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Provision Newsletter

Now to clear the festive debt

Posted On:Jan 12th, 2018     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Australians racked up an extra $29 billion in credit card debt over the festive season, and without early action plenty of people could still be paying off Christmas 2017 in 12 months’ time.

Australian cardholders each notched up an average of $1,727 in holiday debt based on figures from comparison site Finder. The interest cost alone could top $230 million.

The news

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Australians racked up an extra $29 billion in credit card debt over the festive season, and without early action plenty of people could still be paying off Christmas 2017 in 12 months’ time.

Australian cardholders each notched up an average of $1,727 in holiday debt based on figures from comparison site Finder. The interest cost alone could top $230 million.

The news isn’t all bad though. The average card debt accruing interest has fallen from $2,470 in 2012 to $1,890 towards the end of 2017. This suggests we’re becoming better at paying off the plastic.

Even so, while four out of five credit cardholders plan to pay off their holiday-induced debt over the next three months, Finder found the remaining 19% will take longer. One in 20 expect to still be paying off Christmas just gone at the end of this year. Not a great start to 2018.

Balance transfers – one option to clear the slate

One way to trim the tab is with a balance transfer deal. The period of low or zero interest charges can give credit cardholders an opportunity to make headway on their outstanding card balance.

There are currently over 100 balance transfer cards offering 0% transfers. The interest free period varies, but more than half allow a whole year or more interest-free.

The downside is that simply lobbing your debt from one card to another doesn’t address what can be a serious overspending issue.

Your financial adviser is a good source of expert advice to help you get spending under control this year.

Bear in mind too, if you can’t clear the slate with a balance transfer deal before the zero rate period ends, the remaining debt can attract sky high cash advance rates.

That makes it critical to use a balance transfer deal to pay off as much of the debt as possible in the interest-free period.

Or…knuckle down to pay off the debt

An easier solution can be to pay as much as possible off your current card.

If you plan to use this strategy, two steps are critical. First, check to see if you’re getting a good deal on the card. Reward-based credit cards for instance charge some of the highest rates around, and you’re likely to pay a lot more in card interest than you’ll recoup with any freebies.

Next, revisit your budget to see how much you can comfortably allocate to additional card repayments. Sticking to the card issuer’s minimum payments may seem easier on your budget today, but it can drag out the debt for years, even decades. That means paying excessive interest charges – money you could be using to build your own wealth rather than the bank’s.

Please call us on |PHONE| and we can show how much you could save on card debt by making extra repayments. It can be a tremendous incentive to knuckle down and pay off the debt, and it can give you a great head start to achieving your financial goals for the year.

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.

Source: AMP January 11th, 2018

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Strategies to make your resolutions stick

Posted On:Jan 07th, 2018     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Happy New Year! As we kick start 2018, you’ve probably made a few resolutions. It’s not a bad idea – simple lifestyle changes can improve our health and put valuable dollars back in our pocket.

The trick however is to make your resolutions last the whole year, and that can call for a couple of clever strategies.

The potential for big savings

Resolutions

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Happy New Year! As we kick start 2018, you’ve probably made a few resolutions. It’s not a bad idea – simple lifestyle changes can improve our health and put valuable dollars back in our pocket.

The trick however is to make your resolutions last the whole year, and that can call for a couple of clever strategies.

The potential for big savings

Resolutions often involve our wellbeing, and goals like quitting smoking for instance, are definitely worthwhile.

Along with health benefits, if you’re a pack-a-day smoker you could save over $10,000 annually and potentially halve your life insurance premiums by kicking the habit.

Even small steps like swapping three takeaway dinners for home-cooked meals each week could see you save $3,120 over the year, according to comparison site Mozo.

The problem is that even with the best of intentions, our resolutions rarely make it past Valentine’s Day. So here are a few tips to make them stick.

Set bite-sized goals

We tend to set overwhelming goals like “I want to get out of debt”. A better approach might be to set small but specific targets.

Something like “I will pay an extra $100 off my credit card each month” makes it easier to stay committed to your resolution and track your process over the next 12 months.

Tap into technology

Technology can take some of the hard work out of keeping up with financial goals.

If you’ve made a pledge to “save more”, try breaking it down into a bite-sized target like “I plan to save $50 each week” (or whatever your budget will allow for).

You might then consider setting up an automatic funds transfer of this amount from your everyday account and putting it into a savings account.

With savings on auto-pilot, after a few weeks, unless you are on a very tight budget, you won’t miss the money. Think about starting today, and by saving $50 a week, you could have $2,600 by the end of the year.

Focus on you

If you have resolved to save more for retirement, it may be worth ignoring what your friends or peers are doing, and focusing on your own goals.

Researchers from Harvard University ran an experiment to see how much more workers would contribute to their retirement savings if they knew what their colleagues were contributing.

It turned out this actually discouraged people from adding to their retirement nest eggs. Many were demoralised by the sums that some of their colleagues were able to save, and felt as though they were falling behind.

This highlights how building wealth isn’t a matter of keeping up with the Joneses. It’s about setting your own goals and consistently working towards them at the pace you can manage.

Consider investing in good advice

‘Tailored financial advice has the potential to make a valuable difference, helping you set goals to work towards and developing strategies to achieve them.

With some clear goals and a roadmap for success, 2018 could be your most prosperous year yet!

Please contact us on |PHONE| to discuss.

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.

Source: AMP January 5th, 2018

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How to have a budget friendly holiday this summer

Posted On:Nov 30th, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Holidays usually equal good times, but they don’t have to equal big money. 

Everyone loves saving a dollar or two, and one place it really pays to stretch your money further is on holidays. After all, the more cost effective your holidays are, the more of them you can afford to have!

If you’re still searching for a destination to escape to

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Holidays usually equal good times, but they don’t have to equal big money. 

Everyone loves saving a dollar or two, and one place it really pays to stretch your money further is on holidays. After all, the more cost effective your holidays are, the more of them you can afford to have!

If you’re still searching for a destination to escape to this summer, we’ve got some suggestions below that won’t break the bank, plus some smart money saving tips whatever your holiday budget.

Holidays close to home

You don’t have to travel miles from home to get that carefree holiday feeling. We’re lucky enough to be blessed with some pretty spectacular scenery here in Australia, and also some pretty fabulous summer weather.

Jumping in the car and heading a few hours away, either to the coast for a beach holiday, camping for a national park adventure, or to your nearest capital city for a city break all offer their own rewards.

Travel by car cuts the cost of your holiday, but to stretch your money even further, choose self-catering accommodation through sites such as Airbnb so you can save more by cooking some meals for yourself too.

Another option:

For another idea closer to home (and even cheaper) consider a staycation – where you stay at home, but live like you’re on holiday. Think eating out at local restaurants you haven’t had the time to try, getting a massage, going to the movies, and visiting local tourist attractions.

Holidays around Australia

The number of easily accessible Australian destinations continues to grow as budget airlines like Tigerair and Jetstar expand their flight routes. And it’s not just the capital cities you can fly to on the cheap, but major tourist destinations like Uluru, the Gold Coast and the Whitsundays.

If you’d like to explore somewhere different, you can also find inexpensive flights to lesser known local destinations like Townsville, Newcastle, or Launceston, depending on where you live.

One advantage of visiting regional cities or some of Australia’s smaller capital cities, such as Hobart, Adelaide and Canberra, is that the on the ground costs – think accommodation, eating out, attractions – are often lower than Sydney or Melbourne prices.

The key to getting the best flight deals is to keep an eye out for special offers and be flexible – both on when you fly and where you go.

Another option:

Another idea for a good-value Australian holiday is a short cruise. While some short cruises travel between destinations such as Melbourne and Sydney, others, called sampler cruises, depart from, and return to, the same port.  In the case of a cruise the travel is part of the holiday, and the all-inclusive nature, with food and entertainment included, can make them good value. For more information, check out Royal CaribbeanCarnival or P&O.

Holidays overseas

Destinations like Fiji, Bali and other parts of the Pacific Islands and South East Asia are popular with Australian’s looking to holiday overseas – and for good reason.

With budget airlines flying to these destinations, favourable exchange rates and lower costs of living compared to Australia, you can certainly get bang for your buck in destinations such as these, though they may not be as cheap as they once were.

Also on the pocket-friendly list, a destination which offers affordability and plenty of variety is New Zealand.

Another option:

For other overseas destinations it pays to keep an eye on currency exchange rates. Destinations you may have though out of reach on a tight budget, such as the US, become much more affordable when the Australian dollar is high against the US dollar. And if you can be flexible with timing, travelling in the off-season or shoulder seasons can also help you grab a bargain.

Source : AMP 20 November 2017 

This article provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person..

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How to deal with financial stress – nearly 1 in 3 affected

Posted On:Nov 30th, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

See how financial stress is impacting people’s physical and mental wellbeing, and what steps you could take to turn things around.

Close to one in three Aussies is feeling the pinch financially, with money worries reportedly leading to sleep loss, conflicts in relationships, isolation, as well as a range of other things1.

These were the findings from the inaugural Financial Stress Index,

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See how financial stress is impacting people’s physical and mental wellbeing, and what steps you could take to turn things around.

Close to one in three Aussies is feeling the pinch financially, with money worries reportedly leading to sleep loss, conflicts in relationships, isolation, as well as a range of other things1.

These were the findings from the inaugural Financial Stress Index, compiled by global research firm CoreData on behalf of Aussie group, Financial Mindfulness, which indicated financial stress is not only being experienced by low-income households in 20172.

We check out some of the statistics from the research, what defines financial stress, and what steps you could put in place to potentially improve your financial position and overall wellbeing.

Findings from the research

Statistics from the Financial Stress Index revealed the following about financially-stressed Aussies3:

  • More than 66% felt money worries led to feelings of fear, anxiety and/or depression

  • More than 60% felt their physical health was affected by financial stress

  • About 75% said they argued about money with their partner or family 

  • More than 70% said they had problems sleeping due to money concerns

  • Nearly nine out of 10 said they often avoided social functions due to financial stress.

What defines financial stress?

According to the Australian Bureau of Statistics, there are two financial stress indicators—these include financial-stress experiences and missing-out experiences4.

Some examples of financial-stress experiences include:

  • You’re unable to pay various bills on time

  • You spend more money than you receive

  • You can’t raise $2,000 in a week for something important

  • You seek assistance from friends, family or welfare and community groups.

Some examples of missing-out experiences include:

  • You’re not able to afford a night out once a fortnight

  • You can’t afford a week-long holiday once a year

  • You can’t afford friends or family over for a meal once a month

  • You aren’t able to cover any recreational activities.

Actions that could help turn things around

Create a budget

Writing down what you earn, owe and spend could help you to create a workable budget, and at the same time let you quickly identify areas where you could be saving.

Save a bit of money regularly

Even a small amount of cash deposited on a frequent basis could go a long way towards your savings goals. In fact, 41% of Aussies say they save just a little at a time5.

Take cash and leave your credit card at home

Credit cards are handy but they’ll often cost you as they typically charge high interest rates on top of the amount you’ve already taken out.

Write a grocery list that only includes what you need

Over a 12-month period, Aussies will waste more than 4 million tonnes of food, which is enough to bridge the gap between Australia and New Zealand three times6, so it’s worth a thought.

Prioritise your big-ticket items

Buying a car, going on holiday, and moving home all within a six-month period mightn’t be financially viable. Spacing things out and creating a manageable goals timeline might help.

Put some emergency cash aside

This will help next time you bust your phone or need a last minute trip to the dentist. Plus, an emergency fund means you won’t have to rely on high interest borrowing options.

Talk money with your partner

One in two Aussie couples admit to arguing about money7, so if you haven’t already, sit down and make sure you’re on the same page, and that both parties’ goals are being considered.

Call other providers

You more than likely have several product and service providers, and figures show you could save more than a grand annually on energy alone just by switching from the highest priced plan to the most competitive on the market8.

Consider the value of a back-up plan

Whether it’s life insurance, income protection (which provides up to 75% of your income if you can’t work due to illness or injury), or contents insurance to cover items that may be lost, damaged or stolen, there are a range of insurances that could help should the unexpected happen.

Care about your future income

The government’s Age Pension alone is unlikely to be able to cover a comfortable or even modest lifestyle in retirement9, so putting a little extra into super while you have time on your side could reduce the potential of further financial stress later on.

If you seek further discussion on this topic please contact us on |PHONE|

If you or someone you know are feeling financially stressed, there is help and information available on the beyondblue website or you can phone Lifeline on 131 114.

 Source: AMP 21 November 2017 

1 – 3 CoreData / Financial Mindfulness Financial Stress Index – 2017 full press release
ABS – Household Expenditure Survey, Australia: Summary of Results, 2015-16 paragraph 2, 3, 4
ASIC’s MoneySmart – How Australians Save Money table 1
Foodwise: Reduce Food Waste – Food Waste Fast Facts table 1
Finder – Heated conversations: 1 in 2 Aussie couples argue about finances paragraph 1
Mozo: Sick of high energy bills? Aussies willing to change providers could be saving over $1,000 a year paragraph 2
The ASFA Retirement Standard – June quarter 2017 paragraph 4


 This article provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person..

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Avoid a nasty case of holiday debt lag

Posted On:Nov 27th, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Enjoy a well-earned vacation without bringing home a mountain of high-interest debt.

I do love a catchy new phrase, and this one made me laugh. “Debt lag” is a new one for me. It seems that as Chrissy approaches we plan a holiday, but don’t quite get around to saving for it. So some 2 million of us turn to our credit

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Enjoy a well-earned vacation without bringing home a mountain of high-interest debt.

I do love a catchy new phrase, and this one made me laugh. “Debt lag” is a new one for me. It seems that as Chrissy approaches we plan a holiday, but don’t quite get around to saving for it. So some 2 million of us turn to our credit cards on vacation, and cop a nasty case of debt lag!

Among the holidaymakers who return home with a maxed out credit card, half clear the slate within three months. But the remainder can take anywhere from six months to more than a year to pay off their holiday debt.

Vacations see card spending climb by $2,000

Taking a credit card on vacation can make a lot of sense. It’s a lot more secure than carrying wads of foreign currency, and it provides a handy back-up if you run low on the folding stuff. And let’s face it, that’s easily done. Vacations tend to encourage a sense of bonhomie, which can see us splurge on things we wouldn’t even think about buying at home. (A colleague of mine is still questioning the pineapple-shaped slippers she picked up in Hawaii.)

There’s no problem with a bit of overspending – if you can afford it. After all, holidays are meant to be enjoyed. But Australians rack up an average of $2,000 on their credit cards while on vacation, and unless you can pay off the balance immediately the outstanding interest charges won’t just take the shine off a trip’s happy memories, they could leave you cash-strapped well into 2018.

Plan, pay ahead and avoid tourist rip-offs

The key to avoid blowing your vacation budget is to plan how much you’ll spend and how you’ll pay for it all. Most holidaymakers set a travel budget but only around one in two stick to it.

Doing plenty of online research can give you an idea of the sorts of costs you’re facing, and from here it’s easier to set daily spending limits.

Where possible, aim to book and pay for accommodation, tours and even entry to attractions before you leave home so you’re not facing inflated tourist prices.

Bypass the gripe costs

Surprisingly, the most cited rip-offs mentioned by Australian travellers are not dodgy souvenirs that fall apart before you reach the airport. Rather, credit card and ATM fees plus mobile phone roaming charges are among the biggest gripes. Yet these are easy to control.

Read the fine print of your credit card and/or travel card to understand any fees you may be slugged with. When it comes to phone charges, either purchase an add-on pack with your local Telco – it’s likely to be far less costly than pay-as-you-go roaming, or ditch your local SIM altogether. Picking up a prepaid SIM at your destination is a low cost way to stay connected while you’re away.

Source: AMP 23 November 2107  

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.

This article provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person..

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5 considerations before moving into a retirement village

Posted On:Nov 27th, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

It’s important you understand how retirement villages work and the type of costs you’re likely to come across.

Today, around 184,000 Australians call a retirement village home. And, with the country’s senior population only set to increase, the number of people wanting to live in a retirement village is predicted to more than double by 20251.

If it’s something you or a

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It’s important you understand how retirement villages work and the type of costs you’re likely to come across.

Today, around 184,000 Australians call a retirement village home. And, with the country’s senior population only set to increase, the number of people wanting to live in a retirement village is predicted to more than double by 20251.

If it’s something you or a family member have been thinking about, a national survey revealed 93% of retirement village residents felt their overall happiness and life satisfaction remained the same, or had increased slightly to significantly since making the move from the family home2.

If you’d like to know more, we’ve pulled together some general information, as well as some of the costs you’re likely to come across. Remember, it’s also important you speak to a professional and are across any contract complexities before making any decisions.

1. What you can expect 

Retirement villages are generally complexes made up of individual residences. While they were traditionally designed to cater to the needs and lifestyles of people aged 55 and over, the average age of new residents entering retirement villages is currently 753.

Retirement villages are typically self-funded and do not receive government funding or subsidies4. Many offer a range of health, leisure, and support services, and will often include medical facilities, as well as recreational facilities, such as community halls, bowling greens, libraries, and pools.

2. How village residents rate life

According to a national census, the three main reasons residents said they wanted to move into a village were, they wanted to downsize while they could, their former home was becoming too big to manage, and they wanted freedom from house responsibilities to pursue other interests5.

Here are some additional insights from the survey 6:

  • 68% of residents stated their confidence and feeling of security increased slightly to significantly after moving from the family home to their retirement village

  • 73% of residents stated that they were ‘very satisfied’ to ‘extremely satisfied’ that their expectations of their retirement village had been met

  • 75% said they were happy with their decision to move into their retirement village and would make the same decision again.

3. The most common way to pay

There are many different payment models—the ‘loan/licence’ (or licence to occupy) model a popular one among retirement villages7.

Under this model, here are some common costs and considerations you’re likely to come across—and note, the way figures are calculated will differ depending on the retirement village8.

Typical costs include:

  • An entry contribution, which may be refundable, minus an exit fee (commonly referred to as a deferred management fee), which will be payable on your departure

  • Ongoing charges to cover things like maintenance and general services provided by the village, which may still be payable for a period of time after you’ve left.

You also need to consider:

  • How capital gains may be retained by the operator and shared with you upon your exit

  • The potential for special levies to fund new services or refurbishments.

4. How different payment models can vary

The Australian Government has indicated that different fee structures make it difficult to compare the affordability of different retirement villages9, but here’s some general information on the three most common payment models to give you a bit of guidance10:

Loan/licence

  • This model is used by about 50% to 60% of retirement village operators. 

  • As mentioned above the main fees include an entry contribution (which may be refundable), an exit fee, and ongoing service costs.

  • It’s important to note, your license agreement is not registered with the Land Titles Offices, and as such, offers lower security of tenure than a leasehold or freehold title.

Leasehold

  • This model makes up about 30% of retirement village arrangements, offering residents a long-term lease for accommodation, in exchange for a lump-sum payment. 

  • Leases are registered with the relevant Land Titles Offices, which offers residents security of tenure, but which may also attract stamp duty. 

  • Upon departure, you’re entitled to a lease termination payment minus the exit fee (deferred management fee). And note, in some cases, you will not receive your payment until a new resident takes over the lease.

Freehold title

  • These models, where residents have 100% ownership of their retirement village unit, are not particularly common and make up less than 10% of retirement village arrangements.

5. Why contract terms are so important

There is much to think about when assessing your living arrangements in retirement, particularly when it comes to signing contracts and making sure you understand the fine print.

How different villages charge can vary significantly and some residents may be subject to different fee structures. On top of that, what you pay could also change over time to reflect occupancy demand, changes in ownership and fluctuations in property prices11.

Depending on the arrangement, there’s the potential to benefit from having access to home equity or to defer a large portion of your costs until a later date12.

For these reasons, it’s very important to speak to your financial adviser and a legal professional before signing anything. 

If you seek further professional advice please contact us on |PHONE| 

Source : AMP 24 November 2017 

1, 4 Property Council of Australia – National overview of the retirement village sector – October 2014 pages i, 2
2, 5, 6 
The McCrindle Baynes Villages Census Report 2013 pages 8 / 5 / 8, 7, 5
PwC / Property Council Retirement Census 2016 pages 3
7 – 12 
Housing Decisions of Older Australians Productivity Commission Research Paper – December 2015 page 99 / 99 / 100 / 99 / 100 / 101

This article provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

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