Merry Christmas to me! Lifting the budget

Once upon a time I decided I wanted to retire early just like Mr. Money Mustache. I was convinced I would get my spending down below $30k a year, and have hundreds of thousands saved by the time I ticked over 30.

I was sure I would be a DIY queen, and flip houses like Mr. 1500. I'd make amazing food like Mr Tako, and retire to the countryside like the Frugalwoods.

Alas, as I sit here at (almost) 28, it is clear that these things take longer than anticipated. If I want to kick my FIRE into overdrive, I should be cutting back costs so I can save and invest more.

Instead, my Christmas gift to myself is permission to spend more.

In what might be seen as a frugal fail, I think it's time to cut myself a bit of slack, and loosen the purse strings. There are a few reasons why...

Inflation

Firstly, let's talk inflation, specifically Consumer Price Inflation. We're all affected by this, and it's a strange economic phenomenon where the exact same loaf of bread that used to cost me $3.40 a loaf is now costing me $3.50. It's the baffling part where my energy efficient changes haven't made a dent in my power bill, despite my usage rates having dropped by 15%. It's seeing clothes on special that cost more than you paid for them at full price five years ago.

There are many reasons why inflation happens (and if you want to dig into it, you can start here) but for the sake of this post let's just agree that it does happen. It's the reason most employers give you a small pay rise every year - so that you can maintain the same lifestyle. 

For the last three years inflation has fluctuated between 1% and 2%, mostly towards the upper end. This means that something that cost you $100 three years ago will probably cost you $106 now. Or on the flip side, spending $100 now should get you the same product as spending $94 three years ago.

Putting this into perspective, three years ago I set my budget for $40,000 a year. That same amount of money now only buys me $37,650 worth of goods.

Business Expenses

Once upon a time I strove to do just as well as the personal finance gurus. MMM and family lived on $30,000 a year in the early days of his journey, and Mr 1500 planned for his family of four to live on $40,000 a year. The first thing I noticed about this was a significant difference in living costs between Australia and the US. The second thing I noticed was that this didn't include business expenses. However, given that I was just spending for myself, and not for a family, surely I could reach those levels.

Here I stand three years later to say that maybe that was ambitious. However, it's not because I lack self control (I just spend a week debating with myself the value of spending $7.50 on a video game that was on super special). It's because I'm trying to cover the costs of an investment property with that money, including $8,500 a year in interest repayments.

The biggest expense in the Holy Trinity of Big Expenses is housing, and I'm paying for two of them! In fact, my annual budget is $15,000 for house number 1 (that we live in), another $15,000 for house number two (that I rent out) and a measly $10,000 left over for myself - that needs to cover medical, groceries, my phone bill, and still have some left to Have A Life.

Reductions in costs

But, wait! I hear you saying. If my biggest expense is paying two mortgages, then surely over three years since setting a $40k budget, my interest repayments have reduced as I paid down the principal. I am paying principal and interest on my loan, but I'm only paying the minimum, because I'm a firm believer in using the equity in your home to build wealth elsewhere. 

As an employee of the bank, I enjoy fee free loans and I've taken full advantage by restructuring my loans twice, and pulling out as much equity as I can. Coupled with that, while the Reserve Bank interest rates have not changed, all the major banks have snuck their interest rates up in the last couple of years. As a result, I paid $732 interest in October 2016, and $708 in October 2018 - a whopping reduction of twenty-four dollars!! Wow! A whole $288 over the year.

Except remember that according to my (very rough) inflation calculations above, my spending power has reduced from $40,000 to $37,650. I'm down $2,350 in spending power, but up $288 in interest savings!! That's... not brilliant.

Life is calling

Here though, we come to the crux of the issue. Life is calling me. I can throw up all the numbers I want, and I can come up with inventive ways to lower my costs. And while I will continue to do so, certain things defy even the most frugal of magicians. Here's a couple of pieces of life I want to experience, before I'm too old to enjoy them.

The grass is always greener

Have you seen grass? Smelt freshly cut grass? Have you lain in a hammock under a shady tree on a warm day drinking a glass of champagne and reading while the hours drift by? I haven't... because I have no grass. Our house is small, we have approximately 15m2 of dirt that is split between my chickens and my vegetable garden. I love both of these things, and wouldn't sacrifice them for a small patch of grass, but I'm keen for a bigger garden.

I want to step out my back door and gaze over the lawn. To see my chickens scratching in the near-distance. To see bees buzzing around the flowers. I want some space to stretch out, and of course...

It's time for a dog

When I was young I dreamed about all the pets I would have when I moved out of my parents house. Right now it's packed to the rafters with Mr. FIRE, FIRE-cat, four chickens, seven quail and a budgie. 

Mr. FIRE and I coo over pictures of puppies. We debate whether our dog will run mountain biking trails with him, or learn to do tricks and agility competitions with me (it's both right? definitely both). We tease the cat about how she's going to hate us when she has to share the couch with a dog. FIRE-cat ignores us, because she's a cat.

Realistically, we probably won't get a puppy. I've worked in shelters in the past and I know that puppies are noisy, and stinky, and they cry, and they poop and they chew things. We'll probably bring home an adult that's settled into themselves. But regardless of the age, we're so keen to have a dog. A big one.

This is not me. But hopefully,
soon it will be

I believe I can fly

This is an odd one, but I really want to hang-glide. And I've been watching the budget for years and there's never enough wiggle room. As inflation takes hold, the purse strings get tighter and hang-gliding gets further and further away. 

What's in a game?

Lastly, and least importantly - I miss the relaxed childhood of video games. I can't ever recapture a time when I could play games for hours on end, only taking a break to eat the dinner mum had cooked, which was generally my first meal of the day. 

I have responsibilities, see above for a cat, four chickens, seven quail and a budgie.. all of who like to be clean and fed. On top of that, I've sold 40 hours a week of my life to an employer. But I still sneak in a game here or there, and on my current budget each one I purchase sends me into an overspend-shame spiral. 

What now?

While staying accountable for my spending will keep me on the road to FIRE, my current level of tightness is getting too restrictive. I'm finding it hard to agree to events with friends, because while I don't resent spending on them, it means I have nothing left for the rest of the month. 

While it hasn't really hit yet, I'm not interested in being miserly-FIRE. I've been chasing the finish line for three years, and it's still at least 7-8 years away. I don't intend to spend those years refusing to spend on things I know will make me happy, because it might shift the finishing line by a year.

Based on the numbers above, I could raise my budget to $42,500 without feeling a smidgeon of guilt. It's the equivalent of 2% a year since I first set the budget. However, I have also been reducing my spending in the last three years - at first I recorded $46,000 in a year, then $44,000, and then down to $42,000. While it would be nice to assume the downward trend will continue, there's no signs that I'll hit $40k this year. In fact, it looks like I'll spend a bit higher, while still feeling pinched.

So, I'm giving myself another $924 a year to play with. It might seem like an oddly specific number, but that's because I'm shifting my monthly allowance from $3,333 up to $3,400. A nice round number. 

Of that $77 a month, $40 is being split between my properties, $10 into groceries, $10 into pets (in preparation for a doggo!) and $10 into travel, with the odd leftover $7 going into the 'Other' category (where most fun stuff is bought).

While this isn't a hugely exciting splurge, it's a healthy update. I'll still be striving to reduce boring spending like utilities, mortgage payments, and groceries by seeking better deals and inventive approaches. But hopefully I'll stop eyeing off the categories that pay for living a good life.

There's no point in reaching FIRE if I don't enjoy the journey there.

Afterpay (is not) for dummies

When I first saw Afterpay spring up, I thought it was the dumbest way to scam people into spending money they didnt have. With slogans like "Broke AF but strongly support treating yourself? Afterpay" this was clearly a stupid trap for stupid people. A highly effective trap, but a stupid one nonetheless.

If you don't have money to spare, you sure as heck shouldn't be 'treating yoself'. But then I got to thinking, if you already have the money, and already intend to spend it, is Afterpay any worse than a credit card? Time for a quick review.

First things First, how is Afterpay making money?

At a glance you'd assume that Afterpay is making money from you via fees. In fact, if you're on top of your payments, Afterpay doesn't make a cent from you. Instead, they collect fees from the retailer. (Side note: If you really want to support a business, don't Afterpay with them, you're cutting into their profits)

Afterpay uses an age-old 'debt purchasing' model. When lenders are tired of chasing people for money owed, they can sell that debt to a different, more ruthless company. The original lender will sell your debt for less than you own, recoup most of their money and wash their hands of you. The debt collector then hounds you to make the payments, and collects a small profit.

Afterpay is like that, but friendly, and they do it at point of purchase.

For example, you purchase something for $100. You now owe the retailer $100. This is a debt.

Afterpay purchases that debt from the retailer for $96 (specifically, they charge 30cents, plus 4-6% of the transaction value)

The retailer accepts 4% less for an immediate sale. They're hoping that you'll spend money you wouldn't normally. The retailer would be better off if you paid them directly, but hopefully with the lure of Afterpay you've spent extra to close that gap.

Afterpay then collects $100 from you over 4 payments. They make $4 on the transaction.

The important part is, as long as you don't miss the payments Afterpay isn't going to cost you a dime.

Just like a credit card

In a sense, using Afterpay is just like using a credit card. You walk away with the item, and a debt to be paid later. To use Afterpay well, you need to follow three simple rules: 

1. Don't spend money you don't have.
2. Don't spend money you don't have.
3. Don't. Spend. Money. You. Don't. Have.

Got it? Good. If you are worried about your self control you can set up a secondary account for Afterpay transactions. When you make the purchase, move the required amount of money into the Afterpay account and leave it there.

Using it to your advantage

If you Afterpay something, you get to hold on to your money for a little bit longer. Just like with a credit card, this 'spent, but not gone' money can be placed in an offset account against a much loved mortgage, or a high interest savings account. The money can keep working for you before you make the required payment.

Say you make a $400 payment on your credit card and you don't need to pay the balance until 30 days later. You leave $400 in your offset account for those 30 days, against a 4% home loan. In 30 days, you save 75.6cents off your loan. While it's a small amount, it's free money.

Afterpay works even better, because the payment is stretched over a longer period, 42 days from the first payment to the last. Over 42 days, you accumulate an 88.8cent saving, even accounting for the incremental payments across those 42 days.

Combining these two delayed payment options,  you could take two whole months to pay back that $400, and reap the rewards, including credit card rewards points.

After quickly reviewing the numbers, it turns out that if I make a $400 purchase on the 1st of November with Afterpay, instruct Afterpay to take the money from my credit card, and hold the money in my offset account, I can save $1.578, equivalent to getting a 0.4% discount on my purchase.

Here's how it works:

1st November. Set up a $400 purchase with Afterpay, linked to my credit card. Afterpay immediately takes the first payment of $100.
I owe $300 to Afterpay, $100 on my credit card, and have $400 in my account. 

15th of November. Afterpay takes it's next $100.
I owe Afterpay $200, plus $200 outstanding on my credit card. I have $400 in my account, and in the past two weeks, I've saved 61.4cents. 

29th of December, Afterpay takes another $100.
I owe Afterpaty $100, plus $300 outstanding on my credit card. I still have $400 in my account, and in the month since making my purchase (that I still haven't paid for!) I've reduced the interest on my home loan by $1.227 

1st December, the party starts to die down... I make a payment on my credit card.
I owe Afterpay $100, my credit card balance is zero, and I'm down to $100 in my account. So far I have saved $1.249 worth of interest. 

13th December, Afterpay takes it's final $100
I owe $100 on my credit card, and I'm holding $100 in my account. Savings so far: $1.381 

1st January, I make the final payment.
I owe nothing on my credit card, and I'm not holding any extra money in my offset account. Savings over this period: $1.578

Is it worth it?

I hear you pointing out that I've just built an elaborate system for a measly $1.578 savings. The saving is so small I'm pushing my reported number out to another decimal point. It sounds like a lot of effort for such a minuscule return.

I'm here to tell you it's absolutely worth it.

When I shop online, I typically use PayPal. It used to take me 2-3 minutes to type in my details (forgetting my password a couple of times..), confirm that I was targeting the correct account, and hit 'Go' on the payment.

When I set up my first Afterpay payment, it took me less than 10 minutes, including the screen timing out while I wandered down the other end of the house to find my wallet and pat my cat. Any future payments (assuming I use the same credit card) will take me the same amount of time as logging in to PayPal. Just like that, I had a cat tree on the way for FIRE-cat, and I wasn't making the final payment for two months.

If this was a difficult, laborious task, I'd tell you to throw it away, and just make the damn payment. However, this is money on the table. For a couple of minutes of one-time set up, you can reap the (small) rewards forever more.

But, and I cannot stress this enough, don't spend money you don't have. Afterpay and credit cards are not a way to 'treat yoself' when you're 'broke AF'. These delayed payment tools are tricks that wily spenders can use to get ahead. They are also bear-traps that set you up for failure.

Missing an Afterpay payment will cost you $10, plus another $7 a week until the payment is made, regardless of the transaction size. Thankfully the fees are capped at $68, but a $20 pair of jeans could cost you $88 if you stuff up the payments.

If you've got a good hand on your finances, Afterpay can be an easy way to squeeze that extra bit out of each dollar. If you've got even the slightest concerns about keeping on top of your payments, stay away.

So there you have it, Afterpay (is not) for dummies.

Adult Goals: November 2018

After the financial whirlwind of October, it was nice to settle down to some more balanced spending in November. The sun came out and we caught a brief glimpse of summer before being hit with some yo-yo storms and heavy rains.

Thankfully the sun triggered a 'spring cleaning' reflex in me, and for a time I felt like a proper adult, kicking goals and cleaning dust.

Adulting

The November goal was to organise things. While I can confirm that absolutely nothing was alphabetised, so many things were tidied and thrown out. A hoard of moths moved into my pantry which inspired a clean out and a rearrange where I found three different packages of cocoa powder, as well as multiple packets of sugars and flours. While the moths were infuriating, my cupboard is much more streamlined now.

Not only that but I pulled every, single, damn, tupperware container out of the cupboard and matched lids with bases. It's tidy and beautiful. It was not a fun time, but the results are amazing.

November Adulting: Success

For December, I planned to do yoga. And I think I'll stick to yoga. I've been taking better care of my body for the last few weeks, and getting some regular yoga in will be the real icing on the cake.

Savings

Five months down, one month to go, and I can absolutely guarantee I won't meet this goal.

A few days in November sat above the goal line, which was great. Unfortunately it didn't last, those big drops show my mortgage and credit card payments.

Thankfully November was back to normal spending levels after the craziness that was October. A couple of bills were due, and I bought a couple of things I'd been saving for, but nothing overwhelming happened.

This experiment has shown that I'm not great at saving money. I find 'don't spend' to be a very unexciting goal. It doesn't give me a thrill or a challenge, and as such falls quickly to a brainless auto-pilot mode. Contrast that with the Year of Investing where I increased my investment accounts by almost $40,000 in a year. Each week I was investing a bit more into my accounts to take advantage of Dollar Value Averaging. It kept me on track, and engaged. It was fun. Saving cash is... not fun.

My projected total at the end of 2019 will be a cash saving of just under $4,000 in six months, which is only two-thirds of my goal of saving $6,000 in six months. While it's disappointing, it's not a show stopper. I may only end up saving $4,000 in cash in this time, I'm on track to have collectively saved, invested and paid down mortgage debt by over $20,000 (wow!!).

Expenses

For the sake of curiosity, here's what I spent in November, which includes the save-to-spend amounts.

Category	Spent	Budgeted	12 Month Average
Home	$1,310.25	$1,312.50	$1,327.77 (down $25.95)
So technically the water and electricity bill were due, but since I paid a big amount towards the household bills a few months ago to meet the minimum spend on a card, Mr. FIRE has been paying the bills since then to balance out how much we've each put in. Therefore my average is coming down quite nicely.
Investment Property	$792.16	$1,166.67	1,307.54 (up 7.66)
A mortgage only month. Very nice after last months massive bills.
Personal Bills	$126.60	$126.67	$143.79 (down $1.69)
New lower phone bill! Woo!
Groceries	$284.29	$180.00	$205.80 (up $5.32)
This number is actually a lie. At the start of the month I bought a $100 Coles gift card for $95. It's valid for three years and seemed like an easy way to save 5%. The very next day I got an offer saying I would receive 5% cashback on all spends on my Coles credit card for a month. So I packed the gift card away for later. Unfortunately it blew up how much I spent this month.
Pets	$93.08	$35.00	$47.48 (up $5.71)
I made a lot of sales this month - $20 worth of Chicken eggs, and $6 worth of quail eggs. I then turned around and spent all that plus more on Black Friday to buy my cat a much needed (and very awesome) cat tree. And then I fed everyone - who knew food was so expensive!
Roller Derby	$171.49	$185.00	$228.04 (down $4.59)
Most of this cost was for camp, and then some money put aside for safety gear. All reasonable spending :)
Travelling	$110	$108.33	$39.17 (up $9.17)
Next year I'm hoping to go to Canada! I figured I better start putting money aside.
Comfort Food	$66.20	$40	$66.28
Hello, and welcome to a new category called "how much money do you waste on tasty food?". The answer is too damn much.
Other	$410.20	$180.00	$260.17 (down $50.91)
Well, despite spending a lot more than budgeted, I spent a lot less than last November and brought my average way down! I also moved comfort food out of this category and into it's own for better control. Apart from buying a Playstation 4 (which I had been saving for, and got during a Black Friday sale), this month spend was reasonably controlled - I restocked the wine rack at a significant discount and went to the dentist. Otherwise, not much was spent.
Total	$3,364.27	$3,300.83	$3,626.02 (up $10.99)
It is so nice to be back at normal spends after October. Still sitting above the desired spend, and above the desired average, but on a whole we're doing pretty okay. Buckle up for the festive season! I already have 5 events to attend, and even with my no gifts policy I still have a couple of gifts that will sneak in.

Digging deeper for the junk food failure

For years I've been tracking my spending. It started in my first year of university over a decade ago when I wondered how I could make so much money and still have none left at the end of the week. Back in the day it was a simple notebook where I wrote down everything I spent, and totalled it up at the end of the week. Over the years it has grown bigger, more complex, and thanks to Google Sheets, easier to use. and yet somehow I still can't keep control of the 'miscellaneous' spending category.

Pen and Paper

In early university I wanted to buy an investment property, so I knew I needed to properly track my money in and out. At the beginning, all I did was write down what I spent in a notebook, and tally it up at the end of the week. Then I started recording my income at end of the week, directly next to my expenses. Then I started writing down $50 a week for 'bills' and $50 a week for 'savings'. Each time I had a bill I would deduct it from the saved amount. Then I found that making big luxury purchases was hard to fit into the budget, so I started making a list at the end of each week of things I wanted, and putting $5-$10 aside for them each week.

It was a good starter system, but I couldn't really see what I was spending on over the long term. Was I a booze hound? Did I blow all my money on video games? Should I stop buying books? (never stop buying books...)

Technology revolution

A couple of years ago I graduated to Google Sheets. Now I had 12 months of my expenses in my pocket at all times. Recording my spending was easy with my phone. I never had to worry about my pen running out of ink, my book running out of pages, or explaining to everyone what I was doing.

My spreadsheet has morphed and changed over the years, to a point where I now have 1 tab for each month, with columns for each spending category. Another tab collates all that spending into one easy to see snapshot. Other tabs track money being diverted into spending, and my income - which allows me to pull out spending and saving percentages at the drop of a hat.

This visibility of my money habits has dropped my spending from $46,000 in the 2015/16 financial year, to $42,000 in the 2017/18 financial year. While not a dramatic amount, watching my spending going down, and my lifestyle staying steady (or going up?) despite inflation has been a warm fuzzy feeling of success.

Yet somehow, in all of this I've been completely unable to get a hold on my 'miscellaneous' spending category.

Digging deep for expenses

For about a year I've been ending every month by kicking myself and saying 'stop spending so much on miscellaneous crap! It's your early retirement you're wasting!'. Turns out this isn't the most effective method. A lot of things sneak into this miscellaneous category. Some I can control, some I can't. Things like care packages for my derby team mates when they break limbs, and (very occasional) lunch meetings with my co-workers are things that I agreed to when I signed up for these communities. Some things I know are wasteful (hello Red Wine!) but I love and so I choose to continue spending mindfully. And some things are just plain stupid habits, like $7 coffees every time I'm at the airport...

After utterly failing to control this spending, I did a one year review, and here's what I found:

Books - $99.91, $7.93 a month

I am absolutely okay with this! I re-read books all the time, and since I was a small child I've had my nose glued to the pages. I could get more out of this time / money by reading investing books, personal development and all that other nonsense, but I love the escapism of reading about dragons and magic. (Right now I strongly recommend The Waking Fire: Book One of Draconis Memoria )

Video Games - $46.54, $3.70 a month

This is great. Once upon a time I had a bad habit of buying Steam games that I never played because they were on special. It's nice to see I've properly kicked this habit. All the games I've bought recently have twice as much playtime as dollars spent, which is a great Dollar To Fun ratio.

Alcohol - $382.56, $30.38 a month

This is one where I know I could spend less but I don't want to. The majority of my spending is on Red Wine, and I am super sneaky about it. I buy bulk, mixed packs from places like Virgin Wines, and Qantas. I always wait for a sale, and always get things at significantly reduced prices, generally with bonus frequent flyer points.

I do have long term plans to brew my own beers and ciders, but I'm not sure what the savings will be. It's something I plan to do for fun, rather than financial gain.

Clothes - $52.00, $4.13 a month

I have a confession to make - I hate buying clothes. Nothing fits properly and nothing suits my style. Why are bras so expensive? Why does underwear come in 7 different cuts and what is the different between 'boy leg' and 'full brief''? Why is it so hard to find a comfortable pair of jeans that aren't blue or $100?

The end result of my clothes shopping hatred is a super low bill, clothes that come pre-worn from the thrift shop, and underwear that is a decade old....

Medical - $226.60, $18.00 a month

This is excluding my health insurance, which is $91.61 a month for hospital and extras. $18 a month this year has covered contact lenses, 2 trips to the GP, multiple trips to the physio, and a trip to the dentist. I actually think I should spend more here and take better care of myself.

Comfort food - $785.15, $62.35 per month

What, what, What!!! What madness is this!! I've written before about the Latte Equation and the stupidity of paying $5 for takeaway coffee when you can make your own for barely 50cents (using the expensive milk). I've gone on and on about the virtues of baking your own treats and making your own snacks. And here I am spending almost $60 a month on comfort food, how is this happening!

First of all, December happens. In December all your friends want to go out for dinner. All your coworkers want to go out for lunch. And I want to buy Christmas treats. All of this is expensive. In December alone last year I spent $215 on comfort food.

I'm not too mad about December. I love my family and friends, and we're all pretty quiet throughout the year, so having a month of events is okay by me. What is not okay by me is keeping up this crazy spend throughout the year. I found $50 worth of coffees, $100 worth of pizzas, and over $100 worth of entries just labelled 'Junk Food'.

Alone, each of these entries isn't too offensive. But when over $60 a month is disappearing into this chasm of cheap, lazy snacks, something has to change.

Everything else - $2,059.08, $174.95 a month

Inevitably, when sorting out the miscellaneous column, there will be things that don't deserve their own category. Items left in this everything else category include crafting supplies, that time I paid for parking at the hospital, concert tickets, and odds and ends like replacement charging cables, some rammekins and a pair of scissors. While there is a lot of uncategorised spending here, this is a number I'm happy to live with for now.

Where to from here?

In case my rant and the title of this post didn't give it away, I'm less than thrilled with spending $60 a month on comfort foods - especially when I'm more than capable of baking better tasting things myself. 

I'm a very firm believer that what gets measured gets done, as long as the measuring is accurate. To bring the comfort food spending back to a happy level, I've created a new column in my budget, and allotted $50 a month to snacks, junk food, takeaway and other deliciousness. I'm 'funding' that column with $10 out of my groceries budget, and $40 out of my miscellaneous budget.

I'm under no illusions that this will be properly managed in December. While I believe in controlling my spending, I don't believe in cutting out my friends to do so. When I get invited to Christmas outings, I'm absolutely going to go. Then when January rolls around and everyone is burned out from celebrating and feasting, I'll tackle this in earnest.

Adult Goals: October2018

Ya'll... October was expensive. What just happened...

Adulting

The October plan was to make my bed regularly, and to start doing some serious body maintenance. I made my bed a few days in a row, but honestly I didn't get any value out of it, so I gave up on that pretty quickly. It just became one more thing to do before leaving the house in the morning, and I didn't get any of the rumoured buzz of feeling like a #AccomplishedAdult.

I did pay more attention to my body though. I did yoga roughly twice a week, started stretching daily, and got my foam roller out again. I went to see the physio to make sure the knee I banged into the ground multiple times was a-okay, and it is. But all the muscles attached are knotted up and mad at me, so I need to devote more time to the foam roller, my absolute favourite...

October Adulting: Success

For November, it's time to organise things! Which is great, because I've been feeling the spring cleaning itch. I want to pull all the knock off tupperware containers out of my cupboard and match lids with bases (and throw out the ones that don't have any). I'm really excited for the warmer weather, because I can stop wearing layers of clothes, and pack away a lot of things I won't see for six months. I probably won't buy anymore shelving, so I might part company with some of my books to make space. Maybe. I'm very attached to my books.

Savings

So how did the fourth month of saving and rebuilding my cash reserves go? It was the worst so far!! I'm really not good at saving... I'm great at investing. Just plain terrible at saving boring cash in a boring savings account.

Hello flatline!! Actually, technically there is a tiny bit less in my account this month than last month. It was a big bills month, and one of those bills can't be paid on credit card. I also finally replaced my toilet. We're talking 4 years in the making. I paid in cash for a 10% discount off the price. That does meant that this money came out this month, instead of pushing it back another month via credit card magic. Which is great, because I also had a lot of bills that went on the credit card, so that hurts too.

To add to my money misery in October, my rental property is processing the payments a day late, which means I won't see my October rent until November. October was a '5 week month' so I'll get a big payment, but it's disappointing not seeing it till later than usual. My property managers are normally on the ball, so I'm not hugely concerned about it being a little late this one time.

Lastly, I'm still put some money aside for future spending. I'm putting $110 a month into my trip to Canada, saving for a blueberry hedge, a new helmet and (super exciting) a new toilet since I finally replaced the toilet, I've started saving to buy myself some video games for Christmas. 

Expenses

For the sake of curiosity, here's what I spent in October, which includes the save-to-spend amounts.

Category	Spent	Budgeted	12 Month Average
Home	$1,429.89	$1,312.50	$1,353.72 (up $16.74)
I got bills! They're terrifying... not really, they're pretty standard. That doesn't mean I enjoy paying them.
Investment Property	$2,576.51	$1,166.67	$1,299.88 (up $3.70)
Big bills! Very terrifying! Again, not really terrifying, all the bills fell in the same month, including the big bill I get every four months for the Body Corporate. The average barely shifted though, so that's nice.
Personal Bills	$126.61	$126.67	$145.48 (down $1.69)
New lower phone bill! Woo!
Groceries	$141.75	$200.00	$200.48 (down $1.32)
I scored a free box of Hello Fresh meals at the start of the month. I wouldn't recommend the service, because none of the meals produce leftovers, I find the methods they use create a lot of dishes and a lot of plastic waste, and it's expensive to boot. But a free box of food is not something I'm going to turn down.
Pets	$32.21	$35.00	$41.77 (down $3.09)
I made more sales this month - $10 worth of Chicken eggs, and $15 worth of quail eggs. I put the $15 aside to build or buy an incubator, and restocked cat and quail food.
Roller Derby	$161.62	$185.00	$232.63 (down $16.02)
The off season has begun! I paid the last of my season dues, put money aside for new safety gear, and saw the physio to make sure I was doing all the right things for my off season recovery.
Travelling	$110	$108.33	$30 (up $9.17)
Next year I'm going to Canada! I figured I better start putting money aside.
Other	$497.17	$157.25	$311.08 (up $28.06)
It's not as bad as it looks I swear!! Mr FIRE runs his own business, and I invest in a lot of different things, so we pay an accountant to make sure we get the most out of our tax returns. I paid for both our returns this year, and they aren't super cheap. Outside of that, I saw a doctor, ate some ice cream, had about 4 beers and put money aside to buy Christmas gifts.
Total	$5,075.75	$3,300.83	$3,615.03 (up $35.53)
October was expensive.  With all the bills I was over budget before the month even started, no fun. Outside of that, there was very little unplanned spending, so the numbers on paper suck, but I still pat myself on the back for good behaviour. This is typical for October, it's a big bills month.

Adult Goals: September 2018

You guys, it's spring!! Flowers are blooming, bee's are humming and life is warm and sunshiney and great.

And I stepped down from my volunteer treasurer position last night. I'm freeeee!

Oh, and some money stuff happened in September, I can talk about that too.

Adulting

The plan in September was to get rid of my floordrobe... I did not. However! I did get better at using it. Things are folded a little more often for the floordrobe. It was kept at a manageable level. Clothes for the floordrobe were worn before new clean ones. Which is the point of a floordrobe... right?

September Adulting: A little success

For October I'm going to make the bed. Yepp, that was the goal I set myself. But I'm also stepping ahead to the body maintenance goal of December as well, because my body hurts. I feel twice in 2 weeks at derby and smashed the same knee into the ground (with safety gear on). At first I thought it was just swollen, but it still hurts :( I'm going to start with stretching before moving on to 'save me physiotherapist!'

Savings

So how did the third month of saving and rebuilding my cash reserves go? Well.. it happened...

That weird blip in the middle isn't a hefty paycheck or anything exciting like that. Some of the bonds that I owned were redeemed, and it took me a couple of days to redeploy the cash. I had a few options lined up (MEZ and ETHI if anyone is curious) and I needed those days to double check. In terms of savings... really not much. I'm having a bit of a struggle with life at the moment - feeling stressed out all the time for no real reason. I'm glad I've stepped down from being a treasurer, I hope it helps.

My spending in September was nice - we stayed just under $3,000. Which is actually impressive since I spent four days out of the state for a derby trip, and dropped $160 to see Tim Minchin in concert. A month of no bills makes me look good even when I didn't do great on my own merits.

Lastly, I still put some money aside for future spending. I'm still putting $100 a month into my trip to Canada, saving for a blueberry hedge, a new helmet and (super exciting) a new toilet.

Expenses

For the sake of curiosity, here's what I spent in September, which includes the save-to-spend amounts.

Category	Spent	Budgeted	12 Month Average
Home	$1,038.01	$1,312.50	$1,336.98 (down $35.39)
Just like in August, most of this 'spend' is actually putting money aside for new things. Cash towards a toilet, a blueberry hedge and some new camping chairs.
Investment Property	$769.66	$1,166.67	$1,296.18 (up $5.58)
No bills, next month will be a big one though..
Personal Bills	$126.61	$126.67	$147.17 (down $1.69)
New lower phone bill! Woo!
Groceries	$210.31	$200.00	$201.80 (up $1.73)
Well, this was almost $160 month, but on the last day I did a restock on junkfood... It's a long weekend! Snacks are need!
Pets	$16.06	$35.00	$44.86 (down $2.25)
I finally made a sale! I sold $10 worth of eggs, and sold my temporary quail cage for $50. Considering I bought the cage for $15 - I definitely won that transaction. However I had to restock kitty litter this month, which ate up most of the income. And then everyone wanted feeding, as they do.
Roller Derby	$438.26	$185.00	$248.65 (up $21.85)
I was interstate for four days. And our travel schedule didn't allow any kind of relaxing and DIY food prep.
Travelling	$100	$108.33	$20.83 (up $8.33)
Next year I'm going to Canada! I figured I better start putting money aside.
Other	$293.97	$157.25	$283.02 (up $19.06)
I spent $160 on concert tickets less than a week into the month, this was never going to end well... but for the rest of the month there was only one other big spend. I donated $40 to Beyond Blue for Fathers Day. Take care of your dad, you only get one.
Total	$2,992.88	$3,300.83	$3,579.50 (up $19.20)
September was thankfully low spend, but most of that is due to no bills, rather than good behaviour on my part.

Adult Goals: August 2018

August was a great month, wanna know why? I got a new job! With a big fat payrise, a way cooler boss and much more interesting work.

Plus, the daylight hours ticked over to we see more than 10 hours sunlight each day. Super important, and super great.

Adulting

August was dubbed the month of Actually Cleaning My Kitchen, I think maybe it was clean once or twice. Right now there aren't enough clean dishes for breakfast. I've got guests coming over tomorrow so I actually need to get all the dishes done tonight. So excited *cough*

Normally this is where I'd put in a good excuse why I didn't get it done. I don't have one. I got grumpy for the first half of the month, and I played Pokemon Go for the second half...

August Adulting: Abysmal failure...

For September I'm going to work on my floordrobe. I've always had a floordrobe, and it's not so much that I think that's a bad thing, but 99% of my clothes are black. And trying to find the right black jacket in the mound of black shirts and pants is really difficult.

Plus, I'd actually like to be able to put my washing away. This isn't just a 'stop being lazy' goal, but also I need to invest in a set of drawers and come up with a system to actually be able to put all my clothes away. I could have a wardrobe clean out, but I wear everything till it falls apart. Even the things I don't wear often are pulled out semi-regularly for dress ups. I've owned the same Hawaiian shirt for almost 20 years (no, that's not an exaggeration) and it still comes out once or twice a year.

Savings

So how did the second month of saving and rebuilding my cash reserves go? Better than July, still not great though...

So the good news is we're trending upwards (unlike July). The bad news is we're not going up anywhere near fast enough. I didn't realise how aggressively I am investing - I saved over $4,000 in August, but I barely made a blip on this chart because that money goes straight into investments, it's not being held as cash. Obviously this is a good thing, and I'm not going to cut back on my investing to grow my cash reserves faster, but it is making this goal look a bit tenuous.

My spending in August wasn't ideal either. All my pets wanted feeding, and while I buy ahead in bulk, I managed to spend $60 on food this month. Plus I bought four more quail.. because apparently I don't get enough eggs (I get way too many eggs). On top of this I booked more flights for derby, one of which I paid full price for because I've used up my frequent flyer rewards, and I spent money on video games. Plus I had a lot of bills this month (not the ones I prepaid back in June) so it wasn't the cheapest month on record. Thankfully not the most expensive one either.

Lastly, I still put some money aside for future spending. I'm putting $100 a month into my trip to Canada, which will be roughly this time next year. I know it isn't enough but it's a commitment and a start. I'm still saving for a blueberry hedge that I hope to put up in September, a new helmet and (super exciting) a new toilet.

Expenses

For the sake of curiosity, here's what I spent in August, which includes the save-to-spend amounts.

Category	Spent	Budgeted	12 Month Average
Home	$1,286.83	$1,312.50	$1,372.37 (down $1.32)
Most of this 'spend' is actually putting money aside for new things. Cash towards a toilet, a quail pen and a blueberry hedge.
Investment Property	$1,204.31	$1,166.67	$1,290.60 (up $41.76)
Paid the water bill and the mortgage.
Personal Bills	$151.60	$126.67	$148.86 (up $0.39)
My phone contract finally ended, so my bill drops from $59.99 to $35 starting in September. I've dropped the budget to match the new spend. Hopefully this phone holds together for a while, because $25 a month back in my pocket is lovely.
Groceries	$204.95	$200.00	$200.07 (up $0.62)
You would think with all the eggs I've been eating I'd have spent less. But I got a bit excited making fancy new things. I'm going to watch this like a hawk in September. With about 15 rounds of leftovers in my fridge, surely I can bring this back down.
Pets	$82.55	$35.00	$47.11 (up $5.39)
Yeah, so umm... everyone likes to eat! I restocked the chicken and cat food for $60.55 and then went and spent $22 on new quail. Unfortunately the first batch was 3 boys and a girl - gotta fix that gender ratio. I didn't manage to sell any eggs this month, but I did get a refund on a dodgy waterer I bought off eBay. Oh, and FYI, quail is delicious. In September I'm hoping to sell the temporary quail cage to recoup some costs, and going to push a bit more marketing for egg sales.
Roller Derby	$381.87	$185.00	$226.80 (up $14.95)
Oh, so this is what it feels like to pay full price for flights... I ran out of rewards points, and need to use actual cash. I don't like this feeling.
Travelling	$100	$108.33	$12.50 (up $8.33)
Next year I'm going to Canada! I figured I better start putting money aside.
Other	$189.50	$157.25	$264.02 (up $9.62)
So, at the end of July I said I was going to cut back on the nightly wines, and I'm happy to say that I did. The big spends for this months 'other' category was a going away lunch from my old job, a trip to Bunnings, and a trip to the Op Shop. There was also a little spend where I picked up 3 games for $20 - which I have already sunk 50+ hours into, money well spent!
Total	$3,741.61	$3,300.83	$3,562.33 (up $79.75)
The spending crept up this month and I'm not pleased. The major costs were bills, but there was still a couple of luxury shops in there, including the quail (that I swear I will write about soon). I don't think there will be any bills in September (although with some on quarterly cycles, and some on 4-monthly I lose track) so hopefully it will be a nice low spend.

Adult Goals: July 2018

July is done and dusted, and I got to pretend to be a 'real adult' that has my life together - beyond my finances. Writing this blog for almost two years may have given the misguided impression that I'm organised, but beyond the dollars in my bank account I still act like a teenager whose just gotten out of home. Hence, this six months of building good habits while building dollars.

Adulting

July was originally supposed to be a month of Actually Cleaning My Kitchen, however early in the month I attended a seminar where they told me the secret to not being horribly tired all the time is to stop snoozing the alarm in the morning.

While I got in about a week of clean kitchen, the idea of not being horrendously tired was far more appealing. For the first week it was great, but I think it was a trick. The second week wasn't as great, but I must confess that my new routine of snoozing once (to allow time for a morning cuddle) feels much better than snoozing for over an hour.

I think what is missing from getting up when the alarm goes off is the qualifier that you actually need to go to bed at a decent hour. When I was younger I thought that sleeping was a waste of time. As an adult I love sleep, yet somehow I seem to be getting less of it.

July Adulting: Success mostly

For August I'll be going back to the Actually Cleaning My Kitchen. However, because I'm not a real adult, I'm just pretending, I'll be aiming to have a clean kitchen three nights a week. This way I can have lazy nights as well as achieving things.

But, because I know what I'm like, I need to set what nights those are. If I just said 'three nights' then I could just keep saying 'tomorrow night'. Therefore, Sunday, Monday and Thursday will be clean nights.

Savings

So how did the first month of saving and rebuilding my cash reserves go? Prepare to be underwhelming.

I've said a few times that I love using credit cards, and getting rewards points to get cheap flights. However in June I prepaid my bills so that I could meet a minimum spend. Which means that despite having a relatively low spend month, I had to pay the massive credit card bill. Next month should look much nicer.

The interesting part is that I started Saving to Spend back in April, and it's going well. This month I put aside another $250 to spend on big things I want. Most of the money put aside this month was towards getting a new toilet (so exciting) but I also set some money aside for a PlayStation 4, a blueberry hedge, some new safety gear and started saving for a trip to Canada. 

I listed this money as an expense, so when I finally do spend it, I won't need to record it as an expense. This will help my brain, which refuses to accept spending lots in one go, as well as spreading the spending out and keeping my average spending from spiking based on a single expense.

Expenses

For the sake of curiosity, here's what I spent in July.

Category	Spent	Budgeted	12 Month Average
Home	$1,006.07	$1,312.50	$1,373.69 (down $2.22)
Most of this 'spend' is actually putting money aside for new things. Cash towards a toilet, a quail pen and a blueberry hedge.
Investment Property	$1,557.03	$1,166.67	$1,248.84 (down $45.02)
Paid the water bill and the mortgage.
Personal Bills	$151.60	$151.60	$148.47 (up $0.39)
Nothing exciting, just trucking along.
Groceries	$234.94	$200.00	$199.45 (down $0.15)
$25 was put towards my quail cage and blueberry hedge. The rest of this spend is just me enjoying chocolate and sweets. With all the eggs I get from my egg-mpire now, my lunches have gotten both cheaper, and more interesting. Did you know you can fry an egg on a sandwich toaster...
Pets	$36.32	$29.00	$41.72 (up $1.75)
I build a double decker quail pen! Well, I bought the material for it. I've been slowly putting it together for most of the month and it's nearly done. I need to spend a little more money on painting it, and putting together a good feeding and watering system. I also brought in $5 with egg sales - which is a good start considering it's still technically winter.
Roller Derby	$101.45	$150.00	$211.85 (down $5.48)
I paid for my accommodations for my last trip and started putting aside money for new safety gear.
Travelling	$50	$100.00	$4.17 (up $4.17)
Next year I'm going to Canada! I figured I better start putting money aside.
Other	$259.01	$157.25	$254.40 (up $21.58)
Most of this is spending while I was in Darwin at the end of June / start of July. I also bought a few books and put some money aside for a Playstation. Definitely time to cut back on drinking though, I found myself with a glass of wine in hand more nights than not.
Total	$3,013.32	$3,267.02	$3,482.58 (down $24.98)
Somehow, despite putting aside $250 for future spending and spending a few days interstate, this is a nice low spend month. Fingers crossed to keeping costs low and bringing FIRE closer.

Life updates and new goals: Eggs, AI and being a Proper Adult

Life has been wonderfully hectic for the last few of months, and everything has been coming together in July. It's time to set some new goals, and give an update on how life has been.

The best news? I FINALLY signed the paperwork on a new role. Which not only means a payrise, but means a massive career jump and a huge improvement in my day-to-day live.

New Goals

The Year of Investing was great idea, my finances really spiked and it was great to see my investments running up and up.

The Year of Investing showed a very sharp spike in my funds invested

However to do so I dipped into my emergency / opportunity fund to do so, and I would like to rebuild that fund.

Not only that, but I have lived in my house for 4 years now. When I moved in I noticed that the toilet seat was damaged, and the toilet itself had a very slight leak that splashes two or three drops of clean water when you flush. That was four years ago. I still have a very damaged toilet. I haven't fixed it.

The main reason that I haven't fixed this is because I struggle with big expenses. I don't like spending huge amounts, even when it makes sense to do so. In the next six months I will be saving to spend i.e. putting bits of money aside to pay for the jobs that need doing. And to buy a Playstation 4 so I can play Kingdom Hearts 3 - it's six months of mostly adulting.

And finally, taking inspiration from The Three Year Experiment, I want to fix up some habits. I'm 27 and I'm tired of struggling to cook because my eggflip is dirty again. Or spending 10 minutes digging through my cupboards to find the right pair of pants. So each month I'll be tackling one habit, which will include thrilling things like 'stop leaving clothes lying around the house' and 'wash the dirty dishes while you cook, instead of scrolling Facebook'. It's some pretty monumentally exciting stuff happening here.

Throughout this all I'll continue adding to my Raiz, RateSetter and Vanguard investment accounts as in the Year of Investing, but I won't actively report on these. Each month $2,200 will be added to these accounts. I mention this so that it makes sense why my savings targets seem so low - it's because I'm still investing in the background.

Each month I will aim to add $1,000 to my emergency/opportunity fund and record $250 of planned spending. I'm also going to target these 'adult' behaviours:

July: Stop pressing snooze
I've been working on this for a couple of weeks and it's amazing. I have so much more energy in the morning.
August: Have a clean kitchen 3 nights a week. 
I don't have a dishwasher, and having the dishes pile up is a pain.
September:  Get rid of the floor-drobe! 
There will always be clothes that have been worn once and aren't ready for the wash yet, but a knee deep pile is ridiculous.
October:  Make the bed every day. 
I've heard good things about this. Apparently it makes you feel accomplished and starts the day right.
November:  Alphabetise Everything!
I need more storage. Mr. FIRE and I moved in with 3 mismatching bookshelves that aren't big enough for all our books, DVDs and board games. Time to get something properly organised.
December:  Pre-Bed Yoga (or other body maintenance)
In December roller derby takes a break. Which means it's time to get into the habit of taking care of my body.

Life Update

For the last nine months I've had a new boss - I guess that means he's not new anymore. In this time I've learned how very important it is to have mutual respect with your boss, and the have similar ideas about how the team should achieve their goals. Unfortunately I haven't learned this because we've been working in a wonderful utopia - I've learned this because I've been without this respect and shared goals.

As of a couple of days ago I've signed the paperwork for a new role. I have a start date, a new title and all the agreements in place. I feel like the weight of a planet has been taken off my shoulders. I'm not going to rant about my current situation anymore, because I have a light at the end of the tunnel and I'm excited to start.

Another weight off my shoulders has happened in Roller Derby. Every year new people join the team, and there is a teething phase of working out how we fit together. It's my sixth year and it's the first time I've solidly butted heads with someone. It was draining on me to have my hobby become a place I didn't enjoy going.

Thankfully, the person in question decided that derby wasn't for them and hung up their skates. It's not an ideal outcome, but it's meant a huge reduction in my stress levels. While I know it's unfair, I made the choice to lay all of my derby-related stress at their feet and told myself it was all over when they left. I may not be perfect, but doing this has meant I have the patience for all the other niggles now, and I can work through them as they deserve.

And lastly, I've mentioned a few times that my long-term life goal is to have a homestead. Mr. FIRE and I are looking into new houses with a bit more space so we can have a doggo, and a workshop but we keep finding that nothing meets our wants right now. Either the price isn't right, or the location is no good, or property has too much house and not enough backyard. Plus with all the uncertainty around the Royal Commission into Banking in Australia, there is far too much speculation about price drops for me to be comfortable buying.

Cute little birds, with cute TINY eggs

So with this in mind it looks like we aren't moving any time soon, but I still want to take a step towards my homesteading dreams. In March last year I posted about my eggscellent pet chickens. In October I mentioned that I'd been dreaming of quail, but instead I started growing mealworms as a high protein poultry snack. After sitting on my hands for almost a full year I finally pulled the trigger and got quail back at the end of May. Oh, and I doubled my number of chickens at the same time... because reasons.

I need to write a detailed post about the entire experience, but it has been interesting. I reached out to a local cafe and arranged to take away a bag full of food scraps each day so that I can offset the feed costs. I've found a regular buyer for chicken eggs. I thought I bought 4 female quail, but have ended up with three stinky squabbling boys, and one lovely egg laying lady. I initially bought a small $30 cage and have since spent $150 to build a large split level enclosure. And, because this is a finance blog, I've crunched the numbers and determined that (if I can find a market) I should be able to bring in $40-$50 a month selling eggs and birds, as well as offsetting my own grocery costs. All of which requires much more space to talk about than one paragraph! 

So that's a quick wrap up of where I've been, and my next six months financial goals. There's been some good, and a fair bit of bad. It very much looks like there is plenty of good things on the horizon. And hopefully I'll have the time to write about all of it.

The Year of Investing: June 2018 - It's over!

The Year of Investing is over! I kicked all the goals, and I'm stoked to see how much impact this year has had.

The Year of Investing - May 2018

So uh.. I may have bought lots of things. And a fair bit of stuff. And I did some manufactured spending to hit credit card minimum spends. And then I bought some more bits and pieces.

I may have disengaged the frugal auto-pilot for a month. Woops.

How your second job is taxed differently (Hint: It's not)

As we come up to tax time, you should be getting excited for your tax return and getting your paperwork in order. With the proposed changes to the Australian Tax system it can all seem overwhelmingly difficult. I can't cover all the intricacies in one post but I can almost guarantee you that if you work two jobs, you're PAYG tax has been set up to disadvantage you.

I recently read an opinion piece complaining about the unfair taxing of second jobs. I'm not going to link it because it was overwhelmingly poorly written, contained incorrect maths, and a blatant misunderstanding of Australian tax laws. However the myth that your second (or third, or fourth) job is taxed differently to your first is so widely perpetuated that I need to address it.

This (incorrect) article claimed that any job after your first is taxed at a higher rate - 37cents in the dollar. They argued that it's impossible to get ahead working a second job if the $100 you earn in a night is immediately cut down to $63. Not only is this a ridiculous statement ($63 is still more than $0!) but it's completely false.

Okay, so how does Income Tax work?

Income Tax in Australia is sometimes seen as a big complicated issue and to be fair there are plenty of loopholes and boxes on the tax return form that can trip you up. However at the most basic level, when you are simply dealing with one income stream from an employer income tax is very simple.

To be fair it could be simpler, we could have a flat tax rate. But the above system means the if you aren't earning much, you aren't obligated to contribute as much. I like that system, because when you're not earning much the majority of your income gets poured back into our economy by way of day-to-day spending and all the little taxes on that spending (e.g. GST).

But I digress.

Our system requires you to plug in how much you earn, and spits back an amount of have to pay. You can use the able table and back of a napkin to work out your income tax, or use the ATO calculator here: https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=STC&anchor=STC#STC/questions 

The important part is, whether you earn that money working for an employer, through 3 employers, or through a PAYG job, and a side hustle it all rolls up into one figure that you apply to this table.

There are different tax rates for running your own business, money earned overseas, franking credits etc. but for the sake of this article, I'm ignoring them.

Claiming the Low Income Tax Threshold

Fact: You can only claim the Low Income Tax Threshold once

Myth: You can only claim the Low Income Tax Threshold with one employer at a time

The first $18,200 you earn is tax free, this is what I am referring to when I say Low Income Tax Threshold. It is a fact that this can only happen once per tax year. If you earn $18k from two employers, you can't ask for all of it to be tax free. As above, the two amounts are rolled together and you pay tax on $36k.

The myth that perpetuates from this is an assumption that you cannot ask for the Low Income Tax Threshold to be applied when arranging your PAYG deductions. When filling in the tax forms to hand your employer you are allowed to ask for the Low Income Threshold to be applied or not to all of your jobs, or none of them. 

What is withheld during the year is an estimate of the correct amount, made by the information that the people in the payroll have. If you have one employer and earn $30,000, they know to withhold based on that amount. If you have more than one employer, each calculates your withholding based on your salary there, not the overall amount you earn. After all, your employers aren't chatting to each other about your earnings.

Case Study: John, Cindy and Stephen

Let's go back to my case study friends John and Cindy, and one extra participant, Stephen.

John earns $30,000 a year. He has only a single income source and claims no deductions at tax time. John has $2,242 deducted from his salary payments throughout the year. 

Introducing Stephen:
 our third financial case study doggo

Cindy works two jobs, earning $15,000 at each. On advice from her (well meaning) friends and family, she only claims the Low Income Tax Threshold at one of her jobs. When earning less than $18,200 in Australia, no tax needs to be paid, so her first job doesn't deduct anything from her pay. However, she isn't claiming the Low Income Tax Threshold from her second job, so they immediately begin deducting 37c in every dollar she is paid as withholding tax. Her second job deducts $5,550 throughout the year! Cindy is $3,308 worse off than John!

Stephen also works two jobs, and also earns $15,000 at each. However he claims the tax free threshold at both of his jobs. Since neither employer speaks to the other they both only know that he is earning $15,000 with them, so neither of them deduct tax from his pay. Stephen pays no tax throughout the year, getting all $30,000 straight into his pocket.

Wait, what, how?

Simply by working two jobs instead of one, and ticking a different box on their payment forms we have three different people paying three different amounts of tax? Except, that's not actually true. This is why we do an (incorrectly named) Tax Return each year. 

The point of a tax return is not (like most people think) to get a refund on the tax you've paid throughout the year. The point is to confirm that you have paid the correct amount, and balance the books with the ATO. Generally we claim some deductions (and with tax time coming up, make sure you know about these easy to claim tax deductions), which means we get a refund, but that's not always the case.

Looking at our case study, John, Cindy and Stephen have all earned the same amount of money, but have had wildly different amounts deducted from their salary throughout the year. When they lodge a tax return, they find out their correct tax bill, $2,242 each. 

Since Cindy has paid $5,550 during the year, she receives a refund. As Stephen hasn't paid anything he gets a bill for $2,242. As Johns was deducted correctly throughout the year, he owes nothing, and gets no refund.

So, what's the best approach?

At the end of the day, who has more money? It's actually Stephen. While they all earned $27,758 after tax, if Stephen puts that extra money into a high interest savings account during the year he can make roughly $50 of interest. 

Of course, the opposite could happen and Stephen could actually be worse off. If he takes that spends that extra money throughout the year, not realising he will have a tax bill, then he will find himself in a sticky situation when he lodges his return.

This sticky situation is (in my opinion) why everyone is discouraged from claiming the Low Income Tax Threshold at multiple jobs. Not because it's illegal, or because it impacts your tax bill, but because A. many people cannot manage their money, and B. the ATO would rather pay you a refund, than chase you to pay a bill.

So if you're responsible and confident with your money handling skills, I strongly encourage you to claim the Low Income Tax Threshold at all of your PAYG jobs. If not, only claim it at one job and consider it 'forced savings'. Then enjoy a big tax refund at the end of the year. Either way, enjoy that second job or side hustle, whatever you earn, you earned it.

Disclaimer time: I'm not a tax professional. This is not gospel. This is my experience, the laws may have changed. I strongly encourage you to speak directly to someone at the ATO before claiming the Low Income Threshold on two jobs. Don't ask an experienced 'friend', don't ask an accountant. Go directly to the source. This is a good starting place: https://www.ato.gov.au/individuals/working/working-as-an-employee/claiming-the-tax-free-threshold/