Do you earn under $60,342? If so, you may be eligible for FREE MONEY from the government. No, Kevin hasn’t lost his mind again. You may have heard of the government’s co-contribution scheme to bolster super accounts so that we all don’t look forward to living off welfare till our average age reaches 123.

Basically, if you are earning less than $60,342 and contribute after tax monies to a superannuation fund, the government will give you $1.50 for every dollar you contribute. This is based on a sliding scale, phasing out to $0 after $60,342. To see how much you would receive into your super, HERE is the ATO Calculator.

Some people have said, ‘why would I want to put more money into super when it’s going backwards?’. It’s a fair comment, but remember, based on the calculator, you WILL receive 150% return for all after-tax money you put in to your super. Plus whatever your current super fund is (or isn’t) earning in interest. That’s a pretty good investment.

I posted another part to this story at ‘Have the government pay your insurance for you’ where you can link your life insurance and income protection/sickness & accident insurance to your super and the co-contribution covers the additional cost of your insurance.

You have just under two months to arrange something as it looks like KRudd is about to hand down a killer budget which will possibly scrap the co-contribution scheme. I suppose it’s only natural to kill off something that encourages ’saving’.

PD

Is it any surprise that the banks claims that they can’t pass on the interest rate cuts, have been shot down by analysts who point to burgeoning margins on margins and corporate loans?

Last week, there was, yet again, another rate cut for Australian mortgage holders, and once again we get the message that banks will not be passing on the full cut due to “increasing cost of obtaining capital”. Verbal diarrhea I hear you say? I’m inclined to agree with you on that one.

It baffles me to think that every time there is a rate hike, the banks put the rate up instantly, but on the reverse side of the coin, nothing happens. It’s a blatant money grab that defies the law of fair trade in this country.

Then we have the Almighty Wayne ‘Super’ Swan coming out against the banks in all his might stating “Certainly I’m pretty disappointed with their decision or the decisions that have been announced so far” on Wednesday. He went on to say that “You know what they’re like, they do need a good kick up the bum occasionally.”

This comes from the treasurer of our country! His opinion is laughed at by bankers, and should not even be printed as it’s not worth the overpriced parliamentary paper it’s written on. What Wayne Swan needs to do is put something in place to demand that banks follow the lead of the reserve bank, as that is what they base their pricing on, otherwise keep his mouth shut. I understand that banks have a responsibility to their shareholders to return a profit, but they also have a responsibility to their customers to give fair business practice, which is clearl not taking place here.

Call me a conspiracy theorist, but do you think a backroom idea is for people to lock in fixed rates in the short term, and then bring in the rate cut to it’s existing customers? Possibly. The fact is that Wayne Swan needs to grow a pair, and do something about the people he is supposed to serve before corporate greed takes over, if it hasn’t already.

If you would like to voice your opinion to Wayne Swan, as I have here, his parliamentary email address is Wayne.Swan.MP@aph.gov.au

PD

The year of the handout. Some people could replace their salary with the amount of money being given by the government this year. Don’t get me wrong, free cash is great if you can get it, but is this something that will actually help the economy?

I realise that the stimulus packages are ‘designed’ to get people to spend money in retail and keep that sector going, but what about some of Australia’s 1.8 Million small business who employ over 47% of the entire Australian workforce who represent 95% of ALL businesses? These people, myself included (so I am slightly biased here) are doing it just as tough as retailers, but are still slugged with payroll tax, superannuation guarantee contributions, workers compensation, and on top of that having to worry about generating new business. It’s a long way off before many actually turn a dollar for themselves!

Instead of partaking in a massive money throwing orgy, why not reduce the burden of payroll tax to the small business, and possibly throw them a SGC bonus for their employees? Pardon my sinnacle thoughts, but may it be that it not buy popularity in the voting polls? Any three year old can work out that giving money away to the public will generate some spending activity, but as we have seen over the past few months, people haven’t spent nearly enough.

If you don’t know if your job is secure, how likely is it that you will go out and buy a plasma or a new bike? That is why, if you benefit the employer in some way, they are less likely to lay off staff due to an ease in cashflow restrictions. People are put in power to think. The ideas expressed here may not be fool proof and solve anything, but at least it has more thought put into it than a second cash splash.

PD

Much of today’s reasons for not having adequate, or any, insurance is affordability. And it’s not surprising due to the ever growing mortgages, especially in the capital cities, which are not in line with the ever stagnant salaries.

Insurance is usually one of the first casualties to the harder times. I haven’t had too many people during this down turn, but I don’t believe we have seen the worst of it yet. There are still some hard times to come unfortunately. KRudd can keep on handing out freebies, but until the addresses the employers in this country, those who are employed will be in for a unsure time over the next 12 months. But I digress, that is for another post.

We all know that insurance is an important part of life, and to cut it out altogether leaves a certain risk. You can, however, afford to have insurance even without any money! No, insurers are not doing a KRudd and giving out policies, but there is a way to use other means to help your cashflow and still keep your cover in force. The simple answer is ‘Superannuation’.

Especially if you have several old supers from previous jobs, they can all be rolled together and the life or income insurance attached to the super. This way, what would normally be paid from your bank account, will now be paid from your superannuation account. Thanks to the government’s co-contribution scheme, if you earn less than $68,000 year and pay some of your own money into suoper, they will match your contribution 150%!

For example, if your insurance is $500 year, and you use the example above by putting it into super and pay $330 year into it. The government will pay $1.50 for each $1 you’ve paid = $500. By paying it through super, you save yourself $170 year. Obviously the more your premium, the more you save, but you get the picture.

There are many questions that come along with this subject: Wouldn’t that eat into my super?, Isn’t there rules for super not to pay out before retirement?, What if I only have my work super?, Can I pay into the super still?

All these questions are ligitimate, and I will cover them off in the next post on this subect. If you would like someone to talk to about making this a reality. Especially if affordability because of the financial crisis is taking place, please email me.

PD