HammockTalk: Summer 2013 newsletter

Summer2013

Welcome to the

SUMMER EDITION

Contact UsHammock Financial GroupTel 07 4642 1179Email [email protected] www.hammockfinancial.com.auAddress Lvl 1, 516 Ruthven St, ToowoombaPostal PO Box 1869, Toowoomba Qld 4350

Hammock Financial Group Pty Ltd (ABN 88 150 832 232) is an AuthorisedRepresentative of AMP Financial Planning Pty Limited.

Any advice contained in this newsletter is of a general nature only and does not take intoaccount the objectives, financial situation or needs of any particular person. Therefore,before making any decision, you should consider the appropriateness of the advice withregard to those matters.

For important information about us, our services and to read our Financial Services &Credit Guide (FSCG) please visit www.hammockfinancial.com.au.

Summer Edition2013

Summer 2013

Spender or Saver?Are you the spender in the relationship where yourpartner always questions how the money has beenspent at the end of the month? Or is it the other wayaround?

In this issue...

p. 4

p. 8Great Silly Season Savings TipsChristmas is fast approaching. Here are 20 greatsavings tips to help your dollar go further during thesilly season!

Control your debt before it controls youDebt can be very handy but can quickly get out ofcontrol. Here's a simple plan to take control of “bad”debt. It includes some astounding statistics that mayshock you!

p. 12

Busting the myths about financial adviceMany don't seek financial advice because they'reembarrassed about their financial situation, don'thave enough money to invest or think it's onlyrelevant for retirement planning. We bust 5 mythsand facts about financial advice.

p. 14

Resolutions for your New YearIf your New Year resolution is to get a better handleon your finances, our tips might be just what youneed!

p. 16

Super for contractorsJust because you’re a contractor doesn't mean youshould forget about building your retirementnest egg. If you’re a contractor, or know someonewho is, here’s some food for thought to help clean upyour finances!

p. 20

Ideas that won't break the budgetChristmas Special! We've scoured the internet forclever ideas every day people are coming up with.From cheap and tasty recipes, clever usesfor everyday things and DIYs that will blowyour mind, we're on it and want to share it with you!

p. 23

Saver

Spender

Is your other halfspending your

investment funds?Are you a spender or

a saver?

or

We are told thatmoney is usuallyone of the maincauses ofrelationshipproblems andbreakdowns...... or is it?

Many experts agree that it’s really a lack ofcommunication and compromise aboutmoney.

Money has meaning beyond the numbers ona page or notes in your wallet. It is stronglylinked to our sense of security and self worth.If you and your partner argue about moneyyou’re not alone. Most do!

So how can we improve our ‘financialcommunication’?

Discuss your differences1Spender or saver - which one are you?Some like to spend their pay before the end of the month and hope the credit card still has roomto cover possible shortfalls. Others like saving for a rainy day.

Are you the spender in the relationship where your partner always questions how the money hasbeen spent at the end of the month? Or is it the other way around? Why have we attractedsomeone who is completely different to us on the financial platform?

The reality is that we all have different emotional and financial security needs. In manyrelationships one person wants to spend the money they are earning to enjoy luxuries and livelife in the moment. However the other person may feel a constant need to save for a securefuture. We find that spending habits, attitudes and beliefs about money tend to be noticed moresignificantly when you think about starting a family.

It’s my parents’ fault!We learn our spending and savings patterns by watching our parents. These habits tend to staywith us throughout our adult lives. Sometimes this means we behave the same way, butsurprisingly some of us often take a polar opposite approach to our parents.

Communication is the keyIt can be very useful to share your observations and experiences with your partner in a non-judgemental and non-confronting way. You could perhaps start by describing the financial styleof your immediate family members and who you think you are most like. These can be trickyconversations, but if you can find a middle ground it can make a world of difference to your longterm happiness.

Budgeting is not about going wiithout3In fact a realistic budget allows you to enjoy your own spending style with the confidence thatyou are also getting ahead.

Ensure your budget is realistic by estimating your future expenses from past expenses and trackyour regular and incidental costs for a few months. Cater and plan for these expenses.

Ideally your budget will allow you and your partner investment options (eg set aside an amountfor an investment property) to assist in your wealth creation.

Plan to secure a financial future together2Understanding each others’ differences and establishing open communication will help inestablishing your agreed plan. Ask your partner about their own personal dreams and long termfinancial goals.

Looking at the bigger picture helps you decide if you are both prepared to make sacrifices to yourcurrent lifestyle (however small) to achieve long term wealth. Remember you both need to befinancially responsible AND financially satisfied. More often than not, common financial groundcan be found.

One pot or two?4The decision about whether to opt for a traditional combined household fund is a big one andreally depends on your personal circumstances.

These days many couples keep their own accounts and contribute equally to householdexpenses. Others do both - a joint account and their own separate accounts.

This is a subject that requires an open discussion about your circumstances (eg if one person isearning a much higher income or there are children to support).

Should you have a financial controller?5Some relationships work really well with both people actively involved in the finances. Howeverthe picture we often see is that the person who has strengths in this area becomes responsiblefor household finances.

Because it can be a thankless task for those holding the purse strings, we recommend a regularjoint review of your financial situation, budget and goals.

Regardless of who is managing the finances, everyone needs their own spending money. Thisis especially important to help reduce the power imbalance that often exists when there is onlyone income earner.

‘Although you mayinherit your spending,saving and investing

habits through influencesand experiences, if it is notgenerating the results youdesire then it is possible to

change it.’

There is a huge financial future available formost people. The reason 80% of us hold backis that we fail to take control of our financialposition and do not have a full understandingof our investment options. We don’t know whatwe don’t know, and at the risk of seeminguneducated we are usually too afraid to ask.

We also often hear that “my partner is averseto investing”, so nothing happens. It is OURrole to help you understand what is in YOURbest interest based on a discussion of yourindividual circumstances.

Are you ready??If you think you are ready to explore your options after reading this article, we encourage you tohave a chat with us and explore them together in a safe, non threatening environment.

Simply call the office and say “It’s time for a coffee”.

We look forward to hearing from you.

GreatSilly SeasonSavings Tips

Christmas is fast approachingHere are 20 great savings tips to help your dollar go further during

the silly season!

With Christmas and New Year fast approaching, it’smore important than ever to manage your expensesand keep within your means.

Here are 20 great savings tips to help your dollar gofurther during the silly season!

Use a budget planner to help you sort out your budget and find out howmuch money you've got left to spend on holidays and gifts. For a freeonline budget planner, simply go to www.amp.com.au and click on the‘Advice & Guidance’ tab and then click on ‘Calculators’ to locate thebudget planners towards the bottom of the Calculator page.

If you don’t feel your current credit card is the best for you, do a creditcard check at www.infochoice.com.au or www.canstar.com.au to find

out if there are better offers. Make sure you read the fine printcarefully, as there could be entry and exit costs and other charges to

watch out for.

Sign up to Skype (atwww.skype.com) and getfree phone and video callsto your loved ones.

Check outwww.christmaswarehouse.com.aufor great discounts on Christmasdecorations and gifts.

Buy Christmas presentsearly to get better deals.

Make your own lunch during the workingweek. You can save hundreds of dollars

doing this, rather than buying lunch atyour local take-away shop.

Use supermarket petrol discount coupons.

Check out shopping coupons and voucherslikewww.hotdockets.com.au

www.clevercoupons.com.au;www.whypayfullprice.com.au; andwww.valuvouchers.com.au

If you’re over the age of 60, wherepossible, ask for a seniors discount or callSenior Shopper offers on 1300 366 265, ifyou live in Qld, NSW, the ACT or Vic.

Instead of splurging on hotels and other holidayaccommodation, why not go camping? This is one of thecheapest forms of holidaying.

Switch off your hot water and all unnecessaryelectrical appliances (except fridges, freezers etc.)

when you go on holidays.

Replace all your conventional light bulbs with energy-saving lightbulbs. This will help to reduce your electricity intake and savehundreds of dollars for years to come.

For just $1 a day,you can get a bargainone-way driving holiday atwww.standbycars.com.au.

Sign up to discount airline newsletters like Jetstar’s JetMail orVirgin Blue’s V-mail to find out about the latest special offers,promotions and sale fares.

Check out booking sites like www.wotif.com.au andwww.lastminute.com for great flight and hotelaccommodation deals.

If you’re planning to travel overseas during theChristmas and New Year’s break, make sure you gettravel insurance. The benefits and peace of mind couldfar outweigh the cost.

Cut-back on your alcohol intake for a month. This could saveyou hundreds of dollars and can also improve your health.

A great cost-effective way to entertain your family for anight is to take a drive around your suburb or another

nearby suburb to see the Christmas lights. It canbecome a family tradition.

Shave your head throughout the year and save hundreds ofdollars on haircutting costs. You can also raise muchneeded funds for the Leukaemia Foundation by signing uptowww.worldsgreatestshave.com!

Take the time to clear out your house. Clearing outold stuff makes way for new stuff and if you sellyour ''treasures'', you could make a fortune. Tryselling online through www.ebay.com.au orwww.gumtree.com.au.

Control your debtbefore it controls youDebt can be very handy but can quickly get out of control,leaving you stressed and anxious. Here's a simple plan totake control of “bad” debt, giving the you a betterunderstanding of the advantages of “good” debt. It includessome astounding statistics that may shock you!

Debt can be a wonderful slave but anunforgiving master.

Australia, in common with many westerncountries, has an extraordinarily high level ofconsumer debt. The number of new credit cardaccounts opened in the 12 months prior toDecember 2012 increased by 210,000. But thescariest figure is the accruing interest on creditcards – at the time of writing is in excess of$6,300,000,000 per annum (that’s over sixbillion dollars) and growing by the second! Youcan see why banks LOVE credit cards!

Please don’t misunderstand; properly manageddebt can be a great tool. Most people need it tohelp them purchase their first house and othernecessities in life.

It is also very important in investment planning,enabling you to purchase income-producinggrowth assets, such as shares or property, toboost your long-term wealth. In this case theinterest may also be a tax deduction.

The problem arises when debt is used for basicliving costs or purchasing depreciating assets.This is further aggravated when the interest rateapplied is too high and there is no planned debtreduction program in place. When interest ratesincrease most people focus on their mortgagerate and forget that the interest on their creditcards sneaks up too. Most major cards arecharging around 15 to 20% with manycustomers paying only the minimum amountand sinking further into debt.

If you are not paying off your credit cards in fullevery month, have other high interest loans, oryour current level of debt is keeping you awakeat night, you need to seriously consider yourfinancial direction.

Follow this simple plan and take control of yourdebt before it takes control of you...

1. Restructure your debt by consolidating whatyou owe at the lowest available interest rate.Keep ONE credit card and cut up the rest!

2. Seek professional help from a financialadviser to plan your financial goals and how toachieve them.

3. Prepare and keep to a budget to ensure yourcost of living is within your means and put a debtreduction program in place.

4. Beware of “interest free” offers and makesure you can afford to pay off the entire balanceby the end of the contract. A lot can happen in50 months so don’t get behind on yourpayments.

5. Ensure new loans are only for a productivepurpose, such as investing, and can be justifiedby potential future profit.

6. Avoid the mental attitude of “keeping up withthe Joneses” – the laugh will be on them whenthe debt collector turns up at their door!

All of the above steps will make for a mucheasier life in future years ... not to mentionsleeping better every night!

Take control

debt today!

of your

Sources:www.rba.gov.au Credit and charge card statistics current as at December 2012.https://www.moneysmart.gov.au/borrowing-and-credit/credit-cards/credit-card-debt-clockhttp://www.canstar.com.au/credit-cards/compare-everyday-spender/

ABOUTFINANCIAL

Five myths and facts about financialadvice

ADVICE

THE MYTHS

BUSTING

We all look for professional advice when it comes to building a home or diagnosing an illness.But according to research, between 60 and 80 per cent of Australians have never used afinancial planner.*

Many people don't seek financial advice because they're embarrassed about their financialsituation, they don't have enough money to invest or they think it's only relevant for retirementplanning.

Everyone can benefit from visiting a financial planner whether they're young or old, high or lowincome, single or married. Financial advice can help people save money, protect their lovedones and build wealth for the future.

Five myths and facts about financial advice:Myth: I don't have enough money to invest Fact: You don't need a large lump sum to invest or a high disposable incomeEveryone, regardless of their income or how much savings they have, can benefit fromvisiting a financial planner. You don't need to be a high net worth individual to reap therewards of advice. Financial planners can help with everything from budgeting anddebt management, through to superannuation and retirement planning.

Myth: It's only for people who are close to retirement Fact: It's never too early to seek advice Many people don't think it's necessary to visit a financial planner until they'reapproaching retirement. While it's never too late to seek advice, it's also never tooearly. Young people who are just starting their working life can benefit greatly fromfinancial advice. People who establish good money habits early on are less likely todevelop financial problems later in life. Also, the earlier a person starts buildingwealth, the better. For instance, salary sacrificing into super from a young age candramatically boost a person's nest egg due to the effects of compound interest.

Myth: I don't need it and I don't have the time Fact: It's one of the most important things you can do Money issues are often delegated to the 'too hard basket', but there can bedevastating consequences if people bury their heads in the sand. Most Aussies don'thave adequate insurance to protect their loved ones in the event of loss of income.The big four are life insurance, income protection, total and permanent disabilityinsurance (TPD) and trauma insurance. It's also vital to have a will to ensure the rightfunds end up in the right hands at the right time and an enduring power of attorney toenable someone to look after your affairs if you’re incapable. People with kids alsoneed to consider guardianship.

*Australian Securities and Investment Commission, Report 224, Access to financial advice in Australia,December 2010

Myth: Planner fees are too costlyFact: You can't afford not to have financial advice Many people avoid visiting a financial planner because they are worried about thecost, but when you consider all the benefits of advice, it is good value for money.Planners sometimes offer a free initial consultation or a discounted first fee so peopledon't have to engage in the complete financial planning process straight away.People who want to spread out the cost can opt for scaled advice, which addressessingle financial issues at a time, such as budgeting, insurance or superannuation.

Myth: I won't get independent advice Fact: It's all about choosing the right planner It's important for people to take the time to find someone they trust. Look for a licensedplanner who does not receive up front commissions on super, managed funds orretirement products. Look for a planner who charges a fair fee for the advice processand a modest fee for implementation. Ask for recommendations from friends,colleagues and family, or contact the Financial Planning Association for a referral.Finances are very personal, so people need to look for someone who understandsthem and their situation.

LEARN HOW

TO MAKE

AWESOME + SMARTFINANCIAL DESCIONSTHRU EVERY

STAGE OF LIFE

Phone 07 4642 1179www.hammockfinancial.com.au

RESOLUTIONS

NEW YEAR

2014

for your

2014

If your New Year resolution is toget a better handle on your

finances, our tips might be justwhat you need!

Getting fit, starting healthy eating habits and getting your personal finances ontrack are among the New Year resolutions for many Australians. But, often, asthe months pass by these resolutions are forgotten. However, if you plan tomake a a resolution to improve your finances in the new year, our simple andpractical tips may be just what you need.

Get into the habit of maintaining a household budget. Spending more than you earn can quicklyland you on the rollercoaster of debt, so make a promise to start living within your means. There isa budget planner calculator at amp.com.au/calculators which can help or we can provide a morepersonalised service for you.

2. Separate your 'wants' from your 'needs'

1. Start with a budget

Do you really need the $100 per month pay TV package? Or the latest model car? Knowing whatsuits your needs is key to managing your money better. Remember, it’s a trade-off between whatyou have today and your long-term wealth.

3. Use credit cards wisely

Interest rates on credit cards are sometimes as high as 20% or more, so it's important to pay offcredit card debt quickly and within the interest-free period. To do this you will need to make morethan the minimum repayments each month. Also consider rolling different credit card debts intoone low-interest bearing loan facility.

4. Have an emergency fund

As a contingency for life's unexpected expenses, it's vital to have an emergency fund or access tocash through a mortgage redraw facility or offset account. Try to have at least three months’ salaryin savings.

6. Review your mortgage

An effective way to save interest on your home loan is to make extra repayments each month. Themonthly repayment on a $300,000 mortgage over a 25-year term at 7.25 per cent is around $2,168.But you could pay off the loan 10 years earlier and save $158,277 in interest if you increased yourmonthly repayments by $575. You may also want to consider making fortnightly repayments asopposed to monthly repayments, as this may also save you interest in the long term.

7. Have a debt strategy

Pay off 'bad' debt like credit cards first, as they usually have the highest interest rates. As theinterest rates on home loans are much lower than other loans, this type of debt should moreaggressively reduced after your credit card and other high interest loans are under control.

8. Protect your family

Consider taking out life insurance and income protection through your superannuation. Withchanges in regulation, it’s now possible to obtain income protection insurance from some superfunds until age 65, if cash flow is a problem.

To truly ensure that you get the best strategy to improve your financial position,call us today. We are qualified to provide you with the best advice to help youget your New Year off to a flying start, and ensure that it stays that way year inand year out.

5. Get savvy with your super

AMP has introduced a simple service to consolidate your super online for free atamp.com.au/consolidate or you can also call 133 888. And consider topping up yoursuperannuation through salary sacrifice. The benefit is in the compound interest. Lower incomeearners may also be eligible for the Government Co-contribution scheme.

Just because you’re a contractordoesn’t mean you should forgetabout building your retirement nestegg.

superannuation forcontractors

What you should know about buildingup your super

There’s a lot of upside to being a contractor,but it’s important to keep in mind thebenefits you may not be getting to makesure you’re not short changed inretirement. If you’re a contractor, or knowsomeone who is, here’s some food forthought to help clean up your finances!Q: Are you a contractor or an employee?

You’re contracted for a set task or project. Yousubmit invoices for the hours you work. If thissounds like you, you may be one of Australia’s980,000 independent contractors[1]. About 8.5per cent of Australian workers are employed onthis basis[2].

Not all contractors are the same and everyone’ssituation is different.

If you’re not sure about your exact employmentstatus, you can use the Australian TaxationOffice’s Employee/contractor decision tool.Then you can use the Superannuationguarantee eligibility decision tool to work out ifyou’re entitled to super. Both tools can beaccessed at ato.gov.au.

Your classification has important implications foryour tax and superannuation. Determiningwhether an individual contractor is an employeefor Superannuation Guarantee purposes is atax issue for the individual or the entitycontracting the individual. It’s a complex areaand it’s a good idea to consult a tax adviser.

Q: What’s the upside to contracting?

Contracting can be a great experience,particularly if you’re after more control over howmuch you work, or what you’re working on. Byforgoing some of the benefits of permanentemployees, you can also earn more money.

Similarly, if you’re coming back from a careerbreak or joining the workforce for the first time,securing a contract role can often be easier,and sometimes lead to permanent employment.

Q: That’s great. But what’s the downside?

If you’re sick, you will not get paid sick leave.And when it comes to super you may not haveany super contributions made for you.

Employees have superannuation contributionspaid into a nominated superannuation fund bytheir employer. But as an independentcontractor you might be on your own. You’reresponsible for funding your own super, just asyou’re responsible for paying your own tax.

980,000 – number of independent contractors in Australia8.5% – percentage of Australians employed as contractors

Q: So, why does super matter so much?

When you’re starting to make your way in theworkforce, the lack of super may not seem likea big deal. After all, retirement is a fair way off.And you’ve got more money in your backpocket for Friday night. And when you’reyounger, it’s easy to think of super as ‘lostmoney’. You can’t access it now, so it’s out ofsight and out of mind.

But as you establish yourself in the workforceand build up a bigger retirement nest egg, yourperception of super is likely to change.

If you’re contracting later in your career—forexample, after returning from parental leave—or know someone who’s winding back theirhours leading up to retirement, like one of yourparents, you’ll know all about the importance ofsuper.

Super can be the difference between achievingthe lifestyle you want in retirement and needingto rely on the aged pension. Spend too manyyears as a contractor and you could be playingcatch-up if you don’t start making regular supercontributions.

Q: How can you build up your super?

You need to think about the best long-termstrategies to build your retirement nest egg.• Make regular contributions from your pre-taxincome into your super.• Take account of government incentives, likeco-contributions and spouse contributions.• Review your investment mix of growth anddefensive assets to make sure it reflects yourlife stage and risk tolerance.

Now is the time to spring into life, take controlof your retirement savings, and really own yourtomorrow. For more information, call us today.

[1] Australia Bureau of Statistics. (19 April 2013). Media release: Decline in independentcontractors. [2] Independent Contractors Australia. Independent Contractors: How many (Australia).independentcontractors.net.au

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IDEAS THAT WON'TBREAK THE BUDGET

We've scoured the internet for clever ideasevery day people are coming up with. Fromcheap and tasty recipes, clever uses foreveryday things and DIYs that will blow yourmind, we're on it and want to share it withyou!

Got a clever idea or tasty recipe?Email us at [email protected] and you could seeyour idea in our next newsletter!

Christmas Special

For many of us, the thought of buying enough gifts for ourfamilies and friends has us in a financial panic. Instead ofspending all you have (and eating 2 minute noodles allJanuary), why not save some $$ while still giving everyone a giftwith this fun holiday craft? This tutorial makes four amazingchalkboard mugs, which is four less gifts you need to buy!

Link: http://ow.ly/rhCtV (We found this at www.sheknows.com)

DIY Chalkboard Mugs

Okay, hands up which parents are already counting down thedays till school returns? Keep your kids occupied this sillyseason with some fun Christmas crafts like these Christmastree ornaments. Time will fly for both kids and mum and dad!

Link: http://ow.ly/rhDCj (Found at blog.hellolittleone.com)

Homemade Kids Christmas Ornaments

With all the parties and festivities comes a lot of overindulgenceso we thought this healthy summer dessert would go down atreat. Not only does it take advantage of the delicious stone fruitavailable this time of year, it also only takes a mere 5 minutes towhip it up!

Link: http://ow.ly/rhCUP (We found this at www.justataste.com)

5 Minute Frozen Peach Yogurt

These adorable Christmas candies are something the kids canget involved in and help make. Would make great gifts forteachers or neighbours. Just substitute 'white candy coating'with melted white chocolate and viola!

Link: http://ow.ly/rhD7D (Found at www.recipesweet.net)

Sweetheart Pops