Tuesday, May 31, 2011

Indonesian abattoirs fail on humane killing of Australian live exports

See the screenshot I've posted up. The cows in line at that abattoir were trembling with fear and terror as they watched the cows next to them get maimed and slaughtered, skinned and cut up before their very eyes. They are afraid and terrified. 
Have you ever watched the distress on an animal's face?

It was very distressing to see what happened to Australian cattles that are exported live to abattoirs in Indonesia. If humans treated each other like that we'd be screaming cruelty and begging for our rights.

To open your eyes about what is happening in various slaughterhouses across Indonesia, watch this Four Corners/Animal Australia/RSPCA expose 'A Bloody Business': http://www.abc.net.au/4corners/special_eds/20110530/cattle/

What about animals? How can they express themselves when we don't understand them? I can certainly see why some friends have become vegetarians and the longer I live, the more I am turning towards a diet predominantly featuring more vegetables and fruits with very minimal meat. 

I have no grudge against live export or meat consumption but please slaughter the animals as humanely as possible and don't torture them. Ever.

Instead, at the Indonesian and Egyptian abattoirs, they whip the cows, caning their heads with sticks, cut their muscle tendons so that they can't get up, slash their necks multiple times for 'halal' killings and the terrified cows can sometimes struggle for several minutes in absolute terror and pain before finally dying. What can be more distressing than the poor animal seeing it's dead friend on the floor with the head sawn off and the smell of its blood permeating the air? Or trying to stand up but slip because the floor is thick with blood and faeces from previous slaughters?

Cameron Hall, the CEO of LiveCorp was interviewed and all he did was waffle, waffle and waffle. He says, "We know that poor practices have to be improved and that's what we're working hard in the market place to do." Despite the same poor abattoir practices existing in the 1990s until now.

Professor Ivan Caple who is supposedly a 'Leader' of the 'animal welfare review team' was interviewed giving glowing reviews of the practices that he witnessed in Indonesian slaughterhouses. WTF?! "A couple of the handlers were a little bit exuberant with the use of a goad and a very long pointy stick, sometimes a finger were in eye sockets...all of those issues can be picked up by a trainer." The problem is- where are the trainers?? They had over 10 years to rectify this issue and implement training but why hasn't it happened?

If the live animal export industry wants to continue, they need to face up to this problem in Indonesia and in abattoirs elsewhere. Live exports to abattoirs that aren't compliant with humane standards of operations need to be ceased immediately. Until they fully comply, they shouldn't be receiving any Australian livestock.

There are so many things that they can do to try and minimise the bleak conditions of the abattoirs over there:
  • They should have an experienced staff from Australia over there monitoring the abattoir and providing training programs
  • Supply them with stun guns (if that helps minimise the suffering?)
  • Open up their own professionally operated and managed abattoirs that complies with Australian standards
  • Keep providing training sessions and establish standards for abattoirs to comply with in order to qualify for live exports 
  • Allow animal welfare associations to visit the premises at any time to evaluate the conditions to ensure that they are complying with welfare standards
Don't stick your head in the sand, take action against this cruelty whether you're Australian or a reader from another country:

Monday, May 30, 2011

The Pixar Animation: Cars and the financial lessons

Cars is packed with famous voices: Owen Wilson, Jeremy Clarkson (Top Gear fame), Michael Schumacher (Formula One racing fame) and even Jay Leno, the talkshow guy.

People don't normally watch movies or films to analyse the financial lessons or ramifications inherent in the movie. But Cars, the Pixar animation has a crazy amount of financial implications built into the movie.

If you haven't watched the movie before, you should. It's like any other Pixar animation; great storyline, plenty of humour and a little bit of romance. I know it's an old movie(2006) but I was re-watching it with my friend who had never watched the movie before.

What financial lessons?

Lightning McQueen, the hero of the movie was a self absorbed, highly talented race car and very motivated to win at all costs. Towards the end of the movie, you see his transformation as he learns to value friendship and oddly enough, bring business success to the previously dead-end town-Radiator Springs.

He learns a few things along his journey to enlightenment:
  • The importance of having a team and pit crew to support you- just like our life, we need family, friends, great tax accountant, great solicitor/lawyer, possibly a financial planner, great property manager to handle the rentals, reliable electrician/plumber and general fix-it-type of handyman
  • Endorsement is the way to financial success in his industry- Lighting McQueen is the celebrity endorsement for the run down town and he brings it to life with his fame, charisma and success on the tracks. The fashion/perfume/accessories industry survives on celebrity endorsements through icons such as Victoria Beckham, Kate Moss, Beyonce, Sarah Jessica Parker and Blake Lively to name a few
  • Word of mouth advertising- When he advises Michael Schumacher of Ferrari fame to visit Luigi's tyre shop business. If you provide a great service or have a great product, word-of-mouth advertising is free and will result in business expansion
  • You can't attract business if your premises are shabby and in disrepairs - Lightning McQueen paves the damaged roads to perfection, causing the local business owners to fix up their own shabby establishments to match the perfection of the road so that they can draw customers
  • Businesses need to change and evolve with the times- The Radiator Springs town was slowly disintegrating and dying from lack of business due to the freeway that was built to bypass the town. Whilst Lightning did bring fame and success to Radiator Springs by establishing his headquarters there, I don't see why Radiator Springs didn't bring their business TO and ALONG the freeway instead. If customers are too lazy to visit your town, bring the business to the customers by relocating. That was section that was flawed imo
  • Learning from mentors and respecting your elders- He learns from his mentor Doc Hudson, a previous winner of three Piston Cups. He was previously scornful of Doc Hudson until he realised that Doc Hudson wasn't just old, he was old, experienced and was highly successful in his racing field back in the days.
For a animation film, it's surprisingly loaded with adult themes.

Sunday, May 29, 2011

HECS HELP Student Loan: Lump sum payment

Goodbye $3,500 .... I made a lump sum payment against my student loan last Friday. I was reluctant to part with it because it meant that the $3500 won't be sitting in my account accruing interest income for me at $17.06 per month. 

So you're thinking "Bah $17.06, that's nothing!" Let me show you the ramifications of that $17.06/month passive interest income that has been forgone.

Although $17.06/month pre-tax isn't truly significant, the after tax amount could have bought me each month(until I reach 65 yo)**:

* Two sandwiches at the sandwich bar (840 sandwiches) OR
* 28 super soft, freshly baked bread rolls that I love munching on (11,760 bread rolls) OR
* 3 kilos of apples (1,260 kg of apples) OR
* 4 kilos of oranges (1,680kg of oranges) OR
* 2 litres of vanilla ice cream (that's 840 litres of ice cream)  OR
* 4 vanilla slices (that's 1,680 vanilla slices!)

It could have been a passive income of $17.06/month, EVERY month, EVERY year for the rest of my life. Is that starting to sound more significant yet?

$17.06/month in interest income is:
$204.72/year and
$23,389 in total across the next 35-40 years until retirement age**

So maybe I've convinced you to agree that missing out on $23,389 of forgone, sacrificed income does sound significant. It's more significant when you realise that it would have been $23,389 for doing zilch, absolutely nothing at all. All I had to do was let it accumulate and compound every single year until I reach 65yo (if I survive to that age).

You can acquire those benefits too

By saving $17.06 more each month OR by spending $17.06 less each month. All those actions will translate roughly into $23,389 when you're 65yo, presuming you're in your twenties to early thirties.

So why did I make a lump sum payment?

Unfortunately the Government cut the discount rate for upfront lump sum payments of $500 and more from 10% down to only 5%. HECS/HELP loan indexation occurs on 1st of June every year. So by paying $3500, my loan will decrease by $3,850 and also I don't get indexed on $3,850 potentially saving me $115.50 (assuming the inflation indexation rate is 3%). That means a total of $3,965.50 off my loan balance from paying just $3,500.


* Those are pre-tax numbers and will obviously be less with tax
* Assuming I save that $17.06 every month for the next 35-40 years
* That $1 today isn't more valuable than $1 in the future (when $1 today is worth more than a future $1 due to inflation)
* That the compounding interest rate is 5.85% return per annum (what my savings are currently earning)
* That you've got 35-40 years before you turn 65yo
* Assuming prices of apples, ice cream and vanilla slices are the same in 35-40 years (which it won't be because there's always going to be inflation)

Further reading:
1. Perform monthly or fortnightly financial health checks for optimum results
2. Understanding loans and their features

Thursday, May 26, 2011

Australia's Richest Person: Gina Rinehart

Gina Rinehart

 wrote about Gina Rinehart last year. Back then she was Australia's richest women. This year, she's not only Australia's richest women but Australia's richest person. She's obtained the highest crown possible in the world of wealth, business and power in Australia.

With a personal fortune of $10.3 billion and her fingers in several pies: Hancock Prospecting Pty Ltd, Hancock Coal Pty Ltd, HPPL Group of Companies and Ten Network Holdings. She's one saavy business woman who's not resting on her laurels.

First female ever in this elite top spot - well done Gina. Between the sobbing craziness and success of Oprah, Beyonce and Madonna, we have our own in Gina Rinehart.

Mining magnates are now dominating the rich scene. Evolution of the business sector has been depicted by the changing names and faces on the rich list. A few years ago, media barons dominated the top spots, then it was the property barons and now the mining magnates. Throw in a few printing and retail barons but there are only a few of them amongst the other categories.

The Hancock Empire

Gina's father, Langley Hancock (10 June 1909-27 March 1992) discovered the world's largest iron ore deposit in 1952. He became one of the richest men in Australia. Across his lifetime, he was married to three women. His first marriage to Susette Maley didn't work out and they separated. His second wife was Hope Nicholas. They had one child, Gina Rinehart. Hope passed away in 1983. Years later, Langley Hancock married his third wife, Rose Porteous.

Hancock and his business partner Peter Wright had a poignant and successful friendship. They built their mining business together and left vast wealth for their heirs to inherit. Unfortunately the heirs have been involved in bitter disputes over ownership of the iron ore Rhodes Ridge tenement. Rhodes Ridge is an enormous, undeveloped body of iron ore that is worth several hundred million dollars. It was rumoured to be a $500 million deposit in 1989 so in today's value, it's probably worth billions.

Gina Rinehart and Peter Wright's heirs, Angela Bennett and Michael Wright, also earn 2.5% per tonne royalties from the Pilbara iron ore tenement that her father sold to Rio Tinto in the 1960s. The royalties from the Pilbara iron ore tenement contributes millions into their coffers each year.

The Battle of Billionaires versus billionaires

Where there is money, litigation follows.

Gina has reportedly been involved in several litigations over the years. She went to court against her stepmother in 1992 over the split of her father's inheritance. She's also litigated against Wright's heirs over the Rhodes Ridge tenement believing that she is entitled to a 25% share. Back then, 50% was owned by Rio Tinto and 50% by Wright's children.

Ironically, the Wright siblings Angela Bennett and Michael Wright, were also litigated against by their niece and nephew (Tim and Natalie Wright). Peter Wright's grandchildren won a court settlement in 2008 for an estimated $60 million.

Rinehart's daughter, Bianca has been groomed to follow in her mother's footstops into the mining industry. Biance is likely to be the future head of the Hancock empire. They also have interest in the Pilbara Hope Downs iron ore deposit, a deal that was signed in 2005. Rinehart also owns interest in Mulga Downs Iron Ore, Roy Hill Holdings, Minerals Australia, Hancock Coal and Hancock Energy.

For the inquisitive Googlers: Rinehart's husbands

There have been plenty of people who Googled about Gina Rinehart's husband only to land on this blog so I thought I'd write about it. Rinehart first married Greg Milton(who later changed his surname to Hayward), they had two kids (Bianca & John Hayward) and then divorced. Her son John Hayward later changed his name to John Hancock after a dispute with his mother. 

Gina later married Frank Rinehart, an American corporate laywer and he sadly passed away in 1990. She had twins daughters, Hope and Gina, with Rinehart so she has a total of four children.

So Gina was previously Gina Hancock, then Gina Hayward and finally Gina Rinehart. It's rather confusing because her first husband was Greg Milton who had changed his name to Greg Hayward, and her son with Greg Hayward was named John Hayward, but he later changed his name to John Hancock. And to cap the confusion off, Gina Rinehart named one of her twin daughter after herself.

She had a mountain range named Hancock Range, to commemorate her family's contribution to the mining industry.

Ivan Glasenbert

What a low profile he used to have. The first time I saw his name was only recently in the AFR(Australian Financial Review) and now he comes striding onto the rich list into second spot with a fortune of $8.8 billion. Dark horse.

Nathan Tinkler - Youngest member of the elite rich list

Tinkler is a 35 year old mining magnate with a $1.01 billion fortune. That's simply astounding that one so young is achieving so much.

Further reading:

1. Australia's Richest Woman- Gina Rinehart

[Image source: The Australian Newspaper]

Wednesday, May 25, 2011

Advertisers doing what they do best

This is awful, I'm almost brought to tears by three dogs, Dora, Bruce, Barry and a ratty looking kitten on Bondi Vet. Wish I could adopt a few of them but alas, I can only donate to animal charities and try to eat less meat and more vegetarian meals because we've already adopted eight cats and it's cruel to foster or have pets if you haven't got sufficient space for them to run around and play.

Bondi Vet is a TV show about gorgeous looking vets operating on injured animals and giving them treatment. One of the vet was so empathetic that she was on the verge of tears when she was treating Dora, the dog bitten by a Red Belly snake which is one of Australia's most poisonous snake. 

Wish they wouldn't cry cause it brings me to tears too >.<

The audiences are probably predominantly female because the Ad breaks are littered with female orientated Ads inbetween Ads for pet products. Ads for Razza Matazz stockings, leggings, tight jeans, hair products, Mainland cheeses and Oprah's three show finale. The target market must definitely be the female market. Those stockings look enticing and the cheese looks scrumptious...

When the advertisers are doing what they do best, which is appeal to our desire to buy their products, we need to do what we do best, ignore, ignore and ignore. If I keep repeating those words maybe it'll work >.<

Further reading:

1. Buying lunches and dining out
2. Positive employees versus negative employees
3. Generation Y and the issues confronting us

Monday, May 23, 2011

Emergency fund: How much is enough?

Advice from experts and bloggers vary on the amount that one should save for their emergency fund(EF). Whose advice should you follow?

Some recommend three months of expenses while some recommend twelve months. Some recommend round numbers like $1,000 or $50,000 but it's not good enough to just build a random-X-months-emergency-fund or a random-lump-sum-emergency-fund without working out how much you REALLY need if unexpected events unfold.

Be wary of bad advice on the internet. One blogger's recommendation on the amount you need is "really whatever you are comfortable with" and "one way to establish your emergency fund is to base it on the unemployment rate"...what the...?! Just because you're "comfortable" with saving $X doesn't mean that's what you NEED in your emergency fund. And to base your EF requirements on "unemployment rate by sex, age, ethnicity, educational attainment" is insane and truly, bad advice.

Using a credit card in emergencies is fine and dandy if you're able to pay off the credit card bill at the end of the month. If you plan to use your credit card as your emergency fund and unable to pay it off at the end of the month, you will find yourself spiralling into a debt hole on top of your disastrous situation.

Events that could trigger the usage of your emergency fund:

* Job loss(if you're an employee) or loss in sales or revenue(if you're a business owner)
* Accidents
* Unexpected health issues such as broken legs or arms, dental problems etc
* Unexpected expenses such as your car breaks down, washing machine breaks down, your gutter is leaking etc
* Loss of tenant in your investment property, thus a shortfall in rental income before a new tenant could be found
* If you are retired and surviving on dividends, the last thing you want to do is liquidate your stock portfolio at inopportune times just because your dividend income dropped

How much should you have in your emergency fund?

If you can afford income protection insurance, then buy it! If you have a job loss, the income insurance payments will kick in and that means you can survive a lot longer if you don't need to use your EF funds immediately. Always check the fine prints before you buy income protection insurance so you know what they cover, how much they'll cover and when they'll cover you.

While having any funds stashed away for a rainy day is better than having nothing, to calculate the most ideal amount you should have in your EF is to start with the question of unemployment. If you build an emergency fund to cater for a pessimistic scenario then you won't find yourself having to make any panic decisions or having to rashly liquidate your investments in order to put food on the table and a roof over your head.

If you lost your job/main source of income, how long would it take you to find another job/main source of income?

* If it takes anything less than three months to find a new job, then you can build an EF that covers that period plus three months of expenses.

* If you think it will take you seven months to find new work, then your fund should cater for seven months plus three months extra.

That's a rough rule of thumb for a pessimistic scenario. Can you see the pitfalls with saving an emergency fund that covers six months of your expenses when you expect that it will take you eight months(for example) to find employment?

Your emergency fund needs to be large enough to cater for the period that you could be unemployed before finding a new job PLUS extra incase events don't turn out as you expect or you have unexpected expenses on top of your unexpected misfortune.

It's better to be over-prepared than under-prepared. Emergency funds essentially involves catering for the unexpected issues/problems/events and preparing for them so they become expected.

What expenses should the emergency fund cover?

Living and lifestyle expenses. All of it.

If you love your daily coffee or buying a monthly copy of Vogue or Vanity Fair, then build those expenses into your emergency fund. Build your needs and wants into your emergency fund. You don't HAVE to buy all your wants while you're unemployed, injured or whatever, but if you happen to buy a few of your wants, then it's not going to derail your emergency fund while you're unemployed.

If you're going to be unemployed, you'll have ample time on your hands and the last thing you want to do is stay home and mope all day just because you didn't build any luxuries or socialising costs into your emergency fund. On the other hand, you shouldn't be turning to your credit card to finance this just because you didn't prepare for it.

Some examples of expenses and bills that you can cater for when calculating how much you need in your EF:

* Mortgage repayments on all your properties: Principal place of residence and all your investment properties
* Utilities such as electricity, gas, water, landline, mobile, internet, cable
* Car bills such as registration/insurance/maintenance costs
* Insurances: Home and Content, Landlord and Income Protection Insurance
* Health: Medical/dental checkups
* Groceries and household necessities
* Expenses that you pay for your dependents: husband, wives, kids, anyone living in your household that is dependent on your income
* Entertainment: Dinner, movies, coffees etc
* Extracurricular activities such as dance/martial arts/music classes
* Loan repayments: If you have credit card debts/car loans/student loans etc then your emergency fund will need to cater for their repayment across your estimated period of unemployment > check to see if you can qualify for moratoriums on any of these loans and if you can, then the moment that your emergency kicks in, activate these moratoriums if possible

Track your daily expenses for a few months so that you have a good idea of how much you spend and need to set aside to build up your EF. Often times, the reality is that your actual expenses exceed what you thought you were spending.

Should you ever NEED to use your emergency fund in a real emergency, by cutting down on the luxuries and any superfluous spending that isn't a 'need' and is more of a 'want', you can survive a lot longer on your emergency fund stash. If you build your emergency fund on the basis of a temporarily stingy lifestyle then you'll have no cushion, and if you buckle under the pressure of trying to live such a basic lifestyle whilst looking for work, you'll find yourself in trouble when you splurge or treat yourself because you didn't cater for it.

How can you build your fund when you're barely surviving?

If you're in this category, then you can find ideas from reading SimpleLifeHabits article: '21 Simple Ideas to Get Cash Fast for an Emergency Fund' 

I hope this guide answered your questions about emergency funds and gave you some practical ideas on what your emergency fund should cover, how much you need, when and why you need one.

Borrowing $400,000 from the bank

Whoa, I can borrow more than $400,000 

My bank ran some preliminary numbers and said that they can probably arrange a pre-approval for me to borrow $400,000. And that's on top of my current loan commitment. The average Australian loan is about $360,000. If I were to fully leverage myself, then my aggregate investment loan balance would vastly exceed the average loan.

Would you borrow that much?

If your bank offered you an additional loan of $400,000, would you accept their offer?

I'd be crazy to borrow the maximum amount and gear myself to that extent. It's a bad move to over-leverage and also a bad move to under-leverage.

Why is it bad to be under-leveraged? Currently, I'm under-leveraged which means that I have the potential to buy more investment assets and service a greater loan. This can potentially translate to greater passive income and capital gains but I'm not taking advantage of that because I'm under-leveraged. Next year I plan to buy another investment so that should sort out the under-leveraging situation. Although I wouldn't borrow the maximum because that could topple like a house of cards.

Why is over-leveraging risky? No-one should be borrowing up to their maximum servicing capacity(your ability to repay loans) because it doesn't leave any rooms for errors, disruption to the income stream (job loss or fluctuations in business revenue) and it'll probably be rather stressful when you're walking on a financial tight rope. If you subject yourself to high risks, then you're subjecting yourself to the risk of having to liquidate your investments (shares or property) at an inopportune time, therefore, realising your losses and not having the ability to ride out asset price fluctuations.

How do you work out repayments?

I use my favourite site yourmortgage.com.au for their advanced repayment calculator. Although I've compiled my own spreadsheet with inbuilt formulas so no longer use this site but I recommend this one. Why? They have a fantastic loan repayment calculator. It's accurate and doesn't do shabby rounding ups and downs that ultimately give users inaccurate numbers like some of the other online calculators that I've checked out.

A loan of $400,000 at 8% for a loan term of 30 years means repayments of:

$2935.06/month OR
$1354.06/fortnight OR

Of course, if you are buying an investment then you'll be earning investment income so that could contribute towards the repayment. If you're in Australia, then you also get a tax deduction for interest paid and a raft of other tax deductions associated with the maintenance of your investment. After all these deductions, the cost that's coming out of your own pocket is significantly less.

What if I want to instead, maximise my borrowings?

If I really wanted to borrow the maximum, then I would be refinancing my current investments down to a loan valuation ratio(LVR) of 20% so that I could borrow up to 80%.

By doing this, then for every $1 that I have, I can borrow $4. This is how I can fully gear myself and risk over-leveraging:
  • If I have $100k then I can borrow $400k for a $500k investment.
  • If I have $200k then I can borrow $800k for a $1 million investment.
  • If I have $300k then I can borrow $1.2 million for a $1.5 million investment
Generally, you can maximise your borrowings and fully gear yourself without paying lenders mortgage insurance (LMI) if you have at least 20% to deposit.

Further reading:

1. 15 Tips On Paying Off Your Mortgage Faster
2. Understanding Loans and Their Features
3. Paying off your mortgage faster - The scenarios

Sunday, May 22, 2011

Crazy binge shopping

After being stuck in a shopping rut, I finally made up for it this month!! I must have single handedly propped up our economy with my binge shopping >.> 

* Waterproof ski pants; Bought the Burton 2011 Season herringbone for $224. They were originally $280 but the shop had a 20% sale promotion. If I had bought them direct from the United States, they would only cost $150. But I spent about one hour trying on the different pants and $74 for one hour of mucking up their rack and not having to wait for shipment is a fair price to pay.

* Books; Ryde Library just opened and now I have tons of books and magazines to choose from. Black Glass, by Meg Mundell was on my to-buy list at $32.95. I found the book at the library so it's off my to-buy list.

* Pots for gardening; I built a glasshouse on the weekend using a scrap clothes line that I scavenged and scrap plastic so that I could do some cuttings and propagations instead of spending so much on buying plants. As you can see, my hibiscus cutting is flourishing and I can't wait until the purple blooms appear.

I spent WAY too much on plants and pots the other weekend and that's why I needed to build the glasshouse so that I could propagate my own plants. I've yet to try propagating the three toned hibiscus that I saw in Wollongong a few weeks ago:

* Bike gear; Since my huge stack on the bike, I needed a new helmet so I bought an Avanti helmet, padding for my bike seat and lights so that I could go riding at night for some exercise.

There's not much else that I need or want to buy at the moment which is a good thing since I plan to make a lump sum payment on my student debt next week. The Government dropped the lump sum payment discount from 10% to 5% (which sucks) so I plan to make a larger lump sum payment than what I previously planned for to take advantage of the higher discount before it gets cut to 5%.

Next year - my five figure HECS/HELP student loan will FINALLY be paid off :)

Further reading:

1. Stuck in a nothing to spend on rut                   
2. Wish lists and gift giving

Tuesday, May 17, 2011

When a bottle of milk is cheaper than a bottle of water

How does milk end up on the shelves at shops?

Each cow produces roughly 20 litres of milk daily. The milk is then sold to the Processors who buy from farmers, processes and packages the milk which is then sold to retailers. According to Ken Henrick, the chief executive of the National Association of Retail Grocers of Australia, the retailers share of the dairy industry's gross profit is around 80%. Farmers earn varying rates, from as little as 17 cents per litre to 35 cents per litre.

Many are just breaking even and treading water with inability to expand herd numbers or invest in plant and equipment, forced to defer their capital improvements.

If you live in Australia, you would be well aware of the battle between the dairy farmers versus our two supermarket monopolies, Woolworths and Coles. Our Australian dairy industry produces 9 billion litres of milk annually.

Unfortunately for our diary farmers, they have battled with rising supply costs(feed, diesel, transport, labour) whilst also battling with shrinking margins due to the major supermarkets cutting the sale price of their home branded milk to $1 per litre. Consumers now reach for the home brand milk that costs $1 per litre instead of buying the independent milk labels at $2.40 to $3 per litre. So you're probably thinking, "Who cares as long as I can buy cheap milk".

The problems associated with cheap milk

A 600ml bottle of water costs $1.30 but a 1L bottle of milk costs only $1. That's where the ridiculousness lies. It doesn't take a rocket scientist to figure out that the production costs of producing one litre of milk exceeds the production costs of producing one litre of bottled water.

As dairy farmers exit the industry, there will be decreasing numbers of dairy farms. Falling supply will push up prices. Secondly, as the independent milk suppliers, farms and processors shrink in numbers, their bargaining power against retailers will diminish and they will inevitably be price takers.

There is also the question of whether the major supermarkets will increase milk prices back to pre-discounting era prices and retain the profit margins for themselves without passing any profit increases to dairy farmers who have been rendered powerless.

Although I have shares in a major supermarket and possibly a conflict of interest as well due to my history with one of them, I would never want to see the destruction of our dairy farming industry. As a shareholder, an increasing dividend is good but not if it comes at the cost of other farmers and suppliers' misery. I'm happy to accept less dividend growth if it will prevent the implosion of our dairy farming industry.

The problem is, which bottle of milk will Australian shoppers reach for when they contemplate the shelves full of independently labelled milk and the cheaper, generic milk? One that is cheaper today, or one that is more likely to ensure the viability of our local dairy farmers for the future and therefore, cheaper prices in the long run?

Monday, May 16, 2011

Crying poor on a family income of $150,000

The latest Australian budget has been rather hardcore in terms of slashing benefits to middle income threshold families. $150,000 as a family income threshold isn't rich and it isn't poor either in Sydney. It's middle income and middle of the road.

When the budget information was unleashed, suddenly the comments section on mainstream news sites were inundated with unhappy people writing in about how they can't survive on a family income of $150,000 and that they NEED the Government subsidies that were slashed(Baby Bonus, Family Tax Benefits and Paid Parental Leave). It was a very harsh budget for middle income families.

Can you survive on $150,000 per annum?

My question to families that will be affected: If there are families out there that can survive on less, then why can't your family survive on less too?

There are families living in metro and greater Sydney that are earning minimum income(around $30,000pa) or a family income significantly less than $150,000 per annum and if they can survive on $80,000 for example, then why can't the family on $150,000?

At the end of the day, the Government isn't there to subsidise anybody's lifestyle. If a family decides to live near the beach, harbourside or at inner city suburbs or to enrol their children at Private Schools with school fees of $20,000 per child each year, is that a really good reason as to why the Government should subsidise those choices? Should the Government be subsidising families that are going on annual vacations overseas or on skiing holidays?

If you think that the middle to upper class is getting the raw end of the stick, the latest budget is also bringing the stick out to lower income earners, the unemployed who will have to try harder to qualify for their unemployment money, the single parents and the disabled. Or the kids who are earning 'unearned' income.

As long as they don't dabble with Capital Gains Tax(CGT) concessions and Negative Gearing, then I don't care how many subsidies they cut.

A lot of the business owners and wealthier families who have plenty of investment assets have been keeping rather quiet on this budget. They have plenty of investment assets and as long as the budget or tax changes don't meddle with CGT or Negative Gearing, they probably won't care too much about the cut subsidies either. Sure, there's going to be a sense of regret because who doesn't want to get 'free money'(which technically isn't free because you paid taxes) from the Government?

Rule One: Never Lose Money

"Rule One: Never Lose Money. Rule Two: Never Forget Rule One."
Warren Buffet

A more classic take on not losing money would be the old proverb, 'A fool and his money are soon parted'. If you don't treat your capital with care and consideration, then expect your capital to be lost or diminished over time.

Over the recent years, I've had many opportunities presented to me in the form of business ideas, ventures, partnership and pretty much anything where particular friends have been short of funds but think that they've got a good venture to offer to me.

The only time I've ever asked for capital was several years ago when interest rates for savings account were at 1% to 4%pa and I didn't want to risk 100% of my savings in the stockmarket until I'd saved a bit more. Inbetween low yield savings account and the high risk stockmarket, was the bond market. Corporate Bonds. They were offered by the major banks in Australia and probably by other investment banks but I didn't look at the investment bank offerings.

To invest in Corporate Bonds, the minimum capital requirement was $100,000 and I didn't have that capital so I had to try and raise some funds.

The yield was about 5%-7% and it was better than the interest returns we were earning individually on our savings account. Anyway, I could only rustle up an aggregate $80k so it wasn't sufficient. I was accepting all the risks and said that I would re-imburse any losses whatsoever and split all the gains with no accounting for the risks that I was accepting on everyone's behalf, simply because I wanted to experiment with other investment options. 

The risks of default on the Corporate Bond depended on who the Corporate Bond holder was and I was only going to invest in a Blue Chip company bond. Typically, the higher the risk of bond default, the higher the yield. However, my goal wasn't to maximise the yield. It was only to earn more than the low interest rate on savings account available at that time and yet not expose myself to the higher risks of the stock market.

Anyway, fast forward to now, I haven't asked for capital since and I don't need anyones capital anymore to enter into any investments that interests me. I have my own capital for doing whatever I want.

Because of that, over the years, I have had many business ventures proposed to me. Seeking venture capital or partnerships for cafes, restaurants, take aways etc. On average, the typical amount that I've been asked to lend ranged from $50k to $100k. That's a lot of money when the venture has multiple partners and multiple interested parties.

The problem with diluted ownership in ventures with multiple partners is that you lose control in terms of decision making. It becomes more the case of 'majority rules' and because of that, it means you risk subjecting your capital to greater risk of loss. For me, that's a huge detraction. I'm not interested in investing in any venture where I can't control the outcome directly but can only influence the outcome to some extent.

A friend of mine has recently asked me if I wanted to invest $50k with a partnership of four(total investment capital $200k) into a cafe with her uncle as the chef. So what was the problem with her proposal?
  • Firstly, her uncle would not be injecting any capital.
  • Secondly, the business' success will depend on mainly his performance.
  • Thirdly, I knew her and trusted her, but I did not know her uncle and I had no idea about how professional and dedicated he was to the food industry or how much I could trust him
If her uncle decided to throw in the towel and quit, what is going to stop him from walking away? He's not risking any of his money so what's going to stop him from quitting at an inopportune moment? Even if you reinforce his employment with a contract, if he wants out, he could burn all the food or give poor service, leaving you no choice but to terminate the contract. What if the business was built around him and he decided to leave?

There have been friends in the past who invested and lost, telling me that I was lucky not to have thrown my capital in with them. A the end of the day, it's not a question of luck. It's a question of judgement and analysing your risks and deciding what happens in various scenarios and what the possible outcomes could be. And if the potential scenarios aren't great, then having the gumption to say that you're not interested in investing.

Sunday, May 8, 2011

Increasing utility bills changes behaviour

Unused appliances are switched off
Turn off chest freezer and equipment not being used
Install solar powered hot water system
Ensure house is well insulated against heat and cold
Have rainwater drain off the roof to tubs so it can be used to water the plants

These are all actions that my parents have taken.

After having the chest freezer and fridge operating simultaneously for over a decade now, my parents finally turned the chest freezer off, citing high energy prices and the horrendous electricity bills. It's always such a waste to see higher bills when something could have been done about it.

Because they operate a commercial business, there's a lot of electronic equipment and power being used. They are always looking for greener ways to minimise power and water usage. They've already implemented a solar hot water system and were keen on installing solar panels until the Government recently reduced the rebate on offer.

How can this Government in power try to pass themselves off as pro-green and try to implement the CT (Carbon Tax) on one hand but on the other hand, they reduce the rebates and incentives that lure householders and businesses to pursue greener practices?

The price of fuel has increased dramatically and this is a worldwide issue and problem. I suspect that more and more people are eyeing the public transport routes and facilities in their area so that they can plan the alternative for when fuel becomes relatively unaffordable or starts to bite into the budget.

Friday, May 6, 2011

Spending: Books and more books

Reading too much too fast can be bad

Since I've been catching public transport to work for the past few weeks, I've been burning through my reading materials. I often panic if I can't find reading material for the travel to work.

I wonder if anyone else feels that panic sensation if they don't have anything to read while transiting?

 Unlike a lot of travellers, I've never suffered travel sickness of any type and infact, find that I can concentrate very well while travelling. Unfortunately I read too fast and often find myself flying through the books that I've got and have had to buy more. Visited the local Red Cross store to stock up on some more books as you can see in the photo above. Six books for $12 which is not too bad.

I'll read anything, across all the genres. Fantasy, horror, murder mysteries, classics, futuristic, technical texts, romance novels etc Until our local library opens up, I'll be either buying or reading ebooks.

Kindle and ebooks

My friend is lending a Kindle to me. If I really like it then I'll contemplate buying one. Once the Kindle is loaded with ebooks, I'll have a good supply of reading materials so that there's no more panic moments over having nothing to read while travelling.

Recent books read:
  • Patricia Cornwell - Post Mortem (This book is thoroughly chilling)
  • Patricia Cornwell - The Body Farm (Classic story about Munchausen Syndrome)
  • Patricia Cornwell - Body of Evidence (You'll never want to live alone after reading this)
  • The Kite Runner - Khaled Hosseini (A sad story that jerks the heartstrings)
  • Johanna Lindsey - Joining (Historical romance involving Earls, Knights and consipiracy)
Further reading:

1. Crazy binge shopping

Thursday, May 5, 2011

Facebook: Spams, malware, viruses etc

Cleaning the spam out of inbox really is the pits. No matter how many spam/rule filters that I create, the spammers always find a way to bypass these rules with creativity.

The latest spams that are so annoying have been the wave of spam purporting to be from Facebook. How stupid do these spammers think we are?

Unfortunately they probably claim some victims every now and then, otherwise they would have quitted by now.

What do Facebook email scams look like?

 I'll post a few screenshots up so that anyone who isn't tech or internet savvy can have a point of reference. I love the idea of foiling those stupid scammers by posting this up. Anyway, if you get any of these, do NOT click on them. Delete them immediately.

If you really feel the urge to check your Facebook due to these 'fake' reminders, type "http://www.facebook.com" directly into your browser instead of clicking on the 'link' provided. Here are some fake Facebook spams and scams, bon appetit:

Facebook scam clickily.ws
Do yourself a favour and don't click on it, don't 'like' the page, don't add the application and don't add the java script to your address bar or else the spam will be sent to all your friends. If you have already become a victim, you NEED to REMOVE the application from your privacy settings in Facebook. Clickily.ws is a malware and may also possibly be a virus too so don't forget to run your virus and spyware applications.

Hover the mouse over the hyperlinked word "1 messages" and you will see where the landing page is> as you can see in this scam email, it alleges to be from Facebook yet the hyperlink takes the user to http://climbershub(dot)com/single(dot)html and this is dodgy

Hover the mouse over the hyperlinked section "To login to Facebook" and you will see where the landing page is> as you can see in this scam email, it alleges to be from Facebook yet the hyperlink takes the user to http://climbershub(dot)com/single(dot)html and this is dodgy

Do NOT open the attachments - it is most likely a virus/malware/spyware or something malicious.

 How can you identify between a real email and a fake one?

It's getting hard to determine between a real one and a scam because the spammers and scammers are getting intelligent.
  • Don't open up attachments that are from unknown source.
  • Delete emails from anyone that you don't recognise or you're not expecting.
  • If there's a link that's embedded in the email, hover your mouse over the link (do NOT click on it!) and you'll see whether the link that is on your email is the same or differs from the link that is actually embedded (see the images that I've provided).
The same goes for all those fake 'job' emails and fake 'bank password' alert emails. The latest scam that even almost had me caught was when a virus alert popped up on the screen that looked like an authentic Microsoft or Nortons virus checking alert that says you must click on it immediately to stop the 'virus' from infecting your computer.

It compels the user to click quickly to 'activate' the virus checker but instead this activates the virus/malware. I find that if that happens, I kill the pop up and run the virus checking software immediately from the task bar section of the PC (the virus checking icon is usually near your clock on the bottom, right hand side corner of your screen).

Wednesday, May 4, 2011

The best way to save is by learning how to cook

Knom Bujok - It's a traditional Cambodian dish which consists of a lot of fresh(raw!) vegies and can be accompanied by steamed pork belly sliced thinly or shredded chicken, all wrapped up in the lettuce and dipped into the dipping sauce
 Watch Masterchef and be inspired in the kitchen

The TV show Masterchef, is crowned with the title of introducing the kitchen to a lot of Australians who previously did not cook often. By learning how to cook proper meals, you'll enjoy your food more and it's usually more nutricious because you can use quality oil and quality ingredients.

Last night, I had a marathon session in the kitchen where I prepared a simple fresh, raw vegetable dinner with steamed chicken and also prepared a huge pot of pasta because we haven't eaten pasta for a few months now.

Just don't be like me and stockpile your groceries or else you'll end up throwing out some ingredients.

$32.40 worth of groceries bought=14 servings=$2.32 per serving

0.99 bean sprouts
1.29 mint
1.59 for 815g of apples
1.45 for 1kg of carrots
1.59 for 1kg of tomatoes
1.59 for 1kg of zucchinis
1.29 iceberg lettuce
4.17 for 464g of beef mince
6.83 herbed Italian sausages
7.60 for roasted garlic pasta sauce
3.98 for 6 chicken drumsticks

Despite the media repeatedly publishing articles about how groceries are so expensive and unaffordable, healthy ingredients such as fresh fruit and vegetables are cheap, particularly when they are in season.

It's not the fresh unprocessed food that is unaffordable, it's the processed junk, chips, lollies, snacks and meat that have gone up in price drastically over the years and have become relatively unaffordable. After reading about the pain of animals being slaughtered, I've been decreasing my meat consumption. Cooking with less meat, more vegetables and eating vegetarian meals more frequently.

$2.32 per serving

It never ceases to amaze me whenever I check to see whether the proponents of takeaway food are right in their belief that buying takeaway is cheaper than cooking at home. Everytime, the numbers for cooking at home trumps the takeaway option.

If instead, I decided to buy 14 takeaway meals, assuming I even chose the local Chinese $10/meal option, then it would cost $140 to $150 instead. If I were to dine at popular restaurants at $30/meal then it would be on average $420 for 14 meals.

Benefits of home cooked meals

* You can use better quality ingredients and oil than what the restaurants and takeaway shops usually use
* You can omit any vegetable or ingredient that you dislike
* If you use more vegetables and eat more fruit then it's great for weight control
* Better health means less trips to the doctor and less medical problems further down the track
* It's definitely cheaper than buying takeaway or dining out
* You may find the process of cooking relaxing and a stress reliever
* You can learn to appreciate quality meals and may find dining out a lot more pleasurable since you've cut back on dining out often

Further reading:

1. Stockpiling food is such a waste
2. Buying lunches and dining out
3. Update on progress bars and interest income

Tuesday, May 3, 2011

Alexa Ranking: Visitors and pageviews for April 2011

This blog is now ranked at 4,121,485. Last time I wrote about my Alexa Ranking, it was at 6,031,033 

Would ya have a gander at that... the ranking has improved by over 1.9 million spots(1,909,548) to be exact. I like the idea of having trumped over 1.9 million other sites in terms of traffic however, at the end of the day, the traffic is still pretty lame until it grows to Facebook proportion ^_~ but I'll take what I can get!!

Adding to my list of what works and doesn't work in terms of traffic and Alexa Ranking:

* Post regularly and weekly - hard for me to comply with since I can't always find the time to blog inbetween events happening in real life as opposed to digital life
* Have a section on the bottom of your blog with a 'Related Posts' tag and links to previous other posts of yours that may cover similar topics to the current post
* Always use some type of image/photo/graph - looks more professional and breaks down the monotone appearance of a page full of only words
Writing more content - so when readers click on your labels, they have other material to read which means you can entice them to hang around longer or to subscribe - I'm still working on more articles so that readers won't be disappointed when they click on the labels and see only one article
* Googlers like food related posts - my food posts are rather popular which did surprise me but maybe pf folks like reading and looking at food

Stuck in a 'nothing to spend on rut'

Trying to think of something edible to buy

Last night, I tried really hard to find something to think of what I craved to eat and what I could buy for myself. My mind was blank. I didn't crave anything.

It wasn't because I wasn't hungry. Just that I've eaten out so much over these last few years that I'd just about annihilated the list of food that I loved to eat and snack on. Recently, I find that eating my own cooking is more enjoyable than dining out at most places. I barely crave lollies or chocolate or anything else these days. I was uninspired. It was a shocking realisation.

There's a lot that I should buy

There's a list of things that I should be buying(new waterproof ski pants for our forthcoming snow trip, camera lens and tripod, camera flash, books to read, pots for gardening etc) but I'm not really fond of shopping at all. It's enjoyable when it's spontaneous but if I have to plan and research what to buy then it's not exciting. Most of my recent excitement arises from the possible imminent purchase into another investment asset that may happen this year or next year :) 

Goodbye materialism

Not that I was ever materialistic in the first place...

There have been plenty of friends who upgraded their lifestyle to include luxury brand names ever since they've been earning a salary post Uni(Burberry, Louis Vuitton, Hermes, D&G, Chanel, Miu Miu etc) but I live my life relatively without luxury clothing brands with the exception of what I received as gifts from my parents. Although Burberry has just opened up a store at the new Westfields shopping centre in the city and their coats are tempting...

Did the past influence the present?

My parents' house almost burnt down in a bush fire several years ago and we had contended with the idea of losing everything we owned. I saw all the 'stuff' in my room that was close to going up in flames and realised that everything was replaceable and only photos and my hard disk drive were the only thing that I couldn't bear to lose. Fortunately, brave local fire fighters saved our area and doused the bush fires and we lost nothing.

From that moment on, I realised the futility of owning 'stuff' and have not accumulated more 'stuff' ever since. I look at trinkets and think, 'would I be rushing to save these items if I had to evacuate quickly due to fire or flood?' and if the answer is 'no' then I don't buy it.

There's nothing to buy on Ebay

I thought I should set up my Ebay account so that I could build my 'reputation' but after a few months of trying to find something that I wanted to buy on Ebay that I couldn't just buy at our local stores, I've given up. I couldn't find anything I could bother to try bidding for.

Saving 65% of my April income

Despite this post sounding despondent about being stuck in a shopping rut, there is a silver lining... the average Aussie is currently saving 7-10% of their income, but yours truly saved 65% last month.

April is my lowest spending month for a long time since I surprisingly didn't have any major bills to pay. Although June always makes up for it with swags of bills that are due in June. And I'm planning on making a lump sum extra repayment on my HECS/HELP student loan near the end of this month.

Discretionary expenditure for April 

* A beautiful handmade, decorative necklace that I bought from an art store in Kangaroo Valley for $80. I always try to support small towns because life can be tough in small towns.

 * At Berry, another small town we passed through, I bought scone cutters from the homeware store so that I could bake high rise scones and the store owner looked desperate for a sale to justify why he spent Easter holidays opening up the store. I also bought a crank and turn music box which plays 'Santa Claus is coming to town' because it reminded me of fun Christmas holidays and the owner looked just as desperate for a sale.

* Red Cross Charity Store; The volunteers working in my local Red Cross store are 80 year old, fragile looking ladies. It always looks so vacant and sorry looking so I bought a few books and an antique Bone China bowl for $22 and also gave them a $50 donation. I acquired three Patricia Cornwell books for $6 which was cheap reading materials for my train trips to work.

Further reading:

1. Crazy binge shopping