Weekend at Bernie's

According to reports, Bernie Madoff's New York home, located on the beach at Montauk, with sweeping views of the Atlantic Ocean, has been sold for more than the asking price of $8.75 million.

While the property is under contract, the name of the buyer and the purchase price are not being disclosed "to protect the integrity of the sale," the U.S. Marshal's Office said in a statement.

Several buyers had submitted bids for the four-bedroom, three-bath, 3,000-square-foot home, which was on the market for two weeks. Sale proceeds will go toward reimbursing victims of Madoff's estimated $65 billion Ponzi scheme.

If you are in the market for real estate, Montauk is roughly 120 miles east of Manhattan on Long Island and is known for its many large summer homes owned by famous and wealthy people.

Note: wasn't to sure how to categorise this one, so I put it under "goal-setting"

(source: Reuters)

FHOG extension a chance to boost savings

The Federal Government’s extension of the boost to the FIRST-HOME Buyers Grant will give would-be first home-owners a chance to get their finances in order before applying for a loan.

Under the scheme as it was, the boost to the grant was due to cease on June 30, 2009. The Federal Government will extend the boost to the first home-owners grant by six months to December 31. This additional six months extension, announced in last night’s federal budget, will allow borrowers to build their savings to meet the current, more stringent requirements of lenders.

The boosted grants were due to end on June 30 but will now apply for homes purchased on or before September 30 this year.

Since October 2008, first home-buyers have received an extra $7,000 when purchasing an established home and an extra $14,000 for new homes, on top of the $7,000 provided under the first home owners scheme. The boosted grants were due to end on June 30 but will now apply for homes purchased on or before September 30 this year. The extra grants will then be phased down to an additional $3,500 for established homes and $7,000 for new homes up to December 31, 2009. After that date the scheme will continues in its original form providing $7000 to eligible persons to purchase either a new or existing home.

Are you on a Financial Treadmill?

Have you ever looked back at the last 5 years and wondered if you are in the same spot now as you were then? Are you doing the same thing with your money today that you were doing 5 years ago?

Your personality plays a huge role in the decisions you make and how you behave with money. Understanding this can play a big part in moving forward with your financial future. For couples this is especially so. The ability to know and understand each other's financial personality can offer a real leap forward in achieving your goals. Ask yourself these questions:

• What differences have you noticed in how you and your partner treat money?
• What are the strengths and struggles you see between you and your partner?
• Have you and your partner discussed your wealth creation needs?
• Have you and your partner discussed your attitudes toward money?
• Do you both understand each others prior experiences towards money?
• Have you worked out a plan that brings together your wealth creation?
  Does your strategy suit both your needs and is it something you can both comfortably commit to?
• What financial education do you and your partner have?

Are your goals SMART?

In the long run you only hit what you aim at.
Therefore, though you may fail to begin with,
you should aim at something high.

David Henry Thoreau

Clear goals are important because they provide you with something to look forward to. Financially qualifying where you wish to be at some point in the future gives you both a target to aim for and something to measure your progress against. The thing about all goals is they should be SMART.

SPECIFIC: What exactly will you accomplish?
MEASURABLE: How will you know when you have reached your goal?
ACHIEVABLE: Do you have the resources to attain your goal?
RELEVANT: Why is the goal important to you?
TIMELY: When will you achieve your goal?

Ask yourself these five questions when you set yourself a goal and you'll go a long way towards achieving it.

Do your goals inspire you?

This might sound corny, but "Are your goals inspiring?" If your goals are too practical and limited, you wont have incentive to discipline yourself to do the things necessary to achieve them. If you don't involve your emotions and imagination in your goal-setting process you'll find it extremely difficult to stay motivated and interested.

We understand it is necessary to set short-term goals as "milestones" along the road to acheiving your longer term goals but even with these, well defined markers in place, long-term goals will be hard to relate to if they are not specific enough. Consider this goal plan:

I want to save enough money so my children can attend university and then have enough left over so I dont have to live of the pension.

With this:

I want contribute $________ towards John and Sue's university education. I also want to trave to (name of country) for (number) of weeks. I want to save $________ for this purpose. I will have enough money invested so I can draw a monthly income of $_________.

The more colourful and personal the plan, the more real and exciting it becomes. The easier it is to visualise the goal the better. Its your responsibility to arrange your life in any way that suits you. Put some effort into having something to look forward to besides simply meeting a financial obligation.

Set Goals!

First home saver account facts

• Only first home buyers can apply.
• You must be between 18 and 65.
• Limit one account per customer.
• You must save $1000 a year to get the 17 per cent government contribution.
• You can't take the money out until you buy a home at least four years down the track.
• If you change your mind about buying, the money goes into your super fund.
• Earnings are taxed at 15 per cent.

Extra money towards your first home

The burden of saving for your first home has never been greater but, for those saving to purchase in a few years time, the job might be just a little bit easier. From today the federal government’s First Home Saver accounts become available.

If you're saving to buy or build your first home then a first home saver account may suit you. The accounts are complicated by a few rules and regulations but in essence they allow you to attract a contribution from government of up to $850 a year and the tax on the interest you earn is capped at 15 per cent (the same as your superannuation).The overall account balance will be limited to $75,000 and a minimum of fours years needs to pass before the money can be withdrawn to buy a home. The real bonus is that operating one of these accounts doesn’t disqualify your eligibility for the First Home Owners Grant Scheme (FHOG).

To earn the maximum government contribution you need to have saved $5000.00 per year yourself. The contribution is calculated as 17 per cent of the amount saved in each year (17% of $5000.00 = $850.00). If you can achieve this for 4 years you will have $23,400.00 saved which includes the government contribution plus any interest you have earned (less some tax at the lower rate). Add to this the FHOG of $7,000.00 and you’ve got yourself a tidy deposit of just over $30,000.00.

This represents a 6 per cent deposit on a home with a price of $500,000. With the recent exemptions from government stamp duty on homes up to this amount, $30,000.00 will go a long way towards getting you into your first home.

How much can you borrow?

If you’re like most of us, buying a home is the biggest investment you will ever make. Since very few people are able pay cash, obtaining a loan is the foundation of home ownership. How much you borrow depends on a number of factors:

• Your income and expenses
• Estimated repayments
• Serviceability
• Assets and liabilities
• Your lifestyle
• Your deposit

Before you start looking for a home, think carefully about your spending habits. Compare expenses and income by preparing a budget noting all major upcoming expenses such as replacing your car, holidays, school fees, etc. Knowing exactly how much you spend each week is essential in determining how much you can afford to borrow. Having a realistic picture of your finances will avoid costly knock-backs from a potential lender.

Avoid being rejected for a loan. Lenders frequently trade credit information. A decision to decline a loan appears on you credit report and can harm your chances of obtaining a loan with another lender.

When deciding how much you can borrow, lenders will look at your serviceability - whether you can afford the repayments over the life of the loan, not just while interest rates are low. To do this, they use a benchmark figure that is usually several percentage points higher than the prevailing variable rate. Your repayments will also be assessed against your income. In most cases, the upper limit for minimum repayments is about 35 per cent of pre-tax income (or about 30 per cent of combined income for joint borrowers). Some lenders may use your uncommitted income - what is left over after all household expenses - to determine your repayment capacity.

In most cases, to be eligible for a loan you must own more than you owe. Lenders will look carefully at your existing assets and liabilities. Assets include furniture, jewellery, car, savings and investments that you may have built up over the years. Lenders will assess your credit risk to determine whether you are likely to default on the loan. Factors like your occupation, employment history, where you live and past loans are used to build a credit profile. Your credit risk can influence how much you can borrow.

Planning a budget

We have reached a point where we buy on impulse with no thoughts to the consequences. In order to reverse this trend we need to become more responsible with our spending habits. One of the best tools to help an individual accomplish this is the personal budget. Many people do not see the value in creating a budget as they simply have no desire to restrict their spending habits. However, budgeting is not about “financial dieting” but rather it is a decision-making process. While it is about numbers it is not about accounting. It is about making decisions in your life and choosing specific plans to make your goals a reality.

The object of a good budget is to make your money help you reach your goals, not to force you to conform to rigid rules. Don't be discouraged if your plan doesn't work for you right away. You may have to revise it several times until it fits your wants and needs.

Wants, needs and likes

Most of us would have heard of wants and needs and their importance in effective goal-setting. So often our financial ambitions are thwarted because we continue to choose to buy what we want and not what we need.

This is an important aspect of money management to be aware of. While our wants are very powerful motivators and can be central to the goals we aspire to, it is important to recognise that what you think you want may only be the things that you would just like.

The fundamental difference between the two is that you put your energy and effort into acquiring the things you want, while you just wish for the things you would like. To help understand the difference, look at your behavior and the energy you put into achieving some things but not others.

Some of the failure you may have experienced in achieving goal outcomes might be because you have set your goals on things you really only would like to have rather than those that you really want.