Welcome to "Smart Money" for 2004.

Now that we are all well into the new year, and you are back at work and school, it is time to have a good look at your finances.

If you over-used your credit card to pay for Christmas gifts, assess the damage. Can you cover your payment before high interest rates kick in? You may need to work out a stringent budget and cut back on all non-essentials to ensure that your debt does not get out of control.

If you need help with your budget or to get your financial affairs back on track, why not have a money makeover?

Sheila Freeman

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Let us show you, step by step, how you can take back control of your money and your life!

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Pre-paid plans are recommended for children as the best option because credit is limited and the money is paid upfront.

Gymnasium or fitness centre memberships often involve payment of a joining fee and a monthly direct debits from your bank account. Often members do not understand that they have signed a contract for a particular length of time, e.g., a year or eighteen months, rather than a pay-as-you-go system, and that, even if they discontinue their gymnasium attendance, monthly payments will continue to be deducted from their bank accounts.

Before committing yourself to a membership contract, you should:

• Be aware of high pressure sales tactics and ‘special deals’
• Read any membership contract thoroughly and do not sign anything unless you completely understand what it involves. If you do not understand the contract, insist that all conditions and services are stated clearly in plain English.
• Avoid long-term contracts (monthly payment is a safer option) or paying large amounts up-front.
• Request a short-term (for example, one month) trial period to give you time to ensure that the gym’s programs, equipment and opening hours are suitable for you.
• If you decide to cancel your membership, do this in writing and request an acknowledgement.

You can check if you have unclaimed superannuation by telephoning 1300 361 798, emailing admin@mail.apf.net.au or checking on the websites: www.unclaimedsuper.com.au or www.statetrustees.com.au.

To quality, you must be under 71 years of age, contribute to superannuation and have received employer superannuation contributions during the year.

Those who earn up to $27,500 per year and qualify will have their personal contributions (separate to the employer’s compulsory superannuation) matched dollar-for-dollar up to a maximum of $1,000.

For those on incomes of more than $27,500, the cap reduces gradually, phasing out at an income level of $40,000 per year.

There is no application form. When those who qualify submit their tax returns at the end of the year, the Government will work out its contribution and put it directly into the appropriate superannuation account. More information about this Government initiative will be available in March 2004. Until then, you can access information from the Australian Tax Office Superannuation Infoline on 13 10 20, or visit www.ato.gov.au/super.

The best way to guard against internet and email fraud is to adopt basic security measures:

• Make sure your virus software is up-to-date
• Never use computer equipment that could be a security risk
• Always delete email requests for account and password information
• Don’t give your account details to anyone
• Don’t leave your computer unattended while logged on to internet banking
• Log off as soon as you have finished a banking session
• Change your password regularly
• Check for the padlock symbol on the bottom-right of the window, or "https://" in the URL, which signify that you are on a "secure" website, where your information is encrypted
• Contact your bank immediately if you suspect your account details are wrong
• Use a reputable internet service provider.

You will have to begin repaying your HECS debts when your HECS repayment income reaches the minimum threshold for compulsory repayment, which, in the 2003/2004 financial year, was $25,348.

Your accumulated HECS debt does not incur interest but is indexed on 1^st June each year (i.e., adjusted in line with inflation/consumer price index) to maintain its ‘real value’. This indexation adjustment applies to the portion of debt that has remained unpaid for twelve months or more. (It is worth noting that, because your HECS debt only increases in accordance with the CPI, other debts, such as credit cards or personal loans that attract high rates of interest, should be cleared first.)

Voluntary repayments of $500 or more receive a 15% bonus, so it is worth making them before 1^st June each year to minimise the cost of indexation. However, you need to do this before lodging your tax return; if your tax return is lodged first, a compulsory HECS debt might be raised on your tax assessment notice and you will not receive the 15% bonus on the compulsory repayment.

Every effort has been made to ensure that the information on this newsletter is accurate. However, the information is not intended as professional advice and the authors shall have neither liability nor responsibility to any person or entity with respect to any loss or damages arising from the information contained in this newsletter.

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Copyright 2003 Sheila Freeman Consulting