It doesn’t take an expensive present under the tree to say “I love you.” Instead of spending your life savings on extravagant gifts this year – get smart about your Christmas shopping.
Here are 10 tips on how to Christmas shop without blowing your savings.
1. Set a budget – and stick to it. Ask yourself: How much can I afford to spend this year? Failing to set realistic spending limits can lead to unrestrained shopping sprees – and debt.
2. Prioritise your gift list. There will always be people in life who deserve our generosity. But not everyone should be considered equally, and that’s OK. Immediate family will probably come first, followed by close friends, relatives and colleagues. Make a list of potential gifts for everyone and keep track of prices.
3. Avoid impulse buys. It’s easy to get swept up in the holiday spirit when everything in the shops screams Christmas cheer and so many items are discounted. But don’t be fooled into buying things you don’t need. Don’t stray from the list!
4. Give the gift of charity. Consider donating to a charity in someone else’s name. It’s a great way to do something selfless this holiday season while avoiding all the temptations that come with going to the shopping centres.
5. Internet shopping. If you have a specific gift in mind, in most cases it can be purchased online for much cheaper than in stores. Just make sure you leave enough time for delivery.
6. Eliminate unnecessary expenses. Does every gift really need a bow or expensive wrapping? Do gift bags have to have bells on them? Ditch the embellishments and streamline your gift wrapping.
7. Christmas is not the time to go above and beyond. When shopping for kids, keep in mind that they, unlike many adults, don’t look at price tags when considering something’s worth.
8. Make your own Christmas gifts. Going homemade can be a great way to add a personal touch to your holiday shopping list. Put those years in art school to use. Or, maybe you’ve always wanted to pick up quilting, candle-making or even baking – the holidays are a great time to pursue new ventures!
9. Kill two – or three or four or five – birds with one stone. Get one big present for the whole family instead of small presents for each member.
10. Plan for next year by taking advantage of post-holiday sales. The weeks after Christmas are the best time to stock up on things like wrapping paper, tableware and decorations, as many retailers trying sell off their holiday stocks will offer big discounts on Christmas gear.
So that’s our tips on not blowing your savings this Christmas – we hope you have a wonderful festive season! Merry Christmas every one!
This is a great article by the Australian giving a summary of the budget 2017 and what it means to the Property Investor.
For the active investor this week’s federal budget hits a remarkable spectrum of issues: few stones were left unturned by Treasurer Scott Morrison as he issued a range of amendments that will affect tax, super, property and shares. This year’s budget lacked the surprise — some might say consternation — around large-scale superannuation changes we got last year. But Morrison did cast the net wide with a significant number of changes, which every investor must get to know.
Some of these changes are positive — in super and in home ownership and many are negative such as sharp cutbacks on property tax breaks and targeted measures against key investment sectors such as the banks. Crucially, there are also a number of political dimensions to the ultimate delivery of this budget, which must be kept in mind: it has yet to be passed and some compromises on budget details are inevitable in the weeks ahead.
This year the budget item that would appear to be in jeopardy is the planned removal of the so-called Temporary Budget Repair Levy — the extra 2 per cent individuals have to pay on annual earnings above $180,000 — which is due to be scrapped by June 30.
It has been reported the government may be put under pressure to extend the application of this tax into the future in order to get other budget measures passed.
Here are the ten things from the budget 2017 every investors should know:
1. Tax — personal
Personal Tax — The outstanding change here is that the Medicare levy goes from 2 per cent to 2.5 per cent. For many better paid workers this brings the effective annual tax bills up to at least 47.5 per cent: the ATO top personal tax rate is already 45 per cent on earnings above $180,000 and now there will be an expanded Medicare levy of 2.5 per cent on top of that from July 2019. On the other hand, subject to parliamentary approval, the Temporary Budget Repair Levy that had imposed an extra 2 per cent above $180,000 (on top of the Medicare levy) will now be terminated on June 30.
If all goes as planned the combined net effect of the Medicare levy change and the Temporary Budget Repair Levy removal will be a net drop in total income tax of 1.5 per cent for high earners.
In parliament the ALP has said it would only support the Medicare Levy increase for taxpayers on salaries above $87,000. It is also pushing for the Temporary Budget Repair Levy to become permanent. If all does not go as planned and the Temporary Budget Repair Levy is not removed then top salary earners will be facing an annual tax bill of a staggering 49.5 per cent.
2. Tax — capital gains
If you sell an asset you are subject to CGT at your marginal (top) tax rate — however, if you hold the asset (such as a property) for more than a year there is a discount of 50 per cent on your CGT tax assessment.
There had been speculation the government might have cut back the discount but it has left this alone.
3. Tax — negative gearing
The negative gearing tax break, the most popular in the land, has been left untouched.
Investors can claim expenses — including interest — over and above the costs of running an asset (such as an investment property) against their tax bill. One useful aspect of the trend towards higher interest rates in the last year among the commercial banks is that the amount that can be written off in negative gearing is actually increasing … of course, this is of limited value unless the price of underlying asset is increasing too.
4. Superannuation — home downsizing
The budget announcement on home downsizing is offered to a very narrow range of investors. Importantly, it is a variation on the rules on superannuation contributions not on pension access or for that matter on the all-important $1.6m super “cap”.
People at any age over 65 who sell their family home can contribute up to $300,000 of the money as a non-concessional (post-tax) contribution. The measure is expected to be popular.
Under the first iteration of the new superannuation regime over 65s could only contribute $100,000 each year and they had to work at least 40 hours a month and they had to be under 75!
5. Super — borrowing
There is constant pressure on the government to entirely scrap the very existence of borrowing in super. Usefully, the government has not reversed its position here and SMSF operators can continue to borrow though it remains a little complex and quite expensive to do so.
However, the government has made sure nobody can play games around using borrowed funds to get around the new super cap of $1.6m to be introduced on July 1: The budget papers spells out that borrowed funds will be counted in the computation of the $1.6m cap.
6. Super and property — first-home buyers
If you — or someone in your family — are in the business of buying a first home it is worth explaining the budget announcement on this issue. It works like this: the saver can use voluntary superannuation contributions to build a home deposit fund — the maximum contribution is $15,000 a year or $30,000 in total.
This is a limited scheme — voluntary superannuation done through salary sacrifice is effectively limited to a tight cap of $25,000 a year from July 1 and any superannuation guarantee payments must be subtracted to get under the cap.
However, the measure does — controversially — allow super to be accessed early. Previously you could only access super before you retired in cases of extreme financial hardship.
7. Property — expenses shock part 1
Anyone who has ever attended a property investing seminar will know real estate agents and developers always liked to describe in detail the advantages of owning a residential property at some distance from your home — ideally in another state.
Such an arrangement allowed diversification in a property portfolio and offered the additional perk that any expenses incurred visiting the property such as flights, rental cars, etc were a tax deductible expense.
It is now clear the allowance — which absurdly had no limits — was being abused as the government expects to collect a whopping $540 million from the severe decision to scrap the tax allowance completely from July 1.
8. Property — expenses shock part 2
Another strong tax break relating to investment property has been depreciation reductions, which continue to exist — but they have been curtailed.
Most property owners use so-called “deprecation scales” to get an extra tax break soon after they buy a property.
Under an amendment in the budget a new owner of a property cannot get a tax deductions on plant and equipment purchased by a previous owner of the property.
9. Shares — good, bad and ugly
Bank stocks got it in the eye with the budget’s surprise bank levy but other sectors may be net beneficiaries of the budget. Here’s how it breaks down
● Banks — The levy will strip $6 billion or so from the big four banks — ANZ, CBA, NAB and Westpac along with Macquarie Bank.
At its worst, according to Goldman Sachs the move could hit earnings per share by 4 per cent and the sector valuation effect could be double that figure. These are, however, forecasts, which may move due to other factors. Fund managers this week suggest the banks will be pushed to fund the tax from dividend flows — this may affect dividend per share growth forecasts.
● Property stocks — Home builders such as Stockland and Mirvac, which are major players in the first-home buyers market, are expected to benefit. On the other hand, property stocks will be hit by a GST alteration where all buyers of new homes must provide identity and pay the tax office the GST bill directly: A dreadful bureaucratic complexity that already has the industry up in arms. Also foreign investment restrictions have been extended so that no new property developments can have more than 50 per cent “foreign ownership”.
● Managed fund stocks — The listed superannuation managers are expected to get a boost from the new funds that should flow into superannuation with the concession variation for downsizing seniors — stocks pinpointed by Credit Suisse in a note this week include AMP, BT, Challenger, IOOF, Magellan and Platinum.
● Infrastructure stocks — This sector should get a substantial lift from the government’s very large $75bn proposed infrastructure program with the sector due to accelerate strongly through to the end of 2019.
CIMIC, Downer, Worley Parsons, Boral and Adelaide Brighton shares all saw a lift earlier this week as broker’s remodelled forecasts for construction, rail and airport spending.
● Health stocks — The removal of the Medicare rebate freeze for GP services will ultimately be useful to stocks in this area though it does not kick off until 2019 — stocks identified include Primary Healthcare and Sonic Healthcare.
10. Two unlikely goodies
● Capital Gains Tax. In an unlikely development there has been an effective reduction in CGT for some investors — it has been allowed through an increase in the discount available on CGT to investors in “qualified” affordable housing. If you buy a house and sell it after a year you get a 50 per cent discount on CGT (which is set at your marginal rate) if you buy an “affordable house” you can get a discount of 60 per cent.
● Impact Investing — Impact investment bonds are not rated but have been designed by government agencies in conjunction with private groups in order to finance select social welfare opportunities. There has been significant success in the area with the bonds such as the Newpin note paying strong returns. The government allotted $30m over the coming years to finance development especially in housing.
If you would like further info on any of the above feel free to call Chris on 0434 449 455 or drop us an email HERE
Christmas is fast approaching and Santa has already laid plans to destroy all your good budgeting work for the entire year!
With Aussies set to spend close to ten billion dollars on Christmas gifts this year, now is not to the time to go blowing your budget. You can still get all the warm fuzzies of watching your loved ones open awesome gifts without crying into your empty wallet for months into the new year.
We all know Christmas is an expensive time of year. With additional time off work, extra mouths to feed, holiday & travel plans and of course that adorable letter to Santa from your 5 year old containing a list of items that will easily smash your credit card limit.
Listed below are a few tips and tricks to meet your Christmas Budget that even Santa would approve of. Some need to be put in to practice well before now so maybe a heads up for next year.
Set a Christmas Budget – Write a list of every single person that you need to buy for, an amount you feel comfortable spending on them and STICK TO IT. If you go $3 above on one person – make sure you make it up on another, a small overspend on every person can add up!
Do a Secret Santa – If you have a large family and everyone usually buys everyone a gift – it may be time to suggest a secret Santa. This way you can set the budged that you are all comfortable with and instead of getting 10 pretty average gifts from the rellies you get one awesome one.
Set an age limit and budget for the kids – If you have say 20 nieces and nephews this can also be a huge expense. Get the adults in the family to come to an age appropriate budget and again stick to it. I.E under 10’s get a $5 present and 10’s and over get a $10 present. Whatever your family is comfortable spending. The less kids obviously the more you can probably budget for.
Buy second hand – Your 3 year old looks deep into your eyes and tells you that he knows Santa will bring him that remote control ride on Mercedes you saw at Myer for $700? You really wanna make his Christmas dreams come true…. but $700?? Look at online second hand sites, your 3 year old is not going to pull you up and say hey – this Merc has some obvious wear and tear happening, is this second hand?? Sites like Gumtree, Ebay and there are heaps of local face book sale sites that will no doubt have what your looking for. And don’t be afraid to ask to inspect the item before buying – you don’t want to end up with a lemon!
Order Online – Have you seen an incredible kitchen gizmo that would be perfect for Aunty Peggy at the fancy kitchen shop in the Plaza? Well Google that gizmo and I guarantee you’ll find it online for a fraction of the cost. Keep in mind that some of these sites can take up to 2 months to deliver so make sure you check out the delivery date and add an extra week just to be sure.
Save Throughout the Year – You know that this shopping blow out is coming every single year, you should try and figure out your average festive spend, divide it by however may pay cycles you have throughout the year and put that amount aside into a Christmas Budget Fund (much like a holiday fund). This will make the financial pressure A LOT easier come Santa list time.
Get Creative – Really doing it hard financially? Give the gift of time. Do up some vouchers. Give a 3 hour babysitting voucher to your cousin who you know hasn’t left the house in 6 months. A lawn mowing or garden clean up voucher to Uncle Frank who busted his hip this year and cant get around the garden like he used to. Think about what you can do for people that they would really appreciate and that is not going to cost you anything but your time. Trust me – these gifts will be just as well received as a gold watch.
Be Sensible With Credit – Before you begin spending up large, it’s a good idea to review your credit card. Australians average credit card debt currently stands at around $4,300 per cardholder, with an annual interest bill of $700 – if the interest rate is between 15% to 20%. So the interest alone could undo all your awesome bargain hunting and leave you worse off than paying cash at a higher price. So if you plan to give your credit card a workout this Christmas consider shopping around for a good deal, not on gifts but on the actual credit card itself. Many credit card companies offer an interest free term and if you can pay the amount off in the set time you could save yourself heaps.
There are hundreds of other great ways to create and stick to a sensible Christmas Budget but if we don’t wrap this up soon there’ll be no time for shopping!
If you have any Christmas Budget tips, gift giving ideas, cost cutting ways, or any Christmas hacks we would LOVE to hear them! Please comment below so we can see what other great ideas are out there!
Step 1: Figure out how much you actually earn in your hand
We all know how much we are on, but once you take out tax and superannuation, the end figure can look quite different to what you might have thought. You may also need to consider other sources of income like interest on savings or selling old items on ebay.
Step 2: Collect all your financial In and Outgoings
Find and print out your latest banking and financial statements as well as recent bills, invoices and receipts. It may take a while to find everything but its better having the actual figure in front of you rather than estimating costs.
Step 3: Add it all up
Now it’s time to see what you actually end up with each month. Subtract the average amount you spend from your income in hand. This is the number that you’re hoping to improve so if it’s a bit less than you thought don’t worry – it’s only going to get better.
Step 4: See where you can start cutting back
This is the not so fun part. Break down your expenses into fixed and variable. Fixed are those such as mortgage or rent payments which are the same each week and can not be altered, whereas variable may be things like groceries and clothes.
From the variable list, consider areas where you could cut back – even just cutting back on that extra glass of wine can add up over a year. You need your budget to be achievable and you still want to be able to enjoy yourself so don’t be too harsh or set un achievable goals.
Step 5: Set yourself some saving goals
Look at your list of variable expenses, underneath each item set yourself an achievable goal on how much you think you should spend on that particular item. Do this for each item on your variables list. If you add up the savings you’ll make with these new goals, you can estimate how much you will be able to save given your total in hand income.
Step 6: Make a plan
Now that you have an idea of how much you can realistically save each month, create yourself a savings plan. What is the overall goal you would like to achieve and how long is it going to take you? Use this Savings Calculator and you can work out how long it will take you to reach your goal with your estimated savings.
Step 7: Make sure you track your progress
Once you’ve started on your savings plan, monitor how well you’re tracking against the budget you previously set. Look at how close your spending is to your estimates. If the figures aren’t going the way you’d hoped – don’t be too disappointed – factors change, life changes and budgets can take a bit of trial and error. Revise your budget and change areas and or amounts where you had cut back so it’s more realistic and achievable.
Once you’ve got your savings under control – give Chris a call on 0434 449 455
and he’ll show you how to invest it!!
This year’s budget focused on small business, jobs and families with the goals of restoring confidence in the economy. Below is a breakdown and brief explanation of the key announcements and what they mean for you, your business and your family…..
Changes for small business
The Small Business Package has been introduced and the following changes will commence on July 1st of this year
- Small companies will have their tax rate lowered by 1.5% if their turnover is less than $2m per annum
- Unincorporated businesses will receive a tax discount of 5% – up to $1000 per annum
- From 7.30pm May 12th until June 30th 2017 small business can claim an immediate tax deduction (depreciation) for ANY item purchased up to $20,000 (previously $1000)
- Small Business will now be exempt from Capital Gains Tax if the company benefits from changing its business structure
- The three year holding period on employee share allocations can now be waived by the commissioner of Taxation if there are circumstances out of the employees control that require them to sell their shares
- Now ALL business related portable electronics are fringe benefits tax free instead of just one
- A more streamlined business registration process which should make it easier to start a new business
- Immediate claim on set up costs including legal and accounting services for new business
Changes for families
- Access to government funded paid parental leave will be limited to those who do not receive paid parental leave from their employer. If the employers entitlements are less than the government scheme the government will top it up to be the same
- New Child Care Subsidy – this will replace the current Child Care Benefit, The Child Care Rebate and The Jobs, Education & Training Child Care Fee Assistance
- Children must meet immunisation requirement to be eligible for the child care subsidy
- An 85% subsidy of child care fees for families earning under $65,000
- Subsidies will be paid directly to child care facilities
- Families earning over $185,000 will have an annual cap of $10,000 on the amount of assistance per child per year
- A 2 year nanny trial will commence January 1st This will provide a subsidy to eligible families designed to help shift workers and similar with child care expenses
- Extra assistance for families experiencing hardship and ‘vulnerable children’
Changes for pensioners
- For single home owners the value of assets you can have in addition to your home will increase from $202,000 – $250,000 to qualify for the full pension
- Couples who have additional assets less than $451,500 and own their own home will get a higher pension
- For couples that are home owners the value of assets you can have will increase from $286,500 to $375,000 to qualify for the full pension
- People who enter and aged care facility will have any rental income gained from renting their former home included in their means test
- All pensioners that are negatively affected by the scaling back of the maximum assets threshold will be guaranteed eligibility for the Commonwealth Seniors Health Card (CSHC) which provides amongst other things concessions on prescription medicines
Changes for youth
- There will be a 4 week waiting period for under 25 year olds to receive any unemployment benefits, this is in place of the proposed government measure to make young unemployed people wait 6 months
- Improvement to the national work experience program
- Funding in high youth unemployment areas for a youth transition to work program
- Plans to amend regulations to allow terminally ill people to access their super 12 months earlier than is currently set
- National Security will get $1.2b in funding
- ‘Netflix Tax’ a 10% GST on internet downloads to attempt to gain more tax from multinational companies proving downloadable music, movies and books