Gathering the straws of life together

In your interest

In your interest

It is in your interest to know what is going on with your bank accounts. Not only bank accounts but all your financial interests. While some people trust financial advisers and accountants it is always in your interest to check any documents they give you or ask you to sign. Take your time and if necessary take them away and sign another day!

In early May I wrote a post about The Royal Commission into the Financial Services Industry. I notice that it is now called The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. This is the royal commission that almost did not happen until the Liberal National Coalition under the leadership of Malcolm Turnbull changed their mind. I wondered whether Malcolm Turnbull, once a merchant banker, had a view that the banks could be trusted. If that was the case, he has had a surprise, given the bad behaviour of the banks and other parts of the financial industry that is being uncovered.

As of the 3rd May 2018 the commission had received 4501 public submissions, now there are 6320 (banking 64%; financial advice 10%; superannuation 10%). There are considerable concerns about the financial services industry, but mostly about the banks. People have entrusted their life savings with the banks and these have then disappeared into the ether. Take the couple who sold their property for $2.7m. They invested it all with Macquarie Bank who carelessly managed their money. Today, all they have left is $400,000. Where did it all go? Some of it went into the pocket of financial advisers and the rest through bad investment decisions their capital kept disappearing and disappearing. Did the bank care? Probably, the financial adviser has moved overseas or now lives in Bali and eating the cream that was skimmed off the top of each investment move.

In is in your interest to take a walk out of debt.

When you are investing money, you must make sure, it is in your interest first and foremost. It is important to diversify. Don’t put all your money into the one investment option, like the couple who had $2.7m to invest. Many of us are not sophisticated investors, including me. But as I have researched the area I may be more informed than others who blindly trust the banker or financial adviser with that nice smile or welcoming handshake. That is not enough!

I always found it annoying that it was much easier to find the minimum monthly payment amount on my credit card than the total amount due for the month. I was pleased to see this month that the ANZ Bank is providing more information on their credit card statements. They give a minimum payment warning. This is now an Australian Government requirement.

Say you have a balance of $2,500 on your credit card. The monthly minimum payment is about $51. If you no longer use your credit card and continue to pay only the minimum amount each month, it will take a very long time to pay down the debt. Yes, around 23 years and 11 months before you are out of debt! Interest charges are around $6,800. This is, NOT in your interest. That little minimum monthly payment can get you deeper and deeper into debt. If you can’t pay off the monthly amount, then maybe it is time to cut up that credit card. It is time to reshape your thinking about what is important in life. Repair instead of replacing. Reuse instead of disposing. Repurpose – for example use a 2-litre milk container to store your home-made washing detergent liquid. Think about it! We all live in a happier space if we don’t have debt hanging over our head.

If you have fallen on tough times, then talk to the bank. It is time to work out the best payment plan and reduce the amount you will pay in the long-term – it is in your interest!



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