wwgd: should we upgrade the car with our car allowances? (ep921b)

追加: 2026-05-28

[00:00:06]Today in the show, we are joined by another guest for a what would Glenn do episode. If you are new, welcome. Grab a seat, put on that seat belt. If you're an old hand around here, you know the deal. I go through um our listeners cuz we mainly do this with people who listen to the podcast. I go through the listener's current situation and also look at what they want to ask me, what some of their goals are. Then we'll swing back around and I'll let them know what I would do in this situation. If you disagree with me out there in listener land or in YouTube land, awesome. Go at it. That's fine because this is a what Glenn would do. I am not speaking on your behalf, so you can't get too outraged if you disagree with what I say.

[00:00:53]Until then, we're going to have a really great chat. Uh, who have we got here and what are we doing?

[00:00:59]>> Hi. Um, I am Mayor and you're listening to Money Money Money.

[00:01:08]>> Before we get into it, this show is general advice only. I've got a license to provide that advice. Full details can be found in the show description. My name's Glenn James, former financial adviser. I host this show and a show called Retireite. I've got some books, the award-winning quick start guide to investing and the quick start guide to your first property available where good books are sold or in the description. If you're new here, welcome. If you're an old hand, welcome to M3. Let's get into it right now.

[00:01:43]Radio, we have got Mayor and Liam, not their real names. Um, if you are watching on YouTube, you'll see that there's a bit of a blur over Mayor's face because she worked in top security, everyone. We're talking government stuff. Um, no, not really. Mayor, um, welcome to Pod Vegas.

[00:02:01]>> Thank you.

[00:02:02]>> Hey, um, how old are you?

[00:02:05]>> I am 29.

[00:02:06]>> And how old's Liam?

[00:02:09]>> 31.

[00:02:10]>> Cool. Uh, and if I'm getting straight to the point, that's because I'm getting straight to the point. And before we keep going, Mayor and Liam, 29, 31 years old, uh, what do you want to ask me, Mayor?

[00:02:22]>> I want to get your opinion on whether we should upgrade our car and if we do, if you have any advice on, I guess, how much we should spend on said new car.

[00:02:33]>> Yeah. Right. Okay, cool. Um, what do you do for work?

[00:02:39]>> I am a pharmaceutical sales rep.

[00:02:42]>> Ooh, big farmer. Pew, pew, pew.

[00:02:45]Actually, I'll tell you something. Do you know how people get outraged at big farmer?

[00:02:49]>> I reckon they should get outraged at big um vitamin because the amount of vitamins in a lot of chemists and the cost of them. It's more expensive to buy a big tub of fish oil than it is for a script for your freaking heart medication or your reflux or something.

[00:03:11]>> Yeah. Well, PBS is a wonderful thing.

[00:03:13]Um, >> that's true. That's true. Yeah, you are right. But, um, anyway, big farmer, come at us. And what does Liam do for work?

[00:03:20]>> Uh, so he is a BMS technician. Um, so, >> okay. What's BM?

[00:03:26]>> Kind of a Sparky.

[00:03:27]>> Okay.

[00:03:28]>> So, uh, he was a Sparky by trade. So, electrician, what he does is kind of a mix between electrician and engineer, >> right?

[00:03:37]>> If that's probably the best I can explain it to everyone.

[00:03:40]>> Buildings. Yeah. So, big buildings, hospitals, highrises, prisons.

[00:03:45]>> Yeah.

[00:03:45]>> All of it.

[00:03:47]>> And are you both married?

[00:03:49]>> Yes. So, we got married just under two years ago.

[00:03:52]>> Oh, awesome. Very nice. Um, any kids?

[00:03:56]>> Not yet.

[00:03:56]>> Not yet. Um, the yet is that yet as in next Thursday or maybe in a couple of years?

[00:04:03]>> Um, honestly, that just depends on how long it all takes, I guess. Um, I've actually just had a surgery only in February. Uh, with that, we have to wait at least 6 months before we start trying. So, it's going to be realistically at least 18 months before we have a child.

[00:04:21]>> Cool.

[00:04:22]>> In the world.

[00:04:23]>> Um, so we've got a little bit of time to work with.

[00:04:25]>> Awesome. Do you have any pets?

[00:04:28]>> We do. We have one border collie.

[00:04:31]>> Yes.

[00:04:31]>> And two cats.

[00:04:33]>> What type of the cats?

[00:04:36]domestic short hair. They're just little rescues.

[00:04:39]>> Just little cats.

[00:04:41]>> Yeah.

[00:04:42]>> Water shells.

[00:04:43]>> So, you would be a crazy cat lady, but because you've got a dog, that's fine.

[00:04:47]You've got pets.

[00:04:48]>> Yeah, exactly.

[00:04:49]>> Um, okay. What are we doing for our incomes?

[00:04:55]>> As in each of us.

[00:04:56]>> Yeah. Sorry. What What do you earn?

[00:04:57]Sorry. Yeah.

[00:04:58]>> Yeah. No, all good. Uh, so my base is 102. Um, I then get a $24,000 a year car allowance. I have super on top of my base pay and I have the option or like the potential to earn a decent commission. It does fluctuate a little bit. Um, yeah, that's each.

[00:05:22]>> Yeah. Okay. So, last financial year, how much commission do you think?

[00:05:30]>> Oh, that's a good question. Or if you had to guess, looked it in. Um, we have the opportunity for I think they say roughly 42,000 a year >> as a max.

[00:05:48]>> Yes, but it there are some things that have multipliers on them. So, um I think last quarter I earned 8,000 commission.

[00:05:56]>> Okay, cool.

[00:05:57]>> Pre-tax.

[00:05:58]>> Yeah. So you you're basically running maybe 24 grand a year at the moment >> annualized based on that.

[00:06:05]>> Say that. Yeah, it could could fluctuate. Yeah. Yeah, that's fine.

[00:06:09]>> Um and just for my own curiosity, what did you do for like did you have to do a a degree? Do you have to know anything about medicine? Or is it all just be a good salesperson?

[00:06:23]>> I would say I'm in a quite a fortunate position. Um I have not been to university one day in my life.

[00:06:31]>> Awesome.

[00:06:32]>> Um I started off in a pharmacy as a pharmacy assistant for a number of years before like when I finished school even before I finished school.

[00:06:39]>> Great.

[00:06:40]>> Um I then switched into a sales rep role with a company that does a lot more over the counter medicines.

[00:06:48]>> Um they I'm so grateful to them. They put me on at 21 years old without any university degree that Yeah.

[00:06:57]No, I love that.

[00:06:58]>> Yeah. Awesome. Um, we actually, for those listening, if it sounded a bit clunky, we just had to edit something out that was potentially commercially sensitive uh to keep Mayor's um an amenity.

[00:07:12]>> Yes. Um, so yeah, now with a different company. Um, so I'm very lucky to be in the position without going to university.

[00:07:19]>> Yeah. And I really I love that because you know my mom was a dispensary tech for all her life like literally prepped all the scripts for the pharmacist to check. So if you are in that environment for many years you really get to understand conceptually what medications are for what. Not saying that you're a trained pharmacist and there's a whole other skill set there, but in terms of an understanding about, okay, well, I reckon I could get out and talk to otherarmacies and um other medical practices and and sell this stuff. So, >> yeah, absolutely.

[00:07:55]>> And what's Liam on terms of salary?

[00:07:58]>> He has just got a new job. So, his base salary, I believe, is 16,000.

[00:08:06]Um, he then also gets a $16,000 car allowance plus a fuel card.

[00:08:11]>> Okay.

[00:08:12]>> Um, plus super.

[00:08:14]>> So the So yeah, so his fuel is just funded by the company, not as part of the car allowance.

[00:08:21]>> Yep.

[00:08:21]>> Correct. Yeah. Both mine I have a car allowance, but it >> I don't have a fuel card, so I pay for my fuel.

[00:08:28]>> Yep. And how does that work for your car allowance? Do they just pay you more or is it if you salary package it through a novated lease company?

[00:08:37]>> I think there are different ways you can do it. Um for myself I it just essentially gets lumped in with my monthly salary, >> right?

[00:08:45]>> Um so there's just a set amount on there that is designated towards car allowance.

[00:08:49]>> Yeah. So, in theory, with your car allowance at your current job, they say, "Here's 24 grand a year for your car allowance." If you want to drive around in a 2003 Hyundai XL worth nothing, you can do that and pocket the rest.

[00:09:06]>> Yeah.

[00:09:07]>> Yeah.

[00:09:07]>> Um, okay. So, we're going to go through the uh sound financial house foundations. Uh, if you are new to the show, I've got a sound financial house.

[00:09:16]We'll pop a an image up on the screen.

[00:09:19]I suggest if you're building your financial life, you should do things on the right foundations and then build on that because we are building wealth. We are building our financial life. So foundation one and two, you know, a spending plan, budgeting plan, all that stuff. Do you have a money system that you both use and follow?

[00:09:41]>> Yes.

[00:09:42]>> Okay. And do you both share money or is it >> Now we do. We've only just refinanced our house. Um, so completely lumped everything in together now.

[00:09:54]>> How long's that been lumped in together?

[00:09:57]>> Uh, like a month.

[00:09:59]>> How's it How's it feeling?

[00:10:01]>> Oh, it's honestly we for a number of years have essentially just been paid into our own accounts and then transferred everything to joint accounts.

[00:10:10]Just making it easier.

[00:10:11]>> Um, so yeah, just timing made it better.

[00:10:14]>> Sweet. Um, next foundation. cashed up and debt free. Do you have any consumer debt other than any car finance?

[00:10:22]>> No.

[00:10:23]>> U and I trust there's no help debt because no university.

[00:10:28]>> No. So myself and my husband has officially wiped his that he had.

[00:10:34]>> Yeah. So did he have like um Okay, we'll get back to that. So what debt was wiped?

[00:10:41]>> Oh, he um sorry, he's paid that off fully. Yeah. Um, so he had a small trade loan.

[00:10:47]>> Yeah. Through help, >> I think. So >> they usually put them through them.

[00:10:53]>> Yeah.

[00:10:53]>> Yeah. So it was a small trade loan from when he was an apprentice. Um, and that has Yeah. finally cleared.

[00:11:00]>> Yeah. That's awesome. Very exciting.

[00:11:01]>> So talk to us about cash in bank accounts. What have we got?

[00:11:05]>> Uh, so in pure savings accounts, I would say we have about $30,000.

[00:11:10]>> Yep. Uh that's all in offset accounts offsetting our mortgage.

[00:11:14]>> Yeah. Great. Um now part of that 30k is there any that's flagged as emergency funds?

[00:11:25]>> Yes. Um not a specific amount at the moment. Um how I personally just like it is it's all in offsets at the moment but we pay an extra amount on our mortgage each week. And so that will just sit in the red with redraw account.

[00:11:41]>> Yeah.

[00:11:41]>> I personally view our redraw as our emergency fund because I do not want to touch that unless absolutely necessary.

[00:11:48]>> Yeah.

[00:11:48]>> Um so because we've only just refinanced that is a bit lower than I would like it at the moment. We've got extra cash elsewhere, but that'll naturally build up >> hopefully quite quickly. And following on from that, how much do you think is left over um that you both can legitimately save each month or week or Fortnite?

[00:12:12]>> Um at the moment from the budget that I've just done, I think we have approximately like 800 to a,000 left over after all bills, even extra repayments. Um that should be left over each week.

[00:12:27]>> Yeah. Okay. So 800 a week. Yeah.

[00:12:29]>> And what is the um the extra payments that you're paying as the emergency fund redraw buffer? How much of >> do you think is a week going into that?

[00:12:40]>> So our monthly mortgage is $3500 roughly.

[00:12:46]>> Yep.

[00:12:47]>> And I have a set just $1,000 a week payment going straight onto that account.

[00:12:51]>> Okay. So >> roughly 500 a month give or take >> into the redraw. Yeah.

[00:12:58]>> Yeah. Okay. Um and then it was 800 a week and then the 500 a month extra payment. Is that what we're saying?

[00:13:08]>> Am I reading that right? Yeah. Yeah.

[00:13:10]Cool. Yep.

[00:13:11]>> Um okay. Kill care on the foundation three.

[00:13:22]Do you have income protection insurance, disability cover, any of that stuff?

[00:13:28]>> No, that is not something we've got to yet.

[00:13:30]>> Okay. So, yet there is an intention to square that away.

[00:13:35]>> I know it's something that we probably should look at. Um, it's probably bad to say, but it just hasn't been a priority for us at this current stage.

[00:13:45]>> Yeah.

[00:13:46]>> Would you drive around a $100,000 car uninsured?

[00:13:50]>> No.

[00:13:51]>> Okay. Well, you should because you want all areas of your life to have the same logic, but I'll leave that there. I want you to reach out to >> Sky Wealth. Um, reach out to Sky Wealth.

[00:14:03]Just get it sorted. Like, you both have whopping incomes. You're both young.

[00:14:07]It's going to be cheap and you've got the spare money to do that.

[00:14:12]>> So, and it'll be set up in a tax effective way, blah blah blah. U foundation 4, uh, Will's power of attorneys. Do you have them set up?

[00:14:22]>> We really need to do that. That has been on my to-do list ever since we bought our house. And yeah.

[00:14:29]>> Um on the house.

[00:14:31]>> Mhm.

[00:14:32]>> Talk to us about um how long ago you bought it and the purchase price.

[00:14:39]>> Yep. So, we bought our house in August 2023 for 650,000.

[00:14:45]>> Yep.

[00:14:47]And what do you reckon it's worth today?

[00:14:50]>> Uh, with the revaluation or like the >> with the refinance, I think that's the word I'm looking for.

[00:14:57]>> Yeah. Yeah.

[00:14:58]>> Um, the broker did like an online valuation. It came back at just over 950.

[00:15:05]>> Yeah. Cool. And what's the mortgage on that in total now?

[00:15:11]Uh, so we currently have 585,000 owing on the mortgage. Um, we did get in with a lower deposit, but I'm glad we got in when we did.

[00:15:23]>> Oh, totally. It's always um worth it if you can make it happen. I'm just doing one sec.

[00:15:31]Yeah. So, the LVR is healthy at like 60% because of that >> um that growth in property. And tell me about the type of house. Is it an apartment, townhouse, freehold with the land and backyard?

[00:15:45]>> Freehold with the land and backyard. So we are in Brisbane. Uh we have a 800 square meter block.

[00:15:52]>> Nice.

[00:15:52]>> Um old like it's not a brand new house by any stretch of the imagination. Um just a little three bed, one bath, but >> yeah, definitely the land value is what we really saw in it. How um like is it your intention to stay there for the next 5 to seven years?

[00:16:14]>> We're really undecided >> on that in all honesty. Um it's really a toss up for us over the next few years on if we stay in this particular house, do sub some substantial rens to make it a true family home or whether we just utilize the fact that it has gone up in value. um >> roll it over to the next house.

[00:16:38]>> Roll it over to a next house. Um cuz we also don't know whether we want to stay where we are or move a little bit closer to families and stuff when children come along. So, we're just kind of playing it by ear at this stage.

[00:16:49]>> How far is family from you?

[00:16:52]>> Um 1 to two hours. So, not drastically far.

[00:16:58]Um but just not near us. So, just depends on what kind of support we really need.

[00:17:04]>> Yeah. But there's nothing in your mind about we're keeping this as an investment property in the future. And then >> it's probably not the best for an investment property just given the size of the land and there is some established gardens. Um it really would take a specific kind of person to want to maintain all that cuz even we do find it quite a lot to maintain.

[00:17:27]>> Yeah. Yeah. Yeah. Um so there's 585 of debt on it. Yeah. And look, it you've got 600, sorry, 365,000 of equity in there. Um, you really, you know, leaving that as an investment property and buying a house to live in, you probably wouldn't want that much non-deductible debt hanging over with that amount of equity in it.

[00:17:48]So, and and the reason I suggested that is because if if there was plans to turn it into an investment property one day, well, you certainly don't want to be paying into the redraw.

[00:18:02]>> Yeah.

[00:18:03]>> You'd want to keep all your money in offset. So, if you did move out, then >> you can just take all the cash and then most of all of that debt is now non-deductible.

[00:18:14]>> Yeah.

[00:18:14]>> Cool, cool, cool. Let's talk about your superanuation. This segment is brought to you by Australian Retirement Trust.

[00:18:21]If you want to see how your super fund stacks up for your age, just head to art.com.au and search how much super should I have. I'll pop a link in the show notes so you can check your own balances.

[00:18:34]All right, mayor. How much is in your super?

[00:18:38]>> I have just tipped over the 100,000.

[00:18:42]>> Congratulations.

[00:18:43]>> Very exciting. And who is your super with?

[00:18:47]>> Australian Retirement Trust.

[00:18:48]>> How funny. What a coincidence. Um, and it legitimately was a coincidence, everyone. Um, and Liam Super, how much and who's that with?

[00:18:59]>> Um, I believe he has just over 90,000 in his super and it's actually also with Australian Retirement Trust.

[00:19:06]>> Love it. Now, what investment options are you both in?

[00:19:11]I think like the higher growth I actually haven't looked at that too closely in the last few months.

[00:19:18]>> No, no, that's fine. Um, so based on um you being 29 to have a comfortable retirement, quote unquote, you'd really want your super balance to be $70,000 right now. So you're ahead of that metric.

[00:19:38]And for Liam, trying to think what was the fake name we made up for Liam. For Liam, um, pretty much the same, you know, 70 grand. So, you're both on track in terms of comfortable retirement, um, as per the ASA guidelines. And then the average super by age, uh, 25 to 29y old, the average balance for a woman, guess what? Do you reckon average balance for a >> I know it's a bit lower. I can't remember.

[00:20:10]>> Well, it's $23,000.

[00:20:13]25 years to 29 years old. So, >> but you were working full-time at 18, right? So, >> you've been contributing non-stop.

[00:20:23]Um, and then for men, uh, 30 to 34 years old, it's about 53,000. So, you're both healthy on the super front. So, everyone jump on to the art website and uh just see how your super stacks up. That's art.com.au and just search how much super should I have.

[00:20:42]>> Okay. So, talk to us about the current cars.

[00:20:47]>> So, I have a 2023 Hyundai Tucson.

[00:20:53]>> Um, bit of a backstory on that one.

[00:20:55]>> Say what? You need a new car with a three-year-old car. Okay.

[00:20:58]>> Not for me. Not for me.

[00:21:00]>> Oh, the truth comes out. Um, it's for, yeah, for my husband. Um, so yeah, I was in a situation a couple years ago where I had a job where I got a company car and I had 4 weeks to buy a car cuz I was going to a job with a car allowance. Um, so yeah, not the best like financial idea, but basically had to go buy a car with 4 weeks and not really much of a deposit. Um, and but I did go in with it the intention of this is a car that I want to have for a good five to 10 years. Um, and because I do work out of my car, um, yeah, I wasn't too stingy with it.

[00:21:39]>> U, so that currently has, I believe, just over $30,000 remaining on the loan at the moment.

[00:21:48]>> Yep.

[00:21:49]>> Um, >> so that's the um, Tucson.

[00:21:52]>> Yes. 2023 Tucson owing 30 grand.

[00:21:57]>> Yep.

[00:21:57]>> Yeah. Um and then we also have a 2015 Toyota Hilux. Uh we own that one outright. Um so this is the one that we are potentially wanting to upgrade.

[00:22:09]>> Yeah. Cool. And what's that worth, do you think?

[00:22:12]>> Um we think it's worth somewhere between 20 to 27.

[00:22:18]>> Yeah. Um, yeah, there's a little bit of panel damage, so like not drastic. It's only one or two panels. Um, but it just kind of depends on what people are.

[00:22:28]>> So, the 11year-old car, how how long have uh have you owned it?

[00:22:37]>> We have had that for I want to say maybe six years. Yeah, >> we've had it owned outright since either 2022 or 2023. It was before we bought our house.

[00:22:53]>> Yeah. Okay.

[00:22:54]>> I'm not too sure on the timing there.

[00:22:56]>> And when you purchased the Hilux, was it uh financed?

[00:23:02]Like, was it all financed or some of it?

[00:23:04]>> No. So, we did trade in a uh I think we I don't even know what year model it would have been. It was a two wheel drive uh Ford Ranger.

[00:23:14]>> Yeah.

[00:23:14]>> Um so we traded that in. I can't remember exactly what we got for it.

[00:23:19]>> I think we bought the Hilux for just over 30,000.

[00:23:24]>> Yep.

[00:23:24]>> Um not including the trade in or including the trade in value, sorry. So the loan wasn't for 30. Um >> yeah, exactly how much.

[00:23:33]>> Um okay, cool. We'll talk more about the current plans with the car shortly. Uh any boats, bikes, caravans, any of that stuff?

[00:23:43]>> Yeah, we have a little runabout boat um that's owned outright. To be honest, it's not getting too much use at the moment, so it's not really costing us any money.

[00:23:51]>> Um >> what do you reckon that's worth?

[00:23:55]>> Maybe 5 to 7K. Um >> what is it? Like a little Quintrex or something?

[00:24:02]>> Yeah. Yeah. Like a 4.5 or 5.5 m Quintrex like >> 40 horsepower. I don't really know.

[00:24:09]Yeah. Little sewing machine on the back.

[00:24:11]Love it.

[00:24:11]>> Yeah. A little little something gets us around the bay. It's fun.

[00:24:14]>> Love it. Love it. Um any expensive hobbies?

[00:24:19]>> No, we're a little bit boring at the moment.

[00:24:22]>> And any other um investing or investment properties?

[00:24:26]>> Uh no investment properties at the moment. Um I do have about $1,000 in a Sherzy's account that I've just started about 6 months ago. Um, just putting like $50 a week in there at the moment just to slowly build that up a bit.

[00:24:40]>> Yeah. Sweet. Um, so based anything else that I may have missed on your current financial situation.

[00:24:50]>> On paper, no. Um, I think that pretty well covers everything. The only other thing I would say is that I know our savings could be more based on our incomes. Uh, but we have in the past three years bought a house on our own, paid for our own wedding, and gone on a European honeymoon. So, >> I I think it's I think it's fine. I mean, you guys are so young. You're in a house. There's meat in the house. You both got good supers. You don't have any consumer debt. I mean, if you just kept out of consumer debt and didn't do anything else, you'd be fine type thing. It's just not about optimizing. So yeah, I'm the the building isn't on fire by any means. Um, so we should should we upgrade the car?

[00:25:39]I'll let you know what Glenn will do right after this. If you're after personal financial advice, don't get it from a podcast. But if you want guidance tailored to your situation, head to moneypodcast.com.au and click get help. We'll connect you with one of our trusted professionals, financial advisers and mortgage brokers who work with people right across Australia. No matter where you are, they can help. Now, before we get back to the show, a quick reminder to protect your financial life. That means having income protection sorted. It means having death cover if there's any debt or dependent relying on you. It means getting your personal insurance in order. Most people insure their car. They insure their house. But what about themselves? Sky Wealth, who support this podcast, are specialist financial advisers who can help you get the right cover in place.

[00:26:26]Their advice is often more comprehensive and better value than going direct through your super. Book a complimentary 15-minute chat at sky.com.au.

[00:26:35]That's skye.com.au and they'll point you in the right direction.

[00:26:44]Okay. talk to me um about the upgraded upgrading the Toyota.

[00:26:54]>> Yeah. So, at the moment, cuz he's just got the new job where he has just gone from having a company car to now having a car allowance. Um I personally feel like it's a good time to take the advantage and upgrade the car. uh just while we can get I guess tax benefits and things like that from that. The car is also 10 years old. It's starting to need a bit of work. So yeah, we're definitely >> I mean I've got I'm driving around in a 2014 Ranger which is still fine. So there's that. Um the only thing I would So >> just on that, how many kilometers on the Hilux?

[00:27:38]280,000.

[00:27:41]>> Is it diesel?

[00:27:42]>> Yes.

[00:27:44]>> Um, on your So, so what I'm hearing is before this new job, you had three cars.

[00:27:51]Your car, the company car, and the Hilux.

[00:27:53]>> Yeah.

[00:27:54]>> And the Hilux tows the boat when needed.

[00:27:57]>> Yeah. So, the Hilux has definitely been our like adventure car. Like we go uh four-wheel driving, beaches, tow the boat, all that sort of thing. So it >> now it will definitely be a work vehicle that he uses daytoday cuz he yeah is essentially a tradesman so all over the place. Um as well as something that we do use rec recreationally quite a lot.

[00:28:20]>> So his car allowance at the moment it's just extra pay right >> essentially. Yeah.

[00:28:25]>> Yeah. Um so that's the whole thing. It's like you could not spend money on a new car and just keep the after tax dollars and it's all good. Like this is and we're allowed to say it.

[00:28:41]>> Yeah.

[00:28:42]>> You want a new car >> pretty much. Yeah.

[00:28:45]>> Yeah. Okay. So, and you're allowed to have wants. I just I I just don't love the emotional justification and hoops of oh, we've got a car allowance cuz we've just agreed that you both your car allowances there's just extra money but you got to fund your own car.

[00:29:00]>> I'm just like well what about we just keep as much money as that for us and not put towards a car. So there's that, right?

[00:29:07]>> Yeah. So, what I'm probably doing is I I'm not doing anything until you've got your foundation sorted. So, you need to factor in your income insuranceances, potentially a little bit of trauma insurance into your budget and cash flow. Do you have health insurance? I forgot to ask.

[00:29:32]>> Yes, we both got private health insurance. So, I need you to factor in the income insuranceances into your life, right? Pay them with your own money, claim them on tax. You know, it's it's not expensive. So, cuz we need to Everything we do in our financial life is based off the income that walks in the door each month. I mean, if what if one of your incomes stopped tomorrow, what would you do?

[00:29:56]>> That is a good question.

[00:29:58]>> Yeah. So, we know one thing. as we we're not working because we love our job and we just want to give back and then just take some money as well. So, we're a commercial entity here. So, >> yeah, >> we need to fund that. You need to get your wills and estate plan sorted. I'm probably, if it was me, working out exactly how much you need as your emergency fund of 3 months of expenses. Do you have an amount target?

[00:30:28]Yes.

[00:30:29]>> What is that?

[00:30:32]>> I would probably say about the 30,000 to cover bas like our basic needs.

[00:30:39]>> Yeah. Do you have any other short-term things that you're saving for in your life?

[00:30:46]>> Not right now.

[00:30:48]>> Yeah.

[00:30:48]>> Um our biggest thing was our Europe trip that we did last year.

[00:30:52]>> Where'd you go?

[00:30:53]Uh, we did three and a half weeks through London, Paris, Amsterdam, Croatia, Sale, Sarrento, and Rome.

[00:31:04]>> Love it. What month did you do that?

[00:31:06]>> In August.

[00:31:07]>> I was there in September. We could have been in Europe at the same time. And so, how much do you reckon that cost you >> in total? 50.

[00:31:16]>> Um, I don't think 50.

[00:31:19]>> I've got no idea.

[00:31:20]>> I think we got Honestly, I wasn't the best at budgeting and counting that by the end of it. It was just such a We were meant to go in 2020. Um, so by the time we got to go, I was like, you know what, if we've got the money, >> so be it. But it was probably cost about Yeah. Yeah, it was definitely not debt.

[00:31:39]Um, so about 30 to 35 >> in total.

[00:31:43]>> So there's no other So we've paid for a wedding. We've got the home that we're probably going to be in for the next 3 years, would you say? four maybe like there's there's no immediate plans to move the house.

[00:31:56]>> Um you didn't use debt for the and I'm just I I guess I'm speaking to financial habits and behaviors here. This is why I'm just wondering all this stuff. I'm probably um committing that 30k that you've got now to emergency fund.

[00:32:17]>> Yeah. Now, in your world, that's redraw.

[00:32:21]So, if you want to do that, that's fine.

[00:32:23]I don't personally love redraw for emergency funds because not that it's a big deal everyone, and it's probably a bug, not a feature, but during co when things were getting rough, there were some banks and lenders who turned off redraw. So, if you had 30 grand in advance, the terms and conditions are it's not your money, it's theirs. they reset that and squared it off to fix their balance sheets.

[00:32:52]There is probably something deep in financial documents of banks that they can do the same with the offset account. I don't know. But as a tinfoil hat, I don't love redraw for emergency funds cuz it's not your money. So, but I don't I'm not losing sleep over it if you did it.

[00:33:11]Okay.

[00:33:12]>> Um particularly when you just add it.

[00:33:14]Who's the lender?

[00:33:16]>> McQuary.

[00:33:16]>> Yeah. So they will do multiple offset accounts, right?

[00:33:19]>> Yeah. So we have multiple now.

[00:33:20]>> Yeah. So >> So we've just refinanced from >> a lender who didn't offer any offsets.

[00:33:26]We only had a redraw and now we've got the redraw and offset accounts.

[00:33:30]>> Yeah. So I'm probably just doing an offset account, calling an emergency fund >> and getting on with your life. However, the psychology of it, if you know in your heart that once we commit it to the mortgage that we don't touch it, do that. All I'm saying is you've as at the moment, you've got no money free if we're using 30K to fund your real emergency fund.

[00:33:58]>> Yeah.

[00:33:58]>> Does that make sense?

[00:34:00]>> Yeah. Yeah. And that's fine because we've just had all these big expenses, new job, freaking Europe, um, wedding, all that stuff. Like within the next 18 months, we need to now get you ready if you do have a child to start to think, well, what's our income look like when you've got to punch a baby out? Is that the eloquent word?

[00:34:30]look at whatever works.

[00:34:31]>> Well, unless you get a surrogate, I don't know. Uh but usually most of the time when someone's about to have a baby, they go on maternity leave and may have 6 or 12 months off.

[00:34:42]>> Yeah. So, yeah, my current goal is to have my car completely paid off by the time that happens, if not before.

[00:34:51]>> Yeah. Um, and I guess my other thinking behind do we upgrade his now is I feel like it would be easier cash flow-wise to get the brunt of any repayments down now while we do have that dual income rather than say 2 years time if we do have a reduced income from having a child. I don't know. There's just all the >> Yeah, at the end of the day it's got to be paid for whether you bring that forward now or save cash and then buy one later. like it's I I think I'm probably and I'm not being rude, but you're you've said you've got a spending plan and budget. I don't think it's as tight as what it is in your head like in reality. Is that a fair statement?

[00:35:33]>> Look, probably.

[00:35:34]>> Yeah. And hey, I get it. I love spending money and I love all that. Um, so you probably don't really have a good spending plan, but it doesn't matter if you're keeping out of consumer debt, >> right? So, it's just about optimizing.

[00:35:50]>> So, I'm in your, if I'm in your situation, I'm really, and you can download the Glen James spending plan, bring that spreadsheet up, put all the figures in there, and just see right now today what the actual amount is that is left over and not spoken for.

[00:36:06]So, then we know. So on the car we there's there's two kind of things that we need to look at with car purchases. One is the actual capital amount and two is the actual funding mechanism.

[00:36:21]So how do we pay for it and how much car do we buy?

[00:36:25]>> Yeah.

[00:36:26]>> So based on my bush maths your total household income and I'm not going to include the bonuses, right?

[00:36:35]>> Yeah. 102ish for you and I'll just do 110 for Liam. Just bush maths, right? So that is 200 grand a year household income.

[00:36:50]I don't want anyone to have as as an absolute maximum more than half of that.

[00:36:56]So we'll just call it 100k as a very maximum in stuff that's going down in value.

[00:37:03]So cars, caravans, motorbikes, boats, all that stuff. So that's number one. So if we have a look at your current setup, you've got a car worth, so the high will just call it 20 grand cuz nothing's ever what we think it is when we go to sell it. It's worth 20 grand. Your car, call it 30 grand. So at the moment we've got 50 grand plus a boat, call it 60 grand in stuff that's going down in value, right? So >> that's fine.

[00:37:33]So, what's so in a perfect world, if tomorrow we woke up and like we're getting we're replacing the Hilux, what type of car and what type of price?

[00:37:46]>> It's a toss between a new like a newer model Hilux um or a Ford Ranger just to keep that four-wheel drive capacity.

[00:37:54]>> Yeah. So, I've been looking at new Rangers myself.

[00:37:58]you know, you're probably going to get it's going to be 75 80 grand.

[00:38:03]>> Yes. The issue.

[00:38:04]>> Yeah.

[00:38:05]>> So, based on that, if you drop 80 grand on a car tomorrow plus your 30 grand car, you're over that 100k.

[00:38:17]>> Yeah.

[00:38:18]>> In my world, like I'm just not doing that.

[00:38:22]So, and that's brand new. We don't have to buy it brand new, right? And probably let's call it even 60. So even if you did 60k secondhand, right? We know that you've got a track record of Oh, and actually just a sidebar, would you ever, if you're thinking about this, do we live in a reality where you just get the Everest or you worry about family car later?

[00:38:51]I the car that I have, I bought that with the intention of that being my family car when >> Okay, cool. Tucson because it's a big car. Yeah.

[00:38:58]>> Yeah. It's a midsize SUV. So, >> yeah, I bought that with the intention of having it for 5 10 years. So, thinking that would be at least my startup family car.

[00:39:07]>> Yeah.

[00:39:08]>> Um and then yeah, like given his job, a ute is what we are really looking for, not an SUV for him.

[00:39:17]>> And does he have to carry tools?

[00:39:19]>> Yeah. Yeah. Uh, so it is on the tools sometimes.

[00:39:23]>> Yeah. Yeah.

[00:39:24]>> Yeah. Okay. Um, so it is pretty much a work a work car.

[00:39:32]>> Absolutely. Both of our cars are genuinely 90% for work use.

[00:39:38]>> Yeah.

[00:39:39]>> Um, which is where like the tax side of things does start to become a bit of a factor.

[00:39:46]>> Yeah. And I >> So your car that is yours a car loan or a like a noated lease package?

[00:39:56]>> Mine is a car loan.

[00:39:57]>> Yeah.

[00:39:57]>> Yeah. Cuz I wanted to completely have it myself afterwards.

[00:40:01]>> Yeah. Well, the thing with the novated lease, it's by definition no, it's like connected to you. So if you did leave, you're left with the debt and the car, >> right?

[00:40:10]>> Does that make sense?

[00:40:12]>> Yeah. I just wanted to Yeah.

[00:40:15]>> No. Yeah. I didn't really understand how they worked at the time.

[00:40:17]>> No, no, no, no. That's fine. How many kilometers are you doing a week?

[00:40:23]>> Um, it depends. I do some weeks where I'm in and around close to where I live and then I do some weeks where I do drive 4 hours and >> per day that no um 4 hours up to that area, stay around that area. And at the moment, the car is 2 and a half years old and has just over 60,000 KS on it.

[00:40:44]>> Yeah. Okay. Okay. So, you're doing 30 plus a year.

[00:40:47]>> Yeah.

[00:40:48]>> Would you ever like I'm just thinking off the cuff here.

[00:40:55]What have you ever thought about an EV for you?

[00:41:02]>> Uh, yes. When I bought it, I was looking at hybrids, but because I had such a short time frame and I wanted to buy a car where the repayments were 100% going to be covered by my car allowance at the time. So, >> in my head, going back to psychology side of it, it was coming out of my car allowance, not my base salary.

[00:41:24]>> Um, so that didn't happen. And since then, I've had some experiences with higher cars that are EVs, and I'm just a little bit nervous.

[00:41:32]>> Yeah.

[00:41:34]Yes, but no.

[00:41:35]>> Yeah. The only reason I say that is >> at the moment with the um incentives like if you got an EV 100% EV through work as a lease, >> you literally it's the zero rate FBT, >> right? So, in terms of tax, but I'm not opposed to car leases when the numbers stack up. Like, if you go to an accountant and say, "This is Liam's salary. This is how many KS he does per year. Can you please crunch a car purchase with a novated lease over the four to five years? I don't love five, but I think it has to be five years for some of these leases." and just crunch it in a way to actually show the after tax benefit if he's doing a lot of KS because when I was commuting with a novated lease and salary packaging it I paid someone to do the numbers and it actually worked out cheaper for me to do it that way >> because it's pre-tax >> but I'm I'm probably more inclined not to do anything until the car's dead And it's time.

[00:42:53]That's probably what I And the only reason I say that is I've got my 2014 Ranger and sure it's only got 190ks on it, but I'm in this kind of dance right where I would like a newer car to drive around in. Like I was sick of having two cars because I used to have the Lexus then the Volvo as my runaround car and the Ranger for the um boat and just cruising around in life.

[00:43:27]>> Yeah.

[00:43:28]>> But then um I just overnight I was just snapped and I was like I'm sick of having two cars.

[00:43:33]>> So now I've got the Ranger and it's an older Ranger but the thing is it's not worth anything. It's probably only worth like 20 grand, right?

[00:43:44]I I know the price of new ranges because I have been looking and >> Yes.

[00:43:51]>> Yeah. And I'm at the stage where I'm I'll buy brand new and because you know that's what I'll do. But I'm just thinking every day that I drive my Ranger I save $80,000.

[00:44:08]>> This is true.

[00:44:10]today like and then it's just had its yearly service. So, it was $700 for the service.

[00:44:16]A belt tensioner and pulley needed replacing.

[00:44:20]Took it back today and they replaced that. That was $700. The air con has been a bit dicky when it really gets hot. There's like anyway, I took it to auto electrician last week. the like the fan clutch is rooted and also we think the um intercooler thing at the front is clogged.

[00:44:43]Probably the compressor it's running too much pressure. All that all that to say this week I'm spending another two grand on the aircon. Spent the 700 today. You can't say the $700 service because you got to pay service for every car. But I'm thinking far out just spent three grand on this car worth 20 grand. What am I doing emotionally? I just want to get rid of it and start again.

[00:45:10]>> But I'm like, well, at the end of the day, I haven't really spent anything on it other than service costs. Like, it's been pretty good.

[00:45:18]>> I'm at the point in life where I'm probably happy just to keep it for another year. And then if something goes bang, then pull that decision forward.

[00:45:30]>> Yeah.

[00:45:31]>> So there's nothing wrong with the car.

[00:45:33]Is it him that wants a new one or you more or both?

[00:45:37]>> I think it's a bit of both. My thinking is more just like Yeah. do it now while we have a bit more discretionary income.

[00:45:48]>> But you can save that income >> soon. But we could save it >> and just when the time comes plunk. Yes, but also it is getting to the point where we need to do the timing belt.

[00:46:00]We've just done the brakes that was a couple thousand. Um >> because he's now actually using it for work.

[00:46:07]>> Yeah.

[00:46:08]>> It needs a bit more >> like a proper toolbox put on it, not just the dodgy one that we've got.

[00:46:14]>> Yeah. Um, so we're due to spend a good thousand dollars, but at the same time a couple thousand instead of 50 odd thousand post trade in is a lot different. So it's just really tossing >> all of that up.

[00:46:32]>> All right. So what we want to work out is just some rules of thumb and guide.

[00:46:39]So, what I like to say is if someone wants to buy a car, I'd want to keep the monthly payment around 1% of the net income. So the after tax income uh for his salary could be around 100 grand a year once we add on the car allowance, fuel, super and all that. Actually, hang on one sec. So his base income, so just as it stands at the moment, say 118 grand base, 16k car allowance gets to about 134. If we run that through the um tax scales, there's about $33,000 in tax, right?

[00:47:32]>> Yeah.

[00:47:32]>> So it ends up being a a per year after tax income of $100,000. So, what I like to say with car payments is we don't want that payment more than $1,000 per month.

[00:47:47]>> Yeah.

[00:47:48]>> Okay. For the actual car payment. Forget running costs, fuel, and all that. So, then we need to have a look at what's the purchase price of the car.

[00:48:00]So, we know that the ranger would be maybe 75 grand less the 20,000 cuz I think it's important to put some deposit into that so we're not financing the whole thing >> just based on the numbers over a fiveyear term and I think four years is better but if you package it up that I think there is something in the legislation that five years is actually better for an overhead lease for whatever reason.

[00:48:32]The monthly repayments, and I've just put this into a loan repayment calculator, 55 grand plus the 20 grand equals our $75,000 car, right?

[00:48:43]6% interest, principal and interest over 5 years. The monthly repayment is,64.

[00:48:50]So based on my methodology, you do not want to be taking a car loan for him worth more than 55,000.

[00:48:59]>> Yeah.

[00:49:00]>> Because you really capped out. Weirdly as well, the 16 grand car allowance for Liam is like, 1300, I think. 16 divided by 12.

[00:49:15]Yeah, 1333.

[00:49:17]So, if there was $1,000 in repayments, can we run it for $300 a month in terms of fuel? Um, >> fuel would be covered by the fuel card.

[00:49:32]>> Oh, that's right. It's got the fuel card. Okay. So, the question is $300 a month, $300 time 12, that's $3,600.

[00:49:41]Can we pay for registration and insurance for $3,600? We can pay for registration, call it $1,000, $2,600 a year for maintenance. Like, you're right on the line.

[00:49:54]>> Yeah.

[00:49:55]>> So, I'm not opposed to it. I would just really try and put money into it if possible.

[00:50:02]>> Yeah.

[00:50:04]>> Try and, you know, see one of these no lease companies. The problem is they get your they get their claws into you and the next minute you upgrading. Oh, you can get this for more.

[00:50:16]If anything, because that car allowance, I would I would just pay a tax accountant to crunch the numbers.

[00:50:24]>> I wouldn't use online novated lease calculator. I'd literally go >> to an accountant, tax accountant, and say, "This is my income. This is Liam's income for the year.

[00:50:34]>> We want to get a novated lease for the purchase price of uh 55 of 75, but we're going to put 20 into it.

[00:50:44]Get them to give you the numbers. Also, get them to give you the numbers of if it does work and not put any money into it. I don't love that idea cuz I I like the psychology of it of having the car worth what you owe on it at all times and by putting that 20 into it.

[00:51:01]>> That's kind of, you know, prepaying your depreciation.

[00:51:05]>> Yeah.

[00:51:05]>> Um, so yeah, like you both legitimately live in your cars.

[00:51:10]>> Yeah. you just some people fall into the trap where they get given a car allowance. You don't have to spend it all on a car.

[00:51:19]>> Yeah.

[00:51:20]>> And I mean diesel prices at the moment are going savage or for him if work's paying for it. Awesome.

[00:51:26]>> Best time we could have got that fuel card.

[00:51:28]>> Totally. Um we are recording this in March. It's not going up for a couple of maybe six weeks. Um so hey, if you're listening to this and the world's still happening, awesome. If you're listening to this and the world's ended, well, hope you enjoy hell. Um, >> y >> but anyway, I don't I don't know. Um, if it was me, what I would do is just keep saving, using the offsets, doing all that. When the time comes, maybe piss it off. But if you just want one for the hell of it, well, I'm really making sure the monthly repayments are well under $1,000.

[00:52:08]>> Yeah. Um cuz you own it outright, right?

[00:52:11]So >> yeah, so that one we definitely own outright. Um it's literally just costing us and has for like 4 years only insurance and registration.

[00:52:22]>> Mhm.

[00:52:22]>> Yeah.

[00:52:23]>> So it's been the cheapest thing to have.

[00:52:26]It's just now that he will be using it, >> it's going to start costing us more.

[00:52:32]>> Yeah. Um, >> I mean the only other thing in these situations, I don't know how big the company is, is there the option, it's like, hey, do you guys ever provide vans and not pay me a car allowance?

[00:52:43]>> The current company, I don't think that's an option. I think they've gone the car allowance route.

[00:52:48]>> Yeah, because they get a better deal out of that.

[00:52:51]>> It's expensive. Because I I really think yours is more real world 24 grand a year car allowance >> but I pay for my own fuel which >> Yeah. Which at the moment 10 grand is hurting.

[00:53:05]>> Yeah. And I mean I >> I quite similar.

[00:53:08]>> Yeah. I reckon a car allowance a car for an employee is probably worth 15 to 20 grand a year I think.

[00:53:16]>> So it's probably about right. Um I don't know. I'm just not in the weeds enough to understanding and knowing leases and all that. And that's why I just always tell people just go and crunch the numbers. Um >> yeah, >> I think it's just knowing what we would be able to if it were newer, there'd be more that we could claim on depreciation of the car come tax time, whereas now it's pretty much only the kilometers because the car is so old. Not that that's a massive factor when it comes to spending 70 odd grand on a >> I never ever spend money based on the tax >> because you've still got to outlay the capital.

[00:53:56]>> Yeah.

[00:53:57]>> Um >> Yeah.

[00:53:59]>> But um look, you're in relatively good shape. So that's that's what I I would prolong it as much as possible, but you guys need to know do the numbers. Punch that $1,000 getting spent a month or that whole car allowance.

[00:54:17]Punch that into your budget with your income not there or haveved when you take time off for leave.

[00:54:25]>> Yeah.

[00:54:25]>> And just make sure that while you're away from the work full-time, you still can live and it's not >> Yeah.

[00:54:33]>> tight.

[00:54:35]So anyway, bit of a don't know episode from me and maybe sell the boat.

[00:54:42]>> Yeah. Yeah. Um and that's why I think I've resolved when for my own life with my own car, you just keep going around in circles, right? I'm like, I don't actually have to do anything. Everything's fine now.

[00:54:56]>> Yeah.

[00:54:57]>> When the thing shats itself, I'll piss it off.

[00:55:01]That's what I've resolved. Now, sure, I do run the risk these older ranges, maybe around 200k, the engines go bang, and if that happens, I'm not spending 8 grand on a new engine. I'll scrap the car and start again. So, that's a risk I'm taking.

[00:55:19]Like, I'm just not spending 8 to 10 grand on a car worth that, I think. So, I'm just pushing that decision down the road in my life.

[00:55:29]>> All right, let me know in the comments, everyone. what would you do in this situation? It's um and the reason I want to have you on is cuz it's just a really good kind of thought exercise cuz we all need cars, particularly when you use them for work.

[00:55:46]Um but it's just a matter of we still got to pay for it. And the longer that you don't have a car loan, the more that you're saving.

[00:55:54]>> Yeah. We want to start paying off a car now. Well, maybe you put that $1,000 a month in a separate offset account and go, >> "Yeah, >> this is the car offset account. We're just every cent." Because if you turn around tomorrow and get that car, well, there's going to be $250 a week out of your cash flow.

[00:56:14]>> So, enjoy the car. I say hope you like the car. Um, and get rid of the boat if you don't use it anymore.

[00:56:22]>> Or do you use it?

[00:56:25]It's a bit of a >> It's there for family use as well at this point. So, not my decision.

[00:56:32]>> Sweet.

[00:56:33]>> But again, it's not costing us anything.

[00:56:34]So, >> yeah. Enjoy it. All right. Well, let me know in the comments, everyone. What would you do in this situation? I generally don't know what they should do. I know what I would do. I've made it clear. Um, yeah, we read all the YouTube comments. Thank you so much, Mayor, for jumping on for a What would Glenn do.

[00:56:53]Thank you.

[00:56:54]>> Bye.

[00:56:57]>> Any advice is general financial advice only which does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs before acting on the information. If you do choose to buy a financial product, read the product disclosure statement, PDS, and target market determination, TMD, and obtain appropriate financial advice tailored to your needs. Simo Interactive, PTY LTD, the publisher of this podcast, and Glenn James are authorized representatives of Money Sherper, PTY LTD, which holds Financial Services License 451289.

[00:57:33]Opinions or comments from any guest on the podcast are theirs and not those of the hosts or the publisher or their respective license holders.