According to the latest ABS figures, more than 70% of Aussie families are carrying some debt – with 26% of this group holding debts worth three or more times their annual disposable income.^[1]If debt is holding you back, don’t despair, there are plenty of ways you can take control of your debts and set your family up for a strong financial future.

1. KEEP RECORDS

Don’t know where your money’s going? Then it’s time to keep records. For a month, write down everything you spend – from bills, repayments and groceries, to entertainment, trips to the doctor and the hairdresser. Don’t forget to include quarterly or annual payments like car registration, insurances, electricity and school fees. This will give you a realistic indication of your spending, which you can use to create a budget.

2. ELIMINATE UNNECESSARY SPENDING

Once you’ve had a good look at your where your money’s going, cut out any wasteful spending and save that money or use it to pay off debt. This could be things like the gym membership you never use, or subscriptions for pay TV channels that you rarely watch.

While you don’t have to deprive yourselves, be realistic about what’s really adding to your life. A themed birthday party for your four-year-old may look great on Pinterest, but is it really the best use of your hard-earned cash?

3. DITCH THE PLASTIC

Possibly the biggest drag on your budget will be unsecured debt that’s accumulating interest. This means the credit card debt or personal loans for things like holidays and meals out, or items like clothing, shoes and technology that depreciate quickly.

Carrying credit card debt does more than drain your resources now. If you end up defaulting on credit, it can hurt your credit rating down the track, making it harder to get good debt like a mortgage or business loan. So leave your cards at home or even cut them up, then tighten your belt and get them paid off once and for all.

4. BUY SECOND HAND

One way to cut costs, and do the environment some good, is to buy second hand wherever possible. This can be a great way to get good quality items at a fraction of the price. Check eBay or Gumtree, head to a garage sale, or log onto Facebook to find buy, swap and sell groups in your area. You might even be able to get someone to deliver the goods as part of the cost.

5. KNOW WHEN TO TRADE DOWN AND WHEN TO PAY FOR QUALITY

Of course, this isn’t to say that you should always go for the cheapest every time. Sometimes it can be false economy to buy cheaper versions of items that need to last for a while, such as whitegoods. So think carefully about where you can trade down, and where it makes sense to pay a bit more.

For advice specific to your personal situation get in touch with us today o 08 8223 3774.

^[1] ABS 6523.0 – Household Income and Wealth, Australia, 2013-14

Any advice in this post is of a general nature only and has not been tailored to your personal circumstances. Please see personal advice prior to acting on this information.

1. Make a list

Making a list might sound obvious, but Christmas shopping on impulse is dangerous. So make an old-fashioned shopping list and stick to it. Remember, shops spend a fortune on targeting your spending impulses – a list helps you beat them.

2. Set a budget and track it

Use your list to create a realistic budget to help you avoid the mistakes of Christmases past. Look at where you overspent or what you didn’t plan for last year, and work out what your friends or family really need.

Then keep track of your spending to avoid going over budget – an app like ASIC MoneySmart’s TrackMySpend can help make this easy.

3. Think outside the box

Try some gift hacks to reduce costs and double the fun.

Why not try a Secret Santa, so everyone gets just one gift? That way you can spend a little more than usual on your assigned person, and get them something they’ll really enjoy. And meanwhile, the whole family saves, reducing financial stress for everyone. Or you could agree to only buy for the kids in your family or group of friends.

For your kids, buy small gifts for Christmas Day, and give them an IOU for a larger gift to be bought in the post-Christmas sales.

Great gift giving doesn’t mean spending lots of money. For example, the kids can give vouchers for household chores or foot massages or even “best behavior” promise vouchers..

4. Plastic isn’t always fantastic

If you use a credit card this year to pay for some or all of your Christmas gifts and expenses, track your spending and have a plan to pay it off.

If you spend $1,000 on your credit card, for example, and pay it back at $100 per month, it’s likely it will take you around 11 months to pay off [1].

5. Cut the Christmas Day food costs

Consider a simple classic meal, and don’t over-cater. Or if you’re the regular Christmas host, ask everyone to ‘bring a plate’ – or to bring a starter or dessert. Not only will it save money, it’ll also reduce the effort and make sure everyone can enjoy the festivities (including you!).

Buy pantry items for Christmas lunch in the weeks leading up to Christmas so you don’t have all the costs at once.

6. Start saving now to spread the costs

How much did Christmas 2015 cost you? If, for example, you’re planning to spend $1,200 this Christmas, it’s a good idea to start saving now. If you save $50 a week over 12 weeks, you’ll have half of it already saved in time for Christmas!

Any advice in this post is of a general nature only and has not been tailored to your personal circumstances. Please see personal advice prior to acting on this information.

[1] Based on an interest rate of 18%, at https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/credit-card-calculator

Around half of us make New Year’s resolutions – but only around 12% manage to succeed[1]. With getting out of debt and sorting out our finances high on the wish list each year, here are three tips to help you keep your resolution and make 2016 a financial success.

Step 1: Clean up past

The average Australian owes $4,300 on their card[2]. If you’re one of them, and only paying off the minimum each month, this could take you more than 30 years to pay off, and cost you around $10,200 in interest[3].

To start the year on a clean slate, sort out a system to pay off your credit card debt. You may want to consider consolidating them under a personal loan, or transferring the balance to a lower rate card. But remember, these strategies only work if you don’t run up more debt – so be sure to exercise discipline with your card in the future (even if it means keeping them under the mattress for emergencies only).

Step 2: Set yourself up for success

Once you’ve dealt with the past, get the present organised.

A budget is a good idea – but before you create one, have a look at your short and long term goals. How much money do you need to achieve them? Once you’ve worked that out, you can revamp your budget, based on what you want.

And while you’re getting your budget in order, sort out your paperwork too. If it’s cluttering up your desk and hard to find when you need it, go digital. Set up templates for your budget or download one of the many budget apps that are available. Scan your receipts so they’re ready for tax time. And ask your bank and super fund to send your statements electronically from now on.

Step 3: Plan for the future

You’ve probably got some super saved – but will it be enough for the retirement lifestyle you want? If you’re not sure, it’s time to find out.

An online calculator can help you work out what you need and if you’re on track to get there. If you’re not, now’s the time to consider setting up salary sacrifice or look at other ways to boost your super. For example, if you’re approaching retirement, a Transition To Retirement (TTR) strategy may be an ideal way to boost your super savings.

As well as building wealth, make sure you protect what you have for you and your family, with income protection, trauma insurance and TPD and life insurance. Make sure that you have enough cover too, so that if things go wrong, your lifestyle will be protected.

Get Expert advice

Now it’s all in place, schedule a little time throughout the year to make sure things are up to date. Keep track of your goals throughout the year and be prepared to tweak your budget as things change.

And remember – if you need a helping hand with these steps, or any other financial need, wecan help you keep your resolutions, and keep your finances on track.

General Advice Warning: Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

4 financial decisions to make after you’ve changed jobs

You’ve changed jobs and you’re busy focusing on settling in and succeeding in your new role. Here are four financial decisions you’ll need to consider to ensure you’re on track.

1. Consider how you can eliminate or reduce debt

The interest rates you pay on borrowed money can quickly absorb any extra income. If you’re looking to reduce your debt, but can’t decide what to pay off first, it’s usually best to start by eliminating debt with the highest interest rates such as any credit card debt, then any personal loans, followed by the mortgage if you have one on the property you’re living in. There may be tax implications, so speak to your accountant or adviser to find the best approach for you.

2. Get tax ready

Go to the ATO website and review the marginal tax rates and how your income level is taxed. If you have a higher level of income you may incur additional Medicare levies if you don’t have required levels of private health insurance. It may be worth keeping a little money aside for tax time.

3. What to do with extra income

If your salary has increased, you can consider setting up a regular super top up payment, called “salary sacrifice”. You may not even miss the smaller, regular and direct payments into your super account, but your super account will grow much faster. And effective salary sacrifice payments made by your employer to your super fund are treated as concessional contributions and, therefore, only taxed at 15%1 up to the concessional contribution caps2 as opposed to your normal marginal tax rates. Super is likely to become one of your biggest investments that will help you enjoy more lifestyle flexibility once you have retired. To find out more on the best ways to contribute more for super talk to your financial adviser.

4. Update your income protection insurance

Income protection provides you with an income if you become ill or are injured and can’t work. You should carefully consider whether to take out income protection or salary continuance insurance if you don’t have it already and if you do, then now is the time to consider whether to update it with your new income level. If you leave it at your current level at claim time, you may quickly realise the shortfall.

Important information

This information is correct as at 14 December 2016.

Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.

1 Broadly, an additional tax of 15% is payable on concessional contributions (CCs) by individuals ‘earning’ more than $300,000pa. Legislation has passed to reduce this limit to $250,000 from 1 July 2017.

2 For 2016/17 the concessional contribution caps are $30,000 for those 48 or under on 30 June 2016 and $35,000 for those 49 or over on 30 June 2016. Legislation has passed to reduce the CC cap to $25,000 from 1 July 2017 for all individuals irrespective of their age. Any excess CCs are treated as assessable income and taxed at your marginal tax rate plus with a 15% offset for the tax already paid by your super fund. You will also need to pay an excess CC charge. You have the choice to have up to 85% of the excess CC amount released from your super fund to assist you in paying the additional tax liability. Other implications may arise if the excess CC amount is not refunded. Refer to ato.gov.au for further information.