Clearances, Stocktake sales, as far as the eye can see! This Boxing day, shoppers across the nation appeared unaffected by the gloom of the global financial crisis.

NSW Premier Nathan Rees seems to be feeling more generous in the lead-up to Christmas than he was a few months ago, when he delivered the state mini-budget.

In announcing a reduction for developer contributions in NSW, the Rees government has made communities, not developers, the losers this Christmas.

1. They save regularly.

Wealth is not built by accident and contrary to popular belief wealth is not inherited. 80% of the wealthy are first generation and they built their wealth one step at a time. One of the key habits wealthy people possess is a systematic disciplined savings plan. The best way for anyone to develop this habit is to start an automatic monthly savings plan where money comes off your paycheck or out of your bank account before any other expenses or deductions.

2. They live below their means.

According to the book the Millionaire Next Door by Thomas Stanley and William Danko, you may be surprised at what a wealthy person looks like. According to their research, the typical wealthy person might not be the one that drives the nice new Mercedes, living in the biggest house, wearing the top designer clothes. Rather, the millionaire next door is the person living in the same bungalow they have lived in for the past 20 years, they may drive a nice car but it is an older well taken care of car with lower mileage.

3. They know where their money is going.

Most wealthy people not only live below their means but they also are very conscious of where they spend their money. In fact, studies suggest that about two thirds of wealthy people know exactly where they are spending their money. If you want to become wealthy, you should develop a habit of tracking where you are spending your money on a monthly basis. Budgeting can be a very intimidating word but the fact remains, it is an essential habit for wealth accumulation.

4. They avoid non deductible debt.

Wealthy Australians make a very conscious effort to avoid, minimize and pay off debts. It is so easy in our society to access debt. Every week, I get mail offering lines of credit, credit cards and access to other forms of debt. “No Money down”, “Don’t pay till 2009”, “interest free” are all common ploys to get you to spend money you don’t have. It is so enticing but, one of the habits you’ll need to build wealth is to avoid spending money you don’t have.

5. They maximize income.

There is a correlation between wealth and income. The more money people make the more likely they are to build wealth faster. While this makes intuitive sense, it may not always be easy to just go out and increase your income. That being said, it is an important habit to building wealth. Take time to train your mind to think outside the box about ways you might be able to increase your earning power. This might mean getting more education or starting a business or getting a part time job, etc. No one said building wealth did not take some effort.

6. They own appreciating assets.

The majority of wealthy people own their own home. Owning your personal residence develops some productive wealth mindsets. Ownership gives you a better appreciation for the value of goods. In addition, most wealthy Australians have equity in other appreciating assets like business, stocks and real estate. The next time you put your money into something, ask yourself if it is an appreciating asset or a depreciating asset.

7. They get professional advice.

Wealthy people typically have a team of professionals to help them accumulate, manage and protect their wealth. This might include accountants, lawyers and financial advisors. Studies suggest that although they use professional advisors, they ultimately make the final decisions themselves. If you want to become wealthy, you must seek help but ultimately retain control over key decisions.

Passion is the birthplace of the best ideas, when you have passion for something you are motivated to make it work, you get out of bed every morning ready and willing to do what it takes to achieve your goals and you talk enthusiastically about your business to everyone you meet.

INTEREST RATES CUT AGAIN

The Reserve Bank of Australia (RBA) announced a full 1% rate cut on 2 December 2008. This brings the official interest rate to 4.25, down 3 percentage points from the high of 7.25 earlier this year. This is the lowest level seen since late 2001. The major lenders were quick to announce reductions to their standard variable rates, with CBA and NAB cutting by the full 1 percentage point, ANZ by 0.83 points and Westpac by 0.8. Although the international money markets are still tight, the retail and non-bank lenders have been keeping up with the rates set by the Big 4.

We have received a large number of enquiries from people who recently entered into fixed-rate mortgages and feel that they are missing out on the new lower rates. Unfortunately for some borrowers, fees and penalties for breaking a fixed-rate period can run into the thousands of dollars and outweigh the benefit of refinancing to a lower rate. If you are feeling trapped in a rate that appears high now, remember that it is possible for interest rates to move up just as quickly as they have come down. That said, one of our loan consultants would be happy to review your mortgage for you, free of charge and with no obligation. It costs nothing to ask!

CHANGES TO PRODUCT OFFERINGS

Credit policies have been tightened recently, particularly for borrowers seeking more than 60% LVR Lo Doc loans or No Deposit / 95% LVR full doc loans. These products are still available, just not through every lender, so if your bank says ‘no’, we may be able to help.

Recent rate cuts have brought about some great offers from our lender panel in both fixed and variable interest rate products. Of course, it’s not all about a low interest rate. We can assist you to factor in both the establishment fees and monthly fees when comparing mortgage products.

FINANCIAL PLANNING WITH RETIREINVEST

We are happy to introduce our alliance partner, RetireInvest. Not only for people approaching retirement age, RetireInvest can assist you with all aspects of your personal insurance, financial planning and investment needs. They can help you with wealth creation, superannuation and retirement planning, tax minimisation, lifestyle protection with insurance and more.

It is important to consider your personal and family insurance needs when you increase your debt obligations. Most of us assume that our superannuation will be adequate to pay out our debts if we die but in reality the cover may be a lot less. If you were sick or injured, how would you pay the bills? If you became disabled or died prematurely, could your family survive without selling the home?

RetireInvest can tailor insurance especially for your circumstances, and because of their personalised care we highly recommend them. An initial 1 hour consultation is free of charge, and any further work is quoted upfront so there’s no hidden costs.

Kellie, Karen and Ken are available on 07 5491 6722, or contact us and we will arrange for them to get in touch you.

If you have any questions, or would like us to undertake a loan comparison for you, please feel free to call 1300307771 any time. Of course there’s no obligation and our service to you is free.

Andrea Hookham

0412 753 166
Senior Loan Consultant
Leading Home Loans

The greed and stupidity of modern thieves knows no bounds… here are some common sense ways to outsmart them this holiday season.

Shopping online is becoming increasingly popular – especially as transport costs rise and retail store overheads soar.

Many people, however, are reluctant to dive into the online shopping adventure, as they worry about scams, fraud, and their rights as a consumer.

These tips can help you shop safely and enjoy your shopping experience.

We are waiting for news from our lenders on how they are going to pass on this latest interest rate cut.

What was Australia like during the Great Depression and are there any lessons for today.