help to reduce tax / debt
- Thread starter lollypops32
- Start date
Actually, I am blessed and hence naive. A few of my male friends complain about their partners and I ignore instead of realising this is the norm.
My wife is a better saver than me. She is against Daughter getting a pony for instance. Most wife are into that stuff around our way.
Good luck on finding Mrs Right. Sadly, my wife has no sister.
Peter
Same boat as you. I am very blessed too. She is a better saver and spends very practically, even when her pay is almost double mine.
'I added up you expenses and they came to $10,208 so that actually leaves you $2792 pm. It's really the question where this money going and getting that under control which should be your immediate focus. I suspect most of this is just leaking away.'
As part of my comment.
Could you please sit down and work out where this money has gone / goes.
This totals up to $33400 per year which is more money than most people receive.
Does it go on coffees, lunches etc?
Cheers
As part of my comment.
Could you please sit down and work out where this money has gone / goes.
This totals up to $33400 per year which is more money than most people receive.
Does it go on coffees, lunches etc?
Cheers
How does that happen exactly? You sign a contract for a lease with Volvo Finance for $1300/month. They then write to you saying, "sorry but we're going to now charge you $2000/month. Sorry about that."
I was under the impression that leases were a fixed rate contract. Can they be variable?
You'd be amazed at some finance companies. They give you an initial quote, then over the course of the application the costs increase (they never seem to reduce). With some lenders the cost isn't fixed until the final offer comes out in the contract.
Lots of good advise which will definitely help.
I might be wrong but I feel in your case the expenses has grown in proportion to income which somehow is being justified.
I am sure there are lots of people with similar family sizes who would be living comfortably on half your salary.
Learn to save money. Even $5 bucks you save will make a huge difference over the long term. Why? It's not just the dollar value, its about the mindset.
Being disciplined with your expenses and building a savings mentality which IMHO will solve your problems. Until, you change your mentality you will always feel someone else is in control of your life.
One more thing, there is no magic cure to your problems. It won't be fixed overnight. It will take time. But make a start...start with finding savings of $100 per week. Put that money aside where you won't get tempted to spend it. Over time you would be surprised how savings habit can become second nature and easier. Once you are comfortable with savings your next goal should be learning how to invest those savings.
Cheers,
Oracle.
I might be wrong but I feel in your case the expenses has grown in proportion to income which somehow is being justified.
I am sure there are lots of people with similar family sizes who would be living comfortably on half your salary.
Learn to save money. Even $5 bucks you save will make a huge difference over the long term. Why? It's not just the dollar value, its about the mindset.
Being disciplined with your expenses and building a savings mentality which IMHO will solve your problems. Until, you change your mentality you will always feel someone else is in control of your life.
One more thing, there is no magic cure to your problems. It won't be fixed overnight. It will take time. But make a start...start with finding savings of $100 per week. Put that money aside where you won't get tempted to spend it. Over time you would be surprised how savings habit can become second nature and easier. Once you are comfortable with savings your next goal should be learning how to invest those savings.
Cheers,
Oracle.
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i love some of the responses of people trying to catch me out, seems like they've been watching too much CSI. i said i have 4 children at 3 different schools, how is that odd? one is at private school. the others are all at government schools. 2 catch public transport to school. one has special needs. i am locked in to the mobile phone plans and would have to BUY myself out of the contracts, two of the contracts were for the children's combined xmas and birthday presents for the year - that is not damn extravagent. they got nothing else for their birthday/christmas off us. so it probably works out.
i haven't laid my finances bare for this forum to see for you all to pick over the pieces and say ooh you can't have meant this when you said earlier that you did something else. you won't trip me up on any aspect because all of it is truthful, maybe you should read what i have written rather than skipping ahead so you can criticise. thanks.
the lease company HAS increased the payments on the car, hence it has now become an unaffordable expense and i intend to speak to them about it but as it is in my husbands name it is difficult to access all the info i need.
i have no objection to shopping in target, but i said i needed SCHOOL trousers for my son and he has specific UNIFORM blue/black trousers available only from the uniform shop. OK? which is why i haven't tottered off to target to buy them. does that clear that point up nicely inspector clouseau?
my daughter has already used up her $140 annual allowance for glasses and the prescription changed recently so she needs new ones unless there is some HBF perk i don't know about, or maybe i should commit fraud.....does that solve that little mystery sherlock?
what else, ahhh yes, shopping in aldi - that would be lovely but we don't have that benefit in rip off WA.....
takeaways??!!!! ahaaaa we don't have takeaways either, not even for special occasions. not even mcdonalds.
it's not easy being a princess, sponging off my husband and driving about in the luxury car wasting diesel so the lease company can increase our monthly payments again. i don't know why i even thought i had a problem, all i need to do is sell a few tiaras.
and FYI i've cancelled gym membership and the foxtel so we don't need to mention those again......
and i hadn't been scared off by anyone or anything, i've actually been out i'm a volunteer visitor at a residential care home for elderly people with dementia on a tuesday for 3 hours, i visit people who don't have family or family who don't visit it makes me happy, making them happy. maybe i should give that up, it does cost me money to get there and occasionally i take treats in for them.....
i haven't laid my finances bare for this forum to see for you all to pick over the pieces and say ooh you can't have meant this when you said earlier that you did something else. you won't trip me up on any aspect because all of it is truthful, maybe you should read what i have written rather than skipping ahead so you can criticise. thanks.
the lease company HAS increased the payments on the car, hence it has now become an unaffordable expense and i intend to speak to them about it but as it is in my husbands name it is difficult to access all the info i need.
i have no objection to shopping in target, but i said i needed SCHOOL trousers for my son and he has specific UNIFORM blue/black trousers available only from the uniform shop. OK? which is why i haven't tottered off to target to buy them. does that clear that point up nicely inspector clouseau?
my daughter has already used up her $140 annual allowance for glasses and the prescription changed recently so she needs new ones unless there is some HBF perk i don't know about, or maybe i should commit fraud.....does that solve that little mystery sherlock?
what else, ahhh yes, shopping in aldi - that would be lovely but we don't have that benefit in rip off WA.....
takeaways??!!!! ahaaaa we don't have takeaways either, not even for special occasions. not even mcdonalds.
it's not easy being a princess, sponging off my husband and driving about in the luxury car wasting diesel so the lease company can increase our monthly payments again. i don't know why i even thought i had a problem, all i need to do is sell a few tiaras.
and FYI i've cancelled gym membership and the foxtel so we don't need to mention those again......
and i hadn't been scared off by anyone or anything, i've actually been out i'm a volunteer visitor at a residential care home for elderly people with dementia on a tuesday for 3 hours, i visit people who don't have family or family who don't visit it makes me happy, making them happy. maybe i should give that up, it does cost me money to get there and occasionally i take treats in for them.....
Hi Lollypops,
A minority of the replies to your question have been negative, the rest of us have been trying to help. The advice has generally been constructive, I can see that it's hard to be objective about your own situation, but try filtering out the negative comments and relax and try to make some progress based on the information contributed. I don't think you're a princess, I don't know you, but I admire that you've sought help. I hope you get something out of this.
Cheers.
A minority of the replies to your question have been negative, the rest of us have been trying to help. The advice has generally been constructive, I can see that it's hard to be objective about your own situation, but try filtering out the negative comments and relax and try to make some progress based on the information contributed. I don't think you're a princess, I don't know you, but I admire that you've sought help. I hope you get something out of this.
Cheers.
agree with the above......i dont really see any luxuries in your budget, just what modern australia looks like. cars and house a little over the top but they can be fixed
i havent read all the pages but from what i have read
LISTEN to all the advice if you dont you deserve to go bankrupt
if the shares were bought in a LOC and theres no other personal debt mixed with it then it should be deductible right?
could you change your loan back to IO, maybe even fix 80-90% for 3 years at the around the 5.5% mark
surely this would save you around 2k per month (24k a year!!!)
cancel gym and foxtel thats $280 a month (about $3400 a year!!!)
pet insurance.... i would scrap it but lets leave it in there
budget what you spend and dont spend any money on random crap
stop the car leases and get some more realistic cars 2 ba falcons or vy commodores they go for about 6k for reasonable ones (maybe buy with equity from house so it doesnt cost you outright just pay it off quickly) save 36k pay 12k saving of 24k
thats saving around 50k/year now thats around my yearly wage!!
put the extra into the offset that will lower the repayments even more and will have a huge compounding effect
get the kids to get a job a few days a week and pay for there luxuries, phones etc
create an offset against the PPOR if you havent
and ONLY if your good with money management, get a credit card. pay everything with this and SAVE all funds into the offset account BUT pay the credit card off in full when due.
even these basic steps first can save alot of money and ease the pressure no need to sell the house straight away. give yourself time to think
rent your house out and rent somewhere then get a tax variation form filled out that will give you more cash in your pocket each week
LISTEN to all the advice if you dont you deserve to go bankrupt
if the shares were bought in a LOC and theres no other personal debt mixed with it then it should be deductible right?
could you change your loan back to IO, maybe even fix 80-90% for 3 years at the around the 5.5% mark
surely this would save you around 2k per month (24k a year!!!)
cancel gym and foxtel thats $280 a month (about $3400 a year!!!)
pet insurance.... i would scrap it but lets leave it in there
budget what you spend and dont spend any money on random crap
stop the car leases and get some more realistic cars 2 ba falcons or vy commodores they go for about 6k for reasonable ones (maybe buy with equity from house so it doesnt cost you outright just pay it off quickly) save 36k pay 12k saving of 24k
thats saving around 50k/year now thats around my yearly wage!!
put the extra into the offset that will lower the repayments even more and will have a huge compounding effect
get the kids to get a job a few days a week and pay for there luxuries, phones etc
create an offset against the PPOR if you havent
and ONLY if your good with money management, get a credit card. pay everything with this and SAVE all funds into the offset account BUT pay the credit card off in full when due.
even these basic steps first can save alot of money and ease the pressure no need to sell the house straight away. give yourself time to think
rent your house out and rent somewhere then get a tax variation form filled out that will give you more cash in your pocket each week
Bit defensive, don't you think?
You come here asking for assistance and when you don't like the advice given, you get you knickers in a twist. The simple facts are that you are spending more than you earn and if you don't do something about it fast, you are going to be in real trouble. How about you swallow your pride and actually take in some of the advice you've been given. Your disposable income, once you subtract your mortgage & the leases are more than many earn, including some here with high net worth.
Some of the advice given above is good some maybe a bit harsh which you seem to have taken offense to. but at the end of the day with little info people will be commenting on your situation with their own preconceived ideas. I haven't been on this forum long but i noticed one of the main posters offered to meet you and your husband. i'd consider this a great opportunity to go through the finer details with somebody that appears to know what they are talking about. I'd love to have that opportunity myself
Some of the advice given above is good some maybe a bit harsh which you seem to have taken offense to. but at the end of the day with little info people will be commenting on your situation with their own preconceived ideas. I haven't been on this forum long but i noticed one of the main posters offered to meet you and your husband. i'd consider this a great opportunity to go through the finer details with somebody that appears to know what they are talking about. I'd love to have that opportunity myself
hint hint !!
Dazz aint a financial counsellor, but a concerned and helpful person with the runs on the board.
But perhaps in your case, a trustworthy and relateable fellow to be able to mediate a position that works for your family.
I know many investor people would give their eye teeth to have a couple of hours.
ta
rolf
Hi lollypops
well done! cancelling the gym and foxtel, that is a good start. You have recieved some great, honest advice here, and although it may be hard to hear, starting to take it on board is taking action down the right path. next step is to look at the mortgage.
doing the volunteer work is good experience for your part time job in the near future too!
Sounds fantastic lollypops...my daughter does that as well, and she gets great enjoyment and spiritual nourishment from it.
I manage to get out and speak with about 1,000 people every week, with the vast majority of people being elderly as well.
We seem to have a lot in common....let's talk.
No, don't give that up, that's valuable and waaay beyond money matters.
Let's talk.
a bit defensive? no, actually i don't think i was.
you're right i came on asking for advice, but the advice was how i could reduce our tax bill, not how i can afford to buy a pair of trousers from the opshop for my son. it's not that i don't like the advice i've been given, it's that the advice i'm being given is not the advice i was looking for in the first place and as a matter of interest, my knickers are never in a twist, they're from target!
i do appreciate the majority of folk on here are trying to help. and i do know our personal debt needs to be reduced, you don't need to be a genius to work that out. maybe if i were a genius i wouldn't be in such a pickle.
however i borrowed the money for the rubbish investment, it can't be offset against anything because the LOC had other money being switched in and out of it.
i do other voluntary work as well, i'm not lazy, i like to be busy. i have looked at jobs, i applied to join the police a while ago but who looks after my children overnight when i'm on night shift and my husband is overseas on business??
yet more excuses for the princess to stay at the mansion watching foxtel haha
i will start with selling the volvo, it's a lemon. i think we paid over the odds for it and those who have a warped sense of humour might find it amusing to learn that the family that sold it to us are the same ones that gave us that great investment advice.
and what do you do if you find out you will only get $25,000 for it when you owe $45,000 on finance....do you increase your debt by $20,000? you'd also need to find another $6,000 to buy that 'bomb' suddenly it's $31,000 debt with a $6,000 asset which sounds far worse than $45,000 debt with a $25,000 asset or am i missing something and this is how i got myself in the s.h.i.t. to start with?
and a footnote to dazzzz i appreciate your offer to help, i dont mind communicating on a one to one basis and sorry for not acknowledging your offer, it's hard to remember every point that you intended to make once you get started on your reply.
Hi lollypops,
The positive thing from reading your posts is that you are able to take action to stop this nightmare from getting any worse. Going on what you've mentioned regarding your property value and loan, if you sell up, you will have money left over to buy a smaller place (or a house in a different location) with minimal debt.
It sounds like you've raised the issue with your husband - but he won't listen. Perhaps put the information into a spreadsheet - and show him the way things are headed if you continue on this path.
I'd also express your points regarding your children's needs to your husband. Surely he wouldn't want your kids to be suffering as they cannot have the medical treatment they need? I know if I was presented with this information from my wife, I'd be devastated.
I hope you can resolve this situation very soon.
Regards Jason.
The positive thing from reading your posts is that you are able to take action to stop this nightmare from getting any worse. Going on what you've mentioned regarding your property value and loan, if you sell up, you will have money left over to buy a smaller place (or a house in a different location) with minimal debt.
It sounds like you've raised the issue with your husband - but he won't listen. Perhaps put the information into a spreadsheet - and show him the way things are headed if you continue on this path.
I'd also express your points regarding your children's needs to your husband. Surely he wouldn't want your kids to be suffering as they cannot have the medical treatment they need? I know if I was presented with this information from my wife, I'd be devastated.
I hope you can resolve this situation very soon.
Regards Jason.
Asking to reduce your tax bill is the wrong thing to be asking. That's probably how you ended up with the shares. To reduce your tax bill you have to have a loss. At this point in time you really can't afford that.
How about we tackle this one thing at a time. Get the finances under control first, THEN think about investing.
OK, I agree, that was a bit out there (I thought it was shoes, but I digress). But even in saying that, sometimes there are great bargains at those places if you are extremely picky. When my kids were really young most of their clothes came from Op Shops, and most of it was designer labels either new or near new.
Like I said, first things first. Get on top of the spending and THEN look to see what you are comfortable investing in.
Good! You've acknowledged that the debt needs dealing with. Now for the hard part. To get things under control you need some TOUGH LOVE. That means you are going to hear a whole bunch of stuff that you probably don't want to hear.
It looks unikely that you can do anything about this now, so best get over it and chalk that one up to experience.
OK, good start.
Another expensive lesson: Be careful who you listen to for investment advice.
If you owe $45k for it and you only get $25k back for it, then suck it up. You may have to draw out equity from the house to pay for the extra debt on that vehicle, but drawing down $20k is going to cost you less than the $45k already owing. If you absolutely MUST have a second car, then draw that from the equity too and pay cash for it. If there is a chance that you will keep your home, take the redraw as a small separate loan, that way it is identified what it is for. This may help if you want to turn the place into an IP at any stage.
Next, like others have mentioned, is to find out where that extra $2700 per month is getting spent. That is a HUGE amount to not know where it goes. Could it be so simple as that is what Hubby draws for his own discretionary spending coupled with money for the kids at the school canteen & pocket money? If so....well....that's a lot to flutter away each month.
Look at the little things. Lots of little things add up to one big thing. I'll give you an example:
I was talking to a friend of mine the other day. She works and has a large income but like you, it all gets spent. She spends something like $30k on Uni fees for her kids. Anyway, she told me that she had decided to give up coffee and she couldn't believe how much spare money she had each week.
Now, she wasn't giving up coffee to save money, but that was the end result. She was buying coffee every day at work, and while each cup was only a small amount of $$, it adds up over the space of a week. As investors, the 'latte factor' has been thrown around from time to time. Most of us are aware that this one little expense can cost thousands, but this was news to my friend.
Your husband earns a heck of a lot of money. I'd suggest that he probably buys his lunch as well as a couple of coffees each day, perhaps a muffin to go with the coffees too. So lets suppose he spends $30 each day at work on food. That's $150 per week. Now, its probably more than that, but we'll use this as an example. He doesn't see the 'big' picture in the household finances, so if he is reluctant for change, try this little experiment.
Make extra for diner, and give him the leftovers for lunch. A nice home cooked meal should be more tempting than the local sandwich shop/food court. Tell him it's to save time at work, to get more out of his lunch hour, rather than lining up for service, he can heat it up and eat it straight away.
Make some cakes/scones/slices and pack them for his morning/afternoon tea. Sheesh, you could even buy those large trays of muffins from Woollies, freeze them, and give them to the kids/Hubby each day.
And while you're at it, pack lunches for the kids at school as well, if you're not already doing it. You will be surprised at how much this simple little thing will save.
Here's two pieces of tax advice. Some of it has been said before...
Move out of your house and rent it. Rent something yourself, either an equivalent property or a cheaper one.
By renting your home, you'll get lots of tax deductions due to negative gearing and being able to write off household repairs, rates and other holding costs. The effects will be blunted somewhat because you don't appear to be earning a taxable income, only half the benefits would be against your hunband's income, the other half would be lost (but it's still better than nothing).
This is a reasonable strategy. It doesn't cost you anything financially above what you're already doing and does give you back a few dolllars every month. Hard to say how much because we don't know what the potential rental income would be, but I doubt it would be more than about $500.
Here's how a lot of other tax advice goes when you break it down...
Borrow some money and invest it in something. The interest on the loan will be tax deductable. For every dollar it costs you the ATO will give you back 45 cents (maximum, probably less).
I hope you've made a good investment decision that will pay off some day but in the meantime it's likely going to have an impact on your cashflow (which you're saying is already in the red). Probably not a good way to go for the OPs circumstances.
It may be possible to optimise your existing arrangements to pay less tax but without disclosing everything you're unlikely to get much tax saving advice over what's already been said here.
The real problem is cashflow. That comes down to understanding a budget and living within it. Successful investors will all tell you, "Spend less than you earn and invest the surplus".
If you spend more than you earn, you're not in a very good position to invest. About the only thing you get tax deductions for is when investing looses you money in some way.
PS. Lollypops, I don't want to be harsh, but if you lay your financials out on a public forum, both the good and the bad are going to be picked to pieces and analysed, usually on only a fraction of the real story. It's the nature of the internet.
Move out of your house and rent it. Rent something yourself, either an equivalent property or a cheaper one.
By renting your home, you'll get lots of tax deductions due to negative gearing and being able to write off household repairs, rates and other holding costs. The effects will be blunted somewhat because you don't appear to be earning a taxable income, only half the benefits would be against your hunband's income, the other half would be lost (but it's still better than nothing).
This is a reasonable strategy. It doesn't cost you anything financially above what you're already doing and does give you back a few dolllars every month. Hard to say how much because we don't know what the potential rental income would be, but I doubt it would be more than about $500.
Here's how a lot of other tax advice goes when you break it down...
Borrow some money and invest it in something. The interest on the loan will be tax deductable. For every dollar it costs you the ATO will give you back 45 cents (maximum, probably less).
I hope you've made a good investment decision that will pay off some day but in the meantime it's likely going to have an impact on your cashflow (which you're saying is already in the red). Probably not a good way to go for the OPs circumstances.
It may be possible to optimise your existing arrangements to pay less tax but without disclosing everything you're unlikely to get much tax saving advice over what's already been said here.
The real problem is cashflow. That comes down to understanding a budget and living within it. Successful investors will all tell you, "Spend less than you earn and invest the surplus".
If you spend more than you earn, you're not in a very good position to invest. About the only thing you get tax deductions for is when investing looses you money in some way.
PS. Lollypops, I don't want to be harsh, but if you lay your financials out on a public forum, both the good and the bad are going to be picked to pieces and analysed, usually on only a fraction of the real story. It's the nature of the internet.
