short break

If you have been a regular reader/follower of my blog you would have noticed that I haven’t written one for a while now.

The reason for it is that I have decided to take a short break – writing new blogs each week is hard work, especially when my topics on “finances” are not that exciting and I found myself repeating the same message in number of them. I mean, in how many different ways can I explain that overspending is bad for you?!??

So, as Christmas is now fast approaching and most people usually stop thinking about finances but more about their holiday season, which will inflict more pain on their finances I have decided to also take a short break.

Merry Christmas to all and a Happy New Year..I can’s wait for the new year to come because our little angel Alfie will turn 1 in January and hopefully he wills start walking and running – I need to get as much exercise as I can by chasing him. 

Keep an eye on my blog in the new year……..

end of my general insurance

This week I made an important change to my business. As most of you would know my business has been providing accounting, financial planning and general insurance services.

Unfortunately, over the years my workload has dramatically increased due to many changes brought about by the Government in the area of “compliance and training”. This has made it harder for me to try and keep up with the extra training required for each of the three (3) separate licenses.

As a consequence of this I have decided to let go of the “general insurnace business”.

From 1^st October 2012 this business will be transferred to the insurance agency Victorian Insurance Solutions, which is run by couple of experienced insurance agents Carmine Miranda and Nick O’Regan, whom I have known for over 20 years. I am confident they will continue to deliver your general insurance needs in a timely and professional manner.

I take this opportunity to thank all of you that have purchased your general insurance policies form my agency.

IMPORTANT! Please note that this does NOT mean I am retiring – it simply means that in a way I was forced to come to this decision so I can have more time to focus on my accounting and financial planning. I do plan to hang around for many years to come.

Feel free to contact me if you have any questions.

positive life

Last night I was watching the news regarding the funeral of the young Port Adelaide footballer that died in Las Vegas. What a tragic loss of a young person’s life and the sadness it has left behind for his family. And to see his mother’s courage to stand up and talk about her son in such a positive light.

It got me thinking how at funerals we always hear of the positive things that people done, their sense of humour and the many good things they have done.

Have you ever thought about what will be said at your own funeral? Have you done enough good things? have you been funny enough and brave enough during your life?

May be its time we all start doing only positive things in life because after all this is what we all want to be remembered for……….

FixMyBudget

In the line of work that I do, everyday I meet people, be it new clients or existing ones, that for some reason just don’t get it……..they don’t seem to understand that:

YOU CAN NOT LIVE ON CREDIT CARDS!

Just for the record: Credit cards were designed to buy things without using cash. That’s all!  There are no other reasons. I will repeat this: Credit cards were designed to buy things without using cash. There are no other reasons. And yet for some “unexplainable” reason it has become a “financial tool” where people use it to:

• purchase more than they can afford
• delay debts
• (think they can) manipulate the system

Wrong! If you are not managing your credit cards properly then all it will do is help you accumulate debts that over time will bring you down. Make no mistake about this - debts do catch up with people. Just look at how many people are declared bankrupt or lose it all – and most of them start with a small credit card debt.

 IF ARE NOT PAYING OFF THE FULL BALANCE OF YOUR CREDIT CARD BY THE DUE DATE then you need help. BUT HOW DO YOU TEACH PEOPLE “THAT DON’T KNOW WHAT THEY DON’T KNOW”?

 Easy…..I have designed a new FixMYBudget training program that will help you get on top of things. It is an easy “step by step” program that will get you back on track.

Do you think you need help? Feel free to ask for help and my advice…….

answers to last week's blog

OK, its time for the answers to be revealed. If you got them all correct – then well done, you! If you got (even) one wrong then you failed.

 QUESTION 1

If you were offered cash – which option would you pick?

1. $500,000 or
2. $1 doubled 20 times (consecutively)
3. Depends on how much tax I will need to pay in each case
4. $1,000,000 on which you will need to pay tax at your marginal tax bracket.

 THE ANSWER: has to be B. I suspect you all should have got this one correct. For those that didn’t and you would like to know how to calculate it – this is what you do. Grab a calculator and press 1 X 2 then press X again and count ONCE. Then you press 2 then X and count TWICE and so on until you have counted TWENTY – the amount you should see on your calculator is 1,048,576.

QUESTION 2

Assume your tax bracket is in the 30% bracket and you have claimed $1,000 as a tax deduction. How much will this benefit you?

1. Full $1,000 because it 100% tax deductible
2. $300 because it is your tax margin
3. $315 you need to add the Medicare Levy
4. None really because I’ve already spent the $1,000 so how would I benefit anything?

THE ANSWER: option B, although option D is just as good in my books. I am surprised how many people would spend the money for that elusive tax deduction not realizing that tax deductions do not benefit you 100%.

QUESTION 3

Which one of the following is a greater benefit to you?

1. tax deduction of $1,000 or
2. tax rebate of $1,000

THE ANSWER: option B. This is because a tax deduction reduces your tax payable whereas a tax rebate directly reduces the amount of tax you pay.

Feel free to send me a feedback on whether you are enjoying my blog.

hot seat

This week’s blog will be based on the TV show “Hot Seat”. I will be Robert McGuire and you will be the contestant. Now remember! – it is the “Hot Seat” not “Who Wants to be a Millionaire” because you will not be able to call a friend – you will only have 20 seconds to pick the answer. Read the questions, think about the answers and pick the one that you think is correct. So, are you ready? Close the door, settle down, concentrate and let’s go:

QUESTION 1

If you were offered cash – which option would you pick?

1. $500,000 or
2. $1 doubled 20 times (consecutively)
3. Depends on how much tax I will need to pay in each case
4. $1,000,000 on which you will need to pay tax at your marginal tax bracket.

 THE ANSWER: next week

QUESTION 2

Assume your tax bracket is in the 30% bracket and you have claimed $1,000 as a tax deduction. How much will this benefit you?

1. Full $1,000 because it 100% tax deductible
2. $300 because it is your tax margin
3. $315 you need to add the Medicare Levy
4. None really because I’ve already spent the $1,000 so how would I benefit anything?

 THE ANSWER: next week

QUESTION 3

Which one of the following is a greater benefit to you?

1. tax deduction of $1,000 or
2. tax rebate of $1,000

 THE ANSWER: next week

Just tell me to “LOCK IT IN ROBERT”

children accounts

As a parent (and a financial planner) I always encourage parents of young children to think about setting up investments for them because I know (from experience) how important it is to have funds put aside for their education or even giving them a little start in life when they turn say 21. All three of my children benefited from the savings plans that I had set up when they were young. If I could turn the clock back I probably would have put aside even more but hindsight is a beautiful thing. 

If you have set up an account or you are planning to set up a fund for the kids it is important that you are aware of the tax implications because special “higher” rates apply to incomes for minors, known as “children’s tax”. If the income earned by minors is caught under the “children’s tax” that it can be a very expensive exercise – here are the rates:

Up to $416                         nil tax

$415 - $1,307                      66%

$1,307 onwards                45% of the total amount of income

The ides behind the “children’s tax” is to discourage parents from transferring funds into children’s accounts to simply reduce their own tax bill. Technically, setting up children’s bank account should not be done to avoid tax.

Children bank accounts generally are opened in the parents name with the child’s name added to the bank account or the parent may open the bank account in trust for the child. In either case the funds are seen to be owned by the parent and the interest must be declared in that parent’s tax return.

The rule therefore is: because the parent owns the money – the parent must include the interest in their income tax return.

If you have already set up “children’s accounts” and you are not sure or concerned with how it will affect your tax position – feel free to call me or email me.