The monthly newsletter of Sheila Freeman Consulting Issue 10, September 2003   In this Issue: From our Quote Collection: "We talk about human rights, but I don't know of any human right that is more important than a job" - William Norris "If you think nobody cares if you're alive, try missing a couple of car payments." - Earl Wilson "There was a time when a fool and his money were soon parted. Now it happens to everybody." - Adlai Stevenson "A bank is a place that will lend you money if you can prove that you don't need it." - Bob Hope Welcome to the September issue of "Smart Money". This month we cover a new way of financing your retirement years called "Reverse Mortgaging" - check to see if it's right for you. If you're an ANZ Visa Credit Card holder you'll need to be aware of some changes and charges. Tips on better managing your mobile phone accounts and a fun quiz to see if you have "finance phobia". Warm regards Sheila Freeman Email me Money solutions at your fingertips... Let us show you, step by step, how you can take back control of your money and your life! Money Management for Women by Sheila Freeman and Helene Richards is a treasure-trove of "easy to action" advice at your fingertips. Sheila has distilled 15 years of her experience as a financial counsellor in Australia into a simple, easy to understand guide that tackles head-on, the issues of money management from a woman's perspective. We'll let you into a secret - men buy this book too! The entire "Money Management for Women" book is now available online as a download for only AU$19. Pay by credit card on our secure server and download the book immediately. more info >> Reverse Mortgages - the Good and the Bad Cash-strapped home-owners aged 65-plus now have the option of taking out a ‘reverse mortgage’, that is, the lender gives you money in exchange for part of your equity in your home. Who offers these loans? At present, only two mainstream lenders offer reverse mortgages – the Commonwealth and St George banks – as well as the West Australian-based Police and Nurses Credit Society. The Commonwealth Bank’s Equity Unlock Loan for Seniors is offered on a sliding scale, from a maximum of $150,000 to those aged 65-69 (or 20% of the value of their property, whichever is lower) to up to $225,000 to those aged 80-plus (or 35% of the value of the property). CBA also gives borrowers an option of taking the money as a lump sum or as a regular payment to supplement their income. Costs include an up-front fee of $950 and a monthly service fee of $12. The St George Senior Access Loan (capped at $100,000) has an up-front fee of $750 and a monthly service fee of $10. The higher CBA fees equate to an extra $1,000 over 10 years for a $100,000 loan. What are the benefits of reverse mortgages? People are living longer and want to maintain a good quality of life – cashing in part of your home may mean the difference between poverty and a comfortable lifestyle. Also, the interest and fees are rolled into the loan, which does not need to be repaid until you die or sell your home. What are the potential pitfalls? These loans are structured so that interest is charged on the interest. Thus, the longer the term of the loan, the bigger the amount of interest charged on the interest accrued on the original loan amount. This means that the loan could end up being more than the value of the house. (If this occurs, your heirs are not liable for any payment – the bank bears the loss. However, family members who hoped to inherit your assets may be disappointed.) It is also possible that a loan of more than $40,000 could have an impact on the pension payments to pensioners and part-pensioners. Potential borrowers are advised to obtain independent legal and financial advice, and to tell family and potential beneficiaries about the loan. Tips for Saving Money on your Mobile Phone Bill The convenience of having a phone that fits in your pocket or handbag and allows you to be accessed wherever you may be can quickly become a liability if your monthly bills become astronomical. You can minimize the cost of your mobile in various ways: Choose a contract that suits the way you use the phone, e.g., generally plans with low monthly charges come with higher call charges; if you need to make a lot of calls, you may prefer a plan with a higher monthly charge but a lower call rate. Price is not necessarily the only consideration, as service providers offer different additional services, such as special rates for calling other mobiles on the same network. Use a landline whenever possible. Take advantage of off-peak call specials on your particular plan. Check if you are on a per second or per 30 second billing – if you are being charged per 30 seconds and you speak for 31 seconds, you will actually pay for 60 seconds. Delete voicemail once listened to and acted upon so that you do not waste time and money listening to old messages. Be aware of the costs of retrieving messages from your voicemail service. Depending on the contract with your provider this may range from free access to a cost per access.  If there are different charges for peak and off-peak message retrieval, call during off-peak times. If you find your phone bill is getting out of hand, consider using a pre-paid service (i.e. buying a prepaid SIM card with no fixed-term contract) because then you cannot spend more than you pay for upfront. If you use a pre-paid phone, and don’t mind juggling numerous phone numbers and SIM cards, consider SIM swapping, i.e. purchasing a number of prepaid cards and changing them to take advantage of the lower rates offered by various providers at different times. For example, Telstra may be cheaper at a certain time of night, Virgin may have cheaper international calls, or Optus may have lower rates during the day. Note: If you have tried SIM swapping we would be interested to hearing about your experience. Did you find it worthwhile? Which providers offer the cheapest rates at particular times of the day or night, or on international calls? How much did you save when compared to previous bills? Facing a Fear of Finances Do your palms sweat when you open bank statements? do you prefer not to open them at all? You may be suffering from financial phobia. Research by Dr Brendan Burchell at Cambridge University suggests this is a genuine psychological condition that affects some 9 million people in Britain. To check if you're like one of them, consider the statements below. give each a rating from one (strongly agree) to five (strongly disagree). Add the marks together and compare your total. TRUE OR FALSE Monitoring bank accounts is boring I prefer not to think about the state of my finances I feel guilty when I contemplate my spending there's little point in saving money when you lose it through no fault of your own Thinking about money makes me anxious If you scored: 5-9 True Phobic. It's time to face your fears. Open all statements and bills as soon as they arrive and file them. Look for areas that are obviously out of control, such as credit cards or mobile phone bills. If you're in debt, your priority is a plan for repaying it. A good place to start getting your life in order is to buy Money Management for Women. 10-14 Some Symptoms. Confidence is the key. Set aside time each month to look after your affairs. Try using a computer spreadsheet. Reading the personal finance pages of newspapers or websites will help make the subject seem everyday and manageable.  Money Management for Women is a great resource for equipping you with the skills to handle your money like an expert! 15-20 Fairly Comfortable. but are you thinking enough about the long terms? Talk to an independent financial advisor. Review your situation every six months to check that your superannuation and and savings plans are working hard for you. Money Management for Women can help you focus on the long term issues. 21-25 Financialphile. Keep an eye on comparison websites and discuss new products with professionals. don't overlook the small stuff: check your statements and ask it you are spending a lot on things that mean little to you. Easy changes might help hasten achievement of your long term goals. by Kate Saunders, Australian Readers Digest, September 2003 ANZ Credit Card Reforms - Charges to rise Last week the ANZ Bank announced a credit card reform package. Changes include: a 40% increase in charges for credit card late payment and over-limit fees a cap on the frequent flyer points that can be earned by Qantas ANZ Visa cardholders an increase in foreign currency conversion fees from 0.5% to 1.5% a rise from $25 to $30 in the annual fee for the ANZ First Free Days Visa Card. Disclaimer 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. Want to opt out of this newsletter? Simply reply with REMOVE in the subject line. Copyright 2003 Sheila Freeman Consulting

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