Scammed Again?

About a year ago, I got scammed for more than $2,000. I managed to get the money back from the merchant and only had foreign exchange conversion losses. At the time, Commonwealth Bank said they couldn't do anything because I had approved the transaction. This month, I found a round $50 transaction on our credit card from Seenenergy/Post Melbourne Australia. Neither I nor Moominmama recognized this transaction so I raised a dispute online. Almost instantly Commonwealth Bank refunded the $50! I wonder what is the difference between these two cases. I suppose that I did not actually click anything to authorize this transaction? Maybe it is because this is a credit card rather than debit? Or both? Our credit cards have been cancelled and we need to wait for new cards.

Relative Wealth

Take all the bitcoin in the world and divide by the number of people - how much is an equal share? About 0.0025. Similarly, an equal share of the world's mined gold is about 0.8 ounces. Our family of four people has about 400 times its equal share of bitcoin and 50 times its equal share of gold currently. The dollar value of our gold holding is about 1.5 times our bitcoin holding.

Chosing a Fixed vs. Variable Interest Rate Again

I fixed the rate of my CommSec margin loan over the last year. I now have a choice for next year. The variable rate is 9.65% while the fixed rate is 7.79%. For the variable rate to pay off, the Reserve Bank would have to cut its interest rate by more than 1.86% on average over the course of the next year. So, for example, if they don't start cutting interest rates till the middle of the year they would need to cut by 3.75% in total. I can't see that happening and so it makes sense to choose the fixed rate again.

Capital Calls

So, as soon as I had increased the cash buffer in our offset account, I got AUD 40k of capital calls, so back to square one again. The capital call from Unpopular Ventures was expected. We have completed our first 2 year subscription period and are renewing for another two years. We need to make quarterly contributions of USD 10k. This is an act of faith that our investments will eventually be as good as their earlier investments. Ten years of fees come out of the investments up front, so we are underwater on our investment so far.

The other call is from Aura Venture Fund II for AUD 25k. These don't come on any schedule. When they need more money they make a call with about two weeks of notice. We have now contributed 55% of the total capital we pledged. There is no choice about this one. It's also losing at the moment.

Life Insurance and Cash Buffers

This post follows up on EnoughWealth's comments on my previous post on Ramit's Conscious Spending Plan. In that post, I commented that I should have more cash in our offset account, in case I die or something, as otherwise bills might start to bounce (like the bill for tuition for the term for two children... or an AUD 25k capital call from Aura), especially once my salary was stopped. Even though I now have my salary coming into our offset account I am finding I have to shuffle money around quite frequently to able to pay the bills. This is because investments like in Unpopular Ventures are also coming out of this account. We are earning the mortgage rate implicitly on money in the offset account. But as that is less than our top margin rate that we are paying I have been reluctant to just put a lump of tens of thousands in the offset account.

EnoughWealth said that that is the purpose of life insurance. Yes, we both have life insurance attached to our employer superannuation. But getting life insurance paid out could take weeks. Only in 50% of cases is it within 2 weeks. My death cover is AUD 168k. This number seems to be falling as I get older.

So, probably I should hold more cash in our offset account despite the interest cost. I also need to write an "operating manual" and get Moominmama who has no interest in finances to read it... 

I recently learned that I have an above average probability of getting a heart attack for my age (59). I am taking statins now to try to reduce that rate, but who knows how effective that will be.

 

IWT Conscious Spending Plan

I like to watch Ramit Sethi's podcasts where he has an in depth discussion with a couple about their finances. These sessions usually involve the "Conscious Spending Plan", which is basically a type of budget. You can get a copy of the spreadsheet here. I was curious how our numbers compared to the guests on the show and so filled in the template myself.

My main issue was deciding what income number to use. At first, I tried using our income as reported in our tax returns plus employer superannuation contributions. That includes net investment income outside of superannuation. But then it was pretty tricky working out what amounts to put in for investment flows. I switched to using just our salaries plus employer superannuation contributions and it all made much more sense. I added a childcare and education category as that is our largest expense. For the "clothes" category I used our spending on mail order and groceries is what we spend in the supermarkets category. Transportation includes all our transportation spending including petrol, car repair, buses, taxis, e-scooters etc. Saving is our employer superannuation contribution plus the concessional contributions we make for Moominmama to our SMSF. All the numbers in the following are in Australian Dollars:

What do I notice in the results? One is that we don't really do "savings" both in terms of saving towards goals and having savings. Our savings are basically money in "checking" accounts. If we need more money we take it out of an investment account or borrow money. I am thinking I probably should get the savings buffer up more in case something happens to me. Otherwise, the family will quickly have payments bouncing without someone to make sure there is always enough money to cover bills. We used to keep about 1% of net worth in our offset account.

Our total "fixed costs" are at 76%, which Ramit considers too high. On the other hand, our investment contributions are at double the recommended level and I think they are now very low.

The amount left over in the "guilt-free spending" category is only 4%, which Ramit considers to be very low. There is a lot of flexibility here in what should fall into the fixed cost and this category. Is subscribing to e-scooters, which saves me a lot of time and is fun, something I should consider a fixed cost or "guilt-free spending"? Should private school and music lessons be considered a "fixed cost"? I have included some hobby-related subscriptions in the subscription fixed cost...  But moving those would only change things by $100 a month at most.

What is in the guilt-free spending is in practice spending on eating out (mostly lunch these days) and travel - mostly the money we spent on renting a house for our vacation. The recommended 20-35% of spending is really a lot!

Lost Money Found

Got an email from Commonwealth Bank that mentions their "Benefits Finder" button in the CommBank App. This can help you find missing money. Turns out I have about $650 with ASIC in liquidator dividends from the collapse of HIH Insurance. I owned 7,500 shares when it collapsed. Need to have a document with my name and address on at that time. I even have the ASX holding statement for my shares! Get a certified copy, a certified copy of my passport, and a statutory declaration and send it all to ASIC.... Will be paying a visit to the Post Office tomorrow to do all this...

Insurance Inflation

 

This year's home contents insurance bill is 70% higher than last year's! How does that make sense? The number I am comparing to is one that the company provides that they say is adjusted for any change in policy. This seems particularly egregious but part of a general trend of rising insurance costs.

Scammed

I just got scammed for AUD 2,300. I got an email from my webhosting company saying that my card had expired and I needed to renew. Except it wasn't actually from them. Instead of an AUD 100 or so fee, somebody called HalalBooking London charged me AUD 2,381. Now looking at the original email, I see it came from info@thelabhaus.com rather than Crazy Domains. I contacted Commonwealth Bank and they will try to recover the money and I cancelled my debit card. The email looked perfect apart from the email address. I had thought that if a payment was still pending they could always cancel it. Apparently not true. Instead, the bank won't do anything until the payment is no longer pending and only then will they try to reverse it!

Based on this, it seems that there is very little protection against getting scammed here in Australia compared to in the US.

HalalBooking London actually is a website where supposedly you can book Muslim friendly hotels in London. I am guessing it is actually someone else using that name for added confusion value. I contacted the website and asked them to reverse the charge if it is them or be aware that scammers are using their name. I also informed Crazy Domains about the scam.

In other news, Moominmama's friend who bought a knockdown and rebuild property in one of the most expensive suburbs of our city is now asking whether we have a spare AUD 170k we can lend them. Because of the increase in interest rates their bank has reduced the amount they are willing to lend against their existing house. I can't give specific advice without a lot more detail, but seems to me that they are likely going to have to sell their existing house ASAP if they don't want to end up reselling the property they bought. My guess is that the RBA is still going to raise rates more at this point.

P.S.

According to ChatGPT, if I cancelled my debit card while the transaction was still pending the scammer won't be able to complete processing the transaction. This makes sense, but I am a bit dubious as Commonwealth Bank asked me if I wanted to cancel the card to prevent them getting more money rather than to stop them getting this amount. CrazyDomains said I should report it to the police. I already have reported it to ACCC.

P.P.S. 15 November

I got a response from HalalBooking. They said that someone did make a booking via their site for this amount and they detected it as a fraud and refunded it. They said that there is a security vulnerability in the bank's software that was exploited. So, this is looking like there will be a positive outcome.

P.P.P.S. 17 November

Good news - the money has been refunded to our account. I don't know whether this would have happened anyway or it is because I cancelled my card quickly or because I contacted HalalBooking.

P.P.P.P.S 4 December

I found, when compiling the monthly accounts for November, that did have to pay an AUD 70 fee for the international transaction!

Reducing Gas and Electricity Bills

Today I received new format gas and electricity bills from ACTEWAGL which include a notice on the front page that we can reduce our bills by a total of AUD 558 per year by switching to the Direct Saver Plan. I am now doing that. This seems to just be straight up price discrimination, like the higher mortgage rates I used to pay.

Paypal

Closed my Paypal account. Only time it ever comes up is when someone is trying to scam me. Just had someone try to charge USD 599 to me.

What I Get Out of Tracking Spending Categories

Ramit Sethi advocates only tracking about four categories of spending and is critical of couples who do more fine-grained tracking. For the last few years I have been tracking 15 top level spending categories and 27 more detailed spending categories. So, what do I get out of this. I think the following:

• I can track which items have grown fast and maybe we should cut back on. This has resulted in saving money on car insurance, health insurance, and mortgage interest.
• Some things that I think we are spending a lot on, and should cut back on are actually not that big. For example, our current spending on restaurants is AUD 3k per year or 1.7%. My spending on bus, Uber, taxis etc. is AUD 4.5k per year or 2.5%, which is less than half our spending on transport. These are two of my three areas of "luxury" or personal spending. The other is spending money on subscriptions online etc So, being able to see these numbers makes me feel more comfortable about my spending in these areas.
• Perhaps some things seem small and we can consider raising them, like our spending on charity at only 0.4%.
  
• Well, yes it's neat to see what we are spending money on and comparing to other people :)
  

Fixed My Margin Loan Interest Rate

I fixed my margin loan interest rate for the next year at 7.69% instead of a variable rate 9.15%. I am paying the interest in arrears. At the moment I can't see the RBA really cutting interest rates by an average of 1.5% over the next year. It's the first time I have done this. One reason for that is that my balance is relatively low at the moment and I expect it will increase, so I won't have the problem of early termination. I am withdrawing AUD 15k every quarter to invest in the Unpopular Ventures Rolling Fund.

Redundancy Package

Moominmama was offered a redundancy package. Seems a bit like an offer you can't refuse. When she asked if she would be fired anyway if she rejected it, her boss told her he couldn't tell her that... We don't know the details of the package yet. Her lower level manager said that as she is only working two days a week it's hard to involve her in projects or for them to take on projects that need her skills because she doesn't work enough. But she wants to take the package and doesn't want to work more days. 

She plans to reduce the daycare days of our almost 4 year old for the second half of this year. After that he should be in full time pre-school. 

I ran a simulation and through the end of 2024 the effect is a reduction in net worth of about AUD35k before considering the value of the package and after considering the likely value of the package it is about even. After that the effect gets progressively larger, but, surprisingly, in the long run (2029 and 2044) net worth is around 2% lower than in the base case. This is in contrast to the scary numbers that we are currently spending AUD 177k per year and my after tax salary is AUD 130k.

I feel like I must have done something wrong in the simulation.

Comments Stuck in Moderation

I just found that a lot of comments people made in the past were stuck in moderation. I didn't know "sometimes moderation" was on. I approved all the substantive comments and turned moderation off. I apologize to everyone who commented but whose comment wasn't published up till now. I really appreciate all the comments. They made me feel less lonely on this journey.

How Can They Afford It?

One of Moominmama's friends (from undergrad days in the world's most populous country) told her they have bought a house in one of the most expensive neighborhoods here. They plan to knock it down and build their dream home including a swimming pool. It is in walking distance of their two children's school, the most expensive private school here.  Her reasoning is that it costs AUD 4 million to buy an existing house like they want, and this will be cheaper. Still, a crappy house there costs almost AUD 2 million. They haven't sold their existing town house in our neighborhood yet and they apparently also bought her parents an apartment here. She is an administrator at my workplace on probably AUD 100-110k a year and her husband was an associate professor (AUD 150-158k). He recently moved to Moominmama's employer.

 

AUD 3.5 Million House

My immediate reaction was: "How can they afford to do that?" I think Moominmama gets a lot of her aspirations from following this family, including sending our children to private school. 

Real Salary

 

I was wondering whether we were getting worse off over time at my employer and so plotted my real and nominal pre-tax salary for the time I have been in my current position. Halfway along there was a blip where I was department head and got paid more. In real terms I am now about $2000 below where I started in 2011. The union is asking for a 15% increase in the latest bargaining round. After tax that is a about an 11% increase (because of progressive tax rates).

Heading for a Fall in Net Worth

 This is why I have been concerned about saving money recently:

I'm currently forecasting that this year comprehensive after-tax income (including superannuation and unrealized capital gains/losses) will be less than spending. This would be the first decline in end of year net worth (not counting our house) since the financial crisis.

 

Classic Case of Bad Market Timing

 

At the beginning of the 2020-21 financial year the Macquarie Winton Global Alpha Fund (managed futures) had AUD 1.27 billion in assets. It only returned AUD 1 million that year and had been performing weakly for a while. In the 2020-21 financial year there were net redemptions of AUD 829 million. Then in 2021-22 it made AUD 80 million. There were still net redemptions of AUD 194 million this year and the fund is down to AUD 324 million in assets.

More Saving

This blog hasn't really been about saving money in terms of spending less. But facing a year with negative returns and maybe even a fall in net worth in the end, I have focused on cutting expenditure and costs. By switching our car insurance from a comprehensive policy to a third party property damage policy I saved about AUD 400 a year. A reduction from about AUD 675 to AUD 175. The insurance company only values our car at AUD 2,300 and the excess is AUD 695. So, it just didn't make sense to me to insure the car itself. On the new policy we can still get a payout if our car is damaged in an accident by an uninsured driver. 

 

Recently we also called a plumber to look at all the faulty taps in the house. They can't repair taps with ceramic disks and so I decided to just replace all the 7 sets of taps in the house. The plumber told me that I can save money by going buying the taps myself and then getting them to install them. Saving is about $500. So, today we went to a bathroom/plumbing store and selected and ordered taps.

I wonder what Ramit would think about all this?