Financial Gain Vs Lifestyle while helping family.

Hey Geoff,

Thanks for the feedback and I completely agree. What would be the best way to adjust the plan? We thought of running a seperate driveway up the right side of the house and making an entrance to the granny flat there and walling off access to the patio. But the expense of another driveway and culvert (approx $10k) made it a little out of reach.

 

One concern with the new house/land is that the $685K price you think it is going to cost will never be the real price that it is going to cost.

Is your builder selling you a product and telling you what you want to hear about it being suitable for what you want, and have you verified their claims. A true "granny flat" to be rented out and considered as a tax deduction must meet various council and fire safety criteria as per your other post with the floor plan. See your council's website for this criteria. What the builder is suggesting is what I call a multi-generational residence. As long as it is shared within family, it is not a "granny flat" or "separate dwelling".

You may find this arrangement much easier to deal with as far as your own tax returns and Mum's Centrelink payments are concerned. It keeps each household's finances separate.

 

I’m definitely interested in wealth creation. But don’t/didn’t have upfront cash for a car at the time. So negating tax loss was suggested to us over a personal loan. The previous car had cost us over $6k in repairs in 6 months (leaving us stranded in rural locations) and was going downhill fast, so to be fair we hadn’t planned out buying a new car.

If I had to buy a another car today and had no cash deposit, would you suggest another novated lease or a personal loan? (Given out situation with the house/granny flat etc).

 

Hey Angel,

This is really good advice thank you and I will check with the local council today. When you say “you may find this arrangement easier to deal with for our own tax returns and mums Centrelink” are you referring to the multi generational residence or a verified granny flat?

 

I would cut my spending down to the bone and have savings and so more options.

Wealth should be a long term plan. It should have started the day you first started working and continue until, and after, you die.

 

I actually meant charging Mum "board" instead of "rent", and not claiming any tax deductions. This wont matter if it is a legally rentable granny flat or whether she resides anywhere inside your home. Charging Mum rent that is obviously below market value will flag the ATO to investigate it and as was stated above, they will probably disallow your claim. My son who has a disability used to receive rent assistance when he lived with us as well as his DSPension. We did not have to declare his "board" as income.

Geoff's comments about airbnbing mum's home in the future will be about building what overnight and short term guests want vs building what long term tenants require and the laws associated with that situation.

 

But my question was. If I had no savings and needed a new car today. In your opinion which is better and why: a novated lease or a personal loan?

It’s and easy broad statement to say wealth planning should be a long term plan from the moment you start working to the day you die. And it is, but life gets in the way of plans. I’ll give you some examples from my own life:

-Grew Up Poor left home at 17 put myself through uni while renting and working 3 jobs.
-Cancer
-Having to sell property at a loss due to illness
-Relationship breakdown
-IVF
-Responsibility of helping out other poor family members.

All of these things are unexpected and the savings you thought you had can be easily and unexpectedly replaced with debt. Finance was not taught to me from my parents they had no knowledge, they just made ends meet. Good independent financial advice costs thousands (not something I had in my early 20’s which could’ve set me up for later in life) Now in my 30’s I have financial advice but that is primarily around super and insurances not this scenario. There will be no inheritance coming my way, so I definitely plan as much as I can, but it hasn’t been a bed of roses so far. Hence the trepidation.

So for my situation where there is no savings or time to save for a car would you recommend a novated lease or a personal loan?

 

Ahh I understand. Yes I hadn’t considered board or mums $100P/W for the granny flat being under market rent for the granny flat. I’m not sure what the market rent would be for the granny flat side of things. Definitely I think Air Bnb could work in the future, or even just helping out our own children as they move into the world. I don’t think it would be (as is) particularly appealing to investors looking for that “granny flat” or seperate unit option. I wish we could afford that, and I see the value in it but it would just make our repayments too high. I just don’t want to make a poor decision here that is going to cost us in the future.

 

I asked my husband (it’s in his name) and he didn’t know off the top of his head. But I’m going to look at the paperwork today. I’ll get back to you with the interest rate.

 

Hey @Trainee, be gentle, Mate. You too were a beginner once. These guys are heroes.

Jen, you have a great reliable car now and looking after it is all sorted. Tick. You have made the best financial decision that you could at the time. Whenever it is due to be replaced, you and your Hubby will be experts in making an even better financial decision. You guys are doing great so far. All the best for your new Bub.

 

Don’t stress.

You made the decision at the time and in the facts known to you. You probably can’t change the situation easily or economically.

We all look back and see things we could have done better.

 

Just had a look. The interest is 7.90%! With my husband receiving a fortnightly tax benefit of $134.79. The residual payment is $11,308 so I’m guessing a Novated Lease is not the best option...?

 

@JenQld19, convert mistakes and poor decisions into learning opportunities.

I am roughly twice your age and I am still making mistakes/poor decisions. I am still learning!!!