Friday, 31 May 2013

May 2013 in review

May was another good month for the MoH. I was expecting a decrease in my total savings due to the well-publicised struggles of the sharemarket recently. However, somehow my portfolio didn't track as badly as the news would have suggested.

My spending has been kept in check, as I plan for my upcoming holiday. But apart from that, it's been a generally low effort month, as I've been tied up with non-financial matters.

So the final picture looks like this:

Stay tuned for my upcoming June posts tomorrow.

Thursday, 23 May 2013

Book review: Self-Managed Superannuation Funds: A Survival Guide

Today, I’m reviewing Self-Managed Superannuation Funds: A Survival Guide by Max Newnham.  Newnham is a chartered accountant and certified financial planner, plus he’s been a regular contributor to The Age and is the author of various other tax and super books.  So he certainly appears qualified to tackle the quagmire of self-managed super funds (SMSF).

Newnham’s objectives for the book are to:
  • Help people make an informed decision about setting up an SMSF
  • Help people understand what their duties are
  • Help people manage their administrative duties
  • Provide examples of what documentation needs to be prepared
  • Provide examples of tax and investment strategies
  • Make the task of being a trustee of an SMSF more enjoyable

The book includes 11 chapters.

Chapter 1: The history of superannuation addresses (you guessed it) the history of superannuation concepts, from the Roman Empire, through civil service pensions, universal old-age pensions, industrial and commercial pensions, personal superannuation funds, and finally to SMSFs.  It includes both Australian and global examples.

Chapter 2: Fund types and self-managed super outlines the five types of super funds (retirement savings accounts, industry funds, commercial funds, small APRA funds, and SMSFs).  It then covers in more detail the main features of an SMSF, and concludes with a summary of the advantages and disadvantages of establishing an SMSF.

Monday, 20 May 2013

Apologies ...

... for the lack of recent posts.  I've been extraordinarily busy with my day job.  I'll be back shortly!

Thursday, 16 May 2013

Book review: Building Wealth & Loving It

I picked up a copy of Building Wealth & Loving It (a down-to-earth guide to personal finance & investing) by Jimmy B. Prince at my regular weekend haunt, my local library.

Prince is a tax specialist and fellow of CPA Australia.  He has been a lecturer in tax law and is the author of several investment books and numerous investment articles.

The book is intended to appeal to readers who are looking for a single volume covering all the major ways of investing to build wealth.  It includes various practical case studies and handy tips to reinforce the learning journey.

The book includes 18 chapters structured into three parts.

Part I Let the games begin: getting organised includes the following chapters:
  • Chapter 1: Laying down the foundations
  • Chapter 2: Building wealth the smart way
  • Chapter 3: Who is in command? Ownership structures
  • Chapter 4: Borrowing to build wealth

Saturday, 11 May 2013

Saving money on gardening

One of the biggest financial challenges for me when I moved into my house a couple of years ago was managing the garden.  I don’t have an enormous lawn or complex plantings.  But the previous owners appear to have a love for vines, and they planted a species of grass that grows in long runners that in the space of a couple of weeks can grow up a fence!  Living in an apartment does not generally require a single gardening tool, as all the work is outsourced to an external contractor.  So I did not own as much as a single trowel.  It seemed like every weekend involved a trip to Bunnings to purchase additional implements to help me weed, prune, mow, and tame the prolific vegetation.

I’ve learned a few tips and tricks since.  Here are my top 15 hints:
  1. Do-it-yourself – It can be tempting to try to outsource all the work to a gardener.  But at $50 per hour or so in Sydney, this is an expensive option.  The start-up costs of a lawn mower and a few tools is comparatively cheap.  I find that gardening is great exercise, it gets you outside in the sun, and it’s a great opportunity to chat to your neighbours.
  2. Share with your neighbours – Gardening seems to require numerous expensive implements that you use only occasionally.  An effective strategy is to share equipment with friends and neighbours.  In addition, you could also swap plants, or buy together in bulk.

Friday, 10 May 2013

Saving money on food

One source of savings for me to pay my cleaner is my food bill.  The MoH is quite a miser when it comes to food.  I also helps that I’m a vegetarian and dislike junk food and fast food takeaways.  The amount of money many people spend on food is mindboggling to me!

Here are some ideas to save money on food as a single professional (I promise I will not mention meal planning!).
  1. Minimise the amount of takeaway food you eat, for example:
    - Take your lunch to work
    - Have a simple dinner
    - Eat out only when you are with friends; don’t eat takeaway at home by yourself
  2. Minimise the amount of pre-prepared and junk food you eat – although this can be a less costly option than takeaway if it comes down to that (e.g., I buy $2 packets of pre-prepared daal, which costs a lot less than an Indian takeaway and can taste a lot fresher.  I wouldn’t be cooking daal myself in the evening rush, so that’s a good compromise for me.)

Thursday, 9 May 2013

Saving money on cleaning

Cleaning is not a strength of the MoH, so this will be a short post!

The basic strategies I see one could employ are:
  1. Clean less by:
    - Keeping things tidy in the first place
    - Cleaning less frequently
    - Lowering your standards (ever notice how men just don’t see the mess you do?)
    - Have less “stuff” (the more fiddly ornaments and whatnot you have, the more dusting and whatnot required)
  2. Use fewer cleaning products (most of the products in the supermarket are slightly different combinations of the same chemicals in different coloured and shaped bottles)
  3. Use generic cleaning products
  4. If you absolutely need a brand name cleaning product for some reason, buy it on sale
  5. If you don’t trust generic cleaning products, try one just for a limited use (e.g., I’ve bought generic laundry powder to wash my sheets and towels, but not my nice clothes)
  6. Make you own cleaning products (e.g., using baking soda, vinegar, methylated spirits)
  7. DIY clean rather than employing a cleaner … although I have to admit this is not for me

Wednesday, 8 May 2013

Book review: Financial Planning – DIY Guide

Financial Planning – DIY Guide (everything you need to successfully manage your money and invest for wealth creation) by Sam Henderson was published in 2011, so the information is quite current.

Henderson is CEO of Henderson Maxwell, a fee-for-service, independently-owned, boutique financial planning firm.  He is a presenter on Foxtel’s Your Money, Your Call and regularly contributes to magazines and newspapers, including Money and Asset magazines, the Sydney Morning Herald, Financial Review, and the Age.  He describes himself as coming from a non-traditional financial background and focuses on direct shares and property investments as opposed to the typical financial planner focus on managed funds.

In this book, Henderson aims to provide a comprehensive overview of the financial advice process, culminating in a one-page financial plan in the last chapter.  The book is designed to be generalist in nature, credible, and practical.  It focuses on setting good financial foundations rather than high-risk investments.

Tuesday, 7 May 2013

Case study: superannuation

My posts last month forced the MoH to turn my attention to my own super situation.

Historically, I maintained a fairly simple super strategy.  I had two accounts – a low cost one and then whichever was the default fund of my current employer (all of whom paid our life, total and permanent disability (TPD), and income protection insurance premiums, so we needed to belong to the fund to make it efficient).  Whenever I changed jobs, I transferred the balance from the default employer fund of my former employer into the low cost one.

However, after a couple of quick job changes, my attention to detail lapsed, and suddenly I had four super accounts.

Consolidation was required.  Plus I had to purchase life, TPD, and income protection insurance for the first time.

The first step was to select the best fund for myself based on three criteria I developed:
  • Low cost
  • Good performer
  • Reasonably priced insurance

Monday, 6 May 2013

New layout

Have you noticed the new layout?

I received a suggestion in the Millionaire on Heels Turns 100 contest to improve the site navigation.  I definitely agreed that there were so many posts, it was difficult to locate all the ones relevant to a particular topic.

So what I’ve done is add four additional pages covering the key Millionaire on Heels themes – earning, saving, investing, and risk management.  Each page has a number of sections, each with some of the most interesting posts listed below. 

So if you want to browse a particular topic, head straight for the themed pages.  If you prefer the day-by-day view, stick to the home page.

I hope you like the additions.  Please let me know either way.

Sunday, 5 May 2013

Saving money on home and contents insurance

I received my home and contents insurance renewal letter this week, and (yikes) it had gone up by around 35% from last year!

In the 15+ years I’ve lived in Australia, I’ve never made a home and contents insurance claim.  And it’s not like I live on the banks of a river or in the bush.  So it’s hard to believe that my home is really such a risk. 

Therefore, it’s time once again to shop around.  As I’ve found in the past, quotes can be more than $1,000 different for the same property.  And even if you’re happy with your current insurer, you should still get an online quote, as sometimes a quote for a new policy with the same insurer can wind up cheaper than your renewal quote. 

There are dozens of insurers offering home and contents insurance in Australia.  Some options to select the right one for you include:
  • Do it yourself (DIY)
  • Consult an insurance broker
  • Explore cash back brokers (these brokers generally refund managed fund and personal insurance commissions, but some them now refund mortgage and general insurance commissions as well)

Saturday, 4 May 2013

Saving money on water

Unlike gas and electricity, the water industry is still regulated in Australia, so you can’t choose your supplier and negotiate better rates.  The $2+ per kilolitre we now pay in Sydney (plus the supply and sewerage charges on top) is starting to seem a bit pricey to me, especially for something that falls free out of the sky.

The best ways to fight back include:
  • Decrease your reliance on mains water
  • Decrease your water usage

Decrease your reliance on mains water

Take advantage of the “free” water available by installing:
  • A water tank – either a simple rainwater tank or a more complex grey water system, where water can be reused, for example, to flush toilets or water the garden.  My neighbour, who is a plumber, has established quite a large and sophisticated-looking grey water system.  Unfortunately, the tank is right outside my bedroom window, and I can hear the pump running with every flush of the toilet at bedtime!
  • Bore water – where I live, the water table is close to the surface, and nearly every house has a bore.  This is an easy way to water the lawn.  However, as the mineral content is quite high (and staining), you can’t use the water to top up the pool or wash the car.  It also takes electricity to run the pump, so you have to trade off the cost of water v. electricity.

Friday, 3 May 2013

Saving money on gas

To save money on gas, you basically just need to follow the same principles I discussed yesterday on electricity.

In summary:
  • Check that you are receiving the best rate possible from your gas retailer, or consider switching retailers
  • Decrease your usage – focusing on heating, hot water, and cooking
  • Check for any gas leaks – if you turn off all your gas appliances, the meter should not move at all
As gas is relatively cheaper than electricity in Australia, it can pay to shift electricity usage to gas when you can – e.g., hot water and heating. 

Although personally, I’ve found it quite expensive to have gas in the first place because the service availability charge is high (and charged regardless of how much you use) and the cost of some gas appliances is astronomical – e.g., a gas heater can run close to $1,000 compared to an electric fan heater for $20.  It would take me five or ten years to recover that upfront $1,000 compared to running a little fan heater for a few minutes at a time!

Tomorrow I’ll cover the pool owner’s nightmare … the water bill.

Thursday, 2 May 2013

Saving money on electricity

Rising electricity prices are always certain to trigger columns of newsprint warning of the impact of hundreds of dollars per year on the “average household electricity bill”.  I’m a bit sympathetic, but only just.  My electricity bills are quite small, even though I have some more extravagant electricity-using appliances like a pool pump.  My last quarterly bill, for example, was less than $110.  So I’m not sure how people manage to use enough electricity in the first place to achieve the average bills of $500 plus. 

Here are some of the ways you can reduce your electricity bill:
  • Avoid grid power
  • Get the best rates
  • Decrease usage

Avoid grid power

The Australian and state government initiated programs in recent years that provide large discounts on solar panels.  I got in as the rebates were being lowered, but it is still quite cost effective to deck out your roof with a few solar panels.  Mine effectively halved my electricity bill and will recover their cost in just a few years.

Get the best rates

As the electricity is deregulated now in most Australian states, it’s important to check that you are getting the best rates from your electricity supplier.

Wednesday, 1 May 2013

Upcoming May posts


The Millionaire on Heels has passed its five-month birthday now.

Now that the weather’s getting cooler, I’m spending more time inside.  So I thought it would be appropriate to focus on saving money around the house.

I’m also planning an overseas trip to see some of my family.  The costs of overseas travel can really add up.  So I’ve added a section covering saving money on all the aspects of travel I can think of.

And to balance all the focus on spending, I’ll finish the month with a series on boosting your earnings.

As per the usual, I’ve also included a few case studies and book reviews.

The plan for this month’s posts includes:
  1. Upcoming May posts
  2. Saving money on electricity
  3. Saving money on gas
  4. Saving money on water
  5. Saving money on home and contents insurance
  6. New layout
  7. Case study: superannuation
  8. Book review: Financial Planning – DIY Guide
  9. Saving money on cleaning
  10. Saving money on food
  11. Saving money on gardening
  12. Travel – saving money on airfares
  13. Travel – saving money on hotels
  14. Travel – saving money on local transport
  15. Case study: home and contents insurance