This week, we're talking about all things risk profiles. What they are, how they work, what to do when you and your partner's risk profiles conflict, and much more.   [Disclaimer] [Website]

This week, we're talking about all things risk profiles. What they are, how they work, what to do when you and your partner's risk profiles conflict, and much more. <a href="https://financialautonomy.com.au/general-advice-disclaimer" rel="nofollow" target="_blank">[Disclaimer]</a> <a href="https://financialautonomy.com.au/" rel="nofollow" target="_blank">[Website]</a>

Understanding Risk Profiles: Their Foundational Role in Attaining Financial Autonomy

This week I chat with Mitch Potter on his financial autonomy journey - travel, starting an apprenticeship in his 30s, investing, and having plenty of fun along the way.   [Disclaimer] [Website]

This week I chat with Mitch Potter on his financial autonomy journey - travel, starting an apprenticeship in his 30s, investing, and having plenty of fun along the way. <a href="https://financialautonomy.com.au/general-advice-disclaimer/" rel="nofollow" target="_blank">[Disclaimer]</a> <a href="https://financialautonomy.com.au/" rel="nofollow" target="_blank">[Website]</a>

The Globe Trotting Career Changer

With mortgage rates having leapt up this past year, the effective return savers receive by parking their money in an offset account is looking increasingly attractive. This has led to a question we're being asked more and more. Should I invest or just leave my money in the offset account? [Disclaimer] [Website]

With mortgage rates having leapt up this past year, the effective return savers receive by parking their money in an offset account is looking increasingly attractive. This has led to a question we're being asked more and more. Should I invest or just leave my money in the offset account? <a href="https://financialautonomy.com.au/general-advice-disclaimer" rel="nofollow" target="_blank">[Disclaimer]</a> <a href="https://financialautonomy.com.au/" rel="nofollow" target="_blank">[Website]</a>

Should I Invest or Leave My Money in Offset

Today I’m talking with Shannon Nutter, Head of Vanguard Super, about the findings from their recent study - How Australia Retires.   [Disclaimer] [Website]

Today I’m talking with Shannon Nutter, Head of Vanguard Super, about the findings from their recent study - How Australia Retires. <a href="https://financialautonomy.com.au/general-advice-disclaimer/" rel="nofollow" target="_blank">[Disclaimer]</a> <a href="https://financialautonomy.com.au/" rel="nofollow" target="_blank">[Website]</a>

The Superannuation Landscape with Vanguard's Head of Superannuation Shannon Nutter

For an investor trying to build wealth and achieve financial independence, a question they will inevitably face is whether they should be sending their savings into stock market investments, or paying off an investment property instead.   [Website] [Disclaimer]

For an investor trying to build wealth and achieve financial independence, a question they will inevitably face is whether they should be sending their savings into stock market investments, or paying off an investment property instead. <a href="https://financialautonomy.com.au/" rel="nofollow" target="_blank">[Website]</a> <a href="https://financialautonomy.com.au/general-advice-disclaimer" rel="nofollow" target="_blank">[Disclaimer]</a>

The Impossible Question – why it’s so hard for investors to decide between shares or property

Gail Richards

In 2012 Gail, her husband, and their 4 young children set off from Melbourne for a 6-month long Australian adventure. In this week’s episode, I ask Gail how she made it possible, what have been the implications since, and what adventures they have planned next. This one is sure to inspire.   [Disclaimer] [Website]

In 2012 Gail, her husband, and their 4 young children set off from Melbourne for a 6-month long Australian adventure. In this week’s episode, I ask Gail how she made it possible, what have been the implications since, and what adventures they have planned next. This one is sure to inspire. <a href="https://financialautonomy.com.au/general-advice-disclaimer" rel="nofollow" target="_blank">[Disclaimer]</a> <a href="https://financialautonomy.com.au/" rel="nofollow" target="_blank">[Website]</a>

Around Australia with 4 kids - Gail Richards Shares Her Experience

Saving requires forgoing spending today for benefits in the future. Whilst it’s clear that financially, to live entirely in the present with no allowance for the future is unwise, there is the potential to go too far the other way. But how do you know what the right balance is?   [Disclaimer] [Website]

Saving requires forgoing spending today for benefits in the future. Whilst it’s clear that financially, to live entirely in the present with no allowance for the future is unwise, there is the potential to go too far the other way. But how do you know what the right balance is? <a href="https://financialautonomy.com.au/general-advice-disclaimer/" rel="nofollow" target="_blank">[Disclaimer]</a> <a href="https://financialautonomy.com.au/" rel="nofollow" target="_blank">[Website]</a>

Could you be over-saving?

A while back I put a call out in the GainCHOICE email asking for readers to reach out if they had a story to share about taking a career break or making a career transition. Several people came back to me, so over the next few months we’ll have a few interviews around this topic. This week is the first of these. I’m chatting with Brenda today, who is in the early stages of a 6-9 month sabbatical. We talk about her Financial independence journey and how she aligns that with her goal to visit every country on the planet. This is a wonderful discussion that I’m sure you will love.   [Disclaimer] [Website]

A while back I put a call out in the GainCHOICE email asking for readers to reach out if they had a story to share about taking a career break or making a career transition. Several people came back to me, so over the next few months we’ll have a few interviews around this topic. This week is the first of these. I’m chatting with Brenda today, who is in the early stages of a 6-9 month sabbatical. We talk about her Financial independence journey and how she aligns that with her goal to visit every country on the planet. This is a wonderful discussion that I’m sure you will love. <a href="https://financialautonomy.com.au/general-advice-disclaimer/" rel="nofollow" target="_blank">[Disclaimer]</a> <a href="https://financialautonomy.com.au/" rel="nofollow" target="_blank">[Website]</a>

Fitting Career Breaks Into a Financial Independence Plan

This week’s episode is another one inspired by a recent client question, one that we get asked multiple times each year. Should I be topping up my super? The primary motivation in seeking out an answer to this question is to determine whether you're on track to have enough retirement savings for a comfortable and enjoyable later phase of life. But the other element is around tax. There's a general awareness that there are tax savings to be had through using the superannuation system. The unsaid element to this question of topping up super, is whether potential tax savings are being squandered through not taking maximum advantage of the superannuation system.   [Disclaimer] [Website]

This week’s episode is another one inspired by a recent client question, one that we get asked multiple times each year. Should I be topping up my super? The primary motivation in seeking out an answer to this question is to determine whether you're on track to have enough retirement savings for a comfortable and enjoyable later phase of life. But the other element is around tax. There's a general awareness that there are tax savings to be had through using the superannuation system. The unsaid element to this question of topping up super, is whether potential tax savings are being squandered through not taking maximum advantage of the superannuation system. <a href="https://financialautonomy.com.au/general-advice-disclaimer/" rel="nofollow" target="_blank">[Disclaimer]</a> <a href="https://financialautonomy.com.au/" rel="nofollow" target="_blank">[Website]</a>

Should I top-up my super?

Redundancy. With the Australian economy slowing as the impact of higher interest rates begins to bite, job cuts are likely to accelerate. Layer on top of this the potential impact that artificial intelligence might have on the white-collar workforce of the future, and it's easy to understand why many people are feeling anxious about their employment future. I've found that when I'm feeling anxious, the best way to relieve stress is to identify what I would do if the thing that's keeping me awake at night, were to occur. Worst-case scenario planning. Once I'm clear on what I would do, even though it's somewhat unpalatable, I find the anxiety goes away. So if the potential for redundancy is something causing you sleepless nights, this week’s episode might provide you with a way to take control and move forward with positivity. [Disclaimer] [Website]

Redundancy. With the Australian economy slowing as the impact of higher interest rates begins to bite, job cuts are likely to accelerate. Layer on top of this the potential impact that artificial intelligence might have on the white-collar workforce of the future, and it's easy to understand why many people are feeling anxious about their employment future. I've found that when I'm feeling anxious, the best way to relieve stress is to identify what I would do if the thing that's keeping me awake at night, were to occur. Worst-case scenario planning. Once I'm clear on what I would do, even though it's somewhat unpalatable, I find the anxiety goes away. So if the potential for redundancy is something causing you sleepless nights, this week’s episode might provide you with a way to take control and move forward with positivity. <a href="https://financialautonomy.com.au/general-advice-disclaimer/" rel="nofollow" target="_blank">[Disclaimer]</a> <a href="https://financialautonomy.com.au/" rel="nofollow" target="_blank">[Website]</a>

Preparing for the Unknown: Tips for Being Ready if You’re Made Redundant

Plenty of books, podcasts and blogs focus on building wealth – and that’s great, as far as it goes. But focusing just on wealth misses the point. I believe what most of us actually want is to have choice.Choice in how much time we give to income-producing activities.Choice about what those income-producing activities are.Choice about where we live.Choice about when we retire.Choice about the ways we use our money to produce happiness.In the Financial Autonomy podcast, I explore the different ways you can gain choice - from investing in stocks to becoming self-employed, starting a side hustle, or buying an investment property. I share learnings I've gained working with clients for over 20 years as a Certified Financial Planner, and interview others with interesting insights or experiences in gaining choice in life.

I really liked Paul&#39;s focus on learning from the past with examples of Tulip mania and hyper inflation from the past. Even though this podcast originated in Australia, I could really relate to the topics. Great podcast and excellent host.

Very informative

Plenty of books, podcasts and blogs focus on building wealth – and that’s great, as far as it goes. But focusing just on wealth misses the point. I believe what most of us actually want is to have choice. Choice in how much time we give to income-producing activities. Choice about what those income-producing activities are. Choice about where we live. Choice about when we retire. Choice about the ways we use our money to produce happiness. In the Financial Autonomy podcast, I explore the different ways you can gain choice - from investing in stocks to becoming self-employed, starting a side hustle, or buying an investment property. I share learnings I've gained working with clients for over 20 years as a Certified Financial Planner, and interview others with interesting insights or experiences in gaining choice in life.

Financial Autonomy

Episode 57 – 4 Hour Work Week – still relevant today? Originally published in 2007, The 4 Hour Work Week by Tim Ferriss, made some huge waves upon its release. It also laid foundations for its author that continue to this day. Indeed anyone who’s ever browsed the iTunes podcast charts will have come across Tim Ferriss, whose self-named show is regularly towards the top. As regular readers and listeners know, the reason Financial Autonomy exists is to explore how we can all gain choice in our lives. Without doubt The 4 Hour Work Week aims to deliver the same, albeit with a quite specific formula for success.  Now I have to confess that I didn’t pick up the book when it came out. I can’t recall exactly when I became aware of it, but it was a bit like a movie everyone was talking about – I kind of felt I knew all the best bits, and with all the hype, I just couldn’t find the enthusiasm. 11 years on and with the hype having faded, I thought it was time to right that wrong.  The first thing you need to know is that - despite the title, this book really isn’t about only working 4 hours per week. In fact nowhere in it does Tim say that’s all he does, and indeed I’ve read interviews with him where he fully acknowledges that he works more hours than that. So don’t read this book if that is your sole goal. The sub-title – Escape the 9-5, Live Anywhere, and Join the New Rich, is actually much more what The 4 Hour Work Week is all about. The other thing, which is where I got the wrong impression when it was released, is that it’s not all about outsourcing everything to India. Sure, that’s an important element, but it’s not the whole book I was really pleased to find that The 4 Hour Work Week is a really well written and engaging book. An extremely common frustration I find with many thought-leader type books is that the Big Idea could have been summarised in a 5 page essay, but since you can't make money with a 5 page essay, they've padded it out into a book. That is certainly not the case here - the book is well structured, and the ideas are consistent throughout. I didn’t feel like there was any padding. There were elements in the middle where I felt he wasn’t talking my language, but I continued anyway and found value in latter chapters. It’s probably worth explaining the basic structure of the book. There are 4 key elements, broken up into steps: Definition Elimination Automation Liberation The first, Definition is where he explains his New Rich concept and challenges some common assumptions. Elimination is essentially about productivity – getting more done in less time. Automation explores how you might generate income with minimal personal effort – unquestionably the section I had the most difficulty with. And finally Liberation – mini-retirement, travel, and flexibility – very much in our Financial Autonomy wheelhouse. If you think in terms of a Venn diagram, you know, where there are the two circles that overlap in the middle, and one circle is the things Tim espouses in this book, and the other circle contains the ideas and dreams of the Financial Autonomy community, there is definitely significant overlap. The idea of “wealth” not being defined purely by your balance sheet, but rather with reference to the life you can lead, certainly aligned. Where 4 Hour Work Week didn’t resonate for me though was in 2 primary elements:  It seemed a recipe for a single person. Success in the approach espoused equalled lots of living abroad, nomadic style.  Now I love to travel and am a keen learner, but as someone with kids, first I have an obligation to ensure they get a good education and upbringing. And whilst travel can be an important element of that, professional teachers laying solid foundations are irreplaceable.  I also take the view that there’s 15-20 years in my life where I get to enjoy their growing up, and hopefully provide a positive influence in their lives. Traveling to Buenos Aires to learn Latin dancing doesn’t fit into this picture. My kids want to catch-up with friends, play sport and engage in their other interests. The definition of success in 4 Hour Work Week didn’t really seem to allow for that. The other element that jarred for me was that the suggested enabler was building a business that largely runs on auto-pilot with the use of outsourcing staff from India and the likes. If only building a successful business was that easy!  I know from the emails that I receive from you guys, that many of you are entrepreneurially inclined. I also know that finding that viable business idea and making it work is really hard. To then overlay on that the ability to outsource its operation, is something that I would think few could pull off successfully. It’s possible, no doubt about it, but as a template for others to follow, I’m just not convinced.  Indeed the very fact this concept has been around for so long, and yet so few people do it successfully, would seem to prove this point.  I also think it fails to recognise that many of us enjoy the income producing work that we do. Whether it’s working as part of a team, developing creative solutions, helping people live better lives, or the challenge of beating a competitor – our work provides purpose, satisfaction, and yes, enjoyment. Who hasn’t had a glass of wine or a beer at the end of big week and felt, “yeah, I kicked some goals this week”? This idea that all paid work is horrible is a falsehood.  So that’s the issues I had with 4 Hour Work Week. But did that mean reading this book was a waste of my time? Not at all. Was it life changing? No. But have I taken action as a result of reading it (since after all, if no action is taken, what’s the point)? Yes. The immediate action I’ve taken is to better manage my emails which have been consuming a lot of my day, and getting unjustified priority at times. I’ve automated a lot of what happens with my incoming emails, and set-up a few templates to speed up some responses. I’m also experimenting with only actioning emails at certain times of day. I haven’t perfected things, but Tim’s book certainly caused me to pause, reflect, and make changes. The version I bought was the expanded and updated edition published in 2009. The elements that I gather have been added are certainly good, and if you have the choice, I’d certainly encourage you to get this version over the original. There’s a section towards the end titled “Living the 4 hour work week” - case studies, tips, and hacks which I thought was great. You may even want to read that first, then decide if you want to invest the time into consuming the whole book. I also thought the blog post section contained some really useful thoughts. I’m no fan-boy of Tim Ferriss, so I have no idea if he’s living a happy and fulfilled life. But the little I do know suggests he’s succeeded in gaining choice in his life, and so for that I admire him, and I thank him for writing The 4 Hour Work Week – I certainly think this book makes a positive contribution to the potential that exists for all of us in the 21st century.   I’m sure many in the Financial Autonomy community have read 4 Hour Work Week – what did you think? Let me know on the Financial Autonomy Facebook page, or via email from our web site. Also, if you’re a Twitter user, my Twitter handle is @Paul_Benson11 so feel free to connect their.   Click here for the Mini Retirement Planning Checklist

Episode 57 – 4 Hour Work Week – still relevant today? Originally published in 2007, The 4 Hour Work Week by Tim Ferriss, made some huge waves upon its release. It also laid foundations for its author that continue to this day. Indeed anyone who’s ever browsed the iTunes podcast charts will have come across Tim Ferriss, whose self-named show is regularly towards the top. As regular readers and listeners know, the reason Financial Autonomy exists is to explore how we can all gain choice in our lives. Without doubt The 4 Hour Work Week aims to deliver the same, albeit with a quite specific formula for success. Now I have to confess that I didn’t pick up the book when it came out. I can’t recall exactly when I became aware of it, but it was a bit like a movie everyone was talking about – I kind of felt I knew all the best bits, and with all the hype, I just couldn’t find the enthusiasm. 11 years on and with the hype having faded, I thought it was time to right that wrong. <a href="https://find0101.lpages.co/mini-retirement-checklist-sign-up/" rel="nofollow" target="_blank"></a> The first thing you need to know is that - despite the title, this book really isn’t about only working 4 hours per week. In fact nowhere in it does Tim say that’s all he does, and indeed I’ve read interviews with him where he fully acknowledges that he works more hours than that. So don’t read this book if that is your sole goal. The sub-title – Escape the 9-5, Live Anywhere, and Join the New Rich, is actually much more what The 4 Hour Work Week is all about. The other thing, which is where I got the wrong impression when it was released, is that it’s not all about outsourcing everything to India. Sure, that’s an important element, but it’s not the whole book I was really pleased to find that The 4 Hour Work Week is a really well written and engaging book. An extremely common frustration I find with many thought-leader type books is that the Big Idea could have been summarised in a 5 page essay, but since you can't make money with a 5 page essay, they've padded it out into a book. That is certainly not the case here - the book is well structured, and the ideas are consistent throughout. I didn’t feel like there was any padding. There were elements in the middle where I felt he wasn’t talking my language, but I continued anyway and found value in latter chapters. It’s probably worth explaining the basic structure of the book. There are 4 key elements, broken up into steps: Definition Elimination Automation Liberation The first, Definition is where he explains his New Rich concept and challenges some common assumptions. Elimination is essentially about productivity – getting more done in less time. Automation explores how you might generate income with minimal personal effort – unquestionably the section I had the most difficulty with. And finally Liberation – mini-retirement, travel, and flexibility – very much in our Financial Autonomy wheelhouse. If you think in terms of a Venn diagram, you know, where there are the two circles that overlap in the middle, and one circle is the things Tim espouses in this book, and the other circle contains the ideas and dreams of the Financial Autonomy community, there is definitely significant overlap. The idea of “wealth” not being defined purely by your balance sheet, but rather with reference to the life you can lead, certainly aligned. Where 4 Hour Work Week didn’t resonate for me though was in 2 primary elements: <ol> <li>It seemed a recipe for a single person. Success in the approach espoused equalled lots of living abroad, nomadic style. Now I love to travel and am a keen learner, but as someone with kids, first I have an obligation to ensure they get a good education and upbringing. And whilst travel can be an important element of that, professional teachers laying solid foundations are irreplaceable. I also take the view that there’s 15-20 years in my life where I get to enjoy their growing up, and hopefully provide a positive influence in their lives. Traveling to Buenos Aires to learn Latin dancing doesn’t fit into this picture. My kids want to catch-up with friends, play sport and engage in their other interests. The definition of success in 4 Hour Work Week didn’t really seem to allow for that.</li> <li>The other element that jarred for me was that the suggested enabler was building a business that largely runs on auto-pilot with the use of outsourcing staff from India and the likes. If only building a successful business was that easy! I know from the emails that I receive from you guys, that many of you are entrepreneurially inclined. I also know that finding that viable business idea and making it work is really hard. To then overlay on that the ability to outsource its operation, is something that I would think few could pull off successfully. It’s possible, no doubt about it, but as a template for others to follow, I’m just not convinced. Indeed the very fact this concept has been around for so long, and yet so few people do it successfully, would seem to prove this point. I also think it fails to recognise that many of us enjoy the income producing work that we do. Whether it’s working as part of a team, developing creative solutions, helping people live better lives, or the challenge of beating a competitor – our work provides purpose, satisfaction, and yes, enjoyment. Who hasn’t had a glass of wine or a beer at the end of big week and felt, “yeah, I kicked some goals this week”? This idea that all paid work is horrible is a falsehood.</li> </ol> So that’s the issues I had with 4 Hour Work Week. But did that mean reading this book was a waste of my time? Not at all. Was it life changing? No. But have I taken action as a result of reading it (since after all, if no action is taken, what’s the point)? Yes. The immediate action I’ve taken is to better manage my emails which have been consuming a lot of my day, and getting unjustified priority at times. I’ve automated a lot of what happens with my incoming emails, and set-up a few templates to speed up some responses. I’m also experimenting with only actioning emails at certain times of day. I haven’t perfected things, but Tim’s book certainly caused me to pause, reflect, and make changes. The version I bought was the expanded and updated edition published in 2009. The elements that I gather have been added are certainly good, and if you have the choice, I’d certainly encourage you to get this version over the original. There’s a section towards the end titled “Living the 4 hour work week” - case studies, tips, and hacks which I thought was great. You may even want to read that first, then decide if you want to invest the time into consuming the whole book. I also thought the blog post section contained some really useful thoughts. I’m no fan-boy of Tim Ferriss, so I have no idea if he’s living a happy and fulfilled life. But the little I do know suggests he’s succeeded in gaining choice in his life, and so for that I admire him, and I thank him for writing The 4 Hour Work Week – I certainly think this book makes a positive contribution to the potential that exists for all of us in the 21st century. I’m sure many in the Financial Autonomy community have read 4 Hour Work Week – what did you think? Let me know on the Financial Autonomy Facebook page, or via email from our web site. Also, if you’re a Twitter user, my Twitter handle is @Paul_Benson11 so feel free to connect their. <a href="https://find0101.lpages.co/mini-retirement-checklist-sign-up/" rel="nofollow" target="_blank">Click here for the Mini Retirement Planning Checklist</a>

4 Hour Work Week – still relevant today? - Episode 57

You’ve probably stumbled across the FIRE acronym before – it stands for Financial Independence Retire Early. It came out of the US and has spawned countless books, podcasts, conferences, and even a movie. Reddit has huge discussion threads devoted to the idea, with the primary thrust seeming to be how young you can achieve early retirement. Now I’m well on board with the first part of FIRE – Financial Independence. But it’s the second part – Retire Early, that I have a problem with (as indeed do many in the FIRE community themselves). Financial Independence grants you choice. Choice in how you spend your time, how much of your time you devote to income generating activities, and what sort of income generating activities you do. Having gained that choice, why on earth would you want to retire? In this episode, I explain some alternatives that I've seen bring people happiness. SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY  

You’ve probably stumbled across the FIRE acronym before – it stands for Financial Independence Retire Early. It came out of the US and has spawned countless books, podcasts, conferences, and even a movie. Reddit has huge discussion threads devoted to the idea, with the primary thrust seeming to be how young you can achieve early retirement. Now I’m well on board with the first part of FIRE – Financial Independence. But it’s the second part – Retire Early, that I have a problem with (as indeed do many in the FIRE community themselves). Financial Independence grants you choice. Choice in how you spend your time, how much of your time you devote to income generating activities, and what sort of income generating activities you do. Having <a href="https://www.getdrip.com/forms/41864157/submissions/new" rel="nofollow" target="_blank">gained that choice</a>, why on earth would you want to retire? In this episode, I explain some alternatives that I've seen bring people happiness. <a href="https://www.getdrip.com/forms/387275210/submissions/new" rel="nofollow" target="_blank">SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY</a>

FIRE is stupid – here’s some better alternatives - Episode 115

 Whether it’s a stall at a local market selling hand knitted beanies for dogs, running an online store via Amazon selling rainbow coloured shoelaces, or designing the occasional band logo on 99 designs, I believe EVERYONE should have a Side Hustle. We’re here after all to find ways for you to gain choice in your life – that’s what Financial Autonomy is all about. And if it’s choice that you want, there are few greater enablers than a Side Hustle. So in today’s post, we’re going to explore the reasons why I believe everyone should have a Side Hustle in their life. I’ve come up with 6 reasons why I believe we should all have a Side Hustle. I’m sure there’s many more, but hopefully these ones will give you the kick along needed to start something of your own.    1.  The learning As I mentioned at the top, a Side Hustle can take all sorts of forms, and the one that’s right for you needs to align with your personal interests and skills. But let’s take as an example a simple online store. Maybe you sell through Amazon, Ebay, Etsy, or whatever makes sense for you. Hopefully it’s successful and you get the financial rewards that you are seeking. But there is so much more to be gained than just the financial benefits. You have to think about marketing. Will you promote on social media, or Google? Will you embark on a paid advertising strategy, or go for organic word of mouth? If it’s social media, which platform will you focus on, how will you source the images, and on and on. You’ll learn a tonne just working through that. But of course if you’re running an online store there’s a lot more than just the marketing. Where will you source your product? How will you get it to customers? And how will you determine your price? You’ve got book-keeping, tax, and all sorts. Now I’m not trying to put you off here – far from it. You’ll be starting on a small scale, and because it’s not your full time source of income, you can take things at a pace that works for you. But I’m sure you can get a sense of just how many different things you’ll learn as a result of your Side Hustle adventure. So how will that help you? Well imagine if you’re in a meeting at your day job a few months from now and a manager is bemoaning the fact that targets aren’t being met. Perhaps someone throws out an idea of a new approach, which meets with no enthusiasm within the room. But you pipe up and say something like, “I think that’s worth giving a shot. I could run a small campaign on Facebook to that target market, allocate $10 a day for 3 weeks, and we could see if there’s any interest”. Your colleagues all rock back in their set like a bomb just went off in the middle of the room, and you’re ranking on the internal totem pole just moved up several places in management’s eyes. I could stop just here, because I believe the learning gained from giving a Side Hustle a crack is reason enough that everyone should have a Side Hustle. But I won’t stop here.   2.  Resilience Resilience is something we consider a lot when developing financial autonomy strategies for our clients. Life isn’t always chocolates and roses. Unexpected things happen, and often you wished they didn’t. One of the biggest set-backs many of us could face is losing our job. But if you have been working away on a little Side Hustle, perhaps this set-back actually provides an opportunity to see where this little side project can go. Instead of spending 5 hours a week, now you can spend 40 or 50. Maybe the business develops into something to replace your former wages. Or perhaps it gets to a size where it’s sellable, as happened with  Sharon in episode 41. Maybe, with what you’ve learned in your side hustle, you can apply for jobs that previously you would have dismissed because you lacked the pre-requisite knowledge or skills. I know of someone who worked in the automotive industry and of course got made redundant. Now his skills from that old job weren’t especially useful once he’d left, and for the few jobs that could use those skills, there were hundreds of potential candidates to compete against. But he’d always had an interest in automation, and whilst still working had done a course on security systems and the technical aspects behind these systems. When he left the car industry, it took him no time at all to get the necessary licenses and start working under someone installing sophisticated security systems. Now in this example his Side Hustle hadn’t developed into a money making proposition at the time he lost his job, but the mere fact that he was learning new skills meant that his resilience in a time of adversity was enormously enhanced.   3.  The compounding effect of some extra cash Albert Einstein apparently said “compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t, pays it”. Let’s say you’ve got a $300,000 mortgage. And with the current repayments that you’re making, you’re on-track to have it repaid in a little under 19 years. If your Side Hustle could generate enough so that you could increase your loan repayments by just $200 per month – only $200!, $50 dollars per week! , you’d cut 2 and a half years of your loan term and save almost $22,000 in interest. If you’re Side Hustle enabled you to put an extra $500 a month into your loan, your loan is repaid 5 years quicker, and about $44,000 is saved in interest. So your small little Side Hustle that only throws off $6,000 a year could save you $44,000 in interest – have I convinced you yet? But wait, there’s more.   4.  Expand your network This podcast is my Side Hustle. I can’t quite recall how I came across it now, but I stumbled into a meet-up group of Melbourne podcasters, and through that I’ve gotten to know several people who I never would have met otherwise. Most interestingly, they’re from totally different walks of life. The astute podcast listeners amongst you will have noticed that a little while back the disclaimer item that we play in each episode changed a little. The original version was recorded by my wife in our wardrobe – really high-tech stuff! The newer version though is by a friend I meet through the meet-up group who produces the Dating Upside Down podcast. She’s got all the gear and so could help out and give the newer version much better audio quality. Expanding your network can have all sorts of benefits, from new job opportunities, friendships, and support.   5.  More options As mentioned at the beginning, we’re pursuing Financial Autonomy to gain choice. Closely linked to choice is having options, and a Side Hustle helps deliver you options. If you’ve got a commercially viable Side Hustle up and running you become empowered. Current boss treating you poorly? Perhaps your Side Hustle gives you the financial safety net to wave him goodbye. Full time hours not letting you be the parent that you want to be? Maybe your Side Hustle provides the extra income to make it viable to cut back to part time hours. Bored in your current job and want to try something different? As already touched on, your Side Hustle could help facilitate your career change in all sorts of ways. So yet another reason why everyone should have a Side Hustle is that it gives you so many options. And my final reason why everyone, and especially you, should have a Side Hustle is…   6.  Extra cash helps Now I know, money doesn’t buy happiness, and we only need to look at the recent apparent breakdown of Jamie Packer, one of the richest Australian’s there is, to confirm that. But a lack of money certainly causes its own stresses and limitations, and this is where your Side Hustle might come to the rescue. If there are 2 people, both facing the prospect of losing their job, and one has a Side Hustle earning $2,000 a month and the other doesn’t, which do you think is likely to be less stressed? The school holidays are coming up. Your neighbour and her kids are staying home, but your Side Hustle has paid for a week interstate to see the sights. Lots of smiles all around. Or maybe part of the way that you find time for your Side Hustle is that you pay someone else to clean your house - maybe that’s their Side Hustle even!   In summary, most of us could find some good uses for a little extra cash. Well, there you have it, my 6 reasons why I believe everyone should have a Side Hustle – I hope I’ve convinced you. If you’re interested in this topic, be sure to grab our 50 Side Hustle Opportunities for Australians free download. No doubt you have many other great reasons why you’ve started your Side Hustle, or maybe you’re stuck on something that’s keeping you from making a start – jump on the Financial Autonomy Facebook page and let me know your thoughts.

Whether it’s a stall at a local market selling hand knitted beanies for dogs, running an online store via Amazon selling rainbow coloured shoelaces, or designing the occasional band logo on 99 designs, I believe EVERYONE should have a Side Hustle. We’re here after all to find ways for you to gain choice in your life – that’s what Financial Autonomy is all about. And if it’s choice that you want, there are few greater enablers than a Side Hustle. So in today’s post, we’re going to explore the reasons why I believe everyone should have a Side Hustle in their life. I’ve come up with 6 reasons why I believe we should all have a Side Hustle. I’m sure there’s many more, but hopefully these ones will give you the kick along needed to start something of your own.  1.  The learning As I mentioned at the top, a Side Hustle can take all sorts of forms, and the one that’s right for you needs to align with your personal interests and skills. But let’s take as an example a simple online store. Maybe you sell through Amazon, Ebay, Etsy, or whatever makes sense for you. Hopefully it’s successful and you get the financial rewards that you are seeking. But there is so much more to be gained than just the financial benefits. You have to think about marketing. Will you promote on social media, or Google? Will you embark on a paid advertising strategy, or go for organic word of mouth? If it’s social media, which platform will you focus on, how will you source the images, and on and on. You’ll learn a tonne just working through that. But of course if you’re running an online store there’s a lot more than just the marketing. Where will you source your product? How will you get it to customers? And how will you determine your price? You’ve got book-keeping, tax, and all sorts. Now I’m not trying to put you off here – far from it. You’ll be starting on a small scale, and because it’s not your full time source of income, you can take things at a pace that works for you. But I’m sure you can get a sense of just how many different things you’ll learn as a result of your Side Hustle adventure. So how will that help you? Well imagine if you’re in a meeting at your day job a few months from now and a manager is bemoaning the fact that targets aren’t being met. Perhaps someone throws out an idea of a new approach, which meets with no enthusiasm within the room. But you pipe up and say something like, “I think that’s worth giving a shot. I could run a small campaign on Facebook to that target market, allocate $10 a day for 3 weeks, and we could see if there’s any interest”. Your colleagues all rock back in their set like a bomb just went off in the middle of the room, and you’re ranking on the internal totem pole just moved up several places in management’s eyes. I could stop just here, because I believe the learning gained from giving a Side Hustle a crack is reason enough that everyone should have a Side Hustle. But I won’t stop here. 2.  Resilience Resilience is something we consider a lot when developing financial autonomy strategies for our clients. Life isn’t always chocolates and roses. Unexpected things happen, and often you wished they didn’t. One of the biggest set-backs many of us could face is losing our job. But if you have been working away on a little Side Hustle, perhaps this set-back actually provides an opportunity to see where this little side project can go. Instead of spending 5 hours a week, now you can spend 40 or 50. Maybe the business develops into something to replace your former wages. Or perhaps it gets to a size where it’s sellable, as happened with <a href="http://financialautonomy.com.au/index.php/2018/04/18/from-feeling-trapped-to-living-the-life-of-her-dreams-how-sharon-gourlay-blogged-her-way-to-financial-autonomy-episode-41/" rel="nofollow" target="_blank"> Sharon in episode 41</a>. Maybe, with what you’ve learned in your side hustle, you can apply for jobs that previously you would have dismissed because you lacked the pre-requisite knowledge or skills. I know of someone who worked in the automotive industry and of course got made redundant. Now his skills from that old job weren’t especially useful once he’d left, and for the few jobs that could use those skills, there were hundreds of potential candidates to compete against. But he’d always had an interest in automation, and whilst still working had done a course on security systems and the technical aspects behind these systems. When he left the car industry, it took him no time at all to get the necessary licenses and start working under someone installing sophisticated security systems. Now in this example his Side Hustle hadn’t developed into a money making proposition at the time he lost his job, but the mere fact that he was learning new skills meant that his resilience in a time of adversity was enormously enhanced. 3.  The compounding effect of some extra cash Albert Einstein apparently said “compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t, pays it”. Let’s say you’ve got a $300,000 mortgage. And with the current repayments that you’re making, you’re on-track to have it repaid in a little under 19 years. If your Side Hustle could generate enough so that you could increase your loan repayments by just $200 per month – only $200!, $50 dollars per week! , you’d cut 2 and a half years of your loan term and save almost $22,000 in interest. If you’re Side Hustle enabled you to put an extra $500 a month into your loan, your loan is repaid 5 years quicker, and about $44,000 is saved in interest. So your small little Side Hustle that only throws off $6,000 a year could save you $44,000 in interest – have I convinced you yet? But wait, there’s more. 4.  Expand your network This podcast is my Side Hustle. I can’t quite recall how I came across it now, but I stumbled into a meet-up group of Melbourne podcasters, and through that I’ve gotten to know several people who I never would have met otherwise. Most interestingly, they’re from totally different walks of life. The astute podcast listeners amongst you will have noticed that a little while back the disclaimer item that we play in each episode changed a little. The original version was recorded by my wife in our wardrobe – really high-tech stuff! The newer version though is by a friend I meet through the meet-up group who produces the <a href="http://datingupsidedown.com/" rel="nofollow" target="_blank">Dating Upside Down podcast</a>. She’s got all the gear and so could help out and give the newer version much better audio quality. Expanding your network can have all sorts of benefits, from new job opportunities, friendships, and support. 5.  More options As mentioned at the beginning, we’re pursuing Financial Autonomy to gain choice. Closely linked to choice is having options, and a Side Hustle helps deliver you options. If you’ve got a commercially viable Side Hustle up and running you become empowered. Current boss treating you poorly? Perhaps your Side Hustle gives you the financial safety net to wave him goodbye. Full time hours not letting you be the parent that you want to be? Maybe your Side Hustle provides the extra income to make it viable to cut back to part time hours. Bored in your current job and want to try something different? As already touched on, your Side Hustle could help facilitate your career change in all sorts of ways. So yet another reason why everyone should have a Side Hustle is that it gives you so many options. And my final reason why everyone, and especially you, should have a Side Hustle is… 6.  Extra cash helps Now I know, money doesn’t buy happiness, and we only need to look at the recent apparent breakdown of Jamie Packer, one of the richest Australian’s there is, to confirm that. But a lack of money certainly causes its own stresses and limitations, and this is where your Side Hustle might come to the rescue. If there are 2 people, both facing the prospect of losing their job, and one has a Side Hustle earning $2,000 a month and the other doesn’t, which do you think is likely to be less stressed? The school holidays are coming up. Your neighbour and her kids are staying home, but your Side Hustle has paid for a week interstate to see the sights. Lots of smiles all around. Or maybe part of the way that you find time for your Side Hustle is that you pay someone else to clean your house - maybe that’s their Side Hustle even! In summary, most of us could find some good uses for a little extra cash. Well, there you have it, my 6 reasons why I believe everyone should have a Side Hustle – I hope I’ve convinced you. If you’re interested in this topic, be sure to grab our <a href="https://find0101.lpusercontent.com/side-hustle-50-sign-up-page/" rel="nofollow" target="_blank">50 Side Hustle Opportunities for Australians</a> free download. No doubt you have many other great reasons why you’ve started your Side Hustle, or maybe you’re stuck on something that’s keeping you from making a start – jump on the Financial Autonomy Facebook page and let me know your thoughts.

Why everyone should have a Side Hustle - Episode 46

In this episode I review the wins and challenges faced during 2019 and look ahead to our plans for Financial Autonomy in 2020.  A bit of a pull back the curtain episode that I hope you enjoy. SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY 

In this episode I review the wins and challenges faced during 2019 and look ahead to our plans for Financial Autonomy in 2020. A bit of a pull back the curtain episode that I hope you enjoy. <a href="https://www.getdrip.com/forms/387275210/submissions/new" rel="nofollow" target="_blank">SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY</a>

What’s the plan for 2020? - Episode 127

If you catch a snippet of the radio in the morning on your way to work, you’re likely to hear what happened to the Dow Jones overnight. If you read your news online or watch the news on TV it’s likely you’ll hear about the All Ords or maybe the ASX200.  You might even come across acronyms like the NASDAQ and the FTSE. Probably, you know this is something to do with share markets. If you turn your mind to it a bit more, you probably know that the share market is where people buy and sell shares in companies like Telstra or BHP. Maybe you have in mind that the share market is risky and people lose their money sometimes. Well, if this is about the extent of your share market knowledge, you’re not alone, and this episode’s for you.  I think it’s fair to assume that you have an interest in achieving financial independence.  That is what we’re all about here. In working towards that goal, building wealth is likely to be an important feature. With wealth you can generate investment income with which you can then live on. Or perhaps you can use that wealth to buy a business, or invest in starting a new business if that’s where your Financial Autonomy goal points you. Or perhaps Financial Autonomy for you means remaining as an employee in a business with a team of people that you enjoy being around, but with the financial resources to resign if ever management changed or something else happened that meant you no longer enjoyed coming in each day. The goal of this audio blog is to provide you with choice in life, and that sort of goal is a common one I see with many of my clients.  Being in a position to say no.  It’s very empowering, and very liberating. One avenue towards financial independence is to build wealth via investment in the share market.  I should make it clear here that what I’m talking about is investing, not trading.  If you’ve listened to the common investment mistakes series you will recall I covered off on the dangers of trying to be a share market trader.  In short, it’s an almost guaranteed way to get poorer. So we’re talking about investing.  Buying shares that you intend to hold for at least a year, and profiting from both the dividend income, and growth in the value or price of the share over time. There are different ways you can gain exposure to the share market.  Your super fund likely has at least some exposure right now.  Later I’ll look at a couple of options for your non-superannuation money, but let’s start by explaining a few of the terms and elements you will come across when you take an interest in investing the share market. There a multiple markets We refer to the share market like it’s one thing, but that’s not true.  All developed countries have their own share market, and some such as the US have multiple markets. There are 60 major stock markets around the world.  There’s a good  infographic on world share markets here. Technology is gradually bringing these markets together in a practical sense for investors, but for the moment at least, as an Australian, if you want to buy shares in Apple let’s say, it’s not easy.  Why?  Because Apple isn’t listed on the Australian share market, and it’s not straight forward for an Australian investor to invest in the US share market (where Apple is listed) directly. Our local market is called the ASX. The Australian Stock Exchange.  Should be ASE really shouldn’t it, but presumably someone felt the X looked trendier. On the ASX you’ll find lots of companies you’re familiar with – the banks, the big miners, Woolworths, Telstra, etc.  Of course there’s also plenty there you’ve never heard of too.  About 2,000 companies all up I believe. In the United States the main market is the New York Stock Exchange.  This is the largest share market in the world. On the NYSE you’ll find companies like Johnson &amp; Johnson, Exxon Mobil, AT&amp;T, VISA, and Pfizer. The second largest share market in the world is also in the US – the Nasdaq.  This market tends to be more technology focused, so Apple, Amazon and Microsoft are listed here. There’s also the London Stock Exchange and on and on it goes – typically one per country. You’re buying a piece of a company The next thing to recognise is that when you buy a share, you are buying a small piece of a company. Let’s say you buy a share in JB HiFi.  You are now a part owner of that business. If that business performs well, you will get a share of the profits.  If it grows and becomes worth more, the value of what you own will also rise.  Of course if things go badly – maybe Amazon enters Australia and JB HiFi loses a whole lot of customers, then the business might decline, and so the value of your little piece of the company will do the same. As a part owner you have the right to attend the company’s annual meeting and vote on issues like who should sit on the board of the company. I sometimes have clients tell me that they prefer property investment to share market investment because they can touch a property.  It’s a physical thing.  They don’t feel that with shares. Whilst I can understand that, if you think of the share you bought as a small piece of a company, then you can generally find something physical to attach to that.  Walk into the JB HiFi store.  You own a little bit of this.   Blue chip If you start to take even a passing interest in share market investing you will soon come across the term “blue chip”.  So what does it mean? A blue chip share is a large, high value company.  The expression is usually meant to infer that it’s a company that is so big it will never go broke.  In Australia, the big 4 banks, BHP, RIO, Telstra, Woolworths, Wesfarmers - these are all businesses that would typically be described as blue chip. There is no formal definition of a blue chip company, and you won’t see that as a descriptor on the ASX anywhere. Interestingly, the term blue chip apparently comes from poker, where the most valuable chip was traditionally blue. What to buy So let’s say you’ve decided to dip your toe in the water and buy some shares.  How do you decide what to buy?  Well of course you could come to us for advice, but perhaps initially you just want to have a small go yourself to gain some experience – a great idea. Some important numbers you might come across in your research are the dividend yield and the price earnings ratio.  You’ll come across these numbers in the newspaper and on most share trading websites.  So let’s take a quick look at what these mean. Dividend yield – this is the income rate of return from the share and can be compared against bank interest rates to make it meaningful. Resources companies such as BHP typically pay quite low dividend yields of around 2%, because they tend to pour a lot of their profits into expansion of the business, rather than paying out dividends. The banks on the other hand are more generous, usually paying 5-6%. And then there’s franking credits on top, but that’s for another day. Price Earnings ratio – Commonly abbreviated to the PE, this is a ratio of the price of the share, divided by the earnings per share. So if company XYZ was trading at $10, and in its last earnings notice it declared earnings of $1 per share, then the PE would be 10. That is, its price is 10 times its earnings. Most companies trade on PE’s of between 10 and 20 times. I find PE’s are most useful when comparing companies in the same industry, e.g. the banks, to see which banks the market is rating more highly than their peers. A high PE often reflects an expectation that earnings will grow strongly in the future. In contrast a PE under 10 typically suggests that the market anticipates earnings will decline in future. As an investor you can consider whether you believe the market assessment is correct. Importantly both these statistics relate to the share price on that day. If you already own the shares, and purchased them at some other price, it has no relevance, I guess unless you are thinking of selling. It is also important when considering both of these measures to remember that the earnings numbers they are working off are historical, backward looking – nothing is certain in the future. How else to get started with investing the share market So you’re keen to invest, but don’t really want to get into the nitty gritty of choosing and monitoring shares yourself.  Or maybe you’ve done a bit of that already and decided it wasn’t for you. Fortunately for you, most investors who build wealth in the share market don’t personally do the research, buying and selling.  As happens within your super fund, most people invest via a pooled fund where your money is combined with others and a process is used to spread your investment over many shares to reduce your risk. The most common way to achieve this is through either a Managed Fund or an Exchange Traded Fund (ETF). The difference between the two is that with a managed fund you apply to invest directly with the fund manager, quite possibly through an adviser.  And when you want to take your money out, you similarly apply to the fund manager for a redemption. Exchange Traded Funds however are bought and sold on the stock exchange.  This means you can buy and sell more quickly, but it also means you will need to pay some brokerage to your stock broker each time you do so. Another difference is that typically an Exchange Traded Fund is replicating a particular index, such as for instance the ASX200 – the largest 200 companies on the Australian Stock Exchange.  The composition of the portfolio within an Exchange Traded Fund is therefore determined by some sort of mechanical, computerised type process. Whilst some Managed Funds have this investment style too, more often Managed Funds will have a team of people doing research, and making buy and sell decisions based on this research.  Within the industry this is known as Active investing, whereas the approach used by most ETF’s is Passive investing. There is much debate within the investment industry as to whether Active or Passive approaches are best, and in my view each have their place.  But an important thing for you to understand at this point is that ETF’s are usually cheaper than Managed Funds with respect to the management costs associated with running them, and this is because their process for selecting which shares to buy doesn’t require research and analysts. The ETF market is growing increasingly popular, leading to considerable new product development.  Given ETF’s are usually cheaper than their managed fund counterparts, this development is likely to be a positive for share market investors.   

If you catch a snippet of the radio in the morning on your way to work, you’re likely to hear what happened to the Dow Jones overnight. If you read your news online or watch the news on TV it’s likely you’ll hear about the All Ords or maybe the ASX200.  You might even come across acronyms like the NASDAQ and the FTSE. Probably, you know this is something to do with share markets. If you turn your mind to it a bit more, you probably know that the share market is where people buy and sell shares in companies like Telstra or BHP. Maybe you have in mind that the share market is risky and people lose their money sometimes. Well, if this is about the extent of your share market knowledge, you’re not alone, and this episode’s for you. <a href="https://www.getdrip.com/forms/944699082/submissions/new" rel="nofollow" target="_blank"></a> I think it’s fair to assume that you have an interest in achieving financial independence.  That is what we’re all about here. In working towards that goal, building wealth is likely to be an important feature. With wealth you can generate investment income with which you can then live on. Or perhaps you can use that wealth to buy a business, or invest in starting a new business if that’s where your Financial Autonomy goal points you. Or perhaps Financial Autonomy for you means remaining as an employee in a business with a team of people that you enjoy being around, but with the financial resources to resign if ever management changed or something else happened that meant you no longer enjoyed coming in each day. The goal of this audio blog is to provide you with choice in life, and that sort of goal is a common one I see with many of my clients.  Being in a position to say no.  It’s very empowering, and very liberating. One avenue towards financial independence is to build wealth via investment in the share market.  I should make it clear here that what I’m talking about is investing, not trading.  If you’ve listened to the common investment mistakes series you will recall I covered off on the dangers of trying to be a share market trader.  In short, it’s an almost guaranteed way to get poorer. So we’re talking about investing.  Buying shares that you intend to hold for at least a year, and profiting from both the dividend income, and growth in the value or price of the share over time. There are different ways you can gain exposure to the share market.  Your super fund likely has at least some exposure right now.  Later I’ll look at a couple of options for your non-superannuation money, but let’s start by explaining a few of the terms and elements you will come across when you take an interest in investing the share market. There a multiple markets We refer to the share market like it’s one thing, but that’s not true.  All developed countries have their own share market, and some such as the US have multiple markets. There are 60 major stock markets around the world.  There’s a good <a href="http://money.visualcapitalist.com/all-of-the-worlds-stock-exchanges-by-size/" rel="nofollow" target="_blank"> infographic on world share markets here.</a> Technology is gradually bringing these markets together in a practical sense for investors, but for the moment at least, as an Australian, if you want to buy shares in Apple let’s say, it’s not easy.  Why?  Because Apple isn’t listed on the Australian share market, and it’s not straight forward for an Australian investor to invest in the US share market (where Apple is listed) directly. Our local market is called the <a href="http://www.asx.com.au/" rel="nofollow" target="_blank">ASX</a>. The Australian Stock Exchange.  Should be ASE really shouldn’t it, but presumably someone felt the X looked trendier. On the ASX you’ll find lots of companies you’re familiar with – the banks, the big miners, Woolworths, Telstra, etc.  Of course there’s also plenty there you’ve never heard of too.  About 2,000 companies all up I believe. In the United States the main market is the New York Stock Exchange.  This is the largest share market in the world. On the NYSE you’ll find companies like Johnson &amp; Johnson, Exxon Mobil, AT&amp;T, VISA, and Pfizer. The second largest share market in the world is also in the US – the Nasdaq.  This market tends to be more technology focused, so Apple, Amazon and Microsoft are listed here. There’s also the London Stock Exchange and on and on it goes – typically one per country. You’re buying a piece of a company The next thing to recognise is that when you buy a share, you are buying a small piece of a company. Let’s say you buy a share in JB HiFi.  You are now a part owner of that business. If that business performs well, you will get a share of the profits.  If it grows and becomes worth more, the value of what you own will also rise.  Of course if things go badly – maybe Amazon enters Australia and JB HiFi loses a whole lot of customers, then the business might decline, and so the value of your little piece of the company will do the same. As a part owner you have the right to attend the company’s annual meeting and vote on issues like who should sit on the board of the company. I sometimes have clients tell me that they prefer property investment to share market investment because they can touch a property.  It’s a physical thing.  They don’t feel that with shares. Whilst I can understand that, if you think of the share you bought as a small piece of a company, then you can generally find something physical to attach to that.  Walk into the JB HiFi store.  You own a little bit of this.   Blue chip If you start to take even a passing interest in share market investing you will soon come across the term “blue chip”.  So what does it mean? A blue chip share is a large, high value company.  The expression is usually meant to infer that it’s a company that is so big it will never go broke.  In Australia, the big 4 banks, BHP, RIO, Telstra, Woolworths, Wesfarmers - these are all businesses that would typically be described as blue chip. There is no formal definition of a blue chip company, and you won’t see that as a descriptor on the ASX anywhere. Interestingly, the term blue chip apparently comes from poker, where the most valuable chip was traditionally blue. What to buy So let’s say you’ve decided to dip your toe in the water and buy some shares.  How do you decide what to buy?  Well of course you could come to us for advice, but perhaps initially you just want to have a small go yourself to gain some experience – a great idea. Some important numbers you might come across in your research are the dividend yield and the price earnings ratio.  You’ll come across these numbers in the newspaper and on most share trading websites.  So let’s take a quick look at what these mean. Dividend yield – this is the income rate of return from the share and can be compared against bank interest rates to make it meaningful. Resources companies such as BHP typically pay quite low dividend yields of around 2%, because they tend to pour a lot of their profits into expansion of the business, rather than paying out dividends. The banks on the other hand are more generous, usually paying 5-6%. And then there’s franking credits on top, but that’s for another day. Price Earnings ratio – Commonly abbreviated to the PE, this is a ratio of the price of the share, divided by the earnings per share. So if company XYZ was trading at $10, and in its last earnings notice it declared earnings of $1 per share, then the PE would be 10. That is, its price is 10 times its earnings. Most companies trade on PE’s of between 10 and 20 times. I find PE’s are most useful when comparing companies in the same industry, e.g. the banks, to see which banks the market is rating more highly than their peers. A high PE often reflects an expectation that earnings will grow strongly in the future. In contrast a PE under 10 typically suggests that the market anticipates earnings will decline in future. As an investor you can consider whether you believe the market assessment is correct. Importantly both these statistics relate to the share price on that day. If you already own the shares, and purchased them at some other price, it has no relevance, I guess unless you are thinking of selling. It is also important when considering both of these measures to remember that the earnings numbers they are working off are historical, backward looking – nothing is certain in the future. How else to get started with investing the share market So you’re keen to invest, but don’t really want to get into the nitty gritty of choosing and monitoring shares yourself.  Or maybe you’ve done a bit of that already and decided it wasn’t for you. Fortunately for you, most investors who build wealth in the share market don’t personally do the research, buying and selling.  As happens within your super fund, most people invest via a pooled fund where your money is combined with others and a process is used to spread your investment over many shares to reduce your risk. The most common way to achieve this is through either a Managed Fund or an Exchange Traded Fund (ETF). The difference between the two is that with a managed fund you apply to invest directly with the fund manager, quite possibly through an adviser.  And when you want to take your money out, you similarly apply to the fund manager for a redemption. Exchange Traded Funds however are bought and sold on the stock exchange.  This means you can buy and sell more quickly, but it also means you will need to pay some brokerage to your stock broker each time you do so. Another difference is that typically an Exchange Traded Fund is replicating a particular index, such as for instance the ASX200 – the largest 200 companies on the Australian Stock Exchange.  The composition of the portfolio within an Exchange Traded Fund is therefore determined by some sort of mechanical, computerised type process. Whilst some Managed Funds have this investment style too, more often Managed Funds will have a team of people doing research, and making buy and sell decisions based on this research.  Within the industry this is known as Active investing, whereas the approach used by most ETF’s is Passive investing. There is much debate within the investment industry as to whether Active or Passive approaches are best, and in my view each have their place.  But an important thing for you to understand at this point is that ETF’s are usually cheaper than Managed Funds with respect to the management costs associated with running them, and this is because their process for selecting which shares to buy doesn’t require research and analysts. The ETF market is growing increasingly popular, leading to considerable new product development.  Given ETF’s are usually cheaper than their managed fund counterparts, this development is likely to be a positive for share market investors. <a href="https://www.getdrip.com/forms/944699082/submissions/new" rel="nofollow" target="_blank"></a>

The Sharemarket - A beginner's guide - Episode 15

Are you tired of the insecurity that comes from constant corporate restructures and the politics of a large work place?  Way back in episode 11, I explored the  Security Illusion. This looked at the idea that most of us are brainwashed into believing that financial security comes from working for a large corporate, or perhaps even a government body. In reality, these organisations are constantly the subject of restructures and redundancies. They are pyramids, with fewer and fewer roles the closer you get to the top, so people need to be constantly shed to make room for those below to progress. So this post is for those who have reached the point of thinking about life beyond the corporate world, and what they see in their future is some form of self-employment. I’m particularly excited to explore this topic, because this is a path that I’ve walked, and I know it’s been the experience of many in the Financial Autonomy community too. So as I mentioned, transitioning from the corporate world to self-employment has been part of my life experience. I worked for one of Australia’s largest banks for 16 years. I’ve got plenty to be thankful for during that time. I learnt a heck of a lot, worked in several different areas to gain a diversity of skills, and got a start in financial planning. In hindsight I perhaps wish I’d tried to accelerate my path a bit, but that was really about my own lack of maturity rather than a fault of my employer. As a foundation stone for my working life, I have no regrets about my time spent in the corporate world. But I did reach a point back in 2006 where I’d found the thing I was passionate about – Financial Planning - I had another 20+ years of working life ahead of me, and I just couldn’t see my life plan aligning with that of my employer – I knew at some point I’d get shifted, or downsized, or worse, made a team leader, the ultimate kiss of death. My story is far from unique, with perhaps the only wrinkle being that my banking career had lead me to a budding profession that I could continue with in the outside world. Plan So how could you successfully transition from the corporate world to self-employment? I’d suggest the first step is to develop a plan. Start with a 1 page business plan, of which there are plenty of templates available for free on the web. Whatever you will do next, if you’ve chosen the self-employment route it’s highly unlikely you’ll be managing a team of 100’s. So if you can’t explain your business plan on a single page, you’ve gone wrong somewhere. Another step, which I didn’t do when I planned my transition, but I really wish I had, is to draw a diagram of your business model. Just on a piece of paper or a white board, show the various sources where your customers will come from, and how they will go through your funnel to become revenue generating. Here’s an example for my financial planning business:  Just as with the 1 page business plan, your business model should also be 1 page and answer the core question, how will your business make money? Cash flow The next port of call is to think through how you will manage cash flow. Cash flow in your post corporate world life will be very different. No more approving the invoice and sending it to accounts for payment. Cash flow is king. From personal experience I advocate developing a Survival Strategy and a Capital Strategy. The Survival Strategy addresses how you will survive financially whilst you get this business off the ground. The Capital Strategy then considers your new enterprise – how will you fund the start-up costs, marketing etc. For a deeper dive on this, take a look at  How to be financially ready to start a business. It will also be helpful to you in making this transition a success, if you’re in a good financial position – that is you live within your means and you have minimal debt. Also, whatever your business plan, assume things will go wrong. If you forecast initial cash flow coming in at month 3, have a plan for if first cash flow doesn’t arrive until month 6. Most business plans don’t survive their initial interaction with the real world, so always adopt the mantra – Hope for the best but plan for the worst. Can you test? Assuming you’re not leaving corporate unexpectedly as a result of a redundancy, as part of your planning for this transition think about whether there are ways that you can test your idea with minimum risk. Let’s say for example that your plan for the next phase in your life is to start up a florist in your local area. Could you run a stall at a local market to learn what types of flowers people like to buy, who are the most reliable suppliers, and even just if you like dealing with flowers. The main thing you want to try and test is whether people will part with real money to purchase your product or service. You’ll have no shortage of friends and family giving encouraging words, but it’s not until total strangers put their hand in their pocket that you know you have something that’s viable. The book Lean Start-Up explores this quite a bit. It focuses mainly on tech start-ups, so you might be best just reading a few summaries on-line rather than investing the time in the entire book. Like most business books, the key useful information could have been written in a 3-5 page essay, but as that’s not commercially viable they find a way to pad it out into a book. It’s worth remembering here to ensure what you are testing isn’t in conflict with what you do for your current employer. Buying a business Another way you could consider making this transition is to buy an existing business. Like sports people, most business owners don’t get out at the top. Nearly every business that you look at will have had its best years a few years back. So look for a business where you have some expertise, and where you could apply some fresh ideas. The great thing about buying a business is that you have cash flow and customers from day 1. Sure it won’t be exactly as you would have built it, but that can be changed in time. Just don’t rush the changes though. Sit in the business for a few months and get an understanding of why things are the way they are. Talk to your newly acquired customers and check that what they value from your business is what you thought. As an example you might have bought a printing business, and thought that the most important thing to customers was fast turnaround. But once you get into the business and talk to your customers, you might learn that actually what they like is dealing with someone local so they can discuss their needs and fine tune their designs. Had you jumped straight into implementation phase on your assumption that turnaround time was the key, you might have invested in a flash new web site so customers could just jump online and order with you. But by slowing down a bit and speaking to your customers, you learn that actually there’s plenty of printers already doing that, and many cheaper than you would be. You’d be better off investing the money in customer service functions instead to provide help and support. Skills development In making your transition to self-employment, think about what skills you’ll need to give you the greatest chance of success. Often in the corporate world there is opportunities for training. What courses could you do to help in the next phase of your life? Even if these courses need to be done outside of your current working life, if you can at least gain these skills while still bringing in a regular wage, you’re improving your chances of ultimate success. The other way to build up skills while still being a productive employee is to put your hand up for special projects, or even promotions into areas of interest. Nurture your network Never before you will have so much need for the support of others than when you make the leap to self-employment. You’ll be moving from having lots of colleagues around to bounce ideas off, to possibly flying solo, or at best having only a few staff members. No-one knows everything and starting a business can be lonely. You likely have an extensive business network, but perhaps you don’t give it a lot of thought. Reach out to people who you respect and cement those relationships. Connect on LinkedIn so you have a way to stay in touch after you leave, and if appropriate, grab a coffee or lunch with them sometime to dig a bit deeper into what drives them. Knowing someone that you can call or email when you’re stuck on something is incredibly valuable. Of course relationships work in two directions, so make sure you support the people in your network too. Generous people get rewarded. Paul Higgins, founder of the BLG community, a resource for people escaping the corporate world to start their own business observed “Escaping corporate is one of the most exhilarating experiences. You learn by doing, and having the right support group is essential”. Leave well And a final tip for planning your successful transition from the corporate world to self-employment is to leave on a good note. The financial services industry is huge in Australia, yet I still bump into people from when I worked at the bank. Burning bridges is definitely unwise, even if you’re moving to a completely different industry – who knows, some of your former colleagues could become your first customers.

Are you tired of the insecurity that comes from constant corporate restructures and the politics of a large work place?  Way back in episode 11, I explored the <a href="http://financialautonomy.com.au/index.php/2017/08/09/the-security-illusion-episode-11/" rel="nofollow" target="_blank"> Security Illusion</a>. This looked at the idea that most of us are brainwashed into believing that financial security comes from working for a large corporate, or perhaps even a government body. In reality, these organisations are constantly the subject of restructures and redundancies. They are pyramids, with fewer and fewer roles the closer you get to the top, so people need to be constantly shed to make room for those below to progress. So this post is for those who have reached the point of thinking about life beyond the corporate world, and what they see in their future is some form of self-employment. I’m particularly excited to explore this topic, because this is a path that I’ve walked, and I know it’s been the experience of many in the Financial Autonomy community too. So as I mentioned, transitioning from the corporate world to self-employment has been part of my life experience. I worked for one of Australia’s largest banks for 16 years. I’ve got plenty to be thankful for during that time. I learnt a heck of a lot, worked in several different areas to gain a diversity of skills, and got a start in financial planning. In hindsight I perhaps wish I’d tried to accelerate my path a bit, but that was really about my own lack of maturity rather than a fault of my employer. As a foundation stone for my working life, I have no regrets about my time spent in the corporate world. But I did reach a point back in 2006 where I’d found the thing I was passionate about – Financial Planning - I had another 20+ years of working life ahead of me, and I just couldn’t see my life plan aligning with that of my employer – I knew at some point I’d get shifted, or downsized, or worse, made a team leader, the ultimate kiss of death. My story is far from unique, with perhaps the only wrinkle being that my banking career had lead me to a budding profession that I could continue with in the outside world. Plan So how could you successfully transition from the corporate world to self-employment? I’d suggest the first step is to develop a plan. Start with a 1 page business plan, of which there are plenty of templates available for free on the web. Whatever you will do next, if you’ve chosen the self-employment route it’s highly unlikely you’ll be managing a team of 100’s. So if you can’t explain your business plan on a single page, you’ve gone wrong somewhere. Another step, which I didn’t do when I planned my transition, but I really wish I had, is to draw a diagram of your business model. Just on a piece of paper or a white board, show the various sources where your customers will come from, and how they will go through your funnel to become revenue generating. Here’s an example for my financial planning business: Just as with the 1 page business plan, your business model should also be 1 page and answer the core question, how will your business make money? Cash flow The next port of call is to think through how you will manage cash flow. Cash flow in your post corporate world life will be very different. No more approving the invoice and sending it to accounts for payment. Cash flow is king. From personal experience I advocate developing a Survival Strategy and a Capital Strategy. The Survival Strategy addresses how you will survive financially whilst you get this business off the ground. The Capital Strategy then considers your new enterprise – how will you fund the start-up costs, marketing etc. For a deeper dive on this, take a look at <a href="http://financialautonomy.com.au/index.php/2017/06/14/how-to-be-financially-ready-to-start-a-business/" rel="nofollow" target="_blank"> How to be financially ready to start a business</a>. It will also be helpful to you in making this transition a success, if you’re in a good financial position – that is you live within your means and you have minimal debt. Also, whatever your business plan, assume things will go wrong. If you forecast initial cash flow coming in at month 3, have a plan for if first cash flow doesn’t arrive until month 6. Most business plans don’t survive their initial interaction with the real world, so always adopt the mantra – Hope for the best but plan for the worst. Can you test? Assuming you’re not leaving corporate unexpectedly as a result of a redundancy, as part of your planning for this transition think about whether there are ways that you can test your idea with minimum risk. Let’s say for example that your plan for the next phase in your life is to start up a florist in your local area. Could you run a stall at a local market to learn what types of flowers people like to buy, who are the most reliable suppliers, and even just if you like dealing with flowers. The main thing you want to try and test is whether people will part with real money to purchase your product or service. You’ll have no shortage of friends and family giving encouraging words, but it’s not until total strangers put their hand in their pocket that you know you have something that’s viable. The book Lean Start-Up explores this quite a bit. It focuses mainly on tech start-ups, so you might be best just reading a few summaries on-line rather than investing the time in the entire book. Like most business books, the key useful information could have been written in a 3-5 page essay, but as that’s not commercially viable they find a way to pad it out into a book. It’s worth remembering here to ensure what you are testing isn’t in conflict with what you do for your current employer. Buying a business Another way you could consider making this transition is to buy an existing business. Like sports people, most business owners don’t get out at the top. Nearly every business that you look at will have had its best years a few years back. So look for a business where you have some expertise, and where you could apply some fresh ideas. The great thing about buying a business is that you have cash flow and customers from day 1. Sure it won’t be exactly as you would have built it, but that can be changed in time. Just don’t rush the changes though. Sit in the business for a few months and get an understanding of why things are the way they are. Talk to your newly acquired customers and check that what they value from your business is what you thought. As an example you might have bought a printing business, and thought that the most important thing to customers was fast turnaround. But once you get into the business and talk to your customers, you might learn that actually what they like is dealing with someone local so they can discuss their needs and fine tune their designs. Had you jumped straight into implementation phase on your assumption that turnaround time was the key, you might have invested in a flash new web site so customers could just jump online and order with you. But by slowing down a bit and speaking to your customers, you learn that actually there’s plenty of printers already doing that, and many cheaper than you would be. You’d be better off investing the money in customer service functions instead to provide help and support. Skills development In making your transition to self-employment, think about what skills you’ll need to give you the greatest chance of success. Often in the corporate world there is opportunities for training. What courses could you do to help in the next phase of your life? Even if these courses need to be done outside of your current working life, if you can at least gain these skills while still bringing in a regular wage, you’re improving your chances of ultimate success. The other way to build up skills while still being a productive employee is to put your hand up for special projects, or even promotions into areas of interest. Nurture your network Never before you will have so much need for the support of others than when you make the leap to self-employment. You’ll be moving from having lots of colleagues around to bounce ideas off, to possibly flying solo, or at best having only a few staff members. No-one knows everything and starting a business can be lonely. You likely have an extensive business network, but perhaps you don’t give it a lot of thought. Reach out to people who you respect and cement those relationships. Connect on LinkedIn so you have a way to stay in touch after you leave, and if appropriate, grab a coffee or lunch with them sometime to dig a bit deeper into what drives them. Knowing someone that you can call or email when you’re stuck on something is incredibly valuable. Of course relationships work in two directions, so make sure you support the people in your network too. Generous people get rewarded. Paul Higgins, founder of the <a href="https://buildlivegive.com/" rel="nofollow" target="_blank">BLG community</a>, a resource for people escaping the corporate world to start their own business observed “Escaping corporate is one of the most exhilarating experiences. You learn by doing, and having the right support group is essential”. Leave well And a final tip for planning your successful transition from the corporate world to self-employment is to leave on a good note. The financial services industry is huge in Australia, yet I still bump into people from when I worked at the bank. Burning bridges is definitely unwise, even if you’re moving to a completely different industry – who knows, some of your former colleagues could become your first customers.

How to successfully transition from the corporate world to self-employment - Episode 40

SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY    According to Forbes magazine “the world has changed dramatically in the past several decades with more and more of a company’s value attached not to factories, machines, or hard assets but rather the companies’ ideas, processes, and designs – their intellectual property.” Intellectual property (IP) can take a range of forms – writing, music, design, inventions, or software are all examples. The digitisation of the world has meant that the ability to convert these IP assets into money has exploded. In this weeks episode, we explore how you could use intellectual property assets to achieve financial independence.

<a href="https://www.getdrip.com/forms/387275210/submissions/new" rel="nofollow" target="_blank">SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY</a> According to Forbes magazine “the world has changed dramatically in the past several decades with more and more of a company’s value attached not to factories, machines, or hard assets but rather the companies’ ideas, processes, and designs – their intellectual property.” Intellectual property (IP) can take a range of forms – writing, music, design, inventions, or software are all examples. The digitisation of the world has meant that the ability to convert these IP assets into money has exploded. In this weeks episode, we explore how you could use intellectual property assets to achieve financial independence.

Creating intellectual property to achieve Financial Autonomy - Episode 87

SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY  In the last post -  How to start an Investment Portfolio - we looked at the steps and mechanics involved in creating your first investment portfolio. So we covered - setting your Objectives, determining how much Risk you will take on, your investment Time Frame, and Opening a share trading account.  This week we'll progress from this set-up phase, to explore how you then build an investment portfolio.  We talk quite a lot about investments here at Financial Autonomy. That’s because our goal is to enable you to have choice in what it is that you do with your life, and if you have an investment pool that generates income, then some and potentially all of your living costs can be meet without you needing to trade your time for money. The freedom this provides is what can then enable you to spend your time writing your novel, learning a language, building a boat, or whatever it is that is your Financial Autonomy goal. 

<a href="https://www.getdrip.com/forms/387275210/submissions/new" rel="nofollow" target="_blank">SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY</a> In the last post - <a href="http://financialautonomy.com.au/index.php/2019/01/30/how-to-start-an-investment-portofolio-episode-78/" rel="nofollow" target="_blank"> How to start an Investment Portfolio</a> - we looked at the steps and mechanics involved in creating your first investment portfolio. So we covered - setting your Objectives, determining how much Risk you will take on, your investment Time Frame, and Opening a share trading account.  This week we'll progress from this set-up phase, to explore how you then build an investment portfolio.  We talk quite a lot about investments here at Financial Autonomy. That’s because our goal is to enable you to have choice in what it is that you do with your life, and if you have an investment pool that generates income, then some and potentially all of your living costs can be meet without you needing to trade your time for money. The freedom this provides is what can then enable you to spend your time writing your novel, learning a language, building a boat, or whatever it is that is your Financial Autonomy goal.

How to build an Investment Portfolio – Episode 79

We all know that property prices in Australia have gone stupid in recent years.  One significant consequence of that has been that first home buyers have found it increasingly difficult to enter the property market.  Banks like to see at least a 10% deposit, and in the ideal world you’d have a 20% deposit to avoid mortgage insurance costs.  But when a first home can often cost north of half a million dollars, saving a deposit of that size can be really challenging, especially if you have rent to pay, and perhaps a HECS-HELP debt that sucks away a portion of your income. Fortunately there has been recognition of this problem by both sides of politics, and the solution that has been legislated in recent months is the First Home Super Saver Scheme. So what is it, and should the First Home Super Saver Scheme be on your radar as a strategy to enter the housing market?  In short, should you care about this new initiative? Click here to get the toolkit  It’s always good to start at the beginning, so before we dive in, let’s just consider the objective of the First Home Super Saver Scheme. Home ownership is considered a good thing for the nation.  Now as regular listeners and readers will recall, in  episode 19 I looked at whether people who simply can’t enter the property market are financially doomed, and the conclusion that we found is certainly not.  However for those that do wish to own their own home, and that is most of us, the rationale is sound. Owning the roof over your head gives you long term financial security.  Sure, you’ll have a mortgage to repay for many years, but one day this will be paid off, and so in your later years, you’ll have your housing needs covered for relatively little ongoing expense.  This makes retirement that much more affordable, and also provides you with the security of knowing you can remain in your community without disruption. Building equity in your home may also enable you to finance things like starting a business, and provide funds for Aged Care needs towards the end of your life if needed. Home ownership also tends to align with a sense of equality.  I enjoy reading about the period around the French Revolution, in the late 1700’s.  In that era (and it was much the same throughout Europe and England), the wealthy few owned everything, and the vast majority eked out a living as best they could.  In that type of society, the average person had little control over their life, and got blown about by the whims of the wealthy elite, with their wars and ridiculous extravagances.  Australians have always resisted a society like this.  The concept of a fair go is ingrained in us.  And whilst in recent years it feels like perhaps we’ve headed a bit more towards the wealth of the nation become concentrated in fewer hands, the ability to access home ownership for all Australians is a really important foundation stone of our society. So the First Home Super Saver Scheme exists to help ensure that entry into the housing market remains possible. So how does it work?  Now I need to give a jargon alert here.  I always try very hard to not use financial jargon when I write pieces for Financial Autonomy. But because the First Home Super Saver Scheme feeds into the superannuation system, and because Australia’s superannuation system is almost a language all of its own, I won’t be able to avoid having some jargon in this post.  I’ll do my best to explain things in what I hope are easily understood terms, but if anything is unclear, don’t hesitate to drop me an email to clarify. Click here to get the toolkit The First Home Super Saver Scheme enables you to make extra contributions into your superannuation account, and then withdraw them, plus the earnings, for the purposes of a first home deposit.  It’s rational because you are likely to save on tax, and typically the earnings on savings in a super fund will be better than what you would generate with a bank deposit. From 1 July 2018 it is possible to apply to withdraw voluntary contributions made to super after 1 July 2017 for a first home deposit. Voluntary contributions includes both pre-tax (salary sacrifice) and after tax contributions. Your normal superannuation contributions made by your employer are not relevant here – they remain preserved until your retirement.  The First Home Super Saver Scheme only applies to extra contributions that you make. The primary benefit exists for pre-tax contributions, so for the remainder of this post, I’m going to focus on these.  Now the jargon term here is “concessional contributions”.  They are concessional because these type of contributions receive special discounted tax rates.  For most people, concessional contributions occur via salary sacrificing to super.  That is, you arrange with your employer to have an amount taken out of your wage before tax is calculated, and that money is sent to your super fund, on top of the normal employer contribution that they would be making. Now if you’re self-employed, it’s even easier, as it’s probable that any contribution to super that you make will be concessional.  If your taxable income is quite low, this may not be the case, so get some advice here if that’s applicable. Because the money you’re sending to super comes out before tax, you’ll find that the impact on your pay packet is less than you would expect.  So for instance if you were on a wage of $70,000, and you salary sacrificed $500 to super, your take home pay would reduce by around $350, not the full $500 amount. This points to why the First Home Super Saver Scheme makes sense.  It’s all about the tax! When your salary sacrifice contribution arrives at your super fund, it will be taxed at 15%.  So taking the $500 example earlier, after tax is deducted $425 hits your super fund.  But as mentioned earlier, had you instead taken this money as normal take home pay, you would have only got $350 in your pocket, so $425 going into your super fund is a good win. Let’s look at some of the parameters around the scheme. Firstly, the maximum that you can withdraw from the scheme is $30,000 plus the earnings on those funds. The maximum amount that you can have released from a single years contributions is $15,000.  So in other words, in order to get the maximum out, you’d need to contribute for at least 2 years. Also, the normal superannuation contributions limits apply.  The most anyone can contribute to super in pre-tax/concessional contributions is $25,000, and this includes what your employer puts in.  So you might want to save $15,000 in a particular year into super to use in this new scheme, but if your employer already puts in more than $10,000, then you simply don’t have the head room within the contribution caps to be able to do this. When you then withdraw these savings, they will be taxed at your marginal tax rate, less a 30% tax offset.  This bit is confusing at first blush and will catch some people by surprise.  It exists to provide equity in the scheme.  Most people with access to this scheme will pay tax at around 30%, and so any tax applicable at withdrawal will be pretty minimal.  But of course the scheme is open to anyone, even someone earnings several hundred thousand dollars a year, so this mechanism is designed to ensure that higher income earners don’t get a disproportionate benefit from the scheme. I guess the takeaway is just to recognise that when you withdraw, it may be that some tax is deducted.  Rest assured though that where this is the case, you will still have been better off than had you saved the equivalent amount outside of the scheme, assuming earnings rates were the same. It’s also worth noting that you don’t need a new or separate super account for this scheme, nor do you need to tell your super fund that the contributions you are making are for this purpose. The actual mechanism for withdrawing your funds is a little unclear at this point as it hasn’t happened yet.  The tax office is responsible for approving the withdrawal. So either you will apply to the ATO to withdraw the funds, and then when they are satisfied that you are eligible, they will send instructions to your super fund to release the money, OR you will apply to your super fund, who will then go to the ATO for approval to release the money.  The process will become clear later this year once it becomes relevant. The contribution limits apply to an individual, so couples will be able to get twice the benefit if they have the capacity to contribute. Also, it’s probably stating the obvious, but this scheme works by saving you tax.  If you don’t pay any tax, or very little, then there’s likely to be little benefit in the First Home Super Saver Scheme for you.  As a rough guide, I’d imagine it would only be relevant for those earning at least $30,000 per year. So should you care about the First Home Super Saver Scheme?  Well if you’re trying to save a deposit for a home, and earn more than $30,000 per year, then I would say yes. You will save on tax, relative to building up your savings in a normal bank account or investment, and that means more funds available for your first home deposit. The government estimates the scheme will cost the budget $250million in forgone tax revenue over 4 years.  So for those who can use it, why not claim your fair share of that booty?   Click here to get the toolkit   In the toolkit for this episode, we’ve summarised the key elements of the First Home Super Saver Scheme and we have a link to a great calculator that will tell you the gain to be made depending on what your income is, and how much you salary sacrifice.  It tells you the per year benefit and the result over 3 years of saving.  It’s really easy to use and it’s great to really quantify the value of this strategy, so go to the financialautonomy.com.au web site, go to the toolkits page, and download that. Important Information: This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication.

We all know that property prices in Australia have gone stupid in recent years.  One significant consequence of that has been that first home buyers have found it increasingly difficult to enter the property market.  Banks like to see at least a 10% deposit, and in the ideal world you’d have a 20% deposit to avoid mortgage insurance costs.  But when a first home can often cost north of half a million dollars, saving a deposit of that size can be really challenging, especially if you have rent to pay, and perhaps a HECS-HELP debt that sucks away a portion of your income. Fortunately there has been recognition of this problem by both sides of politics, and the solution that has been legislated in recent months is the First Home Super Saver Scheme. So what is it, and should the First Home Super Saver Scheme be on your radar as a strategy to enter the housing market?  In short, should you care about this new initiative? <a href="https://www.getdrip.com/forms/843625951/submissions/new" rel="nofollow" target="_blank">Click here to get the toolkit</a> It’s always good to start at the beginning, so before we dive in, let’s just consider the objective of the First Home Super Saver Scheme. Home ownership is considered a good thing for the nation.  Now as regular listeners and readers will recall, in <a href="http://financialautonomy.com.au/index.php/2017/11/15/i-cant-buy-a-home-am-i-financially-doomed-episode-19/" rel="nofollow" target="_blank"> episode 19</a> I looked at whether people who simply can’t enter the property market are financially doomed, and the conclusion that we found is certainly not.  However for those that do wish to own their own home, and that is most of us, the rationale is sound. Owning the roof over your head gives you long term financial security.  Sure, you’ll have a mortgage to repay for many years, but one day this will be paid off, and so in your later years, you’ll have your housing needs covered for relatively little ongoing expense.  This makes retirement that much more affordable, and also provides you with the security of knowing you can remain in your community without disruption. Building equity in your home may also enable you to finance things like starting a business, and provide funds for Aged Care needs towards the end of your life if needed. Home ownership also tends to align with a sense of equality.  I enjoy reading about the period around the French Revolution, in the late 1700’s.  In that era (and it was much the same throughout Europe and England), the wealthy few owned everything, and the vast majority eked out a living as best they could.  In that type of society, the average person had little control over their life, and got blown about by the whims of the wealthy elite, with their wars and ridiculous extravagances.  Australians have always resisted a society like this.  The concept of a fair go is ingrained in us.  And whilst in recent years it feels like perhaps we’ve headed a bit more towards the wealth of the nation become concentrated in fewer hands, the ability to access home ownership for all Australians is a really important foundation stone of our society. So the First Home Super Saver Scheme exists to help ensure that entry into the housing market remains possible. So how does it work?  Now I need to give a jargon alert here.  I always try very hard to not use financial jargon when I write pieces for Financial Autonomy. But because the First Home Super Saver Scheme feeds into the superannuation system, and because Australia’s superannuation system is almost a language all of its own, I won’t be able to avoid having some jargon in this post.  I’ll do my best to explain things in what I hope are easily understood terms, but if anything is unclear, don’t hesitate to drop me an email to clarify. <a href="https://www.getdrip.com/forms/843625951/submissions/new" rel="nofollow" target="_blank">Click here to get the toolkit</a> The First Home Super Saver Scheme enables you to make extra contributions into your superannuation account, and then withdraw them, plus the earnings, for the purposes of a first home deposit.  It’s rational because you are likely to save on tax, and typically the earnings on savings in a super fund will be better than what you would generate with a bank deposit. From 1 July 2018 it is possible to apply to withdraw voluntary contributions made to super after 1 July 2017 for a first home deposit. Voluntary contributions includes both pre-tax (salary sacrifice) and after tax contributions. Your normal superannuation contributions made by your employer are not relevant here – they remain preserved until your retirement.  The First Home Super Saver Scheme only applies to extra contributions that you make. The primary benefit exists for pre-tax contributions, so for the remainder of this post, I’m going to focus on these.  Now the jargon term here is “concessional contributions”.  They are concessional because these type of contributions receive special discounted tax rates.  For most people, concessional contributions occur via salary sacrificing to super.  That is, you arrange with your employer to have an amount taken out of your wage before tax is calculated, and that money is sent to your super fund, on top of the normal employer contribution that they would be making. Now if you’re self-employed, it’s even easier, as it’s probable that any contribution to super that you make will be concessional.  If your taxable income is quite low, this may not be the case, so get some advice here if that’s applicable. Because the money you’re sending to super comes out before tax, you’ll find that the impact on your pay packet is less than you would expect.  So for instance if you were on a wage of $70,000, and you salary sacrificed $500 to super, your take home pay would reduce by around $350, not the full $500 amount. This points to why the First Home Super Saver Scheme makes sense.  It’s all about the tax! When your salary sacrifice contribution arrives at your super fund, it will be taxed at 15%.  So taking the $500 example earlier, after tax is deducted $425 hits your super fund.  But as mentioned earlier, had you instead taken this money as normal take home pay, you would have only got $350 in your pocket, so $425 going into your super fund is a good win. Let’s look at some of the parameters around the scheme. Firstly, the maximum that you can withdraw from the scheme is $30,000 plus the earnings on those funds. The maximum amount that you can have released from a single years contributions is $15,000.  So in other words, in order to get the maximum out, you’d need to contribute for at least 2 years. Also, the normal superannuation contributions limits apply.  The most anyone can contribute to super in pre-tax/concessional contributions is $25,000, and this includes what your employer puts in.  So you might want to save $15,000 in a particular year into super to use in this new scheme, but if your employer already puts in more than $10,000, then you simply don’t have the head room within the contribution caps to be able to do this. When you then withdraw these savings, they will be taxed at your marginal tax rate, less a 30% tax offset.  This bit is confusing at first blush and will catch some people by surprise.  It exists to provide equity in the scheme.  Most people with access to this scheme will pay tax at around 30%, and so any tax applicable at withdrawal will be pretty minimal.  But of course the scheme is open to anyone, even someone earnings several hundred thousand dollars a year, so this mechanism is designed to ensure that higher income earners don’t get a disproportionate benefit from the scheme. I guess the takeaway is just to recognise that when you withdraw, it may be that some tax is deducted.  Rest assured though that where this is the case, you will still have been better off than had you saved the equivalent amount outside of the scheme, assuming earnings rates were the same. It’s also worth noting that you don’t need a new or separate super account for this scheme, nor do you need to tell your super fund that the contributions you are making are for this purpose. The actual mechanism for withdrawing your funds is a little unclear at this point as it hasn’t happened yet.  The tax office is responsible for approving the withdrawal. So either you will apply to the ATO to withdraw the funds, and then when they are satisfied that you are eligible, they will send instructions to your super fund to release the money, OR you will apply to your super fund, who will then go to the ATO for approval to release the money.  The process will become clear later this year once it becomes relevant. The contribution limits apply to an individual, so couples will be able to get twice the benefit if they have the capacity to contribute. Also, it’s probably stating the obvious, but this scheme works by saving you tax.  If you don’t pay any tax, or very little, then there’s likely to be little benefit in the First Home Super Saver Scheme for you.  As a rough guide, I’d imagine it would only be relevant for those earning at least $30,000 per year. So should you care about the First Home Super Saver Scheme?  Well if you’re trying to save a deposit for a home, and earn more than $30,000 per year, then I would say yes. You will save on tax, relative to building up your savings in a normal bank account or investment, and that means more funds available for your first home deposit. The government estimates the scheme will cost the budget $250million in forgone tax revenue over 4 years.  So for those who can use it, why not claim your fair share of that booty? <a href="https://www.getdrip.com/forms/843625951/submissions/new" rel="nofollow" target="_blank">Click here to get the toolkit</a> In the toolkit for this episode, we’ve summarised the key elements of the First Home Super Saver Scheme and we have a link to a great calculator that will tell you the gain to be made depending on what your income is, and how much you salary sacrifice.  It tells you the per year benefit and the result over 3 years of saving.  It’s really easy to use and it’s great to really quantify the value of this strategy, so go to the <a href="http://financialautonomy.com.au" rel="nofollow" target="_blank">financialautonomy.com.au</a> web site, go to the toolkits page, and download that. Important Information: This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication.

First Home Super Saver Scheme – should I care? Episode 33

Annie Raser Rowland

SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY    In this week’s episode I speak with author Annie Raser-Rowland about her book The Art of Frugal Hedonism.    Annie shares her tips on living a life of maximum happiness and fulfilment, whilst side-stepping some of the limiting societal expectations that we all face.    Annie certainly embodies our theme of Gaining Choice, and I’m sure there are ideas here that you can draw plenty from.  Link: https://www.frugalhedonism.com/

<a href="https://www.getdrip.com/forms/387275210/submissions/new" rel="nofollow" target="_blank">SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY</a> In this week’s episode I speak with author Annie Raser-Rowland about her book The Art of Frugal Hedonism.  Annie shares her tips on living a life of maximum happiness and fulfilment, whilst side-stepping some of the limiting societal expectations that we all face.  Annie certainly embodies our theme of Gaining Choice, and I’m sure there are ideas here that you can draw plenty from.  Link: <a href="https://www.frugalhedonism.com/" rel="noopener noreferrer nofollow" target="_blank">https://www.frugalhedonism.com/</a>

The Art of Frugal Hedonism with Annie Raser Rowland - Episode 104

Trent Taylor

Episode 67 – Trent Taylor and the 3 33 333 plan - work 3 days per week, 33 weeks per year, and earn $333k In this episode, we learn from Trent’s interesting story from being a pilot to building his business to gain choice and improve his family life. In this interview we cover:  His journey and transition from being a commercial pilot to changing his lifestyle by acquiring a franchise and then building his own business to give importance to being the father he wanted to be. Tips from Trent on how to handle your own business. The story of how he brought back a 3-day work week to his life and traveled around Australia with his family using his business model, and how he is teaching this to business owners. Common mistakes people make in their businesses. The process of the Clarity Plan and uncovering your “Why?”. Is being self-employed or running a business for everyone?   Links mentioned in the show Teach It Forward  Trent Taylor LinkedIn

Episode 67 – Trent Taylor and the 3 33 333 plan - work 3 days per week, 33 weeks per year, and earn $333k In this episode, we learn from Trent’s interesting story from being a pilot to building his business to gain choice and improve his family life. In this interview we cover: <ul> <li>His journey and transition from being a commercial pilot to changing his lifestyle by acquiring a franchise and then building his own business to give importance to being the father he wanted to be.</li> <li>Tips from Trent on how to handle your own business.</li> <li>The story of how he brought back a 3-day work week to his life and traveled around Australia with his family using his business model, and how he is teaching this to business owners.</li> <li>Common mistakes people make in their businesses.</li> <li>The process of the Clarity Plan and uncovering your “Why?”.</li> <li>Is being self-employed or running a business for everyone?</li> </ul> Links mentioned in the show <a href="http://www.teachitforward.com.au" rel="nofollow" target="_blank">Teach It Forward</a> <a href="https://www.linkedin.com/in/trent-taylor-1536002a/?trk=public-profile-join-page" rel="nofollow" target="_blank"> Trent Taylor LinkedIn</a>

Trent Taylor and the 3 33 333 plan - work 3 days per week, 33 weeks per year, and earn $333k - Episode 67

SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMYDebt is like the leg irons worn by convicts – it holds you back from gaining choice in life, from achieving Financial Autonomy. Yet if we aspire to own a home, then in all likelihood we’re going to need to take out a very significant loan – a home loan. So given the conflict between:  Our goal here at Financial Autonomy is to help you gain choice in life, and The majority of you will at some point take on a home loan, which potentially limits your choices in life  it makes sense to spend some time exploring how you can get this debt off your back as soon as possible. In this post we’ll run through the key strategies you can use to get that mortgage done and dusted.

<a href="https://www.getdrip.com/forms/387275210/submissions/new" rel="nofollow" target="_blank">SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY</a>Debt is like the leg irons worn by convicts – it holds you back from gaining choice in life, from achieving Financial Autonomy. Yet if we aspire to own a home, then in all likelihood we’re going to need to take out a very significant loan – a home loan. So given the conflict between: <ol> <li>Our goal here at Financial Autonomy is to help you gain choice in life, and</li> <li>The majority of you will at some point take on a home loan, which potentially limits your choices in life</li> </ol> it makes sense to spend some time exploring how you can get this debt off your back as soon as possible. In this post we’ll run through the key strategies you can use to get that mortgage done and dusted.

How to get your home loan repaid sooner – Episode 85

Tara Lucke

Today we chat with Co-founder and consultant with Tara Lucke from View Legal about the importance of Estate planning. Though it is not something we like to talk about, it is so important for protecting your assets and loved ones, no matter what stage of life you are at. In this interview we cover:  Making sure your hard earned money goes to the right place with a good estate plan What happens to your money if you don't have an estate plan Why you need consider having a Power of Attorney no matter what your age Why you may have more assets than you think How to avoid lawyers taking advantage of your estate The two important factors to consider in your estate planning once you have children Case studies of poor estate planning situations The problem of the "I love you" wills Why you need to consider Testamentary Trusts as part of your estate planning for asset protection and tax benefits The different roles of the Power of Attorney Conversations you need to have with family members Considerations for estate planning for Small Business owners    Links mentioned in the show Tara - LinkedIn Tara - Instagram

Today we chat with Co-founder and consultant with Tara Lucke from <a href="https://viewlegal.com.au/" rel="nofollow" target="_blank">View Legal</a> about the importance of Estate planning. Though it is not something we like to talk about, it is so important for protecting your assets and loved ones, no matter what stage of life you are at. In this interview we cover: <ul> <li>Making sure your hard earned money goes to the right place with a good estate plan</li> <li>What happens to your money if you don't have an estate plan</li> <li>Why you need consider having a Power of Attorney no matter what your age</li> <li>Why you may have more assets than you think</li> <li>How to avoid lawyers taking advantage of your estate</li> <li>The two important factors to consider in your estate planning once you have children</li> <li>Case studies of poor estate planning situations</li> <li>The problem of the "I love you" wills</li> <li>Why you need to consider Testamentary Trusts as part of your estate planning for asset protection and tax benefits</li> <li>The different roles of the Power of Attorney</li> <li>Conversations you need to have with family members</li> <li>Considerations for estate planning for Small Business owners</li> </ul> Links mentioned in the show <a href="https://www.linkedin.com/in/taralucke/" rel="nofollow" target="_blank">Tara - LinkedIn</a> <a href="https://www.instagram.com/taraluckelegal/" rel="nofollow" target="_blank">Tara - Instagram</a>

Tara Lucke - the importance of estate planning for those in their 20's, 30's, and 40's - Episode 34

Amy Irvine

This week we talk making the move from employee to self-employment with Amy Irvine a fellow financial planner based in New York. We’ve each made the transition to self-employment, though Amy more recently than me. We share our experiences. The positives gained, as well as the challenges. Moving to self-employment is definitely a pathway to gaining choice in life, so if it’s an option you are considering, I know you’ll get a tonne out of this episode. SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY 

This week we talk making the move from employee to self-employment with <a href="https://www.rootedpg.com/wine-and-dime-podcast" rel="nofollow" target="_blank">Amy Irvine</a> a fellow financial planner based in New York. We’ve each made the transition to self-employment, though Amy more recently than me. We share our experiences. The positives gained, as well as the challenges. Moving to self-employment is definitely a pathway to gaining choice in life, so if it’s an option you are considering, I know you’ll get a tonne out of this episode. <a href="https://www.getdrip.com/forms/387275210/submissions/new" rel="nofollow" target="_blank">SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY</a>

From Employee to Self employed - Amy Irvine and I share our Stories - Episode 126

How hard is it to get started?  I’m sure we’ve all had things that either need to be done, or that we’d like to do, but we put them off – shift them to the bottom of the pile or check out our Facebook feed instead. Procrastination is evil, and it afflicts us all at some point or another.  When it comes to Financial Autonomy dreams, I think procrastination is quite possibly the number 1 impediment to you moving forward.  So with this in mind, I’ve done some research on strategies to overcome procrastination woes, and today I’m going to share with you the key things I’ve learnt.  When it comes to achieving something great, something worthwhile, taking the first step is often the hardest part.  Perhaps it’s not knowing where to begin.  Or a sense of overwhelm – the goal feels like this huge inflatable ball – impossible to get your arms around and difficult to know where to grab it. Procrastination does not equal lazy.  It's likely driven more by fear of uncertainty or failure, or anxiety, which is often closely associated with overwhelm. But if you’re to make progress on your Financial Autonomy goals, then making a start is essential I've seen quotes and interviews from incredibly successful authors Stephen King and Jodi Piccoult, who both have routines that require them to just sit down and write.  It can always be edited latter, but waiting for the inspiration lightning bolt to strike is not the way achieve anything - just make a start! A common strategy deployed to overcome procrastination is to break down the thing – the goal, task or whatever - into smaller tasks, and then work through these small tasks one at a time.  I find Trello really helpful for this so you might like to check that out – it’s free for individual users. Create one column titled “Things to do” and create cards in there for all the components you can think of that need to be done to reach your goal.  Then you create two other columns, one titled “Doing”, and the other “Done”.  Work on one card at a time from the “things to do column, and progressively move them across into the “Done” column.  It really helps clarify your thinking and overcome the sense of overwhelm, and also self reinforces as your see the “Done” column start to fill up – you feel like you’re making progress. Tip 1 to overcoming procrastination – break the goal down into smaller components and deal with one of them at a time. Making a start is hard, but let’s say you’ve taken action on the first tip and broken your goals into small actionable pieces.  Another thing you might want to include is a time frame.  When will you get these done?  I personally wouldn’t set time frames for each small item you’ve identified, because before you start working on them, it’s tough to judge how long it will take – inevitably some tasks will take on the fraction of the time you would have guessed, whilst others are like an old woollen jumper your grandma made you – what starts of a as a single lose thread ends up going on and on the more you pull on it. So don’t set time frames at the individual task level would be my advice, but I think there is value in setting yourself times frames to achieve broader milestones. Let’s say your goal is to start up a side line business online.  Something to generate some extra income, and potentially even develop into your primary source of income one day if it really took off. So you break that down into lots of different things that you need to do – register a business name, buy the website address, get a logo designed, etc.  It might be helpful to set yourself a deadline that by the 1st of March, I’ll have my idea to a point where I can start showing people and getting realistic feedback.  A deadline like that provides flexibility around the individual components, but helps you stay the course, and push on when the energy levels flag a bit. I should add here too that what you don’t want to do is set unrealistic deadlines.  They will just create disappointment and frustration and potentially make you give up on your goal. Tip 2 – is set realistic time frames to get things done. Who hasn’t sat at the dinner table as a kids and seem something on the plate that made you want to run and hide – brussel sprouts, parsnip, fish – we’ve all got something.  And what did our wise elder folk advise?  Eat the things you don’t like first – don’t leave it to last. The same can definitely apply here to you overcoming your procrastination.  What is the ugliest bit that needs to get done if you are to make progress on your Financial Autonomy goals?  Can you tackle that first? I’ve certainly had instances, and I’d imagine you have too, where there’s some task you’ve been dreading, and so you’ve taken every opportunity to put it off.  But the day comes where it just has to get done.  So I grudgingly get started, and after 10 minutes realise, this isn’t nearly as ugly as I thought it would be. And with that ugly bit out the way, it’s downhill from here.  You’ve got momentum now. Tip 3 – can you tackle the worst bit first? Perfection.  A good thing right?  When it comes to overcoming procrastination, no.  A statement I know is often used in software development, but has broader application, is that perfection is the enemy of progress. We all want to produce the best that we can, but sometimes striving for perfection can mean nothing gets produced.  Much better to do the best you can within a reasonable time frame, and then improve from their - it's certainly an approach I've taken with this podcast.  I'm always thinking about how I can improve the audio quality, the structure of the program, how I speak - it goes on and on.  The point is, if I didn't release a single episode until I thought I had these things perfect, there'd never be a Financial Autonomy podcast. This train of thought aligns with the Lean Start Up methodology that I’ve mentioned in the past around Minimum Viable Product and the Build Measure Learn development cycle.  Rather than procrastinate in not launching your idea because you’re worried it’s not perfect, think instead about how you can get your idea out into the world and test whether it works – then improve from there.  Perfection is perhaps something to be achieved over time, or at least perhaps aspired to over time, rather than a hurdle that needs to be strided over before you can move forward. And this can be applied quite broadly.  We’re not just thinking about launching a new business idea here.  Perhaps it’s doing your household budget, or planning for early retirement.  Do the best you can, make a start, and then adjust and improve as you go. Tip 4 – don’t let the aim of achieving perfection prevent you from making a start, rather, aim to adjust and perfect over time. Ever write yourself up a to-do list either at the start of the day or the night before?  Perhaps you’ve felt a bit frustrated that you didn’t achieve what you’d hope to achieve the day before and so you’ve given yourself a good taking to and today you’re going to kick some gaols. As you achieve those things on your list, do you cross them out?  I certainly do.  It makes you feel good.  You’re getting somewhere. This is measuring progress and is a really helpful way to overcome procrastination and make progress on your goals. Ticking off a list makes you feel good.  It provides a positive feedback loop.  Tip 5 in overcoming your procrastination – measure progress. Could your environment be holding you back?  When you wre at school, studying for end of year exams, was it better to do it in a quiet place, like perhaps your bedroom, or in the family room with the TV going and people talking all around you? When you’re looking to put off doing something – procrastinating - distractions are your enemy.  Distractions are an enabler. “I really need to get my paperwork together to lodge my tax return, but, hang on, what’s that coming up next on TV?  The latest David Attenbourgh documentary of the life cycle of the African dung beetle? Sounds like something important. Perhaps I’ll just give that a watch and then I’ll do the tax stuff afterwards”. If you spend a good portion of your day in front of a computer, this can be an enormous distraction source.  Pop-ups that you’ve receive yet another spam email are not helpful – perhaps you could turn those notifications off.  Is social media your Achilles heel.  Maybe make a rule with yourself that you won’t check it between 9am and 5pm. We’re all susceptible to distractions, so if this is a factor in your procrastination, think about how you could escape them. Tip 6 – is your environment enabling your procrastination? As I mentioned at the start, in preparing for this piece, I did quite a bit of research.  One cause of procrastination that I’d never previously considered was the situation where you feel you need to ask someone else for their wisdom or help. But you feel uncomfortable asking. Perhaps you’re worried about interrupting them, and feeling like you’ll look stupid or weak in asking. So you don’t ask, and that gives you the excuse to put it off – make no progress. If this is your procrastination road block, then either you need to push past that concern and just ask, or, perhaps more helpfully, figure it out for yourself.  If you get onto Youtube and type “how do I …”, chances are you’ll find 300 videos showing you step by step instructions on whatever it is that you need to know.  If that doesn’t do it, then you could start Googling.  Or perhaps there is someone else you could ask. Tip 7 in overcoming procrastination is – figure it out for yourself. If you’ve played a game on your smart phone recently, chances are that in the course of the game you will have been given some sort of badge, or token, or coin.  These are valueless outside of the game, but game makers include them because we humans like rewards.  We like recognition that we are making progress or we have achieved something. So how about using that same approach to develop your procrastination beating strategy? Recognise progress and reward yourself.  So for instance, your motivating reward might be "if I can get 3 months in a row where I live within my budget and build up my savings account as planned, I'm going to have a weekend away down at the beach to celebrate”.  Awesome. Perhaps even you tell someone about the deal you’ve made with yourself, or maybe even invite them along – that would really up the ante.  I’m pretty confident it would help you push past your procrastination barrier. Tip 8 therefore is, recognise progress and reward yourself. Finally, if procrastination is something that impacts you, do some self-reflection on what impact procrastination is having on your life, and the circumstances that often lead to procrastination.  This insight might point to a strategy or combination of strategies that can enable you to move forward on your Financial Autonomy dream. I think I’m more susceptible to procrastination in the afternoon than in the morning.  I’m fresher in the morning, more energy, and therefore possess more of a willingness to push through. So by having an awareness of this, when I know there’s something I need to work on that I think will be difficult, and where therefore there’s a chance I might be inclined to put it to the bottom of the pile for another day, I’ll make that the first thing I do in the morning.  For me that’s a strategy that works. I used to have a housemate who had a routine that whenever she got on the phone to have a chat to a friend, she’d light up a cigarette and sit on the back step.  Like most smokers, she had a desire to quit smoking, but of course she procrastinated, in no small part no doubt due to the addictive qualities of nicotine.  But when she did finally decide to quit, she realised that she needed to change her phone catch-up with friends routine. Tip 9 – think about the circumstances that often lead to you procrastinating.  What can you do to prevent those circumstances from disrupting forward progress? Well, hopefully that gives you some good ideas to enable you to push through your procrastination barriers.  As always I’ve put together a toolkit for this episode and in that I’ve included a simple list of the 9 tips shared here.  I’ve also included the Dream Planner template, and listing of useful books that includes info on the Lean Start Up that I mentioned earlier, useful websites that includes a link to the Trello software that I also mentioned, and a piece on SMART goals.  So be sure to download that.  Our toolkits are free and hopefully really helpful in you taking impactful actions.  Here’s the 9 tips to help you overcome your procrastination demons:  Break the goal down into smaller components and deal with one of them at a time Set realistic time frames to get things done Can you tackle the worst bit first? Don’t let the aim of achieving perfection prevent you from making a start. Rather, aim to adjust and perfect over time. Measure progress. Is your environment enabling your procrastination? Figure it out for yourself Recognise progress and reward yourself Think about the circumstances that often lead to you procrastinating. What can you do to prevent those circumstances from disrupting forward progress? 

How hard is it to get started?  I’m sure we’ve all had things that either need to be done, or that we’d like to do, but we put them off – shift them to the bottom of the pile or check out our Facebook feed instead. Procrastination is evil, and it afflicts us all at some point or another.  When it comes to Financial Autonomy dreams, I think procrastination is quite possibly the number 1 impediment to you moving forward.  So with this in mind, I’ve done some research on strategies to overcome procrastination woes, and today I’m going to share with you the key things I’ve learnt. <a href="https://www.getdrip.com/forms/590310825/submissions/new" rel="nofollow" target="_blank"></a> When it comes to achieving something great, something worthwhile, taking the first step is often the hardest part.  Perhaps it’s not knowing where to begin.  Or a sense of overwhelm – the goal feels like this huge inflatable ball – impossible to get your arms around and difficult to know where to grab it. Procrastination does not equal lazy.  It's likely driven more by fear of uncertainty or failure, or anxiety, which is often closely associated with overwhelm. But if you’re to make progress on your Financial Autonomy goals, then making a start is essential I've seen quotes and interviews from incredibly successful authors Stephen King and Jodi Piccoult, who both have routines that require them to just sit down and write.  It can always be edited latter, but waiting for the inspiration lightning bolt to strike is not the way achieve anything - just make a start! A common strategy deployed to overcome procrastination is to break down the thing – the goal, task or whatever - into smaller tasks, and then work through these small tasks one at a time.  I find <a href="http://www.trello.com" rel="nofollow" target="_blank">Trello</a> really helpful for this so you might like to check that out – it’s free for individual users. Create one column titled “Things to do” and create cards in there for all the components you can think of that need to be done to reach your goal.  Then you create two other columns, one titled “Doing”, and the other “Done”.  Work on one card at a time from the “things to do column, and progressively move them across into the “Done” column.  It really helps clarify your thinking and overcome the sense of overwhelm, and also self reinforces as your see the “Done” column start to fill up – you feel like you’re making progress. Tip 1 to overcoming procrastination – break the goal down into smaller components and deal with one of them at a time. Making a start is hard, but let’s say you’ve taken action on the first tip and broken your goals into small actionable pieces.  Another thing you might want to include is a time frame.  When will you get these done?  I personally wouldn’t set time frames for each small item you’ve identified, because before you start working on them, it’s tough to judge how long it will take – inevitably some tasks will take on the fraction of the time you would have guessed, whilst others are like an old woollen jumper your grandma made you – what starts of a as a single lose thread ends up going on and on the more you pull on it. So don’t set time frames at the individual task level would be my advice, but I think there is value in setting yourself times frames to achieve broader milestones. Let’s say your goal is to start up a side line business online.  Something to generate some extra income, and potentially even develop into your primary source of income one day if it really took off. So you break that down into lots of different things that you need to do – register a business name, buy the website address, get a logo designed, etc.  It might be helpful to set yourself a deadline that by the 1st of March, I’ll have my idea to a point where I can start showing people and getting realistic feedback.  A deadline like that provides flexibility around the individual components, but helps you stay the course, and push on when the energy levels flag a bit. I should add here too that what you don’t want to do is set unrealistic deadlines.  They will just create disappointment and frustration and potentially make you give up on your goal. Tip 2 – is set realistic time frames to get things done. Who hasn’t sat at the dinner table as a kids and seem something on the plate that made you want to run and hide – brussel sprouts, parsnip, fish – we’ve all got something.  And what did our wise elder folk advise?  Eat the things you don’t like first – don’t leave it to last. The same can definitely apply here to you overcoming your procrastination.  What is the ugliest bit that needs to get done if you are to make progress on your Financial Autonomy goals?  Can you tackle that first? I’ve certainly had instances, and I’d imagine you have too, where there’s some task you’ve been dreading, and so you’ve taken every opportunity to put it off.  But the day comes where it just has to get done.  So I grudgingly get started, and after 10 minutes realise, this isn’t nearly as ugly as I thought it would be. And with that ugly bit out the way, it’s downhill from here.  You’ve got momentum now. Tip 3 – can you tackle the worst bit first? Perfection.  A good thing right?  When it comes to overcoming procrastination, no.  A statement I know is often used in software development, but has broader application, is that perfection is the enemy of progress. We all want to produce the best that we can, but sometimes striving for perfection can mean nothing gets produced.  Much better to do the best you can within a reasonable time frame, and then improve from their - it's certainly an approach I've taken with this podcast.  I'm always thinking about how I can improve the audio quality, the structure of the program, how I speak - it goes on and on.  The point is, if I didn't release a single episode until I thought I had these things perfect, there'd never be a Financial Autonomy podcast. This train of thought aligns with the Lean Start Up methodology that I’ve mentioned in the past around Minimum Viable Product and the Build Measure Learn development cycle.  Rather than procrastinate in not launching your idea because you’re worried it’s not perfect, think instead about how you can get your idea out into the world and test whether it works – then improve from there.  Perfection is perhaps something to be achieved over time, or at least perhaps aspired to over time, rather than a hurdle that needs to be strided over before you can move forward. And this can be applied quite broadly.  We’re not just thinking about launching a new business idea here.  Perhaps it’s doing your household budget, or planning for early retirement.  Do the best you can, make a start, and then adjust and improve as you go. Tip 4 – don’t let the aim of achieving perfection prevent you from making a start, rather, aim to adjust and perfect over time. Ever write yourself up a to-do list either at the start of the day or the night before?  Perhaps you’ve felt a bit frustrated that you didn’t achieve what you’d hope to achieve the day before and so you’ve given yourself a good taking to and today you’re going to kick some gaols. As you achieve those things on your list, do you cross them out?  I certainly do.  It makes you feel good.  You’re getting somewhere. This is measuring progress and is a really helpful way to overcome procrastination and make progress on your goals. Ticking off a list makes you feel good.  It provides a positive feedback loop. <a href="https://www.getdrip.com/forms/590310825/submissions/new" rel="nofollow" target="_blank"></a> Tip 5 in overcoming your procrastination – measure progress. Could your environment be holding you back?  When you wre at school, studying for end of year exams, was it better to do it in a quiet place, like perhaps your bedroom, or in the family room with the TV going and people talking all around you? When you’re looking to put off doing something – procrastinating - distractions are your enemy.  Distractions are an enabler. “I really need to get my paperwork together to lodge my tax return, but, hang on, what’s that coming up next on TV?  The latest David Attenbourgh documentary of the life cycle of the African dung beetle? Sounds like something important. Perhaps I’ll just give that a watch and then I’ll do the tax stuff afterwards”. If you spend a good portion of your day in front of a computer, this can be an enormous distraction source.  Pop-ups that you’ve receive yet another spam email are not helpful – perhaps you could turn those notifications off.  Is social media your Achilles heel.  Maybe make a rule with yourself that you won’t check it between 9am and 5pm. We’re all susceptible to distractions, so if this is a factor in your procrastination, think about how you could escape them. Tip 6 – is your environment enabling your procrastination? As I mentioned at the start, in preparing for this piece, I did quite a bit of research.  One cause of procrastination that I’d never previously considered was the situation where you feel you need to ask someone else for their wisdom or help. But you feel uncomfortable asking. Perhaps you’re worried about interrupting them, and feeling like you’ll look stupid or weak in asking. So you don’t ask, and that gives you the excuse to put it off – make no progress. If this is your procrastination road block, then either you need to push past that concern and just ask, or, perhaps more helpfully, figure it out for yourself.  If you get onto Youtube and type “how do I …”, chances are you’ll find 300 videos showing you step by step instructions on whatever it is that you need to know.  If that doesn’t do it, then you could start Googling.  Or perhaps there is someone else you could ask. Tip 7 in overcoming procrastination is – figure it out for yourself. If you’ve played a game on your smart phone recently, chances are that in the course of the game you will have been given some sort of badge, or token, or coin.  These are valueless outside of the game, but game makers include them because we humans like rewards.  We like recognition that we are making progress or we have achieved something. So how about using that same approach to develop your procrastination beating strategy? Recognise progress and reward yourself.  So for instance, your motivating reward might be "if I can get 3 months in a row where I live within my budget and build up my savings account as planned, I'm going to have a weekend away down at the beach to celebrate”.  Awesome. Perhaps even you tell someone about the deal you’ve made with yourself, or maybe even invite them along – that would really up the ante.  I’m pretty confident it would help you push past your procrastination barrier. Tip 8 therefore is, recognise progress and reward yourself. Finally, if procrastination is something that impacts you, do some self-reflection on what impact procrastination is having on your life, and the circumstances that often lead to procrastination.  This insight might point to a strategy or combination of strategies that can enable you to move forward on your Financial Autonomy dream. I think I’m more susceptible to procrastination in the afternoon than in the morning.  I’m fresher in the morning, more energy, and therefore possess more of a willingness to push through. So by having an awareness of this, when I know there’s something I need to work on that I think will be difficult, and where therefore there’s a chance I might be inclined to put it to the bottom of the pile for another day, I’ll make that the first thing I do in the morning.  For me that’s a strategy that works. I used to have a housemate who had a routine that whenever she got on the phone to have a chat to a friend, she’d light up a cigarette and sit on the back step.  Like most smokers, she had a desire to quit smoking, but of course she procrastinated, in no small part no doubt due to the addictive qualities of nicotine.  But when she did finally decide to quit, she realised that she needed to change her phone catch-up with friends routine. Tip 9 – think about the circumstances that often lead to you procrastinating.  What can you do to prevent those circumstances from disrupting forward progress? Well, hopefully that gives you some good ideas to enable you to push through your procrastination barriers.  As always I’ve put together a toolkit for this episode and in that I’ve included a simple list of the 9 tips shared here.  I’ve also included the Dream Planner template, and listing of useful books that includes info on the Lean Start Up that I mentioned earlier, useful websites that includes a link to the Trello software that I also mentioned, and a piece on SMART goals.  So be sure to download that.  Our toolkits are free and hopefully really helpful in you taking impactful actions. <a href="https://www.getdrip.com/forms/590310825/submissions/new" rel="nofollow" target="_blank"></a> Here’s the 9 tips to help you overcome your procrastination demons: <ol> <li>Break the goal down into smaller components and deal with one of them at a time</li> <li>Set realistic time frames to get things done</li> <li>Can you tackle the worst bit first?</li> <li>Don’t let the aim of achieving perfection prevent you from making a start. Rather, aim to adjust and perfect over time.</li> <li>Measure progress.</li> <li>Is your environment enabling your procrastination?</li> <li>Figure it out for yourself</li> <li>Recognise progress and reward yourself</li> <li>Think about the circumstances that often lead to you procrastinating. What can you do to prevent those circumstances from disrupting forward progress?</li> </ol>

Procrastination - 9 tips to combat this number one killer of Financial Autonomy dreams - Episode 17

How good would life be if you were debt free? No mortgage payments, or car loans.  No credit cards.  Imagine the weight off your shoulders.  The financial freedom you would gain.  The financial autonomy. Of course many people, probably most people, achieve debt free status over their working life.  This episode is not for those who have already achieved this milestone. This episode is for those of you on the journey.  For whom debt obligations comprise a significant portion of your regular income. We’re going to look at some strategies you might be able to use to get to debt free status quicker.  And that acceleration in clearing your debt brings you closer to whatever your financial autonomy goal is.  For the purposes of this article, I’m going to assume you, the listener or reader has debt, and debt you’d love to see the back of.  Given the title of this post, I’d imagine self-selection should deliver us this outcome. In the modern era, establishing yourself financially without taking on debt is near impossible.  The only way I could imagine this happening is either if you were fortunate to be born into a wealthy family who bought you a home, or else you never owned anything, perhaps rented your whole life. Most people I meet will have a mortgage, or if not a mortgage, then at least a loan for a car, with the hope or intention of having a mortgage one day.  Very often there are credit cards as well.  Sometimes there are debts for whitegoods or a holiday. Debt is not evil.  Borrowing to buy your house is likely to have been a smart investment.  Over time the home’s value rises and you hopefully reduce your debt, so that you build up equity in your home.  One day you will pay off the debt entirely and will have a roof over your head without having to find mortgage or rent payments each month – incredibly liberating. Debt to fund consumption on the other hand is not so wise, but who hasn’t done it?  Financed the brand new car when a 2 or 3 year old vehicle would have been significantly cheaper and still done the job.  Or come back from holidays with a credit card bill you couldn’t pole vault over.   I’ve been there and I’m assuming you have too. So how can we get these debts under control and fast forward your journey towards financial autonomy? Let’s say you decided you needed to lose a few kilo’s.  What’s the first thing you would do?  Would you jump on the bathroom scales and weigh yourself?  That would seem to be a sensible first step.  You need to know your starting point to understand the task ahead – do you need to lose 5 kilograms or 20?  You also want to measure progress.  You want to know if the actions that you are taking, say increasing your exercise, is paying dividends. So in planning to get your debt under control the first step is to establish where you are now.  I’ll put in the tool-kit for this episode a table you can fill in to help make sure you don’t miss anything. In putting this together, you’ll get an accurate picture of how much income you need to generate each month to cover your debt repayments, the different interest rates on each loan, and your total loan balance. It’s also helpful when putting together your list of debts, to establish whether they’re tax deductable or not.  Later, we want to decide which debt to focus on clearing first.  Typically you’d focus on the debt with the highest interest rate, but if it were tax deductable, that could alter the thinking, so it’s useful to know the tax status of each debt. If you have any debt that is tax deductable, you’ll probably already know about it, but to clarify, tax deductable debt arises when the thing you bought with the money you borrowed, generates taxable income.  The most common example is an investment property.  You borrow to buy the property, and the property then brings in rent.  The rent is taxable, and the interest on the debt associated with buying the property is tax deductable. Tax deductable debt could just as easily be for buying shares, a business, and in some cases a vehicle where you use it to generate income. Something that comes up from time to time when ascertaining whether a debt is tax deductable, is which asset the debt is secured against, versus the thing you bought with the money from that debt. The debt on your home is not tax deductable – your home doesn’t generate any income.  But what if you buy another home, and keep your old place as a rental.  You will borrow against you previous home and use the money to buy the new home.  Now people will often assume that given the debt is against the property that is now a rental, it would be tax deductable, but that is wrong.  Tax deductibility has nothing to do with what asset is used as security.  Tax deductibility is determined by how the money that you borrowed was used.  In this case the money was used buy your new home, something that won’t generate any taxable income, and so the interest on that debt is not tax deductable. If you’ve got any uncertainty as to whether a debt is tax deductable or not, best to give your accountant a call to clarify. Anyhow, back to your list of debts and their details.  You’ve now got your starting point.  If you want, you could also write down a list of your assets and their values, and then subtract the total debt value from the total asset value to determine your Net Worth.  For some people, tracking Net Worth can be an empowering way to reinforce the positive progression they are making towards financial independence. So which debt to focus on first?  Well logic would dictate that you’d start with the most expensive debt.  Let’s assume for the illustration that is a credit card debt. For the time being we’re going to leave the other debts as they are – just keep paying the repayments as you are.  Our focus will be clearing this credit card. So the low hanging fruit is to pay more off this debt.  A tax return, a bonus, pay rise or gift. Next, could this debt be refinanced at a lower interest rate?  This is often termed debt consolidation.  Now approach this with caution.  Debt consolidation can certainly lower your debt costs.  But some people simply use it as a way to take on more debt, so don’t head down this path unless you’re serious about getting your debt under control. The other potential trap with debt consolidation is the length of the new loan. Check out this example: Loan amount for both is $20,000 Loan 1 is at an interest rate of 10%, with a repayment term of 3 years. Loan 2 has a lower interest rate of 5%, and with a loan term of 10 years. So which loan results in you paying the least interest? Loan 1: $6,620 of interest paid by the time the loan is paid off in 3 years. Loan 2: $12,577 of interest paid by the time the loan is paid off in 10 years. So the key message here is consider debt consolidation, but be wary of solutions where the loan term is stretched out significantly.  The banks or lenders aren’t your friend.  They survive by making money from you, so if you’re considering debt consolidation, make sure you understand your numbers – get some outside help if you need it. With credit cards, something you could look for is deals where you can transfer your card from one provider to another where they offer an interest free period on balance transfers, often for 6 or 12 months.  Now again, the credit card provider isn’t your friend.  They’re offering this in the hope you don’t pay off this debt, and they’ll make lots of interest from you at the end of the interest free period.  So be sure to really knuckle down on reducing the debt during the interest free period, and when that period ceases, look around to see if you could shift to another credit card provider with a similar deal.  Okay, so you have your debts listed, and you’ve prioritised them from most expensive to least expensive.  You’re keeping then all up to date, but focusing any extra repayments on the most expensive one first.  Awesome. Progress too slow for you though? The steps so far have been fairly painless.  But if you really want to make an impact on your debt, there’s one more thing you’d need to do. No lasting progress will be made unless you get your budget under control.  The hard reality is that if your debt challenges relate to personal debts like credit cards and car loans, you're in debt because you’ve been spending more than you're earning. You need to recognise and acknowledge that, and then take steps to rectify the situation.  What non-essential expenses can you cut?  Subscriptions for magazines, pay TV, or software.  Memberships to the gym or sporting club – would it be cheaper to just pay when you use the facilities?  Clothing.  Eating out. After housing, food is likely to be your next largest expense item.  Reducing what you spend eating out is the most obvious way to reduce expenses - bring your lunch from home and just eat at home whenever you can.  When buying your groceries, is there any branded products that could be replaced by no-name equivalents.  Think of other ways to play it smart - you feel like some beef for dinner, but do you really need that Eye Fillet steak?  Rump steak is about half the price and mince around a quarter.  Whole chickens are much cheaper by the kilo than chicken pieces.  Just watch a 3 minute video on Youtube on how to break down a chicken and you’re away. Think how you could save some extra dollars and then send that money towards your debt.  The more you reduce your debt, the less interest you pay to the bank, which means even more of what you pay each month goes towards reducing the debt, and so your loan reduction strategy just snowballs until one day …. YOU’RE DEBT FREE!!!! I hope this content has been helpful in getting your debt under control.  Be in touch if you need any assistance.  As with all of the Financial Autonomy posts, there is a free toolkit for you to download to help you take action.  In this one I’ve got the debt table that I mentioned earlier so you can get on top of things debt wise, our Budget Tool and also some useful books and web sites. Next episode we will be looking at Procrastination, so be sure to subscribe to the podcast to ensure you don’t miss out. 

How good would life be if you were debt free? No mortgage payments, or car loans.  No credit cards.  Imagine the weight off your shoulders.  The financial freedom you would gain.  The financial autonomy. Of course many people, probably most people, achieve debt free status over their working life.  This episode is not for those who have already achieved this milestone. This episode is for those of you on the journey.  For whom debt obligations comprise a significant portion of your regular income. We’re going to look at some strategies you might be able to use to get to debt free status quicker.  And that acceleration in clearing your debt brings you closer to whatever your financial autonomy goal is. <a href="https://www.getdrip.com/forms/832598006/submissions/new" rel="nofollow" target="_blank"></a> For the purposes of this article, I’m going to assume you, the listener or reader has debt, and debt you’d love to see the back of.  Given the title of this post, I’d imagine self-selection should deliver us this outcome. In the modern era, establishing yourself financially without taking on debt is near impossible.  The only way I could imagine this happening is either if you were fortunate to be born into a wealthy family who bought you a home, or else you never owned anything, perhaps rented your whole life. Most people I meet will have a mortgage, or if not a mortgage, then at least a loan for a car, with the hope or intention of having a mortgage one day.  Very often there are credit cards as well.  Sometimes there are debts for whitegoods or a holiday. Debt is not evil.  Borrowing to buy your house is likely to have been a smart investment.  Over time the home’s value rises and you hopefully reduce your debt, so that you build up equity in your home.  One day you will pay off the debt entirely and will have a roof over your head without having to find mortgage or rent payments each month – incredibly liberating. Debt to fund consumption on the other hand is not so wise, but who hasn’t done it?  Financed the brand new car when a 2 or 3 year old vehicle would have been significantly cheaper and still done the job.  Or come back from holidays with a credit card bill you couldn’t pole vault over.   I’ve been there and I’m assuming you have too. So how can we get these debts under control and fast forward your journey towards financial autonomy? Let’s say you decided you needed to lose a few kilo’s.  What’s the first thing you would do?  Would you jump on the bathroom scales and weigh yourself?  That would seem to be a sensible first step.  You need to know your starting point to understand the task ahead – do you need to lose 5 kilograms or 20?  You also want to measure progress.  You want to know if the actions that you are taking, say increasing your exercise, is paying dividends. So in planning to get your debt under control the first step is to establish where you are now.  I’ll put in the tool-kit for this episode a table you can fill in to help make sure you don’t miss anything. In putting this together, you’ll get an accurate picture of how much income you need to generate each month to cover your debt repayments, the different interest rates on each loan, and your total loan balance. It’s also helpful when putting together your list of debts, to establish whether they’re tax deductable or not.  Later, we want to decide which debt to focus on clearing first.  Typically you’d focus on the debt with the highest interest rate, but if it were tax deductable, that could alter the thinking, so it’s useful to know the tax status of each debt. If you have any debt that is tax deductable, you’ll probably already know about it, but to clarify, tax deductable debt arises when the thing you bought with the money you borrowed, generates taxable income.  The most common example is an investment property.  You borrow to buy the property, and the property then brings in rent.  The rent is taxable, and the interest on the debt associated with buying the property is tax deductable. Tax deductable debt could just as easily be for buying shares, a business, and in some cases a vehicle where you use it to generate income. Something that comes up from time to time when ascertaining whether a debt is tax deductable, is which asset the debt is secured against, versus the thing you bought with the money from that debt. The debt on your home is not tax deductable – your home doesn’t generate any income.  But what if you buy another home, and keep your old place as a rental.  You will borrow against you previous home and use the money to buy the new home.  Now people will often assume that given the debt is against the property that is now a rental, it would be tax deductable, but that is wrong.  Tax deductibility has nothing to do with what asset is used as security.  Tax deductibility is determined by how the money that you borrowed was used.  In this case the money was used buy your new home, something that won’t generate any taxable income, and so the interest on that debt is not tax deductable. If you’ve got any uncertainty as to whether a debt is tax deductable or not, best to give your accountant a call to clarify. Anyhow, back to your list of debts and their details.  You’ve now got your starting point.  If you want, you could also write down a list of your assets and their values, and then subtract the total debt value from the total asset value to determine your Net Worth.  For some people, tracking Net Worth can be an empowering way to reinforce the positive progression they are making towards financial independence. So which debt to focus on first?  Well logic would dictate that you’d start with the most expensive debt.  Let’s assume for the illustration that is a credit card debt. For the time being we’re going to leave the other debts as they are – just keep paying the repayments as you are.  Our focus will be clearing this credit card. So the low hanging fruit is to pay more off this debt.  A tax return, a bonus, pay rise or gift. Next, could this debt be refinanced at a lower interest rate?  This is often termed debt consolidation.  Now approach this with caution.  Debt consolidation can certainly lower your debt costs.  But some people simply use it as a way to take on more debt, so don’t head down this path unless you’re serious about getting your debt under control. The other potential trap with debt consolidation is the length of the new loan. Check out this example: Loan amount for both is $20,000 Loan 1 is at an interest rate of 10%, with a repayment term of 3 years. Loan 2 has a lower interest rate of 5%, and with a loan term of 10 years. So which loan results in you paying the least interest? Loan 1: $6,620 of interest paid by the time the loan is paid off in 3 years. Loan 2: $12,577 of interest paid by the time the loan is paid off in 10 years. So the key message here is consider debt consolidation, but be wary of solutions where the loan term is stretched out significantly.  The banks or lenders aren’t your friend.  They survive by making money from you, so if you’re considering debt consolidation, make sure you understand your numbers – get some outside help if you need it. With credit cards, something you could look for is deals where you can transfer your card from one provider to another where they offer an interest free period on balance transfers, often for 6 or 12 months.  Now again, the credit card provider isn’t your friend.  They’re offering this in the hope you don’t pay off this debt, and they’ll make lots of interest from you at the end of the interest free period.  So be sure to really knuckle down on reducing the debt during the interest free period, and when that period ceases, look around to see if you could shift to another credit card provider with a similar deal. <a href="https://www.getdrip.com/forms/832598006/submissions/new" rel="nofollow" target="_blank"></a> Okay, so you have your debts listed, and you’ve prioritised them from most expensive to least expensive.  You’re keeping then all up to date, but focusing any extra repayments on the most expensive one first.  Awesome. Progress too slow for you though? The steps so far have been fairly painless.  But if you really want to make an impact on your debt, there’s one more thing you’d need to do. No lasting progress will be made unless you get your budget under control.  The hard reality is that if your debt challenges relate to personal debts like credit cards and car loans, you're in debt because you’ve been spending more than you're earning. You need to recognise and acknowledge that, and then take steps to rectify the situation.  What non-essential expenses can you cut?  Subscriptions for magazines, pay TV, or software.  Memberships to the gym or sporting club – would it be cheaper to just pay when you use the facilities?  Clothing.  Eating out. After housing, food is likely to be your next largest expense item.  Reducing what you spend eating out is the most obvious way to reduce expenses - bring your lunch from home and just eat at home whenever you can.  When buying your groceries, is there any branded products that could be replaced by no-name equivalents.  Think of other ways to play it smart - you feel like some beef for dinner, but do you really need that Eye Fillet steak?  Rump steak is about half the price and mince around a quarter.  Whole chickens are much cheaper by the kilo than chicken pieces.  Just watch a 3 minute video on Youtube on how to break down a chicken and you’re away. Think how you could save some extra dollars and then send that money towards your debt.  The more you reduce your debt, the less interest you pay to the bank, which means even more of what you pay each month goes towards reducing the debt, and so your loan reduction strategy just snowballs until one day …. YOU’RE DEBT FREE!!!! I hope this content has been helpful in getting your debt under control.  Be in touch if you need any assistance.  As with all of the Financial Autonomy posts, there is a free toolkit for you to download to help you take action.  In this one I’ve got the debt table that I mentioned earlier so you can get on top of things debt wise, our Budget Tool and also some useful books and web sites. Next episode we will be looking at Procrastination, so be sure to subscribe to the podcast to ensure you don’t miss out. <a href="https://www.getdrip.com/forms/832598006/submissions/new" rel="nofollow" target="_blank"></a>

Getting your debt under control doesn't need to be difficult - Episode 16

SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY  This is the first of a two-part series. In this post we will explore what are the actual steps and mechanics involved in starting an investment portfolio? In the next post, I’ll explore how you should go about building your portfolio. I’ve been building investment portfolios for clients for 20 odd years now. What I’m going to share with you are the actual steps we use to deliver successful outcomes for our clients.

<a href="https://www.getdrip.com/forms/387275210/submissions/new" rel="noopener nofollow" target="_blank">SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY</a> This is the first of a two-part series. In this post we will explore what are the actual steps and mechanics involved in starting an investment portfolio? In the next post, I’ll explore how you should go about building your portfolio. I’ve been building investment portfolios for clients for 20 odd years now. What I’m going to share with you are the actual steps we use to deliver successful outcomes for our clients.

How to start an Investment Portfolio – Episode 78

Episode 63 – Why do investment markets have bubbles? If you’ve ever seen a graph of any share market, you will know that whilst over the long term it tends to go up, the graph isn’t a straight line. Markets will go up, up, up over several years, only to fall back for a year or two, before re-starting their upward climb. Research on United States investors shows that whilst over 20 years to the end of 2017, the S&amp;P500 share market index returned 7.2%, the average investor experienced a return of 5.29% per year. I don’t imagine Australian investors would be much different. This under-performance of investors has been observed for many years, so what’s going on? And how does it relate to market bubbles? Market bubbles, and their subsequent busts, reflect over-reaction. We bid up prices beyond that which makes sense, and then on the downward slope, we sell when we don’t need to, and prices go below what logic would dictate they should be. These extremes have nothing to do with balance sheets and profit and loss statements, and everything to do with human behaviour. In behavioural finance (for which one of the key founders, Richard Thaler, won a Nobel prize in 2017), the term used is herd behaviour. We sometimes also refer to it with the acronym FOMO – Fear Of Missing Out. Market bubbles don’t occur because investors are stupid. They happen because we’re human. We’ve learnt through thousands of years of evolution that if a lot of people are running in one direction, it’s probably wise to do the same. The luxury of waiting to confirm for ourselves that there is indeed a danger worth fleeing from, may well lead to our death. So when markets keep rising, as we’ve seen in Australia over the past decade with residential property for instance, or when they fall, like we experienced with global share markets through 2008, our inbuilt, human reflex, is to jump on the band wagon. Another thing that is happening is a concept known as Recency Bias. This is the human trait of disproportionally considering things that have happened recently, and dismissing older information. As an illustration of recency bias in action, if you make an initial foray into some shares, and in the first 6 months they rise 10%, then you're quite likely to put more money in. And if that also rises quite quickly, you start thinking about where you can borrow money from to invest some more. This positive feedback loop is how bubbles emerge. Interestingly the two most famous share market bubbles of the twentieth century, the bubble in American stocks in the 1920s just before the Wall Street Crash of 1929, and the Dot-com bubble of the late 1990s, arose from optimism surrounding the development of new technologies.  An amazing range of technological innovations including radio, automobiles, aviation and the deployment of electrical power grids arose during the 1920’s. The 1990s was the decade when Internet and e-commerce technologies emerged. The potential long term impact of these new technologies is hard to evaluate, which leaves plenty of room company share prices to climb, even when they are losing money. So why should you care about investment market bubbles? The answer ties in with the Dalbar statistics I mentioned in the introduction. An investor in the US could have earnt 7.2% over 20 years simply holding onto a well-diversified portfolio that reflected the index. Yet the average investor in fact only experienced a return of 5.3% because they followed the madness of the crowd. They bought and sold when they should have just left things alone. The selling is what does the real damage. There is no perfect time to buy, it’s only known with the benefit of hindsight. And the cost of waiting on the side lines can be significant. But the selling is something we can be smart about. To start with, don’t sell when markets are in a panic. Recognise the herd mentality and step back to consider what is right for you. In 2008, as markets declined, I had clients in their 30’s and 40’s asking if they should get their superannuation out of shares. I had to point out that they can’t touch that money until at least age 60, so short term falls are certainly not a reason to change plans. Indeed for accumulators, markets falls have the silver lining that you are a buyer, and prices are cheap. Also during that period I saw recency bias in action. People would say – “my balance has fallen x% this past year. If it keeps going like this for another 5 years, I won’t have enough to retire on”. But hang on, we know that the long term average return for growth type portfolio’s is around 8%. So why would you extrapolate last year’s down year and assume that’s what the future holds? Recency bias – applying disproportionate weight to recent returns. Rebalancing portfolios can be a useful tool. That’s the process of periodically selling down investments in particular asset classes that have done well, and re-allocating the proceeds to the underperforming sectors. So for instance if the Global Share portion of your portfolio had a very good year, you would sell down some of this holding, and reallocate it to the weaker sector, perhaps Australian Bonds for instance. Considerable research has shown that this rebalancing process can add significant value. But it goes against the grain. It’s the opposite of what we naturally want to do, so it requires discipline. To wrap up then, investment markets experience bubbles because humans make it so. And despite all the advancements in technology that we’ve seen in recent years, human behaviour hasn’t changed, so bubbles will continue to occur. So what should you? Be a long term investor. Ensure your wealth strategy won’t force you to sell when markets drop. And if your strategy doesn’t already have a rebalancing process, explore how you might be able to change things to gain this valuable feature.   Other posts you might find useful:  Bike paths, Bitcoin, and Risk Budgets  Investing – How to get started   Important Information: This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication.

Episode 63 – Why do investment markets have bubbles? If you’ve ever seen a graph of any share market, you will know that whilst over the long term it tends to go up, the graph isn’t a straight line. Markets will go up, up, up over several years, only to fall back for a year or two, before re-starting their upward climb. Research on United States investors shows that whilst over 20 years to the end of 2017, the S&amp;P500 share market index returned 7.2%, the average investor experienced a return of 5.29% per year. I don’t imagine Australian investors would be much different. This under-performance of investors has been observed for many years, so what’s going on? And how does it relate to market bubbles? Market bubbles, and their subsequent busts, reflect over-reaction. We bid up prices beyond that which makes sense, and then on the downward slope, we sell when we don’t need to, and prices go below what logic would dictate they should be. These extremes have nothing to do with balance sheets and profit and loss statements, and everything to do with human behaviour. In behavioural finance (for which one of the key founders, Richard Thaler, won a Nobel prize in 2017), the term used is herd behaviour. We sometimes also refer to it with the acronym FOMO – Fear Of Missing Out. Market bubbles don’t occur because investors are stupid. They happen because we’re human. We’ve learnt through thousands of years of evolution that if a lot of people are running in one direction, it’s probably wise to do the same. The luxury of waiting to confirm for ourselves that there is indeed a danger worth fleeing from, may well lead to our death. So when markets keep rising, as we’ve seen in Australia over the past decade with residential property for instance, or when they fall, like we experienced with global share markets through 2008, our inbuilt, human reflex, is to jump on the band wagon. Another thing that is happening is a concept known as Recency Bias. This is the human trait of disproportionally considering things that have happened recently, and dismissing older information. As an illustration of recency bias in action, if you make an initial foray into some shares, and in the first 6 months they rise 10%, then you're quite likely to put more money in. And if that also rises quite quickly, you start thinking about where you can borrow money from to invest some more. This positive feedback loop is how bubbles emerge. Interestingly the two most famous share market bubbles of the twentieth century, the bubble in American stocks in the 1920s just before the Wall Street Crash of 1929, and the Dot-com bubble of the late 1990s, arose from optimism surrounding the development of new technologies.  An amazing range of technological innovations including radio, automobiles, aviation and the deployment of electrical power grids arose during the 1920’s. The 1990s was the decade when Internet and e-commerce technologies emerged. The potential long term impact of these new technologies is hard to evaluate, which leaves plenty of room company share prices to climb, even when they are losing money. So why should you care about investment market bubbles? The answer ties in with the Dalbar statistics I mentioned in the introduction. An investor in the US could have earnt 7.2% over 20 years simply holding onto a well-diversified portfolio that reflected the index. Yet the average investor in fact only experienced a return of 5.3% because they followed the madness of the crowd. They bought and sold when they should have just left things alone. The selling is what does the real damage. There is no perfect time to buy, it’s only known with the benefit of hindsight. And the cost of waiting on the side lines can be significant. But the selling is something we can be smart about. To start with, don’t sell when markets are in a panic. Recognise the herd mentality and step back to consider what is right for you. In 2008, as markets declined, I had clients in their 30’s and 40’s asking if they should get their superannuation out of shares. I had to point out that they can’t touch that money until at least age 60, so short term falls are certainly not a reason to change plans. Indeed for accumulators, markets falls have the silver lining that you are a buyer, and prices are cheap. Also during that period I saw recency bias in action. People would say – “my balance has fallen x% this past year. If it keeps going like this for another 5 years, I won’t have enough to retire on”. But hang on, we know that the long term average return for growth type portfolio’s is around 8%. So why would you extrapolate last year’s down year and assume that’s what the future holds? Recency bias – applying disproportionate weight to recent returns. Rebalancing portfolios can be a useful tool. That’s the process of periodically selling down investments in particular asset classes that have done well, and re-allocating the proceeds to the underperforming sectors. So for instance if the Global Share portion of your portfolio had a very good year, you would sell down some of this holding, and reallocate it to the weaker sector, perhaps Australian Bonds for instance. Considerable research has shown that this rebalancing process can add significant value. But it goes against the grain. It’s the opposite of what we naturally want to do, so it requires discipline. To wrap up then, investment markets experience bubbles because humans make it so. And despite all the advancements in technology that we’ve seen in recent years, human behaviour hasn’t changed, so bubbles will continue to occur. So what should you? Be a long term investor. Ensure your wealth strategy won’t force you to sell when markets drop. And if your strategy doesn’t already have a rebalancing process, explore how you might be able to change things to gain this valuable feature. Other posts you might find useful: <a href="http://financialautonomy.com.au/index.php/2018/06/13/bike-paths-bitcoin-and-risk-budgets-episode-49/" rel="nofollow" target="_blank"> Bike paths, Bitcoin, and Risk Budgets</a> <a href="http://financialautonomy.com.au/index.php/2018/03/07/investing-how-to-get-started-episode-35/" rel="nofollow" target="_blank"> Investing – How to get started</a> Important Information: This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication.

Crackle & Pop! - Why do investment markets have bubbles - Episode 63

Brian Portnoy

Episode 64 – Money &amp; happiness - Brian Portnoy - The Geometry of Wealth I am joined by author Brian Portnoy in this episode as we talk about his book on money and happiness called The Geometry of Wealth. In this interview we cover:  What is “The Geometry of Wealth” about and what led and triggered him to write it. An elaboration of “Adaptive Simplicity”. The 4 C’s of the happiness element and how to practically apply it in our life. An explanation of the biggest definition of the book and the 3 symbols - circle, triangle and square. What are the ultimate drivers of success? Discussions on investments, asset allocations, building portfolios and diversification.   Brian’s advice for investors. The importance of having a financial advisor. Do we really need to retire early?    Links mentioned in the show Financial Autonomy Website Brian Portnoy LinkedIn Brian Portnoy Twitter Shaping Wealth Virtus

Episode 64 – Money &amp; happiness - Brian Portnoy - The Geometry of Wealth I am joined by author Brian Portnoy in this episode as we talk about his book on money and happiness called The Geometry of Wealth. In this interview we cover: <ul> <li>What is “The Geometry of Wealth” about and what led and triggered him to write it.</li> <li>An elaboration of “Adaptive Simplicity”.</li> <li>The 4 C’s of the happiness element and how to practically apply it in our life.</li> <li>An explanation of the biggest definition of the book and the 3 symbols - circle, triangle and square.</li> <li>What are the ultimate drivers of success?</li> <li>Discussions on investments, asset allocations, building portfolios and diversification.  </li> <li>Brian’s advice for investors.</li> <li>The importance of having a financial advisor.</li> <li>Do we really need to retire early?</li> </ul> Links mentioned in the show <a href="http://financialautonomy.com.au" rel="nofollow" target="_blank">Financial Autonomy Website</a> <a href="https://www.linkedin.com/in/brianportnoy/" rel="nofollow" target="_blank">Brian Portnoy LinkedIn</a> <a href="http://twitter.com/brianportnoy" rel="nofollow" target="_blank">Brian Portnoy Twitter</a> <a href="http://shapingwealth.com" rel="nofollow" target="_blank">Shaping Wealth</a> <a href="https://www.virtus.com" rel="nofollow" target="_blank">Virtus</a>

Money & happiness -  Brian Portnoy - The Geometry of Wealth - Episode 64

SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY One of the best ways to gain choice in life is to become self-employed, and a great way to bring that aspiration to life is by trying your hand at a Side Hustle. For the uninitiated, a Side Hustle is a business that you create as a second income to your primary source of making a living. It can be used to pay off some debt or build an investment, but it can also be a way to test out a business idea that could perhaps become your full time gig in the future. But there’s a problem. How do we find the time? In today’s post I’m going to share with you 8 ideas I’ve found that might help you side step this obstacle.

<a href="https://www.getdrip.com/forms/387275210/submissions/new" rel="nofollow" target="_blank">SUBSCRIBE TO OUR WEEKLY EMAIL “GAINING CHOICE” TO KEEP UP WITH ALL THINGS FINANCIAL AUTONOMY</a> One of the best ways to gain choice in life is to become self-employed, and a great way to bring that aspiration to life is by trying your hand at a Side Hustle. For the uninitiated, a Side Hustle is a business that you create as a second income to your primary source of making a living. It can be used to pay off some debt or build an investment, but it can also be a way to test out a business idea that could perhaps become your full time gig in the future. But there’s a problem. How do we find the time? In today’s post I’m going to share with you 8 ideas I’ve found that might help you side step this obstacle.

I don’t have time to start a side hustle - 8 tips to slay this dragon - Episode 76

The best podcast episodes on Startups. For anyone working in a startup, or anyone interested in the incredible stories behind how people built companies like Instagram, and Facebook. Offering both practical advice and insights, as well as the stories for how many of the biggest startups got to where they are today. Add episodes you're interested into your queue below!

OwlTail

Best Startups Podcasts

The best philosophy podcast episodes. Asking questions about how to live a better life, what it means to be and do good, to the idea of God. This topic includes episodes that bring about important questions that everyone should be asking themselves. Add episodes you're interested into your queue below!