Mums Finance

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Well, that’s what women in Australia are doing right now - or will be doing in a few months time anyway. Back in 2004 the Liberal Govt decided that the birthrate was too low to sustain a working population in 30 years time  (I am not too sure about that one; Australia seems to have plenty of kids to me).

The then Federal Treasurer, Peter Costello, urged Australian couples to have ‘ one baby for your husband, one for your wife and one for the country’. From the 1st July 2004 each couple was paid a lump sum amount of $3000 for each child born; the amount has since risen to it’s current payment of $4000 per child born and after July the amount will increase to $5000. Of course you can imagine how this went over - extremely well.

The lump sum payment is intended to ease the initial costs of having a baby in the first weeks and months but, of course, many parents have not exactly spent the small fortune on the child - in fact it has been acknowledged that the sale of luxury items such as plasma TV’s went through the roof after the introduction of this windfall. You can just imagine. And also there is the other side of the coin…the Govt has been criticised for encouraging teenage females to fall pregnant in order to get the cash; this in fact has been happening as it was only too obvious that it would. The Govt now has determined to pay mothers, 18 years and under, the lump sum in fortnightly instalments to take the temptation out of the equation.

There is currently a heated debate raging around this entire issue. Should the cash payment instead be converted to food vouchers; utility vouchers and possibly investment incentives in order to stop greedy parents spending the money on themselves rather than the child itself. And do not forget it will soon be five thousand dollars - have a baby each year and you really start to profit. As a good number of single females have chosen to do…

Drug addicted mothers too have been found to be buying drugs with the cash; alcoholic parents are drinking the money rather than buying food and clothing for the baby - handing such a large sum of instant cash to people who are not in the position to be responsible with it really has just exacerbated these already common social ill’s.

Personally I think it is a ridiculous amount of cash to pay out for one baby; it should be ‘capped’ for sure i.e. no more payments after the second claim; not too long ago the third prize in the NSW State Lottery was $5000 if that puts it into perspective. That’s an awful lot of third prize lottery winners! the thing is millions of parents, like myself, managed pre-2004 to raise our kids without this much money being thrown at us all at once - and that also mean’t we didn’t have the luxury shopping sprees that new Mum’s now have when they get out of hospital.

But the new Labour Govt, while it decides how to best deal with the future handling of this payment and will hardly scrap it (it’s one hell of a vote winner), it must come up with a better scheme to ensure that those babies born end up benefiting from the allowance…rather than the proprietors of electrical goods stores and Gucci boutiques.

Popularity: 11% [?]

Falling property values across a swathe of Sydney’s mortgage belt suburbs have thrust another knife into the heart of families struggling with the latest round of interest rate increasesThis revelation came as Treasurer Wayne Swan warned Australians they will need to exercise restraint and tighten their belts in 2008 in the face of higher inflation and likely further rises in interest rates. Mr Swan said latest Treasury forecasts pointed to a period of prolonged price rises across the economy.They suggest we need to prepare for a period of elevated inflation - that’s the legacy that Peter Costello has left the Australian people,” Mr Swan said, in an exclusive interview.

“I think we have an inflationary challenge on our hands and that requires restraint from all sections of Australia, from corporations to unions and government.”

The triple dose of bad news means battling families mortgaged to the hilt face higher loan payments, increased grocery, petrol and living expenses - and may now have negative equity in their home, where the loan exceeds the value of their property.

Sounds like stuff we all heard in the 80’s and early 90’s…

Popularity: 7% [?]

With inflation still on the rise  interest rates will continue to move upwards unless the national economy begins a downshift in the near future. With this, mortgage rates are set to enter double figures again after a long respite of 11 years. I remember well the 1980’s where the average house owner was paying up to 18 per cent interest on their loans; this resulted in many people losing their homes.

For the first time in 11 years though rates are set to climb to 6.75 per cent, an all time high for many years. But will this be enough to bring down inflation?. Many experts and top economists think not, with most predicting at least two more rate rises next year before any change in the inflation climate is detected. Rates may even peak at 9 per cent. While this may spell disaster for many people the answer may lie in refinancing their mortgages.

The best thing to do would be to consult a mortgage broker asap and find what options are available. Until inflation comes under control the average homeowner should take all precautions to protect themselves should those rates climb further towards those dreaded ‘double figures’ once again.

Popularity: 7% [?]