Why It WasWeb and Marketing

To most I would seem like the perfect person First Home Saver Accounts are aimed at. Kevin Rudd and the Labour Government seem to think else wise. I am 24, been in a steady relationship for three years, looking to purchase a place in the next couple of years. I have been saving for a year now for a place. I save above the $5,000 a year, so I would get the full $850 bonus off the Government plus the 8% interest off AMP if I put my money there.

What is the First Home Saver Accounts?
The Australian Government has released their First Home Savers accounts on 1 October 2008. These accounts are meant to help people planning to buy their first home save for it. This is done by the person agreeing that the money in these special accounts will only be used to buy their first home or the money goes to their super. For each fiscal year the person saves at least $1,000 the Government will kick in 17 cents per a $1, for the first $5,000.

What is the catch?

There is a massive risk of losing all that money till your 60 (per current laws). to buy a house using this money you have to deposit a minimum of $1,000 into the account in four separate fiscal years. If you purchase a house before this then all the money gets locked away into super.

Why is this so bad?

Basically it means that people who are committed to buy a home in the next four years are not able to take advantage off this offer. It locks people into renting for a minimum of four years. If you lose the money to your super account you would of saved more then you get if you had of directly salary sacrifice the money into super.

Why cant people who seriously want to buy a house take advantage of this offer?

Anyone who is serious about saving for a house and buying it in the next couple of years do not want to have to wait the four years to access their money. So this means the offer is more suited to people who are thinking maybe one day. Other wise it is really good for the rich who decided that they are going to give their kids $5,000 a year.

How are people forced to rent for a minimum of four years?

The Government puts your money in hostage. If you want to use that money to buy a house before depositing a minimum of $1,000 per a fiscal year over four separate fiscal years, the Government will lock your hard savings into savings. People who are already renting and wanting to get out do not say ‘I want to stop renting in a minimum of 4 years’. It is more like a two to three commitment to get out. So if a couple save really hard for a place over three years and decide they have found the right place the Government is going to take that money from them and keep it from them for 40 YEARS or more!

What do you mean it is more viable to salary sacrifice?

Most people leaving uni are paying 30 cents in the dollar tax. The money that goes into the account has already been taxed. By salary sacrificing you save 30 cent in the dollar compared to 17 cents in the dollar you get off the Government. The catch of salary sacrificing is that is locked in till your 60.

Using a simple example you have $1,000, normally this would be taxed at $300, so you really get $700.

Super Salary Sacrifice
For the $1,000 all $1,000 goes into the account, and your taxable income drops by $1,000 reducing you taxable income by $300, effectively giving you $300. But your HECS repayment is is reduced for the year. So for the $1,000 you lock away, which you do not see, you effectively get $360 in your pocket and the full $1000 in your account. The money is not accessible till your 60 except for special exceptions.

First Home Saver
That same $1,000, first becomes $700 post tax you are putting into the account. The government gives $119.00 for that $700, making it $819. Into your account. This money is locked away for minimum of four year and must be used to buy your first home or it goes into super.

Regular Savings
That same $1,000, first becomes $700 post tax you are putting into the account. This money is accessible whenever, depending on account type.

All of the above examples earn interest. Using the above $1000 pre-tax $’s you get:

So First Home Saver is a lot bigger earner then your normal savings account, as savings into a normal savings account are post tax. If for some reason, and there is a lot of ways, your money from the First Home Savers account get locked into super you are a lot worst off.

Who is it good for?

People who are willing to save $1,000 to $5,000 a year for a minimum of 4 years. They will need to have adequate alternative savings for an emergency purchases as they cannot use the money in this account. They need to ignore any houses on the market for that time. If I was to open one of these accounts I would put no more then $5,000 a year in there as you only get the benefit on the first $5,000. Each dollar after the first $5,000 would be just locking it away for no point.

So for my own personal situation the above applies. Of course you should assess your own situation when considering the First Home Savers account and consult a financial adviser as you may be in a different situation.

iStockphoto’s Tip of the week use to be awesome. I really looked forward to them and would forward them onto other friends. The old tips of the week were about how to create better images, now they are about how to search and find your old receipts of iStockphoto, not really that exciting. Along with a lot of other things I believe Veer.com is the better option.

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Yesterday Ziggs.Com was the hottest trend on Google. This surprised me! As it is kind of a very over staturated market. You already have Facebook, MySpace, Friendster, Hi5, LinkedIn etc. It is a bit confusing to why it was so popular yesterday, but that might have something to do with some press releases.

What is Ziggs.Com?

In my humble opinion it is a site to try to control the search results for your name, which comes at a cost ($4.95 /month). There is a lot more. They provide a free profile for you like Facebook but meant to be more professional, elegant and in your control. It alerts to when, how, and the location of who is looking at your Ziggs profile. Then there is the money making side of things. You can buy people Starbuck’s gift certificates etc. Book travel and make payments on things and buy other stuff. There is an empathise on job advertising, though recruiters and employers probably don’t have the time to hunt for people.

The official line is:

Ziggs is for the Internet user who proactively wants to market themself on the Web – to be found by recruiters, to find a better job, or just to be found when searched for. Ziggs is also for the Internet user who wants to develop or participate in private online communities with colleagues, friends, club members or charity teams.

Why Ziggs?

It is meant to provide the elegant professional profile, but www.linkedin.com already does a good job of that. I would guess it is for people who want to know about who is Googleing them. The problem of course is that for your profile to be on top of the Google listings you have to pay the $US4.95 / month and have it in the yellow Google Ads section of the search results. To get the alerts the person has to click on your Ziggs profile. Of course there is the wonderful services you but like Starbucks Gift Certificates to spend at the local Starbucks that use to be around the corner from you now completely empty.

When would you use Ziggs?

I guess their arguement is, always. They try to say it is all about when you have someone Googleing you, you want to have the most glowing profile possible. Truth is you probably can get away with your LinkedIn profile for the time being.

Summary

Ziggs.com is not worth the effort or money. You want to get your name to the top of a search engine, go on and blog a lot, post repsonse to blogs, and have a good LinkedIn profile. Real-time alerts might also be depressing when you go 6 months without an alert. It really is a affiliates marketing webstie dressed up as social-networking site.