Do you know how much of your house you own?

House mortgage is one of bigger, if not the biggest, debts that most people get into. While reading the other blogs, I came across a chart at JosephSangl.com that shows how much of the house you own. Instead of a charting the amount left to be paid against time, an outline of your house is slowly filled in to indicate how much of it you own. As your payment gets better, the more of the house is filled it.

I am planning to do this as well, use green for bits of the house that we own and red for the house the bank owns.

It certainly put your house payments into perspective! Incredibly motivating.

LPG vs Petrol

We have chosen our new car, it is the Ford Territory. We test drive it the other day, and my wife loved it! I am unsure if the Ford Territory is sold in only in Australia, but basically it is based upon the Ford Falcon except it has a different body.

The Ford Territory can be fitted with a LPG option. With the current fuel pricing almost hitting the $1.50 per litre mark, having the car on LPG (at about $0.60 per litre) is certainly attractive. We considered it, but after closely looking the maths. It take a while to break even at the cost of it. Lets have a look at the maths.

1. The differential cost between the fuel and LPG is about $1 per litre.
2. The cost of the fitting the LPG option is about $3500 and $4800, excluding the government rebate.
3. The government rebate is $2000, which will being the cost to $1500 to $2800. We would qualify for a $2000, instead of a $1000, as this option is considered as an after market option as Ford does not recommend a LPG unit for the Ford Territory.
   
4. We will start to save money after we have used up 1500 litres and 2800 litres of LPG.
5. The Ford Territory has a fuel economy of about 12 litres / 100km. This works out to be a distance of about 12,500 kilometers or 23,0000 kilometers.
   

With the way, we drive our car, it will take about 2-3 years to reach that distance, which means that our savings does not really start until year 2009 at the earliest.

So we have made the decision to stay with petrol, and will revisit this option again later on.

SIDS and Kids VIC

A couple of blog post ago, I wrote about how SIDS and Kids VIC was promoting a discount coupons books run by the Citibook. Since then, I was contacted by Lisa Kennewell to highlight some inconsistency in my post. She indicated the following

1. The link to SIDS and Kids VIC was incorrectly pointed to the national group. The link to the Victorian group is here.
2. The link that I provided does not download a Citibook that would donate some money to SIDS and Kids VIC. The correct link is here. Citibook does not have any link to SIDS and Kids VIC version of their discount coupons. The link is to the SIDS and Kids VIC version of the Citibook is also available from this webpage as well.
   

By the way, it is very poor form of Citibook to enter into a promotion with SIDS and Kids VIC but don't do anything to promote it. You can't even find a link to it anywhere on Citibook's website! The only version of Citibook that it offers to download is GOLD104.3 version. I wonder if Citibook gets a bigger cut from this version?

I have also edited the inconsistency out of the blog.

Many thanks to Lisa Kennewell to pointing out the errors.

How we got a 32% discount on outdoor furniture!

We have an outdoor area just outside the back door which is disparately under utilised as it is quite bare without any outdoor furniture. So what do we do in this situation? We went shopping!

About half an hour drive away at Narre Warren, there is an large shopping area and includes many of the larger shops like Harvey Norman, BBQ Galores and Ray Tents city.

We finally arrived at one particular shop that specialise in outdoor furniture. We were looking for an aluminum framed furniture with cloth backed chairs. In one corner of the shop floor, we noticed a set for sale, it comes with six chairs and a glass table top. The whole ensemble fits our back area just right, and it is also on sale!

We started the bargaining process by asking if we are able to mix and match the table with a different set of chairs as we are not too keen on the standard chairs. Specifically, we pointed to set of wicker chairs that were also on sale.

The shop assistance went to the counter and came back with a price of $699 for the set. She told us that this is a special price to offload the last remaining stock of these items. We see this as an opportunity to reduce the price further. The RRP on these items were about $840. My wife and I had a chat about it, and asked if she could the deal at $600 as this was budget for the furniture. I was not too sure if she believed about the "budget" line, however after a few moments she relented but stated that this is a pick up price only. Sweet! We left a $100 holding deposit on the items and left the store extremely happy.

One week later, we received a phone call from the store manager saying that they could not find 2 of the 6 chairs that we ordered, and they will have to order it from their supplier if we still want to proceed with the order. Not wanting to let go of a good deal, I said yes. The store manager gave me a couple of choices.

1. pick the tables and the four chairs now, and return later for the other two chairs when they are available.
   
2. wait till the two chairs are available and pickup the all the items in one go.

I felt that there is an opportunity to get a bit more from the deal and suggest to the store manager that we will wait until the two chairs are available and that they throw in free delivery (a $45 cost) as this delay was caused by them. The store manager agreed after a few moments hesitation.

So far, we have gained a total of $295 or a discount of 33% on the package . That was a pretty good deal.

It gets better, the store manager rang my wife yesterday to inform us that they are not able to deliver the goods this week as their delivery truck is fully booked. I think this is their way of recuperating some cost. My wife stood her ground and told them they are not doing what they promise so they gave us a further $30 off the price. The cost of the outdoor furniture is now $570. At the end of the day, we prefer a further $30 discount instead of free delivery as we don't really pay for the delivery, but $30 is hard cash that doesn't get handed over.

So the final discount is a total of $270, or a discount of 32%. Still a pretty good discount.

citibook

Just a quick post to note that I came across citibook today. I read about it in the SIDS and Kids VIC newsletter.

It is essentially a website full of resuable discount coupons that you can print whenever you want. You can either browse through the affiliated business online or download the book which allows you to browse through it offline.

Citibook have two levels of discounts. The free discounts are usually between 5% to 50% off. The next level is the VIP discounts which will usually give your double amount discounts.

They appears to have a large range of businesses offering many discounts, from restaurants to car services.

By the way, if you are looking for a charity to support, consider the SIDS and kids VIC foundation.

Updated: Lisa Kennewell left a comment and posted the correct url that allow the downloading of the citibook that supports the SIDS and Kids VIC foundation. Link is found at http://www.sidsandkids.org/vic

Apologies to SIDS and Kids VIC foundation for not posting this link before.

What to do with $20K from a car trade-in?

We are currently revisiting the issued of getting a replacement car for our Toyota Prado. We have had it since 2001 and had traveled about 135,000 kilometers in it. For a 4WD, it has hardly reach middle age. What caused us to revisit it is the price of fuel and the maintenance cost of it. The car runs on diesel and it is currently approaching $1.50 per litre, plus the fuel economy on it is about 17litres per 100KM.

I had another chat with my HR manager about novated leasing and the following point was made.

The novated lease is only valid for the true value of the car, not the amount needed to change over the car.

In my situation, I will be looking to finance about $40K (value of the car) instead of $20K (change over cost of the cars). This will be OK if all you are considering is the out of pocket expenses at the time of purchase, but if you are looking at it over the term of the lease, it could make a major difference to your wallet.

So what are the options to help lessen the financial hit. I have only able to come up with two possible options.

1. With the $20K cash that we will get for the trade in, we could invest it a high interest bank account that pays monthly. The interest will offset the novated lease repayments. So if the novated leased is financed at 9% and the high interest bank account is at 6.75%, the net effect is the new car is being financed at 2.25%.
2. Take a overall perspective, and use the $20K cash to reduce the current mortgage, and any other high interest bearing debts like credit cards bills. This should cut a large chunk of interest off, especially the mortgage.

What would you do?

What cost should I be considering when selecting a school for my son?

In about two years time, my son will be just about at the right age to start his 12 or so years of formal education. First off, it will probably be kindergarten. Apart from the other non-financial factors such as should it be a single sex school, or what kind of curriculum does the school focus on, what financial costs I should be considering when selecting the school?
I have had a thought about this today and came up with a top three cost items that I should consider.

1. School Fees - The school fees has to be justifiable and suitable for the services that my child will be receiving from the school. One can make the assumption that the higher the cost, the better the quality for the education. However, that assumption could back fire if not enough research is performed.
2. Transport - If the school is not within a short drive away, the transport costs our son to and from school will be significant. If the long term plan is for my son to attended the same school for the whole 12 years, it could be very significant if the only transport option is car. As my son gets older, an expectation would be that he makes his own way to school when it is possible.
3. Clothing - Some schools will demand school uniforms. School uniform is more than just what is being worn to school, there is also a set for summer and a different set for winter. Physical education uniform will also be different as well. This will need to be considered if the uniforms are specific for the schools. If the school only something like a white shirt and dark pants without any logos, than that should be cheaper.
   

The Victorian government does provide some financial assistance towards the educating of your child. This webpage from the Victorian education department outlines the various options available. I think we will only be a eligible for the School Start Bonus.

Some may say that to make these types of decision at this stage is futile as there are more than two years before we decide. The way I see it, selecting a school is such an emotive tasks and an important cornerstone of our children's future, spending as much time on it as possible is the least I can do.

How has the soaring dollar affected you?

In recent months, the humble Australian dollar is soaring against the American. Today, 1 Australian dollar will purchase about 92 American cents, and the financial commentators are predicting that it may reach parity before year end.

What does that mean for the average man on the street? We will have to look at it from two perspectives. There is the perspective of the consumer, that is how our spending habits may change. There is also the perspective of the worker, that is how our jobs and work is going to be affected.

Spending the dollar

The majority of the products that we purchase, especially the manufactured products such as plastic goods, electronics and cars, are manufactured overseas. The goods being imported into Australia should be a deal cheaper, when compared to the start of 2007 where the Australian dollar only was only buying 78 American cents.

I think for the big value items such as cars, it will take a period of time before the current stock are sold and the new stock purchased at the higher exchange rate.

There are already some products that are already being sold at a lower price, such as computer software where the turnover in stock is a lot quicker.

For primary products like fresh fruits and vegetables, the current pricing is high because of the drought, and should not be that depending upon the exchange rate.

One of the products that I wish were more dependent upon the exchange rate is the price of fuel, but for some reason, it is always been high for one reason or another. The oil company always seems to have some reasons.

Earning the dollar

If you are working in an export industry, such as manufacturing or the resources, it will be harder to sell your product overseas as it will be expensive for them to purchase them from the Australians. However it seems that the Chinese is not perturbed by the high exchange rate and buying our coal and others as fast as we can dig them out of the ground.

In some ways, some of the raw materials that goes into the manufacturing industry are purchased from overseas, so the price of these raw materials will be cheaper, and perhaps, the cost of the manufacturing may also be cheaper. It all depends on how and what goods are manufactured.

The bottom line is that job security for the man on the street may be an issue if the Australian increase further. So be prepared.

The increasing Australian dollar will affect people in many different ways. How has the changing currency affected you?