With the holiday season fast approaching, it’s tempting to throw out the year’s careful planning and budgeting to splurge in the name of Christmas. But getting into the Christmas spirit doesn’t mean you have to get into debt. Follow these tips on how you may be able to emerge in the New Year debt-free.

Set a budget

First take some time out to review your current finances. Determine how much you can realistically afford to spend without getting into the red. Remember to include gifts and entertainment as well as all the small things that come with the season like cards, stamps, decorations, food and travel. Next make a list of everyone you plan on giving a gift to and decide how much you want to spend on each person. Finally check that the total figure you want to spend is not beyond your budget. You may need to reduce the amount you’re able to spend on each person or reassess the number of people on your list.

Start early

Before you know it, Christmas will be upon us. In fact, the department stores have already started spruiking their Christmas wares. By shopping early, you can look out for sales and great deals for later in the year. You also have time to comparison shop rather than last-minute shop; where your panic to pick up something (anything) will usually mean spending more.

Look for savings and incentives

If you choose to use your credit card, look for any rewards or discounts that may be available through your credit provider.

Also try to shop online first as you’re less likely to impulse shop and can easily compare prices across various websites. There are plenty of online retailers that offer savings across a number of product categories such as fashion, skincare, make up, fragrances, books and electrical appliances. You can also find discounts through online community classifieds, auctions and daily deal sites.

Remember who you’re shopping for

When you’re shopping for family and friends, it’s very easy to find things which will be just perfect for you. This is a very common mistake which is sure to break your budget. Christmas shopping isn’t a ‘one for you, one for me’ deal. Don’t buy it. If you really need to have it, wait until after the holidays when it’s more likely to be on sale.

Stick to your budget

Remember that a deal is not a deal if you can’t afford it. Once you reach your budget limit, stop.

Save early

Get off the overspending merry-go-round by saving early for next year. As soon as the holiday season is over, determine next year’s Christmas budget and set up automatic direct debits into a dedicated Christmas savings account. You’ll be all set by the time the department stores bring out their tinsel again.

Source: IOOF, October 2014.

If you’d like more advice on how to manage debt and build a savings plan, speak to one of our financial planners today.
Call (02) 4926 2300 or email us.

Leenane Templeton accountants and financial planners are her to help with any questions you may have on debt and staying debt free, especially over the Christmas period.

The post All I want for Christmas is to survive debt free appeared first on Newcastle Financial Planners & Financial Advisors.

Being a parent working towards owning your home carries with it many dilemmas. One such quandary is funding education for your children.
 

While the best option will depend on your family’s specific circumstances, two important strategies to consider are:
 

1. Direct spare cash into the home loan and use redraws to fund education costs.
 

Benefits of this strategy:
• Reduces the total amount of interest paid on the home loan.
• After-tax investment return is equal to your home loan interest rate – risk free!
• Invest amounts that are income and capital gains tax-free.
• Easy access to your cash if required sooner than anticipated with the flexibility of an offset or redraw facility available with some home loan products.
 

Problems with this strategy:
• Offset account or redraw facilities are not available with every home loan.
• Financial institution may charge a fee to redraw payments in advance.
• Could achieve lower returns than alternative investments.
 

2. Investing in a managed fund dedicated to funding educational costs.
 

Benefits of this strategy:
• Can choose a mix of assets to suit timeframe and desired investment return.
• Many funds allow regular investing which takes advantage of dollar cost averaging.
 

Problems with this strategy:
• Income and capital gains tax are generally payable on managed fund investments.
• Investments made within a managed fund are subject to market fluctuations. In times when investment markets perform poorly, returns on the fund may be low or even negative, but this is often more than offset with high returns during the good years.
• Most funds charge entry, exit and/or administration fees.
 

Other important factors to consider:
 

Investment timeframe before children start school: Managed funds are usually a long-term investment (from five to seven years plus). If your timeframe is less, investing in a managed fund is not usually recommended due to the risk that you may receive less when you withdraw the funds than you originally invested.
 

Time before retirement: Not many people want to pay a home loan with their retirement income. Generally speaking, the further you are from retirement the more sense it makes to use the home loan to fund education costs.
 

Interest rates: How much interest are you paying on your home loan? If your rate is higher than the managed fund return, it usually makes more sense to focus on paying down your home loan and invest separately in a managed fund.
 

Investing wisely: High penalty tax rates exist for income earned by minors. This makes investing in the name of a child under 18 undesirable.
 

Our team of professionals and award winning financial planners are at hand to help with any questions you may have regarding this article.
Call on (02) 4926 2300 or email us.
 

Disclaimer.
 

Funding education can be confusing, so if you’re not sure what would work best for your family, talk to us.

The post Funding education: Managed funds vs Home loans appeared first on Newcastle Financial Planners & Financial Advisors.

The new financial year is a perfect time to make some resolutions to improve your financial health. If you create simple and easy-to-follow resolutions you will be more likely to succeed. To start, you can ask yourself the following questions:
• What do I really want to change?
• What are the benefits of making changes?
• What steps do I need to take to make changes?
• What will stop me from making positive changes?
• Are my changes realistic and long term?

This article lists some simple, easy-to implement resolutions you could take on for the new financial year.

Keep your receipts

The most common reason people don’t take advantage of tax deductions when they file their tax return is simply because they don’t keep receipts. While keeping receipts for big ticket items is necessary, you don’t always need a receipt for the smaller items such as stationery and books.

Create a budget

Achieving your financial goals doesn’t have to be daunting; a good way to start is with a budget. Try to keep a diary of your expenses and your spending. This will enable you to track where your money is going and how much spare cash you can use to either attack your debt or build investments.

Cut your spending

Look at cutting unnecessary expenses. This could be as easy as making your lunch or coffee at home, cutting out optional extras such as lottery tickets or taking public transport instead of driving.

Pay extra

Try paying more than the minimum off your debts. Whether it’s personal loans or credit cards, paying the minimum will hardly make a dent as you will only be paying off the interest.

Increase your savings

Set aside a little bit of extra money each day, week or month. If you can save just $10 a day, you will have an extra $3,650 at the end of the year. You can talk to your employer about getting it automatically deducted from your pay – if you don’t see it you are less likely to miss it.

Contribute to your super

Think of the long term and your lifestyle when you retire. One way to increase your retirement savings is through salary sacrificing some of your pre-tax salary.
This will not only help to increase your super savings but could also reduce the amount of tax you pay.

Seek professional advice

Your financial adviser will help you keep to your resolutions and make sure your financial strategy is appropriate for the year ahead.

Contact the Team at Leenane Templeton to discuss your financial position and goals. Please call (02) 4926 2300. Like us on facebook and keep an eye out for blogs, events and workplace culture.

Source: IOOF, May 2013

The post Happy New Financial Year appeared first on Newcastle Financial Planners & Financial Advisors.