Managing money to make life easier

[Clues_Of_Blue]

One of the big things that causes stress and sure kicks you about when you already have mental illness to play with is money. Whether you're in debt, just scraping by, or feel like you're working to much to maintain a lifestyle. Here is a place to talk about how to make your dollars go a bit further and take off some financial pressure.

I'll start with some basic pointers:

- Plan a little with food. Make work lunches, decide on meals for the week and stick to your shopping list. If you shop a bit later you're also likely to get a lot of fresh produce at a discount.

- Check regularly (every six months or so) on your utilities. Often there is a better plan out there to switch to. As customers, loyalty to a company usually just gets us a quietly growing bill instead of discounts or rewards. Vote with your feet.

- Same with your home loan, you can refinance to one with a better interest rate, just watch out for exit fees (and LMI if you still owe more than 80% of the house value)

If you have any tips or questions, feel free to share or ask.

[ecomama]

Hey Blue

Yep over here in our other loungeroom to discuss some financial stuff going on.

I've pretty much made up my mind but it's still causing me TONS of anxiety, mainly because it's all on me to make these decisions AND will all fall on me to do the vast majority of the work.

SO I spoke to a new Home Loan company 2 days ago. My current interest is 3.08% and this new company offers 1.85% fixed for the first 24 months and 2.something after that on variable. Big difference.
Even without all that, a major diff is that my current loan entails a $395 / year package fee which none of those costs are charged with the other firm (NOT a Bank).
So even if I changed over to them with no % diff, the savings are around $7k - $10k just not paying the $395 for the life of the loan.

It'll cost me $1000 to change over but this is saved in the first 3 months of the new loan.

Now for the BIG decision.... they offered to ADD $25K in a separate loan (for ease of Taxation) to begin and greatly help boost the building of my cabin.

I freaked.

Just freaked lol.

I only have a tiny window of time opportunity because of my age to do this.
My last Bank said they'd never loan me another cent because of my age. Btw they mean, I'm too old lol.

Basically even WITH the extra $25k added on, I'm still paying LESS than I pay now BUT the clincher is that I have a 20y loan (currently I have 17y left but no cabin in sight - which is the downer).

So the new home loan co. is calling back tomorrow to answer any more questions.
I have ONE question which is, "Is the $25k geared like a 'new build' loan and I only pay interest on what I USE over time?"
Do you have any?

All my kids say it's a no brainer. It's time to DO IT as we all know (me included) that I'd always regret NOT doing it later.

Rents on any housing here is at record highs. A vague rent per week is stated and an Auction war begins outside now. Also I'd allow a dog or 2 just because there'll be lots of yard space and I think it's awful that people can't have their dogs with them to rent, I can charge more.

I need to speak with a Real Estate Agent I know so he or the property manager can talk me through costs for managing the property - I refuse to do that alone. I need a third party, it's a Tax Deduction anyhow.

I'm so nervous, what do you think?
Yes $25k won't cover it BUT it will boost the build HEAPS.

Thankyou!

Love EMxxxx

[Clues_Of_Blue]

Hey EM,

I understand your anxiety, and I know what you mean about being the one making decisions and doing the greater part of the work. That was me with the refinance of my place. LM has taken the reins re solar finance and that has turned wonky. I wonder if it might have gone that way if I were the one doing it. I know he's doing his best, nevertheless, it hasn't done my credit history any favours. But that's another story and one I don't have the energy for today, I am smarting from the whole business.

Okay, the interest rate is a great improvement, no annual fee is a great improvement. The $1K to change over, no problem, as you've said, it will pay for itself. I see your concerns about the life of the loan being extended, but that doesn't have to be a problem. Given the factor of your age (heck, I'm only in my 40s and they were getting mouthy with me about my age), borrowing that money later could prove very difficult.

I'm not familiar with "new build" loans, but your question makes sense. Were they specific about how the $25 loan is structured, i.e. I would want to be sure they weren't going to get cute and class it as a personal loan with a different interest rate. If it's essentially part of the same loan, at the same rate, that's all fine and dandy. My main other question would be in regard to paying extra. I'm sure you know some banks penalise you for paying loans ahead, and knowing you, I imagine you would try to continue paying in what you're paying now to clear the debt faster, rather than sticking to minimum repayments. I'd be asking how much more can you pay in a year, and what sort of fee would they hit you with if you pay and discharge the loan early. Presumably still better than you'd be losing over the life of your current loan.

Good idea to involve a third party in property management, some good (tax deductible) advice never goes astray.

I wouldn't quite say it's a no brainer, but I would say that given you have an investment plan with very likely quite good returns, it's a very low risk and worthwhile investment to follow this up. In your place, I would go ahead. I understand the nervousness, though. It's scary, but assuming you do it, I know you're up to this. It would improve your position markedly.

Blue.

[ecomama]

Thankyou for responding so eloquently as usual Blues lol, you're a gem. xxxx

Aha, same questions as I had.
~ yes I can pay ahead, even in the first 24 months at the lower rate (which I won't be able to do if I'm building but yeah lol), can't remember if he said unlimited or up to $10k? I think he was criticising the $10k Bank rule but need to ask him that again, thanks!

~ for ONCE there's no penalty for completing loan early - it's an Australian Company based in Qld and he said they've taken all the Oz values into account as far as possible, so no costs and penalties that Banks enforce are there (they don't have to pay large rents for Office spaces and Branches and staff is at a minimum ie no Tellers, no Bank account but CAN BPay etc from it... weird but I could work it out),

~ The extra $25k he explained is a separate loan, in a sub-section of the loan, for purposes such as building a granny flat. Same interest, same conditions, something like a "split loan" for Taxation purposes.

You said: "I imagine you would try to continue paying in what you're paying now to clear the debt faster, rather than sticking to minimum repayments".... yes, later I intend on doing this, once I have income from the cabin. The $25k will not cover the build costs, so every cent will go into building it asap to get the income, THEN I aim to pay as much as possible into my own home's part of the loan (no point in paying down the cabin's loan for Taxation purposes lol).

I estimate it will take me minimum 2y to build. There's a LOT of stuff to do before even breaking ground.
I need to speak with my Accountant or my Book Keeper who works there, ask lots of questions about what I can claim and what I can't. eg "Can I claim removal of the dead trees to prepare for the build?" stuff like that.
Plus I have to complete an Owner Builder's Course, I hope to do this by end of the year if all proceeds.

I've decided to take a month or so before proceeding with the loan, just in case I think of any pitfalls.
Indeed I can't wait too long bec of my age.

Surprised I can borrow ANY money, as my own bank said 'never again'.
2 pay rises and 'losing' children as dependents bec of their age probably helped? Unsure.
Anyway nothing has been formally approved yet, so we'll see!

Shame about the panels for you guys. They're reducing what they pay us back all the time so you'd need to weigh up the cost benefits anyway now!
I have about 16 months left to pay on those. Hmmmm.

Love EMxxxx

[Clues_Of_Blue]

Hey EM,

You're welcome. 🙂

Up to $10K extra a year is fairly standard for most banks, I think. Couldn't hurt to clarify it though, I'm sure.

Nice, it's unusual not to be penalised for paying out a loan early. Easier for them to do without the overheads most banks have, as you mentioned.

Okay, glad that's been specified. Definitely easier for tax that way. Completely agree with you about paying any extra (when you can) onto your existing home not the investment. Definitely better for tax.

2 years is a while, but it's good to have a figure and steps laid out for what to do and what to learn next. I'd like to think removing dead trees on the build site will be covered as a tax deduction. Fingers crossed! How long (and for that matter how expensive) is the Owner Builder's Course? Definitely something you could claim on tax, I would say. I hope it doesn't add too much stress to an already pretty full-on schedule.

A month is a good grace period. Time to formulate any questions, do some research, but not so long things will fall through. As for what your bank said, the new one doesn't know that. They all have their own benchmarks - and certainly more pay and less dependents would work in your favour.

Yeah, I know rebates are reducing. The mess with the finance won't stop us going ahead, but it does mean paying up front instead of hanging onto some money as a buffer for other things going awry. Not happy about that, nor about the black mark on my credit history, but not paying a heap in bank fees or interest is a plus. Eff 'em. As I see it, even if it takes time for the panels to make back their up front worth, the value of ongoing decreased mandatory living expenses is paramount in my priorities. The less I pay for day-to-day living, the less I have to work. In that way, the money is well spent. Happy for you there's not a super long time left to finish paying off your solar panels.

Blue.

[ecomama]

Hey Blues, thanks for your support, I really appreciate your financial head involved lol.

Absolutely I see your point and have no idea why you'd now have a black mark on your Credit history!
Explain if you want but that's pretty bad.

I also agree about the whole point being to reduce actual LIVING expenses, those that just continue on and on (like electricity)... I get that. We can research, plan, act and keep trying I guess!

Well a huge thing happened with the loan co I was negotiating with.
Seems like it'll be a no goer bec of demon's actions.
I'll still follow through in my meagre moments of "spare time" to get my Credit report done.

Whether any other company will finance me is a total OTHER question.

Indeed the Owner Builder's Course IS a Tax Deduction 100%. Costs about $395 last look. This whole process keeps getting pushed back and that's ok. I can only do what I can do. I may not complete that this year, IDK.

I have so much info to gather. So many calls to make; my Accountant, the ATO, local Council plus lots more online research to do. I can't push myself too hard.

BUT GOOD NEWS. I had a very long and detailed talk with BF today. Basically yesterday he offered to put forward the $25k I wanted to borrow, towards the cabin build. I was taken aback, in shock I think, let it go yesterday.
Overnight I thought about it so brought it up with him today.

I've got lots of ideas of how to move forward in collaboration with BF. A dual spreadsheet so that we pay 50% costs each etc, no real clues on how we WILL move forward.
It's all strange to me tbh.

Basically he wants me to be happy. Knows this is important to us both financially to get it happening. Understands I'm in a pickle with finances to do it (ie I would have to do it VERY slowly alone). The money is just sitting in his bank account doing nothing he said. He already buys shares from his pay each fortnight, funds 2 Super funds.
So yeah. I'm still in a bit of shock over it.

I also still want to enjoy time with my kids and grandkids so tomorrow we're doing the Park thing - which is legal during lock down lol.

Love always
EMxxxx

[Clues_Of_Blue]

Hey EM,

No problem, always happy to discuss stuff.

I always figured any failed loan application was a black mark on one's credit history - it's certainly something that gets queried on any new loan application - I've not had one fail yet, but can't imagine it looking good if we refinance again any time soon. I did do some research and discovered failed loan applications don't affect credit score as badly as I thought - though any application does affect it. I'm still not bloody happy about it.

Yeah, it's the ongoing expenses I'm trying to cut down as much as humanly possible. Initial outlay, savings, etc. can get you out of trouble in the short term, but getting mandatory ongoing expenses minimised is going to do a lot more for long term financial security. Moreover, it will cut down further how much I have to work to maintain the same standard of living. The benefit is undeniable.

Ugh, what a mess. Have you got your credit report, to figure out what the heck happened? I'm sorry your efforts to improve things have been undermined yet again. Is it only borrowing extra that you're stuffed up on, or refinancing to a better interest rate, period? From what you've said re the cabin, the support from BF will in fact put you in a better position than borrowing extra at least, no bank fees or interest to cough up on top of the loan amount. I am in a similar situation with the solar - we can pull together the money, and save quite a bit from not going through a financial institution. I'm not nuts about having a much smaller financial buffer for emergencies because of it, though. Still, it doesn't completely wipe out our savings, it's more of an inconvenience than anything. I couldn't have said that about something like this 5 years ago.

The owner builder course doesn't sound too expensive, least of all as a full tax deduction.

Anyway, I'm really glad BF is supporting you like this, and you have lots of ideas. The research and planning stage is going to be a bit of work, but you're more than capable. I'm always happy to listen and offer my thoughts as needed.

Blue.