Articles by The Professional Trustee Team
For many of us, each New Year starts off with good intentions. We make New Year Resolutions and expand great energy in the first couple of weeks achieving our goals. Around February or March, our motivational levels dwindle and our everyday lives take over. Needless to say, those New Year Resolutions get put on the back burner.
With the above in mind, I decided New Years Eve not to make any Resolutions for 2012. Yep, I'm having a year off. Well … sort of. What I thought I'd do instead is make some subtle changes to my everyday life. And because those changes are slight in nature and easily able to be incorporated into my daily routine, I reckon this year I've got a chance of pulling them off. Just to give me extra focus, I thought I'd share them with you.
Stopping the leakage
Isn't it amazing how our money is spent almost before we earn it? Pay packets get drained just as soon as they get filled. Bills spring up from nowhere. In a bid to stop unnecessary spending, I'm going to concentrate on a monthly and then a weekly budget. I'm putting in goals with respect to spending and saving. I'm intending to plan my travel so I save on petrol, take brown paper bag lunches so I conserve my lunch money and whilst the good weather lasts, have friends over for BBQs to halt the drain via the entertainment fund.
And to help me do my planning and analysing of where my well-earned gold coins go, I'm going to use the Gilligan Rowe & Associates Wealth Suite software. An amazing tool which is easy to use and understand. It tells you where you are right now with your money and shows you where you will go. It enables you to set goals and plot your progress toward retirement. Wealth Suite is subscription based, and is discounted for GRA accounting clients.
Organising the bankers
I've advocated this for a long while and with my budget in place, I'm going to revisit it. It's the 3 Banks 3 Bank Account Rule. The first account is held at say ANZ Bank. It receives your salary and pays your bills by automatic payment. The second account is held at another bank. Maybe ASB. It receives by automatic payment a percentage of your salary. This account has no Eftpos on it. It is a pure savings account. Never to be touched. Most importantly, for obvious reasons, this account shouldn't be held with a bank that you have any debt facilities operating at. The third account is held at yet another bank. This account will also receive by automatic payment a percentage of your pay. Unlike account 2 however, on this account you will have Eftpos loaded because this is where you will do your discretionary spending. Again, you should have this account at a bank where you do not hold any debt.
The beauty of running Account 2 as above is, besides from paying everyone else, you pay yourself each and every time you receive your salary. This is only right because who on earth works 40 to 100 hours a week, without paying themselves? Not only that, but if you try to save funds after you've paid everyone else, you very rarely achieve your savings goals. Why? Because we all live to what we are paid – well at least most of us do.
To increase efficiency, rather than using your Eftpos card for Account 3, try taking a set amount of cash out each and every week. Keep that in your wallet and you will be conscious of your spending when you start to see it dwindling down.
Dealing with the insurances
Ever noticed how we put lots of energy into getting our insurance policies all set up but then never review them. I intend to take a real look at the type of insurances I've got in March and look at alternative products. If I can get the same or better benefits at reduced rates, then maybe I will. This is especially so with medical insurance where there is just so much competition. If my broker is reading this article, expect a call and a directive to do some research for me.
Looking at the mortgages – interest rates
Much has happened in the interest rate market. Right now I've got a mortgage on floating and I'm going to have to decide whether to fix or float. This isn't an easy decision given the goings on in Asia, America and Europe. Then again, the Reserve Bank left our OCR at 2.5% this week and the word on the street is it isn't moving until September 2012 or later. This of course will depend on where inflation is sitting, how the rebuilding of Christchurch affects the market and where our dollar is sitting.
Maybe I will float a portion of the loan and also fix a bit. I need to run the numbers and talk to my broker. If I can save interest costs over the next couple of years, I'm intending to do so. That would certainly help towards my saving goals. If you are already using Wealth Suite, put in different interest rates to reflect the changes; this way you can determine if you can afford the increase in fixing rather than floating.
Wills and trusts
We've had a bit of a change in our family in the last couple of months. This is going to necessitate a change to my Will. Not a difficult exercise but one most people put off or at least put to the end of their lists. But I really want to sort it out because I don't want to take a chance of the people I love not benefiting should I depart planet terra firma earlier than I expect. Note to self – call lawyer.
At the time of dealing with my Will, I'm going to look over my Trust and Memorandum of Wishes. Lots of changes have come into play this year, especially in the gifting regime and I want to ensure I have truly crossed all T's and dotted all I's as this is going to be imperative to ensure my assets are protected when the Trust is looked at in the future.
The above list doesn't look that onerous. It involves a little work for me via Gilligan Rowe & Associates products and services. My insurance broker, loan specialist and lawyer will also have to do their bit but taken over the next two months, they are small jobs which once completed, could make a large difference to where I end up at the end of the year. That of course is where we come in. We are all things money. We are able to help you take control and plan your finances. We are able to help you get ahead. If you need any assistance, please contact us. Remember there's only one name in the money game. That's GRA. Until I meet you, I wish you short spendings and long earnings as the Russian money barons say.
Thanks again for creating a resolution for my ACC levies situation, which quite frankly blindsided us. Without your expertise & nous, we would have been in a very uncomfortable position. I was very impressed by speed that your were able to resolve our challenge for us. Not surprisingly, my family & I would not hesitate in recommending your or the team at GRA for financial & taxation strategies - C Patterson
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