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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16580
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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A complicated savings-goal planning question plus the issue:

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A complicated savings-goal planning question plus the issue: should I even go after it? If so, how long will it take and how realistic should I modify it to be? The goal is to buy an apartment (assuming that is more affordable than a house) but the big problem to me is controlling how much income I earn right up to the point of, maybe, getting a loan

I suspect I have lots of calculation and savings questions - but don't know WHICH questions should be asked in which order. I also have the issue of deciding whether I should even hope and plan for an independent financial future. So I think I will need an understanding expert who can think about details as well as the big picture - both financial and non-financial (eg worry, self-confidence, career planning)

Goals: getting a good job and/or self-employment eventually are now real possibilities plus the dream of owning my own home one day is now FINALLY a possibility to consider. I want to plan ahead by starting any savings

Time line: the above mere possibilities rather than realities cannot start until early 2016 or late that year say from August or September. Then I don't know how long it will take to save enough for a deposit on a home. My preference is to do it within 10 to 12 years from 2016 because of my age

Three Issues
FIRST, there is ONE big income constraint, I suspect, might present 2 obstacles: that is, there is a limit to how much I can earn before there are financial consequences: 1) if I eventually earn one dollar over $80,000 I will have to pay the current high market rate for my rented flat. That might affect the budgeting and how much I can save if and when that point in time might occur. (So it is not a constant amount that I can budget for). Also, after a year or two paying the high market value, there just might be the possibility that I might be forced to find another place to rent (details if needed) - but God forbid; and, 2) if I earn over 38,000 I have to pay 5% of the accumulating government education debt as an extra tax that cannot be rebated or deducted against; currently it is $21,000 and rises by CPI each year and any extra studies I might do. I really don't know how much the growing principal will be by 2016 because universities put up their tuition fees per course/subject each year at different rates. But a very rough estimate to complete the degree is a 50,000 "deferred loan" not including the CPI interest.
SECOND, stability of socio-economic assumptions: eg. we have had a very low interest rate but a higher CPI (I don't know how long that could last - but I suspect CPI will go up more than the interest rate because the cost of rentals and living here are ridiculously high due to a long-term shortage of housing)
THIRD, but very important to me is my fear of dealing with all of it: I am on disability support and living in a very good standard government subsidised apartment; I feel lucky but have only had the housing for the last 4 years and the disability benefit from last year. People who have been lucky in the past to have all their career and financial goals pan out would think I'm crazy to fear stepping out of the "security" of being on welfare. See, bad things happened to make me lose confidence and interest in becoming financially independent. Experience has made me fear that if more bad things happen, eg inadvertently choosing the wrong employer who ends up making me go through the unemployment cycle, it would all stuff up my housing goal. I hope you can see the cost and benefits of staying in welfare (not everyone in Australia on welfare has been so "lucky" but it took years of suffering and documentation to convince the government for my housing), versus the uncertainty of slowly untangling myself from it (eg getting fired due to disability, or having to move out of subsidised housing once income goes over the limit), and the totally foreign idea of financial independence
Thank you for thinking of me with this question. However, I do not know enough about Australian rules and regulations to give you a comprehensive and intelligent response. I can advise of simple saving strategies, but keep in mind that I am an American CPA.

Please let me know if you want some generic saving strategies, keeping in mind that I would not be able to factor in all the specifics that you mentioned in your question.

Customer: replied 4 years ago.

OK, any help as a start would be good. And, later, if you think of another expert here maybe you could refer me.


I am educated enough to find out whatever information you need to help me help myself. (Thinking about the future causes great anxiety but I want to attempt to deal with it). So, which questions or issues should we start with?


I can start by asking you what your ultimate savings goal is, and how much can you budget each month towards your savings goal.

I can't help you calculate how much you can afford to save, because it sounds like there are too many variables that I am not familiar with.

I also don't personally know any Australian experts on the site.

Customer: replied 4 years ago.

EDIT additional info: Yes, I'm sorry to present you with this and realise that the government policies & taxation are complicated in Australia. BUT there is a first-home owners grant offered by the State I'm in (which I don't know how long will last) and a more stable Federal govt first-home owner's grant (but of a lesser amount)


The average apartment is currently advertised for sale at an average of $400,000. I don't know how much the average will be by 2028. My current savings is 15,000 (I've removed some for emergencies and important household needs). Currently, on welfare and living extremely spartanly, I have seen that in the last 4 years I can save an average of 4000 a year. All that doesn't include interest. Tax is not an issue as long as I stay on welfare


First, I would recommend that you have a dedicated savings account that is separate from the funds that you use for your day-to-day living.

I would, each month, pay that savings account just like you would any other bill. I would not touch that amount. If you are comfortable, I would invest your savings. If you are uncomfortable taking risks, just place your savings in an account that bears interest. In the US, savings accounts are insured by the government but I'm not sure how that is handled in Australia.

At the end of each month after you have paid all your essentials, if there's anything left over I would sweep it into that savings account. You may be surprised to find that you can save more than $4,000 per year.

How much is the government grant for, and how much of a down payment does Australia require to purchase a home?

Also, please rate each response I give you as "excellent" so that I receive credit by the site. I will continue responding to each of your questions.

Thanks, XXXXX XXXXX I look forward to working with you further.
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Customer: replied 4 years ago.

Ok, you are suggesting a term deposit. All financial institutions are highly straight-jacket regulated in Oz. Established banks are guaranteed by the government


Currently my bank is offering me only 4.2% but alternative building societies, international banks, and less established banks are offering various rates higher. I regret that I did not put my money into a 7.25 percent offer 2 years ago when interest rates were higher


Please give me time to look up the govt grant BUT suffice to say: one needs to be employed at least 2 years before one qualifies for the govt grant. Given a steady job, how it works is you put in an amount held by the Tax Office and at the end of the year the govt contributes x%


Don't worry about ratings. I will rate. Is there any other info you need from me before I surf for the info?


OH! I forgot: I would buy bonds if I knew how. I would buy some "save" company shares but that would start complicating my current no-tax position. Also, when interest rates are low isn't it that bonds pay higher? (I think even if I earned from a bond, it wouldn't seriously affect my tax position as long as I'm not working - but I could be wrong)


If you are a subscriber, I get paid with each rating you give, so if you rate each answer I will be compensated more than if you simply rate one time. This does not cost you any extra, but assists me given the difficulty of the question.

You are lucky to receive 4.2%. In the US, you are LUCKY to get a savings rate of 1%.

I would invest your savings in a vehicle that earns interest. If you are comfortable not having an account that is in an institution guaranteed by the government, take advantage of those higher rates.

The additional interest will really add up over time. This will help you reach your goal sooner.

Does your welfare system have a cap on how much savings you can have? Here in the US you cannot have financial resources such as a savings account in excess of $2,000.

Thanks again for your response and I look forward to conversing with you further.
Customer: replied 4 years ago.

10% is the standard home deposit needed but I've seen banks now accepting 5%. My personal goal, if possible, is to save up to 20% or 30 (including any govt contribution) for the stamp duty, deposit, etc)


Please finish with this question you have guided me on and then we can start new ones, as many as it takes to fit into the next 5 days to get your ratings up. BUT I hope you can guide me as much as you can, eg I fear unknowns and don't know how to buy bonds


Please reply to this and I will return with the govt grant info (may take an hour or so)

So your savings goal would be $80,000 to $120,000 for a flat that costs $400,000. You currently have $15,000 and can contribute $4,000 per year.

I am unsure where you want me to go next with this. What are your questions?
Customer: replied 4 years ago.

I don't know what my questions are: that's why I need help to clarify my thoughts and goals! Please re-read my original questions to get what you might have missed


It will also take time to find out the limit of the total asset amount and income that one can earn on disability support (different amounts apply to what type of welfare one is on)


I am sorry about what's happening in the USA. Thanks for mentioning the rates in America: it makes me feel like my position isn't disastrous after all. But it doesn't make it any easier when there are constraints on how much one can save and earn


BTW, I think I am conservative and fear risks. If I were to buy shares I would only stick to established companies I know but that's a scary thing to think about right now


I don't know enough about Australia to formulate what your variables are -and I need questions before I can provide answers. I can tell you how to save, and where to put your money and how long it may take you to reach your goal based on what you can do now.

Do you want me to step out and see if another expert can assist? I don't know of anyone who knows Australian rules personally, but the moderators can look for someone for you

Thanks! I want to make sure you get the help that you are looking for. I don't want to short change you.

Customer: replied 4 years ago.

Alright: you can please help by at least helping me to work out what a realistic savings goal is. For example, that 400,000 dollars is only for a simple flat, one bedroom. How much do you think it might be in 2028 to buy?? I don't know if there are any valuation experts on this site who can estimate by looking at Google maps and real estate pictures. I seriously don't know how to look up info for the rate at which real estate has been rising BUT I can tell you that it has been a ridiculous average amount since 2005. Strangely greedy attitudes here from sellers which I believe cannot be sustainable in the long term (but I might be wrong since there is a nationwide housing shortage of both rentals and sales)


Yes, when we have completed this question (which isn't satisfactory to me yet) ask the moderator


I am asking now what is my goal? You think it stupid don't you? BUT why have experts at all?

I think that your goals are excellent, and what you are wanting to do is great.

I could not tell you how much a flat would be in 2028; there are too many variables. With the cost of real estate rising so drastically in Australia, it could be like what happened here in 2008 - the housing market could "collapse" so to speak, and prices fall. In 2004-2008, the values of housing were increasing at a drastic rate, so much so that it was hard for people to afford housing. Then, eventually the market corrected itself, prices declined, and now housing is much more reasonable.

Tiane, I would love to help guide you in reaching your goal, but the goal needs to be clearly defined. If I were to define it, I would say that you need to save at least $120,000 based on the information that you gave me. This should give you enough for a decent down payment on a flat.

Now, I don't know what you can afford. I don't know your income, and what you can afford to pay on housing. This all would impact what you eventually spend on a house. We would need to know more about your situation to even begin informing you of what you need to do to reach your goal.

Customer: replied 4 years ago.

OK, I've calmed down based on your response.


I think 120,000 might be achievable. If I start with 15000 now into a term deposit at 4.75% how long will it take??? I can only hope that real estate prices will drop by 2028 here


Please stop judging me. My original question was well written given my state of anxiety. It would be clear enough to identify what is my first steps. Why can't you tell me which is the priority right now?


Anyone who reads this might think I'm lucky - but if they read word for word that is NOT the case OK? Do you think it is good economically for to stay on welfare for the rest of my life?


If someone has a combined accounting, financial planning, finance and/or economics or valuation degrees, it might help BUT I've clearly shown I will favour you if you just help identify something concrete I can start with; help me to help you help me


I cannot assist in determining your variables, based on the fact that I have no experience with the Australian system.

I calculate that it will take 16 years to reach your goal, given your current savings ability. You could reduce this time by either finding investments with a higher interest rate, or by saving more money.

I'm in no way judging you. I am trying to provide you with an unbiased, financially sound answer.

I hope this helps. Let me know if I can assist further. Thanks again for using
Customer: replied 4 years ago.

Yes, finally something clear: you say 120000 is a realistic goal if I stay on welfare at the current savings I am able to achieve, for an interest of 4.2 percent, right? That would be 16 years to 2029, is that correct?


By re-stating what you said I am showing you whether I understand you or not: You are also telling me to find a higher interest rate if I can, right?

I used a rate of 4.75% given your prior response. Yes, your current savings would take you out to 2029.

I am not telling you to find a higher interest rate, I am telling you that if you got a higher interest rate you would decrease the time it takes to save up the funds.

Megan C and other Finance Specialists are ready to help you
Customer: replied 4 years ago.

OK, thanks for clarifying that you calculated it based on 4.75%. 2029 is only one year off. If a higher interest rate were available in future then I would move whatever is saved.


I am giving this rating because I appreciate that you stuck it out with me. But I also helped you to identify the issues and feel that most people would not be as articulate as me. I honestly didn't know what to ask, so that was effort on my part.


Yes there are many unknown variables; but I also gave you real variables to work with. I am not being cheeky but laid out all the issues running through my mind, as I see it, and just needed clarity. I really hate having to explain myself to people with so many words, even after I have shown myself to be articulate


Please refer me so I can work out what my next issue is. It has been a struggle working out this question on your part, I do acknowledge. But it also has been difficult trying to help you help me. Maybe you can appreciate the feedback contained in what I've written because most people won't know what to ask: they think they do but they don't


And, I know you are an accountant but your face was the only choice given to me at the time. Don't blame me because I think I did give you insight into how to deal with questions from people. Thanks for your patience anyway

Thanks, XXXXX XXXXX the opportunity to assist. Unfortunately, I am unable to assist you further with your inquiry. I am opting out of this question. Another expert will pick it up if they are available to assist you with this. Thanks.

Customer: replied 4 years ago.

There are no smiley faces to choose from at the end of this


Do I scroll back to choose an earlier smiley face? I was going to give it "good" but now an OK given that I got out of it only one calculation

Yes, each answer provided has the opportunity to click on the smiley faces. You can do that for each one (earlier too.) I think that there are three or so of them.

Please let me know if you need further assistance. Thanks again for the opportunity to work with you.
Customer: replied 4 years ago.

Yes, if you can see someone here with a financial planning qualification to refer me to that would be good


I've got a rough goal from you but I suspect the next would be to confirm it or to discuss taxation issues. But I want a financial planner/adviser to read this first because I have given you plenty of leeway to direct this conversation but got only one calculation out of frustration on both our parts

Your new question is out there, and if there is an expert comfortable with the question they will assist. I do not know of any Australian experts, so it may be a while before you hear from a new expert.

If you would be so kind as to rate my other answers. I would be appreciative. Thanks.
Megan C and other Finance Specialists are ready to help you