How to save the $$$$

[Wirra436]

Hi All,

I was just curious how people save thier cash and upon creating regular savings what they do with it in regards to "types" of saving?
Also perhaps measures they put in place to not spend it ??!!

Do they put it into a Term Deposit ?
Buy Low Risk Shares?
Sit it all in an Offset Account?
High Interest Saver Account?
Give it to a "Trusted" parent/Relative so you cannot spend it?

This may have been asked before.

I'm currently putting away a few thousand a month into a High Interest saver account that I try my hardest not too touch, The rest goes into an offset.

What are others thoughts?

Cheers,

Wirra

 

[jingo]

I'm currently putting away a few thousand a month into a High Interest saver account that I try my hardest not too touch, The rest goes into an offset.

What are others thoughts?

Cheers,

Wirra

Would you receive a better return putting it all in the offset account?? I stash my spare cash in offset accounts.

 

[tess85]

Usually you'd be better off putting it into the offset account because you would pay tax on the savings account, surely? (depends on your marginal tax rate). Interest rate on loans is also higher than interest rate received on any savings account.

I have all my cash in the offset against my PPOR but I have a few grand in shares or managed funds. They need to return more than my mortgage rate divided by (1 - marginal tax rate). Eg. 6% / (1 - 32.5%) = 8.9% for it to be worthwhile investing outside of my mortgage.

 

[Richard Feynman]

100% in offset against PPOR. When there's enough, it's reinvested.

Not spending it is pretty easy -- I stick to my budget. All my surplus goes towards savings, then investment.

 

[skater]

100% in offset against PPOR. When there's enough, it's reinvested.

Not spending it is pretty easy --.

Like Richard said, not spending is a non-issue, but I gather that the OP is rather young, as one of the options is to give it to a parent.

You need to develop your mindset into what is a need and what is a want. Then look at what you want most, and what you are happy to give up to get it.

For instance, we have a reasonable net worth, but we don't drive new cars. To me a car is merely a form of transport & not worth tens of thousands of $$. I might like a new car, but I don't need one. I'd rather put my money towards an appreciating asset.

 

[Simon]

I always found I was better at paying back a debt than saving money.

What worked for me was to borrow smaller amounts and buy shares. Then pay it back as fast as I could.

Rinse and repeat.

Tax deductible debt and franked dividends.

Also a little of an extra decision to sell the shares than leaving cash in the offset account which is just a few keystrokes from paying out my Visa Card.

But if you got the discipline then go offset

 

[A Jeremy]

I'm in the same boat as Simon - paying off loans better than saving cash, but because our properties are bought through a company, our lender doesn't offer offset accounts for our loan products so I utilise a high(er) interest internet savings account.

 

[redwing]

The invest it into a 2013 Harley Fat-Boy

 

[Deltaberry]

If you can't save cash living in Australia, you're in big trouble.

 

[D.T.]

If you can't save cash living in Australia, you're in big trouble.

Not sure if you read the post, but seems like he doesnt have any trouble saving. Moreso asking for the best place to do so.

 

[Wirra436]

The invest it into a 2013 Harley Fat-Boy

HaHaHa that was a Birthday Present for myself !!

Gotta buy a Toy and Have a bit of fun !!

 

[redwing]

I'm currently putting away a few thousand a month into a High Interest saver account that I try my hardest not too touch, The rest goes into an offset.

What are others thoughts?

Thoughts

Is the high interest account a higher rate than the mortgage rate?

You pay tax on the income from the high interest account

 

[Wirra436]

Thoughts

Is the high interest account a higher rate than the mortgage rate?

You pay tax on the income from the high interest account

High Interest Saver is 4.11%

I will just put it all into the Offset Account.

Easy done

Cheers,

Wirra

 

[Wirra436]

If you can't save cash living in Australia, you're in big trouble.

I have no trouble saving the Cash.

Was more curious where the majority tend to stash it.

Obviously a few reward spends like the new harley that redwing pointed out, but at least I paid $$$ for it and didn't borrow a cent.

Unlike Fellow employees I work with, who do have the cash-flow, but instead of saving decide to borrow for their brand new 4WD, Boat, Jet Ski etc. $100,000+ of lifestyle goods all borrowed using personal loans etc

Each to their own.

 

[Singo]

Not spending is easy. Have a dollar price for an hour of work. So for every product/service you buy, calculate the price in hours. That is your life, something you can never buy back. When spending consider whether spending X amount of your life is worth it!

 

[BuildingBlocks]

High Interest Saver is 4.11%

Which in most cases after tax is like having it in an offset account where the interest rate is 2-3%.

So if your mortgage interest rate is above 3% then the offset account is the place to put it out of the two options

 

[allsuccess]

Sit it all in an Offset Account against PPOR. Also, as some others said, we have a tight budget so not spending is a non-issue.

 

[WattleIdo]

Not spending is easy. Have a dollar price for an hour of work. So for every product/service you buy, calculate the price in hours. That is your life, something you can never buy back. When spending consider whether spending X amount of your life is worth it!

Excellent advice!

 

[BayView]

I have no trouble saving the Cash.

Was more curious where the majority tend to stash it.

Obviously a few reward spends like the new harley that redwing pointed out, but at least I paid $$$ for it and didn't borrow a cent.

Unlike Fellow employees I work with, who do have the cash-flow, but instead of saving decide to borrow for their brand new 4WD, Boat, Jet Ski etc. $100,000+ of lifestyle goods all borrowed using personal loans etc

Each to their own.

Interestingly; those who are in the "to their own" bracket who are in the above doodad buying bracket are often quite vocal about their resentment of the folks who put their extra cash into the mortgage (as I always have done), or TD, or online savings account etc (i.e; the "rich c#nts).

I think where you save depends a lot on your debt position and type.

There is a terrific worksheet/formula in one of John Burley's books relating to this.

Basically; pay off the most expensive debt first (not the biggest debt). This is usually the Credit Card, followed by such things as store cards, or car loans, and finally the Mortgage.

Once you pay off the first lot of debt using extra payments, you then add that payment to your normal minimum payment on the next most expensive debt, and so on.

For most folk, if you only have a Mortgage as your debt, then any other form of savings return that doesn't exceed the interest rate on the Mortgage is pretty much a waste of time - 100% offset as others have said.

Better off smashing the mortgage and when able; invest some equity (tax deductible debt) into income producing investments as the next savings vehicle.

One of my favourite forms of saving is to:
1. Go shopping with no wallett.
2. Never go shopping.

 

[Brady]

BV don't think it's resentment like you state. It's more of a case of people wanting more flexibility. If you move PPOR and keep the existing as an IP can miss out on some good tax deductions.

Smashing the mortgage to me is putting funds into offset for you it's off the balance, both net the same result at this stage. You have nailed it with this comment.

I think where you save depends a lot on your debt position and type.

1 size doesn't fit all.