1st street Blog

Managing your money when you move in together - 18/09/2017

Living together is a big step. You may be merging your lives more closely, but should you merge your finances?

So you’ve taken the leap and decided to move in together.

It’s an exciting time which can take your relationship to a new level, but it can also add new pressures as you address practical matters such as how you divide the chores and the costs.

Set your new home up for success by discussing joint finances upfront and early on.

How serious are you?

Consider how long you’ve been together and how serious the relationship is before deciding to merge your money.

Moving in together can make or break a relationship so it might be a good idea to give your new living arrangement a few months to settle before addressing the question of joint finances.

Talk about values and past experiences

Both how you were raised and your past experiences can have a big influence on your financial outlook.

It’s worth discussing your attitudes to money including:

  • who managed the finances in your family
  • how family financial decisions were made
  • experiences you may have from managing money in past relationships and
  • whether you’re a financial conservative or risk taker.

Consider your future goals

A conversation about your goals, both personally and as a couple, can help ensure you’re on the same path. You might uncover joint goals to begin saving for things such as:

  • travelling and working overseas
  • saving for a house
  • saving for a wedding or
  • saving to start a family.

All or nothing?

Merging money doesn’t have to be a case of all or nothing.

Perhaps you could open a joint account for shared expenses and bills while maintaining separate accounts for personal spending?

A joint savings account that you can both contribute to in order to save for your goals could also be useful.

What else to consider

Once you’ve been living together for two years you’re legally considered to be defactos.This means that if your relationship ends, the division of any assets or debts could be decided by the courts, just as for married couples. So while it’s not pleasant to think about, it’s important to consider whether you’d like to be protected and how easily your money could be separated, if need be.

It’s also important to ensure you’re getting the most from your money – whether it’s managed together or separately, it’s a good idea to have a budget. And finally, let us know if we can assist you in any aspect of setting up your financial lives together.



RBA LEAVES CASH RATE AT 1.50% - 05/09/2017

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

For full article please visit www.rba.gov.au.

The 1st Street Experience - 04/09/2017

Recently we were contacted by an existing client who asked for our assistance in helping a close friend with their first home purchase. These customers had previous credit issues in their business due to unexpected health events a few years prior. The clients previous mortgage broker took over a month to work on the application with no result.

We completed a 1st Street review and were in full support of the application. Due to our relationship with the lender and the ability to clearly articulate the previous issues and the fact the business had gone from strength to strength, we were able to secure them an approval on Friday afternoon and within 2 days from submission. That weekend they exchanged on a property they had had their eyes for weeks. The ability to provide a solution to clients who thought they had no options is one of the best parts of this job. This family now has their first home and are truly grateful for the effort and support that 1st Street provided.

A Very Special Place - 01/09/2017

1st Street’s Charity of the Month for September is ‘A Very Special Place’.

Bear Cottage is a warm and home-like environment providing respite, support and end-of-life care for children with life-limiting conditions and their families. Bear Cottage is the only children’s hospice in NSW, and one of only two in Australia.

Families who care for a child with a life-limiting condition often do so around the clock for many years. Bear Cottage’s vision is to be as far removed from a hospital environment as possible. They’re set up to provide excellence in paediatric palliative care 24 hours a day.

At 1st Street we believe this is a cause worth supporting and will donate a portion of our income earned for all loans settled in the month of September.

To find out more about the amazing work that Bear Cottage does, please visit their website: http://www.bearcottage.chw.edu.au/

Money Can Buy You Happiness, You’re Just Spending It Wrong - 21/08/2017

This is the view of Dr Michael Norton from Harvard Business School. Michael’s research indicates that money can indeed make you happy if you use it to buy experiences, time, or invest in others.

Buying experiences – when we buy experiences, we don’t just buy the duration of that experience. Michael’s team’s research found that we’re happiest the day before leaving for a holiday–the anticipation is just a valuable. Furthermore, we experience positivity bias when we remember a holiday. And the more time spent in an experience the better it gets in our memory.

Buying time – when we buy big houses, they tend to be further from where we work. So while our big house doesn’t make us more or less happy, the commute is longer. We spend more time away from our families, and less time doing the things we enjoy or that are good for us, like exercise. This makes us less happy. If we can use our money to buy things that save us from time spent on mundane experiences like vacuuming or commuting, we’re happier overall.

Investing in others – Michael’s team undertook a study instructing some people to spend money on others, and some to spend it on themselves. It found those who spent money on others experienced an increase in happiness by the end of the day, while those who spent it on themselves did not. Interestingly, the study also found minimal difference in happiness levels between those who were able impact another person’s life significantly, and those whose good deeds were more trivial.

We spoke to Michael further about the findings of his research.

Is there any difference in the level of happiness when people are using their own money compared to ‘free money’ such as lottery winnings?

Turns out that spending free cash on yourself–like winning the lottery–does nothing to affect your overall happiness. However, spending free cash on others makes you happier, and spending your own money on others makes you the happiest. But it’s not a huge difference between spending free cash and spending your own.

The problem is that more people are likely to give away free money, than their own, so on balance there’s more happiness created by the free money.

What about when you spend money on yourself: is there a difference in happiness levels when you’re spending money that you’ve earned?

There doesn’t seem to be, actually. We tried to find ways where spending your own money on yourself does make you happy, and we thought that it might when you’re treating yourself with your own money – say, when you’ve had a hard week. In the moment it does, but it does nothing to affect lasting happiness.

When you spoke about incentivising people to volunteer, you mentioned they were happier, and therefore more likely to do something they were already interested in. On the flip side, you could argue people are motivated to help because they feel guilty. Is guilt a major factor in motivating people to do things?

The number one reason people say they can’t volunteer is because they don’t have time. For some people that’s true but we had a feeling that for many people they do have time but don’t realise it. So we did an experiment where we asked people if they could volunteer for an hour a week and everyone said “no, I don’t have enough time”.

But then we took a different approach with another group. We asked them; “do you watch TV?”. The answer was often yes. Then we asked them “how many hours per day?”. They’d say something like three. So then we calculated it; three hours per day, “do you realise you watch more than 15 hours per week?”. You show them that they do have time, but you also increase the feeling of guilt.

It looks like guilt could be a better short term rather than long term incentive. So when someone comes into the office and asks you to donate to their kid’s charity initiative, you feel guilty, but there’s no clear link to whether you later continue to be nice because of that feeling.

For some people the concept of buying time by living closer to their workplace may seem out of reach. Is there any evidence to suggest that better use of the time spent on unavoidable necessities like commuting, could help to make you happier?

It turns out that if you give people free time, they typically spend it doing things that don’t make them happy. We did one experiment where we had people come to our lab, then we told them they were finished early – effectively giving them a windfall.

We found that most people either wasted the time or treated themselves to something like a massage. The problem is that at the end of the day, they’re still not that happy.

The only thing that made people happy was when we asked them to spend the extra time on someone else. They did things like call a friend they knew was struggling – small things you know you should do. Those things make us happier, but we don’t naturally default to them when we have time.

© AMP Life Limited.

If you’re interested in learning more about how money can buy happiness, watch Michael’s highly informative presentation from the 2017 AMP Amplify festival

1st Street Takes on ‘The Block’ 2017 - 15/08/2017

The 1st Street Team are watching Channel 9’s ‘The Block’ this year with much anticipation. Our very own client, Mark Croker AKA Sticks, makes up one half of the NSW South Coast team, ‘Sticks and Wombat’. The likeable larrikins have been working so hard to deliver a fully renovated room each week on the show and have produced some awesome results already. “Wombat and I are doing this to make something for ourselves and our families,” Sticks said. “That’s what it’s always been about, my family.”

From the team at 1st Street we wish the boys the best of luck for the rest of the series and the live auction later this year.

Interest Only – What’s all the fuss about? - 15/08/2017

Over the past few months, the Australian regulator APRA has made several decisions which have resulted in a change to the way that lenders are required to operate. APRA has clamped down on interest-only loans in a bid to cool the east coast property market and stated that from now on, interest-only loans must be restricted to a maximum 30% of new residential mortgage loans. Currently, interest-only lending represents nearly 40% of residential mortgage lending by banks, which APRA has said is “quite high” by international and historical standards.

APRA will be monitoring the share of interest-only lending within total new mortgage lending for each lender, and will consider the need to impose additional requirements on a lender when the proportion of new lending for interest-only loans exceeds 30% of total new mortgage lending. APRA will also continue to monitor higher risk mortgage lending, lending at high loan-to-valuation ratios, and lending at very long terms. APRA also believes the 10% benchmark for growth in lending to investors continues to provide an appropriate constraint in the current environment.

The new measures being imposed by APRA can be summarised as follows:

  • Limit the flow of new interest-only lending to 30% of total new residential mortgage lending and within that, place strict internal limits on the volume of interest-only lending at loan-to-value ratios (LVRs) above 80% and ensure there is strong scrutiny and justification of any instances of interest-only lending at an LVR above 90%.
  • Manage lending to investors to comfortably remain below the previously advised benchmark of 10%.

APRA is concerned about an over-heated property market predominantly in Sydney whilst also cautious about Melbourne however their measures apply to property investors Australia-wide which is unfair. The instruction to banks to reduce interest-only lending to 30% of the market will mean everyone will pay more for interest-only loans. As the banks have also been told to restrict the growth in investor lending to no more that 10% per annum, investors can also expect to pay more than owner-occupiers.

Essentially, APRA and the banks will be encouraging principal and interest lending even if sophisticated investors have a proven interest-only strategy. However, interest rates are still at all time lows and lenders are still open for business.

6 Creative Ways To Declutter Your Home - 01/08/2017

The idea of decluttering the home may seem totally overwhelming to some, as it can be hard to know just where exactly to start. However, the process doesn’t need to be as painful and tedious as some make it out to be and can even be quite fun and therapeutic. Why not give these creative yet simple strategies a try?

  1. Create a 30-day list: The problem with decluttering is that the clutter ends up accumulating again when more stuff is bought. Solution? Don’t buy it in the first place. Create a 30-day list: anything you want to buy that’s not absolutely necessary must stay on the list for 30 days before you buy it. Often you’ll lose the urge to buy it and you’ll save a lot of money and clutter.
  2. 5 minute daily sing-a-long: Each day play a song you love that’s five minutes long and commit to decluttering until the end of it. Whether it’s organising cupboards/drawers, throwing things out, or simply putting things back where they belong. What about all those Tupperware containers you have in the kitchen that don’t have matching lids? Take this opportunity to get rid of them. Why not do it whilst waiting for the kettle to boil or dinner to cook in the oven?!
  3. Give away one item each day: It doesn’t get any simpler than this. If it’s a bit scary at first, try getting rid of one item per week instead and work your way up, and see how quickly you start to remove the unnecessary clutter that you overlook in your home.
  4. Fill a bag with expired goods: Simple take a large black garbage bag and see how quickly you can fill it with containers of expired products. Check all of your packet pantry items like sauces, cans and bottles and throw away anything that has passed its use-by date. Do the same in your bathroom cupboard. Tip: if you find a product that’s opened and you don’t use it regularly but can’t remember when you opened it, add it to the garbage bag too!
  5. Try the Closet Hanger Experiment: It’s true that people only wear 10% of their wardrobe, 90% of the time. So to declutter the many unworn items, use the method made famous by Oprah Winfrey. Begin by hanging all your clothes with the hangers in the reverse direction. After you wear an item, return it to the wardrobe with the hanger facing the right direction. After 6 months, you’ll know exactly what clothes are worth keeping and which pieces you can say goodbye to!
  6. Take the 12-12-12 challenge: Get your entire household involved with a little competition to locate 12 items to throw away, 12 items to donate to charity and 12 items to be returned to their proper home as fast as possible. This can be an exciting and fun way to quickly organise 36 things each in your house. With a potentially edible (and chocolatey!) prize at the end, who wouldn’t want to participate?!

RBA LEAVES CASH RATE AT 1.50% - 01/08/2017

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

For full article please visit www.rba.gov.au.

1st Street Supports Parkinson’s NSW - 01/08/2017

For the month of August 1st Street Financial is supporting Parkinson’s NSW.

In Australia, there are over 80,000 people living with Parkinson’s disease, which makes it the second most common degenerative neurological condition. A diagnosis can occur at any age with the most common age of diagnosis being 65. 20% of those diagnosed are under the age of 50. 10% before the age of 40.

Parkinson’s NSW provide invaluable, essential services to people with Parkinson’s, their families and carers by providing free services throughout NSW.

At 1st Street we believe this is a cause worth supporting and will donate a portion of our income earned for all loans settled in the month of August.


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