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The SmartyPig Blog
November 24, 2009 • Posted by Samantha RobinsonNew Year, New Pay Packet?
Dreaming of a pay rise in 2010? It seems you’re not alone. According to the latest research to come out of the Melbourne Institute, the average Australian worker is looking forward to a 2.1 per cent pay increase in the new year. Now granted, that probably won’t make a huge difference to the household budget, especially with interest rates on the rise and expected to increase by Christmas but, if there’s a pay rise on offer, who are we to argue? At this point, we reckon we’ll take all we can get.
Of course, if you happen to belong to Gen Y, your eyes are set fairly and squarely on a much grander vision for 2010 with expectations that your pay will leap by a very attractive 10 per cent. Nice work if you can get it. The only question is, what would you do with all that extra cash? Well before you decide to head out on a little pre-emptive shopping spree in celebration of all those extra dollars you hope to be earning in a few short months, stop and take a quick check of your financial health. Sure, those extra few bucks could make the world of difference to your wardrobe, but isn’t there more to life than the latest fashion or technological gadget? So if you do find 2010 brings a financial windfall – however big or small – make it work for you, not against you in the long term. Here are some ideas to get you going:
- Take a look at your credit card debt. With most credit card interest rates in double digits, this may be one debt you can do without. Then, once you’re on top of your credit card, consider whether creating the habit of paying it off monthly is something that .
- Ponder paying extra off your mortgage. While interest rates remain relatively low, it could be a great opportunity to pay as much as you can now.
- Save, save, save! If it helps, think of it as locking in a discount… 'cause there’s nothing like guaranteeing you won’t be paying interest on your next shopping trip! It really so easy to achieve, especially with SmartyPig on your side.
Ah 2010, so much to look forward to. Wouldn’t it be great to start the new year – and the new decade -with a pay rise, clear financial goals and money in the bank? Now that’s a dream worth having.
Until next time
Team SmartyPig
November Giftcard Giveaway – The Results!
Twas *that* time of the month again to hold our infamous giftcard giveaway… Did you play? Did you win? Here’s the video of the big draw:
Sorry to Daredevil Rob 
November And The Delights Of HECS
Ah November, it’s a great month to….
- finish school or uni (rejoice!)
- get a job (or at least start thinking about it)
- grow a mo for charity (if you can, though ladies, you might want to think twice about this one)
- do your Christmas shopping (how’s that Christmas list and budget coming along?)
- get ready for summer (isn’t it already here?).
Which brings us to our topic of the day: HECS. Yes, we can hear the collective groan from here. So to all those uni students gleefully welcoming the endless days of summer and putting off the inevitable – full-time work – until 2010, perhaps it’s worth thinking about how HECS may affect your income next year.
Now, there will be some out there who’ve taken full advantage of the Government’s 20 per cent discount to pay their fees up front. Not a bad option to take so bravo to you and enjoy a start to working life that’s free from at least one type of debt.
For the rest, reality may soon hit home. If you’ve deferred your HECS repayments and are about to join the ranks of the working man and woman, be prepared. HECS deductions kick in once your repayment income is above the minimum repayment threshold. In 2009-10, that magic number is $43 150 when you’ll be hit with four per cent of your salary in repayments. As your earning power and pay increases, so will your HECS repayments, eventually maxing out at eight per cent once you reach a salary of $80,137 and above. All sounds rather scary doesn’t it, especially when you’ve probably spent the last few years living on nothing but two-minute noodles and cup-a-soup and have been champing at the bit to earn some real cash.
But don’t despair, HECS is not all bad news and there are some positives. It may be a bit of a cliché, but you really should think of HECS as investment in your career and future. And in the grand scheme of things, it’s a relatively 'cheap’ loan that’s indexed to inflation (as at September 2009 that’s about 1.3 per cent)….and doesn’t attract interest. Now, hasn’t that put a different spin on it?
There are also ways you can lessen the pain of a HECS debt once you are working. You could make voluntary repayments (of $500 or more) after graduation and receive a very welcome 10 per cent bonus for doing so. So if you pay, say $1000 voluntarily, you’ll also receive a $100 bonus payment, reducing your debt by $1100. Nice. Only question is, how are you going to get your hands on a lump sum to make the payment? Well, you may get a bonus at work, money for your birthday or win tattslotto, but instead of rushing to the store, why not throw it straight onto your HECS debt. Or, here’s a crazy thought: why not set up a SmartyPig goal just for HECS? At the end of 12 months even just contributing the minimum $10 a month, you’ll have accrued a tidy sum which you can deposit directly onto your HECS debt and receive the bonus into the bargain. Easy, painless and we reckon you’ll hardly even notice the monthly deductions…but man what a difference it could make.
You know, the prospect of facing any debt is hard to swallow, but probably never more than when you finally get your first “real” job and have money in your pocket. The challenge is to be smart about your cash, stay on top of your debts and keep life financially simple.
'Til next time
Team SmartyPig
PS – Don’t go forgetting, next Friday at 3pm AEDST (aka Melbourne time) we’ll be giving away 3 x $100 SmartyPig gift cards via Twitter. Make sure you’re signed up and have access to our page at that time! www.twitter.com/smartypigau
Money For Jam
Ever wished you had a secret stash of cash just hidden away for a rainy day? Maybe it’s tucked under the mattress, buried in the garden or carefully hidden behind the shed. Or you could be lucky, like one of our followers, who years ago while growing up in “small town” Australia, was the beneficiary of an unusual 'savings account’ located in several glass jam jars under a close family member’s kitchen sink. Now it could quite reasonably be argued that a glass jar is neither the most sensible nor the most secure of locations for your hard earned dollars but for the “owner” of this special account, it seemed a far more attractive option than depositing in a bank. (Obviously, he hadn’t done his research on the wonder of all that lovely compound interest he could have earned over time!). Luckily for our friend and reader, accessing these funds was a relatively painless affair involving no stress and no paperwork, just a commitment to repay the funds over an agreed period of time….straight back into the ever-growing collection of jam jars. No interest, no problems, no questions asked. Now granted, it does sound like a story that’s straight out of the vaults of the “strange but true” files but maybe, at the heart of it, it’s not so crazy. Isn’t it just a tale of someone who worked hard, was very careful with their money, (loved jam!) and remained focused on saving for the proverbial rainy day? Or, as the case may be, someone else’s rainy day?
Now in 2009, keeping your money in a jar under the kitchen sink is not recommended as a great course of action. (Unless of course, your kitchen cupboards are made of 3-inch steel and protected by 24-hour armed guards, pay you a competitive interest rate, and, quite frankly, who has the money, time or inclination for that?) But the principle remains the same. Work hard, save your money and reap the rewards on whatever your rainy day goal may be… a new car, home deposit, holiday, school fees or THAT pair of shoes.
So step away from the kitchen and focus. Chances are you won’t find a Cottees jar filled with $50 notes hidden at the back of the cupboard behind the kitchen cleaners. Instead, set yourself a goal, fill in your SmartyPig profile, start your monthly deductions and name the date. Then watch as your dream is realised. It is almost as easy as opening a jam jar… but possibly more rewarding.
'Til next time
Team SmartyPig
The Number Crunch
Ok, focus people. Drag yourselves away from the fine fillies and frocks at Flemington for just a minute to talk numbers. Well, you have to admit it’s been a big week for it. Our friends at the Reserve Bank certainly stuck to the form guide, delivering a little sobriety – via a 25 basis point rise in official interest rates – to an otherwise festive day of national celebrations. But for those with mortgages out there, it’s a case of hold onto your hats and whatever you do, don’t bet the house on the next race!
But while we’re all thinking numbers and considering how we’ll find any spare change to whack onto the ever-growing mortgage repayments (or wondering if we’ll ever save enough for that all-elusive deposit), have a think about this for a minute. Punters in Victoria and NSW wagered a record $96 million on the Melbourne Cup, a staggering $7 million more than last year. It almost seems like a misprint, but, hate to tell you, it’s not. Despite the financial crisis, it seems there’s little that’s more sacrosanct than having a wager on “the race that stops a nation“. Did someone say Global Financial Crisis? Nah, we didn’t think so either.
Which brings us to the question of the day: when the going gets tough, do the tough get racing? If we’re all counting our pennies and being more fiscally responsible, why do we still look for that quick win where, just for a second, we believe we’re on the fast-track to financial freedom? Deep down we know that each way bet on the favourite or Number 12 in the office sweep will never reap huge financial rewards but perhaps it’s the thrill of that one race and the chance to be a 'part’ of a truly national event. (And, if you’re like so many Melbourne Cup punters, it really will be your once-a-year flutter.) So for a few minutes every year we suspend reality, don a crazy hat, sup indulgently on chicken and a glass of bubbles in the office, and imagine ourselves scooping the pool and walking away with the “big one”. Ah well, we can but dream.
The good news is that in the true spirit of the Spring Racing season, we do have a hot tip for you. If you’re really looking for a great each way bet, there’s this Pig that’s worth a closer look. Smart, savvy and paying great 'odds’ in the form of an interest rate. Now that’s a sure thing that’s definitely worth putting your money on!
‘Til next time
Team SmartyPig.
