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Saturday, 18 February 2017

Sudden (tiny) windfalls

I just scored a couple of tiny leg-ups towards my $20,000 by July goal. My tax variation went through, and my interest rate on my loan has dropped meaning my required repayments have also dropped. Naturally I'm headed straight to the shops for new shoes!

Ahaha, yeah, definitely joking there. Although I have a rather impressive shoe collection (mostly Converse) and no idea how I ended up with 20+ shoes I would never get excited about buying shoes. Last time I had to replace my shoes I found the exact same pair I had just worn through for $12, so I bought two pairs. That's how I feel about shoes.

But I did hit a couple of windfalls, although I'm using the term quite loosely because I actually had to go chasing these wins. Unlike the Latte Equation, these are ongoing wins from a once off piece of work.

Tax variation

Let me open with the fact that I do not recommend this unless you like swearing at online forms, doing everything twice and using Internet Explorer. This process was a giant pain, but since I've owned my rental for almost six years now I was able to reference old tax returns while working through it. I had a stretch without tenants this year (about 2 months) and I shelled out close to ten grand on renovations and repair work that the previous tenants never bothered to mention. Minor things like the sliding door not rolling smoothly, or the fan being old and rattly. The sort of things that could have been maintained over six years for a small fee that all happened at once. Urgh.

In short I knew my income was down this year, and my expenses up. Rather than waiting for my tax return and getting a lump sum back I decided to fight with some horrendously unfriendly and out-dated forms and request a lower withholding for the year. I had to submit some invoices to confirm I wasn't making up a $10,000 spend, and they lowered my taxable income by almost $8,000.

It's not more money in my pocket, but it means I get pay less tax now and I'll have a smaller return at the end of the year. Since my goal is to have $20,000 before July, I couldn't wait for my tax return.

4 hours work, return $150 a fortnight

Changed to home loan rate

Is your mortgage on a variable interest rate? Stop reading. Right now. Unless it's outside of business hours. Google two or three of the big name banks in your area and have a look at their home loan rates. If it's lower than yours call your bank right now and read this line out loud:

"Hi, I've been looking around online and I can see that Bank Name is offering home loans for interest rate. My current loan with you is higher than that. Anything you can do to help me out?"

Nine times out of ten the person on the phone is empowered to drop your home loan rate right then and there. I strongly recommend repeating this exercise every six months. Banks make an absolute killing on mortgages, it is their number one income stream. They will squeeze you for every dollar they can, so make sure you squeeze back.

I recently had my mortgage rate dropped by .3% which means my minimum repayments have dropped as well. I just received a letter saying they are going to vary their automatic withdrawals from $493 to $477. One less than 15 minute phone call, $16 a fortnight back to me.

If I didn't have savings goals I would probably throw that money straight back at the mortgage. Or into a different investment with a higher return. But as it stands my goal is $5k in a savings account (Done in my December Update) and $15k in my offset account. Overpaying my mortgage or holding the money in the offset account will have the same affect on the amount of interest I'm paying, so I'll take this tiny win and push it towards my savings goal.

15 minutes work, $16 a fortnight

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