FUEL Companies Profit Grab

What exactly is going on here in Australia where we are still paying upwards of $1.40 per litre of fuel? Forget the excise tax, forget the GST component!!

The barrel has dropped significantly over the last few months and the fuel companies are slow to pass on these drops even though their margins won't be affected. Is this a pure profit grab and are the fuel companies just extending the margin gain by slowing down the decrease in fuel prices??? Absolutely!!

What are the consumer watch dogs doing?? Not a great deal!! I think the world is too busy worrying about the financial crisis and the fuel companies are using this diversion to keep on putting additional profit margin in their pockets.

The difference that 10 or 20 cents a litre makes to a family budget is substantial over a period of time and can help lower the cost of living for all people!!

What I'm concerned about here too is that due to higher fuel prices over the last 12 months of more the price of basic food items has risen too. My question is, will the supermarket chains begin to pass on any savings to the consumer when fuel prices do fall or will they too get caught up in the profit margin grab just like the fuel companies??

You tell me, I don't think it takes a rocket scientist to figure this one out. Let me know what you think people.....

Should I Sell my Shares?

In short, NO NO NO!!!! Do not sell your shares not matter what people are saying! Right now is the time to buy more shares as you would be cost averaging the price out and if you are able to put more funds into shares right now then it is an ideal time to do it.

The only time you will realise a loss is on the physcial sale of shares so if you're portfolio has dropped in value it is time to buy up on the quality stocks you hold and lower your cost average price.

In the long term it will be well worth the cash outlay as it will take less time to recoup your (Paper) losses if you lower your entry price.

Remember these key words, buy in gloom and sell in boom!!

Rudd on Taxing up the Big Wigs

Only a few days ago did Prime Minister Kevin Rudd announce that the government will be reviewing highly paid executives who are earning over 1m per annum. You need to ask the question, what the hell is this actually going to achieve?

Aside from the obvious revenue implications for the government coffers what is this going to do to stave off the recession we are already in?? Absolutely nothing!!

This is a fantastic vote grab for the PM and has touched the hearts of middle and lower class Australians who all suffer from tall poppy syndrome. 'Why the heck should this rich bloke get taxed the same way as others, it's not fair, it's not the Australian way' are the screams heard from the masses!

In essence the PM is saying that theres really no point in aspiring to earn this kind of money because you will be penalised for it anyway. What's the message that's being spruiked here? Should we all just remain in the middle income bracket and be average Jo's just to satisfy the masses and not get hit with a higher tax rate?

Is the PM advocating mediocrity for Australia? I for one do not earn this kind of money but damn it if I'd worked my way through the ranks for years only to penalised for me expertise in a chosen field I'd be rather pissed about it all!

Check out this blog for more info on the PM and the actions of the Australian Government.

Global Recession is here - It's About Time -

Everyone is scared about the recession which is now finally here and will stay for around 3 years before we see a rise in share markets and property values anywhere in the free world.

Is this a doomsday prophecy? No, it's the reality of impacts due to both the share market and property sector seeing growth well beyond the standard 7 year cycle. For nearly 4 years these two markets have been powering on and the result is pricing and values which are falsely inflated. The catalyst has simply been the liquidity crisis which was sparked off in America and now the donimos are starting to fall as a consequence.

What this recession will do is provide a market correction in these and other sectors of finance and bring values to a level which is in line with real world results. Will this happen again? Absolutely, you can guarantee that we will see another recession time and time again. It is how we manage it from a personal and business perspective that will see us get through these tough times or fold like many are about to.

Check out this post here for a more detailed look into the recession and the next phase of the global meltdown. Some itneresting reading to be had.

Wall Street to be Bailed Out

The global economy is still struggling although with the recent injection of funds from the US government Wall Street rose by a full 11pc from the opening bell. Will this have a profound effect on the overall economy? Yes, without doubt what the US is doing will have positive effects not only on the US economy but also the global economy.

The reason for this is that the world looks to the US for financial direction and with at least some signs of life now showing through the global impact is far greater than the average person realises.

The world leaders are now looking to work together to put in place a world wide financial architecture which helps smooth out road bumps along the globes financial journey. Not since the end of WWII have world leaders considered working together to form a more stable financial system and this can only be a good thing. For more information and a great read check out this blog.....

Unfortunately it is only in times like these that world leaders come together to achieve a common goal. Does this mean that demarcation lines will be crossed and the micro financial focus will become macro? One can only hope that this utopian ideal is realised, if this does come to fruition then I truly believe the world will move to an even more united front not only from a financial perspective but overall.

Does this mean we will have a global government one day? Yes, perhaps not in this lifetime but it certainly seems that we are heading that way and when the world comes together we may well see peace and prosperity of a different kind.

Bank Deposits Gauranteed - 700bn Allocated -

Over the weekend is was announced that the Federal Government will be guaranteeing bank deposits and have allocated a total of 700bn to do this. As a result the Australian dollar has started trading at higher levels almost immediately since the beginning of trade this morning.

This will go a long way to inspire consumer confidence and create a safety net in a worst case scenario, again assuring Australians who have savings in a banking institution that their money is safeguarded against loss.

The stabilisation of the Australian economy is critical at the local level and is a leading step towards showing the global economy and governments on how to manage this credit crisis.

There is also a move to inject funds into the financial markets through a further $4bn being offered to lending institutions to allocate to borrowers although the process for lenders applying and being approved for funding is yet to be determined.

Talks about similar initiatives are being held currently by Eurozone countries, as a combined effort the impact of such decisions can have an enormous positive impact on a global scale. More news to come on the Eurozone decision so stay tuned as a blog on this will be out shortly.

Another blog you may be interested in is the 'Financial Review - AWFG -' which is updated regularly and contains a great deal of up to date information and opinion on economies across the globe.

Your Credit History - How can it impact you?

When it comes to credit files and what's on them, most of us really don't know. Suprising when you think that your individual credit file can dictate whether or not you are successful in getting a loan, even if applying for particular jobs which require a clean credit history.

Often I've worked with clients in obtaining finance for them, be it a home loan or a personal loan and often they are suprised to find that they're credit file has a blemish on it. What this means a lot of the time is that their application for finance has been knocked back, what's even scarier is that some of these clients have been knocked back for a default which was as small at $75.

A default is simply a bill from a service provider which was not paid, once it has aged for approx 90 to 120 days it is then listed on your credit file as a payment default. How easily can this happen? Far too easily, especially when it comes to telecommunications providers who are notorious in listing people as soon as they cross a certain time frame of non payment.

Here's a real life example for you, person A moves premises and simply forgets to advise their telco provider of their new address. By the time they settle into their new place, unpack boxes and get accustomed to their new surroundings a few months have gone by. All of a sudden they have been listed by their provider for non payment.

Is this the Telco providers fault, no! The onus is on the individual to ensure that all utility and other companies they receive bills from are advised of their current address.

There are some simple things you can do to ensure this doesn't happen to you, it's as simple as popping into your local Australia Post store and filling in a mail redirection form. The cost is minimal and you can have mail redirected for 3, 6 or 12 months. For the cost of this service as compared to having a listing on your credit file I believe it is worth every cent!!

When you have a default on your credit file, no matter how great or small the listing stays on your file for approximately 5 years. Let's take a quick look at how a default can affect you:

1. Restricted ability to obtain a home loan
2. If you do obtain a home loan you may need to get it through non conforming lenders who charge a higher interest rate
3. Potential to not be able to activate a mobile phone service (post paid service)
4. Impact on obtaining certain jobs which require a clean credit history

These are just some of the impacts that a listing on your credit file can have. Having bad credit is no laughing matter as the ramifications are far reaching.

Even if you do not have a default or a listing of any type on your credit file there is a record kept of every single application for finance, for example if you were to go to several different lenders for a personal loan and all of them performed a credit enquiry then your credit file will show all of these transactions.

Even though you did not obtain credit your credit file shows all of these applications, now the impact even this can have is that subsequent lenders will have a concern about your activity and in a lot of cases will refuse you credit based on high levels of applications.

To obtain your credit file with detailed information you can simply click here and order it online. It will be the best money you've spent in a long time and the information contained will actually suprise you.

Hope this has helped highlight the impact of having a blemish on your credit file and I invite you to ask me a question and I'll be happy to assist.

RBA Drops 100 Basis Pts - Largest in 16 Years -

The time has come for some drastic measures from the RBA. Fortunately the Reserve Bank of Australia has slashed the cash rate by a full 1% (or 100 basis pts) to help stem the tide of the market slow down.

This is some very positive news and in line with this Westpac has announced it will pass on up to 80 basis points to its customers, given this lead from a major bank we should expect to see the other majors follow suit shortly.

The RBA has made a very positive move forward to help kickstart the economy as the inaction of the ruling government has seen prices of fuel, shopping and general living skyrocket as they have been unable to put a cap on inflation through diligent fiscal management.

The decrease in the interest rates has come at the right time for the retail sector as well, especially leading up to Christmas. By the time the decreased rates are passed on and the positive impact is felt by all who have a home loan it will be just about Christmas time.

What this means is that retailers should see some benefit by way of heightened activity as compared to the previous trading quarters which saw sales slump. With more money injected into the retail sector this could also mean the creation or sustaining of more retail sector jobs and this can only be a good thing.

I believe that there is still more fall out yet to come from the US Credit Crisis but in the same breath I also believe that the RBA have responded quickly enough to counteract future effects of the crisis. Hats off to the RBA for making such a big call and dropping the rates a full percentage point for the first time in 16 years, if you're old enough to remember this was during the 'recession we had to have'......

The credit rating blog is still on the cards and will be out shortly, I thought this was more important at this stage to highlight to the readers of this blog.

Credit Crisis - Is there More to Come?

With the credit crisis still going through the throws of settling down we are yet to see the full impact of the US meltdown. The impact of the credit crisis is only beginning to be felt by the global economy, more so it is the individual consumer who will pay for this in the long run.

At this stage the Australian economy has slowed down in the finance sector, the property sector and we have also seen substantial impact in the share market. What we are yet to see is the impact from an unemployment perspective and also from a home loan default and personal credit default perspective.

Yes we are seeing more and more martgagee auctions but is the smaller ticket items such as credit cards, store cards and personal loan going into default which will impact consumers for years to come.

The amount of people in Australia which have a listing on their credit file will skyrocket over the coming twelve months as people struggle to repay debt which was accrued during a time of low interest rates and lower cost of living in general.

This was ok during this period of lower interest rates and cost of living although now where a home loan costs hundreds of dollars more per month and the average fuel bill is now an average of $100 per month more the amount it costs just to maintain these repayments has seriously sapped the disposable income which was once available.

Where does this lead from here? In many cases it leads to people juggling money between credit cards and potentially making late payments on their bills that are due. If this cycle is not broken quickly by way of cutting down on all unecessary spending or earning more money then these late bills start to pile up and can quite easily turn into a serious debt issue.

Once a bill is more than 90 days in arrears the provider of the service has the right to place a default listing on your credit file and this can take up to five years to come off your credit file even if you pay it in full at a later stage.

I have helped many clients break this cycle by way of a refinance and more specifically the consolidation of debt in their home loan.

I will be writing up more information on the impact of a credit listing in my next blog due out very soon.

RBA To Drop Rates - What are the Banks Doing?

The RBA is set to drop rates yet again but before you breathe a sigh of relief the major banks have already stated that they would not pass this onto the consumer. In my view this is an absolute joke and simply a profit grab from the banking institutions.

Think back a month ago when the RBA dropped its rates and the banks followed suit, this time the banks will not drop their rates so in effect what the banks are doing is regaining any lost profit margin they gave away last month! Welcome to shareholder return at the cost of the community!

What makes matters worse is that the Australian government in all their wisdom have seen fit to not enforce the lowering of rates to the consumer. In essence the Australian Government has become a toothless tiger, since when does the corporate sector not have to follow the guidelines set out by a government and how come the average person has to bear the brunt of profiteering.

We are up in arms about fuel prices and consumer watchdogs are all over oil companies like a rash but the banks seem to dictate their own terms regardless of whats good for the Australian economy.

If the government of today were to really make an impact then they should enforce through legislation that the banks do pass on the decrease to consumers so that the flow on effect will be that little light of hope for all who have a home loan.

To find out more please contact me via e-mail or go to my website which is www.aussiewisefg.com.au and you can touch base with me through there.

Christmas is Nearly Here!! Is this a good thing??

With Christmas nearly upon us the time to spread the joy is knocking on the door. The question is, will the joy that we spread now come back and bite us where it hurts?

In short yes! With many of us relying on credit cards to carry us through this insane shopping season we often don't factor in that we need to pay this debt off and when the bill arrives in January along with the usual household expenses it can all seem too much. Especially if you have a home loan to juggle as well.

We can all too easily get caught up in the madness which is Christmas and yes it is great to be able to buy your loved ones a lovely present but do we actually sit back and consider the stress this will put us under when we actually have to pay for them all? No, and this is why you need to think carefully about what it is your actually spending, here are some tips on how to better manage your Christmas spend:

1. Set a firm budget on all the presents you need to buy
2. Plan months in advance and start saving towards this budget so you use cash you have and not credit
3. If you see a present that is on special even months before Christmas grab it now and keep it aside, this way you break up the spend required and save yourself some money in the process
4. Try to ensure you have enough funds available in January to cover all the bills and at the same time plan out what your bills will be for January so you save towards this as well
5. Keep in mind that buying a present is not about outdoing anyone in the value of the present, Christmas is not a competition

Being in the finance industry I often come across many people who approach me for assistance not long after the new year has begun and they ask me to help them lower their debt. There are many ways in which people can help themselves and the most common is that of consolidating their debt into either a low rate personal loan or into their home loan.

The point I make with all of my clients is that it is a great idea to consolidate debt and if they are serious about making a long term difference then as part of the debt consolidation process they need to cut up the credit card! More info at www.aussiewisefg.com.au

In the most they don't take too kindly to this suggestion but once I highlight the fact that if the card is still there then the likelihood is that they will again rack up the debt in a short space of time. If this happens and it most likely will, they will simply end up with another debt by way of a personal loan or a higher home loan repayment AND have to deal with a burgeoning credit card debt as well so they will actually be worse off then before.

Remember that Christmas is meant to be a joyous time and if approached in the right way shouldn't cause more stress in the new year simply to enjoy a few days of celebration.

Above all else, remember that Christmas is a time of celebration of another kind for many people so retain your focus on this and remember that buying presents is not the only aspect of Christmas we need to celebrate.

RBA Drops Rates - What does that mean for my Home Loan?

The RBA recently dropped its cash rate by a quarter percent and although this is a positive move forward it does little for someone with a home loan when on average the savings equate to around $40 per month.

The RBA have touted that they will be decreasing interest rates again a further 3 or 4 times across the coming 12 months, then and only then will the home loan market be able to breathe a sigh of relief. When the average person all of a sudden has a further $200 to $300 per month will the market start to grow again, these savings will help compensate for the higher cost of fuel and in turn day to day living.

There have been rumours that the RBA may decrease interest rates again prior to Christmas, now is this to help people with home loans? I don't believe so, the real reason this move would happen is to inspire some confidence in the general market leading up to the crazy Christmas shoppign season.

You see if people believe that they have more available funds because of home loan repayment savings then human nature dictates that the first thing one does is to go and spend it! This may sound insane but is it a ploy to inject some life into the struggling retail sector, if the RBA does decrease home loan interest rates then the most likely result would be a stronger Christmas trading season for all retailers.

The flow on effect of this is that jobs will remain in place and potentially grow within the sector itself. Mums and Dads will be happy as they are able to buy those items they couldnt afford a few months ago and the average Australian has a smile on their face.

When the general populous is happy then consumer confidence increases and this has an impact across all market spaces.

As far as the home loan market is concerned there is a long way to go before a real positive impact is felt through the RBA's decrease in interest rates, I forecast that this is at least 6-8 months and 4 decreases away.

When it comes to home loan providers and the property market there is still a dim light there although the tough times will remain for another 2 years at least until we see the growth truly come back.

For more information on home loand and other financial products please visit my website which is www.aussiewisefg.com.au and you can contact me there.

Global Liquidity Crisis & The Australian Home Loan Impact

Months ago we heard reports from the US about how lenders were impacted greatly due to the high level of defaults and the growing amount of mortgagee auctions. People were losing their home; they were crying out that the bank sold my home from under me. On the other hand the lenders were crying poor too saying they had to sell to recoup losses.

The reality of why this occurred lays equally on both the lenders and the borrowers shoulders, firstly the lenders were providing finance to borrowers on a low doc basis (low documentation) where evidence of income is limited to non existent and also providing in excess of the homes valuation by way of borrowings. For example if a house were worth 300k the lenders would often lender 320k on the property.

This would leave the borrower in a negative equity position along with the banks!

In saying that, some responsibility must be taken on the borrowers behalf as well. Common sense should prevail but rather than do some basic math on what’s owed versus the value of the home, most borrowers would be happy to put themselves in a negative equity position.

Now there are many reasons that lenders did this ranging from keeping up with the Jones’ and having that new SUV or Plasma TV to borrowing good money after bad to continue to make home loan repayments which simply created a vicious cycle of debt on debt.

The one question many forgot to ask is ‘Can I actually afford this?’ it’s also a question that the lenders should be asking too.

Many months down the track, the ramifications of these poor lending practices are being felt around the globe. In particular the Australian market has suffered a major slow down in the property sector with interest rates increasing and lending policies tightening up dramatically.

This is not such a bad thing although people are asking ‘Why are we suffering because of what the US lenders did?’ This is a fair question to ask too, with the answer not being as clear as one would think.

The reality of why there is a global liquidity crisis is that because if the actions of US lenders and their lending policies the securitised lending market has collapsed. Securitised simply means that an investor has cash funds they are willing to invest which will be secured against property.

The direct impact of the US property and lending crash has seen investors flee the market and the ones who remain have placed strict parameters on whom, where and how much they will lend. From an investors perspective this is a logical way to react and I personally would be doing the same thing.

So how come it has affected Australia’s lending policies and home loan market? Simple, funds which were once available to invest in securitised lending are now all but gone, this has restricted the options available by second tier and non bank lenders. The funds which are available to the market nowadays is coming at a higher cost based on perceived risk which has been driven by the negative US economy and in particular the home loan and property market there too.

My company has seen these changes occur over several months now with many non bank lenders and mortgage originators closing their doors and or merging with other companies to maintain economies of scale.

Unfortunately the home loan market and Australian borrowers are suffering as a result with the impact of higher interest rates and reduced capacity to borrow as a direct result of this. As a flow on the property market has slowed down although we are not seeing the regression we had during the ‘recession we had to have’ in the early 90’s.

There are signs of life again and in the next blog I will be touching on these signs and highlighting areas to look for as an indicator to better times ahead.

For information on home loans and the latest interest rates hop onto my company website which is www.aussiewisefg.com.au and stay tuned to my regular blogs for updates on the financial state of play.

Note – I have added the subscribe option for RSS feeds and I invite you to use this to keep in the loop. I also invite you to send me through your e-mails and feedback.

State of the Home Loan Market & the Australian Economy

It’s interesting to note that although home loan interest rates have recently been dropped by a quarter percent that the state of the property market is still poor. Why is this? It’s pretty simple really, not only have home loan interest rates increased substantially over the last several years but the cost of fuel and inflationary pressures have had an impact too.

When you combine these factors and the flow on effects of higher fuel prices which trickle down to the food we buy and other goods which require transport to reach the retail sector there is a considerable amount of strain placed on the household income.

What was once ‘disposable’ income has now become essential to simply maintain a reasonable lifestyle and in a lot of cases put food on the table.

So when will this all change? Not for a while yet, although the home loan interest rate has decreased for the first time in several years there is simply not enough income liberated from this to breath life into consumer confidence levels.

The market will bounce back as it always has done although this will take several months to occur, what we will see is the RBA (Reserve Bank of Australia www.rba.gov.au) cutting interest rates in the new calendar year two to three times. Once this happens there will be enough income liberated for people to start feeling confident in opening their wallets and spending again.

The flow on effect will be felt in the retail sector and in the property market, jobs will be created and money will start to flow within the economy again.

What this means for the home loan market is an increase in overall enquiries and home loan settlements. Time and time again I have seen this occur in the industry and with every downturn there is an eventual upturn, it is a matter of when not if and it all comes down to time and timing of economic factors which all have an impact.

Aussie Wise Finance Group has been through the ups and downs of fluctuating economies and will again be there when the market moves into positive territory. To find out about me and my organisation simply follow this link to www.aussiewisefg.com.au or you can give me a call to have a chat.

Bookmark this blog as I will be regularly updating it with market goings on and will run a special in a few weeks on the sub prime crash or as is known in the industry the current ‘liquidity crisis’…. More on that soon….