My Budget Outcome for 2013 (Australia). What do you think?

[This_Is_My_Username]

Income    Jan 2013 – June 2013			Income    Jul 2013 – Dec 2013
Gross salary	40510
Tax	8806
Net Salary	31704		Net Salary	39722
Govt Payments	1645		Govt Payments	3249
			Tax Return	1664
Total Income	33349		Total Income	44635
Savings Rate	36.4%		Savings Rate	56.5%
Expenses   Jan 2013 – June 2013			Expenses   Jul 2013 – Dec 2013
Total	21218		Total	19420
Mortgage Interest	7592		Mortgage Interest	6733
Childcare	4820		Childcare	4614
Aldi Groceries	1578		Aldi Groceries	1657
Coles Groceries	215		Coles Groceries	269
Petrol	602		Petrol	689
Electricity Bill	441		Electricity Bill	515
Body Corporate Fees	728		Body Corporate Fees	728
Water and Sewerage	350		Water and Sewerage	323
Home Contents Insurance	347
Internet Provider	285		Internet Provider	301
Mobile Phone	80		Mobile Phone	116
Telstra Home Phone	153		Telstra Home Phone	76
Ambulance Insurance (12 months)	76
Car Registration (12 months)	858
			Rates (12 months)	915
			Third Party Property Insurance	164
			NRMA Roadside Assist	92
			Legal Fees	154
Washing Machine Purchase	400
Furniture Purchase	100
Bike Parts	181		Bike Parts	21
Car Repair	18		Car Repair	580
Specialist Appointments	230		Specialist Appointments	400
Work Shoes	78
Meidcal	11		Medical	293
Home Hardware	79		Home Hardware	55
Sports Club Membership (12 months)	271
Spectacles	60		Spectacles	48
Gifts	354		Gifts	65
Photo Printing	51
Department Store	30		Department Stores	195
Liquor	51
Books	36		Books	11
Theatre	89
Parking Fine	83		Parking Fine	91
Cash Spending on random shit	960		Cash Spending on random shit	300
Misc	13		Misc	14

Good things:
1. Cash spending is a lot lower.  This was helped by selling some clutter for a little bit of cash.
2. Gifts are a lot lower.  I arranged a christmas+birthday truce in my family.
3. Telstra home phone was removed recently.  I am mobile-only.  Fuck tesltra.
4. I have NBN :)

Bad things: 
1. Car repair (I will do this myself from now onwards)
2. Parking fine
3. Legal fees
4. books
5. Childcare is expensive, but will be finishing up in 12 months from now.

I am a single parent with 50% custody of the 2 kids. 

I am aiming for a 70% savings rate, for retirement in 10.5 years.

let me know of your comments/thoughts/questions.  I welcome the feedback.

[Nudelkopf]

You have so many categories!

[marisska]

wow.very good effort achieving such a savings rate.I might have missed it but is there any restaurants, or holidays, health insurance?  The reduction in child care costs next year will make a big difference. well done

[marty998]

An Aussie who spends only $51 a year on booze.

Now I've seen everything.

I wish my strata fees were that low (pay $530 a quarter - still quite low in comparison to what is out there). Can't get them to agree to switch off the lift or stick solar panels on the roof, those 2 items would really cut the bills down.

I think you've done rather well. It's so easy to drop a hundred here or there on a night out. I was at the Sydney Sixers / Perth Scorchers big bash game last night. Whole evening only cost me the $20 entry fee to the SCG, transport was free as I have a weekly train ticket for work that I could use. Brought my own chips $2 and water.

Mentally added up what my friend spent on the same night - car parking $25, petrol $10 at least, dinner for him and his GF $50, beers before game $10, entry tickets $40, beers during game $25, food during game $15. Like I said, it adds up very quickly.

[This_Is_My_Username]

wow.very good effort achieving such a savings rate.I might have missed it but is there any restaurants, or holidays, health insurance?  The reduction in child care costs next year will make a big difference. well done

Thanks Marisska :)

1. Restaurants are under 'Cash Spending on random shit'.  I don't go to many restaurants. 
2. I've been on a few driving/camping holidays, which is covered under petrol and groceries.  No flights.
3. hospitals and General Practicioners are free in Australia.  Specialists are expensive, and cost me $693 in the previous 6 months.

[This_Is_My_Username]

An Aussie who spends only $51 a year on booze.

Now I've seen everything.

I wish my strata fees were that low (pay $530 a quarter - still quite low in comparison to what is out there). Can't get them to agree to switch off the lift or stick solar panels on the roof, those 2 items would really cut the bills down.

I think you've done rather well. It's so easy to drop a hundred here or there on a night out. I was at the Sydney Sixers / Perth Scorchers big bash game last night. Whole evening only cost me the $20 entry fee to the SCG, transport was free as I have a weekly train ticket for work that I could use. Brought my own chips $2 and water.

Mentally added up what my friend spent on the same night - car parking $25, petrol $10 at least, dinner for him and his GF $50, beers before game $10, entry tickets $40, beers during game $25, food during game $15. Like I said, it adds up very quickly.

Thanks for the comments marty

I buy a lot of liquor during grocery shopping.  maybe $500-$700 in a year(?)

With strata fees, being active and interested in the Committee got me most of what I wanted.  only 5%-8% of residents actually care enough to do any work.  If that did not succeed, I talked to the other interested committee memebrs and used a few persuasion tricks to get them to agree with my preferred course of action.  (a bit like politics?)

and I agree, nights out on the town can really add up fast.

[This_Is_My_Username]

You have so many categories!

Nudelkopf, how do you get your grocery expenditure so low?

2860 for you, vs ~4000 for me.  Any tips?

[Nudelkopf]

You have so many categories!

Nudelkopf, how do you get your grocery expenditure so low?
2860 for you, vs ~4000 for me.  Any tips?

Don't have kids? :P And I put my alcohol (maybe $20/month) into "Social", which I see you put into your grocery column. I also eat very boring, Homebrand food - meat, veg, fruit, wheet-bix, milk, crackers, cheese, sandwiches (vegemite/peanut paste), baking, chocolate. (That's seriously about 99% of my diet).

I didn't mean to sound so negative in regards to how you budget - it just seems so overwhelming! I like to group smaller categories so I can easily see where I've gone out of control. But the benefit of yours is that you can see precisely where your money has gone.

"Grown up" things seem to cost a lot (home, childcare, car, insurance) :(

[Anatidae V]

This shows me one thing for certain: at the next Perth meet up I'm taking my grocery receipts and getting some help!

Also, glad to hear your GP bulk bills. Mine does occasionally. I'm not far along in terms of spending efficiency, but yours looks pretty good to me!

[happy]

Excellent, well done :)

[nikki]

How come you've broken it into 6 month chunks?

[This_Is_My_Username]

Thanks Nudelkopf, anatidaev, and happy for the comments. :)

nikki, the 6-month chunks are an accident of when I took the time to analyse all my expenses.

I'm thinking I should do it monthly from now onwards, to give me more frequent information and motivation!

[nikki]

Thanks Nudelkopf, anatidaev, and happy for the comments. :)

nikki, the 6-month chunks are an accident of when I took the time to analyse all my expenses.

I'm thinking I should do it monthly from now onwards, to give me more frequent information and motivation!

I see. I thought you just added monthly information up and posted it into 6-month chunks for a reason I couldn't figure out. I'm a big fan of keeping track of it monthly. I record things the day of, in fact. Pretty easy to do and not time consuming, as I imagine a 6-month round-up would be.

[vincenth]

I assume your savings rate is paying down the mortgage? The moment that disappears will greatly increase your capacity to save...

[HappierAtHome]

Is that childcare expenditure 50% of the cost for 2 kids to be in full time childcare? Just interested because realistic childcare costs are something I'm not across. It'll be awesome when you don't have to pay for childcare any more!

[This_Is_My_Username]

I assume your savings rate is paying down the mortgage? The moment that disappears will greatly increase your capacity to save...

Yes, that is correct at the moment. 

Interest rates extremely low, and ~maybe there will be another RBA rate cut in the next few months.  My mortgage rate is currently 5.2%

I'm thinking about buying shares, where the long term return probably will be greater than 5.2%

Does anyone have views on that? 

Pay the mortgage for a guaranteed 5.2%, or buy shares for a volatile 7%(?)

[nora]

Our mortgage is 5.2% also, and I am putting any excess towards that as it is the lowest risk option for us at the moment.

[This_Is_My_Username]

Is that childcare expenditure 50% of the cost for 2 kids to be in full time childcare? Just interested because realistic childcare costs are something I'm not across. It'll be awesome when you don't have to pay for childcare any more!

No, that is not full-time childcare.  Childcare is very expensive.  Indicative rates are: 0.5yrs-2yrs = $110/day. 2yrs-3yrs = $105/day. 3yrs-5yrs = $100/day.  And this is in 2014 - these rates will increase faster than CPI because profit.

Child Care Benefit (CCB) is paid on a sliding scale, with maximum benefit for HOUSEHOLD incomes below $42k, and $0 benefit for household incomes above $145k.  HappierAtHome, I think this means $0 CCB for your household(?).

Childcare Rebate (CCR) pays half of out-of-pocket expenses, after CCB is raken in to account.  No income test on CCR.  Annual $ limit  of $7500.

So, for example, if you have one 12-month old in childcare 5 days a week, and a household pretax income of $160k, you will pay:

$110x5x51 = 28050.  -7500 for CCR = $20,550 for one year.

Yes, this is extremely expensive

[Melody]

Good job! If I subtract your childcare we spend about the same and I am a renter without kids (face-punches for me!)

I didn't see much to pick on, however you should check out TPG for internet $60/month for unlimited internet + land line ($5 for unlimited land line to land line calls).

Also have you considered "extras" insurance. I get it with HIF and it pays for one dental visit a year (value $140) and costs $200/year. For glasses, specialists etc it will give me 60% back. It looks like it might work out for you to take out insurance for the family member that requires specialist care. (It also includes ambulance).

Also regarding the mortgage, if you are on a variable rate, can you re-fi or call and ask for a discount, I know some banks are offering 4.69% at the moment. (Obviously need to weigh up costs of doing this.)

With shares 7% isn't a fair comparison. Many blue chips pay 4ish% dividend (which comes with a 30% franking credit attached, so on your income would be tax free). If these are subsequently sold (after 12 months) you will make x% gain (or loss!) and pay tax on half the value of the gain (so at 15% on your wage).

However that said I would strongly steer towards paying down the mortgage as your risk profile is very different to mine. You are a sole wage earner with dependents and that gives you very little margin for error. Those extra payments now mean you can take a "repayment holiday" in the future if the worst were to happen - loss of job, not able to work for extended time due to health reasons etc.

[This_Is_My_Username]

Good job! If I subtract your childcare we spend about the same and I am a renter without kids (face-punches for me!)

I didn't see much to pick on, however you should check out TPG for internet $60/month for unlimited internet + land line ($5 for unlimited land line to land line calls).

Also have you considered "extras" insurance. I get it with HIF and it pays for one dental visit a year (value $140) and costs $200/year. For glasses, specialists etc it will give me 60% back. It looks like it might work out for you to take out insurance for the family member that requires specialist care. (It also includes ambulance).

Also regarding the mortgage, if you are on a variable rate, can you re-fi or call and ask for a discount, I know some banks are offering 4.69% at the moment. (Obviously need to weigh up costs of doing this.)

With shares 7% isn't a fair comparison. Many blue chips pay 4ish% dividend (which comes with a 30% franking credit attached, so on your income would be tax free). If these are subsequently sold (after 12 months) you will make x% gain (or loss!) and pay tax on half the value of the gain (so at 15% on your wage).

However that said I would strongly steer towards paying down the mortgage as your risk profile is very different to mine. You are a sole wage earner with dependents and that gives you very little margin for error. Those extra payments now mean you can take a "repayment holiday" in the future if the worst were to happen - loss of job, not able to work for extended time due to health reasons etc.

Thanks for the feedback melody :).

1. I recently started a $50/month 25Mbps NBN plan, and ditched the telstra landline, because telstra were gouging me.

2. Thanks for the extras insurance tip.  I'll need to check the cost/benefit.  I get my prescrition spectacles for $10-$15 online delivered from China.

3. I am doing a re-finance soon, in relation to the separation financial agreement.  And I learned the number 1 rule for early retirement: never get divorced!

4. thanks for the comments on risk tolerance.  I see now that risk tolerance is not just an emotional feeling, it needs to consider the real-world risks of each persons's situation.

Thanks melody.

[Mark31]

This_is_my_username, your budget is possibly the tightest Australian budget I've seen on this site! (although nudelkopf may give you a run for your money)

Subtracting mortgage interest and childcare (to help with comparisons), I get spending of only $16,900 a year, for a (average) household size of one adult and one child.

If I was spending as little as you in my situation, I would be spending only $33,800, and I'm spending 20%+ over that.

I really can't offer you any advice and will instead just draw inspiration from your low spending.

[This_Is_My_Username]

Cheers, Mark31. 

I find myself missing out on the economies of scale of a 2-adult household. 

e.g. it is less than twice as difficult to cook and wash up for 2 people than it is for one person.

[HappierAtHome]

I find myself missing out on the economies of scale of a 2-adult household. 

e.g. it is less than twice as difficult to cook and wash up for 2 people than it is for one person.

This is so true, and makes a real difference in a million small ways.

Thanks for explaining the cost of childcare! You're right that I won't be eligible for the benefit but I'm not going to complain about that, I think with a combined household income of ~$250k it would quite frankly be ridiculous for us to receive childcare rebates.

[stripey]

I have nothing further to add... very well done!!! I suspect you have trimmed most of the 'easy' fat

[Melody]

Glad I could be of help, because as others have already pointed out, you are totally bad-ass!

You might find this site helpful for the re-fi http://au.pfinance.yahoo.com/compare/

And yeah not being a two adult household is hard. Even in a two adult one income household things are easier as one person has the time to help the household save money. The radical way of dealing with this might involve combining households with a friend in a similar situation or a single who is happy to help with the kids and cooking (e.g. a cousin or younger brother/sister helping out etc.) When my boyfriend's sister had her children (and both sister and hubs were working) my boyfriend lived in a caravan in their garden, he got free rent, they got free babysitting and house-help and everyone was happy... At least for the first winter! As the second winter approached he decided to rent a house ;-)