“Great things are not done by impulse, but by a series of small things brought together.”(Vincent Van Gogh)

Everyone has an ‘end goal’, a place of financial independence with all the time in the world to exercise and do the things we always want to do! So, how do you go from here to there? Well, you need to crawl before you can walk! You need to make a start with small steps…Make the start today by including these 7 simple steps in your everyday life!!

get started today towards your ultimate lifestyle!!

1. Lose The Fat!!

I don’t think there’s one person out there who doesn’t enjoy being in great shape or want to get into great shape! The first part of getting into amazing shape is usually to lose body fat and trim down and really is it NOT ‘easier said than done”! It just takes a little discipline with working out and your diet. Focus HARD on cardio and High Intensity Interval Training. Give it 3 or 4 months for your body to make adjustments and don’t give up on it!! Losing body fat is going to give you extra energy and make you feel great both mentally and physically!!‏

2. Add Lean Muscle!!

Adding weight/resistance training as part of your workout routine is important as muscle requires more energy to exist than fat does. Thus your body requires and uses more of its ‘stored energy’ when muscle exists! The muscle I want you to concentrate on is ‘lean’ muscle. This is muscle that is built up slowly over time and has the nice ‘defined’ look, not the big ‘puffy’ look. Work out hard in the gym but lift lower volumes and compliment weight training with cardio to get the more natural athletic looking figure. You want to look like you play a lot of sports, NOT spend all day in the gym!

3. Clean Up Your Diet!!

Diet is the building block we must utilize if we want to make changes to our bodies!! Train all you want but if your diet is poor, then the results will follow. I stick to a relatively low calorie diet, but am not fanatical about counting calories!! I believe in balance and will NEVER be completely anal about calories or working out. If you deprive yourself of something, you’ll tend to binge on it! In saying that, it’s important to get to what I call the ‘maintenance

eat plenty of fresh fruit and vegetables!!

phase’ first. (look out for an upcoming post on this). When you’re in the maintenance phase, you’ve done the hard yards and know how your body reacts, it’s more about maintaining your fit body 12 months of the year! Anyway, back to diet..I eat the normal 3 meals a day but pretty much just cut out the crap and eat fresh natural foods! Lots of chicken, meat, salads…just beware of quantity and calories.

4. Set SPECIFIC Goals!!

‘I want to lose weight’
‘I want to travel’
‘I want to meet somebody nice’
‘I want to purchase my first property’

etc…

These are NOT specific goals and you will not reach them!!

Be CLEAR & SPECIFIC!!

‘I am going to lose 5kgs within the next 2 months’
‘I am going to save $200 per week and travel to South America in November 2008’
‘I am going to make myself more available and meet 2 new people everyday’
‘I am going to do my research, use my savings, and buy my first property within the next 3 months’

Notice the difference? The second list is assertive and specific!!

5. Write Down Your Goals!!

Once you’ve set specific goals you need to write them down!! You need to drill them into your head, over and over!! Place them somewhere where they’re always in your face!! I have some goals that I’ve placed on my fridge so every time I go to open the fridge I am forced to read them over and over!! These goals should be specific and attainable but also hard to reach…set the bar high for yourself! Go over your goals with a friend and be held accountable for them if you slack off!

6. Sort Out Your Finances!!

There is no excuse for paying a higher interest rate on your home loan than what you need to! There is a lot of competition out there and a lot of products that will apply to your specific situation and help reduce your payments or pay off your loan quicker! Get motivated and discuss your situation with a professional and sort out your mortgage!
Be mindful not to run up too much personal debt such as personal loans and credit cards and if you have a few of these along with a mortgage then think about consolidating them into your home loan (there are pros & cons to this) and then make sure you cancel that debt completely. Credit cards also have zero percent balance transfer from one lender to the next, it’s just a matter of doing a little research…And there is nothing stopping you from doing this over and over and over again every 6 months!

7. Take Some Risks!!

Ok, every one has a different situation you are currently in whether it be married with children or just out of University. My posts are written from the point of view of a early thirties, single, sporty guy but that doesn’t mean if you are older and settled that you shouldn’t look at creating opportunities for yourself! If you are happy and content then that is great but keep challenging yourself to do better…you can ALWAYS do better! As we get older it’s more difficult to stay in great shape but that doesn’t mean it can’t be done! A saying that I enjoy is ‘Risk and Reward’, take some risks and enjoy the rewards! Start a business, take that overseas trip, get that promotion, get in fantastic shape!!…life is short remember!!

BE A LION!!!!

Real Estate has always been regarded as one of the safest and most popular forms of investment over the years! Good old bricks and mortar! We’ve always been told to invest in real estate…it’s tangible, you can see it, it’s easier to understand than other investments such as shares, managed funds etc..and it’s relatively safe (or so we are told!). Property will always be in demand and will always be a very popular way to invest. Here are some tips and things to consider when you’re ready to purchase property for investment!

Don’t get emotional about your property!

First and foremost you are an investor. Look at property as a ways to make money! And the more money you make, the better!! You need the property to make you money, not to have all the latest fixtures and fittings!! I know a property investor who has actually never set foot in a few of his investment properties!

build your property portfolio one property at a time!!

Property moves in cycles!

Somewhere in the country property values are increasing while maybe homes in your neighbourhood are going the other way! Who says you need to purchase where you live? It’s a matter of finding the next booming area and capitalizing on it!

Positive Cashflow!

Is where the income from the investment property and all the deductions are more than the expenses the property incurs. These properties can be hard to find but they are out there, it’s just a matter of doing the research! try and keep as close to positive cash flow as you can as this will keep you in the market longer and costs you less out of your own pocket!

Negative Gearing!

Is where the income does not cover all the expenses of the investment property and this amount can be offset against your income…so in other words this amount is tax deductable. Banks also use negative gearing in their servicing calculators if you have any investment loans. Sure, it’s a tax deduction but at the end of the day you are still losing on the property…aim for as close to positive cashflow as you can!

Debt to Equity Ratio

Yes there are Banks who will give you 97% LVR to purchase an investment property but be cautious. Property is an investment and there is no certainty in any investing! There is ALWAYS a risk! What happens if you’re at 97% and the property value decreases…it can happen! Try and use 80% as a guideline, this gives you a comfort zone if something bad were to happen!

Capital Gains Tax (CGT)

There’s not much fun associated with CGT but think about it…CGT is a by-product of success!! I’d much rather take a profit and pay the CGT than have to sit on a loss for years! Remember, you always have to do better with your money!!

One Bedroom Apartments

Are often well tenanted, often near the CBD or Educational Institutions. Often yield better and have less vacancies. Are often generally more affordable so have a better entry price and are always in demand….An option that a lot of people don’t think about! Remember, don’t get emotional with your investment property!

Keeping your Property Tenanted!

There is no magic formula! Do plenty of research before buying in the area you choose. Make sure there is constant demand, a growing area, great economic structure for eg. universities, schools, shops.

Do I Manage the Property by Myself?

Why? to save $10 a week? The answer is NO!! Make sure you have a property manager you are happy with and is professional…it will save you $$$ in the long term!!

Location, Location, Location!

Can be associated with Research, Research, Research!!!! Whatever your goal for your investment property whether it be positive cashflow or capital growth in a few years, do your research and think about location!!

Are you purchasing or looking at refinancing and thinking about a fixed rate mortgage? Interest Rates are the highest they’ve been in years and we’ve had several rate rises in the last 8 months!! You can watch the news, read the papers, or see your financial advisor but the reality is that nobody really knows what is going to happen in the short term. Whatever you hear is just somebody else’s opinion!! So when will it end and is it the right time to consider fixing your loan??

always make sure you can make additional repayments with your loan product

It is nerve-wracking with continual rate increases!!

However, fixing your interest rate now could cost you more in the long term! Interest rates move in cycles and fixing at the wrong period in the cycle can see you paying more than if you had left it as variable. You see, fixing your loan for 2, 3, or 5 years is a long time and a lot can happen in that time! The common question you always hear is “Has the horse already bolted?” and when it comes to fixing your loan you would have to say YES it has!! Realistically fixing your loan a year or two ago would have been the answer but hindsight is a wonderful thing!! So fixing now at a high rate will cost you if and when rates begin to stabilize and even decrease again.

Banks love you fixing your loan do you want to know why??

In general, fixed rates already have several rate rises built into them. You are paying for stability or less risk!! You are already paying a higher interest rate and secondly there is no flexibility with making extra payments. Banks make their money by keeping you on the books as long as they can and would rather you pay the highest interest rate possible and you are doing this with a fixed rate with no flexibilty to further reduce your balance!! Not to mention the fees they will charge if you wish to change lender! Who wants to be locked into a rate at the peak without having the ability to make additional payments??

A combination of both fixed and variable is a good solution

In recent times of unstability, you may be 100% correct in fixing your whole loan or you may be 100% wrong if rates begin to fall. Why not have a combination of both and at least be 50% right?? A lot of products let you fix a portion of your loan amount while the rest can remain as variable. The advantage of this is you can make additional payments to the variable portion as you need to, while you also have the stability of your fixed portion!

Be smart and don’t panic!!

As I’ve stated in previous posts, I believe in reducing your mortgage as soon as you can, and you can still do this with a combination of both fixed and variable rates. With only a fixed rate, you cannot make additional payments and if rates do level off or fall you are stuck paying a higher rate!! Reducing your risk is the goal and in volatile times it may pay to spread the risk by splitting your loan into both fixed and variable rates!

So you want to buy your first property and get into the real estate market?? You’re ready to fulfil the ‘Great Australian Dream’ of home ownership!! You’ve saved up enough money for a deposit and then it hits you, “I’m happy with where I’m renting, it’s not costing me too much, it’s close to work, so why do I want to purchase?” Because, buying your first property is like a natural progression through life, and although rates have risen lately it’s not all doom & gloom!!…there are bargains to be found!

think about your first home as a long term investment

So then the dilemma begins…”should I purchase an investment property or an owner occupied property first?”

Both forms of ownership definitely have their benefits but which one is right for you? If you’re a couple who want to purchase and live in your home/unit long term then that is fine! But for those who are considering a purchase for either owner occupied or investment use, you need to consider all the pros & cons associated with both forms of ownership. Especially if you’re currently renting in inner Sydney or Melbourne, as mortgage payments can be almost double what rent payments are! You may be renting in a 2 bedroom unit worth $500,000 and paying $600 per week rent ($300 per room) but mortgage payments on the same unti would be much higher! The facts are that we usually need to live relatively close to where we work, so if you work in the inner city is it best to stretch yourself with buying an owner occupied in expensive inner city or buy something more affordable further out?

It’s not an easy decision but it doesn’t mean you can’t get into the property market!!

You just need a change or shift in your way of thinking. You should think about renting where you want to live, and become a landlord in other areas where affordability is more realistic, returns are greater, and where you won’t stretch yourself too thin!! The fact is, renting is a lot cheaper! Sure, it’s great to say you own property, but not if it costs you everything you earn!!

So does this mean I should purchase an investment property first?

No, it doesn’t…although turning your property into an investment property is what you should think about doing eventually. I previously wrote a post on the First Home Owners Grant and while this is available to first home buyers it should be taken up!! It’s too big a saving for anyone to pass up!! You will need to live in your property for the first 6 months and then you are free to rent it out and turn it into an investment. So keeping with the theory of renting where you want to live and purchasing in more affordable area, you may need to travel a bit further everyday for a few months before you go back and rent where you were before and turn your property into an investment.

The benefits of buying an owner occupied first are obviously the FHOG and stamp duty concessions (in NSW). The benefits of turning your property into an investment and then renting again are that there a lot of tax deductions you can receive on an investment property.

But how can I pay for a mortgage and rent payments also?

Because your rental income will need to exceed your rent payments (which it usually will) which will also give you extra to put towards your mortgage. And on top of that there is depreciation on building, fittings, fixtures you can receive and your accountant will help you with all this to reduce your taxable income!

Utilize the Govt grant (FHOG) while it is available, but shift your mindset to that of an investor…owning your own property and living in it is a great thing, but living in the Capital cities is expensive and it may be better to make your money work for you and reduce your taxable income!! And in a few years time you’ll have equity in that property that you can use to purchase another one!!

In times of increasing Interest Rates and with no clear stability on the horizon, a lot of people are looking at ways they can tidy up their debts, and consolidating them into their home loan is a very popular way of doing this, but beware as this can lead to greater debt and if refinanced into the wrong loan product can often end up costing you more!

make good decisions when it comes to debt consolidation!

Look Closely at your Current Situation!

It’s a stressful time at the moment and nobody really knows for certain what will happen in the short term with regards to interest rates! It’s a time where we need to tighten the strings and prepare for worst case scenario! I’ve been looking over my finances and looking for ways to cut costs and everybody needs to keep abreast of how they can do the same and consolidation can be a good way to ease some of the pressure…but with caution!! The problem with consolidating debt into a home loan is that often that personal debt ie. credit cards, personal loans etc.. rear their ugly heads again once the consolidation is completed!!

Debt Consolidation Adds to your Home Loan Balance

Someone who wants an extra $20k to pay out their credit card, increases their home loan by $20k to do this, but the question is “does this person actually then cut up and cancel their credit card after settlement?” If not, then they have just increased their overall debt by $20k without saving themselves anything! My previous job as a Lending Manager I oversaw hundreds of applications for refinancing & debt consolidation, sure there are settlement conditions for these debts to be repaid but with debt consolidation it’s usually up to the individual applicants to do this. The Banks won’t actually control the funding and will just treat it as an equity release. It is essential that if you are considering eating into equity in your property that you don’t get a new credit card after settlement and fall into the same habits!

Debt Consolidation Reduces your Equity!

95% of the time I found that a refinance also had a debt consolidation associated with it, and if spending habits don’t change after refinancing and more personal debt incurred then the home loan can balloon out of control! In the above example, $20k has been added to the home loan, which has effectively reduced the equity in the property! And then what happens if the home value decreases?

Consider all the Options!

Debt consolidation can be an effective way to tidy up debts, but only if refinanced into a lower interest rate and spending habits become more disciplined! As I’ve stated before in previous posts, I believe it’s best to pay off your mortgage the fastest way possible, and by consolidating you are adding to your home loan…so there are both pros and cons when it comes to debt consolidation!!