The seasons are changing, the weather is heating up, and so is the talk about the stock market decline, and the state of global economies.
Will the Reserve Bank drop interest rates even further than the current record low rates? Will the price of oil, coal and iron ore rebound? Are share prices going up or down?
While the answers to those questions will play out over time and no doubt make up many stories in the media, knowing your financial position and the impact that these factors may have on your business or personal income and expenses, assets and debts, is paramount.
So, the first question you need to ask yourself is: where am I (or your business) now? Without knowing exactly how good (or bad) your financial position is, you won’t know whether you need to change your investments, pay down debt or take another strategy to further your financial security. On the other side of the equation, by reviewing your income and expenses you will then be able to work out your financial capacity for change i.e. how much money you have to invest and reduce debt.
Are you stuck and don’t know to work it all out? Contact us at Value Beyond to discuss how you can make sense of the numbers, and discover some strategies for putting yourself in a better financial position.
To Balloon or Not Balloon, Is That Even The Right Question?
One common option is to finance a car over 3, 4 or 5 years, with a residual amount payable at the end of the loan. This option usually results in a lower monthly payment, but is this the best option?
Consider the graph below showing the loan balance over 5 years for $50,000 car, one option paying that loan out fully, the other with 40% residual.
The zero residual option has a monthly repayment of $966.64 (6% interest, 60 month term) while the 40% residual option has a monthly repayment of $679.98. So the residual option is better right, because the repayment is nearly $300 per month less?
Not quite so fast!
Over the whole 5 years, the total interest cost on the loan looks like this:
The 40% residual option results in an additional $2,800 in interest payable over 5 years, plus you will need to find a $20,000 lump sum at the end of the 5 years – alternatively you will need to sell the car to pay the loan out, or take out a further loan which could see you paying for that car for 8 years.
ATO and myGov
This has been particularly notable of late as Notices of Assessment will be sent to myGov if you have linked your ATO account. As a result, we no longer receive any notification that the notice of assessment has been issued, and must manually retrieve a copy of the notice of assessment if we are aware that it has been issued.
There are a lot of benefits in having all of your government services in one location and being able to retrieve information online at any time of the day.
However, if you wish to revert receiving ATO correspondence from electronic to a paper delivery method, you can call the ATO on 13 28 61 Mon-Fri 8:00am-10:00pm, or 10:00am-4:00pm Saturday (except public holidays).