Reader Case Study: Any Australian Mustachians? Am I on the right track? I'm New.

[LadyTomoro]

Life Situation:
Mr Tomoro owns small business creating websites, Mrs Tomoro is a stay at home mum and does the bookkeeping (and budgets) for the business also from home. We have to pay our own annual Tax bill, as well as quarterly GST. We are both 32 years old and have two boys 5 & 7. As I indicated in the subject line we live in Australia in a country city called Toowoomba in Queensland. We are debt free (no credit cards) excluding a small mortgage of $130,000 on a house worth $350,000AU Mrs T is looking to study soon and afterwards start a part time business - when little Mr 5 starts school in a couple of months, may take time and start up money before bringing in a significant income.

Gross Salary/Wages & Taxes:
Our business turnover last year was $170,000 (year before $140,000) however with work expense deductions we are left with about $112,000 (year before 99,000) then need to pay tax on that. This year tax was $20,400. (We can't guarantee we will earn the exact same income this year however we have already made $44,000 after expenses in 3 &1/2 months so I think we are pretty on track (we keep in mind the upcoming xmas/new year season is always a low income period)

Pre-tax deductions:
Life Insurance $480pa but no Super yet. Hospital Basics Cover (Medicare) included in tax approx $2000 per year

Other Ordinary Income:
We have a side hobby income from a footy forum that brings in about $1000 per month.

Qualified Dividends & Long Term Capital Gains:
We both have a small Superannuation Fund (we are not yet contributing to it yet- on our to-do list) which we cannot access until we are 55, it has approx $10K each.

Current expenses: We use YNAB so figures are monthly/4week averages over a year and include our business expenses.

Average Business Expenses Total $6984.67 Breakdown below:
GST   $1,151.38
Business Client Expenses   $1,400.00
Vehicle Fuel & Exps (45% business deduction)   $272.00
Business Account Bank Fees   $10.00
Mr Tomoro’s Phone & Internet $130 +75   $205.00
Car Insurance    $91.55
Xero - Accounting software   $50.00
Life/ Trauma/ Income Protection - Insurances   $111.75
Business Insurance/ Cyber Insurance   $200.00
Adobe Software Subscription   $57.99
Accounting & Company Expenses   $100.00
Office Rent   $715.00
Business Travel Expenses   $120.00
Equipment   $350.00
Employee Expenses/ Payroll   $400.00
Annual Tax $21K   $1,750.00


Average monthly Income after Business Expenses & Taxes $7405.52


Average House Expenses Total: $944.27 Breakdown Below:
Mortgage $320-360 (Interest Only)
Home Insurance    $111.76
Gas for Heating, Water & Cooking   $87.50
Electricity   $133.34
Water   $66.67
House Council Rates    $185.00

Other Spending Average Total: $4621.25 Breakdown Below:
Groceries   $1,100.00
Tithing    $680.00
Fun Money   $160
Eat Out & Take Away   $400.00 (Usually 1 eat out dinner, 1 cuppa date, 1 lunch out per week)
Unexpected Expenses   $50.00
Kids Book Budget   $20.00
Mrs Tomoro’s Phone   $30.00
Extras Health Insurance    $56.25
Health Expenses eg Eyes/Teeth   $150.00
Clothing   $250.00
Household Goods & Appliances   $250.00
Home Maintenance + Veggie & Flower Garden   $200.00
Birthdays & Gifts   $150.00
School Books, Excursions & Uniform   $60.00
Kids Music Lessons (Proposed for Next Year)   $120.00
Kids Sport Swim/Soccer/Karate   $85.00
Date Nights & Entertainment (incl netflix & itunes movies)   $100.00
School Holidays Activities   $40.00
Anniversary Treat - Weekend Away   $70.00
Xmas Prezzies & Annual Camping Trip   $250.00
Hobbies/ Cycling/ Craft   $100.00
Hair cuts, skincare, waxing, makeup etc   $300.00

Savings: $1840
Mortgage $680-640 Principle per month
Superannuation Contribution (New Category just this month)   $200.00
‘Merica Holiday Savings $25K (currently at 12K)   $1,000.00
Renovations - Not while saving for overseas

Savings Rate = Approx 24%

Assets:
2014 Renault Megane Family Car - purchased with cash $20,000 after trade in of old car in 2015.
(Used mainly by Mrs T for school pickup/drop off x10 per week, Groceries x1 per week & Church x3 per week)
Lots of bikes ranging in prices $50-$5000 all get used regularly.
$10K Emergency Fund/Buffer
House worth $350,000AU

Liabilities: Small mortgage of $130,000

The kids school is 2.4kms away = 35mins up hill for an adult to walk (a little too far for my 5 year old unfortunately) Moving any closer to the school would mean $100,000 added to mortgage because of better area for exactly the same size - Cost of moving doesn't seem worth it at this stage. The high school is only 1km so definitely walking there.
Mr Tomoro rides to work 3.6kms everyday excluding raining days when Mrs T drops him off first before the kids go to school.

[marty998]

You can't list the car expenses as a business expense if you use it predominantly for private use. ("Used mainly by Mrs T for school pickup/drop off x10 per week, Groceries x1 per week & Church x3 per week").

Small matter of tax laws being broken there.

Otherwise well done and congrats on building a growing business.

[Anatidae V]

You're doing great! My comprehension skills might suck, though - what do you guys want to do? You're on the right track (as per thread title) to open up a lot of options, but if you have a plan then people can let you know how to boost it a bit.

[happy]

Welcome, lots of Aussies here.

On an after tax income of 90k you should be able to do better than a 24% savings rate.
The following are too high/spurious:
fun money
eat out and takeaway - try fortnightly or monthly rather than weekly
kids book budget - there's a library
clothing - 3k a year, ru kidding
household good and appliance - another 3k???
date nights and entertainment, on top of eating out?
gifts - bday - 1.8k PLUS more for Xmas. list how much the Xmas holiday is and look at how you can reduce gift budget
Hair cuts, skincare, waxing, makeup etc   $300.00 per month!!! good grief. fix this. (3.6k a year, I feel faint)

You can probably optimise other stuff,  but these are the easy picks IMO.

You're doing well in the commute distances, mortgage area.

Cruise the journals, there's lots of us there.

[LadyTomoro]

Good Suggestions so far thanks.

Marty998 - The 45% business is legit from a car log book as we occasionally need to do Brisbane and Interstate trips (can't ride there) for business, but on a day-to-day basis, its is for Mrs and tax is portioned on each transaction in the bookkeeping.

Anatidae V - Good question - My Partner and I seem to be on different pages here... we need to have some serious 'future' discussions...

Happy - you're definitely right... there are a few categories there which need looking at, Hair can be reduced if I decide to be a brunette instead of blonde in the near future, Skincare unfortunately is unavoidable atm as I have a dermatology problem, but definitely can be reduced. 
Have been attempting to give handmade gifts recently to friends but I tend to splurge too much on close family presents.
Clothing tends to run away from me... growing boys and my own weight gains have left problems there.
Am consciously aiming to reduce household goods & appliances by embracing minimalism and decluttering... have started by reducing 5 items every day for the last couple of weeks, surprisingly fun! Just need to make sure I don't end up replacing them in a couple of months time.
I have also been looking at the take away budget and looking at ways to have relaxing meals at home instead of eating out, we have recently landscaped our backyard set up for bbqs and a fire pit, already starting to implement. Fun money - holding on to it for dear life, however I do occasionally skip a week when I have left over amounts.

I hope to start reducing some of these immediately so will post back in a month or two on our progress... 
How is the grocery bill in comparison to other 2 Adult 2 Children Australian families? I have tried very diligently to reduce this amount to no avail.

[happy]

Grocery is not too bad - I go a little less than that for 3 adults.  If you really want to get into it though, Cath from http://www.debtfreecashedupandlaughing.com.au feeds 5 on $300/month. Good site for ideas and techniques even if you don't achieve that level.

[Bee21]

Congrats on the business income, that looks great.

The food combined with eating out and dates is high. We spend 180 a week for a fam of 4, and we eat a lot. Its a combo of coles, woolies and the indian fruit shop.  We rarely eat out, because it is not fun to go to restaurants with small kids, who never eat what they order.it is more relaxing and cheaper to put a decent steak on my own barbie.

Also, what presents are you buying and for how many people? I vote against homemade presents, they can be cheap and tacky unless you are very talented, and they are a waste of time and space.nobody needs more clutter.  I have a present box where i collect presents during the year if i find a good deal, and if there is a bday invitation, my kids just choose sth for their friend from the box. I recently stocked up on 5 dollar board games and craft kits for the upcoming bday parties. Flybuy points can be turned into giftcards, I am planning to buy the kids xmas presents with those this year too, i usually get around 150 dollars by the end of the year. We spend 20 dollars on the nieces for bdays and xmas and exchange a 50 myer giftcard with my sister in law and hit the boxing day sales together. This amount is sort of mutually agreed upon, so it works well.

I also recommend Cath Armstrong, i learnt a lot from her books and site. Check out the link  happy provided.

[mustachepungoeshere]

Another Aussie!

Welcome to the forum. :)

[deborah]

I think you won't be getting superannuation until you are a few years older than 55 - I suspect it is 60 for you - see https://www.ato.gov.au/Rates/key-superannuation-rates-and-thresholds/?page=10#Preservation_age and you should be putting SOMETHING in - as a small business, there are quite a few tax lurks in superannuation/retirement. I know you don't need to put in the required amount, and if you are retiring early, it's good not to have too much locked up until you are 60, but I think you should be putting something in.

[frugalsurfer]

Mr Tomoro rides to work 3.6kms everyday excluding raining days when Mrs T drops him off first before the kids go to school.

I'd literally murder for a commute distance like this. Feel for us city folk down the coast spending 3-4 hours in total each day in traffic or a crammed train carriage. I need to change career and work from home, you have an excellent situation there! So jealous!

And yeah, as others have mentioned you seem to be spending slightly too much on luxuries, although maybe it's justified? Toowoomba doesn't strike me as a particularly exciting place to live, no offense intended.

And $25k for a USA trip? Seems like a lot, even considering it's a family affair. Hopefully it's a good, long trip? I am planning 3 months in North America in a year or so, and my net budget is around $3k. Buy a vehicle at the start, use it for your own transport and accommodation, cook your own food as often as possible, and then sell the vehicle for the same price at the end of the trip. We did the same in South America last year, actually we sold the vehicle at a slight profit which compensated for all the tolls we had to pay. :D

[LadyTomoro]

Thanks heaps for the suggestions...

deborah - I have convinced my husband that we need to make superannuation contributions for the tax 'lurks' and have booked in to see a professional.

Frugal Surfer - your exactly right, Toowoomba can be a bit dull... no cheap beach to spend time and very little money at on the weekend, so our treats are usually getting accomodation at the coast, plus the fuel to get there, and the meal out without cooking facilities... fun weekends though. I understand the commutes, I used to live in Adelaide - which isn't too bad at usually 1 hour drive each way.  My husband also had a serious conversation about our USA trip, it was going to be a long one but now we have decided to down size it to only 3 weeks and a lot less needed to save, which feels like a burden lifted off my shoulders!

mustachepungoeshere - Thanks! I'm actually pretty surprised how may Aussies are here.

Mark31- I'm checking out that topic next! haven't found it easy to navigate the topics just yet. Definitely room for improvement (biggest hurdle is getting my husband on board... proving a challenge...tiny steps)

Bee21 - I probably didn't explain very well but with our xmas budget we don't make any income from our business over that period so we often live off that money saved for xmas, not much goes to prezzies and some goes to camping equipment & fees too.

Thanks again everyone... tiny steps for us and our family but I can tell we are already making improvements

[HappierAtHome]

I'd literally murder for a commute distance like this.

Wow, this thread took an unexpected turn for the macabre. Remember, good mustachians save up lots of fees to pay their lawyers before they literally murder someone. Though I guess you wouldn't have to worry about the commute anymore in jail.