National Savings Certificates and Lloyds Bank

We finally have managed to get a UK national savings certificate worth about £40k that was in my father's name only transferred to my mother's name. My father died almost ten years ago. The truth is though that we didn't start trying to fix this till recently. My brother dealt with getting a lawyer etc. to complete the UK probate and get this sorted out. They wouldn't accept the inheritance documents from the country where my father died...

But now we have the problem of what to do with the certificate. They will only allow us to cash it out if we transfer the money to a bank in the UK. But my mother's bank, Lloyds (which I was once a customer of too*) is extremely difficult to deal with, even though my brother has a power of attorney. In my brother's words:

"the people in the branch don't really care and the call center is worse. They all stick very closely to the letter of their regulations. I have a limited power of signature there. They don't respect faxes, generally ignore letters, don't use email... in short useless. The problem appears to be that it is a regular banking account and they are not set up to work internationally. When I tried to make a transfer of GBP 700 to the UK lawyer for the probate they said I could only do it if a came into the branch, so I did it in the end from UBS..."

They'll only do anything if they talk to my mother on the phone but then they will likely decide that she is incompetent... So even closing the account seems impossible. To complicate things further, my mother still has a small pension that is paid into this account.

So it looks like we will keep the certificate renewing in her name now.

* My first bank account was with Lloyds. I entered some competition where they opened an account with £10 in it. That was back in 1983 I think. I got rid of the account some time around 1997 probably and no longer have any financial connection to the UK.

Snork Maiden's Job Made Permanent

She had the interview about four weeks ago but had to wait till today to get confirmation that her position which was a temporary one has been converted to a continuing one. This also means a promotion to what would be the assistant professor level if she was at a university rather than a government lab.

Meeting a Lender

Today we went to meet with a mortgage lender. We didn't get far though. I thought I would be OK that I had easily accessible money in managed funds but they want to see at least a 5% deposit held in cash for at least 3 months. So I've been busy selling some of Snork Maiden's managed funds - mainly a bond fund - and redrawing money I had deposited into my margin loan account since last August and we now have $A70k in cash in Australia. I'm aiming for a 10% down-payment. So we now meet the 5% requirement and are well on our way to the 10% down-payment (assuming the house we buy would be $750k +).

Sydney is the 7th most expensive city in the world to live in and 50% more expensive than New York. As Melbourne is 8th, I'm sure Canberra is also in the top 10. To bear in mind when reading my blog and comparing to US costs and prices :)

2012 Forecast

If the stock markets do well, the Australian Dollar stays high, and we don't buy a house we might hit $US800k this year... Buying a house would reduce net worth by about $50k due to purchase costs - mostly "stamp duty". If the Australian Dollar fell to its purchasing power parity level we'd more likely be at $US600k. If the stock market is flat we'd probably be $100k lower. I doubt after two negative years in Australia there will be a third negative year. I also doubt the Australian Dollar would really fall to 70 US cents... But $US500-800k is probably a good range to expect. In AUD expect $A600-800k.

It is looking like Snork Maiden's job will be converted to a permanent position (and a promotion) but the paperwork is still being processed...

Commonwealth Bank Don't Seem to Want to Lend Money

So we (Snork Maiden and me) went into a Commonwealth Bank branch and talked to the person at the customer service desk about getting pre-approved for a mortgage. She said she would get someone to call us about setting up an appointment. After a week, no-one has called us. So I next thought I'll phone the bank to set up an appointment. But I got into the automatic phone system and without a "phone banking password" I couldn't continue to talk to anyone. I don't have one because usually I do everything online. This would stop any new customers either... I could send them an e-mail, but instead I will go to the central branch in Canberra first and see if that works. Otherwise, we'll have to go to a different bank, it would be nice though to have everything consolidated together...

One Million Kilometres

I'm planning a trip next month to a neighboring country and just realized I will hit 1 million kilometres of flying during my flight there. I've kept a spreadsheet of my travel from when I first moved to the US and hadn't flown much yet recording all flights I've ever been on. A professor in an environmental studies class noted he didn't have a car but had flown as far as the moon and back (I think that is what he said) and so wondered if he was hypocritical and I wondered how much I'd flown. I use a piece of software called anAtlas to compute the distances. It's a long way to go to match George Clooney's character :)



Yes, I didn't fly anywhere until I was 18 years old.

Saving and Buying a House

This graph explains our sudden interest in the housing market. It shows monthly saving in Australian Dollars outside of retirement accounts and not including investment income or losses. The dark line is a 12 month moving average. Negative numbers mean that we spent more than we earned in that month. The main reasons for that have been major international trips or moves and a period of unemployment when I was single back in 2001-2 followed by an international move. The record high saving in 2001 is due to a termination payment when my job ended.

There is a recent move up to a much higher level of saving, which means that we could, in theory, afford mortgage payments that are going to be $2000-$4000 more than our current rent (plus other housing costs). As you can see, there's never been a saving level like this in my financial history. After we moved back to Australia in 2007 saving was minimal and then jumped to about $3k per month for a short while. So we definitely could not afford to buy a house during that period. I now have a permanent job. Snork Maiden is still waiting to find out if her job will be converted to permanent status.

Moominmama Portfolio Performance January 2012

As usual, this much more conservative portfolio returned less than the stock market or the Moominvalley portfolio. And with dissaving rather than saving it is off the historic highs. The strongest performing asset classes were Brazilian and Asian stocks. But all categories gained money.

Moominvalley January 2012 Report

This was a good month with decent market returns, a relief after a year where most months we were losing money. The big news is that we hit a record net worth in both Australian Dollars and US Dollars. Here is what it looks like in AUD:



The new net worth is $A553k. The previous high water mark in Australian Dollars was $A527k in August 2007, which was the month Snork Maiden and I merged finances in preparation to move to Australia. So in that sense we have finally recovered from the trauma of the GFC (and the costs of moving to Australia) but profit levels are very depressed and so in that sense we haven't recovered at all. It's mostly down to saving:



As you can see from both these graphs, non-retirement savings is the main driver. We also hit a new high in USD at $US586k. The previous high was $US574k in April last year. The income /expenditure accounts in US Dollars look like this:



Investment income was high and the Australian Dollar gained to almost $US1.06. Expenditure was higher than last month but within recent norms. Net worth increased by $US50k ($A30k).

The MSCI World Index gained 5.84% in USD terms and the S&P500, 4.48%. We gained 7.55% in USD terms (4.05% in AUD terms and 4.90% in currency neutral terms). We reduced cash and net loans and the allocation to large cap Australian stocks increased most (to 44.76%) due to market performance. US stocks were our highest performing asset class.

Failed Auction

We went to our first home auction today. There was a big crowd but in the end only 4 people seem to have registered to bid in the auction. The auctioneer called for bids and no-one bidded. Not even "$500k" say. Maybe those people were just too embarassed to say they weren't bidding? So the auctioneer went inside and phoned the vendor and came back and made a bid (he's allowed to make one) at $820k. No-one bidded and the house was passed in without sale. It will now be remarketed with a fixed price. It will be interesting if that will be at $820k or less. This is a further sign that the property market is softening here. There are few auctions now. Most properties are marketed with fixed prices and there are a lot for sale compared to the number that have sold recently. A year or two ago it was mostly auctions.

P.S.
This house that we saw last weekend has already been slashed by $70k. It started way too high of course.