Top Tips For A More Fiscally Fabulous Financial Year

June 30 signals the end of another financial year. There’s still a little time to get this year’s finances in order or take the opportunity to make some resolutions about how you manage your money from July 1.

Here are Haven’s top tips for a more fiscally fabulous financial year.

MANAGE YOUR MORTGAGE
It’s easy to put your home or investment loan on the mental back burner, especially with interest rates so low. But complacency could be costing you thousands over the life of your loan. It costs nothing to talk to your broker to see what other lenders are offering or if you can slice the interest rate with your current lender.

SOCK AWAY EXTRA SAVINGS
Make a point of hoarding any extra cash throughout the year. Turn tax returns, pay increases and work bonuses into savings, not spending. Inject these and other windfalls into your mortgage to reduce the cost and life of your loan. If you have a redraw facility you can always pull the cash back out if a need arises.

DOUBLE DOWN ON CLEARING DEBT
Pay down your most expensive debts first, then take care of the rest. If only making the minimum repayments on credit and store cards, you will be carrying debt for a lot longer than needed and making it harder to get ahead. Review your debts and make a point of paying off those attracting the highest interest rates first. You should also consider transferring high-interest credit card debt to a low interest option. Keep an eye out for zero-interest transfer offers and make the most of the opportunity to clear your balance sooner.

GET SAVVY WITH YOUR SUPER
Your annual super statement will land in the new financial year. Take the time to read it and see how your nest egg faired. Employers must contribute a minimum of 9.5 per cent of your salary to your super, and some offer more. You can also salary sacrifice contributions to top up your investment. How much depends on your stage of life and personal finances.

Talk to your financial adviser to check how much extra you can contribute without being penalised and whether making extra contributions is the best option for your financial circumstances. From July 1 concessional (before tax) contributions will be capped at $25,000 per year for all ages.

You should also check your investment mix and adjust it if not happy with its performance. Your super fund should offer a choice of investments based on risk. The higher the yield opportunity, the higher the risk. How you spread your super across various investments, such as shares and cash, is up to you.

If receiving more than one super statement, consider bundling your accounts into one. Super builds on compound interest, so you may be short-changing yourself if your accounts are dispersed.

CASH IN ON TAX DEDUCTIONS
You still have time to make any tax deductable purchases before June 30. Check with the ATO (www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/tools,-equipment-and-other-assets/) what you can claim for your specific job if you are a PAYE employee.

Small business owners have until June 30 this year to cash in on the $20,000 instant asset threshold. This allows you to immediately deduct the business use portion of a depreciating asset that costs less than $20,000.

Now is also the time to make tax-deductible donations to a registered charity of your choice.

If you are cashed up, you may be able to pre-pay some tax deductable expenses, such as accountant fees, interest costs on investments and some work-related expenses, for the next financial year. Check with your financial advisor to ensure you are eligible for pre-payments and they suit your situation.

Tax: the information in this article does not constitute advice. As taxation legislation is complex we recommend you speak with your financial advisor, tax advisor or contact the ATO for further details and expert advice regarding your personal circumstances.

How To Avoid Property Pitfalls

If you have seen the movie Money Pit, in which Tom Hanks and Shelley Long play a hapless couple whose home renovations plummet from bad to disastrous with every swing of the hammer, it’s easy to see why buyers should be beware.

But it’s not just hidden and costly repairs that can snag home owners and investors. Haven lifts the lid on other potential pitfalls.

Title check
It’s worth enlisting a professional conveyancer to undertake a title search when buying a property. The title search will reveal any easements (shared access) or covenants (restrictions). Easements could include the right for pipes to be buried on your land, while covenants can specify building materials or restrict building height. Easements and covenants are not necessarily dealbreakers, but you should be aware so you can plan around them, especially if renovating or rebuilding.

Off the plan
There are pros and cons to purchasing off the plan. While many punters have notched up solid returns in the short and long term, it remains one of the more speculative ways to buy, especially in markets with high volumes of new apartments in the pipeline.

Beware the push by investment advisors, who will promote tax advantages and rental returns but may be receiving kick-backs from the developers, which they are not required to declare.

If buying off the plan, make sure you do your homework on the local market and have sufficient financial back-up to withstand any dip in value on your purchase price once built and any short-comings in the projected rental return.

Weather resistant
Avoid being a fair-weather buyer who collects the keys having only seen the property on sunshiny days. Rain can quickly transform a poorly-drained property from bliss to bog. If you don’t get to inspect the property in wet weather, be bold and ask neighbours how the property holds up in a downpour. You should also always check council flood maps to see if the property is at risk of flash, creek or river flooding. Some councils do a better job than others of collecting and sharing flood data. If council flood maps are not publicly available, a council planner might be able to give you historical information about your property.

A professional building inspection can also help detect any drainage issues.

Know your neighbours
It’s hard to know who lives over the fence or down the hall until you move in, but bad neighbours (at the risk of another movie reference) can make or break your dream home.

At the risk of snooping before you move in, try and get a read on who else lives in the street or complex. If flanked by households of renting students, you could be in for some late-night parties, which may be tolerable if a midnight party-goer yourself, but less welcome if you have a young family.

Close inspection
Be sure to invest during the cooling off period in a pre-purchase pest and building inspection by a licensed and insured professional.

Professional inspections can unearth evidence of pests – including termites and rodents – and structural issues such as dry rot, rising damp, roof leaks, asbestos and poor drainage.

There is no cooling off period at auctions, so book an inspection and read the report well ahead of auction day.

Body corporates
If buying an apartment, villa or townhouse, do your homework on the body corporate – the fees for each quarter and how the body corporate operates. A well-run body corporate can help avoid surprise costs for unforeseen repairs and prevent disputes over common areas.

Check there is an adequate sinking fund to cover repairs and refurbishments and sufficient strata insurance to cover total replacement of the apartment building or complex in the event of a catastrophic fire or natural disaster.

You should also request copies of at least the previous three body corporate meetings to get a read on any potential issues.

Beyond your means
Be careful not to commit beyond your finances. Interest rates are at record lows and will inevitably rise again. Make sure you leave a buffer in your budget to manage any increases or change in personal circumstances, even if your lender lets you borrow more initially.

Ideally, your mortgage repayments should be no more than 25 per cent of your total household net income. Talk to your broker to assess your affordability in line with your personal circumstances.

Your Finance and Lifestyle News Update

Dear Wizloans Customer,

Do you or someone you know own a small business? In 2016 the Australian Bureau of Statistics reported that the establishment of Australian small businesses was on the rise, with more than 2.1 million small businesses now trading across the country. With the nation’s economic growth driven by the hard work of Australian businesses, a new report into small business lending from the Australian Small Business and Family Enterprise Ombudsman has been welcomed by small to medium sized enterprises. Check out our lead article for more detail around the proposed shake-up that is set to make lending terms fairer for small business owners.

As we hurtle towards the middle of the year and tax time looms, a quick financial health check is worth adding to your ‘to do’ list. Our tips on ways to manage your money might not be new, but they’re always worth a revisit.

Awkward family photos – the internet takes great joy in posting hilarious examples, and we’re on the hunt for your version. If you have a daggy or embarrassing family photo buried away in an old family album, send in a copy for a chance to win $1,000.

If you have any questions about your finance situation, or have a friend or family member that could use my expertise, please don’t hesitate to get in touch.

Domenic Forgione
Wiz Loans Australia