You are only worth at market value

Back in 2002, my wife and I went into semi-retirement. Well, more really like putting our working lives on hold and recharging our personal life. Since graduated from university in 1992, I have never had an extended period of holiday or even a time to reflect on my life and where I want to head towards.

At the start of 2002, I told my boss that I am resigning my position, I told my family that I am selling the house going traveling around Australia in a caravan. Their reaction was a bit of disbelief and telling us that we are quite mad.

So we sold the house in Feb 2002, paid all our debts and put any remainder into a term deposit.

We reached Brisbane after six months of a traveling up the east coast of Australia from Melbourne. I started to look for a job and ended up with an offer of a job that I thought would paid a bit more. They offer me $45K, and I rejected their offer. That is one of the biggest mistake that I have ever made!

I rejected their offer because I believe that I am worth more than the offer, and my mistake is that assumption. The reality of what I am worth is that I am only worth as much as the job market is willing to pay for my services.

You may be the the most talented engineer in the country that is worth $150K, but if the hiring companies can only pay $50K, that is all you are worth.

What do you do if you think you are worth more? Well, the following may be worth attempting.

1. Wait for the job market to evolve. The job market may change so that your position is worth more, but are you able to wait that long?
2. Move to another city where the job market is willing to pay more. Many people do this, think of how many country folks come to the city for the bigger salary.
3. Switch profession. If a different job market pays more, consider switching. However, the time it takes to reach the equivalent career level may take a few more years, and then the job market may change again!

We finally returned to our working lives when our travels brought us to Adelaide and I got a position to work in Singapore for three months. My wife enjoyed it very much, and I enjoyed the food very much as well ;-)

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The rules of buying

My pair of shoes are just about to die, it was then that I realised that the last time I bought some shoes was back in 2003! I haven't even bought a pair of cheap sandals for the beach since 2003.

There are quite a few reasons why that is, but I believe that the main is that I purchase high quality and robust shoes.The last three pair of shoes that I bought were Birkenstock shoes. These shoes are build to last! These shoes are not the cheapest nor are they the most expensive. However, I believe is spending that little bit more to ensure that I get good value for money.

Applying this concept to other products, such as kitchen appliances, clothing and other house hold items, have allow us to not purchase many high price. However, with many of the electrical products emerging from China and India, their quality are questionable.

So my rules are

1. Buy the best that you can afford. Everyone has a budget on what they can afford, so buy the best that you afford. Some of the best quality products are not even the more expensive products.
   
2. Know what makes it a good quality product. For example, a good pair of shoes that last a long time has real leather uppers and eyelets that doesn't cut the laces. For high price items, I would spend a few weeks researching on the product. The car that we purchased, we spend six months researching it.
   
3. Dare to be different. Not purchasing the same product as everybody else allows you to choose from a larger range of products, however do the research on why the popular products are popular. They might actually be of good quality.
4. Talk to the experts. The majority of the items that we purchased, we have no idea on what qualities we should be focusing on? Is the fit of a shoe, or how breathable the upper that is the most important. I have no idea, so I talk to a few of our friends whom have worn Birkenstocks before.
5. Make sure that it has a good support system. If the product does need to be repaired, it is supported by a good warranty return system with a quick repair time. Is the warranty period reasonable?

What are some your rules when it comes to buying?

Photo credit: sundeip arora
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Earth Hour 2008

Earth Hour began in 31 March 2007 in the Australian city of Sydney at 8pm to 9pm. The idea is for as many people as possible to stop using electricity for one hour, such as turning off their lights or switch their appliances at the power point, for one hour.

The effect was startling. For that one hour, it reduced the power consumption in the City of Sydney by 10.2%! That is only in one city. In 2008, Earth Hour is going global!

29 March 2008 8pm - 9pm is Earth Hour 2008.

Earth Hour 2007 showed us the following.

1. It shows how much energy is being wasted. The majority of the time, we just leave a light switch on because we can't be bother to switch it off. Just switch off when you are not using it. I usually leave my computer on at work when I leave my desk at the end of the day. I need to make a conscious effort to switch it off when I leave, especially over the weekends.
   
2. Stand-by power is really wasteful. Stand-by power is when the appliances are still be left on when you 'switch it off'. For example, when you switch off the TV, it is still being powered up. The TV is still powered up to do things like being able to be switched on via the remote control, or remember its last settings. To really switch it off, flick the switch at the power point.
3. Wasting energy is also wasting money. If you like wasting energy, then you must like throwing money into the bin as well. The effect to your wallet is just the same. Don't do it!

Please consider support this. You don't really have to register to join in. Just switch off the power on the 29 March 2008 at 8pm, and consider doing it every week. It will make a difference.

Earth Hour is supported by WWF, (no, not the wrestling guys, these are the panda guys!).

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superannuation revisited

I have just received my annual statement for my superannuation fund and it has triggered some rethink on my superannuation strategy. The downturn in the stock market this year have probably put many superannuation funds in a similar position. Lets start by looking at some of the figures that has caused me to do the rethink.

Account balance change: 7.12% on the opening balance
Return on Investment: -2.58% of closing balance
Management Fee: 16% of contribution

Looking at each of these figures in turn.

Account balance change: This represents the raw change in my account balance. A positive figure here is an absolute must as it indicates that I haven't lost all of the my contributions to the falling investments, fees etc.

Return on investment: I was expecting this figure to be a negative value. We can look across the Pacific Ocean towards the American economy. I actually thought this figure would be a lot worse, I expected it to be around -5% to -7.5%. I was quite relieve to see this figure of -2.58%.

Management Fee: This is how much I am paying my super fund to management my account. Now 16% of my contribution goes off my superannuation's wallet. When I did the calculation and realised what I am paying, I was pretty upset. This figure is what actually drove me to investigate other superannuation fund and how I can maximise the investment.

At end of my calculation, it came down to the following strategy.

1. Lowest fee structure. Two reasons here, firstly minimising fees is one of the very few items about the superannuation fund that can be influence so make it as effective as possible, secondly, I want to maximise the magic of compounding interest.
2. Online access. My current superannuation fund does not allow online access. So its performance can not be analysed in a timely manner.
3. Good insurance policy. Most superannuation has an insurance component, we need to ensure that the policy is suitable and covers all the family members.

What are some of yours?

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Lowest taxable income in metropolitan Melbourne

The Australian Tax Office has just released some tax statistics for the 2005-2006. Although the data is a few years old, it makes for interesting reading, in particular the data on personal tax.

One of the statistics that I noticed was that Frankston North has one of the lowest mean taxable income at $33,638 for each taxable resident.

We lived in Frankston North for about two years, just before we shifted to our current location. I must say that during our time in Frankston North, we can sense that the place is not a wealthy suburb, but from talking to our neighbour and the other Frankston North residents, the ambiance certainly does not give it that sense.

Living in such a low income area does have its concerns. We saw a lot of the typical events that you would expect to see. For example, we witnessed a police car chase in a residential street, regular thieving and stealing at the local shopping centres, and the occasional violence. We were always on our toes, trying to keep as safe and secure as possible.

Having said that, I am totally convinced that the majority of Frankston North residents are everyday people trying to make ends meet. I wonder if how long before Frankston North begin to move up the scale, if it ever will?

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How to keep cool in a heat wave.

Today is the first day where the night time temperature has dropped below 25 degC. The last few days in Melbourne has the day time temperatures in the high 30s. I think it peaked at around 40 degC yesterday. The nights have been quite unpleasant.

Apart from giving more money to the utility company by using the electricity to run the air conditioner or the fan, I was trying to think of what we can do to keep ourselves cool, in a frugal manner. These measures need to be immediate effect, so things like checking that the insulation in the roof is adequate is out of the question as it cost too much and it doesn't happen overnight.

• A visit to the beach - When the sun has gone down, visiting the beach to lap up the evening sea breeze has to be one of the best way and cheapest way of cooling down, not to mention the evening sunset is always nice to look at.
• Closing all the blinds on the sun side of the house, and opening the windows on the shadow side of the house - This was the effect of shielding the direct heat source (the sun) from heating up the house. The open windows will allow any cool air from shadowed side to enter the house.
• Drink plenty of fluid - Keeping the body hydrate also allows the you sweat. As the moisture evaporates from your skin, it has a cooling effect.
• Wear light clothing - This is a obvious one. Allow the the body to expend as much heat as possible by not insulating it with any thick clothing.
• Avoid drinking coffee - Caffeinated drinks like coffee dehydrate the body (this could be a myth, as by googling was able to provide a conclusive answer)
  
• Visit the local shopping centre - The local shopping centre is usually air condifiioned. The kids can played at the local indoor play ground. However, be careful not to be tempted by the shops around!
• Visit the local library - The library is also usually conditioned. The books and activities are also educational and functional as well.
  

What else would you do during the many days of high heat? I would love to hear anyone from Adelaide where it recently endure 15 days of temperature of 35 degC or more. It peaked at 40.5 degC.

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To be sure at the CoPF, to be sure...

I could almost brew a keg of green beer after being included in the St. Patrick's edition of the Carnival of Personal Finance #144 over at beingfrugal.net. Lynnae did a fantastic job collating all the blog posts and hosting them.

Some of my favourites are

• Know The Ledge - 10 ways to find more money. I especially like the wise and 'fun' advice in tip#10.
• The Dough Roller - 0% Balance Transfer Credit Cards: The 10 Commandments of Responsible Borrowing.
• Online Savings Blog - How to Get a Raise at Your Job

Thanks to Lynnae for including my post on How will my financials change when No.2 arrives.

Other than those articles mentioned, there are plenty more quality articles at the carnival.

If you are a PF blogger, consider submitting an article into the carnival at Carnival of Personal Finance.

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Carnival of Personal Finance #140 - Prison Break Edition

The upside of rising interest rates.

While I was doing some on-line banking the other night, I thought I looked at what the interest rate is on our BankWest account. It paid 7%, which I thought was pretty good. Hmm, I better check out their other products. Their rates on their personal accounts makes interest reading. Here are some highlights

Kids bonus saver account - 10%
Regular saver account - 9%
Children savings account - 6%

10% is an amazing interest rate. This account has bonus interest rates associated with it, but it has some conditions. $25 - $250 needs to be deposited on a monthly basis, and no withdrawal is allow. If either of these two conditions are broken, the interest rates drops to 0.01%. Oh, this account must be linked to a Bankwest Children Savings Account as well.

My home bank, ANZ, also has similar interest rates for their saving accounts, although not as impressive. Some ANZ's highlights are

ANZ Online Call Account - 7.75% for balances of $2000+
ANZ Youth Account - 4.50%

While I was looking through ANZ's interest rates, I noticed that the interest rate on their 4-year interest rate for home loans has increased to a whopping 9.4%. Their home loan variable rate has gone past double digits to 10.7%. Ouch! I think that we were very lucky to lock our interest rate when we did.

The interest rates in Australia has been consecutively increased since the first increase on 8 May 2002. The current cash rate as set by the RBA is 7.25%, starting from a low 4.25% in 5 Dec 2001. While I wish that interest rate would be on a downward trend, I am also glad that the banking folks also provide a balance by increasing their saving accounts, sort of.

photo credit: svilen murad
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First PPP post

This is my first sponsored PayPerPost post. After looking through the list of opportunities available to me, this is the only one available. What I like about it is that it doesn't mind if the post has a positive comments or negative comments.

So what this post is about is tell the world that I have signed up for PPP, what my initial thoughts were, what I am going to do with the money etc.

Well, the one thing that I like about it is that there are opportunities available that allows negative comments as well as positive comments. I would prefer these opportunities rather than the ones that are specifically looking for positive comments.

The other thing I am surprised about the opportunities is the sponsored prices. There are some opportunities worth more than $100, however these opportunities are only available to blogs with high google page ranking.

The things that I don't really like about PPP is that depending how you write it, the articles could look like paid advertisements. This is definitely not something that I want to head towards. (one of the reasons why I am only going for opportunities that allow negative comments). I also want to write the articles in such manner that it does not detract the current readership.

It also has a blog for those who wants to keep up with what is going on behind the scenes at payperpost.

What am I going to do with the money? We I am going to use it to pay for those annoying weekend surcharges at the local ice-cream stores. (thanks Andy :-).

So far, it is too early to tell if PPP will work out for me, however, even though it is sponsored, I won't let it get in the way of an unbiased opinion.

Be careful of the public holiday surcharge!

Today was the Labour day holiday in Melbourne, and the Melbourne Motor Show was on as well. So this morning, when we decided on to do, we decided to visit the motor show and spend the day in the city. The weather was nice, and warm. My son had a terrific day at the motor show, he wanted to jump into every car he saw and drive it away! He has a great imagination for a two year old.

To finish the day, we bought some ice-cream. When I am paying for it, I fail to notice the sign indicating that a 10% surcharge is applicable because of the public holiday at this ice cream shop. At first I was a bit annoyed that I did not notice this sign, but paid for the ice cream and enjoyed it with my family along the Yarra River. I also noticed that not all the shops are applying the public holiday surcharge.

Later today, I thought about it  a bit more, I realised what really annoyed me was that the sign on the ice cream store also state that the surcharge is also applicable on weekends as well. I have a real problem with the fact that the cost of an ice cream is cheaper on weekday that it is on a weekend. I wonder how many other ice cream or side street business operate this way?

In the future, I am going to be more wary of the what I am really paying for, in particular of the surcharges. By the way, if the surcharges are not displayed, the shop could be applying the surcharges in an illegal manner.

I have just been accepted by PPP

Just got an email that I was accepted by PPP. I recently blogged that I was rejected by PPP for some superficial reasons. I was stumped and was about to give up investigating it more. The next few days, Andy from Finance Viewpoint left the following comment.

PPP does work, sometimes it takes a while. Install the tools they say and re-apply after a week.

I am an Aussie blogger and here is a referral link others have used to sign-up : http://tinyurl.com/2995wq

I have 2 blogs on this program and it earns me about $30 p/month. Have to be careful with the sponsored posts as most of the advertisers are American.

I thought, what the heck, I just spent a small amount of time and do what Andy suggested. Lo and behold, I received an email from the PPP that my blog has been accepted a few days ago. The only thing that I changed was to install the tools.

I guess my next step is to decide which items I want to write about. Stay posted.

By the way, you are welcome to use Andy's referral or my referral, http://tinyurl.com/2bxo7b


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Public Housing and the homeless

My recent participation in the CoPF #142, which has a homeless theme, has caused me to think about what kind of homes are available for the homeless.

To me, homeless means a few thing, but it boils down to not having a place where my family and I can feel safe and secure. The difficulty is obtaining that place, either buying or renting a house. The rental market in Melbourne is red hot, and the affordability of buying a house is at record low.

The Victorian government tries to ease the situation by provide public housing. Public housing is not free housing. Essentially, it is houses that are the Victorian government rents out the public. The differences between public housing and private housing is the criteria which the house are rented.

If you want to rent a house privately, prove to your landlord that you can afford to pay the rent, and not damage the property while you are renting, and the property is yours. The rental rate is set by the landlord. The rental market is so competitive that I have heard of landlord auctioning off the leases.

With public housing, you will need to meet the following criteria to be on the waiting list for a suitable housing to be available. According to this pdf document, there are close to 35,000 people on the list!

• not exceed the current general public housing income and asset eligibility limits.
• live in Victoria.
• not own or part own a house, unit or flat.
• have Australian citizenship or permanent residency status.
• repay any money that you still owe from a previous public housing tenancy or Bond Loan.

If your situation is extreme, you can be apply for early housing where, if suitable housing is available, your application will have a higher priority. These situation includes recurring homelessness, supported housing and special housing needs.

The key thing is that the rent rate is set at either market rate or rebated rate, whichever one is lower. Market rate is the going rate for a similar property in the private rental market. Rebated rate is calculated at 25% of the combined household income.

The Victorian Government's Office of Housing has a great website that has a lot of detail information.

My closest experience with homeless was when I sold up and went traveling around Australia about 5 years ago. I know that what I did was not even 5% of what a homeless person would experience because being homeless is not just a physical thing, it is also a mental state and also an emotional state. As I traveled around the country, I met many others in makeshift shelters, transient accommodations and hostels. It provided me with an opportunity allow me to talk and to get an indication of their lives. In some ways, I feel encouraged that they are able to survive on a day-to-day basis, given their extreme conditions. On the other hand, I also felt angry and disappointed that in this country that we are not able to do more for the homeless.

Photo credit: Piotr Ciuchta
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Homeless at the carnival.

CoPF #142 is up over at The Bag Lady. The bag lady chose a very tough theme, the homeless.

Some of my childhood was spent growing up in Malaysia. Back then, Malaysia was a third world country pretending to be a country in the same company as Australia or England, pseudo wealthy. One of the most striking images while I was growing up was seeing the many homeless people on the streets of Kuala Lumpur. Typically, when my parents drove through the city at night on our way home from the market, I would frequently see many people bedding down to sleep in cardboard boxes as their makeshift homes. I would also see many people begging in the streets, searching for food among the street rubbish bins or trying to keep dry during the monsoonal rain storms. Those images has certainly stayed with me for many years, and always reminded how fortunate I am to have the life that I am living.

Some picks from the among the many good articles from the carnival are:

Canadian Dream asks How Can A Person be 'Debt Free' with a 300K mortgage? I sort of agree with this article, but only if the discussion is limited to mortgages. There is such a thing as good debt, just ask any business starting up.

DebtBeater talks about his moment of truth in My Financial Epiphany. It is a great article and reminds us of a time when we thought that things will never go bad.

The Digerati Life gives some wise warnings in They Want To Make Money Fast.

A big thanks to The Bag Lady for including my discussion article on Would you miss a meal to pay your rent?

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Carnival of Personal Finance #140 - Prison Break Edition

How will my financials change when No.2 arrives?

Preparation for your first child is not a task to be take lightly. Amount the physical needs of the child, their emotional needs as well as their financial needs must be catered for.

Is the preparation for the second or the third child any different from the first child? Trent at the The Simple Dollar has some nice advice on how to prepare for the second arrival in a frugal manner.

For one thing, the on-going family expenses will be increasing. Therefore, planning on to the deal the change is key. Apart from the obvious items such as the medical bills, clothing etc, it is worthwhile to investigate the other part of your life that will need to be change and how much that will cost to change it.

1. If your car is not of the right size, you may need a purchase a larger car. It is also true that the current house you are in may not be larger house enough.
   
2. One of the parents being a full-time home maker. This will affect the household income. Being a full time home maker is a very personal decision, but sometimes the key reason may be due to financial reasoning. EG, unable to afford to put that many child in child care.
   
3. The work hours of the bread winner may have to be reduced to give more support to the full time home maker.
4. Increase in your life or income protection insurance, this usually means an increase in the insurance premiums. I believe that this particularly important as the number of family members has increased and the new addition's welfare must be looked after.
   
5. Ensure that your emergency fund is changed to ensure that it covers the new arrivals.

Photo credit: Joe Zlomek
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