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

Yesterday the prime minister indicated the boosted first home owners grant (FOHG) would not be extended beyond the 30 June. Today, reports in the Daily Telegraph and Herald Sun suggested it would be extended when the Budget is announced on 12 May.

The Daily Telegraph quoted “insiders” as saying the boosted grant would be extended following lobbying by the housing industry. A report in The Australian last week also said extending the boosted FHOG was a “certainty” in the budget.

But yesterday, Kevin Rudd said in a speech in Perth that “all good things must come to an end” and that the boosted FHOG was only intended for a finite length of time.

Lobbyists, including AFG, the MFAA and The Loan Market Group have all called for the incentive program to be extended. These broking groups said that if it is not renewed, then the housing market will suffer a ‘massive hangover’.

I’ve heard many commentators argue that the FOHG is creating a false market bubble and may be putting people in homes they could otherwise not afford. But isn’t that more about the ‘credit generation’ than anything else. I would say that people would still get into houses they couldn’t afford anyway.

The CBA’a Ralph Norris said recently the scheme should not be extended.

The boosted first homebuyer scheme was introduced last December as part of the government’s first economic stimulus package. First homebuyers of existing houses receive $14,000, while those buying a new house receive $21,000 - as opposed to just $7,000.

Shouldn’t the government be thinking of ways to ’stimulate’ the economy in a proactive way instead of just handing out cash that can go anywhere? At least this initiative puts money in the pockets of many small businesses who then employ others in our economy. If they put a lid on this scheme, they need to take a good har look at themselves, because I don’t believe they know what they are doing.

PD

(Story by brokernews.com.au)

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