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

How much SHOULD you pay in rent?

I have mention in several posts recently that I have moved into an apartment on my own recently.  I decided to continue renting instead of buying as I wanted to save up a larger deposit for my own home as well as the fact that I have several big life goals that I want to achieve later this year.  This post will cover what I thought about when I was thinking about how much I wanted to spend on rent and what you should think about if you are looking into it.

The question is what SHOULD I spend on rent? NOT what CAN I afford?

When most people think about renting a place they think about what they can afford to get.  While it is important to live within your means I think it is much better to think about what type of place you want first and then look at how much it costs to get a place like that.

The problem with looking at what you can afford is that we are all maximisers.  I don't know anyone that would choose a place for $300 per week when their budget is $350 per week because in most cases the $350 place is much much better than the $300 place.

I have outlined a process below that I went through (and that you can follow) to work out what you should be paying in rent.

Step 1: Make a list of what you need and want in your home

Every one of us has different things that we need and want in our own home.  I was very focused on space and entertaining while the newness of the place was much more important to me.  If my girlfriend was choosing the place it would be a place which was smaller but where all the fixtures, fittings and appliances were new.

Work out what is important to you and then make a list of everything you want.  I decided that I wanted a 2 bedroom place - I hated en-suite only bathrooms (which typically come with one bedroom places) and I also wanted to have people over regularly so wanted to extra space that came with a 2 bedroom place.  I also drive so a car park was a must.  I needed to be close to the station because I catch the train into work every day.

Making this list of needs and wants helps focus you mind and will stop you maximising when you are hunting for a rental property.

Step 2: Work out what you can afford

I know I said that the question above should be what SHOULD you spend not what can you afford but it is important to keep your expectations in check.  If what you need and want far exceeds what you can afford then you need to trim back on your expectations.

Also - your rent should never

First Home Saver Account - Super Return but mind the strings attached

The First Home Saver Account is an initiative by the Australian government which allows people buying their first home (to live in) to get help from the government to save up for a deposit.  I remember being turned off by all the strings attached to the plan when I first looked at it a few years ago but if the timing works for you it can trump any other savings plan / investment in the market.

What is the First Home Savers Account?

The first home savers account is basically a savings account that you hold at your bank or credit union (note that most of the major Australian banks do not offer this any more but you can still get it from credit unions) which you use to save for your first home.

The benefit of this account is that:

• For every dollar you put into the account (up to $6000) in any financial year the government will co contribute $0.17 (i.e. up to $1020)...that's a 17% risk free rate of return on the $6,000 deposited 
• The account earns interest like a normal savings account.  Members Equity had the highest rate I could find at 3.25% p.a.
• The earnings in the account are only taxed at 15%

Trust me when I say there is nothing else out there which gives you a return anything like this.  In fact if it wasn't the government giving you the return I'd wonder if it was a scam.  But there are strings attached...make sure you don't trip over them.

What are the strings attached to the First Home Savers Account?

There are some pretty big strings attached to the account.  Look at the Australian Tax Office website for full details but in order to be eligible

1. You need to be an Australian citizen or Permanent Resident
2. You must not have owned a house in Australia as your primary residence (this is how I still qualify - I own an investment property but it was never my residence)
3. You must not have had a first home saver account before

Then there are the strings attached to being able to withdraw the cash itself:

Selling at a loss hurts...but lazy capital hurts more

Towards the end of last year I wrote quite a long post on the need to constantly re-evaluate your portfolio.  The chances are that you do not understand why you are holding onto every one of your stocks.  Worse, there may be some stocks in your portfolio which you know are never going to recover but which you hold onto because the original thesis (which was great) never panned out and you now have lazy capital.

Just because a share has decreased in value does not mean it is a bad investments

An investment thesis almost never plays out straight away.  If you buy a share or other investment and it goes down over the next few weeks or months don't stress about this - if your thesis still holds and you have confidence in it, then have the courage to stick by it.

An investment thesis can sometimes take years to play out but the rewards are there at the end - one stock I owned kept falling for almost 2 years but I still believed in my thesis and then within the space of a few months it more than doubled in value from my original buy in price on the back of that thesis.

Where your thesis has not played out...and you have turned out to be wrong then it is better to admit your mistake quickly

The first step is to stay on top of your investments.  If you have invested in a stock that seems undervalued and then the market fundamentals of that stock deteriorate rapidly then it is better to admit your mistake quickly.  Several years ago I invested in Fairfax Media (ASX: FXJ) on the basis that the stock was trading on an extremely cheap multiple - implying that the market expected print media to go out of business rapidly (i.e. a significant earnings deterioration in a very short period of time).

I thought that the market was over-doing it and I invested in the stock at $0.99 per share on the basis that I thought that it was worth at least $1.20.  In hindsight the market was completely right and I was completely wrong.  The stock very rapidly declined in value, with earnings being eaten away much more quickly that I expected and before long the stock was trading in the mid $0.30 range.

The dilemma I then had was that the stock once again appeared to be

Are crowd sourced product reviews really that helpful?

Several of my posts recently have been about setting up my new apartment.  This is the first time that I have lived on my own (and not in a share house) and so I am going through the joys of getting basic services set up such as gas, electricity, internet, contents insurance etc.  I have written a series of posts on how you should always shop around and that you can save significant amounts of money if you search for better deals on things like your power bills and your car insurance.

Getting the cheapest price is not the only consideration...you also need to consider service quality

There is normally a price / quality trade off.  Customer service is often significantly over rated but you really do want good dispute resolution practices and a company that is prompt in responding to your concerns or issues.  The ideal situation therefore is to find a company which is reasonably priced but which provides an adequate service and deals with you in a fair manner.

We often look to 'unbiased' crowd sourced reviews on the internet before purchasing

The internet allows any one of us to express our views about both the good and bad about anything we buy and use.  It also provides you an opportunity to find out about the service level offered by different companies before you sign a long contract.  This is definitely a good thing as it allows us as consumers to make more informed choices about what we buy.

However...there is a natural bias when it comes to 'real' reviews which most people ignore

I only realised that there was a natural bias when it came to reviews when I came to sign up with an energy provider.  I found one (Red Energy) which appeared to give me the cheapest price and then I went online to look at what other customers were saying about them.

I was aghast at some of the things that their customers had to say...how could one company be so bad.  No wonder they were so cheap!  I was relieved that I had stopped myself in time and I then went to look at the next cheapest company and was dismayed to find that they too had a litany of complaints about them.  And so it went on...every company I checked out had complaints.  I went to the expensive 'premium' service providers and they too had pages and pages of negative reviews.

That was when I realised that crowd sourced reviews have a natural bias