The problem with inheritances is that old people aren't dying quick enough. They're living longer and enjoying a greater level of health than at any time in history.

Prior to our parents generation, our grandparents saw an inheritance as a major windfall. They could finally pay off the home, travel to that exotic destination they had always dreamed of and maybe buy a new car.

But our parents are too wealthy already and most have a greater financial base than their parents. So when a grandparent finally carcs it the inheritance becomes like a ripple in the next generations finances, barely rating a mention on the Richter scale of appreciation.

This then causes an adjustment, a paradigm shift if you like, as the older generations consider what to do with their accumulated wealth. Here's the options as I see it;

1. Give it away to charity - Your children will only flitter it away as if it were pocket change anyway. It's far better to give it to those who need it than leave the family in a quandary wondering where it should go.

   More and more charitable organisations are targeting older people to include them in their will. On the surface it may appear like a scavenger circling overhead a rotting corpse but it makes common sense. This money if given to families will predominantly spend on materialistic items whereas this option gives a sense of legacy.



2. Give it to the second generation - the parents don't need it. The kids on the other hand are only just setting out in life and a sizable inheritance could be the kick start they need. Buying a piece of property, paying for their kids tuition and maybe buying a decent car are options that the lower generations will invest in.

   They realise that a holiday or new Jaguar are far too frivolous too spend someone's lifetime wealth accumulation. While an inheritance would only be a ripple in the 2nd generations pockets it would be a small Tsunami for the younger ones.



3. Spend it yourself - Well, why not? You earned it. Inheritances have far less importance these days so saving your money to pass on to future generations is less required. Better than splitting it between your kids why not selfishly enjoy it while you still have your health and wits about you?

   In Australia, we refer to them as "Grey Nomads" - the baby boomer generation that retires at 55, sells up and buys a large 4WD and caravan and traverses the nation for the next x years. They even sport bumper stickers stating "Spending the Kid's Inheritance".

Regardless, it's your money and you can do what you like with it.

Posted by Stuart at 6:11 AM | Permalink | Comments (2)

I hope you read the fine print.

In many of today's credit card application contracts there is reference to a set of terms should you default on a payment. You may start out on a low interest rate but find, by missing a payment, you will end up converting to the default interest rate - usually 20-30% higher than you were initially paying. There's nothing new about this practice yet there are still many credit card users who are unaware of this policy because they don't read the fine print carefully.

However, this little nuance is minor compared to what is being defined as the Universal Default clause. This clause states that if you miss making a payment to ANYONE that reports on your credit history your interest rate will immediately convert to the default rate.

Take this in for a moment.

You could have faithfully used your credit card, making payments as and when they fall due yet you miss a payment on your telephone bill that is reported to the credit reporting agencies and immediately your credit card institution hikes the interest rate. And they're well within their rights to do so.

For anyone who is looking to accept a really low interest rate for a new credit card make sure you read through the contract and understand all the fine print.

Source: Bill Burt "'Universal default': Lenders gang up on late payment"

Posted by Stuart at 7:25 AM | Permalink

Your personal financial plan is your road map to financial freedom and independence. I probably should have underlined the word YOUR because we so often hand the reins of our financial plans over to others. We may do it consciously by accepting the latest morsel of advice hoping that this new piece of knowledge may be the key we've always been looking for. Or worse, we accept the "voices" in our head that tell us to deviate from our premeditated plan.

An analogy that may encapsulate my point is the many times I would head off 4 wheel driving in the bush. If I had unlimited time and an ongoing source of fuel I would explore every track that I came across. But I usually had a destination in mind before I set off. As an undiscovered track appeared I would stop and weigh the virtue of adventure against the map. If it took me in an opposite direction or would obviously increase the time taken to get to my destination then I could easily discern that it was a wrong way.

The same applies to your own personal financial plan. Sorry...did you just say you don't have one? Well that's like hopping into you car with a blindfold covering your eyes. You drive off aimlessly hoping to arrive somewhere but readily realising your chances of success are extremely limited.

Continue reading "Stick to your personal financial plan like superglue" »

Posted by Stuart at 6:50 AM | Permalink | Comments (1)

Imagine paying a $20,000 debt in 5 years with only a $22,000 annual income. Apparently this is what Tawra Kellam did after seeing her mother raise two children as a single parent on less than $500 per month.

These two frugal champions have now published a book "Dining on a Dime Cook Book" and operate a highly regarded website www.livingonadime.com.

In this article, "Think thrifty: save yourself from spending" the writer explains some of their great tips on saving. Wise advice such as reducing the amount of drinks the families buy to cleaning up the kitchen in the morning which prevents your psyche from wimping out and ordering take-away at dinner. They're not coupon pushers and actually advise that these methods don't actually save your family money.

They recommend implementing one change at a time and being successful with that change before introducing another. These great tips could help your family back on the road to financial recovery.

Posted by Stuart at 7:21 AM | Permalink

We tread the internet in tip-toe fashion, trying not to clumsily step on anything hazardous to our online health or alerting the attention of unwanted hacker publicity. Why? Because we know that lurking in the not too distant background is the possibility that our identity could be stolen and used innappropriately or credit card details could be used to transact a criminal's spending spree.

We're just trying to download the latest offering from iTunes or pay for a successful auction win on Ebay unaware that the threat is real or that it may be greater than we first assumed. Most internet users, myself included, assume that e-crime is something that happens to other people and optimistically prescribe to the notion that companies are getting better at dealing with these security risks. They're not!

In fact, most online companies while employing a 128bit SSL for their transactions fail to secure the backend of their data, inadvertently creating a back-door for would-be hackers. Now imagine for a second that your data, address, full name, date of birth and credit card details are sitting insitu on some (unfortunately not-so) secure server with the backdoor left wide open. It's like a red-rag to a bull teasing hackers to try their luck.

And who's to blame for the increase in e-crime? Well, while we're pointing the finger it must be directed toward the door of the reigning governments initially. Are they fair dinkum (an Australian colloquialism translated as "genuine") about resolving this type of crime that will inevitably cost the community? There seems to be little that is being legislated in this arena and the resourcing for crime prevention compared to the resourcing of criminals borders on obscure.

My life, like many others, is becoming increasingly dependent on the web. Unfortunately though, it can be that life can be rubbed out quicker on the internet that it can in real life.

Read this article.

Posted by Stuart at 8:43 AM | Permalink

Is personal finance an issue that can be taught or do you just pick it up along the journey of life? The 'school-of-hard-knocks" is where many seem to sharpen their teeth on fiscal matters but is that the right playground for our society to be maintaining?

I've just read another article Back to personal-finance basics on a school system hoping to influence young students in money matters. I'm bouyed by the optimism but I struggle with the pressures that you can't teach kids that will inevitably inch their way into their lives.

For instance, here's a big one: Will they teach them that staying together in a relationship and working hard at it to make it successful makes better financial sense that separating years down the track? What about those ridiculous purchasing terms of "Pay nothing now - 4 years interest free" - how do you teach kids when they're mates all have the latest Plasma that delayed gratification is a better deal?

I'm all for education, but education taught as theory only seems to me to be the biggest waste of time. You would never train a doctor purely from manuals and tutorials. They need experience with the tools of their trade - bodies and scalpels. The same needs to happen with teaching kids about personal financial skills. They need to somehow deal with the pressures of this world in a simulated environment that's as close to real as possible.

Where can this happen? Where it should happen - in the home.

Posted by Stuart at 6:24 AM | Permalink

Have plastic - will shop! Tired of seeing those credit card statements roll in each month and find that you're kicking yourself for some of the purchases you made on that list. Then there's the usual discussion with your spouse concerning the relevance of such transactions like "I don't remember ordering anything from Danoz this month?", "A Mars bar, you put a Mars bar on the card?"

They say hindsight is the greatest teacher you just don't want to have to use it at the end of every month. So, rub some ointment into those bruises, lift your head up from the ground and let's apply some strategy to next month's purchases.

Continue reading "9 tips to curb you credit card spending" »

Posted by Stuart at 6:50 AM | Permalink

Sprite coined the phrase in their marketing campaign in 2001 starring the NBA's Grant Hill and seemingly it's been the reality for a generation, or two.

We base image as the number one advertisement of who we are and what we mean to society. If you're making a lot of money it's unlikely that you're still driving that Datsun 120Y you had when you started out at college or university. Datsun 120Y's scream "Poverty-stricken-teenager-that-can-hardly-afford-the-fuel." This is not a great image if you're a real estate agent or financial planner trying to woo your next client.

So, is "Image" everything? Could I honestly look at my last 5 purchases and say they had nothing to do with forming and reiterating who I think I am?

Continue reading "Image is Everything: Obey Your Thirst" »

Posted by Stuart at 3:25 PM | Permalink

There is only one way to reduce your debt. Pay it off!

I know... you're blown away at my wisdom in financial matters. However, there is nothing you can do about reducing your debt other than to pay it off. The time it takes you and what it actually costs you are an entirely different matter.

Here are a few pointers to help you on your way.

Continue reading "1 easy step to reducing your debt" »

Posted by Stuart at 6:40 AM | Permalink