)


Answer: They're Jewish ....owned and/or founded and/or invented.


A lovely fruit and homemade
 yoghurt breakfast


  Interestingly, the very fact that you probably will not be able to knowingly match a single Jewish name to any one of these things reveals another interesting Jewish wealth principle viz. that Jewish folk promote their product to society not themselves. Of course there are exceptions when the product is themselves e.g. Jewish actors (the list is too long to write here!)

Jews believe in the morality of business. They believe in offering a service or goods to wider society as an act of being able to genuinely fulfill the needs of society. A product well placed in the lives of others is something to be proud of.....and the money earned are just notes of appreciation for the product from those who needed it.


My office....the kitchen table


Incidentally, the list above is rather small (I was just thinking of things Australians would know) - our USA and UK readers would be able to add another 100 products to this list easily.

Take care and stay nice!

Mr HM (Phil)

Saturday, 28 October 2017

Simultaneously Frugal and Extravagant




Simultaneously Frugal and Extravagant? What on earth is Mr HM on about?!  Well, what I'm 'on about' is another Jewish wealth principle.

It is not unusual to hear Jewish folk going off about the price of petrol, how much coffee is, how on earth they are going to afford this that or the other ..... whilst the Mercedes is quietly sitting in the driveway and the gardener is pruning the roses.  It sounds hypocritical and fake, however it is not. You see, Jewish folks understand that wealth has a purpose and that it is not an end in itself. Being generally frugal allows spending on other things that are important to them. Jewish folk will scrimp and save on a whole myriad of things whilst simultaneously funding some really big ticket items.

The Jewish family who invests several million dollars/pounds into a local hospital will probably be also drinking no-name tea and coffee, shopping at Aldi and snipping coupons. Our said Mercedes-driving Jewish neighbours will also be getting their shoes repaired, cooking all their meals from scratch, wearing the same outfits from season to season and still using fly swats (because Mortein costs money and fly swats are essentially free!!).

Quintessentially, Jewish folk spend money on what they value. Their values are well balanced across family, synagogue, community and country.  Their children will get a lavish education whilst sharing a bedroom with siblings. The synagogue will get a fat subscription every year whilst the family takes a packed lunch daily. Their local community will have this Jewish family as a known financial benefactor of many good causes, whilst also being known to bargain with the butcher over the price of Friday chicken. The same Jewish family and their brothers, aunts, uncles, parents, cousins....(there is never just one of them!).... will also have their names on those plaques you see on Universities, hospitals, schools, galleries and the like, as being major investors and/or patrons. You'll also see these exact same folk buying specials in bulk too.

Jewish folks spend up big on things that are important to them or things that represent quality. They will also purposely spend as little as possible on absolutely everything else. There is the lesson right there.

Take care folks and stay nice.

Mr HM

Tuesday, 24 October 2017

Suspicious of Superannuation





No doubt ...... no doubt ....... the Australian Superannuation system has some terrific tax benefits both during accumulation phase and also during pension phase.  The ability to salary sacrifice at only 15% tax during accumulation stage is wonderful as is the tax free earnings, tax free dividends and tax free capital gains events during the pension phase.

However, I'm still suspicious of placing all my eggs into this government regulated Superannuation system. Now, I am no finance man, I have no qualifications in this regard, so my following thoughts can only be fairly classified as a conspiracy theory - nevertheless, I see what I see.

Consider the following with regards to Superannuation:

1. Constantly changing rules and many layers of complexity
2. Your money is not truly accessible tax free before retirement preservation age.
3. Retirement age is getting older by law - (mine is now 67 !!)
4. No ability to access your money before preservation age (60 for me) without a huge tax bill
5. Most Superannuation funds have huge fees - as bad as most fat managed funds in many cases
6. Default Super options (the one that you automatically get if you do not choose) is usually a balanced fund with significant fees.
7. Very difficult to see where your funds are invested beside vague labels like "Australian Shares" etc
8. Not everyone can choose a fund of their liking depending on their employer.
9. Fees are often hard to understand and can be recorded (hidden!) in several scattered places across PDS's (Product Disclosure Statement).
10. Administration fees during retirement or pension phase are often many times greater than when in accumulation phase.
11. Life insurance within Superannuation can be very tricky to access in a variety of scenarios and can sometimes be taxed.
12. Transition to retirement (TTR) tax rules have recently been introduced into Superannuation which do not benefit the retiree.
13. Maximum limits on pension phase accounts have been introduced and changed recently.
14. Before and after tax contribution limits have been changed for the worse too.
15. Thresholds have changed and many pensioners have had their aged pensions drastically reduced simply because they were good savers and used Superannuation the way they were historically told to. A nice reward for doing the right thing - not!
16. What future changes will the government make to Superannuation? It is a complete unknown. Therefore is my money predictably a proper investment in Superannuation?
17. Will Superannuation taxation structures and rules change?  If so, this could completely compromise your retirement plans.
18. Cyber risk to Superannuation funds is a hush-hush topic
19. How will future legislation impact on Superannuation? Given the long list of legislative changes directly impacting Superannuation over the years, it is reasonable to assume that this trend will not change.
20. The younger you are, the less appealing Superannuation is as legislative changes across the next 30 or 40 years could massively change the intention and viability of Superannuation in much the same way as the aged pension has gone from being a wonderful innovation generations ago, to now being a pittance that is mockingly referred to by many as a charitable or social security payment.
21. I challenge you to easily read and understand your superannuation yearly statement (!)


Look, in Australia our employers are obliged to contribute 9.5% of our gross salaries into a Superannuation fund for us. We have zero say in this. So my approach is that I have chosen not to add any extra than this obligatory 9.5% because we plan to retire from our current paid work before our preservation ages and thus we will need plenty of funds invested and accessible outside of Superannuation for this purpose.

So because I have to get the best out of my obligatory Superannuation account, I have therefore researched scores of Superannuation PDS's (product disclosure statements - gosh they are so freaking boring) and have chosen a Superannuation fund that offers a Balanced Index Fund charging only 0.02% fees plus a $78 yearly admin fee. This Superannuation fund also offers a very low cost self-managed investment platform where I can choose a reasonably good selection of ETF's, LIC's, individual stocks, bonds and term deposits to invest into directly.  The proviso is that only 80% of my funds can be invested via the self-managed platform and the other 20% needs to be in the Indexed Balanced Fund option - but that is OK.  The other pleasing (and rare) thing about this Superannuation fund is that once I am allowed to retire and change my accumulation account across to a pension account, they will allow me to transfer all my stock holdings across to my pension account as a once-of transaction without the need to sell all my holdings which would normally trigger a massive capital gains tax event - this is pretty good.

However, outside of Superannuation we will continue to stick to our personal budget to invest 20% of our net incomes into tax efficient investments (namely investments that are 100% franked). Fortuitously, under Australian law, the company tax of 30% paid by the company on its 100% franked dividends does not need to be double taxed by the owner of the shares and thus can be used as an efficient tax claim at tax time each year.   e.g. for low income earners, they will get a tax rebate on their 100% franked dividends and for high income earners they will only need to pay the difference between the 30% tax already paid on their dividends and their particular tax bracket. Australian shares also generally pay slightly better dividend percentages than international stocks. Because of the lower immediate tax advantages but higher growth trends of international stocks (USA, Europe, Asia etc) I use my Superannuation to buy international growth ETF's and stocks thus taking advantage of the generous tax rules within Superannuation to diversify my holdings outside of the tiny Australian stock market whilst my ex-Superannuation investments are all Australian investments specifically geared to be tax friendly.

When we eventually decide to pull the ribbon out of our typewriters for the last time, we will first use our investments made outside of Superannuation as an income stream to tide us over the decade or more before we are allowed by the government to access our Superannuation funds.

Anyway, make sure you thoroughly check everything I have said because I am not a qualified finance person and may well have got it all badly wrong ..... (but I doubt it). I am only sharing this information for the purposes of encouragement and open, honest discussion about the often taboo subject of money and investments - this post is obviously not qualified financial advice. Always do your own homework.

Take care folks and stay nice.

Mr HM (Phil)

Sunday, 22 October 2017

Mr and Mrs Home Maker's Weekend



Mr and Mrs HM out at a country fundraising pig race.



Hi Folks

Just a quick picture post on this rainy Sunday evening of a couple of things we got up to over the last couple of days - enjoy


Sometimes dinner is just a plate of great cheese.
Saves a whole lot of washing up and is pretty fabulous

Home made hot stewed apple

My lovely girls bought me an exquisite
pocket watch for my 50th birthday. I wear
it to work every day now connected by a chain
across my waistcoat.
 (I love 1940's men's clothes in case you wondered)

The piglets at the Westpac Rescue Helicopter fundraising
pig race at Denman NSW. They were super cute and ran real fast!

Our cute little red Suzuki petrol miser hanging out with the big
country petrol guzzler boys  at Merriwa NSW
 (....we were in the bakery!)

The wonderful B&B we stay at when we go to Merriwa.
Pam and Peter at B&BonBettington are the cheeriest folk I know
and the place is spotless, decorated in old world style and you
get a hearty cooked breakfast and a great chat before heading off.
We have our cuppa out on the balcony through those French doors.

Mrs HM doing the meat prep for the week. It all gets cut up
and packed....

.....into meal-sized portions before being popped into the
$50 freezer that just keeps on going (!)

I found myself a pair of good quality
plum coloured jeans reduced from $70
to $4.99 exactly my size. Frugal much!

A beautiful Italian quill pen and ink - a 50th birthday
present from my wonderful friends Kathy and David.
(p.s. Kathy is a avid crocheter  - her work is extraordinary)


Lovely chatting folks  - have a great rest-of-the-day.


Take care and stay nice too.

Mr HM
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