Once again I am doing the completely political incorrect thing of talking about our finances.
Why? Because no-one talks about personal finances. We are more likely to talk about our sexual preferences than our personal finances these days. Yet as I said in a prior post, how else do we learn from each other?
Anyway, I was discussing with D our dire situation at present and I realised we were in 'the perfect storm'.
D had a fantabulous year last year with hitting his sales target (he won various sales awards and prizes including an ounce of gold - literally - where does one store such things?!) so this year they jumped his targets to a ridiculous level. Funnily enough, he has grown his business significantly over last year even though public sector spending on health has come to a grinding halt (don't tell the newspapers apparently - imagine if the public knew that waiting lists for elective surgery are going to blow out so significantly as there have simply been NO surgery for hips and knees as a cost cutting measure. Yes achieves that measure but what about the patients? Apparently you don't officially go on a waiting list for surgery until you are 'seen' by a doctor from the hospital. So if you don't get 'seen' you are on ANOTHER sort of list that is not counted as a waiting list. Huh?) Anyway upshot of all that is - no bonuses for D. And the downshot of that is that as a family we cannot live on D's base salary. We are short $3k per month.
At the same time, our Mackay investment - which is finishing this month is fully expended (that is full price paid and loan from bank at 100%) but no rent yet. Hoping to rent it out by end of this year, perhaps early December. In the meantime we have $3k per month interest bill not yet covered in anyway, plus rates.
Speaking of rates, we just had three properties rates fall due in the same week - that is another $4k or so just for this month. Now this is just a cashflow issue not profitablity as the rent easily covers interest and outgoings such as rates.
Electricity for our home last quarter was down on usage. But up $300 on price. That is, we used less electricity than last year but now our quarterly bill is $1,200. And this was not in a quarter where we used the airconditioning or pool solar heater! A few years ago I converted our pool filter to off-peak electricity ($1,500 to do so) and I am very conscious of our electricity usage (particularly the big downstairs tv) but I feel a lot of our usage is the oven and the kettle and the hot water system. We do not have natural gas to our house, but use BBQ cylinders for the stove, so we cannot use a gas hot water system. We have six people living in our house, soon to be seven so per capital we don't use a lot of electricity at all. In fact, studies have shown that larger households are much more efficient - makes sense - we only need one light on for all of us to benefit! Anyway a big hit this month!
As I have mentioned our tax return from last year was delayed due to an ATO audit. I do not in anyway resent this - it is good that the ATO check returns. D's was a big income last year (compared to prior years - enough to make a flag go off in some system some where no doubt) plus we had the three investment property deductions and his MBA cost deductions. I of course re checked all my calculations on the deductions (including paying $150 to get the bank to reprint statements in hard copy as I only had the internet reports in case they wanted to see EVERYTHING). But no, the problem was that my tax accountant had input my estimated income for D's salary that I gave him June in order for him to do tax planning, not the MYOB file figures I had given him with the final figures in July. Admittedly I should have double checked that transpose but instead only checked the deductions as they are normally where there are problems. So his fault and mine, I guess..... Anyway apparently it is all cleared up now with the upshot being an extra 95cents in tax return. Ha ha. Anyway that $19k will certainly help pay off the last of the personal home mortgage. Should be with us by end of November.
Our government Building Boost Grant for Mackay is all approved by the Office of State Revenue apparently. $10,000 is due to us for propping up the flagging construction industry by building a new property not buying an old one. But has it been released yet by the government? No. When is it likely to be paid? Unknown. Holy moly.
So in summary, the above is indeed the perfect storm. Which will pass over. In the meantime, I have maxxed out one credit card ($7k) and am working my way through another ($4k gone, about $3k left I think). Interest is due end of month so I cannot spend any cash to ensure I cover it all.
What has been so interesting is how much I have ALMOST enjoyed the challenge of being frugal. Many will attest that this not my normal state of being. Since my Hong Kong work days when I earned a hell of a lot of money, I have always had lots of money and if I didn't in actuality, I always had a very positive view that money would come when it was needed. And it did. Up until recently, if I wanted something I bought it. I am not a crazy spender and I always pay off my credit card monthly. If anything, I don't spend on petty things in a small way (like clothes or unnecessary items) but I do like to buy houses, or do significant renovations (like put a pool in) or have fabulous (ly expensive) overseas holidays. When I spend, I tend to spend big.
However up until recently I never really looked in detail at where the money goes. Like working out how much we spend on kid's extra curricular activities, or how much I spend on hair, beauty, massage for myself, or how much we spend on kids presents (I buy a lot of my kids throughout the year just because I see something I like and I don't wait for a birthday or Christmas. Also D and I would generally have a 'date night' at least once or twice a month and spend $150 on a dinner out. Also we would have take away sushi once a week (for five people that is about $80 worth now days) and Thai takeaway a few times a month ($40 ish).
And of course, I am not working. Normally I work a few days a month and get a few thousand dollars as a result - not huge but it helps. I haven't really had that for two years. Bring on January 2014 for that to recommence - a long time away.
Once this baby pops I will get the government's maternity leave - better than a poke in the eye with a sharp stick .... and I am grateful for this.
Well I started tracking every cent (yup!) since July this year. How very interesting! Knowing I will record everything (a bit like a weight loss campaign) makes me much more careful on what I spend. I think I do frugality pretty well! Certainly no more eating out (dinner, sushi, Thai) but I do buy smoke salmon and prosciutto at Aldi once a week for 'treats'. I still buy T his gluten-free goodies, and we eat an expensive cereal from Vive.
But there is no more careless spending. And I think in doing so I realise what we REALLY need to live on and not what we may want to live on. I hope we can go back to a bit less frugality next year! D will need some business shirts at some stage! I will go back to being my size 10 and need some new clothes (it has been a few years when I haven't been pregnant, or breast feeding).
We are using all family Christmas presents to pay for the kids' extra curricular activities - piano is $30 per half hour so steep. I am using our credit card points to buy most of the family Christmas presents as well, to make Christmas manageable.
I am using ebay and online shopping heaps for those other items - so that I can shop around for price and get the best price. E loves In the Night Garden and it is his only tv show that he can watch from start to end so I am getting that on ebay. T is going to a birthday party so I have found a wonderful gift on line for $17 normally $30 at the shops.
This is so not my style - I am normally a 'see it, buy it' kind of person. But I am enjoying this. I hope it helps me when I have do to the same thing for my diet post baby. I am not generally good at denying myself food. I hope that when I start that process I can blog about it - and you can keep me all committed!
I actually think that I will never likely lose the lessons of the last five months of frugality. It is freeing to not be in such a tight grip of the 'material' world. I do sometimes envy my friends with larger family incomes, but really, we are comfortable comparatively to many others so that envy is small and not strong. Funnily enough, I think this year we may actually qualify for family income support! But of course we will only know that at year end so not sure how that works at all in terms of getting paid. Once again, a cashflow consideration!
So if I decline social outings folks, this is why! But beware, I will be back with bells on next year hopefully, sans baby belly. We have paid the deposit on a waterfront unit at Noosa for Easter holidays so we have to take that up or we lose the deposit. This is pre-frugality days commitment! But gee am I looking forward to it! Obviously no dinners out, and Aldi bags will grace the foyer when we move in - but I will love every moment of my sea view!
Labels: finances, Property Investing, Stay at home mum
