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.


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.


Tuesday, 17 October 2017

When Can I Retire?

Hi when can we retire?

Well, I had this exact discussion with a work colleague yesterday. Here is a rough transcript of that conversation:


Phil:  Hey Sam

Sam: Hey, I wonder if I can ask you a question about retirement?

Phil:  Yeah sure Sam - but hey I'm not a qualified finance guy or anything  - you know that?

Sam: Yeah, that's alright. How do I figure out when I can retire? Like...the simple version (grins). Do you know how to do that math?

Phil:  Yep - so the simple answer is when you have enough invested to cover 25 times your yearly can retire.

Sam: (Chokes on his biscuit) What??!

Phil: So yeah, just say your yearly expenses are say $60 thousand dollars, then times that by 25 and you would need $1.5 million dollars invested to retire and live off that drawing down $60 thousand dollars a year.

Sam:  I will never be able to save up that much!!  (expletive). Well, OK then, what percentage of my wage will I need to save to retire in ....say... 9 years.

Phil: (raises eyebrow incredulously) To retire in 9 years at least 70% of your wage needs to be pure untouched savings Sam.

Sam: OK, OK (snorts) well what about if I wanted to retire in 15 years - just being a bit more realistic.....?

Phil: Then that would require pretty close to 50% savings mate.

Sam: Strewth! Well, what about retiring in 30 years, would that mean 25% savings?

Phil: Nope - only about 20% actually......and 10% savings would be needed if you were to retire in 45 years time.  Look, I'll jot it down for you on the back of this envelope (I scribble on the envelope)

(What I Scribbled Down For Sam)

25 x your yearly expenses (lump sum invested)

Years to retire / net pay savings rate:
45 years - 10% savings
30 years - 20% savings
15 yrs - 50% savings
9 yrs - 70% savings

Sam:  But hang on, work pays us 9.5% into Superannuation so.....(scratches head trying to do the mental arithmetic)

Phil: Yep.... so we'll see you retiring in about 49 years using that percentage alone. (pauses with spoon poised dramatically whilst giving Sam 'the look') (side note...Mr HM has conspiracy theories about Superannuation, but spares Sam that conversation)

Sam: Oh no!!  So if I just rely on my Super' I'm gonna have to work for a lifetime.

Phil: Yup (stirs coffee nonchalantly) pretty much.

Sam: Are....are....are you sure you are doing the math right?

Phil:  Yep. I'm sure.

(long pause as this all sinks in ....)

Phil: (quietly) So....what are you going to do about that Sam? (me now feeling I prying too much??  But I can't let this conversation finish unresolved like this)

Sam: Gee Phil -  all of of sudden reducing my expenses is really important - that way I will not need to save so much - Yeah?

Phil: Spot on Sir!

Sam: ...and, and, and earning some more but not increasing my spending also looks pretty important too ..... like, so I don't have to wait so long - Yeah? (looks at me hopefully)

Phil: Right again.

Sam: (sounding more hopeful now) ..... and I'll have to get a grip on how to invest and all that jazz so I get reasonable returns on my savings.

Phil:  Absolutely.....but learning how to invest is actually the easiest bit.

Sam: So in a nut shell (uses his fingers to tick off each item...) 1. Reduce my expenses ..... um, 2. Increase my earnings and, um..... 3. Invest wisely. Yeah?

Phil: ....... and do all three in equal measure. Each of those three is as important as the other. Like a triangle approach.

Sam: Got it. Good chat Boss

Phil: Y'welcome Sam. No more chatting but.... now go do it.

Sam: (smiles broadly) Yup.


Now can we see why the math is important folks?

Boring - but important.

Take care folks and stay nice.


Sunday, 15 October 2017

I'm 50 this week - NEW GOALS

Hi folks

I turn 50 on Wednesday and instead of moping, I have decided to set myself some goals.

My Goals:

1. Running - To go from Couch Potato Esq. to running for 30 mins daily within 30 days. This will start in the morning at 6:00 am - 6:30am every morning for the next 30 days. I intend to walk 29 mins and run 1 min on day one, walk 28 mins and run 2 mins on day 2 and so on and so forth till I run the full 30 mins on day 30.

2. Write an eBook on Debt Reduction - The consumer debt reduction journey has been my most significant personal journey over the last few years and I want to write about it and share it, not as a financial book, but as a normal bloke talking openly about it.  I will be devoting 30 minutes each evening to writing this until it is done....and then I'll have to figure out how to get it onto Amazon etc. This goal starts tomorrow evening and will continue daily till it is done. You all will be the first to know when it is done.

3. Resume losing weight - I have done so well and have now stalled, so need to keep going. I will resume my frugal weight-loss regime that was working very well and keep updates happening. Luckily I have only put on a very small amount which will be simple enough to shift and continue losing. I need to get to 80kg (176.5 pounds) in 40 weeks.

4. Become Financially Independent - it sounds like a bit of a  hype buzz-word, but I can now see that there is a large, quiet and sensible community of folks worldwide taking this very seriously. I will be 67 in 17 years and need to ensure that my income streams will be well in place before then. I simply will not be able to do the work I am currently doing into my 70's, nor can I wait till then to create new streams of income, so I need to start now. Total retirement is not a very big motivator for me, so I will need to create income streams that will keep me engaged well into old age. Step 4a is to devote 30 minutes each day to educating myself on multiple income streams and how to create them and keep them healthy. Step 4b will be to track my savings to ensure a nest-egg of sufficient size is invested by the age of 67 to cover all living expenses and be maintained to leave a legacy for my daughters when I eventually choof off.

5. I intend to live till I am 110.  I just decided this recently.  I believe with a combination of emerging medical technology and research, a commitment to excellent eating habits, a commitment to physical exercise, a commitment to loving relationships, an excellent GP, an interesting and brain-stimulating way to create income, a non-focus on retirement (in the classical sense) and an increased interest and commitment to contributing to my community/country/world should do the trick. I have just decided to live (really live...not nursing home live) till 110 - so there! I have wasted 40 of the last 50 years in so many ways and thus I intend to have those 40 years back  - I intend to have my time over again which means I'll have to live till I'm 110 and that's that. I'm determined to do it, and if I don't, then I'll die trying ;-)

Have a great week ahead folks

Take care and stay nice.

Mr HM (Phil)

Tumblr, Facebook and Pinterest

Hi folks

My daughters have encouraged me to add my blog to Tumblr - so I have (very obediently) and I will figure out the world of Tumblr soon enough I guess!

In case you needed to know, Mr Home Maker is also on Pinterest and Facebook if that is your preferred point of entry.

Facebook - the link is HERE

Pinterest - the link is HERE

Tumblr - the link is HERE

Have a lovely Sunday evening folks - take care and stay nice.


Thursday, 12 October 2017

The Simplest Budget

Delicious meatloaf cooked from scratch

Hi Folks

I think this is the simplest budgeting model ever. We use it here at the HM household and it delivers excellent results. It simply is this:

Using your net income, allocate strictly in this order:

The Ideal Budget

1. 20% Invest
2. 60% All living expenses and commitments
3. 10% Saving for large purchases
4. 10% Spend on whatever you want

If you have consumer debt, then use this version of the budget:

The Debt Busters 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 debt has been cleared, revert immediately to the Ideal Budget.

The obvious challenge about this Ideal Budget and its sister version the Debt Busters Budget is the necessity to live on 60% of whatever your income source is. Do not dismiss it as impossible. Many, many folk achieve this or better, even on very small incomes. This is where we must allow our minds to be inventive and seek solutions (this is what our minds do best actually). Living on 60% of our incomes is fully supported by the simple living community world wide who actively and practically share all their tips, tricks, support and encouragement with astounding generousity.

Actually, this simplistic post is probably THE single best practical money advice I can ever share.

Take care folks and stay nice.

Mr HM (Phil)

Monday, 9 October 2017

Jewish Wealth Wisdom - The Four Rivers

This beautiful fern is growing in a very small pot. I fear the roots may have
grown right through the pavers.

Hi folks

I have left this post for a while as it is the most profound piece of Jewish wisdom thus far. It is about the the analogy of rivers that flow into the garden of Eden based on one of the very early stories in the Torah. You will also find the story  in the Christian Bible in Genesis 2:10-14 (I'll leave you to read/Google it yourself). The story speaks of the river that flowed out from the idyllic garden of Eden and branched into four separate rivers which watered the whole land. Seeing as geologists are left scratching their heads about the physicality of such a place, it is clear that the main thrust of this story is spiritual. Now, remember in previous posts I have explained that Jewish folks see money and wealth as spiritual, not in the prosperity Gospel sense but simply because it is not physical....coupled with the fact that they believe the Torah holds all the basics of money and wealth management in its code and analogies.  This story is the  most profound piece of Jewish wealth wisdom.

Home made spinach and ricotta cannelloni 

Here  is the Jewish spiritual meaning of this ancient story:

The meanings of the names of the four rivers approximately mean: 
1. Increase
2. Bursting forth
3. Rapid
4. Fruitful
As well, the context of the placement of these rivers talks about gold, precious stones, precious commodities, reaching to many different lands and nations ..... clearly wealth and diversification.

A delightful caramel sponge cooked from scratch.

OK, so let's get practical here and talk plainly. Jewish folk whilst often specialising in a single area of expertise ALWAYS understand and practice the discipline of multiple income streams.  They have more than one river of wealth happening. What? Are we meant to go out and work four jobs? Nope. Just like the rivers that all flow at the same time, our income streams need to be simultaneously providing us with unique sources of income. Also like the four rivers our income streams need to come from the one source (go back and read the story)....that source is us!  Jewish folk believe that all of us are given many different abilities and talents to be able to generate diverse streams of income simultaneously  - and they do.

Those flour-coated snags again :-)

This Jewish wealth wisdom took a while to sink in for me, but then the penny eventually dropped - I needed to stop relying on just my job as a single source of income. 
Just like lack of diversification when investing is risky, so is lack of diversification in income. 
If you have ever lost your job you will know just how utterly risky and devastating having a single source of income is.

Make enough dinner for two nights. Eat one and freeze the other.

Normally I will only blog about things I am doing or have done - this post is an exception. I am right in the middle of unlearning a lifetime of beliefs that demand I have just one source of income and rewire my brain to seeing the huge risk and the utter exhaustion that comes with only having one source of income and expecting it to do everything we need and want it to do. Strangely, all through my life there has been many situations that have shown me that I have the capacity, skills and insight to be able to create other streams (rivers) of income but I always brushed these moments off as my 'crazy' thinking. I always dismissed these emerging opportunities and thoughts with "Oh, I could not make a living out of that".... gosh I'm a bit dim sometimes hey?!.  Anyway, 'spilled milk' I suppose - but the lesson is now in the process of being learnt! Training my brain to fully realise that my good job as my single source of income is actually a significant life risk, is taking its merry time - but it is happening.

I want to introduce some colour into this shady garden.
Any suggestions?

So now I am in the planning and discovery stage, looking at my skills, looking at things I can create and produce that can be marketed to realise a repetitive and diverse income stream. The challenge is to move away from the continually-swapping-my-time-for-money model of working and thinking deeply about what product I can create that will add significant and genuine value to others' lives and can be produced just once but on-sold numerous times.....hmmm.

Pie in the oven.......

Anyway, there are chapters and chapters I could write on this topic but there it is folks - another piece of Jewish wisdom that says that just having a job is the riskiest way to to bring income into our homes and families. Sensible, wise, low risk income must be created by several diverse income least four - just like those ancient rivers.

Take care folks and stay nice. 

Mr HM (Phil)

Saturday, 7 October 2017

Twelve Little Pictures

Ms HM Daughter number 4 decided to do a trial Halloween cake - she had some
fun by the looks. Inside was a rich, luscious chocolate cake.

Hi folks

Its still busy, busy, busy here at the new house with unpacking and all.  Here are some random pictures to share with you all of things and goings-on around our new place. Predictably, there are way too many food pictures....ah well.

Ms HM daughter number 3 is a fabulous cook. Here she is
filling cannelloni shells with a lovely Ricotta, spinach and
garlic filling.

We hung our red candle lantern on the trunk of the
Norfolk Island pine. It looks lovely at night when we
dine outside.

Mrs HM bought a pressure cleaner......nothing is safe!

Who knew that we had terracotta coloured pavers out the back!?

A simple meal. Always coat the sausages in flour for a
delightfully delicious outcome

Nothing beats a simple nourishing garden salad

Out the front of our new house. As you can see the gardens
need lots of work, as does the lawn. Can't wait till the
Frangipani and the two Camellias flower.

Caspar the ghost meringue.

Can you see it?  A water dragon. It is nearly a meter long.
Scared the living daylights out of me as I thought it was a
stick! It pranced off all offended.

Ooops - can't seems to rotate the pic of this delicious
apple and blueberry rough pie. It is straight
out of the oven and will be eaten with custard.

Fried chicken. Just makes you feel better about life.

Have a great weekend folks.  I'll be back into writing proper posts soon but hopefully sharing these pictures again today will keep us in touch.

Take care and stay nice.

Mr HM (Phil)
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