Comfort with Money

by Rodney Gibson Financial Advisor

I am a sole practitioner with 40 years experience in finance, taxation, law, business and accounting. I am currently associated with SALA Financial Services. I provide the following:

  • Estate Planning, including wills and powers of attorney (EPOAs)

  • Estate Management

  • Taxation advice

  • Investment advice, including superannuation

  • Business structure advice

 

My aim is to assist you to live within your means and achieve all your financial goals.

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Mortgage - A Dirty Word?

I remember as a young child overhearing a couple talking about their neighbour in terms of pity, citing the fact that the said neighbour “had a mortgage”. Shock horror! As a young adult I was somewhat intrigued to hear a respected businessman boasting of the fact that he had a million dollar mortgage. If you have a mortgage these days you are guaranteed to have an asset as well which overshadows the said mortgage (unless it’s one of those “submarine” mortgages which prompted the GFC!). The sensible use of debt has enabled the vast majority of the world’s richest people to become mega millionaires. “Debt” is a four letter word, but as long as it’s preceded by the descriptive “manageable”, it

Opportunity Cost (Again)

If you live in a mortgage free house that you own and it’s worth $600,000, then in addition to rates, insurance and maintenance it’s COSTING you about $800 PER WEEK to live in your own home. This is the “opportunity cost” of owning the asset – what you are losing by not putting that asset to work for you by earning you money. If you consistently have “substantial” amounts in your cheque account, the bank may be generous enough to charge a nil account keeping fee but it is still costing you money to keep it there instead of putting that money to work.

Living Wage

The phrase “a living wage” compared with a minimum wage has a poetic ring to it but who is going to make the judgment on what sort of a life you can live on a “living wage”. I have 3 children and the living wage I needed when they were all at school was dramatically different when they had all left home and I still had the same job and income. I seem to remember that the “essentials” of life are food and shelter. If we asked a range of people from different socio-economic backgrounds to give a list of the facilities without which life would be unbearable or even not worth living the list would be very long and would certainly include, for some, champagne, Chanel and Mediterranean cruises. Fo

Margins

At least 60 years ago (and possibly still today) some awards converted time and a half overtime into double time after 3 hours had elapsed. I worked under such an award and could never understand the problems the foreman had in getting anyone to work beyond three hours. The reason for refusal was always the same – too much tax! In those days I didn’t think these blokes got A grades in arithmetic at school, but that’s a disease that afflicts large numbers of workers in all sorts of industries. It also afflicts pensioners but in that case the reluctance to earn taxable income is fueled by the horrors of losing a smaller amount of non-taxable government grants. Very curious!