Talking Money: Rude or Not?

Talking about how much you earn is a big taboo. It’s a big no-no for dinner party conversations, or over coffee with friends, sometimes it’s even a bad idea talking about it with family, and your significant other.

Why is such an important topic and massive aspect of our lives not discussed more in the open?

I think that one of the reasons for so many people having money issues is due to the lack of talk among family and friends about finances. I don’t care how much my friends earn. Their earnings don’t define our friendship.

Money ought to be a topic we can talk to our family and friends about without feeling uncomfortable or embarrassed. Honestly, I don’t care if people know how much I earn or spend. Actually, I’m very open about both (my spending habits have been shocking of late, I admit I’m an emotional spender. I’m on about the average annual income in Australia).

It’s funny. You hear people talking about their sex lives over lunch but as soon as the topic of money comes up the table goes silent. If not silent there’s a lot of umming and arring, vague comments that are generally nowhere near the truth. Then they go back to freely and comfortably talking the previous night’s shenanigans.

Talking about sex is ok but talking money isn’t? I don’t get it.

I recall lunch dates with friends where each dollar was accounted for. There were arguments over the bill to the last cent. The situation made me cringe. At the moment one friend who is getting married is accusing another who is supposed to be the maid of honour of demanding the bride to be pays for everything related to the wedding party. There have been no demands. Is it worth losing a fifteen year friendship over misperception?

While you probably don’t want to announce it to any old soul that you just scored on the Gold Lotto, discussing your finances when the need arises isn’t so bad. If my friend asked me outright how much I earned I’d tell her. If she wanted to know how much I spent on a car, a house, or the new pair of shoes, I wouldn’t hesitate. If I had problems and needed advice from a friend on how to curb my spending there shouldn’t be anything wrong with asking for tips and tricks especially if they haven proven successful to them.

We don’t want to revolve all our talk about money, but making the topic less taboo could help rinse away a bit of the financial strife a large portion of the population is in. The truth is that people may look rich with diamonds on their fingers, driving fancy Mercedes Benz and living in a beach front apartment but at the same time their Amex could be maxed out, creditors knocking on their doors and no more than $1000 in their savings account.

Money is money. It’s a means to an end. It’s better that you have some than none at all. Most of our lives are spent earning it and spending it. For some reason we’re afraid to discuss it.

Do you think people should be more open about their finances? Or should it be a taboo topic?

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Swap Not Stop

Changing your spending habits is not the easiest of tasks. You can’t expect to become a pro money manager of your own household if you’ve been struggling and living pay check to pay check for the past decade.

Just like anything else, becoming money savvy takes time. That’s just fine. It’s better late than never.

What I’ve noticed in my own spending habits is that deprivation is often to blame for not sticking to a plan. You don’t want to go cold turkey and a few days or weeks later go on a massive binge that ruins all your hard work.

No more spending. No more going out with friends. Forget dining in restaurants. Take away coffee, not a chance. Pack your own lunch. Leave all your cash at home. Don’t even think about taking the ATM or credit card out of the freezer.


Life’s too short to say no to everything. And you shouldn’t have to.

You need to be able to still enjoy life while you’re working towards achieving financial freedom because you don’t know what may or may not happen tomorrow. I think it’s silly putting off living your life for when there’s enough just as it is silly living pay check to pay check.

So, instead of stopping all your favourite habits it’s much easier to swap them.

I love eating out. Breakfast, lunch, dinner and even in between. It’s convenient but it can get pricey. It doesn’t have to be. I still eat out but I’ve swapped some of the cafe and restaurant meals for barbecues in the park, coffee at the beach, breakfast instead of dinner, once a fortnight instead of once a week.

Now I have more satisfaction from a picnic by the beach than I do from dining at a fancy restaurant. My bank balance is healthier too.

Here are some other swaps to help you save while keeping your sanity in tac.

Weekend drinks out to Friday night drinks at home. 

Lunch in the park with friends, everyone brings a plate.

Staying in to watch a DVD with homemade popcorn instead of the overpriced cinemas. 

Offering your time and skills instead of forking out for expensive gifts.

Washing your car while working on your tan instead of the local car wash cafe.

One Lotto ticket a month instead of three per week. 

Home made pizza and burgers instead of take out varieties.

A walk in the park with friends instead of gossiping over cake and tea at the cafe. 

Cleaning out your wardrobe before cleaning out your wallet.

Meet up with friends for a run outside or join a group boot camp instead of hiring a personal trainer to keep you accountable.

Massage and pedi in the comfort of your own bathroom instead of a salon.

Growing your own herbs and veggies instead of shopping organic.

What other swaps do you think could save you money and give you more satisfaction from every day living?

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3 Steps to Financial Freedom

Step 3: Eliminate debt

Debt is a pain in the ass. It creates stress, forces us to work longer hours and creates worry that could generally be avoided.

At first it starts small. A $500 credit card. Then a credit increase. Followed by a car loan. Student loans. A personal loan. Then a mortgage. It all adds up and before you know it the debt spirals out of control.

If you’re one of the lucky ones who have been smart with money from the beginning then congratulations. You’re a step ahead. For those who have debt to worry about it’s time to take control of it and start the process of elimination.

1 – Start small. Take your lowest credit card or loan and pay it off first. You’ll get it out of the way quicker and gain a bit of momentum and motivation to keep reducing your debts.

2 – Freeze the credit cards. If they’re in your freezer you’ll have to defrost them before use so that will give you time to rethink your purchase.

3 – Only spend the cash in your wallet and nothing more. Leave a minimum amount. Whatever is left over at the end of the day, pay it towards your debts.

4 – Make extra repayments. Just because you’ve taken out a 5 year car loan or a 30 year mortgage doesn’t mean you have to pay if off for so long. An extra $100 per repayment can take months of your car loan and years off your home loan. It doesn’t take much to make a significant difference over time.

5 – Use some of your savings to pay down debt. Just leave some for those unexpected emergencies.

Debt elimination goals for 2013:

Cancel one of my smaller credit cards – $1800 with HSBC. This one has about $50 owing on it at the moment so it can be done any day now.

Reduce the balance of my $6000 WBC card to $0 in the next 3 months. It was almost at zero but because of a few medical bills and unexpected expenses it went up again to about $3k. Hopefully, my health insurance provider should reimburse me about $1k so that will go straight onto the card and with about six pays I should be able to pay off the rest.

There’s a personal loan that’s haunting me. A huge mistake loan, I call it. It was meant to help me consolidate my loans but really it just got me into a lot more shit. Consolidating is not always the best option. Anyway, I have about $6k on that and am aiming to have it exterminated by 31 October 2013.

HECS – thanks to not paying for a bachelor and master’s degrees and switching a few times, I racked up a $40k HECS (high education) debt. I’m paying it off slowly. It’s not a priority though. The obligatory 4% – 6% (depends on how much I earn each year) of my annual income is used to pay this debt off. It gets done automatically with my tax. I don’t have to think about it. Once my other debt is paid off I might consider making occasional lump sum repayments on this as the government gives a 5% discount for extra voluntary contributions. So if you pay $1000, the government will take off an extra $50. It’s not much but over time it makes a difference.

What are you doing to help eliminate your debt?

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3 Steps to Financial Freedom

Step 2: Invest

Investing isn’t just for the rich. It’s an effective way to slowly build your wealth regardless of your income.

All investments carry risk. It’s important to do your due diligence before making any investments and speak to a financial planner so they can advise you in regards to your personal financial situation.

At the moment our options for investing are limited to shares and superannuation. In six months time we hope that we’ll add property to this also.


I sorted out my super last year and consolidated all my accounts into one. The current balance is at around $15k. It’s not much. I spent four years living overseas and missed out on putting funds into my super. Fortunately, I don’t believe in super as being my source of income in retirement. That’s just something extra I can dig into once I’m 65 and over.


In 2011, I purchased my first parcel of ANZ shares. $1000 worth. Not much by any means but a good start. I felt good making that purchase. A few months later I purchased $1000 more. I’ve also signed up for the Dividend Reinvestment Plan. Every six months, the company pays dividends. Instead of taking cash, I get extra shares. Each year, the balance grows without me having to do anything. That’s the type of investment I like

Shares goal for 2013:

Increase my current $3k investment in ANZ shares to $5000

Purchase a parcel of shares ($1000-$2000 worth) in another high yield company. I’m still looking at a few that I’m interested in and have narrowed it down to about four. I’ll talk to my broker about it and discuss what my best option will be at the time of purchase.

(My investment strategy for shares is long term. If they go down in the next six months or even two years I’m not going to lose sleep over it. The plan is to hold these shares for 7-10 years at least and eventually use them as a stream of income).

Property goal for 2013:

If we save enough deposit, we would like to purchase our own home or an investment property by December. Preferably a 3 bedroom, 2 bathroom property on a decent sized block. Here we’re looking at anything from $350,000 +

The other option is a 2 bed 1 bath unit 2-3km from the beach at around $250,000. Time will tell as to which option we’ll choose. This all depends on our financial position and situation in six months.

Next up is debt elimination.

So what are your investment goals for this year?

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Retire by…

I’ve been reading a lot of articles and posts about people wanting to retire by 30 or 35 or 40.

I think that’s awesome.

Being able to retire 20 or even 30 years sooner than the norm would be liberating. Imagine all the things that you could do that you always claimed you had no time for. All the dreams you could fulfil.

I was one of those people who wanted retirement by a certain age. In theory it was doable but in practice, well, I didn’t have it in me then. Now as I’m on the verge of turning 30 my perceptions of what I want are changing. I’m sure they’re going to change when I’m forty too.

For now, I want to focus on financial freedom rather than retirement. I don’t plan on working full time till I’m 65 or 70 and then worrying about my superannuation being enough to live of or relying on a pension. However, I’m not going to stop working completely at 40 either, even if I’m financially free and able to.

I don’t see complete retirement as a the best option (at least for me, others may disagree) or for the economy. If you’re thinking who gives a hoot about the economy consider the bigger picture – yourself, your kids, your future grandkids and their kids. Taking financial responsibility today can reduce the financial burden on your loved ones later, especially in such uncertain times like today.

How different might things be in 10 years time, 20 years, in 30 years when you’re ready and able to retire? Is the pension still going to exist? Will superannuation be effective? Will you have enough to live on?

Retirement sounds like an ending. That’s it. I’m done and out of here. No. I don’t want that. I want a choice. I want the financial freedom to choose whether I work or play. I want the freedom of being able to choose whether I live in Australia or spend several months abroad. I don’t want to be stuck in the rat (or rut) race until I’m too old and set in my ways. That doesn’t necessarily mean early retirement though.

For me, financial freedom is the goal. It means making a certain figure from passive income. Six figures in passive income would be nice, that’s anywhere from $100,000 to $999,999. Since I’m a bit of a geek, the challenge is going to be fun and rewarding.

Tomorrow I’ll tell you my first steps to achieving that freedom.

What are your thoughts on financial freedom?

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One Account or Three?

Once upon a time you had one bank account and that was enough. Now you can have the online savings account linked to your everyday account, a sub account to save for that holiday and even a first home owner account to save for probably the biggest purchase in your life, your house.

Whenever I bring up the subject of opening another bank account the other half just shakes his head and smiles. He just doesn’t see the point in having five different bank accounts for five different goals. You can save for all these things using just one account. At least he can.

If you find it difficult to control your spending when there’s money in your everyday account you’re more likely to see it disappear than watch it build every week. That’s where multiple accounts come in handy.

Generally, a sub account is not linked to your EFTPOS card. To spend money you have to do an online transfer which takes time. With some accounts there’s even a fee involved. Having money transferred into different accounts from each pay packet helps you save for all those bigger goals – a holiday, a car, that house deposit.

At first you might miss the money being moved into your sub accounts, but within a few short weeks you learn to live without it but you can sleep easy knowing that you’re on the road to achieving your financial goals and reducing the risk of wasting your cash on clothes, take out and too many Jimmy Choos.

I currently have three accounts plus one joint with the other half.

Our joint account is the one we’re using to save up for a house deposit. We want to have at least $20,000 in there by August and since we had some unexpected but necessary expenses in recent months our mutual savings dropped from $15,000 down to $2000. But having said that we did manage to eliminate one of my annoying credit cards (less debt, yay!!), we had an opportunity to buy car for cash (no loan, double yay). Since we have family overseas and we know we may not be able to visit them again for at least eighteen months or longer once we buy our house, we grabbed two cheap plane tickets saving us over $1500 (for us this travel is a necessity).

The other three accounts are an everyday account that’s used to receive my salary and pay the bills. One sub account is the emergency fund I’ve started growing. I’m hoping to increase it to $2500 by the end of the year. The third account is very important to me. It’s my baby account. Since we’re planning on starting a family, I’d like to have at least $10,000 saved in there before our future baby is born to cover expenses and give us peace of mind during the time I’ll be on maternity leave.

When it comes to the number of accounts you have it’s important to consider what works for you. If you can organise yourself with one account and stay on track with your goals that’s great. If you need a separate one for a house, car, holiday or baby then that’s great too. Just remember to choose an account or accounts that don’t charge you fees.

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Tiny Steps

Saving is pretty simple when you think about. Spend less than you earn and chuck the difference into your savings account. Unfortunately, it’s been made into a more complex task that many people are failing at.

It drives me nuts when I hear people saying they can’t afford to start saving and then they go buy a bottle of coke from the corner store, purchase a Marie Claire with their Starbucks double latte, and a lotto ticket every Tuesday, Thursday and Saturday night. Then there’s those that can’t pay their bills on time yet there’s always enough to buy a pack a day and fill the fridge with beer. Heaven forbid they say no to dinner and drinks on Saturday night with friends.

I used to spend carelessly too and moan that I couldn’t hold a penny to my name. What’s $10 every day for lunch. It’s $50 per week? $2600 per year. It makes a huge difference. Then there’d be the breakfast on Saturday morning that added to $20, and there goes another $1040 on nothing. Over $3500 every year practically giving money away.

Now, don’t get me wrong. I still like my coffee from Zaraffas. Instead of drinking it everyday I leave it as my Saturday or Sunday treat. Unless it’s a special occasion, I can make my breakfast at home just the way I like it, and bring a sandwich or leftover dinner to work for lunch during the week.
The bank balance is starting to look a lot healthier now that I’ve found balance in the costly pleasures I enjoy. I actually enjoy my coffee or random meal out much more than I did before.

Saving isn’t rocket science (although sometimes it may feel that way). It doesn’t mean you have to start with 50% of your income to make a difference because you’ve wasted 10 years of your working life spending and paying others with your hard earned cash.

10% is a good starting point. So if you’re earning $750 per week, putting away $75 each Friday into a savings account shouldn’t be hard. If it is, don’t fret. You can start with 5% ($37.5) or even 1% ($7.50).

You can even work towards saving more by starting with less. Say for instance you want to really start saving but you’re finding it hard to put away 20%. The first week or pay packet start with 1%, then the second week aim for 2%, then 3% and so on. By the second month you could be saving 8% of your income and already have $270 in your savings account. Within 5 months you could have trained yourself up to be saving 20%. But even if it takes longer, you’re still saving something. And something is always better than nothing.

Even that 1% can make you feel empowered. You’ll start to feel more confident with your money. You’ll worry less because you’ll have a stash of cash for when it rains (and when it rains it pours). But that’s ok. Your savings will grow and you’ll be better off. So don’t be discouraged if you’re only starting with $5 per week.

Tiny steps are better than no steps at all.

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Which Comes First?

Investing. Saving. Debt reduction. Not necessarily the order we get told to get financially ahead. The traditional path would be to eliminate all debt, start saving and then think about investing.

What if you’re personality and your motivation came from elsewhere? What if the thought of debt reduction didn’t ignite any excitement in you to spend less and lower those credit card balances? What if you were to save and invest first and then crack down on your debt reduction?

Would you be wrong?

Absolutely not.

I was struggling with debt since my early twenties. My biggest mistake was getting a credit card when I really didn’t need one. I just wanted to feel grown up. Silly, isn’t it. It happens a lot. The consequences are nasty, the credit limit increases, the debt creeps up and sooner or later you’re left with a level of debt you can’t even justify.

My mid twenties I struggled with reducing the debt and being in the clear. While I still have a little bit to go by changing my tactics over the past twelve months I’ve managed to (a) reduce my personal debt by 50%, (b) increase my savings, (c) start investing, and (d) become more confident in my ability to attain financial freedom well before the standard retirement age.

By shifting perspective and focusing on saving and investing rather than just debt elimination I’m in a much better financial position today then when I was at the beginning of 2012. I’m confident that by the end of this year I’ll be free and clear of personal debt and already have a savings and investment base to work with.

When it comes to becoming financially responsible it’s important to find the method that works best for you, your lifestyle and your personality. While you might be told it’s best to get rid of your debt before you think about investing and building your savings, and for you that might be the case, for others they’ll feel more confident if they put in $1000 into a shares account, or start contributing 20% of their income into an online savings account.

The most important thing to do is ensure that whatever you spend, save, invest or use for debt reduction fits into your weekly, fortnightly or monthly wages. The worst thing you can do is live beyond your means. After all, that’s where all the trouble with money starts.

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$3.50 Lattes

I love my latte. I can’t imagine depriving myself of this one treat that keeps me sane and keeps the words flowing. The lovely latte or cappuccino or espresso or whatever coffee that strikes one fancy is often one of the things that gets taken of the list of can and can’t have’s when considering a budget. It’s one that I refuse to remove from mine. Right now as I write this I’m sipping on the latte at a coffee shop I frequent on a regular basis. It’s what keeps me sane and helps my brain function. Over a latte which will take about an hour to two to drink I will get as much writing done as I would sitting at home in five. That $3.50 is saving me time because I’m not wasting it surfing the net (no internet access at the café), playing Solitaire (why waste battery life), and no distractions like putting up the washing, taking the dog for a walk or getting up to look in the fridge for the fifth time in half an hour. I just grab my coffee and get my work done.

$3.50 x 52 = $182 per year if I only drink one cup a week, $364 if the amount goes up to two cups per week which is a more accurate calculation. Yes, that’s money that could go into a saving account, it could also go to reduce my debt or towards a holiday. The other side is that it’s only $3.50(or $7.00) which gives me a ton of satisfaction and puts a smile on my face and gets the work done – now that’s priceless.

The $3.50 comes out of my sanity allowance (I got this term from Anita Bell’s book Your Mortgage and how to pay it off in 5 years by someone who did it in 3). The sanity allowance is a weekly amount that I’m allowed to spend on anything I want, and that includes my yummy latte in a mug. Anita, recommends no more than about $20 a fortnight however for me and my lifestyle needs and wants that figure is a tad on the low
side. Currently, as I’m not working that’s my sanity allowance for a week, once I do start working I will probably increase that amount to about $50 per week – I love dining with friends. But as someone who doesn’t smoke and rarely drinks more than a glass or two of wine, that’s really not much. Many people spend more than that on cigarettes, chocolate and alcohol each week. The important thing is not to judge and find a figure that suits your needs and wants, and your income. The $3.50 latte is something that is a permanent fix in my budget and it is a treat that keeps me happy.

What treats do you budget for and how do they make you happy?

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