“That’s interesting”, I thought, ” I might write an article about that”.

Then two days later while rummaging through old computer cables I found a 5 year old mobile phone that I’d forgotten I had. Bingo!

I quickly visited the website on the flyer and discovered they were willing to buy it. So instead of dropping it in a mobile phone recycling bin (for free) I could recycle the phone AND make money. Score!

The process was simple and quick.

1. Find the model of your old phone
2. Register your details
3. Print the postage paid label (cool!)
4. Send the gadget
5. Get paid (by PayPal or EFT into you bank account)

Through the process I received a couple of e-mails to keep me informed of progress, which I appreciated.

How much can you sell for?

Since my old phone was quite old and only partially working I received $9. That might not sound like much, but it was actually less effort than remembering to take the phone next time I go to a shopping centre.

Better still, when my current phone contract expires in 4 months I’ll be able to sell my current smart phone for $110. That’s helpful if I decide to re-contract and/or upgrade my handset.

There’s no need to have an old phone sitting around creating clutter, especially if it still works.

I used Cash A Phone because that was the flyer I saw and they were willing to buy my 5 year old phone,  but they are not the  only company that buys old phones.

Reduce, Re-use, Recycle

Another important bonus for me is that I have the knowledge that my old phone may be refurbished and re-used in a developing country or recycled. Good news all round!

If you can’t sell your old mobile phone then I encourage you to recycle it. Mobile Muster is the official recycling program of the Australian mobile phone industry.

Sell your old gadgets too

One other part that impressed me is that Cash A Phone will also buy or recycle your old gadgets, including:

• iPods
• iPads and other tablet computers
• Laptops
• Digital cameras
• Game consoles
• Sat-Nav (GPS)

So next time you upgrade a gadget act quickly to see how much money you may be able to make from it.

You may also enjoy these related articles:

1. Job change checklist
2. How to reduce your tax
3. Ensure your employer paid your super last month

What a waste!

Back then it was a common complaint that reward seats were scarce and never when most people wanted to fly. Ten years on reward flights are easier to come by and you can even use points to partially fund a flight.

And there has been one other excellent development.

You can now cash in your frequent flyer points!

The Qantas Frequent Flyer Store currently includes 214 gift vouchers. The vouchers that excite me the most are the ones for everyday essentials like groceries, fuel and clothes.

The best value gift voucher I have found is just 13,500 points for a $100 voucher. This rate applies for many of the retail stores, such as Big W, Myer and Adairs, and also for car hire, hotels and Qantas Holidays.

Most other gift vouchers for Woolworths Group stores cost 14,500 points for a $100 voucher. That means your points are worth about 0.69 cents each. (Yes, less than one cent per point.)

Flights or gift cards?

Yes, redeeming your points for a flight award may offer slightly better value depending on when you fly. However if you usually fly only on cheap fares and specials then you’ll probably find, as I have, that the savings are about the same.

By redeeming your points for vouchers you can reduce the impact of rising costs. And, if you’re on the ball, you should therefore be able to boost your cash savings.

Even better, if you direct those savings into additional mortgage repayments you will be able to own your home sooner. Awesome!

When weighing up whether to accrue your points for flights or redeem them for cash keep this in mind – you don’t earn interest on your frequent flyer points.

In fact it seems that even though flight prices haven’t increased much the amount of points required has increased. So the value of your award points is actually decreasing.

Getting started is easy

With just 3,750 points you can redeem a $25 gift card. So log on right now and start redeeming.

Automate it

Qantas Frequent Flyer has recently introduced Auto Rewards. You can elect to automatically redeem your points for a Woolworths gift card every three months.

The current maximum amount is a $20 gift card costing 3,000 points. (That’s a value of 0.66 cents per point.)

Worried about security?

Yes gift cards are cash-like so you are right to give some thought to security.

At the very least you should have a decent padlock on your mail box to help protect yourself from identity theft. That will also help against theft of your gift cards.

Alternatively use a post office box – either your own or where you work.

Take the pressure down this Christmas

There are gift vouchers that will cover most items that will hit your budget this Christmas, including gifts. From general retail stores to travel, auto, hardware, electronics, food and liquor.

You may even decide to just give the voucher to someone as a gift. Hmm, that gives me an idea. I might redeem some points for a Bunnings voucher for my father-in-law.

You may also enjoy these related articles:

1. How to easily save 5% on your groceries
2. Avoid the Christmas and New Year Debt Hangover
3. Would you like a cheap holiday?

One of the most useful elements of this quarter’s update is the release of an online quick estimator of your retirement lifestyle cost.

To estimate how much you need to save in order to make work optional (“retire”) on your terms you need to define your retirement lifestyle target. If you have no idea of how much to set for your retirement lifestyle target then use the quick estimator to get a feeling of what current retirees are spending. I recommend you shoot for the “comfortable” lifestyle target.

You may also enjoy these related articles:

1. Dec 2010 qtr retirement cost statistics
2. How much super you need to fund a comfy lifestyle
3. The annual cost of retirement

Question
Hi Brett. I’m a recent university graduate. I’ve been lucky enough to land a graduate job earning a decent wage. The problem is, with rents so high and house prices even worse I can’t seem to get a foothold in the market. I have a bunch of friends that are in a similar boat. Can we all chip in to buy a house without getting into legal fights later on?

Answer
You are not alone. My graduate lawyers constantly ask for a pay rise so they can buy a house. However, it seems with the cost of renting and house prices – some people feel trapped.

Option 1: Buy a house with friends agreement

The ‘buy a house with friends agreement’ is a great way to get a foothold in the property market. You and your Gen-Y mates can pool your resources to buy a house together.

Sounds simple. But, why do you need it when you can just do that without an agreement?

The Buy A House With Friends Agreement clearly sets out the nature of the relationship between all your friends. We call the relationship a syndicate. It just sounds better than calling it a collective of mates.

But, everyone gets along fine. Why do we need legal documents?

Those are famous last words of many people who do business with friends. Just because everyone gets along well now, doesn’t mean that you always will. The buy a house with friends agreement defines:

1. Each party’s investment contribution;
2. What the property is that the syndicate owns;
3. How the property is owned;
4. Each party’s share of the capital and income of the venture;
5. Whether the parties can borrow against the property;
6. How the parties can end the agreement;
7. How the parties can transfer their share of the syndicate;
8. Whether the parties can force the sale of the property; and
9. How the parties can exit the syndicate.

By establishing all of the above details at the beginning – everyone knows where they stand.

We even include a mutual promise that each party is to promptly meet their individual finance obligations. What does that mean? Put simply, everyone agrees to pay their mortgage repayments on time.

Although my litigators hate me for this it saves you more on legal fees to have the agreement in place now. We see disputes over property going to court and in the end both parties spend their share of the property in legal fees. It is such a waste of your time and effort.

Option 2: Investing through a Unit Trust

A unit trust is another great way for a group of people to pool their resources to invest somewhere. In this case, invest in property. The key players in a unit trust are:

• Trustee; and
• Unit Holders.

The unit trust is a ‘relationship’ between the trustee and the unit holders whereby the trustee owns property for the sole benefit of the unit holders. The trustee can either be each unit holder (acting in their personal capacity) jointly or you can set up a corporate trustee.

The unit trust offers greater flexibility for the unit holders. The unit holders are able to freely transfer their unit holdings amongst each other and subject to the terms of the trust, can transfer their units to third parties too. The units are much the same as shares in a company in that respect.

Are you thinking ‘if this all goes well we might buy another place later’?

If your answer to the above question is yes, then a unit trust may be the way to go for you. The unit trust offers the flexibility of acquiring new trust assets without requiring a new agreement. That is because the unit trust lives for at least 80 years.

Once you have set up the structure, it is practically with you for life.

Who do you appoint as the trustee?

It really depends on the number of people you intend to involve in the whole process. Remember, every person that is named as a trustee of the unit trust is required to be named as the registered owner of the property. That can be very cumbersome if you pool together 10 friends. You even need to change the title registration every time a unit holder sells out or a new one comes in. After all, there is no need for a former unit holder to be a trustee.

Another option is to create a corporate trustee. It is a relatively simple process. Just build a company on Law Central and you are on your way. Now the company is shown as the registered owner of the property. Better yet, whenever unit holders change – you don’t need to change the trustee.

Who controls the corporate trustee?

In the normal course, you appoint at least one person to be the director. You also issue shares to each of the unit holders in the same proportions as their unit holding. That way each unit holder has an appropriate degree of influence over the corporate trustee.

Then, when unit holders change or their unit holding changes, they simply transfer the appropriate number of shares in the trustee company to ensure everything remains kosher.

I hope you and your friends manage to make a solid start in the property market. If you are unsure about what is right for you, speak to your accountant and adviser first to get the financial advice you need. Then call me and one of my team can set you in the right structure.

You may also enjoy these related articles:

1. I’ll huff and I’ll puff and I’ll…
2. First Home Buyers: Don’t Rush In
3. Property prices do go down

And after you’ve finished checking your breasts check if you have protection from the financial consequences of a serious illness like breast cancer.

The key tool is trauma insurance, which pays you a lump sum on diagnosis.

You can use the lump sum to:

• Help fund out-of-pocket costs for medical treatment
• Give your partner time off work to be with you knowing you can keep food on the table
• Take time off work to smell the roses

You may also enjoy these related articles:

1. Four types of life insurance
2. Life Saving Advice
3. Insurers never pay, right? Wrong!

Compound interest is an essential base concept to understand before investing. So if you don’t understand it then I recommend you spend one minute watching this video. Then please share in the comments below – did the video help you understand?

You may also enjoy these related articles:

1. Solving The Financial Decisions On Your Mind
2. Trading in Exchange Traded Funds
3. Rely on newspapers for property research at your peril

This year the Australian Federal Police have published an excellent survey to test how well you protect yourself against identity crime. The survey is a quick 15 questions and quite insightful. I recommend you take the survey now to test how protected you are.

Identity theft can cost you a fortune in lost money and time. This week take a few moments to assess how risky your behaviour is and read my article on how to prevent ID theft. Then of course take action!

You may also enjoy these related articles:

1. Protect yourself from identity theft
2. Is this a scam?

After letting on she was a bit older than 40 and maybe even late 50s or early 60s I asked if Kate had been to one of the many free retirement planning seminars that are offered by financial planners around the place. The reply was:

“Yes, I’ve been to quite a few. But they always seem to want you to come in for a meeting and sign up for a $3,000 financial plan.”

I hear that a lot, but this time I quickly shoved another canape in my mouth to stop my urge to evangelise.

Imagine my shock when 10 minutes later we were discussing the transition to retirement strategy and Kate came out with:

“Lots of people at work have told me I’m crazy not to be doing it, but I just haven’t got around to it. Oh, it’d only save me about $5,000 in tax a year.”

Did your jaw just drop too?

That’s irrational! How can you be happy to pay an extra $5,000 of tax per year but be unwilling to pay $3,000 once-off for comprehensive retirement planning advice?

Kate’s mistaken beliefs about the value of financial advice had given her tunnel vision in regards to getting professional help.

That tunnel vision was costing her at least $5,000 per year by her own estimate. Imagine how much more benefit she perhaps could get from advice that she was was not yet aware of.

Are your beliefs about financial advice and financial advisers giving you costly tunnel vision?

Were those beliefs formed years, even decades ago? Were they formed just on someone else’s experience, not even your own? If so, the industry has changed – a lot!

Perhaps it’s time to take the blinkers off and discover what you don’t know you need to know.

You may also enjoy these related articles:

1. Defining TRUE financial planning
2. What is fee for service financial advice?
3. Profit sharing with your adviser

In truth no-one knows what will happen.

The great news is that the actions which prepare you to survive a massive change also position you to thrive if instead a boom arrives. So irrespective of your personal forecast it is worth implementing these suggestions.

What could happen

If massive change arrives it probably won’t be pretty. You may experience some of the following:

• You lose your income, maybe for an extended period.
• Just to keep food on the table you have to sell assets, maybe including your home, cheaper than what you paid for them.
• Your loved ones lose their income and assets and move in with you.
• Your investment values go sideways or even down.

It’s all about cash flow

To keep food on the table and a roof over your head you need cash flow. Your best bet to keep money flowing in is to keep your job.

Even in the Great Depression seventy per cent of Australian men remained employed, so if you play your cards right there’s a good chance you’ll stay employed.

To protect your employment income you need to maintain expertise of value to your employer, your industry and to the country.

One way to achieve this is through ongoing professional development. Another way is by being more productive – work smarter, not longer.

For some people though, reskilling and reinvention will be necessary. This will likely apply to those working in retail and other consumer discretionary industries. Don’t despair – these days changing careers is the new black.

Contain your expenses

Borrowing to the max seemed normal while wages and asset prices grew steadily. But it’s now evident many financial houses were built on unsuitable foundations. To survive and thrive avoid over-committing to large debt repayments that are reliant upon two incomes.

Make like a squirrel

It’s time to make like a squirrel and save up your nuts for winter. Build a reserve of emergency funds you can use to fund your expenses if the worst happens.

The best emergency fund is cash you can access within about 1 to 2 days’ notice. The cash can take a number of forms including:

• Actual cash in a high interest online bank account
• Available redraw on your mortgage because you are way ahead in your repayments
• Withdrawal capacity in a personal line of credit secured against your home

Don’t rely solely on your investments

You may be thinking your investments are your backup plan.

If massive world change arrives it may be the worst time to sell your investments. In fact for lumpy assets like property you may not even be able to find a buyer. I know people who during the Global Financial Crisis couldn’t find buyers even after cutting prices.

In a “crisis” companies may slash dividends to preserve cash, leaving you empty handed.

And if people start bunking together to save costs your investment property may be without tenants. Or you may have to slash rents just to get a tenant.

So don’t rely on living off your investments if you lose your job for an extended period.

When the sun shines

Of course doomsday may never arrive and instead we’ll re-enter years of prosperity.

In that case, having invested in your professional development you’ll be in demand and may experience significant pay increases.

As a diligent debt repayer you won’t care as much when interest rates go up (to curb inflation) because you’ll have much less, if any debt.

Couple the higher income with contained expenses and you’ll have plenty of surplus income to invest in funding your early and luxurious retirement.

Chill out

Follow this timeless, common sense approach and you can confidently keep a “she’ll be right mate” attitude no matter what happens.

You may also enjoy these related articles:

1. Time for tax planning
2. How to reduce your tax
3. An example of how DIY is costly

I recall that being an often expressed goal around the traps twenty years ago.

Back then the median gross annual income was just $17,056* so the millionaire goal was quite a stretch. It was also before the explosion of free information on the internet.

Since then there’s been an endless stream of information published to show you how to wisely manage your money and become rich. Most of the information is dirt cheap or even free.

So despite all of this information why still do only 5% of Australians have net wealth in the millions? (Excluding the value in their principal residence.)*

That is the question I often ask participants in my seminars and courses.

The common reasons they suggest are:

• It’s easier to spend now than save. We don’t have the discipline.
• We make bad decisions.
• We don’t know what is the right or wrong decisions so we don’t make a decision.
• We get sucked into glamorous marketing and don’t know how to evaluate if the investments are any good.

All of those reasons are spot on. What do you think? Are there any other reasons you’d add?

Choice overload is a big problem

We’ve had an explosion of choice but our ability to make wise choices has not kept pace. So we hit information and choice overload.

In such circumstances often we either:

• Throw our hands in the air in exasperation and do nothing.
• Grab at something close that gets our attention and seems easy and do it whilst hoping for the best.

The problem with that is delay is the greatest cost in wealth creation. And bad choices can be just as costly.

This applies to all lifestyle goals

You may not have the goal to be a millionaire but I bet you have other lifestyle goals like a dream house, holiday, car, children’s education or retirement lifestyle.

Money is one of the resources that helps fund your important life experiences.

If you’ve ever said “I’d really love to do that but I just can’t afford it” then this probably applies to you. I bet the reasons you didn’t have the money for what you really wanted when you wanted it include those reasons listed above.

What to do about it

The elusive delayed gratification

Applying discipline is tough.

In the financial context I suggest you:

• Get clear on what matters most to you in life
• Save for the significant
• Automate as much as possible

Last Thursday one of my cash flow coaching clients said to me:
“I’d rather have lunch in Venice than buy lunch at work every day.”

She was getting clear on what was more important to her and then changing her habits to ensure she achieved her dream of lunching in Venice with the love of her life.

What about you? What experiences matter most to you in life?

Once you know what you really want next I suggest you harness recent technological advances to do the heavy lifting and protect you from your impulsive self. In the old days they used envelopes or jars and manually topped them up. Now you can have multiple online high interest bank accounts and set up automatic transfers to coincide with your pay cycle.

Learn how to make smart choices

You don’t need to know everything. You just need to know what you need to know.

You can save yourself a lot time, indecision headaches and stress if you learn how to filter the information overload.

The big time saver comes from learning how to quickly filter out things are not appropriate to you right now.

The big financial kick comes from knowing how to choose actions that are right for you and will boost your net wealth. You can avoid procrastination and inaction and get on with doing.

To have enough money for what you really want when you really want it I strongly recommend you invest time in learning how to make smart choices.

Stop scouring the internet and media for tips on the best shares, suburbs and other investments to buy into.

Rather than learning more about all the possible investments out there instead learn decision making models and frameworks you can use to filter every new thing you hear.

The knowledge of how to choose stays with you for life and can be frequently reused. Learning how to choose therefore pays you dividends for life.

You gain clarity from knowing how to identify what are right and wrong decisions. Therefore you’re much less likely to get overwhelmed and either do nothing or follow the next hot tip you hear.

Here’s the plug

My observation is that there are plenty of books telling you what you can do but not many teaching you how to choose.

So I created a course DIY Wealth Creation for Busy People that teaches you how to make the right choices for you right now. In the course I share many decision making models you can apply for the rest of your life.

They’re decision making models I’ve created so you can only get them from me.

If you want to learn how to make smart choices I recommend you check out my course DIY Wealth Creation for Busy People.

Interested but can’t make it?

If you’re interested in the course but the time or location does not suit you please e-mail me and let me know (including interstate folk). That will help me make smart choices about other formats for effectively sharing the knowledge.

Article sources:

• ABS 1301.0 – Year Book Australia, 1991
• ABS 6554.0 – Household Wealth and Wealth Distribution, Australia, 2005-06 (latest release)

You may also enjoy these related articles:

1. An updated wealth creation rule of thumb
2. How to make smart financial choices
3. Ruth Ostrow’s tip on how to discover what matters