the mozo blog

Booze, burritos and big nights out. Student life is full of vices but can your wallet handle the squeeze? A little sacrifice could lead to BIG rewards… check out our slick infographic to see how!

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!

Is online shopping all it’s cracked up to be? Find out with our Xmas infographic…

Kylie Ofiu, Guest Blog

This week is the first week of spring and is the perfect opportunity to spring clean your finances. Too often we set and forget many things such as our insurance which can cost us a lot of money. If I left my insurance as is each year instead of comparing it would have cost me $200 this year alone, let alone the $1,500+ difference there was when I was under 25. That’s right, one year by comparing and changing just my insurance company I saved $1,500 on that bill. By reviewing your finances with the following 5 steps can save you hundreds, even thousands of dollars! This year I have saved $510 just on step one.

1. Compare your providers. Compare all your bills such as car insurance, phone and electricity to see if you really are getting the best deal. You might not need everything in your contract and could downsize or switch providers for a better deal.
2. Transfer any debt. If you have a credit card you are struggling to pay off, check to see if there are any interest free or low interest offers on and transfer your debt. Cancel the old card and use the interest free time to pay down your debt. Do this with any debt, personal, home and car loans too.
3. Check direct debits. Sometimes we set up direct debit for bills or subscribe to offers and then forget about them. They money keeps coming out of our account whether we are still using the services or not. Go through your statements to see if you have an unnecessary direct debits coming out of your account.
4. Work out a budget. A budget is a plan for your money. It doesn’t need to be complex. Write out your expenses, divide them by how often you get paid (e.g. 52 for weekly) then compare the total expenses to your income. If they are more than your income, see where you can cut back. Then stick to it!  Try an online budget calculator.
5. Set up automatic savings. Ask payroll at your work to direct debit savings from your pay before you even get it. This way you won’t miss it. Alternatively set up a direct debit through your online banking to transfer a set amount out the day after pay day.

It doesn’t take long to go over your finances and save yourself money. A quick comparison online and changing is all you need to save yourself money.

Kylie Ofiu is an author, freelance writer and blogger. Her blog Kylie Ofiu is all about ways to make and save money as well as her goal to be a millionaire by 30 (April 2015).

But where should you stash your hard-earned cash in this tumultuous economic climate?

With stock markets around the globe in free-fall this week, we asked the Mozo community what advice they had to protect hard earned super and savings. Mozo Answers Guru Katie responded with a provoking question of her own. We thought it was worth sharing with our blog readers, and wondered what other Australians think…         

Is superannuation a con?

Many people are starting to wonder. Nothing can really protect people from the uncertainty of the stockmarket in relation to superannuation. Unfortunately, unless you are one of the really lucky few who are reaping the benefits in retirement from a (now unavailable) superannuation scheme that is indexed against the CPI on DEFINED BENEFITS, you will join the majority of us punters on the “Super Roller Coaster”!

The tax benefits, whilst substantial if you are prepared to stick it out for decades, may not offset the severe losses experienced by many in a undulating market which has set some people back to the same level they were on five years ago!

If you do the math and invested $200,000 in a term deposit five years ago at the, then, available 8% you would be $80,000 better off even when you deduct tax. Whilst the gains MAY be made over 30+ years, the share market (forming the base of superannuation investment) is a gamble. Of course, one must NEVER change their options or attempt to withdraw Super when it is at its lowest as it will compound your losses severely. However, I really do believe that Super is over-hyped and under-performing.

The REAL danger with Super is that it is also subject to ongoing political interference. Don’t be surprised if, in the near future, the federal government will prevent anyone from taking LUMP SUMS and change the laws so that everyone will need to eke out a pension. As huge numbers of Baby Boomers are retiring, the federal government will be prodding and poking away at the methods of superannuation payments to ensure they will not have the burden of paying out massive lump sums over time.

Personally, I believe that it is preferable to invest in an investment property over time which, at least, will provide you with a steady rental income. Alternatively, take the lump sum as soon as you hit 60 (or 65) and put it in a Term Deposit. The HIGHS may not be as good as the occasional uplift in Super, but you can sit on the money (without worry) and sleep at night knowing exactly how much you are going to get each month.

That means a lot when you’re retired – who needs the stress?

I was at the ATM getting some cash out to pay for my traditional Sunday night pizza when it dawned on me that in a lot of ways, the different types of bank accounts are very much akin to different types of pizza, with the account as a base and the features as toppings. With Sunday’s pizza now just another delicious faded memory, I’ve decided to fully explore this notion and in doing so, identify the best slices of bank account goodness out there.

Slice 1: The Margarita

Sometimes the best pizza is the simplest, and there’s no simpler pizza than an old fashioned margarita. In banking terms, this is the standard transaction account which gives you full access via EFTPOS, debit card and branch but no interest paid on the account. Not all margarita pizzas are created equal mind you and my slice of choice is NAB’s Classic banking account. It’s got no monthly fee, unlimited withdrawals from NAB and rediATMs as well as unlimited free access to your money via EFTPOS, internet banking, phone banking, branch and cheque book. There are similar accounts such as the Suncorp Everyday Basics account and the Citibank Plus Transaction account, but NAB has the widest distribution of ATMs and branches.

Slice 2: The Supreme

If you’re the type who wants it all, from pineapple to parmesan, nothing beats a Supreme pizza. In banking terms, you’ll be looking for a bank account that not only acts as a transaction account, but also pays high interest. My choice of supreme is the AMP eASYSaver (you’ll have to forgive their appalling capitalisation policy in naming the thing though!). You get 5.15% interest on every dollar, unlimited free access through internet, NAB and rediATMs, EFTPOS and an optional free chequebook.

There are other high-interest transaction accounts such as the BankWest Hero account, but AMP has the highest rate as well as no conditions with regards to balances or deposits. One thing to note however, is that this account has a $5 monthly fee, so you’ll need to hold a balance of at least $1,200 at all times to make the interest cover the fee.

Slice 3: The Gourmet

If you see yourself as a bit of a gourmand, there are niche accounts providing extra ATM benefits on top of being great everyday accounts as well.

The Moroccan Lamb and Tandoori Chicken banking equivalents come hot from the ovens of ING Direct and BankWest. ING DIRECT’s offering is the Orange Everyday account. There’s no monthly fee and unlimited free ATM withdrawals at any Australian ATM if you withdraw more than $200. On top of that there’s unlimited free EFTPOS transactions and ING Direct even pays you $0.50 if you withdraw more than $200 through EFTPOS. A few of those and you’ve got yourself some free garlic bread!

The second slice of choice is the BankWest Zero Transaction Account. Again, there’s no monthly fee, unlimited free ATM withdrawals at any ANZ, Commonwealth, NAB, Westpac or BankWest ATM as well as unlimited free EFTPOS transactions. The only catch is that you need to deposit $2000 a month into the account to maintain it, otherwise you’ll be switched over to another BankWest account.

The Crust: Final Thoughts

So next time you’re siting idly at home waiting for the delivery boy to arrive, instead of wallowing in your own hunger, use the time to see if there’s a bank account that’s more suited to your taste. It’s a slice of advice that could make things a lot easier for you.

Still hungry for information on bank accounts? Finish off that pizza and head over to Mozo Answers!

It’s the third week since we launched Mozo Answers and the questions just haven’t stopped coming! A big topic of conversation this week has been about debt consolidation, mainly squared around the best way to consolidate and pay off numerous debts as one.

There are a fews to do this, namely: using a credit card balance transfer, debt consolidation personal loan or through borrowing on your home’s equity. Each have different benefits and drawbacks depending on your circumstances, so I’ve run the rule over them to help give you a clearer picture.

Option 1: Credit Card Balance Transfers

In my opinion the best option is to take advantage of one of the balance transfer credit cards. Simply pay off all your debts with an existing card, then transfer the balance onto a new card with a balance transfer offer. Some cards are currently offering extremely low rates for long periods of time. For example, ANZ has 2.9% for 18 months, NAB has 0% till the end of the year and Westpac has 0.99% for 9 months on particular cards. Using a standard credit card* and an average credit card balance of $3,000, I used Mozo’s nifty Credit Card Health Check tool to run a few scenarios to illustrate the potential savings to be had.

As you can see, there’s a whole lot of interest to be saved. This is particularly evident in the first scenario, where making slow but steady payments of $100 a month on an ANZ First card could save you $1267 and a whole lot of time to boot. Conversely, if you’re paying it of in big chunks you’ll pay barely any interest at all with the Westpac 55 day Mastercard or Visa!

Option 2 – Debt Consolidation Personal Loans

Another option is to take out a debt consolidation personal loan. In short, you roll all your various outstanding debts into one loan which you then pay off at the rate set by the lender. They’re a decent option, but these loans tend to feature much higher rates than balance transfers. That being said, with some rates below 10% they are still potentially a lot cheaper than a credit card’s purchase rate (which can go as high as 23.5%) and are well worth looking into if you want to avoid the temptation of having another credit card in your possession.

Option 3 – Home Equity Loans

Finally, for those who have the option, a third avenue would be to look at borrowing from your home’s equity (for example line of credit home loans). This would allow you to consolidate your loans at a home loan rate much lower than what you would see in most personal loans. They won’t be as low as balance transfers, but if you’re looking for long-term solution it’s a very viable fix as the ongoing rate is far lower than that of a credit card – the flip side is that as the payment term is much longer you may end up paying more interest.

If you’ve got more questions or you’re a finance expert ready to do some answering yourself, head on down to the Mozo Answers forum.

As you may have noticed, we here at Mozo have just launched Mozo Answers, a brand spanking-new forum platform where anyone can start up or get involved in a range of money conversations. As an offshoot, I’ve decided to launch a ‘question of the week’ style column, where I’ll take the best or most commonly asked question of the week and attempt to provide an in depth answer myself.

This week’s about the young ones. It seems like there are a lot of forward-thinking parents looking to setup childrens’ savings accounts for a myriad of purposes. Whether you’re saving for university, angling for tax breaks or simply looking to teach your kids the value of saving, here’s my take on the best accounts in the market.

First off, let’s look at kids savings accounts. The big fish at the moment is BankWest’s Kids’ Bonus Saver, which offers a jaw-dropping 10%. Like most other kids accounts however, there are number of conditions that affect how much you can earn. The key flaws with the account are that you lose interest if you make any withdrawals, there is a maximum deposit of $250 a month and that after one year all your money is swept into a different BankWest account that earns a paltry 1%. These sorts of deposit and withdrawal conditions are commonplace amongst kids accounts, and as I’m about to show you, they can make a considerable difference.

In terms of simplicity, flexibility and interest my personal vote would have to go to Suncorp’s Kids Saving account, which allows 1 withdrawal per month and earns 5.75% interest. As a testament to the power of small print, despite it having a markedly lower headline rate than BankWest’s offering, you’d stand to make $209 more interest with Suncorp (assuming a regular monthly deposit of $250 with no withdrawals).

If your child is over 12 then there’s an ever better option. RaboDirect’s High Interest Savings has a great, market-leading standard interest rate of 6.0%, no deposit conditions and no monthly fees. It’s available to anyone over 12 years of age and as it’s not a kids account per see, your child can keep using the account well into adulthood.

All up, the key message to take away is to look for a flexible account with a good headline rate, keeping well abreast of the small print in the process. Follow these rules and your child may no longer need to hit you up up for pocket money (not likely mind you!).

Got any more questions on kids accounts? Or anything else for that matter? Ask away on Mozo Answers.

“I want to stand as close to the edge as I can without going over. Out on the edge you see all the kinds of things you can’t see from the center.”
Kurt Vonnegut

On the surface, seminal author Kurt Vonnegut and credit card giant American Express don’t seem to have much in common. Upon deeper reading though, there are a number of similarities. Both are American. Both were irrevocably shaped by war, Kurt through his life as a soldier in WW2 and American Express through the loss of its primary railroad business during WW1. And now we can add another – they both like things close to the edge.

The American Express Platinum Edge, Amex’s latest credit card offering, has really piqued our interest here at Mozo HQ. Why? Well it’s because Amex have created a credit card that in many respects has reinvented the idea of a platinum card. Where the platinum card has traditionally been positioned as the bastion of the elites, this is a platinum card designed for the masses.

It’s a rewards card which rather than rewarding merely for total spend, instead rewards for spending on regular expenses using what Amex is calling the “3-2-1” system. You get 3 points per dollar spent at all major supermarket chains, which is an outstanding offer, particularly for families racking up big grocery bills every week. On top of that, you also get 2 points per dollar on fuel purchases at all major fuel retailers as well as 1 point per dollar on the rest.

These points are all redeemed through the American Express Ascent rewards program, giving you the choice to redeem with 6 different frequent flyer programs, as well as over 1500 merchandise and gift options from the online store.

On the financial side, the card has a purchase rate of 20.49% which is one of the highest on the market, but you do get 55 days interest free. If you pay your balance off each month there should be no concerns. There is an annual fee (including rewards) of $149 but this is well below the $258 average for Platinum cards. Only catch is you have to meet the minimum income requirement of $50,000.

In terms of extras, the headline grabber is a complimentary return domestic economy flight every year, covering a big chunk of the annual fee cost. It comes with travel insurance as well as a bonus 20,000 points when you sign up, enough for a $200 travel voucher. However, when compared with other American Express platinum cards, there’s been some pruning. There is no concierge, no purchase protection or extended warranty. Consumers will just have to decide whether flights or features are more important to them in a card.

All in all, it’s refreshing to see a credit card provider looking to pitch a platinum card towards the middle end of the market. American Express’ Platinum edge card blurs the lines between a standard and a platinum card well, and its innovative rewards offering may see more consumers joining Kurt out on the edge.

Compare credit cards at mozo.com.au