Jellyman Investing - Personal Finance for Australians

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When I think of buying a house I don't just think of the actual purchase event. I think about what happens if interest rates increase, I think about how I can capitalize if housing demand drops, I think about what happens if I suddenly lose my job, I think about unexpected expenses or changes to my life like having a kid. I want to set up my life so I have protection and you can too. 

Building your 6-12 months (or more) of savings is absolutely crucial. What I see a lot of people do is jump from paying off debt to planning to buy a house. 

Here's the way I found to work TOWARDS a house:

1. Set up your automation and accounts for everyday expenses.
2. Build your 6-12 months of emergency savings.
3. Begin investing in index funds.
4. Meet with a broker to assess your financial position relative to how much you'd like to borrow.
5. Readjust your borrowing power based on rising interest rates.
6. Build an additional buffer for post-home purchase (ensures you have enough left over just in case).
7. Buy a house.

As you can see, building the buffer is step 2. The buffer ensures that if unexpected expenses occur, we can cover them without becoming mentally derailed. It's hard when you have to move money back and forth between accounts because it feels like progress is being taken away from you.

The automation in step 1 will automatically push money towards your savings account. What some people do is create a whole new bank account with a different bank and have the money transferred there. This account has no associated card, which removes the temptation to spend it.

Let's add time to the equation. What tends to happen when you've automated your accounts is that it just happens in the background. Before you know it, you've built up enough savings. You might think that the next step is to buy a house. But I actually think people should invest in stocks first.

Now, before you start telling me it's risky, hear me out. Index funds, which are a basket of stocks that allow you to become automatically diversified, are relatively low risk and have good returns, even in bad economic times. You can even buy index funds specifically tied to property.

Because it now takes much longer to save for a house, while you wait for the best time to strike, the value of your stocks goes up. In fact, in my personal situation, after I had my 6-12 months saved up, I began buying stocks each month. But it took a few years before the timing was right to get a house. In those few years, I ended up accruing an additional $15k in stock value, which I could sell to buy my house.

Luckily for me, during the time I was buying stock, I was still diverting some of my funds towards saving for a house. After meeting with a broker, he told me I actually had enough in my savings to buy a house, which meant I could leave the stocks to keep growing and still buy a house.

This is a win-win situation and gives me a number of options. If I suddenly need cash, I can always liquidate some of my stocks (which I've never had to do). By leaving my stock, it can just grow. Another win for me.

Now, I have mentioned a few times that having equity sounds good on paper, but it's not real money until you sell the asset. That is true. But the way I like to think about finances is to try and have a win scenario for every situation.

If the stock market crashes tomorrow, I have cash on standby to purchase stocks at a discount. If the market instead jumps, I already have stocks to ride the wave. If housing prices go down, it's fine because I already have a home to live in. If they go up, my equity increases. If I lose my job, I have several other income streams.

https://www.patreon.com/Jellyman_Investing

Intro

"Welcome to the Jellyman Investing podcast, where I guide you through the intricate world of personal finance, paving your path to financial stability and success. I'm Jed Guinto, and today, I'm thrilled to share an exclusive look at my Patreon page, featuring comprehensive collections on various financial topics. Whether you're battling debt or planning for retirement, I've got tailored content just for you. Let's explore."

1. Getting Out of Debt:

"In the 'Getting Out of Debt' collection, I dive into effective strategies for overcoming debt. You'll discover personal anecdotes, actionable advice, and tools to help you pay off your debts more efficiently. From smart budgeting to negotiating with creditors, this collection is your ally in the fight against debt."

2. Everyday Finance:

"The 'Everyday Finance' collection focuses on mastering your day-to-day financial management. Here, I share methods for creating and sticking to budgets, insights on minimizing expenses, and tips to maximize your financial health with simple, everyday decisions."

3. Investing in Index Funds:
"For those intrigued by the stock market, my 'Investing in Index Funds' collection is a treasure trove of information. I break down what index funds are, why they're a wise choice for long-term investment, and how you can start investing in them today."

4. Passive Income:
"In the 'Passive Income' collection, I explore various avenues to earn income with minimal ongoing effort. From real estate investments to dividend-yielding stocks and digital entrepreneurship, I'll guide you through creating additional income streams for a more financially secure future."

5. Buying Your First House
"Thinking about homeownership? 'Buying Your First House' is your comprehensive guide. This collection includes everything from saving for a down payment to navigating the home-buying process, complete with practical checklists and financing insights."

6. Buying Individual Stocks:
"If you're interested in a hands-on approach to investing, the 'Buying Individual Stocks' collection is for you. I delve into how to select stocks, conduct a thorough analysis, and manage a robust stock portfolio, equipping you with knowledge for informed investing."

 7. Investment Properties:
"The 'Investment Properties' collection is for those looking to delve into real estate investing. I cover everything from selecting the right property to managing tenants, ensuring you get the most from your real estate investments."

8. Planning for Children:
"Preparing for a family? In the 'Planning for Children' collection, I provide financial advice for future parents. This includes strategies for saving for education, budgeting for an additional family member, and securing their financial future."

9. Financial Freedom:
"'Financial Freedom' is all about escaping the paycheck-to-paycheck lifestyle. In this collection, I share ways to build wealth, reduce reliance on regular employment, and achieve true financial independence."

10. Retirement Planning:
"And finally, 'Retirement Planning' is designed to help you prepare for a worry-free retirement. From understanding pension plans to exploring retirement accounts, I guide you through various strategies to ensure a financially secure retirement."

Outro:

"That's a quick tour of the exclusive collections available on my Patreon page. For full access and more in-depth content, head over to Patreon and join the Jellyman Investing community. Thank you for listening to the Jellyman Investing podcast. Remember, your journey to financial literacy and empowerment starts right now!"

https://www.patreon.com/Jellyman_Investing

Is fire a good thing? It can devastate forests, destroy houses or it can cook food and provide heat. In short the answer is, depends who's controlling the fire. 

Before I get on with this episode, a reminder that I have a Patreon page where you can read articles, download spreadsheets, get internet resources, watch tutorial videos and even chat with me. It's free to join so sign up today. The link is:

Patreon.com/Jellyman_Investing

Also, a disclaimer, that I am not a financial advisor, please consult with a professional before making any financial decisions. On with the episode. 

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Many Real Estate 'gurus' on platforms like YouTube and TikTok praise the concept of 'good debt.' This is reminiscent of a World War II story where engineers wrongly focused on reinforcing parts of returning fighter planes instead of considering the ones that didn't return. This analogy is vital for understanding the risks of good debt in real estate investing.

Good debt involves borrowing money, usually for real estate, with the aim of wealth accumulation. It seems straightforward: take a loan, buy property, wait for equity growth, and profit. However, this simplistic view often leads to underestimating the risks.

Consider those who aggressively invest in property, like a woman I knew who used credit and loans to increase her home's value. This strategy worked until the 2008 financial crisis, which eroded much of her home's value. This illustrates that equity, though valuable on paper, isn't accessible wealth until the asset is sold. Many, planning to retire in their homes, will never realize this equity.

The term 'equity rich, cash poor' describes those with valuable assets but little liquid wealth. Real estate and leverage aren't inherently bad, akin to fire that can cook food or burn forests. However, debt increases risk. The more you borrow, the higher the interest and the greater the financial burden if things go awry.

The key to using leverage is caution. Avoid over-borrowing, start small, build a buffer, and don't hastily compare your progress to others. Opting for modest living with financial security is preferable to a lavish lifestyle with constant financial worries.

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When you get your financial affairs in order, when you educate yourself to the point where regardless of what's happening in the economy you still make money or protect yourself and your family, you've won the game of life. It's not that hard, just takes time. 

Before I get on with this episode, a reminder that I have a Patreon page where you can read articles, download spreadsheets, get internet resources, watch tutorial videos and even chat with me. It's free to join so sign up today. The link is:

Patreon.com/Jellyman_Investing

Also, a disclaimer, that I am not a financial advisor, please consult with a professional before making any financial decisions. On with the episode. 

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Right now you make be broke, in debt, no savings, no house, whatever. Things could be bad for you? I mean is it worth trying to get all my financial affairs in order? What's at the end of the rainbow here?

So to get you motivated and excited about the future let's talk about what your life could be like once you achieved many of your large financial goals. Here's some of the advantages. 

You're not worried about not getting your paycheck that week.
You're not worried about unpaid leave. 
You're not worried about slightly higher bills.
You're not worried about unexpected expenses.
You're not fearful that you can't provide for your children.
You don't care about change home interest rates. 
You don't check the price of food on menus. 
You can buy what you want, when you want and however much you want. 
You can flight first class. 
You spend and enjoy life, and yet your assets still grow in value. 
You don't care which party is in Government.
You can capitalize on market downturns. 
You can sleep at night knowing your investments are conservative
You've managed your investment risk such that downturns don't scare you. 
You can pay your house off soon. 

The list goes on. The point is, these are all extremely exciting things. You may not get all of them, but what's important to understand is how these things unfold. 

You don't wake up one day and 10 of these are suddenly true. What tends to happen, is that you achieve one which frees up capacity to achieve the next. 

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There was once a king who was to pay a farmer for his work. He asked how much he'd like to get paid. The farmer replied saying, place two coins on the first square of the chess board. Then double the number of coins when you go from one square to the next. 

First there was 2, then 4, then 8 and so on. Can you guess how many coins there are by the time he reaches the end of the chess board?

Before I get on with this episode, a reminder that I have a Patreon page where you can read articles, download spreadsheets, get internet resources, watch tutorial videos and even chat with me. It's free to join so sign up today. The link is:

Patreon.com/Jellyman_Investing

Also, a disclaimer, that I am not a financial advisor, please consult with a professional before making any financial decisions. On with the episode. 

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The article explains compound growth, a key concept in investing where money earns more money, eventually outpacing expenses and leading to financial freedom. This can be achieved through various investment avenues like stocks, index funds, real estate, or business ownership.

The concept is similar to how credit card interest works. If only minimal payments are made, the interest accumulates, leading to an ever-increasing debt. This compounding effect can turn a small debt into a large one over time, illustrating how banks make money and the dangers of credit card debt.

The article then applies this concept to investing. For instance, investing in a company like Apple allows the investor to benefit from the company's growth, which in turn increases the investment's value. The goal for long-term investors is to have investments that grow more than their annual expenses.

An example is provided to illustrate this: investing $1M in stocks that grow by 10% annually. By withdrawing $100k each year, the investor maintains the principal amount while benefiting from the growth.

The article emphasizes the power of compound growth and how even a small change in the growth rate can significantly impact the investment's final value. It also highlights the importance of choosing the right investment vehicles, like superannuation funds with minimal fees, as small differences can lead to substantial gains or losses over time.

Finally, the article promises to explore further topics like investment choices, risk assessment, and the role of age in investment strategies in future discussions.

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Once your accounts are set up and put into autopilot, its time to get efficient. You'll come to understand that when it comes to investing, it's not necessarily the amount you earn or the amount you invest, it's the time you stay invested. 

Before I get on with this episode, a reminder that I have a Patreon page where you can read articles, download spreadsheets, get internet resources, watch tutorial videos and even chat with me. It's free to join so sign up today. The link is:

Patreon.com/Jellyman_Investing

Also, a disclaimer, that I am not a financial advisor, please consult with a professional before making any financial decisions. On with the episode. 

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 To illustrate the impact of extra repayments on a home loan, consider a $500k house purchased with a 100% bank loan, a 30-year term, and a 5% interest rate. Monthly repayments are about $2,700, totaling $466k in interest over 30 years, nearly doubling the house's cost.

Adding an extra $200 per month reduces the loan term by nearly 5 years and saves about $80k in interest. Increasing the extra payment to $500 monthly saves $150k in interest and cuts almost 10 years off the loan.

Building wealth isn't about sudden windfalls or high salaries; it involves small, consistent habits over time. Making minor lifestyle adjustments can significantly affect loan repayments. For example:

1. Reducing utility bills and switching to energy-saving bulbs.
2. Being more efficient with food consumption.
3. Using an electric scooter for short trips.
4. Making coffee at home.
5. Choosing a bank with no account fees.
6. Reducing streaming services and Uber Eats usage.

These savings, potentially totaling $300 monthly, can accelerate mortgage repayment, increase savings, or build an emergency fund. Additional income sources, like tax returns, bonuses, or side jobs, further contribute to this strategy.

Managing small amounts effectively prepares for handling larger sums. The same principles apply whether dealing with $50 or $50,000. It's about developing a mindset from the ground up. Wealth often accumulates subtly, and how one manages small savings can influence their overall financial growth and ability to build wealth sustainably.

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Welcome to another episode here at Jellyman Investing where we'll be talking about building your foundation. That means, learning how to structure and automate your accounts so that you don't over spend, you have a better understanding of where the money is flowing and most importantly, slowly and steadily build your savings to the coveted 6-12 month target. 

Before I get on with this episode, a reminder that I have a Patreon page where you can read articles, download spreadsheets, get internet resources, watch tutorial videos and even chat with me. It's free to join so sign up today. The link is:

Patreon.com/Jellyman_Investing

Also, a disclaimer, that I am not a financial advisor, please consult with a professional before making any financial decisions. On with the episode. 

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 In the past, many people, including myself, managed finances through a single bank account, making it hard to track spending, bills, and savings. This approach often leads to overspending and unclear savings growth.

The game-changer for me was learning about account structuring and automation from "Barefoot Investor." Automating finances reduces reliance on willpower and provides clear visibility on each account's growth.

Most banks offer multiple accounts through their apps. A basic structure includes four accounts, but customization is encouraged for individual needs.

1. Everyday Spending: For daily expenses like lunch and transport.
2. Enjoyment: Allocating funds for leisure without overspending.
3. Short to Mid-term Goals: Saving for things like weekend trips or special purchases.
4. Emergencies: The most crucial account for unexpected, large expenses. It's important to prioritize this fund to avoid setbacks.

For instance, if unexpected expenses average around $1,000, aim to save $2,000-$3,000 in the emergency fund. Once this target is met, allocate more to other accounts.

Many people spend their paycheck without saving effectively. Scheduled payments in banking apps can help allocate specific amounts to each account based on income and expense understanding.

This system resembles the Japanese practice of using labeled envelopes for budgeting. Expanding beyond four accounts for specific expenses like bills, insurance, or pets ensures funds are always available for each category. Surplus funds in these accounts act like mini savings accounts, gradually growing.

This practice is crucial regardless of income level, from $2,000 to $50,000 a month. Efficiently moving money to where it's needed prepares you for more complex financial ventures like investing and real estate.

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There is nothing I hate more than Credit Cards and Personal Loans. Many times designed and marketed to prey on the weak of our society to keep them down, low and poor. Generating billions of revenue for banks at interest rates that are utterly ridiculous and difficult to understand. 

 Before I get on with this episode and vent like crazy about credit cards, a reminder that I have a Patreon page….

 Patreon.com/Jellyman_Investing

 where you can read articles, download spreadsheets, get internet resources and even chat with me. It's free to join. 

 Also, a disclaimer, that I am not a financial advisor, please consult with a professional before making any financial decisions. On with the episode. 

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Before making any investments or significant purchases, it's crucial to eliminate debt, especially from credit cards or personal loans. These debts act like a hole in a ship, hindering progress regardless of other factors.

Debt, especially with high interest rates, impedes financial growth. Many only pay the minimum on credit cards, which barely reduces the principal, the original borrowed amount. This results in most payments going towards interest, with interest continually growing due to ongoing spending.

Many aren't aware of their interest rates and are shocked when they realize how much they've paid. As debt grows, banks frequently contact debtors, contrasting with their usual unavailability.

To address debt, consolidating loans through a balance transfer can be effective. For instance, if you owe $5,000 on each of three credit cards from different banks, a bank like ANZ can consolidate this debt. This means you now owe ANZ $15,000 instead of the three original banks.

The advantage is that ANZ may offer 0% interest on the consolidated debt, compared to the high rates of the original banks. This allows payments to fully reduce the principal. However, this 0% interest is usually temporary, often for 12-18 months, and may involve transfer fees. After the promotional period, a higher interest rate may apply.

The key to success with this strategy is having a plan to pay off the debt before the low-interest period ends. This approach requires discipline but is vital for financial success. The first step towards building a sound financial plan is to get out of debt.

https://www.patreon.com/Jellyman_Investing

Before we begin on this wonderful journey of personal finance, a few things. Firstly, I have a Patreon page set up specifically so people can read these podcasts in article form, but there'll also be downloadable files, video tutorials and more. Simply because trying to explain a certain things through a podcast can be challenging and I have been requested to provide the spreadsheets I use, websites I frequent to assess housing and more. It's free to join and it's the perfect way for you to reach out and chat to me as well. 

 The URL is patreon.com/Jellyman_Investing

 Let's get on with the episode. 

 If you've lived a life similar to mine which is reaching your late 20's and having no savings and possibly even being in debt, it can be challenging to start thinking positively or even believing it's possible to live a debt-free life where you're not constantly worried about finances. 

 Trust me though, it is possible because I've done it and so can you. Not only will I provide you with knowledge but I'll be your personal cheerleader. I'll wear the skirt if I have to. That's how committed I am to you. 

 Becoming financially positive after these setbacks is a lot like getting back into the dating game after having your heart broken. You're a little deflated, your hairs a mess, socks don't match, and you've lost belief that you'll find your Ryan Gosling or as it was in my case, my Rachel McAdams. 

 But finances, just like in dating don't get better just sitting on the couch. It's time to hit the gym, giving up the coke (coca cola I'm referring to, not the other kind), getting a haircut and quite simply going outside and getting some fresh air. 

 I'm serious, take the next 20 seconds and take the deepest 3 breaths of your life. I'll do them with you. 

 Close your eyes, stop what you're doing (Unless you're driving or holding a baby), and I'm serious take 3 deepest breaths you've ever taken in your life!!!

 Through the nose, out the mouth. Let those shoulders drop.

 Through the nose, out the mouth. 

 Through the nose, out the mouth. 

 Today is the day that the old you is no more. Built into our brains is a small lizard part known as the amigdala. It is remnants of our cave dwelling days where our goal was to search for food, find shelter, procreate, oh and that's right….NOT GET EATEN BY TIGERS AND BEARS! 

 Built into our brain is the fear that things will never change or that whatever we do attempt will fail and we'll make a fool of ourselves. It's time to tell that part of your brain, to go to hell. That you're in charge now and that no matter, we will conquer the road ahead. 

 This all starts by forgiving yourself. To forgive your parents for not teaching you. To forgive the schools for not training you. To forgive past managers and boss that didn't take care of you. This is all holding you back. It's keeping you in this state and it's time to break free. 

 All the decisions and experiences of that past that have lead you here, is now in the past. These emotions are holding you back from the future. It's like a crazy ex-girlfriend that just keeps texting you. It's time to block her number, change your address, change your name, move to Hawaii and grow a beard. 

 From this moment forward, we will be focused on learning. On discovery. On getting stronger and more capable. On building our confidence and courage so that we can live a life of joy, opportunity and colour. 

 3 deep breaths. That's all it takes. Let's go. 

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Welcome to the first episode of Jellyman Investing. Thank you for joining me and lets get this show underway. 

If you're listening to this podcast no doubt you're wanting to improve your financial situation in some way. Maybe you're hoping to get out of debt, or learn about investing, buying your first house, planning finances for children, working towards financial independence, planning retirement and more. 

These are just some of the things I plan to talk about in this podcast. My goal is to make each episode short and sweet. Maybe 5-10 minutes long about as long as it takes to drink a cup of coffee. 

Let me talk a little about my journey and maybe you can relate a little bit. It's also so you know I didn't just get this from reading books. I've lived a lot of this stuff. 

I am 36 years old. My family came here from the Philippines in the late 80's. I was fortunate enough to go to school and eventually university. I studied Aerospace Engineering for a number of years even at one point pursuing a Ph.D. in Vibro-Acoustics in Composite Commercial Aircraft Material for the Early Detection of Microfractures. That's right. I had to say that every time someone ask me what my research was on. By my late 20's I switched careers into Data Analytics working for a number of institutions across Education, Automotive, Manufacturing and now in Banking. 

Now why did I tell you all that? To gloat? No, definitely not. The reason I tell you that is that even though academically it may appear I did very well, you'd assume I was just as intelligent in regards to my finances. 

Yet, by my 27th birthday, I was unemployed, 5 figures in debt, multiple credit cards, no savings, no job prospects, buying a house wasn't even on the radar, my girlfriend was about to leave me and I was on the verge of getting kicked out of my home. 

The conclusion, school, university and our parents (through no fault of their own) do not prepare you financially. I've lost count of how many people I speak to who through their illustreous careers and education, who are some of the smartest people you'll meet, but yet even with $180k yearly salaries, struggle to make ends meet or worse, they're in debt. 

Why is it doctors struggle financially? 
Why do programmers on $200k salaries, struggle to pay rent? 
Why are people who've been in jobs for 10+ years, still have no savings? 
Why is it, we invest in highly risky things such as Crypto?
Why is buying a house so godamn hard these days? 
Why is it, those with multiple degrees and higher levels of education than the rest of us, still can't gather enough for a home deposit?

These are the sort of scenarios and questions I want to talk about in this podcast because my goal is to get you debt free, financiall stress free, educated so you can capitalize on global investment opportunities, be able to buy your first house, support your wife or husband, provide for you children, care for your parents and more. 

Let's do this.