We wish you a Frugal Christmas

Former years have seen rises in personal wealth (or the illusion of it), with rises in share markets and property prices but 2010 saw mostly rises in unemployment and dramatic rises in interest rates. Two of the Big Four banks raised their interest rates higher than the Reserve Bank; time to vote with your feet, Australia!

Considering that the festive holiday season (regardless of your religious beliefs) was originally said to be all about Jesus, we can always claim to be following biblical precedent when we are frugal at Christmas.

Consider that 2000 years ago, according to tradition, God gave the world a small baby who was destined to be the saviour of the world. God did not send Rambo or Chuck Norris to save the Palestinians from Roman slavery, nor did he give a billion buckets of gold. The baby in a manger was a seedling gift of hope.

In honour of this tradition, we suggest that you give a small gift that means big things will come. Spread some frugality this year and also help to spread HOPE for the New Year. 2011 just has to be better than 2010, right?

1. Blooming great gift: Consider a few packets of seeds instead of a bouquet of flowers. They are cheaper to send through the post & will grow in value over the next few months, unlike flowers which will wilt & die within a few days. Those in small apartments or units can be given something small for a window box or movable planter pots. Also consider edible treats such as fruits or vegetables. There are also many species of flowers which are safe to eat, such as chrysanthemums, roses, daisies and more; check with the nursery and deliver something beautiful, tasty and practical!

2. Handmade Gifts: homemade jams and other homemade baked goods from the talented ladies and something creative from the talented blokes. Recycle some old household goods or get carving, whittling, gluing or wiring. Nothing says Christmas love like investing your precious time (not just your money) into a gift. We once received a model aeroplane made from empty beer cans and one created from old wooden clothes pegs. Novel, fun and a good talking point.

3. Newspaper Gift Wrapping: Wrap children's birthday gifts in old comics for a fun twist. A fancy red ribbon would go nicely with black and white newsprint for adults, or even "brown paper packages tied up with string" for a “Mary (Poppins) Christmas”.

4. Christmas Presence: Giving someone your time is a very valuable thing and memories last a long time. You could give a couple the gift of a night off by babysitting their kids, or you could pack a picnic basket for a single friend to have an afternoon together chatting and drinking wine in an unusual location. Most mums would love an hour of housework done while they relax in the bath and dad would love for his car to be cleaned or shed tidied.

Whatever you decide, keep it simple, practical and keep the love central to your theme. Holiday seasons are all about spending time with family, friends and loved ones, not spending money for the profits of big banks, toy companies and retail stores.


Jeremy Britton is an independent wealth adviser. For more tips, tricks & advice go to www.24hourwealthcoach.com. Article also featured in Strike publications, Ipswich City News

Interest rates are INTERESTING, part 1: both sides to the coin

Rising interest rates may seem like a burden for Australians, particularly those who are paying off a large mortgage. The thing to remember is that whilst the family picnic may be ruined by wet weather, the farmers love the rain! More rain will eventually mean more food and more picnics later on.

Examples of people who may be affected positively by interest rate rises are investors, particularly self-funded retirees or those who are about to retire (such as the "Baby Boomers"). These people will now be receiving a higher income which means that they can spend more money on new goods and services; possibly in your workplace.

Yes, the average home-owner with a mortgage will have to spend more money on their bank loan, but this will have a flow-on effect in the greater economy. Consider that without an interest rate rise, the economy may overheat, which causes further job losses. A higher interest rate can be a good thing if your homeloan costs more but you do get to keep your job!

At present, interest rates are at record lows in the UK and the USA (below 1%). We will look more at why this is in “Interest Rates Part Two: how to make $50 000 for nothing”. These economies are suffering badly and job losses are at record highs. The economies in Australia and China are weathering the economic storms more strongly, and both countries have just raised their interest rates.

International investors are strongly attracted to Australia with its stronger dollar, more secure economy and higher rates of return on investment. Investors are attracted to China for similar reasons. Investors’ money is rapidly leaving the USA & UK (earning 1% interest) and flooding to Australia and China to be invested at 5% or greater. This international investment means more jobs, even if the mortgages are going up.

Whilst mortgage rates may be high for the foreseeable future, homeowners are advised to cut back on unnecessary expenditure, such as cable TV, cigarettes, alcohol, work lunches or anything that is not essential or anything does not MAKE you money or SAVE you money. Ensure you do essential maintenance on the car but hold off on the new in-dash DVD player.

Consider doing an imaginary cashflow projection based on a 10% mortgage; you will soon see areas where you can cut back. You can pay 10% payments off the mortgage anyway; this will put you in front on the loan, impress the banks and be good insulation if anything unexpected should occur.

Next article: How to make $50 000 for nothing & Higher interest rates just like 1992: where to invest for the best returns beyond 2015.