A senate inquiry has revealed shocking stories about the debt young Australians incur through buy now, pay later companies like Afterpay and Zip Money. These providers market themselves as a financially-savvy alternative to credit card companies, as users can pay their purchases off over time with interest-free instalments. However, they’ve been accused of targeting vulnerable Aussies without the means of repaying their debts.

One of those Australians is Renny O’Dwyer, a 19-year-old university student making just $300 a week from Centrelink payments and her part-time job. Despite earning less than a fifth of the average Australian weekly wage, Afterpay allowed her to rack up debts of $3110.

“When I shop, it’s quite an addictive thing — you get adrenaline when you purchase things,” she told the ABC’s PM program. “I would more often than not just keep using it, and for things that I wouldn’t necessarily buy.”

Ms O’Dwyer says half of her weekly earnings are now consumed by Afterpay repayments. She believes the financial provider and other companies like it are dangerous for anyone who isn’t financially literate.

“You know, you’re just out of high school, you’re a uni student, you don’t have a full-time job — you’ve never had that kind of experience where there’s expenses to life,” she told the ABC.

Her assertions are supported by a recent Australian Securities and Investment Commission report, which found one in six customers who use Afterpay are in financial trouble. More than half of these people are aged between 18 and 32.

Despite the findings, Afterpay co-founder and chief executive Nick Molnar insists his company is financially responsible.

“Afterpay is not in the business of offering a $20,000, or even a $5000 loan,” he told the hearing. “We’re not a line of credit, payments are attached to a discrete product or service, which means we can never be used for a gambling-type service.”

He added that Afterpay users cannot continue accumulating more debt through the service if their payments are outstanding. He also noted the average Afterpay user owes just $208, far less than the average credit card debt of $4200.

However, while people typically have smaller debts using Afterpay and other buy now, pay later services, that doesn’t diminish the stress some users feel repaying their purchases. If you’re a stressed out Afterpay customer or simply feel your debt and spending is out of control, call Chase Edwards on 1300 854 833. We can help you pay down your debt and regain control of your finances much faster than you might think. Discover a smarter, less stressful way of managing your money today.

Do you ever wonder why some people seem to find growing wealth easy while others always seem strapped for cash? Is higher education the key, or perhaps the wisdom that comes with age and experience? According to new research from Temple University in Pennsylvania, the willpower to resist instant gratification is a greater factor in determining financial success.

The willpower to resist instant gratification doesn’t just come in handy when browsing the shops or driving past fast food restaurants. It also helps resist addictive substances, like cigarettes and alcohol, which can deplete savings and limit earning potential. When people struggle with these substances, their confidence can also suffer. Negative self-esteem can hold people back from pursuing further education or higher job opportunities, which puts additional pressure on finances. The lack of cognitive control which inhibits willpower also negatively impacts creative and productive thinking, two activities usually rewarded in the workplace.

“Put simply, if people can vividly imagine themselves in the future with larger rewards, they are more likely to be patient,” the researchers claimed in their report.

The researchers admit that the jury is still out on whether the ability to resist the things we want is an inherent personality trait or a skill that can be learned. However, if we can learn to have willpower, they say these lessons should start early.

“If you want your child to grow up to earn a good salary, consider instilling in them the importance of passing on smaller, immediate rewards in favour of larger ones that they have to wait for,” said William Hampton, the study’s lead author.

If you find it difficult to resist the impulse to spend, we believe it’s never too late to change your habits. Chase Edwards friendly financial experts can work with you, helping you repay your debts and grow your wealth faster than you might think. Call us on 1300 854 833 to learn more about our services.

Homebuyers have traditionally tried avoiding Lenders Mortgage Insurance (LMI), a fee banks impose on mortgage applicants with deposits of 20 percent or less. However, experts say that in the modern real estate climate, it can be worth wearing the costs.

Last year nearly 82 percent of first homebuyers paid LMI after taking out mortgages of greater than 80 percent of their property’s price. Should these homebuyers have waited until they had a larger deposit? Bob Korver, a broker for Mortgage Choice, said it depends on their individual circumstances.

He says with property prices increasing, an extra year spent saving may not be the smartest financial decision. Rising house prices and rents could see applicants ultimately spending more than they would have paying the LMI.

“The longer you delay when you buy, the more likely you are to miss an opportunity to get on the ladder,” he told news.com.au. “Your time in the market is generally what reaps you the most rewards in the long term and the longer you are in the market, the more money your property will make.”

“Certainly, for first home buyers, the cost of missing out on a rising market would sometimes exceed the cost of an LMI premium,” added Aaron Sainsbury, a mortgage broker for Smartline.

While Korver acknowledged it wasn’t a viable solution for all first homebuyers, he also suggested that parents might consider serving as guarantor for their children to help them avoid the LMI while getting their foot into the property market.

Brett Clifton and Sussi Bergenstrahle-Fotivec, who paid for LMI on two loans over the past two years, said Australians should research the property market carefully before deciding whether to pay the LMI or delay their property purchase.

“We know that the other homes for sale in that area and that have been sold since then, have sold for more than what the bank valued our place at. The valuation played very heavily into the amount of LMI we had to pay and it as a lot steeper because the valuation came in fairly conservatively,” he said. “We paid about $45,000 LMI which is a lot. I turn 55 this year so I didn’t have more time to wait and in the meantime, we are paying $1000 a fortnight in rent. If we left it, we might not have saved up the money and the market would have moved away.”

Before deciding whether to buy now with a small deposit or wait to buy a new home or investment property, contact Chase Edwards on 1300 854 833. We’ll provide an honest appraisal of your finances, free of charge, that can help you make the right decision on your property plans.

Collaroy residents Kell and Sarah Driver recently bought an investment property in Newcastle.

Investors Sarah and Kell Driver were on the lookout for their next investment property and realised they could get a considerably better deal in Newcastle – and match their Sydney investments for growth.

The Collaroy Residents recently settled on a home in the Newcastle suburb of Wallsend and said they liked the area because it offered the opportunity to be positively geared.

“It was so much more affordable buying in Newcastle”, Mrs Driver said. “We had basically given up on Sydney. It was just too expensive”.

Despite the cheaper prices, the couple said they faced a lot more competition than they anticipated, Mrs Driver said.

“It feels like the market was pretty hot when we bought. Now it’s probably even more competitive” she said.

“The properties with potential to be renovated are what seem to be most in demand. When there was one of those listed they would always sell very quickly too”.

Strong investor activity in the Newcastle and surrounding Hunter Region appears to have had a marked impact on values. The median price of a Newcastle house rose by nearly 13 per cent over the year to July.

In the nearby council area of Cessnock, which includes towns such as Pokolbin and Kurri Kurri, house values increased by an average of 9 per cent.

McGrath Estate Agents founder John McGrath said many of Sydney’s surrounding regions and cities, like with Melbourne, were primed for growth because they were considerably cheaper.

“Sydney and Melbourne have become the ‘New York of Australia’. However, the value gap between these two centres and the rest of the country is too wide in my view”. Mr McGrath said.

“I believe the gap is likely to close somewhat over the next few years, it will not be because of a major correction of values in Sydney and Melbourne. Rather, it will happen as other cities play catch up”.

Real Estate Buyers Agents Association of Australia president Rich Harvey said Newcastle’s diverse industry and economy was part of the appeal for investors.

“There’s no point for investors to simply buy in an area because it’s affordable – there has to be growth drivers that will make them money”, Mr Harvey said.

“The key with Newcastle is that it has a good mix of drivers. Lots of gentrification is happening around the CBD, there is a new light rail line coming and the economy is doing very well”.

Newcastle rental returns were also better than Sydney, especially since the larger blocks meant there was more potential for duel rental income from a granny flat or duplex, Mr Harvey said.

Source: https://www.realestate.com.au/news/sydney-investors-are-buying-in-newcastle-for-better-returns/

Despite Australian employers chipping in compulsory superannuation payments for the last 25 years, many Australians aren’t adequately prepared for retirement, according to the recently released Retirement Readiness Report. In typical laidback Aussie fashion, many Australians procrastinated about putting a retirement plan in place, leaving them financially ill-prepared to leave the workforce the joint study conducted by the Australia Actuaries Institute, the American Academy of Actuaries, and the Institute and Faculty of Actuaries in the United Kingdom found.

Wayne Wanders, the study’s author and a chartered accountant, believes the Australian government and the superannuation industry should review the current superannuation system considering the report’s finding and the current state of retirement in Australia. He noted that people are retiring later, typically after the age of 70. Most Australians retire only partially and some never at all. Not so coincidentally, relatively few Australians believe they’ll enjoy a comfortable retirement.

He’s urged the federal government and superannuation bodies to consider changes to the way superannuation balances are reported to members.

“Right now, people get their annual super statement and it has a balance,” he explained to Money Management magazine. “But very few people actually understand what that really means for them in retirement. We need to convert that to a payment stream in retirement.”

He added that rather than simply noting a balance of $50,000 for example, superannuation statements should explain that at an earnings rate of five percent, this balance over 15 years would amount to a monthly payment of $395.

Variable earnings rates and periods of drawdown should also be addressed, Mr Wanders said. He believes the federal government should set the earnings rate and drawdown period to make sure all superannuation holders are “comparing apples with apples.”

Finally, Mr Wanders has advocated for better financial education.

 “All Australians need better education around financial literacy, especially around how financial decisions today impact on future retirement outcomes,” he confirmed.

While Mr Wanders has some great ideas about the future of superannuation in this country, at this point they’re just ideas. It will take time for the government and superannuation bodies to implement them, if they ever do. In the meantime, all Australians need to take responsibility for their own retirements through careful planning. There’s no better time to stop procrastinating on your retirement plans than now. Call 1300 854 833to organise an appointment with one of Chase Edwards’ retirement forecasting experts. They’ll honestly assess your finances and help you put strategies in place to create the retirement nest egg you need. It’s never too late to put a retirement plan in place, and with Chase Edwards it’s easier than you might imagine.

In the past, Australians wouldn’t get an inheritance until their parents passed away. But increasing numbers of elderly Australians are gifting their children their inheritance before they pass away, a practice which money experts say could put the financial futures of generous seniors at risk.

Some seniors are motivated by a desire to help their children when they need it most, like when they’re saving for their first property or starting a family.

“That way they can see the benefits first hand and in some cases offer advice on how to invest the money so it provides ongoing value,” Adrian Frinsdorf, William Buck’s director of wealth advisory told news.com.au.

“As grandparents become increasingly involved as carers in the lives of their grandchildren, I’m also seeing more early inheritance funds being used to pay for secondary and tertiary education.”

However, some other older Australians reportedly feel pressured by their children to cough up the cash early. Known as Early Inheritance Syndrome, this type of elder abuse is a “reasonably regular occurrence,” according to Joshua Crowther, a wills and estates law specialist at Stacks Law Firm. He hopes Australia will introduce laws dealing with elder financial abuse, like California and some other American states have, to combat the problem.

While it’s only natural to want to provide for your children, it should never come at the expense of your own lifestyle. You must be confident your generosity won’t compromise your own future. Your gift could also have unexpected tax consequences for you and your child. If you’re considering giving your kids their inheritance early, speak to Chase Edwards first.

Our financial health checks are free and there’s no obligation for you to use our services. They’ll offer an impartial assessment of your finances and whether you can really afford to help your kids. If it’s not the right time for you to give your kids their inheritance now, we can help you devise strategies to increase your wealth and achieve that financial goal. Call us on 1300 854 833 to set up an appointment with our friendly money experts.

Australians have a diverse range of financial goals, according to new research from finder.com.au. Paying off a mortgage was considered an important financial milestone for three out of four of the 2000 Australians surveyed, but saving enough superannuation for a comfortable retirement wasn’t far behind.

Paying off debt, financing international travel, and securing an investment property were also key goals among those Australians surveyed. Further down the list, but still important to many Aussies, were achievements like retiring at 50, earning an annual salary over $150,000, starting a business, helping children secure their first home, and expanding an investment portfolio.

Bessie Hassan, a money expert from the comparison website said the survey showed a shift in how modern Australians measure financial success.

“While property is still prevalent among our financial aspirations, there are other goals that are highly valued such having a salary of $150,000 or greater and helping kids get a foothold on the property ladder,” she explained. “It’s encouraging to see that Australians are adopting a long-term mindset and thinking about paying down mortgage debt, [and] having enough funds to retire.”

Perhaps those long-term goals have come into focus because fewer Australians are achieving them. While most Australians (65.5 percent) own the home they live in, the proportion of Australians owning property dropped 1.5 percent between 2011 and 2016, according to domain.com.au. Just 53 percent of couples and 22 percent of single Australians are on track to save enough for a comfortable retirement, according to research from the University of Melbourne and Towers Watson.

At Chase Edwards, we understand that Australians have a range of different financial goals. Our financial solutions are as different as your aspirations because we understand that a one-size-fits-all approach to money management simply doesn’t work. To learn more about how we can help you achieve the financial goals that matter most to you, call us on 1300 854 833.

When we’re asked whether we’ll pay by cash or card at the checkout, we’re likely to reach for plastic. That’s plunged our population into $52 billion worth of debt. We have more than 16.7 million credit cards and each one has an average balance of $4730. National treasurer Scott Morrison has had enough, and he’s taking action.

Morrison plans to introduce a raft of new measures to protect Australians from accumulating excessive amounts of credit card debt. By the end of the year, credit card providers must assess whether individuals can repay their credit limit within a reasonable period of time before approving any new cards. They will also be unable to approach consumers with credit limit increase offers without prior approval. Credit card holders will also be able to reduce their credit card limits or cancel their cards altogether online. The way credit cards calculate interest will also be simplified so Australians can better understand and reduce the excess charges.

“It is vital that we protect vulnerable Australians from predatory behaviour which seeks to make a quick buck from people’s misfortune, and compound their financial hardship,” Treasurer Scott Morrison said in a press statement.

However, Morrison still has his critics. Labor says the promises are nothing more than the reinstatement of old Liberal policies never delivered.

“If the government had delivered on its own commitment last year these reforms would be in place and credit card customers would be getting a better deal,” Katy Gallagher, the Labor party’s financial services spokesperson said.

Meanwhile ME Bank says the changes don’t go far enough to protect ordinary Australians.

“Most people get into serious credit card debt because of an unexpected event, like loss of employment, which the new affordability assessment won’t and can’t predict,” explained Nic Emery, the bank’s head of deposits and transactional banking.

He suggests making changing credit card providers easier would drive down interest rates as financial institutions would face greater competition.

However, Mr Morrison is confident his party’s proposals will ease the debt burden for Australian credit card holders.

“These measures will help protect vulnerable Australians, and ensure financial companies do the right thing by their customers,” he said.

While Mr Morrison’s changes should make getting into greater debt more difficult, they don’t really help people struggling to pay off existing debt. If your credit card balance seems overwhelming, speak to Chase Edwards. We offer a free, no-obligation financial health check to help everyday Australians learn more about their financial situation and how they might change it. Call 1300 854 833 to organise your appointment today.

If you’ve considered buying an investment property or your first home in New South Wales, it may pay to get in quickly. Real estate experts are predicting property prices within the state will rise when the state government abolishes stamp duty for first home buyers.

The NSW government will scrap stamp duty for first home buyers purchasing new and existing properties valued up to $650,000 from July 1. First home buyers will also be eligible for discounts on properties priced to $800,000. Currently the stamp duty is only waived for first home buyers purchasing new properties to the value of $550,000.

The new legislation aims to help NSW residents save nearly $25,000 on their first home. However, research firm Corelogic worries that the policy will inflate property prices within the state.

“The long-term outcome may be self-defeating due to higher demand pushing up prices,” the group’s head of research, Tim Lawless, told news.com.au.

The state government will hope doubling its Foreign Investor Surcharge Duty will reduce interest from overseas buyers and offset increased demand from first homebuyers. However, financial services firm UBS fears developers could undermine the state government’s efforts. Developers typically rely on presales to finance construction. The bulk of these presales come from foreign investors, who developers will want to entice back to the market.

Kim Wright, UBS’ global head of real estate cited the example of Hong Kong, which introduced a higher stamp duty for foreign buyers. This legislation saw foreign investments initially fall from 40 percent to 5 percent. However, this drop was short-lived. 

“But then what has happened is developers provided rebates, where they would refund all or part of the stamp duty, so Chinese buying picked back up to pretty high levels,” she explained. “I think [the NSW changes] will slow down some demand, then it will depend on how the developers respond.”

If foreign investment wanes, it’s not all good news according to the Urban Development Institute of Australia. It says that if foreign investors don’t put money into local construction, whole housing projects may be cancelled. This will worsen under supply issues in boom areas like Sydney, which should also push property prices higher.

With all signs pointing to rising real estate prices in New South Wales, there’s no better time to secure an investment property. Call Chase Edwards on 1300 854 833 to assess your finances and take the first steps towards building your property portfolio.

If you’ve ever considered investing in real estate, a recent study may be enough to convince you. CoreLogic’s latest Pain & Gain report found the overwhelming majority of Australian homes are selling for profit. In the December quarter, 91.1 percent of homes sold locally fetched more than their original purchase prices.

That’s an improvement on the already strong results of the previous quarter, when 90.7 percent of local real estate sales turned a profit.

The December quarter profits are nothing to sneeze at either. During this period, Australian homes sold generated $18.8 billion in profits. The median profit was an impressive $172,000. While there were some losses, these were comparably minor with a median value of $33,000.

The report also found the longer an owner had the property, the greater its chance of selling for profit.

“These latest results highlight that ownership of property, whether for investment or owner occupier purposes, should be seen as a long-term investment,” CoreLogic analyst Cameron Kusher wrote in a press release.

CoreLogic’s research also found homes in capital cities also tended to perform better than those in regional areas. Adelaide and Perth were the only cities where the proportion of homes reselling at a loss didn’t fall. The Australian Capital Territory had the lowest level of loss-making sells, with just 1.1 percent of homes failing to make more than their last purchase price. Sydney wasn’t too far behind, with just 1.9 percent of homes posting a loss, followed by Melbourne at 4.4 percent and Brisbane at 7.9 percent.

If you’re encouraged by the strong profit-making potential of real estate in Australia, speak to Chase Edwards on 1300 854 833. We can offer an honest assessment of your finances and help you gather what you need for a deposit, as well as guiding you through the process of purchasing your first investment property. Visit our testimonials page to learn how we’ve helped other Australians just like you develop their property portfolios.