Why I gave up my Investment Property and moved into it as my own home

A few years ago I asked the question: 'Should move into my investment property?'.  It didn't make the greatest financial sense and in fact it didn't grant me the lifestyle I was looking for as a young, single bachelor.

Fast forward 3 years and all that has changed.  I'm now married and my wife and I we made the decision to move into my investment property...it was the right thing for us to do at this time.

So what changed?

When my wife and I sat down to work out where we wanted to live when we got married we actually decided to keep the investment property as an investment and to move into another rental as we saved for our own place.

This is not what my wife wanted.  Unlike my outlook on life her every decision is not dictated or influenced by financial considerations.  She wanted to live in her own home with a garden.  She didn't mind where it was either.

I was far more picky.  I couldn't be more that 45 minutes from the city, I wanted it to be in a decent area, close to public transport and to amenities. Unfortunately most of the houses which combined decent land size and good areas were well out of our price range...hence the decision to rent.

One concession I did have to make was that we would be in our own home by the time we were looking to have kids.  The property market is so hot in Australia at the moment and buying another property in this kind of environment is definitely not what I was looking to do! 

That being said I made that concession because my wife really doesn't push me all that much in terms of financial issues and this was one thing she was adamant about.

Fate intervened unexpectedly

You may remember that last year I had a mild panic attack when I raised my rent on my tenants and they never responded...had I just lost amazing tenants by being too greedy?  All was well though because on the date the rent increase came into effect they just started transferring the new rent amount.

This year I knew something was up when they didn't sign a new lease even though I offered them the ability to sign a one year lease at exactly the same rent they were on last year.  Sure enough a few weeks before my wedding they gave their notice of intention to vacate and their due date to move out was 4 days after my wedding.

Deciding whether to move in became purely a financial decision

My rental property is great and I've always been glad that I bought a suburban family home however it is not a 10 year house either for my wife or myself.  I'm not the biggest fan of the area and my wife wants more land to garden.

What it is though is a perfect interim place to live.  Somewhere we could live for 3 or 4 years while we save and look for our next place.

So the decision became...is it worth getting another tenant in and us find another place to rent for a shorter period of time or do we give up the rental income and tax deductions and move into our own place?

Pros of moving into the rental

1. I needed to do quite a bit of work on the property and doing this while tenants are in there is quite difficult
• Things like repainting and carpeting as well as replacing a fence have all been on the things to do list for years and being there myself will help me get this done
• 
  
2. Putting off buying another property for a few years
• Earlier I mentioned that I was incredibly wary about the current state of the Australian property market.  If we hadn't moved in the pressure to buy a place from my other half would have been intense!  I have managed to push this inevitability back 2 to 3 years
3. The rent I was receiving on the property was approximately $40 a week less than what we were looking to spend on a rental
• Normally the interest deductibility of your investment loan would needed to be counted in this valuation however my property was positively geared so I wasn't actually getting any benefit from this.

Cons of moving into the investment property

1. It was an area that I wasn't too keen on living in.  
• The area the investment property is in is great if you are raising a family but it is useless if you want things like convenience to the CBD, cafes etc.  However given my wife and I are looking to start a family soon the family aspect of it suddenly becomes far more compelling
2. It reduced the imperative to save hard for our own home.  
• I think people save for a variety of reasons.  My wife is brilliant at saving if she has something to save for.  My major concern was thay by living in our own home already thay she would not have the same motivation to save.  If I'm going to honest this is still a concern and I'm testing ways to keep us on track
3. All the repairs and expenses that are part of home ownership are no longer tax deductible.  
• This is a very real downside and it bit me in the backside almost as soon as I moved into the house
• I suddenly had to paint, fix fences and repair burst water pipes all without the benefit of being able to claim the expenses back on tax.  Some of the bigger jobs I will keep receipts for and add it to the capital value of the property (and depreciate it later when it goes back to being a rental) however smaller jobs I will no longer be able to deduct.

After weighing up all these pros and cons we decided to move into the property...so what swayed it for us?

So why did we decide to move into the Investment Property?

Although we came to the same conclusion my wife and I reached the decision to move into the investment property for quite different reasons:

• I saw it as a financially neutral decision which allowed me to put off buying into a hot property market for a few years.  The risk to this approach is that we take our foot off the wealth building accelerator because we are comfortable.
• My wife saw it as an ability to get into our own home ahead of children which provided stability.  The risk from her point of view is that we don't actually move after a few years and she doesn't get her garden.

I'm learning that relationship finances is as much about finding common ground even if they are for completely different reasons rather than always compromising what you you both want.

So what do you think about my decision to move into my investment property? Would you have done something different?

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What health insurance product is right for you?

When it comes to insurance I'm the type of person that is always over-insured.  It's not so much that I think insurance is a great deal...it's just that I tend to up-sell myself to premium products whenever I look at insurance.  This results in me paying far more than I really ought to be paying.

This is especially true when it comes to Health Insurance.  I currently have a very high level of hospital and extras cover when I barely use any of it.  I'm healthy, in shape and have no serious pre-existing or family conditions to worry about...I'm the last person that should have full cover on everything (I even have pregnancy cover...).

I obviously have had the wrong health insurance for a long time (despite promising myself to the contrary) I have done nothing about it and I continue to pay my exorbitant premiums.  However I was recently forced to re-look at my health insurance plans when I was considering my fiance's and my future financial position.

She doesn't have health insurance however she was going to get stuck with both the medicare levy surcharge as well as the lifetime health cover loading in one hit after marrying me (which would affect my tax as well) so we started looking at plans together.

Comparing health insurance plans is incredibly difficult

Let's state this up front.  Comparing health insurance plans is one of the most difficult things you can do.  They all offer different levels of cover, they exclude different procedures and offer different amounts back for the same procedure.  Some offer policy limits and some offer limits per person per year while others have lifetime limits on what you can claim.

With all of this complexity how on earth do you sort it all out?  I like to think that I'm pretty astute when it comes to finance but honestly comparing these plans was about the most difficult thing I have ever done.

I have put together the following step by step guide to help you work through the nightmare of health insurance products, premiums and offerings.  Some of this is very similar to my original post 'Choosing the Right Health Insurance' but this will go into more detail.

Step 1: Know what you want and what you need

Before you start looking at any products you need to know both what you need and what you want.  If you don't you're going to be inundated with choice and too much

Financial questions to ask BEFORE you get married

You don't have to be a regular reader of this blog to know that I'm interested in finance.  Almost everything I write about is finance related and I am quite content sitting down and reading a finance book for hours on end.

I am also quite open about finance with those I talk to and am friends with.  Whilst I don't disclose how much I earn or what I am worth to those who know me I will happily talk about money and finance with anyone who would like the discussion.

With that sort of background you would be forgiven for assuming that I had had every single discussion necessary about finance before entering married life.  In fact I thought that is the one area that I had nailed down and that we didn't really need to talk about any more...but I was incredibly wrong!

There are a range of topics financial topics you need to talk about before committing to another person

I honestly thought I had covered all of the financial topics possible with my future wife.  We knew how we were going to save for a house, how we were going to pay the bills, what we were going to do when kids came around...everything...or at least I thought so...

One of the things people highly recommend is doing a marriage course so my fiance and I went along to one of these courses which gave us a huge multi choice questionnaire which covered a heap of different topics.  At least 30 of the questions covered finances and how much we had discussed them...and they covered incredibly important topics that we hadn't even touched.

Instead of just writing about my experience I thought I would make a list of topics that you should discuss with your significant other before you get married.  This list isn't exhaustive and if there are other things that concern you then you should definitely talk about them!

Financial topics you should talk about before getting married

Broadly speaking the things you should talk about fall into a few broad categories

1. Life plans and preferred lifestyle and the income you will need to support these
2. Attitudes towards spending and saving
3. Debt, current and future and how this will be incurred
4. Savings, goals and how you will achieve these
5. The day to day organisation of your finances

1. Life plans, lifestyle and generating the income you need to support this

This is the first thing you

I have the goal...I have the plan...so now what?

I should start this post by apologising to my regular readers for the significant drop off in posts in the last month or two.

Part of this was related to burn out (I was simply trying to do too much at one type) but a lot of it also had to do with the fact that I was simply executing on the plans I have been writing and talking about for so many years.  Planning is something I can write about all day...but execution stuff is boring and actually fits quite neatly into my monthly net worth and expenditure tracking posts.

The good news is that my financial plan is working...

I guess I shouldn't be surprised but the truth is that it is slightly disconcerting when everything falls into place exactly how you expect it to.  I'm saving where I'm meant to be saving.  I'm investing where I'm meant to be investment (and being more active about taking profits and re-investing other opportunities) and I'm spending within my planned goals and budgets.

The one area where I am perhaps a little bit behind is my long running plan to start my own business.  Last year I started Banker's Pitch - a blog about Investment Banking and my original plan was to turn this into an information resource which could then be used as a platform to sell further services and informational products.  Although I haven't pulled the plug yet I'm thinking of re-focusing my attention and efforts elsewhere for reasons I will go into at a later point.

With the exception of the above though everything is tracking remarkably smoothly.

As a quick aside - the expenditure smoothing approach I took to big expenses a few years ago is probably the best financial thing I have ever done.  My wedding is fully paid for more than 3 months out from the big day and saving for the honeymoon is going to be a walk in the park.  We have managed to fund both these massive expenses without ever having to dip into my savings and investment portfolio which is exactly what I wanted.

The bad news is that a working financial plan is...well...boring

Having a plan that is working exactly how you want it to is exactly what you want...but it does tend to be a bit boring.  There is nothing to 'fix', there are no new strategies I'm keen to try at the moment and everything is tweaking around the edges.

That tends to make for a pretty boring financial blog...but a pretty good financial plan.  Half my effort in recent months has been to stop myself doing things for the sake of doing them.  Combined with this is the fact that I'm in the middle of wedding planning (which is the most painful thing I have ever done) which makes me want to focus on my financial life (or anything else for that matter).

So what's next?

My real focus at the moment has been my share portfolio.  I'm getting incredibly uncomfortable with the level the market is getting to and the valuations in markets.  The big problem I have is that I'm already very long cash and I'd rather not hold cash for long periods of time in a low interest rate environment and I can't find any alternative investments I'd rather be in.

Opportunities do rear their head from time to time but it is certainly not the share buyers market that it was 3 or 4 years ago when I was writing lots of posts about what I wanted to be investing in next.

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Importing my Japanese sports car...Step 2: Between the auction yard and the ship

I am importing a sports car from Japan into Australia for a variety of reasons I have outlined before.  In my last post I outlined the process of finding, inspecting and bidding for the car before actually winning my car at auction.

I thought it would be a quick and easy process from that point on...but unfortunately I was mistaken.  The whole importing process turned out to be much longer and far more frustrating than I first thought.

Working out who and what you are paying is far more convoluted than you first think

When I first researched buying a car from overseas I thought I understood all the costs and where all the different fees and services went to.  In fact it was far more complex than I first imagined and if I'm going to be honest I still don't know exactly where all the money went to.

The problem really stems from the fact that when you talk to your car import broker you are talking about a landed and complied cost (that is the cost to actually get the car into Australia and to your door step), back solving all the different costs along the way becomes incredibly complicated.

My car purchase was a case in point.  When I bought my car I was told that I had won it for a FOB (free on board) price of JPY707,000 however the actual price the car sold at auction for was more like JPY597,000.  The difference is approximately A$1,000 and although I knew that auction fees and transport costs had to be paid to the port I certainly couldn't work out how this could cost 1/6th the cost of the car.

Complicating this was the actual person I was paying.  The bill I received actually wasn't from the auction house at all - it was from what looked like a broker operating out of Japan so presumably they put a margin on top as well.

This was only the start of the number of fees that I had to pay...at some point I should add them all up.  You may ask why I didn't kick up a bit of a fuss about the fees I was paying to unknown parties.  The fact is that if I get my car for the landed and complied cost that my broker was talking about I would still have gotten a deal compared to Australian prices...so I kept my mouth shut.

Paying the auction cost involved using a foreign exchange broker

Next I actually had to pay the JPY 707,000 to the broker in Japan.  I had their banking details and I was going to go into the bank

Importing my Japanese sports car...Step 1: Buy the car

As some readers of this blog may know - I have been looking to get a sports car for years.  I finally decided to stop talking and do something about it.  After looking for a while and trying to work out what I actually wanted to buy I settled on buying a Nissan Skyline...the only problem being that I had to buy an import from Japan.

I could either buy one that had already been imported by someone else (and run the risk that the clock had been wound back) or I could import one myself (and go through all the hassles that that entails).  In the end I decided to import the car myself and I appointed an import broker to help me through the process (you can see that post here).

Finding the car was much more involved than I first imagined

I had originally planned to let my import broker do all the work.  He could scour the lists of cars coming up for auction and then could contact me when one met my requirements, give me a price estimate and a history of the car along with the results of any tests and the whole process would be easy.

However I got much more involved than I previously intended to be

I love cars and I couldn't help myself - every day I would scour the auction lists on the import brokers website looking for any car that could meet my requirements.  After a while I started to get bored and started to loosen my requirements - I was looking at older cars that didn't have the specifications I wanted in colours I was previously not interested in.

I also started to get a better idea of what specific cars would sell for - after a while I was pretty confident that I could estimate how much a particular car could go for given it's specifications and after taking a look at the pictures.

I found several cars...but they needed to pass muster first...

This is where having an import broker really started to pay dividends.  I found several cars that met my requirements and I would get my import broker to send along a guy to test the car and give a report back (along with photos) of what he found.  Some of them turned out to be duds mechanically while another had a smokers smell (which is something you would never see in pictures)

...and then I came across one which I thought may just be the one

After a few weeks of absolutely nothing and as

You are never too young to have a Will

Recently a friend of mine passed away.  He was very young, not sick and it came completely out of the blue.  He had no dependents, lived at home and like most young people (including myself) he had no will nor had he given any thought (or provided any indication) about how he would like his personal possessions dealt with.

If you have no dependents you don't really need a will...right?

Honestly that was pretty much the approach I had taken until now.  I have no dependents and if I passed away people could do with my stuff as they liked...I'm no longer here and there is no one I need to look after...so no worries right?

As I found out I couldn't be more wrong

Even if we are not 'responsible' for anyone our affairs (especially our financial affairs) still need to be dealt with by someone.  Normally it will be a family member who will step up but essentially you are putting the responsibility on them of deciding what should be done with your things and how it should be split up.

Does your next of kin know what you want done with your affairs and who you want taken care of?  Do they even know how many bank accounts you have or where everything is?  Are you going to create problems for them if you don't have a plan that you have thought through?  Do you care who gets looked after and who misses out?

Honestly these are all very real questions.  It is hard enough to deal with these issues when a family is functional and close (as my friend's family is) however can you imagine if this happened in a family where there was dysfunction (as many are)?

Having a will is the easiest way of ensuring the basics are taken care of

Honestly having a will is the easiest way to ensure that

1. The people and causes you care about are taken care of
2. The person you want to deal with your financial affairs will be the one who does so
3. A reduced chance of fighting and dysfunction occurring on your behalf
4. It doesn't leave your assets and their disposal in the hands of the government (in the event of no will there is a specified order of preference for who receives your assets)

Wills don't have to be incredibly expense.  In some

2014 Expenditure Tracker...A year in review

Last year I attempted to track and budget for every dollar that came in my pay check and it was a great exercise to go through.  It was an incredibly valuable process with some interesting outcomes.  Below is a summary of how I did as well as a detailed look at where I outperformed and where I under-performed my budget.

Item	Actual 2014	Target 2014	Perf. vs Target
Accommodation / Living expenses	$27,617	$26,950	+$667
Car expenses	$6,926	$8,300	-$1,374
Health / Well being expenses	$6,162	$6,790	-$628
Entertainment / Personal expenses	$15,738	$14,764	+$974
Travel expenses	$10,299	$8,100	+$2,199
Other 'big' expenses	$40,695	$42,100	-$1,405
Savings / Investments	$11,393	$12,613	-$1,220

So what happened?

Accommodation / Living expenses: +$667

Almost every single expense line in this category came in exactly where I forecast.  Rent, utilities and insurance came in almost exactly where I forecast.  The big variances came from groceries ($600 less than I forecast), clothing ($450 more than I forecast) and apartment set up costs ($600 more than I forecast).  

If I hadn't bought my new television right at the end of the year I would have been well below my overall target.  I can't believe how close my estimates were.  It really does show how effective budgeting and tracking can be.

Car expenses: -$1,374

I was honestly a little surprised how well I performed in this particular category.  I spent a little bit more on registration and maintenance than I had forecast however my fuel costs, parking and toll costs and car washing costs were way below my forecasts. 

Once again, actually tracking my expenses made me focus on saving money wherever possible.  I used my car less, bought my own equipment to wash my car (instead of paying for it) and paid far fewer tolls in previous years because I could see it affecting my budget every time I spent on one of these items.

Health / Well Being expenses: -$628

I confess I was surprised

2015 Financial Goals

I love this time of the year.  Setting goals for the coming year is exciting.  Everything is a blank canvas and the year always has so much potential ahead.

Last year I tracked every single dollar I spent and allocated all of that cash to achieving goals which I set out at the start of the year.  My ability to do this going forward is limited by the fact that I now share finances with my fiancee (although we are not fully integrated yet).  Given how tedious tracking every dollar is I'm not going to ask her to do this and so I'm going to have to settle for a way of tracking my goals which is less hands on than last year.

 But before we get to the 'how'...I'm going to outline my savings and spending goals for the coming year.

My financial goals for 2015

I set my financial goals this year with my fiancee.  This was the first year that I had to do it with someone else and I had to reign in what I wanted to achieve in order for us to accommodate both of our goals.

The goals listed below are joint goals.  I tried separating these out but it really was far too complicated and I couldn't work out how to track them separately either.

Goal #1: Get Married.  Required savings: $5,000

My fiancee and I decided to have a shorter engagement rather than a longer one.  Neither of us really wanted a long and drawn out engagement.  This was for a variety of personal factors including life plans and age and also neither of us want to drag out the wedding planning phase for too long.

I have outlined my wedding savings plan before.  We have budgeted $40,000 for the wedding itself.  Some serious saving done through 2014 means we only have $5,000 left to save for the wedding.

Goal #2: Go on a grand tour of Europe for our honeymoon.  Required savings: $20,000

The best part about planning a wedding is definitely the honeymoon.  I love travelling and I really wanted to travel through Europe before I had to settle down with children.  When I budgeted for my wedding in 2014 I was also budgeting for my honeymoon so although it looks like I haven't saved anything it's because it has all been allocated to the wedding (which comes first)

Goal #3: Save for a home deposit.  Required savings: $40,000

Ok - for all those who were worried that I had suddenly changed into a person who had totally given up saving and investing don't worry - I haven't.  Saving for a home deposit is something that I've been doing for years.  I haven't explicitly said that is what I was doing but every time I put money in my investment property's home loan offset account it was to form a deposit for my own home when it came time to buy it.

Merry Christmas! Here is a little Christmas nudge...

Merry Christmas everyone.  I hope you all have a very safe, happy and enjoyable holiday season. Hopefully you can take this time to step back and re-assess your goals and priorities and come back in the new year refreshed and ready to take your personal finance journey to the new step.

This is just a little post around Christmas to nudge you in the direction of some Christmas giving.

Don't forget those less fortunate than ourselves

The very nature of a personal finance journey means that we are often looking to improve our own lot in life.  There is nothing wrong with this and focusing on my financial journey and blogging about it is one of the things I enjoy doing most.

However it is easy to forget (especially as we start to build up some wealth, traction and momentum) that there are others who are less fortunate than ourselves.  

This is a little nudge to remind you (and myself) to give a little and hopefully improve someone else's Christmas.

Micro-finance organisations are great for those looking to give to others on a financial journey

Last year around

NEVER ever take a Cash Advance or a Pay Day Loan

Getting into debt around Christmas is incredibly easy.  It is easy to fall into the spending trap and to feel obligated to spend large amounts of money.  The constant bombardment of advertising at this time of year was what prompted me to write my article providing 5 tips on saving money this Christmas.

However this year I noticed another worrying trend when it came to advertising: the number of payday loan companies that started to advertise on the radio, internet and on television.  "Strapped for cash...stop the worrying and say yes" type advertising  that most of us should ignore.

If you thought credit cards were bad...wait until you see cash advance loans

I have talked about how the best way to get ahead is to avoid credit card debt (where the interest becomes payable).  The interest rates on credit cards run at 19 - 22% p.a. which is outrageous...at least I thought so until I saw the types of rates being charged on cash advances.

The first site I clicked on charged 24% for a 30 day loan...24%...that's not a per annum rate.  That is the rate over the 30 days.  That is a 966% interest rate per year (compounded).

I was going to do a full summary of payday lending but this video encapsulates everything I wanted to say:

The more I research this issue the more saddened, outraged and worried I am for the financial health of some of the most vulnerable people in society.  However for an explanation which is far more complete than mine could ever be check out this brilliant video by John Oliver

But what if you need the cash right now?  Should I take a pay day loan?

No!  There is almost no situation I can think of where you should take a pay day loan.

When you're desperate, you're desperate right?  What if

5 ways to save money this Christmas

Christmas is an expensive time of year for a huge number of reasons: you have to buy presents for family and friends, you need to book new years events and there are dinners to attend (or to host yourself) as well as work functions and whole heap of other things to do.

I love Christmas and everything that comes at this time of the year but it does get expensive.  Here are 5 simple ways that you can save money this Christmas (I'm doing all of these this year).

1. Set a budget for gift giving (per person) and then stick to that budget

Christmas gifts can get incredibly expensive especially if you have a lot of close family and friends.  It is easy to see an item and think "oh my mum would love that" and then pick it up only to realise far too late how much you've actually spent cumulatively.

I recommend setting a budget for each person you are giving a gift to and then stick to that budget.  I normally have a budget of $150 for each of my close family members however this year I'm dropping it to $75 because I have some incredibly large expenses coming up (and they got some pretty cool gifts from me when I got back from South America)

If you have to give presents to a large number of extended family consider reducing the amount you spend per person because even $30 - $50 per person can add up very quickly.

2. If you have a large extended family consider instituting a Kris Kringle or Secret Santa

Large and close extended families are awesome however they can be a real problem around Christmas time because gifts cost so much.  It can get especially painful if there are lots of kids involved because there is no way you can get away with a $10 box of chocolates or skimp out.

What you can do is to have a chat about this with your family and institute a Kris Kringle or Secret Santa program.  These programs work for multiple reasons - it saves you time and money and people actually get better and more thoughtful gifts and they can be pretty fun around a Christmas tree if you have a large family gathering.

It is generally pretty easy to institute one of these systems:

• Meet up a month in advance - everyone's name gets put into a hat and you draw out a name for yourself and for each of your kids (if you have more kids you have to fund more presents)
• Set a maximum amount that you are allowed to spend per gift - this is crucial. 
• In my family this is generally around the $50 mark - it's not too expensive and as a receiver you are getting a pretty decent gift
• You can have different caps for children and adults if you like (so that kids get nicer gifts)

3. Do your shopping early OR after Christmas

You can save a great deal of money by timing your shopping.  You either need to:

I'm importing a car from Japan...here's why

I have been talking about buying a sports car for years and it's finally in progress!  After humming and hawing and budgeting and saving it feels good to make some concrete steps towards buying this car.

As you could probably tell from the title of this post I am not going down the conventional route when it comes to buying the car.  I have decided to import a luxury / sports car from Japan and below I'll outline why and how I'm going to do it.

Why on earth would you want to import a car from Japan?

I have had this response more than once however having done my research there are a few reasons I wanted to import a car from Japan:

1. I had looked through the cars available in Australia and I either didn't like them or they were too expensive
• I spent weeks if not months looking at various cars on car sales websites and they were either not exactly what I was looking for or if they were they had high kilometres or were too old
• I decided to drop my two door requirement and decided instead to look for a 2 door sports car that had practical back seats 
• I then came across the Nissan Skyline 350GT which seemed to be exactly what I was looking for - it may not be a 'true' sports car but it certainly has enough grunt to make me very excited about buying one
  
2. The only problem was that this car was never sold in Australia and all the cars you see on the road are actually imports
3. So why didn't I buy a second hand one in Australia? How do you know what you're getting when you buy overseas?
• It is true that a lot of cars which are imported into Australia have their clocks wound back - the problem when you get it here is that the a lot of the original documentation is actually missing so you can't verify that the km are genuine
• If you can get this documentation and if you go through a genuine broker your chance of getting a wound back car is significantly reduced.  Why?  Because brokers trade on their reputation and they are reliant on people saying good things about them to get more business
• If I bought a car in Australia (privately)  I would need to take it to a mechanic near the seller (one I don't know and wouldn't trust because there is no ongoing relationship so they could tell me anything).  This is no different to getting someone in Japan to check the car out for me
  
4. There is greater choice when you are buying from Japan
• Not only do they have more cars but it honestly doesn't matter where in Japan I am buying the car from.  In Australia I'm basically restricted to cars I can go and see while in Japan I have someone doing that for me
• Further there are more options coming onto the market in Japan so I can be a bit more picky
  
5. The price is slightly better
• The price is only slightly cheaper in Japan than it is in Australia once you take into account shipping, compliance, taxes and registration
• It is actually incredibly easy to import a car from Japan in Australia (provided it is on the list of approved cars for import) so Australian second hand models tend to depreciate with their Japanese counterparts

Aren't I going to have issues with insurance and repairs?

Insurance is the one big draw back of getting a Japanese import.  Insurers generally hate them and the ones that do insure you will charge you a massive amount.  However when I got a quote for insurance on the car I was quite pleasantly surprised.  Although it is $500 a year more than my current insurance it certainly wasn't the massive bill I was expecting.

I imagine this is for a few reasons:

• I'm a bit older and have an extensive accident-free driving record
• The car I'm getting isn't going to have any modifications 
• Although it is a sports car it is also a bit of a luxury car - i.e. their accident record isn't as bad as some other hot imports

Repairs aren't going to be an issue either.  I did a lot of research on this topic and it isn't really an issue because it shares an engine with the Nissan 350z which is sold here so there are plenty of parts around.  You generally have to wait for body parts to arrive from Japan which is a 2 - 3 week wait but that isn't a big issue either.

I haven't bought the car yet...but the process has started

The thing about importing a car is that you have to wait for the car you want to come up at an auction.  I have appointed a broker to help me facilitate this process and provided him with my budget and requirements. 

My request for a sunroof means that I am going to have to wait a lot longer than I would normally...and I've given him quite a challenging budget so it will be interesting to see whether I can get exactly what I am looking for.

So far I have paid the $1,100 broker fee (which needs to be paid upfront) but nothing else.  As I get further along in this process I will keep you up to date.  As with my wedding spending I am not going to do a whole heap of posts on this topic but if you're interested shoot me an email and I can give you some great reading that I've done on the whole import topic.

Many thanks also to one of the readers, Mike, who put me onto the whole concept of buying cars at auction.  I really do get a lot of knowledge from those who shoot me emails and ideas.

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How to combine finances with your partner...a transitioned approach

A few months ago I asked whether there was a right way to combine finances with your partner.  I received some great tips both from the comments on the website and from some very detailed emails that people sent me.

What I realised was that everyone's situation was different and it completely depended on the couple involved.  In my original post I outlined some of the ways that couples combined their finances.  In this post I will talk about transitioning to such an arrangement - i.e. how do you combine finances with your partner smoothly.

How to combine finances with your partner in a smooth and trouble free manner

Some people are completely comfortable joining their finances together immediately.  I talked to plenty of people who didn't bother thinking about it too much - they just did it and worked it out along the way.  However largely these people seemed to either

• Be broke (or not have a lot) when they combined finances - combining nothing is quite easy to do!
• Regret not thinking about it more at the start - they were 'young and thought nothing could go wrong'

If you are thinking about combining finances when you're a bit older and if you're the type of person that thinks about things far too much (like I do) then mashing together two peoples financial lives straight away doesn't seem like the best idea.

Transitioning to joint finances has many advantages

There are several advantages of transitioning to joint finances instead of setting up one bank account and putting everything you have in there straight away.  These include:

1. Being able to see how your partner deals with money
• You will probably have a feel for this well before it comes to it however when you are actually sharing finances you will learn far more about how your partner thinks about and deals with money
• For example - I never thought my fiancée was bad with money however she never really seemed to save a lot and didn't have any sort of nest egg.  What I discovered when we started saving together was that as long as she had a goal and knew how much she had to save each pay check then she would save like a fiend!  It's not the way I operate with money but it gave me far more comfort in combining finances
  
2. Allows two people who come to a relationship with vastly different financial situations to have a 'mine', 'yours' and 'ours' bucket
• I have no doubt that eventually everything is going to fall into the 'ours' bucket...especially when I get married
• However in the interim I didn't feel comfortable lumping everything together straight away.  Perhaps I'm just a cautious person but I did prefer a slower integration
  
3. You don't feel 'trapped' too early
• A lot of people (including myself) valued the sense of freedom that came with being single.  This didn't mean that I don't want to be in a relationship...but if I have been saving for my sports car for a few years I don't want to have to have to run that by someone else (I saved for this!)
• Eventually your finances will probably be completely shared and then something frivolous like a sports car becomes a joint decision but early on it should still be yours and transitioning to combined finances helps with this!
  
4. Avoids some potential tax issues
• If you already have a share portfolio or other assets be careful about transferring title (even when you do get married)
• Often transferring title (even to a trust if you decide to set one up) will result in a capital gains event and will result in you having to pay tax even when you don't plan on selling the shares

A slow and progressive transitioning to combined finances is both natural...and it works

I found that slowly moving to more integrated finances is the best way to combine finances.  Below is an example of how you can slowly move to integrated finances:

1. Set up a joint account and pay shared bills out of that account if you live together  
• Work out roughly how much you need to spend each month in joint expenses and then each of you transfer an assigned amount into this account (it does not necessarily have to be half and half but it should be shared)
• Continue to pay your wage etc. into your own account...the point of this is to combine finances slowly
  

My 4 Rules for entering gaming venues

I don't often go to Casino's.  It's not that I have a particular moral objection to them - I just prefer not to play a game where the odds are mathematically tilted against me.  However I went to a casino recently (context to come later) and after doing so I now have new rules for myself about gabling generally.

My rules for entering gaming establishments

1. I will never spend more than 2 hours in a gaming establishment
2. I will never gamble more than $50 in a night
3. I will never use a card of any sort in a gaming establishment (credit or debit)
4. I will never enter a gaming establishment after drinking

...and now it's time for some context...

How did my personal rules for gambling come about?

I was at a bucks night recently (getting married seems to be the thing to do amongst my friends at the moment) which ended up at a casino after several hours of drinking.  We left the casino to go elsewhere however ended up back at the casino later in the night.

Before I go into what I saw and experienced that night let me just say upfront that I did not lose thousands of dollars and this is not a post of regret.  I bet $20, at one point in the night I was up $100 and I ended up down $10 at the end of the night.

When I looked around I was staggered at the amount being bet...and lost

I love people watching however people watching in a casino is one of the most depressing things I have ever done.  I was just on the regular gaming floor (on the cheap tables I may add) but the amount of money being bet was still staggering.

I saw one man playing

My Updated Wedding Savings Plan

Around Valentines Day this year I set out my plan to save for a ring and ultimately marriage.  I had heard how much marriage costs and I didn't want to have any sort of bill shock when the inevitable expenses actually came around so I decided to spread some of the expenditure associated with marriage.

My original plan called for $60,000 in total savings:

• $10,000 for the engagement ring and proposal
• $30,000 for the wedding itself
• $20,000 for the honeymoon

I'm glad to say that the first part is done and dusted.  I bought the engagement ring (for $10,000), got the GST back on the ring when I went overseas (-$909) and then spent about $1,500 on the proposal itself.  I was about $600 over budget but in the grand scheme of things I'm not too worried about that.

However, being proposed and being able to talk about the wedding with my fiancée has helped clarify what we want to spend and how much we're probably going to need for the wedding.

The new budget is $10,000 higher than the old budget...and the timeline is shorter

Spreading expenses over a particular time requires you to know 2 variables:

1. How much are you going to spend?
2. When are you going to need to spend it?

I had originally forecast $30,000 for an August wedding in 2015 however once my fiancée and I sat down and did the numbers we realised that we would probably need to spend more and save it in less time.

The wedding is going to be ~$10,000 more than I originally forecast...

The wedding is going to be more expensive than I originally forecast for 2 reasons

1. I under-estimated how many people we had to invite.
• I originally did the calculations on a wedding for ~120 people however when we actually listed how many people we wanted to invite the list turned out to be more like 150
2. There are some significant costs I didn't originally think about
• When I first budgeted for the wedding I thought about the costs that most people incur such as the reception, outfits, church, flowers etc. etc. and I gained these lists of expenses from online forums and calculators
• However there are some costs which you will incur that are specific to your wedding.  In our case we are going to have to pay for the flights and accommodation of some very close family members that we want to be at the wedding but who genuinely can't afford to be there if we didn't help them out.  I am more than happy to spend this money but it does add up very quickly

...and is also likely to be a month earlier than forecast

I had originally forecast an August wedding and had set my savings plan up accordingly.  However when we worked out when we actually wanted to get married we realised that we were actually looking at early July (due to my work commitments in August).

This effectively reduced our time to save for the wedding by 2 months.  This may not seem like a bit reduction however a few factors meant that it has having a far larger impact than I first imagined:

• I had originally structured my savings plan so that I was paying more the closer I got to the wedding
• Originally I was paying

My sports car dilemma....

I have been talking about buying a sports car for years.  I have mentioned to everybody...my friends my family and I have talked about it on this blog more times than I can imagine.

I have the cash to spend on my sports car...

At the start of this year I committed to buying it as part of my financial plan and budget.  There were some hiccups along the way...the fact that I was running over budget on a lot of my other planned expenditures made me realise that I would have to compromise on the amount I had to spend.  However recently there was some good news on that front:

• I spent far less than I had originally budgeted on my South American holiday
• I got my bonus figures a few days ago and it was significantly better than what I was expecting

The excess cash from these two factors should cover the 'over-spend' on other items throughout the year which leaves me free to spend my original budget on my sports car.

...but here's the hitch...

I can't work out what

What is a normal home loan interest rate?

When you look to buy a house, chances are the first question you will ask is "how much can I afford to pay" which is really asking the question "how much can I borrow?".  Once you know how much you can borrow, you can go out house hunting and buy that perfect home.

Unfortunately most people just Google one of those home loan calculators or go into a bank branch and ask them how much they can afford to pay and don't look at the biggest assumption that will determine the answer to the original question...the interest rate on the home loan.

The interest rate is the biggest unknown factor when it comes to taking out a loan

In Australia, most loans are variable rate.  If you are lucky you may be able to lock in a 5 year fixed interest period but for the majority of your loan you will be paying an unknown rate of interest.  Why is this a problem?

The problem is that most 'affordability' calculators assume the prevailing interest rates or they may have a small buffer in there if rates move.  In Australia the current rate of interest is ~5% on 30 year mortgages but will it stay like this forever...and will you be able to afford the interest bill if the interest rate moves?

The question we should be asking is: What is a 'normal' home loan interest rate?

The problem with this question is that there is no right answer.  Economists will argue until the cows come home what a steady state 'normal' interest rate will be but the fact is that it will all depend on the economic conditions and government policy in the future and there is too much uncertainty around that question.

So how do we deal with the uncertainty associated with unknown future interest rates?

The simple answer is to

I did my own taxes...and it was great!

I am usually terrible at doing my taxes on time.   I always have the receipts sorted out and spreadsheet done well in advance however when it actually comes to seeing the accountant and submitting my taxes I tend to procrastinate for weeks or even months.  Last year I submitted my taxes 6 months late.

This year I swore I would be different.  But not only that...I also decided to do my taxes myself

Why did I do my own taxes?

There are a whole host of reasons I decided to do my own taxes this year including:

1. I virtually do them for my accountant anyway!
• The spreadsheet I give my accountant is so detailed it means he never has to look through any of my documentation and I generally only have a few questions that I need to ask him
2. I value my time less than my accountant charges me
• My accountant charges $120 per hour to do my taxes and given the work I normally do on them I generally only get charged for 2 hours of work (i.e. $240)
• I wasn't exactly sure how long it would take me to do my taxes but I was pretty sure I would be ahead if I did them myself
• As it turned out it took me 4 additional hours to do my taxes (i.e. the time taken to do what the accountant usually does) 
• I value my personal time at less than $60 per hour so it was a great trade for me
3. I hate taking time off to go to my accountant
• I normally have to take a bit of time off work to go to my accountant who works in the suburbs (while I work in the city).  Work doesn't have a problem with this but half the reason I generally procrastinate for so long is that I find it such a waste of time to go out there
• I thought about getting an accountant that was more convenient but this one knew my personal financial situation rather well and I didn't feel like having to explain it to someone new all over again

Would I do my own taxes again?

Is there a right way to combine finances with your partner?

Over the weekend I proposed to my girlfriend and we are now engaged to be married which is incredibly exciting.  I have been talking about doing it for so long on this blog that it a little surreal that the event has finally come and gone (although now a whole set of new planning starts).

A few months ago I wrote a post about money and relationships which encouraged readers to communicate with their partner to avoid misunderstandings, but also to make sure you are on the same page when it comes to finances.  For once I have been taking my own advice and my girlfriend fiancée and I have had some great discussions about our goals and objectives.

Finding a 'system' for finances is important...

However it is something that I have absolutely no experience in.  Most of my posts on this blog go through things I have settled on or decided but this question leaves me floundering.  I have absolutely no experience in sharing finances with someone else...

I have taken a poll of my married friends and friends that are in long term relationships and the number of systems are as varied as the number of relationships.  

Some people work on a strict system...

Some couples have a