4 cents/litre or 8 cents/litre?

In Australia, some of the supermarkets gives a fuel voucher for a discount of $0.04 per litre at its affiliated service station. The two major affiliations are Coles with Shell and Safeway with Caltex. As our car has a tank capacity of 159 litres, we usually try use these vouchers as much as possible. To get the discount voucher, your grocery bill needs to be $30 or more for a single transaction. (I have seen shoppers separating their grocery purchases so that they can get more than one discount vouchers!)

I have always wondered if these vouchers actually save you any money?

Last night, I was filling up my 4wd at the local petrol station. This time, we haven't filled it for a couple of weeks and the tank is running quite low. With the price of diesel at about $1.24 per litre, it would cost $197.16 to fill the tank right up.

However, with the discount vouchers, there are several conditions.

1. A single transaction can only be use for 150 litres of fuel.
2. The voucher has a validity period, usually 1 month.

So with a saving of $0.04 per litre, the maximum discount I can get is $6..00, due to the 150 litres limit. What makes this discount rather unbearable is that the saving is not dependent upon the fuel price, so the higher the fuel price, the smaller percentage saving you will get.

So as I was filling up my 4wd last night, I noticed a sign at the bowser saying that if I spent $5 in -store, I get a further $0.04 per litre discount. This gives me a total discount of $0.08 per litre.

Working through the maths,

Maximum saving is 0.08 * 150 = $12.00
Purchase to get extra $0.04 discount = $5.00
Effective saving is 12.00 - 5 = $7.00

This is good news as it would be worthwhile for me to spend the extra $5 in-store to effectively gain an extra $1.00 saving.

However, if I spend more than $6.00 in-store, it would be better if I just stay at a discount rate of $0.04 per litre as my saving would start to diminished.

So I guess that next time I rush in-store and purchased a chocolate bar and a bottle of soft-drink for the extra discount, I need to be careful not to spend more than $6.00.

Around the net, I found the following resources for saving fuel on cars.

• JD at Get Rich Slowly gives his 23 top tips on better gas mileage.
• ethoskiwi has a blog at Increasing Fuel Economy telling us how to do it.
• Some Fuel Saving Tips from Pierre Ford. This is interesting as Pierre Ford is a car dealership the Ford Motor Company based in Seattle, WA.

Carnival of personal finance #102 - The musical edition

Ben over at Money Smart Life has just hosted the musical money carnival of personal finance #102.

Some of the articles that caught my eye were:

1. “Take a little trip, Take a little trip… Low rider don’t use no gas now”. My Own Millions presents 11 Ways to Save Gas and Robert gives us One Road to Lower Gas Prices.
2. -“Don’t look now, There’s a monkey on your back! Why can’t you set your monkey free?” HOWTO: Tackle Your Debt in Five Simple Step.
3. -Blunt Money presents Automating Your Finances.
   

My small article on making it happen is also part of the carnival (Shameless plug).

There are many great articles among these lots, so head over to Money Smart Life and have a read. You never know what you might find.

Cut out flash cards

Just a quick post on a great idea my wife came up with.

My dear wife came home from her mum's group and told me about their discussion about the price of toys. She wanted to start our son on his path of learning. They idea they came up with was to cut pictures out of catalogues and laminate them. My wifes uses a very thin laminating material call "Contact".

The cut outs can be used as flash cards to teach our son about everyday living around the home, like fruits, kitchen items and house hold furniture.

I thought what a great idea!

It certainly would save a few dollars. The flash cards we saw at the shops were about $10 per pack. I reckon you would be hard to break the dollar with what my wife is doing.

Making it happen, part II

A couple of posts ago, I wrote about making it happen as a way of keeping things in focus and an in right perspective. I have just read a nice article by Stephanie at Poorer Than You. It is written from a different perspective by attempting to write a final article about personal finance. She said that to reach the end, a start needs to be made.

Stephanie said that

"none of that really matters, if you never actually start."

I think that really sums it up.

$20K at 0% for 9 Months

Who would have thought that it would be that difficult to close down a credit card account, it took me three attempts to close down one of my credit cards today.

When I was young and stupid, I applied for a credit card from Citibank. Over the years, with automatic credit limit increase and prestige level promotion, I have reached a credit limit of more than $20K with a Platinum level credit card.

Again, when I was young and stupid, I was quite amaze as to how fast I was able to go from a person with no history with the bank to someone carrying a Platinum credit card.

Don't get me wrong, the card gave me some really nice perks when we were stationed Singapore. Imagine, getting a 60% discount at the restaurant just because we are paying with a Citibank Platinum credit card. It was only for a bill for about $50, but a discount is a discount.

Now that we don't use it as much and the perks aren't as good in Australia as they are in Asia, we want to cancel it. Furthermore, the annual fee for it is $245 and the interest rate is around the 18%. Not too appealing.

When I tried to cancel it, they started to put a dangle a few carrots in front of me. In my situation, I was not able to take advantage of the offers. Some of the offers were

1. Balance transfer to the Platinum card for 6 mths at 4.9%. This is not such a bad deal, it is certainly similar to many of the balance tranfer deals that the other banks are doing. However, we don't really have that much owing with our other credit cards, so it doesn't make that much difference.
2. Balance transfer to Platinum card for 9 mths at 0%. This is getting better. It was nine months because I have already pay the annual fee earlier and it had nine months left. Again, as we don't have much owing with our credit cards, it was not worth while.
3. A bank cheque for $20K at 0% for 9 mths. I was amaze at this offer. But at this stage, we really need to get rid of this card as it will restrict us on how much we can borrow for the next house. So we decline this offer.
   

After I hung up the phone, if we weren't going to buy a new house, I would have try to use that $20K in several ways. The most obvious thought is to put into a high bearing interest bank account like the Bankwest TeleNet Account or an ING Saving Maximiser. At $20K, the interest would have been reasonable. We would just withdraw the minimum repayment amount from the internet bank account.

I wonder what else you could do with that money at low risk, what do you think?

Our house is sold!

Our house has been on the market for only four days, and guess what, the house is sold! As usual, their initial offer was way out in the "no way, get outta of here" regions but with some skilled negotiations from our agent. It reached the priced that we wanted.

As I posted earlier, choosing the right agent is crucial in selling your house. I mean, the whole thing is far from being finished. We have to wait for sometime so that can be settled and all the conditions are met. The purchaser has requested for the usual building and pest inspection, and also subjected to their finance being approved.

Even at this stage, I was thinking if there is way of saving money. This are the ways that we are saving at this process.

1. Sell the house as they have inspected it. Avoid having to do anymore to do the house as part of the sale. When the purchase initially made an offer on the house, they want a couple of things repaired as part of the offer. We told them, no way. The house is on the market as he has inspected it. We have done our research and believe that the price that we are asking for is appropriate for the condition of the house.
2. Arrange for as short settlement period as possible. The longer the setttlement period, the more mortgage that you will have to pay. IE: if the settlement period is 6o days, then, you will still have to be prepared for 3 monthly mortgage payments. The shorter the settlement period, the quicker you will get the money in you bank account and working for you.
3. Get the agent the release the deposit ASAP. The deposit that the purchaser has left on the property belongs to you. So ask for its release from the agent as soon as possible. In the past, I have been under the impression that the deposit is released to you at settlement, but it can be released to you much sooner.

We start looking for the new house...hmm that is a whole new ball game.

Making it happen

As I was reading the other personal finance blogs, I was thinking that there are absolutely millions of advice on how to be frugal, save money, generate wealth etc, etc, but how many of you actually take the advice on board and act upon it.

I mean, all the these financial advices are good to read about, and perhaps it may have even caused us to think a little bit about it but unless we act upon it, we might just as well have listened to the opera. The net effect on our finance would be the same, zilch!

I have come up with some points that will get us going and start down the path to saving some money. Let me know if you agree with me.

1. Make a start. This is by far the most important step to take. No matter how small of a step you take, it is still in the correct direction, and is certainly better than taking no step at all.
   
2. Have realistic goals. It is much easier to achieve realistic goals that will benefit you than having a set of unrealistic goals that will only be a waste of your precious time and resource. Achieving these realistic goals will create financial inertia and confidence to tackle larger and more complex goals.
3. Get the right tools. A carpenter would certainly not use his hands to bang in a nail as it is not the right tool for the job. This is the same for making it happen. There are many great tools on net to help you along. GTD among of the tools that will help you along. Check out some of the list at the end of post. Your tools could be as low tech as a notepad and a pen. Just list the things you to do, and tick them off as complete each one.
4. Set aside some time to actually do it. There are many times that things just doesn't done because we don't have the time. Well, bite the bullet and make some time to complete these tasks. Focus on the fact that completing the task will be a step to having a better life in the long run.
   

List of GTD resources

• If you use gmail and firefox, gtdinbox is a great tool.
• the folks at Zen Habits has a massive list of gtd resources.
  

Good luck!

Freecycle it.

Nothing is better than free, except maybe, free with no strings attached. Many, many free things are offered to you except you have to give something back, especially on the net. Who remembers the free ipod give away.

I came across freecycle on the net the other day, and took a look. It is actually quite an innovative system where it uses the internet infrastructure to spread the word around, sort of like a community bulletin board.

freecycle would not really work unless there is a local chapter in your area, so I searched for one in my area. Not only have I found one, but two. There is one for Frankston, which is a really localise version of it, but there is also one for Melbourne. A list of other freecycle chapters are also shown on the Australian site.

Interestingly, the Melbourne chapter is the second largest chapter outside of the North America. Only London is bigger.

The one golden rule for freecyclers is that "We don't allow any trades, and no money can change hands".

One good tip is that freecycle is a a good source of free household items for when you first moved out of home. For the young ones who have just left home to begin their big life adventure, freecycle is a great source for things like cutlery, pre-loved sofa, kitchen tables and clothes.

The house is on the market

My wife just rang me to say that the "For Sale" sign is on the fence and is there for all the see and admire. Hell, that means that our house is really on the market.

Before the sign went up, we were negotiating with our chosen real estate agent what commission they will be getting for the sale of the house. This is an interesting aspect of the house selling process and could make quite a different to the money that goes into your bank account.

Some of the ideas are:

1. Offer the agent a commission only sale. This means that all you would pay the agent is the commission. You don't pay for any advertising or the preparation of conveyancing or any other cost associated with the sale.
2. Offer the agent a structured commission. Say you are wish to sell the house for $250K, but would be happy if the agent manage to sell it for $225K. Offer the agent the full commission if it is sold at $250K, a smaller commission for less than $250K, and even smaller for $225K or lower. This would give the agent an incentive to try harder for your price.
   
3. Negotiate with the agent for a non-exclusive contact. Most agents will want you to exclusively market your property through them. If you are able to advertise the property with the other agencies, the size of your potential buyers would increase. I feel that this idea may not bear much fruit as most astute buyers would try to look at properties from many different agencies, but may be a strategy worth trying if there are a lot real estate agencies in your area.
4. Get the agent to pay for the GST. The commission quoted usually does not include the GST, so be very careful on the figure quoted as the GST could end up coming out of your pocket.
   

My other posts on house selling are here.

I have found the following around the net on this topic.

1. In Queensland, it seems that the real estate commission is regulated. Check it out at the REIQ.
2. An interesting article for agents on how to handle a commission discounting exercise by the vendors.
   

HELP is on its way.

OK, you have just graduated from University after four hard years! What do you get at the end of it? Unless you are very lucky, as well as a degree, you will accumulate quite a large debt, courtesy of the Australian Government.

This is now known as Higher Education Loan Programme (HELP). When I graduated from RMIT, it was known as Higher Education Contribution Scheme (HECS). I guess many of today's graduates are in no doubt that the money is a loan and is to be repaid!

When I graduated from RMIT, I was lucky and HECS only kicked in at the second of my four year engineering degree. So I only had 3 years worth of HECS fees to repay. In those days, my debt was in the region of $7,500, which is quite a sizable chunk of money. These days, I have heard of a HELP debt of $20,000 or more for an engineering course.

So what can you do to reduce that debt. Here are some tips.

1. Repay some of the debt on a voluntary basis. The ATO has a good explanation. Essentially, you get a 10% discount of the repayment that you made. So the more you repay, the bigger the discount.
2. Get your employee to contribute to the debt. If you are an excellent graduate and many companies are chasing after your skills, you may be able to negotiate it as part of your salary package, such as salary sacrificing. The ATO also has a note on this. Salary sacrificing also reduces your taxable income.
   
3. Pay it off as fast as possible. Your HELP debt will be subject to CPI, so every year of outstanding debt, it will increased according to inflation. For the year 2007, it was indexed by 3.4%.

The ATO has also many other advice in regards to HELP. Check it out here.

However, if you study hard and start your career with a solid groundings, that is what you should be aiming for. Repaying the debt will be well within your reach.

Around the net, I also found some other items that may help you save some money as well.

• How to save money while in college - This has a on-link to 118 Ways to Save Money in College. As some of the comments, some of these tips are rather suspect.
  
• Uni of QLD has a few tips.

Mother's Day 2007

Mother's day just came and went. Well, this is the second time I celebrated three mother's at once. My beautiful wife, my lovely mum and my dear mother-in-law.

If you are thinking of ways of saving for your mother's day, one phrase, DON'T EVEN THINK ABOUT IT! Your mum is the reason why you are here, she gave birth to you, look after you when you are at your most vulnerable and she loves you unconditionally.

Once again, give your mum all the love you can ever give. They are the best!

Cooking for the kids

Our son is growing like a mushroom, he just had his 18 month regular health checkup. The maternal nurse measured his height, check it against the curve. Guess what, our son's height is that of a 30 month old toddler! I am guessing that the food we are feeding him is OK!

My wife and I tend to cook him food rather than purchase specially made baby food from the supermarket, the ones that usually comes in a small jar container. We do it for a few of reasons, mainly we believe that it is healthier for him and for our hip-pocket.

One of our son's favourite and simplest recipe is fruit salad. This is simple, quick and very healthy to do. Not too mention a lot cheaper than the jar variety, especially if you compare it by weight.

Our fruit salad always consist of banana, catalope, watermelon and yoghurt. We also make sure that the pieces are cut up to size for his little fingers. He usually has this for breakfast.

I also came across this great blog at minti.com with many, many nice recipes from mums around the world.

So from a money saving perspective, why would you want to cook your baby's meal?

1. Share the cost. By using the same ingredients from your meals to cooking your baby's meal, you are essentially sharing the cost of feeding the family with all of the family members. Typically, the baby will only use a small portion of the ingredients. When the baby is able to eat the same food as you, the cost of feeding your baby will probably fall further. That is until the baby becomes a kid and eats like a horse!
2. Cheaper. Do the comparison between a cook meal and a jar food on the basis of its weight, you will probably find that the cook meal is cheaper, probably by more than 50%.
3. Cook meal are healthier. Healthier baby means that there is less chance of the baby becoming sick, much less trips to the doctors and fewer medical bills!

Here are a few links for baby recipes

• Kidspot recipe finder
• Adventures in Baby Food
  
• Porridge recipes from Shannon Chong - baby loves porridge, especially rice porridge.

Staying outta town

The year's easter time came and went. As we are preparing to sell our house, it came as quite a relief to be able to take a few days off and enjoy some relaxation in the country. The family and I headed up to the spa country in the Victoria hills.

The spa area centres around Daylesford and Hepburn Springs. Being the busy season of Easter, my wife rang around and found that accommodation is hard to get and is also very expensive. We got quoted $140 per night for a 3 star hotel!

We try a different strategy and found a very nice hotel just outside of Daylesford in a small town of Bullarto. Bullarto is about 5 mins east of Daylesford. Its population feels like less than 10 people.

We stayed at the Pine Cone Motel. The service was wonderful, and the rates were very reasonable. It was at about 60% of rates of the hotels in Daylesford.

Staying just outside of towns has a few other benefits. Here are my top 5.

1. The rates are significant cheaper than the hotels in town. We have see up to 30% difference in the pricing.
   
2. The atmosphere is usually more relaxing and peaceful. In town, we have to put up with the crowds and the busy cafes, especially in a busy holiday period like easter and in a popular town like Daylesford.
3. Your neighbours are usually friendlier. From our experience, people that stay out in outta town motels like the Pine Cone Motel tends to be a lot friendlier. Remember that they also want the peace and the relaxation that you are seeking by staying at the outta town motel.
4. The children usually has big open space to explore. In outta town hotels, they are usually on larger properties with plenty of grass and perhaps some animals on it as well. The kids will love the open space and the animals.
5. Improve the economy in the smaller town. The smaller town usually misses out on the economy generated by the combination of a popular period and a popular destination. By improving the economy in a small town like Bullarto, you are giving it an economic reason for it to be around the next time you are seeking to get away.

Pine Cone Motel is definitely a motel that I would recommend to anyone, they also have a room with a full kitchen. Extremely handy for a family on holiday.

Money Magazine, May07 edition

The money magazine is always a good source of ideas for saving money. Having just received the May07 issue, I quickly browsed through it. This month, the reader's tips theme is "saving on the cost of kids".

Unfortunately, the closest I found to a link to these tips is here, but it is basically a reprint of the table of contents of the magazine. So to spread the ideas around, I have picked the top 5 ideas that the readers have submitted.

1. Teach the kids about money - they should know about savings and buying their own things from a very young age.
   
2. Set up an account for your child from day one. For $10 deposit a week you can present your child with almost $10,000 on their 18th birthday.
3. Most museums are free or don't cost much. Libraries have many great activities such as craft and story time.
   
4. Visit a Lifeline Book Fair to buy books - they are usually held twice a year in each capital city. The books can be as cheap as 50c and you are helping out those in need.
5. Check the lost property boxes at school. It's amazing how often things are lost at school.
   

Thanks for Lynda (QLD), Kelly (NSW), Kimberly (email), Samantha (ACT) and Annette (QLD) for submitting those tips to the Money Magazine.

By the way, if you buy the Money magazine, be sure to save receipts as its purchase may be tax deductible.