I'm doing the Projcet Ikonz Spare Change Challenge

One of the regular readers of this blog recently set up a great blog of his own called Project Ikonz - it's focused on wealth creation and his path to achieving it.  I have been reading it fairly religiously and he recently did a post on spare change and how you can end up saving quite a lot by just putting your change in a jar by the end of each day.

How does it work

The idea is actually fairly simple:

• Most people (especially men who don't often have enough space to store coins) spend money in notes and get some change that is in coins
• These coins often get lost or wasted on small pointless purchases
• You can save a lot of money by putting these coins on some jar and not touching them for a while

Does it actually work?

I first read the spare challenge post about 2 weeks ago.  I already had a container where I put all my coins - I generally used this money to wash my car and to pay for my coffee each morning so the pattern was already set.  Instead of using the money I decided over the last 2 weeks to see how much it would build up if I was committed to not touching the cash.  It really is

What ever happened to that small business idea? February 2014 Update

The downside of my real time small business experiment (which I started 2 years ago) is that all my regular readers have been clearly able to see how futile my efforts have been to start a business.

Since I first raised the idea  I have gone through a series of ideas and put the work into several projects however unfortunately none of them have come to fruition.  Some never really got past the ideas stage, others I was developing something which I thought was a good idea and the market was missing only to find out that it was incredibly difficult to actually do and finally - one idea I put a great deal of time and effort into actually came to market (in much the form as I would have done it) before I had even gotten started (and the natural big company to introduce it was the one that did introduce it).

Although it's frustrating that none of my ideas have worked out...I'm not giving up

I was originally going to write that it would be easy to give up this goal of mine - but it simply isn't. I find myself putting aside my goal of starting my own business for a few months at a time but the drive always comes back with

How to save MORE on your fuel bill

Perhaps it is just my luck or perhaps my timing is always off but somehow I managed to get stung with a very high cost of fuel / petrol every time I am required to fill up my tank.  I have tried leaving it until mid-week and I have tried waiting until the price drops before filling however every time I fill it seems as if the price is higher than it has ever been.

Recently the fluctuation in prices has been extraordinary.  I have seen the price of fuel vary by 20c / litre over the course of a week!  Somehow I always manage to get stung by the higher cost.  The 4c / L discount offered by the major supermarkets barely makes a dent in this higher fuel price.  I started looking for a way to save more on fuel...and I found it.

Use your 4c / litre shopping docket

This program has been running for years but when you buy $30 worth of groceries at a Coles or a Woolworths you will get a 4c / L fuel discount.  Recently Coles started offering 8c / L discount however their fuel stations seemed to consistently be significantly more expensive so there was no extra saving - it was a bit of a scam.

On a regular 60 litre tank this will save you $2.40 off your fuel bill...nothing to get excited about until you combine it with the following...

Buy a

Reporting Season: Are you keeping up?

Every six months I write a post complaining about reporting season (that time of year when companies report their results to the market) - it's normally the time of year that I am the busiest and when my hard effort at the gym for the rest of the year gets undone.

But it is also the most interesting time of the year - it tends to be the time of the year when you get lots of new information on companies.  Why is this important?  Because when you invest in companies this new information can really move the valuation dial so you should really be keeping up.

A reminder from the past - don't make rash decisions

The danger with a whole heap of new information is you get out there and start trading on this information before you really process what it means and how relevant it actually is.  Decisions about trading never have to be made so take your time to absorb all the information.

But make sure you actually get the information

Even if you don't trade on

Saving for Marriage: My Plan

I mentioned at the start of this year that one of the things that I wanted to do this year was get engaged. The more I thought about this, the more I realised how much of both a life and financial decision it was.  Not only are the implications significant for the rest of my life - but also in the very near term.

The whole proposition is crazily expensive...

Weddings and the lead up to marriage is a ridiculously expensive process.  Ignoring the cost of the ring there is also the wedding itself, the honeymoon, an engagement party and who knows what else there is to come! Unfortunately so much of this is tradition and is expected - I am a little bit of a traditionalist in this sense so unfortunately I think I am up for a lot of these expenses.

...so I made sure I had a plan

I foresaw a lot of these expenses when I was thinking about my budget for the year (and for next year as well).  Unfortunately neither my girlfriend or I come from families that are very well off so I can't imagine getting much financial support from either set of parents so we will be funding the wedding ourselves.  My girlfriend doesn't earn spectacularly well either so a large part of the financial responsibility for this event will be mine.

The only reason I disclose the above is so when you are thinking about planning a wedding / engagement yourself you really think about how you will fund it.  If you have parents who are willing to fund everything then you really have very little to worry about...but if you partner doesn't work or you are both on low incomes...perhaps you should start thinking about how you do it sooner rather than later.

How much am I budgeting for my wedding?

My weddings savings plan is basically in 2 parts:

• Cash that I need to save for expenses this year; and
• Cash that will be used in the future

In the first category will go the ring, the proposal itself and any engagement party.  I have set a hard budget on this cost - I will not be spending more than $10,000 on

A free alternative to The Entertainment Book

I am a huge fan of The Entertainment Book.  It offers great ways to save money from large discounts on dining out and eating experience, to discounts on car hire and hotels to being able to save 5% off your weekly grocery bill as well as discounted movie tickets.  The list goes on and on and the book is huge.

The book also raises money for charity and is a great way to both benefit charity and save money yourself.  The one downside is that the vouchers in the book only last for 12 months and it is typically $65 per year to buy the book.  It is not a huge cost but for some people (especially if you are single and are not likely to get the full benefit of the book) this cost can outweigh the benefits of the book.

One way you can get a lot of the benefits of The Entertainment Book is through the Red Energy rewards program

I recently posted about my hunt for an energy provider and how I settled on Red Energy.  I did not do this because of their rewards program for members - I think those sort of programs exist to distract people from looking at what gives them the best value for money.  It just turned out that for me Red Energy happened to be the best and cheapest solution.

What I didn't realise was that I would get a slimmed down version of The Entertainment Book for free.  They call it something else but if you look at the vouchers in the book they are actually straight from The Entertainment Book. Even better, their online system has many more vouchers that can be printed or just redeemed using a membership card that they send you (avoiding the need to even use a voucher).

The big benefits that I use are still there

• You can still get Coles and Woolworths gift cards discounted by 5%
• You can still get super cheap movie tickets from Hoyts and Village
• There are still heaps of restaurants available (although it should be noted that it is not even close to the number offered in The Entertainment Book)

And the best bit is that it

Golden Rules for Share market novices

One of my good friends, who has never invested in the share market recently opened a trading account and was looking to invest in basic index ETFs as a starting point but then got very nervous when they saw the share market falling.  I found myself writing a long email to them about the psychology of investing and I thought I would replicate the tips here.

Here are some golden rules that new investors should stick to when investing in the share market.  These may seem basic to experienced investors or if you have been trading for a little while...but if you are a new investor I suggest taking them on board.

Golden Rules for Share market novices

1. You never have to trade
• There will always been good deals available and although some will be better than others, deciding to buy or sell without thinking through your decision because of something you've heard or seen is almost always a bad idea
• You never have to trade - there will almost always be another opportunity
  
2. Stop checking your portfolio every day
• Unless you are a full time trader you have no reason to check what the price of your investment is doing every single day - it will  just stress you out
• Share markets move up and they move down.  Stay on top of the fundamentals of your investment but if there is no new news ignore what the share market is doing
  

Optimising your First Home Saver Account

Recently I wrote about the benefits of the Australian government mandated First Home Saver Account.  If you did not read that piece I recommend having a look as there are quite a few strings attached to the account and the penalties if you do not meet the requirements are quite harsh (the amount you have saved gets rolled into your superannuation and you cannot access this until your retire).

That being said, if you do qualify for this account and you are thinking about buying a home in the near to medium term (at least 2.5 years away) then there are ways that you can maximise your investment in this account.

The superior returns from this account are due to a combination of a significant government co-contribution and concessional taxation

The beauty of this account is that the superior return comes in 2 separate forms:

• A 17c co-contribution (return) on the first $6,000 deposited each financial year
• An incredible return especially given it is risk free
• This return has the biggest impact in the first year on total returns and a diminishing impact as time goes on
• A 15% tax rate on any earnings within the account
• Members Equity has a First Home Saver Account which earns 3.25% p.a. which is a decent return but nothing amazing
• However if you think about the fact that this is taxed at only 15% you would need a significantly higher pre-tax return on any other account to get the same after tax return as this account.  For this different marginal tax rates (including the Medicare Levy)
• If your marginal tax rate is 19% (you're probably not paying the Medicare Levy) so you would need a 3.41% pre tax return to get the same after tax return
• 34% marginal tax rate (32.5%+1.5% levy) = 4.19% pre-tax return equivalent
• 38.5% marginal tax rate (37%+1.5% levy) = 4.49% pre-tax return equivalent
• 46.5% marginal tax rate (45% + 1.5% levy) = 5.16% pre-tax return equivalent

The next thing you need to look at is the alternative for your savings and investment dollars.  The first $6,000 each year is a no brainer - I can guarantee you that you will not get a better return of any other investment (other than paying off high interest credit card debt).  

The next thing you need to ask yourself

Keeping it Professional: Emails and Instant Messaging

This post is sponsored by Grammarly.  Use Grammarly's plagiarism checker because citing the site, great grammar and superior spelling will help you avoid terrible alliteration and obvious clichés.

This post is specifically target at anyone in my generation (Gen Y) but can be applied across the board.  Email, instant messaging, texting and other forms of instant communication mean that we are ever more connected to our friends and our family.  However they are also now used frequently in business dealings.  I don't know a single person that doesn't use email for business and most large organisations now use some sort of instant office communicator for meetings and other communications.

The problem arises when we do not separate the way in which we use instant communications for our personal dealings and instant communications for our business dealings.

You should not be less formal just because you are using email or instant messaging

The temptation to shoot of a quick email without any of the 'niceties' that we would associate with letter writing or even if we were giving another person a call can be very tempting.  After all 'it's just an email'.  But in the business context you should always strive for a business tone when sending any form of communication - not only does it reflect on the company you work for (when you are dealing with clients) but it more importantly reflects on you in both an internal and external sense.

This does not mean you need to be overly formal...but avoid communicating like you would with your friends

I am not suggesting that you become overly formal in your business dealings - especially if you are sending an internal email to someone else in your office.  You can keep the tone and level of familiarity relevant to the situation but avoid communicating in ways you would with your friends

• Do not use abbreviations
• I use abbreviations all the time when I am communicating with my friends - I started writing a list of the ones I use commonly but then realised it made me look like a teenager but you get the general idea
• Never use them in

January 2014 Expenditure Tracker

Changing the way you report and track things is always a rather big decision because you no longer have the benefit of going back and comparing what you did in previous years.  My expenditure tracker posts have been running for exactly 2 years now and they have largely been in the same format - i.e. how much am I saving towards my home loan, how much am I investing in shares and how much am I spending on personal expenses.

In my 2014 financial goals, however, I mentioned that this year will be a 'no savings' year where I am going to try and achieve all those things which I have been putting off for a very long time.  Given that I am typically an over-saver rather than an over-spender this is not a bad thing, however it does make my previous expenditure trackers quite pointless.

So why continue with the expenditure tracker at all?

Quite simply because I have a budget.  Actually it is a rather tight budget.  Even though I am not saving much this year (for the long term) I am trying to get a lot done.  Have a look at my 2014 financial goals and you'll see that to achieve some of them I actually need to sell some of my automatic share investments.  This means I am tracking what I am spending much more closely than in the past.

How am I tracking my expenses now?

Although I'm not going to provide the details (because it would bore everyone) I have set up a spreadsheet where I track every dollar I spend.  I update this daily (takes about 2 minutes) and there are 7 top level categories and 38 sub categories which I can fill the details into.

For the purpose of this post every month I will provide details on the top level categories.  Some expenses (such as home set up costs for my new apartment) are very lumpy.  The new expenditure tracker sheet that I have allows me to see when I'm actually behind (according to my goals) and when it is just a lumpy month.

January 2014 Expenditure Tracker - Updated Version

Item	Jan 2014	Monthly Target	Perf. vs Target
Accommodation / Living expenses	$4,297	$2,246	+$2,052
Car expenses	$1368.9	$692	+$677
Health / Well being expenses	$399	$566	-$167
Entertainment / Personal expenses	$1,452	$1,230	+$222
Travel expenses	$429	$675	-$246
Other 'big' expenses	$1,900	$3,508	-$1,608
Savings / Investments	-$2,840	$1,051	-$3,891

The sea of red may look terrible above but

January 2014 Net Worth: $477,000 (-0.1%)

	Value	% Change
Assets	$836,000	+0.2%
Liabilities	$359,000	+0.5%
Net worth	$477,000	-0.1%

In a rather rocky start to the 2014 year, my net worth this month decreased by 0.1% which was only the second time (the first time being in June 2013) that my net worth has decreased).  The decrease was driven by two separate factors which was a (hopefully) higher than normal expenses month combined with the share market pulling back sharply towards the end of the month.

I had been hoping for my net worth to reach $480,000 this half (which I mentioned in my December 2013 Net Worth post) and for much of the month I thought I was going to do this easily.  As it turned out the result could have been a lot worse but for a few factors.  I have outlined both the positive and negative factors affecting my net worth performance this month

Positive factors

• An updated statement for my managed funds
• I rarely talk about managed funds because I prefer to invest in stocks directly or in ETFs
• I have a few managed funds which were gifted to me by my parents when I was a bit younger and I have basically stuck these under a rock and they will do what they do - it is almost rainy day insurance for me
• Whilst I update all of my other accounts monthly, my managed funds only ever send me statements every 6 months and in the last six month period they performed very strongly (i.e. an increase of $2,000 over the previous six months)
• Continued investment in my superannuation account and my employee share plan
• I have mentioned several times before the benefit that comes from having a plan where the cash gets taken away before you see it
• Superannuation works in much the same way and is a great source of retirement saving for most people
• An increase in my home loan offset account and cash balances
• Although my