help to reduce tax / debt

PT_Bear said:
mobile phones $180
pet insurance $45
foxtel $142
internet / phone $80
gym membership $140
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You could cut some of these, but in reality it's not going to help you much. Saving $140 a month for Foxtel is going to pay about 17 HOURS of your $6000 a month mortgage.

The main issue to me is not these items, it's the mortgage. If it is refinanced to a more friendly rate, the savings would more than cover the Foxtel and other bits and pieces.

If it can't be refinanced, then look to sell. If you can't afford it, you can't afford it. Trimming away at the edges is not going to solve your problems.
 
Hi OP,

I feel for you. I sense a few things there aside from the $$ pressure, which may impact your relationship with husband and kids if not resolved quickly.

I completely agree with PT_Bear suggestion of rent your current house out and rent another place. This can be done quickly, painless (i.e. minimum impact to lifestyle) bring you at at least. $1440- $2880 extra per month from tax saving (depending on ownership of the house) and potentially much more from depreciation. Doing them will buy you some 'breathing space' while entangling some of the more fundamental issue (i.e. changing spending options, etc.).

This will also give you a chance to move to a different neighbourhood (if you wish too), preferably one with a good public school - so that your younger kids could get a good affordable education growing up, and with less pressure to be in a private school.

All the best. I hope things get better soon.
 
skater said:
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.
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That's a bit harsh Skater. I think it's the assumptions and the 'holier than thou' attitudes, more than the genuine advice, that gets people on the defensive.

Personally, I think there's more than meets the eye here. I'd guess that money issues are not the only issues here.
 
A few people have mentioned renting out the current place while renting elsewhere. Just keep in mind the possible CGT implications with this option.
 
Lollypops, some harsh truths have been brought out in the course of this thread that you are unfortunate to have to face.

1. You hate where you live
2. Your husband thinks the exact opposite
3. You know you are in trouble and are trying to manage as best you can
4. Your husband doesn't/wont believe this

If your family, as one, arent prepared to agree on reality, and what needs to be done it will of course be a constant fight.

I hope you and your husband take up Dazz's offer. Talking to an impartial third party face to face would do wonders, particularly this impartial third party.

If the above isnt sorted first, the rest of the advice is pointless.

Beyond that:
1. If you arent going to move in the near term refinance if you can
2. Wylie and a couple of others are spot on with this:

wylie said:
I'm thinking that with such a high income coming in, you really need to understand where it is leaking (other than the expenses you have identified) and try to turn that situation around.
Click to expand...

You have identified around $3k a month of spending that is unaccounted for/incidental. Find out EXACTLY what it is, where it is, how much. I know it's very cliche, but what gets measured gets managed. Start measuring.

If you can even claw back a few hundred a month (on top of the extra you're getting from cancelling foxtel etc) that will solve a whole heap of the problems you have raised and the weight will start to lift off your shoulders.

I sincerely hope you turn things around, all the best.

blw101
 
lollypops32 said:
i don't have my husband on board with this at all.....he doesn't think we have a problem and if you have ever tried 'controlling' what a grown man spends then you'll realise it's easier said than done.
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Ahh we might have found another problem, what does your hubby spend / buy each day.

1. Talk to Dazz!

2. You probably need reliable cars so don't worry about selling.

3. Cancel Foxtel and gym membership and use the savings to get your kids glasses and x-rays etc.

4. Do you need to take credit card off husband and give him a set amount of cash each day to spend?

5. Next 3 kids may have to go to a public school and having a mother at home is more important than working to support kids to go to a private school IMHO.

6. In your situation I would sell your house if you could get 1.4M and buy a smaller house to reduce 900K mortgage to around 200K.

7. Eldest child probably needs to get an after school job - apply online for Woolies and Coles etc.

8. I can see that mobile phones are safety link to kids - but should be prepaid.

All hard emotional decisions to be made and very hard to get your partner on board, we have friends in the same/similiar situation except they are still paying off 2 cars from years ago.


Regards
Sheryn
 
Sheryn said:
4. Do you need to take credit card off husband and give him a set amount of cash each day to spend?
Click to expand...

Yes, then maybe he can enrol in the local kindergarten for naughty children.

Sheryn, did you miss the bit where he works 14 hour days? Judging by the size of his salary, he doesn't have some cushy office job where he gets to surf the net all day. When does he have time to spend money?

Whilst they both need to be proactive in getting control here, how likely do you think it's the husband that is doing the majority of the spending?
 
lollypops32 said:
we live in a large house but it has a large mortgage and large bills (rates / running costs), the house is worth $1.4m, mortgage just under $900,000, repayments $6,000 per month.
income per month $13,000, we have two cars on finance, school fees, all the usual insurances etc. it's a great income (single source) but we just don't seem to have any spare cash to enjoy life. we bought when interest rates were a lot lower but we probably didn't expect to be so squeezed financially.
we also made a ridiculous 'investment' in a friend's company that admittedly seemed too good to be true and for a short time it was, we stupidly borrowed $100,000 to buy shares, they doubled in value at one stage but because we had only held them for a short time we didn't want to sell and pay all that tax. if only we had. the shares currently stand at a value less than $5,000. i actually cover my eyes when i bring myself to see what they're worth. of course, we are having to pay off the money we borrowed to buy these damn things.
we are worse off financially than we were when we were reckless teenagers, eating beans out of a tin in order to pay our rent! yet i would be embarassed to share with any of our friends what our monthly income is as it seems such a large amount. even a takeaway has become a luxury we literally can't afford due to our overcommitment.
my question is....how much would we be better off if we sold this one house, bought two houses for approx the same value as the one we sell, live in one, rent out the other on a negatively geared basis?
secondly, with the taxman waiting in the wings rubbing his hands to have some of your profit, does he also sympathise when you make a massive loss (as we have with these shares). in other words, when the shares were worth just under $200,000 we would have paid almost 50% of the $100,000 profit but do we have any 'benefit' from having lost money, or do we just have to suck it up?
also, if anyone has any reasonable suggestions where we can start make savings, i'd really appreciate it.
Click to expand...

130 posts and counting in four days for a new forumite and well, you've had some very valuable input here, lollypops32.

Consider yourself fortunate to have some very savvy folk on here offer you a plethora of solutions. Some of it can be confronting for sure, however nothing will change if nothing changes.

End of the day, whether or not you give up discretionary items that are available for free (such as free to air digital tv and gym/exercise to name but two) is up to you. No doubt there are likely to be more small items (that don't seem to matter) adding to the leaks in your money boat. Schooling is another that can perhaps be down-shifted from full on high level private schools to perhaps a mid-tier fee structure or semi-private as handyandy mentioned. When I write "you", by implication this includes your husband and family.

Don't scrimp on health care necessarily and I noticed one suggestion of going to Sp3cSavers. Don't even think about it unless it is single vision lenses. Their left hand doesn't know what their right hand is doing. :rolleyes:

Apologies if this has been covered elsewhere and I missed it, with one main bread winner on a decent wicket, I hope you have necessaery insurances especially income replacement policy, TPD and life insurance.

BTW, without first addressing your spending habits and getting control of your situation, investment properties especially negatively geared ones are not on the agenda just yet. You need to be able to walk before you can run with further income sapping assets/items.

You've been given a very gracious offer from one forum member here in Perth who obviously feels the pain and distress in your post.

Bottom line is, that continuing to eat your desert before your vegetables will hasten the deterioration in your (fiscal) health. :cool:
 
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What wylie said about the leaky purse (or wallet as it were) is the bullseye here.

A lot of people seem to be focused on the mortgage. Now, let's put it into perspective. The income is 13K net per month. The mortgage is 6K per month. That's 40% of the monthly income, give or take a few percent. Whilst it's a little high, it's not the problem. With 7K net after the mortgage gets paid, the mortgage is not the issue. Think about it - it doesn't cost any more to do the weekly grocery shop if you earn 13K a month as opposed to bringing home 4K.

So let's say half that can be accounted for. That still leaves three and a half thousand dollaridoos a month that the family can't account for. That's where the problem lies. If they are willing to account for this money, and stop it going walkabout, there is suddenly plenty of money left over each month. Money that, with discipline, can be used to reduce the mortgage at a rapid clip.

No need to cancel gym memberships and Foxtel or sell the house or cars or any of that stuff. Just account for the, you know, THREE AND A HALF THOUSAND DOLLARS A MONTH that is simply walking out the door and do something about it.
 
Mr. Fabulous said:
So let's say half that can be accounted for. That still leaves three and a half thousand dollaridoos a month that the family can't account for. That's where the problem lies. If they are willing to account for this money, and stop it going walkabout, there is suddenly plenty of money left over each month. Money that, with discipline, can be used to reduce the mortgage at a rapid clip.
Click to expand...

Several people have mentioned this. The OP has, however chosen to ignore this part of the equation. If you don't know where the money is going, how on earth are you going to know where the problem is?
 
Understandably, lollipops32 didn't feel comfortable meeting some unknown crackpot off the internet, and so has decided to tackle her problems in other ways.

I wished her success in her endeavours.
 
Mr. Fabulous said:
Yes, then maybe he can enrol in the local kindergarten for naughty children.

Sheryn, did you miss the bit where he works 14 hour days? Judging by the size of his salary, he doesn't have some cushy office job where he gets to surf the net all day. When does he have time to spend money?

Whilst they both need to be proactive in getting control here, how likely do you think it's the husband that is doing the majority of the spending?
Click to expand...

Apologies to Lollipops husband, and I agree Mr Fabulous there is a 50% chance it could be either not having a handle on the spending.

I have a group of close friends who are having trouble with hubbies spending a large portion of disposable income eg $250 per week on alcohol and $100 on smokes or the one who spends between $1000 - $2000 per month on accessories for the 4 wheel drive.

Lollipops
Most likely you will find out there are many on the forum who have suffered a signficant financial setback, ours was investing heavily in Telstra but you know what? The setback stressed and distressed me at first then it motivated me to increase my knowledge and make plans.


Kind Regards
Sheryn
 
Lollypop sorry that you have not found the easy way out for your situation. Unfortunately you can't claim your husband as a liability nor get a deduction for his spending / aka the family's loss.

13k x 12 mths = 156,000 pa in your pocket... I would love to have that problem!

You could sell everything and start over and still be in front. IMHO.
 
CHAOS said:
You could sell everything and start over and still be in front. IMHO.
Click to expand...

confronting but comforting at the same time

+ve net asset value

I have a few clients whose current goal is to get back to broke from - 500 k and more.

So your position although not what youd like, could indeed be worse

ta
rolf
 
Agreed things will be tight. $156k per annum will mean an after tax salary of about $107,180.

If your mortgage is costing about $6k per month then you are left with $35k. 2 cars on finance is probably another $1k per month so there is another $12k gone leaving about $23k to pay school fees, food, etc. I can truly understand the financial stress.

The big issue is the mortgage. It is eating up a huge amount of your take home income. If you don't address that issue then the stress will continue.

Rolf was spot on in the first post he made on this thread. The house you are living in needs to be dealt with first.
 
coastymike said:
Agreed things will be tight. $156k per annum will mean an after tax salary of about $107,180.

If your mortgage is costing about $6k per month then you are left with $35k. 2 cars on finance is probably another $1k per month so there is another $12k gone leaving about $23k to pay school fees, food, etc. I can truly understand the financial stress.

The big issue is the mortgage. It is eating up a huge amount of your take home income. If you don't address that issue then the stress will continue.

Rolf was spot on in the first post he made on this thread. The house you are living in needs to be dealt with first.
Click to expand...

Coastymike

the $13000/month is net income
 

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