Savings strategies

Ridin-High said:
I'd be pretty close to IV's 30/70 rule.
70% on investing, 30% on living expenses (car, food, entertainment).
I have a highly geared portfolio tho so its more forced, probably not something to envy lol.

Regards,

RH
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Not really, i remember one argument used by private equity. Debt teaches you to be efficient, you cant wear 'fat' because of the debt factor.
Debt forces the efficiency factor to come into play.

Look from an alternative viewpoint, if you didnt have the debt in play, then you might be more tempted to spend on 'non-wealth creation items'.

Having said the above though, my ultimate preference in the current environment is less debt full stop. Investment angles will present themselves periodically, but if your shop is full of debt already, you wont be able to maximise the benefit that such opportunities present.

In the current environment i am trying to be very flexible.
As i mentioned i am in the black now for the 2010 calender year, i wouldnt be in this situation if i was fully leveraged at the start of 2010.
 
I've probably "lucked it" abit more then actual skill thats because i jumped into the pond pretty much in the depth of the current dip (Shares POV)

Just when i started looking yields on bluechip stuff looked really good.

But yeah thats a great point you have and something i've gotta train myself to do, is keep abit of cash/equity aside for really good oppurtunity instead of investing all my $$$ soon after i get it

Regards,

RH
 
We just switched our largest loan to P&I (took weeks to do that, grr) and now 'need' to pay an extra $100 a month into it. As I said earlier, we're going to pay enough for the new loan into that same account, which just happens to be around $400 a fortnight P&I.

So we're going to increase payments to that loan from $250 a fortnight to $700 a fortnight. I'm sure I'm asking for some tax implications there, considering this is redraw not offset and we will be taking out any advance payments at the end of the year, either by redraw or refinancing, to buy a new PPoR with. A substantial part of this loan will already *not* be tax deductable when it becomes an IP anyway so I don't think it could get much worse as is.

I was hoping to have already started this strategy but apparently it takes a very long time to get the baby bonus/parenting payment/FTA these days so I've been budgeting for all this money to be coming in and in reality my income has been damn close to zero since I had this baby, since I'm not working either, and apparently its not backpaid, they just give you what they should have when you do your tax - ie, well over a year from now, much later than when we need it as a house deposit :mad:
 
Saving is great. But even better is to create new sources of revenue. Work another job after 6pm, or work later hours and get over time.
 
rugrat said:
It not 'even better' if you have kids or other commitments. ;)
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I definitely think early on when you DON'T have those commitments is when such a strategy could/should be utilised ;)

Even working 1 day a week on Saturday or Sunday (additional to full time employment) can make a huge difference to young investors such as myself. Working on say $20/hr, 8 hours = $160 per week = additional $8320.00/year. For me, to do that for five years between 21 and 25, and there's $40,000 odd right there.

Adds up when it's put into perspective.

Cheers,

Steve
 
I heard someone say nipple so I rushed over to this thread to see what the fuss was about.

Since I’m already here I’ll make an on topic post. Currently have a 70/30 split saving / expenditure. I live with the olds so it’s pretty easy. Set up one of those UBank accounts and the money is automatically taken out of my daily account on a fortnightly basis, pretty basic stuff really. Since I work 10hour days minimum and pretty much too buggered to do anything massive on the weekend (except a few beers and xbox with some mates and maybe a few at the pub after, definitely no more lines of jagger bombs or champagne by the bottle) I don’t feel like I’m missing out on much by not throwing money around like a boss.

Biggest expenses are car related but I’ll be cutting her loose at the start of next year for my PPOR deposit. I guess the point I’m trying to make is that if you’re a young person just start saving and stop going to trendy clubs / bars / restaurants, or just go on a massive binge, have an epiphany that its all just w@nk and generally get it out of your system, it worked for me.
 
Isn't the modern idea of saving where you go out and find an item (doodad) on special, and because it is 40% off, or half price or whatever, you buy twice as much?

Spend more and save. ;):rolleyes:

naaah, but seriously; spend less than you earn.

End of lecture from Dr.R.K.T. Syienz
 
As a young guy I was a bad saver but good at paying my debts.

What worked for me was taking a small loan of $5000 at my credit union and buying blue chip shares. The debt was deductible and I'd pay it back in 6 months.

Nowadays it would be $10-15K but the principle is still the same.

Funny thing was my mates all thought I was crazy borrowing to buy shares. They all borrowed much more for new cars. We all knew which purchase was most likely to depreciate!

Worked for me.
 
Demand good bonuses/pay rises. Spend within your means and never carry a credit card on you. If you don't have money, don't spend? Try to spend less than 5% of your net salary. If you have to spend, use around 10% max of your rental income.
 
Simon said:
As a young guy I was a bad saver but good at paying my debts.

What worked for me was taking a small loan of $5000 at my credit union and buying blue chip shares. The debt was deductible and I'd pay it back in 6 months.

Worked for me.
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I am the same type of person (lousy saver but would rather die than miss a loan payment). I reckon your strategy is fantastic!

I think that a lot of financial/investment advice doesnt really factor in irrational investor psychology enough. For example, I struggle with the interest only loan strategy, because I hate the damn bank so much that I cant stand the thought of being 'in a relationship' with it for 30 years.
 
The only suggestion I can make for people (especially young people) thinking about saving a decent amount of money is to adopt a workable budget.

Rather then write it again, here is where I have written about it before:

Read this first, then this.

:)
 
i try to smash all of my bills first then save, but i find that just when you are at th point where you pay 400 dollars a week off something, the next thing comes up and it frustrates the living heck out of me
 
Ben Kelleher said:
i try to smash all of my bills first then save, but i find that just when you are at th point where you pay 400 dollars a week off something, the next thing comes up and it frustrates the living heck out of me
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Hi Ben,

Have you tried to reverse the system? Treat your savings as a bill and pay yourself first each and every pay day. Even if the amount is small, saving regularly is the trick.

Try to stagger your bills and limit the amount you spend each pay day on your bills. If you have to pay a bill a couple of days late in order for your system to work, do it. (But don't pay your bills too far past the due date!)

Regards Jason.
 
Africandaisy said:
For example, I struggle with the interest only loan strategy, because I hate the damn bank so much that I cant stand the thought of being 'in a relationship' with it for 30 years.
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I used to think like this, but now my mindset on banks is that they are a business partner.

They are emotionless about my business of course, so I am also as equally emotionless about my loyalty to any one of them these days.
 
No loyalty needed - my family has some decent-size banking with a particular bank via these high-flying private bankers who invite you to the bird cage on Melb Cup etc, and I can't believe I could get a better deal just by walking into another retail bank the other day. Useless bunch.
 
BayView said:
I used to think like this, but now my mindset on banks is that they are a business partner.
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They are a biz partner till something goes wrong, then they become your enemy.
But as long as you have income & savings, they'll keep being your partner.

Deltaberry said:
Demand good bonuses/pay rises.
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As long as you dont have a fair boss (like me) and you will be fired, one way or another, for demanding anything.
Work more, better, be more productive and you will make more money.
Demand, and there's plenty waiting to take your job.
Though you could be doing your employer a favour...
 
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