How to get an extra $935 each year towards your first home

Do you know about the government’s First Home Saver Accounts?

First home saver accounts are designed to assist Australians 18 years and older to save for their first home. The accounts are offered by a range of banks and credit unions. The first home saver account is a government initiative designed to compliment the existing First Home Owners Grant scheme.

Features of First Home Saver Accounts:

• The Australian Government contributes 17 per cent on the first $5,500 (indexed) of individual contributions made every year. For example, if you contribute $5,500, the government will contribute $935.
• A minimum of $1,000 per year over four separate financial years must be deposited before funds can be withdrawn for the purpose of buying a property
• Interest earned is taxed at the low rate of 15 per cent
• Withdrawals from the account are tax free when they are used to purchase a first home to live in
• No minimum annual deposit is required to keep the account open
• First Home Saver accounts can remain open until you are 65 at which point they must be closed
• Withdrawals are not allowed from the account except for the purpose of buying a first home.
• Make personal contributions of at least $1,000 for each of four financial years (not necessarily consecutive years) before you can withdraw your money.
• An account balance cap of $85,000 exists (indexed annually), after which interest is still paid to increase the balance but further contributions by the account holder are not accepted

First Home Saver Account Restrictions

In May 2010 the government announced amendments to some of the restrictions on the account. Borrowers who open a FHSA but purchase a property within the first four years will now have their funds credited to their home loan account tax free rather than their super at the end of the four year minimum period. Savings will still be credited to the account holders superannuation account should a property not be purchased for owner-occupation, such as an investment property. These changes have been legislated and were introduced recently.

Compare First Home Saver Accounts

If you are considering opening a FHSA, it pays to do your research beforehand. There are currently 19 institutions in Australia offering FHSAs and their offerings will vary. The main differential is the interest which they apply to the account above the government contribution. At the time of writing the range of interest was 0-5%, which can equate to a difference of $1250 worth of interest earnings on a $25,000 deposit.

Source:  CANSTAR

Your experience with the First Home Saver Account

• What has been your experience with the First Home Saver Account?
• Did you know about it before reading this blog?
• Are you using it?
• Did you know about the different interest rates available?

7 Steps to Incredible Personal Productivity

Here is some practical advice to turn an average workday into an incredibly productive day.

Occasionally you need to go the extra mile. Sometimes you need to complete a major project, tackle a task you’ve put off, or just knock out a ton of work in one day.

Here’s the best way to turn a normal workday into an incredibly productive workday: And then you can apply the successful tricks to your normal day and get more from it every time.

1. Let everyone know. Interruptions destroy focus and kill productivity. So are the guilt trips your family "sometimes unintentionally" lay on you. Let coworkers and family know you’re planning a “project day.” Tell key customers too. Announce you will be tied up on, say, Tuesday, and that you will respond to calls and emails on Thursday. Let people know who to contact in an emergency. Some will get with you before Tuesday, and the rest will make a mental note you’re not available. In either case, you’re covered.

Plus you get the “peer pressure” benefit: When you tell people you plan to finish a project you will be more likely to see the job through. Peer pressure can be positive motivation harness it.

2. Set a target. Don’t plan your project day based on fuzzy parameters like, “I will stay at it as long as possible,” or, “I won’t leave until I no longer feel productive.” Those approaches give you an easy out. Commit to working for as long as you estimate it will take. Pick a number.

There’s a cool benefit to this approach too: The longer the time frame you set the quicker the early hours seem to go by. Something about knowing you will be working for a long time allows you to stop checking the clock. When you know you’re in for a long haul your mind automatically adapts. Try it, it works.

3. Start unusually early or unusually late. When you step outside your norm, your perspective of time shifts as well. Start at 5 a.m. or revisit your student days and start at 6 p.m. and work through the night. Set the stage for an unusually productive day by dramatically changing your normal routine.

4. Delay gratification. Say you like to listen to music while you work. Don’t, at least for the first couple of hours. That way, when your enthusiasm really starts to wane, turning on the music will perk you back up. Hold off on whatever things you use to brighten up your workday, at least for a while. Delayed gratification is always better gratification, and in this case can provide just the spark you need to keep going.

5. Refuel and recharge before you need to. When endurance athletes wait until they are thirsty to drink they’ve waited too long. The same premise applies at work. Have a snack a little earlier than normal. Start drinking water right away. If you normally sit, stand up before you start to feel stiff or cramped. If you normally stand, sit before your back stiffens or your legs ache. Be proactive so discomfort can’t dampen your motivation or weaken your resolve.

And make sure you plan meals wisely. Don’t take an hour for lunch. Plan food ahead of time that you can prepare and eat quickly. The goal is to refuel, re-hydrate, and keep on rolling. Remember, this is an unusual day treat it that way.

6. Don’t take rest breaks. Take productivity breaks. Newton’s Law of Productivity states that a productive person in motion tends to stay in motion. Maintaining momentum is everything. Don’t take a TV or Internet break. Take breaks that reinforce your sense of activity and accomplishment. Take a quick walk and think about what you’re tackling next. Then jump back in. Even a few minutes spent in the land of inactivity make it hard to regain momentum.

7. Don’t stop until it’s done. Stopping simply because you’re tired or bored is habit-forming. (Plus you’re always capable of doing more than you think.) If the only barrier to completion is effort or motivation, stay at it and break through that barrier.

Think about your normal workday; at some point you typically think, “That’s it. That’s all I have in me today.” That limit was set long ago, but it’s an artificial limit based on habit. Pushing through the “pain” is a habit anyone can develop, and when you do, you automatically set your effort limit a little higher making you capable of even more on a regular basis.

 Author Jeff Haden 

Self-employed - can you get a loan?

It doesn’t matter how much you earn or how regular your income is: if you’re self-employed, that’s one more hoop you’ll need to jump through when applying for a home loan.

That’s not to say all self-employed borrowers will struggle getting finance. It just means you might need to work a little bit harder and pay close attention to the details.

No matter what else, to boost your chances of getting an approval, you’ve got to make sure you know your numbers.

Sit down with your broker or lender and establish what taxable income level you need to apply for credit, otherwise you’re flying in the dark and destined to be disappointed.

Once you’ve established your borrowing power and determined eligibility for finance, you’ll need to prove that your income is what you say it is.

Information is king. When assessing a self-employed applicant’s eligibility for a home loan, lenders looks for consistency of income. They want to see that business has been ticking along steadily and maintaining a level of income that is suitable to meet their minimum servicing requirements.

To confirm this, the lender will request the most recent two years’ worth of personal tax returns. If there is a large fluctuation between taxable income for the two financial years, the lender will generally utilise the figures that relate to the lower of the two, even if that is the older statement.

This can often leave the applicant falling short and failing the banks initial servicing check. Not all hope is lost, though. By working closely with your broker and your accountant, you can often unearth pertinent information about your business that can mitigate large deviations.

For example, a start-up business may have a lot of one-off expenses in the early days, which a lender might take as being ongoing or recurring expenses account.

Also, if you renew a certain piece of equipment or attend courses or training one financial year, you won’t necessarily have this same expense every year, so future year’s will see this expense show up in net profits.

Self-employed applicants must tell their broker or lender what’s been going on in the business, as a solution may not be obvious to the applicant, but will be to a trained eye.

Finally, the most common issue for self-employed applicants is that their accountants are too good at reducing their taxable income, which can come back to bite you when it comes to applying for credit.

Without adequate taxable income, most lenders will shy away from doing business with you. In this new age of regulation and responsible lending, there is increased pressure on lenders and indeed brokers to confirm an applicant’s ability to meet minimal servicing requirements.

Ask yourself this – if I am not able to borrow money, how is this going to impact on my ability to make the financial decisions I have planned? Am I saving more by not paying tax, or am I losing more by not being able to invest in a new home or investment property? And go from there.