Money musings, financial commentary plus the rambling wit and
wisdom of the team from Mozo - Australia's money info zone
Thinking of buying that dream home this year? What about annihilating your debt for good? Don’t rely on luck to stay on top of your money matters. Read our fun infographic to roll your way to financial health in 2012!
We recently launched a travel money section on Mozo to help Aussie travellers get more spending power when overseas. We tracked down writer and self confessed ‘Money Geek’ Kerry Lotzof in Paris, where she is currently living and working, and asked her to share some of her top tips for managing the budget when living abroad – here’s what she had to say:
Dream of hiking through South America, making it big in New York or busking your way through Europe on a ukulele? These tips will ensure your savings last the distance, so you can focus on having the time of your life.
A little wave of foreign-city anxiety is perfectly normal but how you manage it can mean the difference between being an impulsive (quickly impoverished) tourist and a savvy (cashed up) traveller.
5 practises of savvy travellers
Taking money overseas has come a long way since travellers cheques were in vogue (thank goodness.) Their more robust descendants, prepaid travel cards, are a safe and convenient option for travellers but be warned, not all cards are made equal. Before you sign up, double check the card you apply for has the following features:
Also, make sure you compare any specialty travel products with your existing bank cards or frequent flyer reward cards – sometimes the answer is already in your wallet.
Visiting the ATM less frequently, withdrawing larger amounts at a time and wherever possible using your credit card facility to make purchases will save you a bundle in expensive international ATM fees.
A few hundred dollars a month dedicated to ‘splurging’ will mean you won’t have to deny yourself any of those crazy indulgent experiences. Eating stale bread and backpacker-bequeathed nutella for several days to make up for the cost of a private box at L’Opera may be worth it, but (believe me) it isn’t fun.
Some of the best experiences come from sharing meals with locals and being open to visiting (and hosting) fellow travellers. Of course, free accommodation and home cooked meals will save you a bit of money but it’s the life long friendships that make the experience truly priceless.
Kerry is a freelance writer and “money geek” with a clandestine passion for vintage fashion and adventure travel. Currently living and working in Paris, France, she lives by the philosophy that it is possible to have your baguette and eat it too.
6 weeks is a long time to try and keep kids entertained, especially if you are on a budget. It seems that everything there is to do costs so much money right? Actually, there are lots of things you can do during the holidays, which are not just for kids. It’s the time when many attractions will offer discounts, so even if you don’t have kids it can be a great time to take advantage of school holiday specials for you and friends.
Google “Free things in xyz” with xyz being the city you live in or surrounds. You will be amazed at what comes up. You’ll find everything from local botanical gardens, bushwalks, festivals, movies in the park and more. Be a tourist in your own city. There are probably many things you could do or have wanted to do, but just never got around to.
Check your local library to see what school holiday activities they are running. Many have story time; movie days, exhibitions and crafts kids can go and do.
Many attractions have 2 for 1 deals on for the holidays. Keep an eye out in your local newspaper, on the radio or check out coupon sites such as Groupon, Spreets and similar.
Camping can be a cheap, virtually free holiday once you have some equipment. All you really need is a tent, an esky, sleeping bags, torches and camp mats. Everything else you can just substitute with stuff from home. There are many free camping locations around Australia and it can be fun to go off on a road trip.
Decorate cupcakes, make chocolate fudge, experiment with making ice cream, cook biscuits and slices or try out some recipes to take on a picnic. There is an endless supply of recipes you can try. They don’t all have to be food either you can make experiment and make slime, glue, puffy paints, bath crayons, bath bombs, natural beauty remedies and more depending on age and interests of your kids.
As for crafts, look up different types of origami, recycle t-shirts into headbands, do collages, hot air balloons, teach your kids to sew, cross stitch or knit. Make marble runs, piñata’s, robots and more.
Staying at home can get boring, not matter how many activities you plan. Why not try geo caching if you have a GPS? It’s a lot of fun for all ages. Alternatively do a scavenger hunt in your local area. It can either be one where they collect items or use a camera to photograph them.
Sleeping over at friend’s houses or having friends over was one of the things I loved about weekends and school holidays as a kid. It was so much more fun to have someone else to play with. We’d watch movies, make cubby houses, play games like hide and seek, chasings, marbles, ride skateboards and more. We’d make popcorn, pancakes and cakes together. Getting together with some other parents to arrange some sleep overs or play days can mean you each get a break and it stops some of the school holiday boredom.
What were your favourite things to do during holidays when you were younger or what are some of the things your kids love to do now?
Kylie Ofiu is the author of 365 Ways To Make Money. On her blog she writes about ways to make and save money.
Is online shopping all it’s cracked up to be? Find out with our Xmas infographic…
Guest Blog: Kylie Ofiu
On my recent trip to America I did a bit of research into what was the best way to use my money while there. I found my bank didn’t charge much for transactions, but if I wanted to withdraw US dollars from them before leaving they would charge me an arm and a leg.
There are a few things you can do to save on fees and charges when travelling overseas.
1. Compare banks
Different banks charge different fees for different things. You might find one bank has high fees for using ATM’s overseas, (as much as $5) but their over the counter currency conversions are really cheap. Find out which one has the best deal for you and use them.
Banks often charge these fees, but also a fee when changing the currency as well as a commission for converting the currency which can be anywhere from 1.5% – 3.65%. You can compare these fees with the Mozo debit card fee finder. Getting it right can save you a lot.
2. Negotiate
Try negotiating with your bank. If you find a better deal elsewhere ask your bank if they will match or beat it. It is cheaper for them to keep a customer rather than try and get a new customer, so it is in their best interests to keep you happy.
3. Get the right cards
I say cards because not all cards are accepted everywhere. There are 4 different types of cards you can use overseas: prepaid travel cards, credit cards, debit cards and you regular ATM card. A prepaid card is just like a credit card except you put your money on it before you go. Credit cards are great as they are easy to replace and many such as AMEX have excellent reward schemes attached. A debit card enables you to use your money, but it can be used as a credit card. A regular ATM card is your own money again, but the fees can be steep.
Compare different cards to find which will be right for you, or take a couple of options such as a credit card and a prepaid card.
4. Deal in large sums of money
To really avoid transaction fees deal in large sums of money. This can be risky as you are carrying around cash instead of a card, and you cannot get cash back if it is lost or stolen, whereas you can cancel credit cards, get them replaced and prove certain expenses were not made by you.
Taking out a large sum of money at one time instead of regular smaller sums means you will only have one transaction fee instead of several.
Kylie Ofiu is an author, blogger and writer. On her blog she writes about ways to make and save money.
We recently launched a new investment section on Mozo and our money forum, Mozo answers has been abuzz with questions from the Mozo community about investment products and fees. We are thrilled to have guest blogger, Colin Williams on the Mozo Blog to spread his knowledge about financial adviser fees. Colin is the founder of humble savers and has over 25 years experience in the financial planning industry.
Trying to decipher the fees charged by a financial adviser can be one of the most difficult tasks that you’ll ever undertake. Many investors simply give up trying to understand the all of the fees and choose a financial adviser based upon their personality (the one everyone likes!). This can be a big mistake.
If you have an investment portfolio of $200,000 and it earned a gross 8% (before fees) for the next 20 years, the combined financial adviser and product fees could eat away about 30% of your return.In total around $350,000 can be paid in fees!
The vast majority of financial advisers in Australia are tied, in one form or another, to a major financial institution. These institutions have a similar approach to financial planning and as a result, clients will often have a standard portfolio and fee structure as shown below:
Now, let’s take a closer look at all the fees related to a typical $200,000 investment portfolio. All fees are approximate.
The fees will vary from one financial adviser and one institution to another. The main purpose of this article is not to precisely question each fee, but rather to demonstrate how the combined fees will affect your investment portfolio.
The up-front fees. You are affectively down $4,500 (over 2%) before you make any investment earnings. These fees often look very high and in some cases they are. However, these up-front fees are not normally the major concern.
The big issue is the on-going fees. While an adviser fee of 1% does not sound so high on its own,when combined with the products, the total on-going fees can easily be around 2.55% of the investment portfolio.
If your portfolio had a gross investment return of say 8%, the net return after the fees, in our example is 5.45%. Or to put it another way, more than 30% of your investment return is being eaten away in fees! This situation takes on a greater importance, as when your investment grows, so do the fees. This is highlighted in the table below.
As you can see, if your investments earned a Gross Return of 8%, with no fees attached, the balance would be $932,191. With fees charged at 2.55%, your $200,000 has only grown to $578,045. The fees charged over this period will have been $354,146. ($932,191 – $578,045 = $354,146). Ouch I hear you say!
There are alternatives, such as:
As we often say here at humble savers, “Forewarned is forearmed”. There’s a real battle out there for your hard earned cash and you should do all that you can to build and protect your financial future.
While the Reserve Bank this month dropped the official cash rate, fixed rate home loans have been coming down for a number of months. There are still some great opportunities for borrowers to lock in a rate that is lower than where variable rates currently sit.
Fixing is not for everyone but it provides certainty that you don’t get with variable rates. You won’t benefit from any further reductions in rates, but you’re insulated against any increases affecting your rate or repayment amount until your fixed term expires.
When it does expire you’ll have a choice of re-fixing or reverting to a variable rate.
If you don’t re-fix when your fixed term expires you will revert to a variable rate. You need to be aware that unless you’ve already been paying a yearly fee on your loan, most lenders don’t roll you on to their most competitive variable rate. More often than not, you’ll end up on their most expensive (standard variable) rate. Ouch!
It is unfair that an existing customer coming out of a fixed rate should be dumped onto a rate rarely sold to new customers. If you’re lucky, you may have an opportunity to convert to a cheaper variable product but it typically won’t happen unless you initiate the process and you may have to pay a fee to do so. Check these details before you sign up for your fixed rate loan. Ask your lender what rate you will revert to at the end of your fixed rate loan.
The Greater’s Great Rate Fixed Rate Home Loan and Ultimate Fixed Home Loan both automatically revert to rates lower than our standard variable rate (at no cost) should a borrower choose not to re-fix.
This is one of the reasons why the comparison rates on our fixed rate loans are usually much lower than our competitors, even if the headline (advertised) rate isn’t. Remember to always look at the comparison rate when choosing a loan. Mozo lists comparison rates as well as advertised rates.
David Bryde is a Mozo Answers Industry Insider and Product Manager for the winner of Mozo’s 2011 People’s Choice Award for Best Home Loan Provider, Best Saving Account Provider and Best Building Society, Greater Building Society. He also contributes to the Greater’s Blog.
Sometimes you need a personal loan. I needed one last year when my car broke down. Even with the cost of interest and fees, getting a car loan was thousands of dollars cheaper than fixing up my old bomb and driving that.
We went looking at new cars. There were some great deals on which on the surface, looked fantastic such as low interest, but once I looked deeper into the contracts, the fine print would have cost us a lot.
There are two types of finance at car yards, the car dealer finance and factory finance and it’s important to understand there are differences between this type of finance and a regular car loan or personal loan from a bank or credit union.
Most car dealers will give you on the spot finance. Car dealers bet on the fact that you will see something and want it instantly. Whilst some car yards have their finance backed by major banks such as St George, others do not. When looking into dealer finance, there are a few things to watch for:
You can negotiate and request those clauses to be removed or amended to reduce the cost. Also go in to the dealer at the end of the month. Dealers get commission on loans as well as the cars and at the end of the month, they will be keen to secure a bonus and be more likely to negotiate.
When we were looking, we were offered extras worth thousands in an effort to secure the loan and sale because it was the end of the month. We spoke to a few different dealers, all with offers and one even said, “Look, it’s the end of the month and I haven’t made my bonus. If you buy this, I get a bonus”.
These cheap deals are often only on certain models, not the entire range of cars and the interest saved is usually less than if you negotiated a lower price with finance from elsewhere, so they are not always a great deal.
By knowing what to look out for, what to negotiate on and the differences in loans, you are much better prepared to secure a good deal and save yourself thousands.
Kylie Ofiu the author of 365 Ways To Make Money, a blogger and freelance writer. On her blog, Kylie Ofiu she discusses real ways to make and save money.
Many of you are undoubtedly aware of credit card purchase protection. I know not everyone has it, but when you look at what is on offer from some of the companies now it can be well worth it.
Traditionally credit card purchase protection has only really covered you if goods were lost or stolen in a set time frame, but now there are so many more features included, such as price protection, and some even offer it for free with the card.
What if you could be guaranteed to never miss out on a sale? No matter what, you will always get the best price on an item. How? Well there are some cards now which allow you to claim back the difference in price if you purchase an item for a certain price than see it on sale later, sometimes for just 1 -3 weeks after, sometimes much longer.
For example, you purchase some swimmers at David Jones, then the next week you see the exact swimmers on sale for $50 less. You contact your credit card company, use the credit card purchase protection and you get refunded the $50! How amazing is that? Even if there was a small monthly fee for it, as is the case with some cards, it would still be worth it.
Even larger items like washing machines are included which means you could save hundreds of dollars by paying with your credit card and keeping an eye out to see if what you bought goes on sale later.
What is even better is it’s all done online and as long as you are keeping track of your finances, what you buy and how much you pay, it will be easy to use your credit card to make your money work hard for you.
Kylie Ofiu blogs about ways to make and save money at her site Kylie Ofiu She is also the author of 365 Ways To Make Money and a freelancewriter.
It’s that time again, and everybody’s talking about Mozo’s second annual People’s Choice Awards. Has it already been a year?
For those who live under a rock, the People’s Choice Awards are like parent-teacher night for bankers, with a dash of ‘financial Logies’ glamour. A massive 23,000 votes were cast (in the form of ratings from banking and insurance customers around Australia) to determine the best performing providers. Mozo’s election officials counted the beans and certified the results.
And the big winners?
The Greater Building Society achieved a record average rating of 9.2 out of 10, and scooped the Awards of Best Building Society, Best Home Loans and Best Savings Accounts.
ING Direct was voted Australia’s Best Bank for the second year running for its consistently competitive products, and also scooped Best Bank Accounts and Most Trusted Bank.
Victoria Teachers Credit Union was again voted Best Credit Union with a towering rating of 9.1 out of 10, and earned the extra credit of being the only provider not to receive a rating less than 5.
The top 18 providers all scored an average rating above Mozo’s ‘Fan’ score of ‘8 and above’, while the next 24 managed the ‘Fair’ score of ‘5 to 7’.
As for the losers, well, not everybody’s going to be happy with their report card. The Big Four as a group performed rather averagely, although there were winners and losers amongst them. Westpac scooped the awards for Best Term Deposits and Best Personal Loans,while the Commonwealth Bank copped a caning for its super sized home loan rate rise last November, being rated Australia’s worst home loan provider and worst Big 4 bank.
NAB marketed ‘break-ups’ and ‘asterisk-killing’ instead of mega rate rises, and won fans as a result. NAB’s average customer rating climbed to 7.1 out of 10, vaulting it to pole position as Australia’s favourite Big 4 bank.
And at the bottom of the pack? American Express gained more than a point over last year’s rating but still only managed 5.6 out of 10, while HomeSide, Citibank and GE Money each ended up with a ‘Fail’ rating of below 5 points.
The average rating for the whole class fell from 7.4 in 2010 to 7.2 in 2011, which suggests that less empty marketing hype and more real actions that benefit customers are needed in 2012.
For the full run-down of winners and losers, check out Mozo’s People Choice Awards page.