The Nine Steps to Financial Integrity and Independance

The Financial Integrity Program

This program involves nine distinct hands-on practices that integrate classic financial wisdom into daily financial activities. These practices are a bit like parts of a DNA spiral – they are the building blocks of a contented life. They are interconnected and interdependent, each one important to the whole. How you put them together is up to you; they are not linear like ladder steps. Yet they do work most efficiently when done in a certain order.

Even if you do only one of the steps, we guarantee you will get something out of it. But why stop with just one? Just as all the spokes of a wheel are important to moving forward smoothly, so it is with the steps. When you give equal weight to ALL the steps, you can go to amazing places very quickly. And when you discover how well they work for you, you will move through them over and over again.

• Step 1. How much money has come into your life and what do you have to show for it?
• Step 2. Being in the present: Tracking your life energy
• Step 3. Where is it all going: Monthly tabulation
• Step 4. Three questions that will transform your life
• Step 5. Making life energy visible: Your wall chart
• Step 6. Respecting your life energy: Minimizing spending
• Step 7. Respecting your life energy: Maximizing income
• Step 8. Capital and the crossover point
• Step 9. Securing your financial independence

To find out more please contact Money for Life Coaching

Could your credit card squash your home loan application?

Fantastic plastic can help you purchase things in the short term that you may not be able to afford otherwise, but your credit card debt could actually get in the way of your home ownership dreams.

If you were to walk down the street and canvas the people who pass by, you’d be hard pressed to find someone who doesn’t have at least one credit card.

In fact, most of us have two or three credit cards on the go at any one time, with varying credit limits and balances.

The Reserve Bank estimates that we each hold around $3,250 in credit card debt, but for some people this figure is much higher. Brett, 37, admits that his credit card debt spiralled out of control over a number of years, eventually reaching $100,000 across seven cards. He was forced to refinance his home loan to included his credit card debt, meaning he’ll be paying off those credit card purchases for another 25 years!

Brett was actually lucky that a bank was willing to consolidate his loans; these days, credit card debt can have a serious impact on your borrowing power, as high levels of unsecured personal debt is often the reason why home loan applicants are declined for a mortgage.

A credit card debt of just $5000 can have the impact of reducing your mortgage borrowing power by up to $25,000. Say you and your partner have four credit cards between you, with a combined credit limit of $15,000: if you were to apply for a home loan together, your borrowing power would be reduced by up to $75,000.

So what does this mean for you as a would-be homeowner? It means that before you buy your own property – whether it’s to live in yourself, or as an investment – you need to get your personal debts in order.

Firstly, reduce your credit card limits down to the bare minimum. The banks pay attention to your overall credit limits, not your balance.

So, if you have a credit card with a limit of $2,500 and a balance of $1,120, call your bank right now and reduce the limit down to $1,200. You don’t necessarily need to maintain credit limits in $500 blocks, so ask your bank to reduce your limit to an amount that suits you.

By doing this you will not only put a lid on your temptation to charge frivolous extra expenses to your card, but you’ll also put yourself in a better position to get a loan when it comes time to apply for a mortgage.

Next, work on eradicating your personal debts as quickly as possible, Make sure you pay more than the minimum each month and if you have more than one credit card, try and focus on one card at a time to eliminate each debt. This will help to demonstrate to lenders that you’re responsible with money, which will only serve to help you when you’re shopping for a mortgage!

Every client who completed our Money for Life Program has successfully reduced and in many cases eliminated their credit card debt.  Please contact us now for more information coaching@directadvisers.com.au. 

Are you ready for the new financial year?

The end of one financial year and the start of the next is always a busy period for small business owners, but it's a perfect opportunity to reflect and plan for the year ahead. Taking time to review your business plan, banking and accounting arrangements are business imperatives that Small Businesses owners often say they wish they did but never get around to. Now is the time.

Here are five tips to ensure you start the new financial year on the front foot.

1. Ensure your records are in order

Good record keeping is essential all year round, but it really pays dividends at tax time. There are many accounting software packages to keep you on the right financial track, including the online accounting service Xero. Xero gives you much greater visibility of your cash flow and it's quick and easy to reconcile your bank transactions.

2. Measure your progress

It is important to take some time to track your progress in the last 12 months. Have you achieved your financial goals? Have you met your goals in areas such as customer numbers or web traffic? If not, why? Businesses determined to drive continuous improvements must consistently review and assess their operations. Once you have reviewed the previous year's progress, set new goals for the coming year. Setting budgets is a crucial part of planning for the next financial year. Budgets ensure that all parts of the business are working together, and that you have clear, measurable goals to work towards. However, budgets shouldn't just be looked at just once a year. A clear plan will enable you to consistently review your budget and assess your progress. That way, you will be able to spot potential problems and opportunities.

3. Start thinking about tax well before June 30

There are a number of things a small business owner can do before the end of the tax year on June 30 to maximise their tax return, including pre-paying some expenses and deferring some income. Get more advice from your accountant or adviser to find out what strategies you can put in place. Your accountant can also advise you of the strict deadlines that must be met at tax time. Superannuation payments for the June quarter must be made by June 30 and Pay As You Go payment summaries (they used to be known as group certificates) must be issued to employees by July 14. If you didn’t do all of these things this time, make sure you diarise them for the end of June 2012!

4. Reassess your business plan

Budgeting typically looks at the year ahead, but a business plan might look two, three or even five years ahead. A business plan provides a top-down view of your business - what your value proposition is, who your target market is, what strengths, weaknesses, threats and opportunities could emerge in the next few years. If you haven’t already go a business plan that is clear and easy to follow, find the right business plan template for you by Googling.

5. Make sure your banking and cashflow will facilitate your plans

If your business plan calls for growth, you need to ensure you have the financial tools and strategies to support this. A full review of your banking by a banking business specialist will help ensure your banking is in good shape and you have access to the products you need, such as; everyday accounts, loans, insurance and business and equipment finance. Every bank will have a website link to find help with this.

Your summary checklist to be ready for the new financial year:

• Consider if your accounting software is making it easy to keep records up to date.
• Measure your business' performance over the last 12 months.
• Set performance goals for the new financial year.
• Prepare a budget for the new financial year.
• Speak to your accountant or adviser for tips on maximising your tax return BEFORE next June 30th.
• Make a list of key dates you need to meet to be tax compliant.
• Update or write your business plan.
• Get a health check on your banking.