My Journey to Eliminate Debt: February 2009

Building the business

My 'To Do' List this week has all been business and finance related. Firstly arranging to become an employer has been a fun learning curve! So far I have:

Registered for PAYG Tax

Set up superannuation payments

Taken out a workers compensation policy

Set up a traineeship contract

Bought new business software

Bought a new Mac for the business

This week's been busy, not much time for blogging, but it's all good. Once I get all the business data transferred over to the new system I'll be sitting down and setting some new business goals and targets. Now that I won't have to spend my time doing administration I can increase my client workload. I expect my profits for this month and next to be down, but after that they should increase due to me being able just focus on client work. Can't wait!!

Life Insurance Upgrade

Do you have term life and disability insurance? Our insurance was always through our superannuation fund. In preparation for withdrawing our money I have been getting quotes from different insurers. I also received pre-approved application from the professional association I belong to which turned out to be the best value and that is the one we agreed on this weekend.

The cost to insure both of us was $1264 per year for $500,000 life cover, $250,000 total & permanent disability cover. This was much cheaper than any other quote, mainly because the premiums are based on my age only and I am 5 years younger than DH.

We talked a lot about how much cover to take out. We decided on this figure based on clearing debt, replacing the car and the loss of income both of us would face. If I died or was disabled DH would not have enough income to live on with his part time job. If he died or was disabled I would have no income for whatever period I required away from my business (I am thinking months here).

We took into account the (hopefully soon) future purchase of the office premises which would still require me to pay rent, and the ongoing business expenses that I would still have to pay regardless of income. DS is still dependent and we calculated his ongoing education expenses as well.

A few things to keep in mind:

Is your life insurance linked to your employment? eg in a superannuation fund
Get a lot of quotes & compare the details / fine print
read and understand the exceptions and restrictions on TPD (total & permanent disability)
If you or your partner are member of a professional association contact them to see if they offer discounted life insurance.
How much would you need to cover debt payoff, lost income, monthly living expenses, dependents expenses, funeral expenses.

These topics are often difficult to talk about, but NOT talking about them could leave you, or your family facing a very uncertain future. Please read this post as well: Asking Yourself the Difficult Questions

Lost your job? Freebie to download!

I was planning a post on managing redundancy this week which I don't have time to write up just now. So this is a quick post to let you know about David who is offering a free download of his book on job loss today:

Here's the blurb from Daves site:

David moved from London to Ireland in 1986.

He lives in County Meath, is separated and has 3 children.
David has had a varied working career including jobs as a factory manager, a building worker and a part time counsellor. He lost his job in January 2009.
He has never been unemployed before.

Visit his site to download your free book.

(I'll get round to my post on job loss later.)

Business Decisions

Well it's been all about business finance today! I am going to employ DD on a casual basis with the possibility of a more permanent arrangement in a few months. She started today. I also have been giving a lot of thought to using a better program to integrate the accounts, client information, government reporting, taxation, BAS and booking systems. Over the last few weeks I have been trialling a few different programs and today I finally bought one. Cost $900.

I also needed to update my laptop to be able to manage the program (it's 4 years old, with only 20 GB hardrive). I bought a new Macbook!! It will be only for business and has the capacity to run the program I bought. It has 120 GB hardrive, 2 GB's RAM. I can also use it to do the online consulting (via Skype). Cost: $1649

I feel my business is at that point where it can go forward, but only if I invest in resources that improve my productivity and efficiency. I will not have as much to throw at the debt this month but I think these changes will pay off in the long run.

I just love the work that I do. If I didn't need to work I would still do it, I'd just do it for free. I have so many ideas that I want to put into action!! It's exciting to be in charge of my own success, trusting my own judgement! I have set some specific business goals and a timeline to reach them.

I guess one part of me is also afraid of success and maybe that's part of why I hold back sometimes, and why I take on too many projects instead of just focusing on one thing. But I don't want to die wondering... could I really be a business success just doing what I love, following my purpose?

I know I'mgoing to have a lot of fun finding out!!

"What work I have done I have done because it has been play.

If it had been work I shouldn't have done it.

Who was it who said, "Blessed is the man who has found his work"?

Whoever it was he had the right idea in his mind.

Mark you, he says his work--not somebody else's work.

The work that is really a man's own work is play and not work at all."

Mark Twain

Real Estate Progress

Last week we contacted several real estate agents about purchasing my own office premises. We gave them very clear information on what we were looking for, the area, and price range etc. We said we were ready to start inspecting properties with a view to purchasing in the next 12 weeks. Of course they took our details and said they would check the books and get back to us. We had already identified seven properties that we want to inspect listed with those agents.

I would have thought that a customer who gives information indicating they have done their research and are serious about purchasing would be a customer they would want to follow up on.

Not one phone call!

Not one contact to follow up on our enquiry.

I find that amazing! If they can't contact a genuine customer why are they making all those phone calls trying to drum up business by offering free appraisals to people who aren't interested? .. but I digress...

So yesterday DH did the rounds again to request more information. He had to explain he wanted information so we could shortlist those we want to inspect and start arranging inspection times around my work schedule. He said most weren't really that interested or remembered that we had been there a week ago. But one young girl stood out head and shoulders above the rest. She did an immediate search of the books, found six properties that met the criteria. She was helpful and took notice of our requirements and had a good understanding about the disability and commercial aspects of the purchase.

So in total we now have 10 properties we want to inspect in the next month. Two in particular have caught my eye. One has the potential for 5-6 offices, it has been completely refurbished recently and it is only two blocks from the CBD. The other is in excellent condition, has four rooms for offices, is further from the CBD and has approval for subdivision. The location may be the problem as it is further from the CBD and on a busy road, but we could subdivide and sell off the block and make some quick income. However the ongoing income potential is less.

We will be meeting with our accountant next week to discuss setting up the set up of the SMSF trust deed and investment strategy. Once this is done then we will transfer our money and there will be withdrawal fees to pay. After much discussion we have made the decision to withdraw our funds and manage them ourselves whether we get knocked back for the property loan or not. Our investment strategy will include property and shares.

We using our accountant to set it up which costs approximately $2000. I'd rather do that than a DIY option online which costs about $800. Mainly because I trust my accountant and I have access to discuss anything with him at any time. As I said in a previous post " I heart my accountant!"

So our To Do List for the next month or so:

Meet with accountant and set up trust deed, investment strategy
Review best bank / building society for funds & open
Arrange appointments with several lenders re property finance
Arrange property inspections

.. and in the meantime take all the work I can fit in!

How honest are you?

Leanna over at Apples & Telephones wrote a thought provoking post about what you would and would not do to save money: Illegal/OK?. It made me think about what I have done that might be questionable as far as honesty goes, so I decided to copy it the list and bold the things that I have done. Thanks Leanna :)

Downloading movies (torrenting - not paying)
Downloading music (limewire or equivalent - not paying

Take extra packages of sauce/ketchup/salt, etc from fast food outlets to use at home
Taking extra packaged/disposable utensils from fast food outlets
Stealing metal cutlery from restaurants
Taking pint glasses from pubs
Keeping the free mini wine bottles/cola cans from airplanes to drink at home
Looping past people on the street handing free things out to stock up
Taking extra pens/pencils/stationary from the office to use at home
Using the office printer/fax/scanner at the office for personal use
Taking bathroom supplies from restaurants/fast food outlets/the office for home use (toilet paper, soap, etc)
Taking all the toiletries provided in a hotel bathroom for use at home Always! I just donated my stock of supplies ( had heaps!) to the bushfire victims.
Buying things 'for donation' and not paying/paying very little (think votive candles at churches, poppies for Rememberance Day)
Not correcting a cashier/salesperson when they forget to ring in an item/ring it in at a lower price If it's a big chain store I don't correct them. If it's a local business I always correct them.
Switching price tags on items to avoid paying the full price
Using a student card to get a discount when you are no longer a student
Taking extra ziplock bags from the airport booth (for your carry-on liquids) to use at home
Paying for once movie and skipping from theatre to theatre watching movies all day on one ticket.

Working 'under-the-table' for cash. Ahh, the good old days, I used to be able to take a couple of hundred a week off the top in cash but those days are long gone now.
Keeping a close watch on hours earned to cut losses on your paycheques because of forgotten hours
Lying to your supervisors about extra hours worked to make extra cash (lying about overtime, etc) No but I did once take a weeks paid seminar leave and just stay at home for a rest. I read up on the presenters abstracts in case anyone asked for a presentation, no one ever did! Had a great week!

Stealing sattelite T.V.
Hacking (or plain ol' accessing) a neighbors unsecured wireless to do your internettin'.
Dumpster diving for used items.
Hitting the front of the local thrift stores before the store opens to loot through the donations people have left overnight (that the store hasn't claimed yet).
Using 'free trial software' for the period specified (let's say 30 days), then uninstalling it and reinstalling it, or hacking it to work permanently.
Shaking a vending machine until a candy bar falls free, for free.
Buying an item in a vending maching from the same slot as a stuck item, so you get 2 for 1.

I have a couple more to confess:

Burning music CDs and audiobooks

Claiming personal expenses as business deductions, (all 'just' legal but questionable!)

Using friends staff cards to get a store discount

DD confesses to:

Finding $20 in the ATM Machine and kept it.

Putting her phone in for repairs three times when it had nothing wrong with it. After three repairs you get and upgrade so she got a really fancy new phone for free.

Always saying saying she has a coupon when she rings for pizza , even though we never have them. When she arrives she just says she forgot it and gets the discount price every time!

When she busy CD's for presents she always burns her own copy before gift wrapping!

Calling the number on the vending machine and complaining you didn't get the product, (when you haven't purchased anything) they sent her a free case of soft drink and free carton of chips.

DH only owned up to the following:

Not telling HR when they forgot to deduct two weeks holidays from his entitlements.

How do you measure up? Any more to add to the list?

Extra money coming!

Yesterday the $42 billion economic stimulus plan finally passed. It included $12 million for one off payments to low & middle income earners. These payments have been reduced from the originally proposal:

Single income families: $900

Individuals earning

<$80,000 receive $900

$80 - $90,000 receive $600

$90- $100,000 receive $250

Now I know that the idea is to spend the extra money but we will be putting ours off the credit card. DH and I will receive $900 each, based on last years tax return. Dad and DD will also receive $900.

I also earned $407 online last month so that will go off the credit card soon as well. I have made the decision to start working Saturdays to increase our income. I am feeling a lot better than I was a few weeks ago and yesterday got the all clear on all my medical tests. I've been poked, prodded, scanned, and checked inside and out and all the big nasties have been ruled out which is a relief. I now know what the health problem is and it's annoying, will probably happen again but is not serious.

DH is still putting in for full time jobs, DD applied for 13 jobs in the last two weeks and has finally registered for unemployment benefits. I know she hated doing it but her savings are almost gone and she has to keep her health insurance as she has a chronic illness.

If I can focus on working full time hours, and can get my own office premises I will employ her to do my business administration if she is still looking for work in a few months.

Well we have really cold weather here today after our heatwave, yesterday I was in a winter coat! I'm off to work, hope you have a great weekend.

Bush fire donations & Koalas

The bush fires continue to dominate news here. Our local community is sending trucks filled with donated goods to Victoria today so we spent the last two evenings going through our clothes, old toys and linen and donated what we no longer need. We don't have near as much 'stuff' as we used to but there is always a bit more to declutter for a good cause. I gave away all my size 18- 2o clothes as I am now in a size 16 and getting closer to a 14 every day.

My workload has suddenly increased now that school is back. In Australia just about everything stops in January. It is difficult to get tradespeople, health professionals, and a lot of small businesses close for the month. Then school goes back and it's suddenly full on again! This week I took 9 new referrals, I am even working a half day on Saturdays for the next few weeks to keep up with the new work which is great for the bank balance and the debt payoff.

I saw several people yesterday that were very distressed by the fires for various reasons so it was a long and emotional day. So far 75 million dollars has been donated to bush fire victims which is fantastic! I will leave you a few videos and links. The first is a lovely video of a koala, now known as Sam, saved by a fireman. (The first bit is a bit blurry but keep watching)

You can buy a photo of Sam the koala being helped here. All proceeds go to the Country Fire Authority.

Donations to help the wildlife injured by the bush fire can be made at Wildlife Victoria.

If you are an Etsy lover visit the Oz Bushfire Etsy Shop . So far they have raised $3500. You can donate goods to sell as well.

For an update on Sam's Progress, and a few other very cute koalas check out this video below, I love the pink bandages on her paws!

Life is as dear to a mute creature as it is to man.

Just as one wants happiness and fears pain, just as one wants to live and not die,

so do other creatures.

His Holiness The Dalai Lama

DIY Super & Purchasing Business Premises

We have been busy researching the feasibility of our plan to set up our own super (retirement) fund and purchase my own office premises. The basic plan is that the super fund would purchase the property as part of it's investment strategy and the rooms would be rented out as consulting rooms. I would rent one of those rooms, and so the rent I currently pay would be helping to build our own assets for retirement.

I hope to have 4 rooms in total to rent out for $230 - $250 week. So the monthly income would be approximately $4000. Expenses would include: electricity, security system, rates, insurance, cleaning & maintenance & supplies. I have already been told by one colleague that she will take a room with me and I know of others looking in the local area.

So far this week we have:

Been to council and collected information on converting houses to offices, lodging development applications, disability requirements & fire requirements
Set up an appointment with our bank to discuss our borrowing capacity. Three years ago they were wanting to lend us $300,000 to invest, it will be interesting to see if they want to lend to us now I am self employed.
Started reading up on all the DIY superannuation requirements, specifically about purchasing property.
Visited the local real estate agent to discuss our requirements. I have been attending open houses each Saturday for a while now and there are some good buys around that would work well as offices.

There is a lot of reading to get through and we both realise that we may look into it and find out it is not possible, but we need to do this research and crunch numbers before we make our decision. To find out more about DIY super in Australia:

ATO Self Managed Super Fund information

DIY Super. This is a concise one page summary.

Using Super to Purchase Commercial Property. Gives a good example of what we are hoping to do.

Property Installment Warrants

A sad day in Australia

What an awful day in Australia. The hot conditions over the last few days have seen the worst bush fires in our history. Yesterday when I started driving home the news was saying that over 40 people had died, by last night the number had risen to 89.

This morning it stands at 109 dead and many more expected.

Over 700 homes destroyed and whole communities wiped out.

Families died in their cars trying to escape.

While we sit here in the sweltering conditions again today at least we are not in an area under immediate threat from the fires, and for that I am grateful. I know that my office will be a sombre place today, a tragedy like this has a huge ripple effect and clients will be distressed at what has happened and need to talk. Over the coming week this will trigger memories and distress in many in our community. The fire brigades and emergency workers in NSW will also be affected by what is happening in our state, which may impact on my work as well.

A few years ago I went to a conference where we had talks by researchers into the Ash Wednesday fires and the long term effects on the survivors. It's devastating. It's so sad that with all the preparations for this weekend there has still been so many who lost their lives.

My thoughts are with those in Victoria today. Lets hope that this ends soon.

I've made a donation to the bushfire appeal. How small my troubles seem in light of what is happening. If you would like to donate please visit the red cross online donation site.

Heat wave..

This heat wave is taking it's toll. I have had a record number of cancellations this week, yesterday over half my clients cancelled on the day which is just unheard of. I usually get maybe 1-2 cancellations a week. I spoke to others in the office who experienced the same thing this week and feel it is the extreme heat keeping people at home.

I am going to Sydney today to see Top Gear Live and then on to spend the weekend with Dad which I'm really looking forward to. It's predicted 43 degrees in Sydney today and even hotter the next day. In fact NSW will officially be the hottest place on the planet this weekend with temperatures reaching 47 degrees this weekend. Last night was so hot here, we just lay on the bed with the window open and wet towels on us to try and cool down. It seems strange that we are having such hot conditions and the other side of the world are having problems with severe snow and ice.

I thought I'd leave you with a link to this cute little baby koala trying to cool down, it's worth a look.

Progress Report #19

Well January has flown by! The last week has been a heat wave here with daily temperatures hitting 39-40 degrees. I'm so glad that we do have air conditioning! We have it set on 25 degrees and it only gets turned on when it's really hot.

Here's the numbers:

Credit Card: $18,444

Mortgage: $149,655

The Good:

$2800 paid off the credit card this month!! YAY!!
online consulting site is up
moved offices and

The Bad:

I have been off sick again, I have more tests ordered
car problems and expenses

The ugly

none really

I completed some of the things on my January To Do List including moving offices, setting up my website for online consulting, cancelled old credit cards, read more than two books and listed items on eBay.

I didn't bid of the contracts I planned to as I am concerned that I may need more time off if these health problems persist. Part of the difficulty is that stress makes my symptoms increase so I'm supposed to be 'slowing down'. But as the main family breadwinner I need to work hard to sort out our finances. So it's a balancing act at the moment.

DH is still applying for full time jobs and still getting knocked back, but his part time income really does make a difference. DD heard back from the interview. The job she applied for was full time. When she arrived the said that the jobs were now casual, with a guaranteed 20 hours a week only. She was offered a position but turned it down as she simply can't afford to move interstate without a full time job. She is now applying for jobs locally.

February will be a busy month. Work is getting busy and when I'm not at work I'm just resting a lot. I'm just hoping I don't have to take any more time off. I am going to visit Dad, also going to Sydney to see Top Gear Live with DH which I'm looking forward to. DS returns to university and DD hopefully gets a job. It's going to be an interesting month!

My Journey to Eliminate Debt

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