First Home Super Saver Scheme in 7 Steps

The government announced the creatively named First Home Super Saver Scheme (FHSS) for first-home buyers in mid-2017, and since then I’ve been mulling it over. With the easing housing market and constant expectation of having to move (been renting in the same house for over 6 years, but it’s inevitable I’ll be booted some time!), I’ve been thinking more about moving some cash into housing (see dreams below). I’ve figured out the 7 main steps needed to make it work.


The scheme itself is a little confusing, but this is basically what I’ve figured out the run-down to be:

  1. You need to have not bought any property yet!
  2. The contributions to your super fund can be made up of salary sacrifice (concessional) and/or post-income tax contributions aka personal savings (non-concessional), up to a maximum of $15,000 per year and overall total of $30,000.
  3. Salary sacrifice contributions must be within the concessional contributions limit which is $25,000 per year (also includes you employer’s super payments) – to calculate your maximum additional contribution you can make via salary sacrifice you need to minus your employer’s yearly super payments from the $25,000 – for me, my employer contributes about $8000/year (9.5%), so I can add the full FHSS maximum of $15,000/yr via salary sacrifice and come under the contributions cap.
  4. Your salary sacrifice (concessional) contributions are taxed at 15% when they enter your super fund (but you avoid income tax).
  5. When withdrawing, you can take out 85% of your concessional (salary sacrifice) contributions as they have been taxed 15% and 100% for your non-concessional (post-tax income) contributions, up to the $30,000 PLUS deemed earnings. Deemed earnings are calculated using the ‘deemed rate of return’ which = 90-day Bank Bill rate + 3% (currently around 4.8% – double most HISA!).
  6. You pay some tax (taken out by ATO before it gets to you) when you withdraw the money. The tax is based on FHSS assessable income, with a 30% tax offset (eg. if tax bracket 32.5%, you pay 2.5% tax – obviously higher for higher earners):
    • For non-concessional (after-tax) amounts: tax is only paid on deemed earnings, so assuming 32.5% tax bracket and only non-concessional contributions made:
      • Tax paid = $30,000 x 4.8% (deemed interest) x 2.5% (tax) = $36 – this seems low but remember income tax has already been paid on this before it was contributed (around $14,000 at 32.5%)
      • Total withdrawal = $29,964
    • For salary sacrifice (concessional) amounts: assessable income for the scheme = concessional contribution amount + deemed returns. So total tax on withdrawals using salary sacrificed $30,000 (assuming basic interest formula and 32.5% tax bracket):
      • Tax paid = [$25,500 (ie. 85% of concessional contributions) + $25,500 x 4.8% (deemed interest)] x (2.5% tax)  = $668
      • Total withdrawal (after two years) = approx. $24,830  *actually slightly higher ($25,292) as interest is compounded

7. You then “have up to 12 months to sign a contract to purchase or construct a home”. There are rules and penalties for not using the withdrawals to buy a property within 12 months (time extensions can be applied for) – see here for more details.

For most capital cities, $25-30,000 isn’t much of a deposit, but it is definitely a start and has some significant tax advantages, so I’m sold!


As your taxable income will be reduced, your employer will reduce the amount of HECS-HELP tax it takes out of your pay. HOWEVER, your final HECS-HELP payment is a percentage of your assessable income = taxable income + concessional contributions, with the percentage depending on the threshold you fall into*. So you will end up with a tax bill at the end of the financial year to make up the difference**. This will be substantial if you are salary sacrificing the maximum $15,000 per year.

  • For example:
    • If earning $80,000, you will pay 6% back as a HECS repayment = $4800
    • BUT if you salary sacrifice $15000, your employer will pay back at the 4.5% rate (as your income looks like it is only $65000) = $2925
    • Which means you will have additional HECS repayment bill of $1875

*These thresholds are changing from 2018/19, so everyone will be paying more HECS back

** This is also true for the Medicare Levy Surcharge (MLS) for high income earners ($90,000 individual or $180,000 couple), but not for the Medicare Levy which is just based on taxable income


a. Set up salary sacrifice contributions totalling $15,000/year for two years – $577/fn

b. Set up a automatic transfer from my salary into a separate bank account in order to cover the HECS payment difference at the end of the year – around $77/fn


More details


CALCULATOR (for salary sacrifice):



Quick answers to six financial roadblocks

  1. I don’t have enough money to invest…. Get ACORNS -it’s a micro-investing platform where you can invest in the sharemarket for as little as $5 a month!
  2. I don’t know how to save… You don’t need to! Splash out on the future you by spending on yourself first and put your cash into difficult to access high-interest savings or investment accounts.
  3. I spend all my money shopping… Cut up your credit cards and store cards. Only carry cash. How easy is it to spend now?
  4. I don’t have time to sort out my finances… Start small – 5 minutes a day writing down your expenses. Consciousness is a key. A few hours now tracking expenses, writing up a budget and automating your investing is like paying yourself thousands of dollars per hour in future gains. Not doing it means your pissing that money away.
  5. I don’t know where to startStart with taking lunch and a refillable bottle of water. Put the money you would have spent into a HISA or old-school piggy bank.
  6. But the market will crash… It will. Take a breath. Then stick to your plan. Sharemarket dips are an opportunity to buy in at lower prices, and they have invariably recovered. No one retires early from the interest on CD/savings accounts.


Are there any other big financial roadblocks you have simple answers to? Let me know!

7 Little Changes that Sparked the FIRE

It’s been about 18 months since I jumped on the FIRE bandwagon and realised I wasn’t all that keen on gorging myself on debt and plasma screens till I collapsed. These are the 10 changes I made that have set me up for the future:

  1. Figuring out where all the money went – tracking all of my expenses for a month gave me a really powerfully insight into where it was all going, and just how much I was tossing away on crap that brought very little value. Getting into the economics-trained mindset, there was very little gain from a significant amount of financial outlay at a massive opportunity cost (ie. an early retirement!). Now I use a detailed FIRE spreadsheet to track how I’m progressing towards my financial goals.
  2. Taking lunch – $10-20 bucks a day on lunch and coffee adds up to an awful lot of future relaxing lost. Getting some decent tupperware and spending an hour or two during the week prepping a week of decent lunches is one of the best investments you can make. Not only is the food likely to be healthier, it means you can avoid lots of other frivolous spending opportunities by not having to visit food courts and malls, and free up some cash for investing. Plus you can instead take your lunch to a sunny park or chill on a bench chatting to a friend – cheaper, healthier, happier.
  3. Telling people I was going to retire after 15 years of work – making it public firstly gives you a great justification for adjusting your lifestyle and people have a way to comprehend the changes be it suggesting what people perceive as cheaper alternative options, bringing lunch, drinking cheap beer, ditching the car, not constantly updating the waredrobe, and secondly publisicing is a massive motivation to stick to the challenge, especially with so many naysayers!
  4. Fixing everything – youtube has an insane amount of videos on how to fix so many things, and whilst it is a small time investment initially, it works out incredibly cheap in money and time to repair most things yourself rather than replace.
  5. 4603522314_76dd819095_bWorking with my after-save pay – when I first started saving with a full-time paycheck, I tried to think of my pay in post-savings terms. If I wanted to save $300 a fortnight, then I didn’t earn $1800, instead I earned $1500. Then I had to figure out how I could work around this figure. In my mind I was able to subsist on less than a $800 a fortnight at uni, so it was possible, and made saving the priority.
  6. Scrutinising the car – when I first got a car it was fantastic, I could go anywhere, it was generally quicker for longer trips and could carry much more than a bike! Then the costs started piling up, and the belly fat. When I got all the costs down on a paper I realised I really needed to investigate other options. Now I use a combo of cycling and public transport to get the work. It takes about 20 minutes longer than driving, but instead of sitting in traffic, I’m exercising and reading. And saving a bucket load of pineapples.
  7. Getting to grips with index and managed funds – despite doing an economics and business degree, I didn’t fully understand the ins and outs of these investment options, particularly in terms of long-run returns, fees, investment types and the best way to get into them. I ‘m not expert, but I figured out that getting in with the minimum investment into a broad-based sharemarket tracking (index) fund with low fees is not a bad start. Then adding to it on a very regular basis to smooth out the highs and lows (known as average cost investing) is a pretty low-risk way to build them. Currently I have an international hedged index fund, ethical ASX managed fund and a bond fund which I contribute to each week via automatic transfers. Slow and steady wins the race (hopefully!).



Why I ignore my student debt

Whilst our US buddies are straddled with high-interest student loans, Australia is mildly lucky that the government provides ‘interest-free’ loans for higher education (IT SHOULD BE FREE!).
Currently, government supplied student loans (‘HECS-HELP’) are indexed to inflation which at the time of writing was 1.5%. This is basically the cheapest loan you are ever likely to get, and the reason why I don’t make any more than the compulsory repayments which the government takes out of my pay. At the moment it will take me about 9 years to pay back my $35,000 HECS debt without a voluntary repayment


The two main reasons why it’s not worth paying down your student debt in Australia:

  1. You’re being charged 1.5% ‘interest’ on the loan which just keeps it on track with inflation – there is no economic sense to use your spare cash to pay more than compulsory repayments which are taken out through the income tax system because either a) you can earn 2.75% putting that money in a savings account (a gain of 1%), or b) you have debts with much higher interest rates.
  2. Either you earn over $54000 and you will be forced to pay down that debt as compulsory repayments are taken out of your pay anyway OR you don’t earn over $54000 and will never need to pay it back!

This situation may change in the future with regular government rumblings about policies to dig deeper into people’s pockets for something that should be free, but at the moment it’s just not worth worrying about your HECS – build your future instead through some savvy financial or personal investments.

The current compulsory repayment rates as a percentage of your income, from the ATO:

2016–17 repayment income thresholds and rates for HELP, SSL, ABSTUDY SSL and TSL
Repayment income (RI*) Repayment rate

Below $54,869


$54,869 – $61,119


$61,120 – $67,368


$67,369 – $70,909


$70,910 – $76,222


$76,223 – $82,550


$82,551 – $86,894


$86,895 – $95,626


$95,627 – $101,899


$101,900 and above


Taming expenses – the key to financial independence

Why would someone on $250,000 a year never be able to retire? Because they’re spending $260,000. They’re always chasing debt.

At a certain level of income, your basic needs are met – food, housing, clothes, utilities,
public transport. If you earn beyond this level of basic needs, it’s up to you as to how soon you reach financial independence. Every dollar you earn above your basic needs is a choice between spending the dollars today, and investing the dollars in your future. It is a careful balance, requiring some planning and a little bit of willpower. The truth is that most people on an average income can reach financial independence or retirement a lot earlier than they may assume and it all comes down to expenses.

Here are some very basic calculations I did to see how my expenses would impact my
financial independence. For these, assume a withdrawal rate of 4% (ie. how much you withdraw from your wealth each year post-retirement) and a real interest rate about 3% (ie. how much return you receive on investments above inflation). These are true for all levels of income after you first begin saving:

  • If you spend 100% and save/invest 0% of your earnings, you will never retire!
  • If you spend 90% and save/invest 10% of your earnings, you will reach financial independence in 70 years
  • If you spend 75% and save/invest 25% of your earnings, you will reach financial independence in 40 years
  • If you spend 50% and save/invest 50% of your earnings, you will reach financial independence in 19 years
  • If you spend 25% and save/invest 75% of your earnings, you will reach financial independence in 7.5 years
  • If you spend 10% and save/invest 90% of your earnings, you will reach financial independence in 2.7 years

After seeing these numbers and adjusting for different incomes and expense levels, I realised two key things:

  1. Your savings rate is key to financial independence. Depending on your situation, improving your savings rate (% of income not spent) may be more easily achieved by either earning more and maintaining expenses or by spending less and maintaining earnings. My current income as a full-time teacher allows me to easily meet my basic needs and more, so I have found that cutting $100 from my regular expenses is more easily achieved than regularly earning an extra $100 (up to a point!). For an extreme example of expense minimisation and achieving early retirement, check out . This level of cost-cutting is not achievable or desirable for everyone, but it does give some insights into the importance or the savings rate and how to find ways to significantly reduce expenses.
  2. An additional dollar saved is more powerful than an additional dollar earned, in
    the quest for early retirement. To understand this requires a little maths. Lets say you’re saving 0% and then you cancel your unnecessary, expensive cable and gym memberships and now you’re only spending 80% of your income, your savings rate is 20%. But your mate who also saves 0% thinks that’s a terrible idea and instead takes on additional work which increases their income by 20%, and they don’t increase any expenses, their savings rate is only 16.5%. Looking at the calculations above, its clear to see you will be retiring before your mate, even though they’re on an income 20% higher than yours.

What is best for you will depend both on your current level of income and expenses, and which approach to increasing the savings rate is most easily attainable whilst maintaining a sufficiently good quality of life. Though for many people, myself included, there are ample opportunities to reduce expenses and improve our savings rate to achieve our wealth and retirement goals sooner.

A simple calculator play around with to understand the impact of savings and expenses can be found here – and I have a bunch of other useful tools described on my page: 10 great tools for crunching the numbers.



Make Sunday Count – 6 ways to prep for a fantastically frugal week

As a 9-5er, Sunday is about reading, walking, picnicking with friends, nursing a hangover, catching up on sleep and laundry. But a really great Sunday can also help set you up for an awesome and wealth-wise week. Here are a couple of things I try to do most Sundays to fire me up for a new week:

  1. Make a big batch of lunches (45minutes – save $45) – I love cooking and I love cooking beans, which are an excellent food to reheat at work with some rice and smoky hot sauce. As part of Sunday dinner prep, I throw the rice cooker on (best $15 you will ever spend), and then chop up onions, garlic, veggies, fry it up with choice spices (cumin, smoked paprika, cinnamon, oregano), add some tinned tomatoes and tinned beans, and after about 30mins of cooking you have excellent lunches for the whole week. Just whack a serve of rice and beans into five tupperware containers and bam, healthy, cheap lunches for the week! If you don’t like beans and rice, there are heaps of other options – sandwiches, pasta, curries – whatever you like cooking and love eating. Either way, you will save heaps by not paying for lunch at work and likely eat a much healthier meal.
  2. Stock the fridge with healthy and nutritious snacks – I tend to do a shop on Sunday and try to make sure there is a good abundance of fruit, nuts, veggies and dips in the fridge to make sure that I have plenty of great snacks to take to work and avoid the mad rush to the takeaway kebab joint in the afternoon when a 5pm-hunger starts to kick in.
  3. Put a water bottle in your bag – you never know when you will need a drink, and there is pretty much always a tap to be found somewhere to fill up. This always saves me cash as I never need to buy bottled water and reduces my impact on the environment from massively energy intensive and wasteful plastic bottles. Win-win!
  4. Check your expenses for the week and put that into your spending account – I like to take a few minutes to think about what I will be spending during the week (groceries, petrol, pub meal etc.) and just transferring that amount into my debit card account. This allows me to pre-plan and figure out strategies to reduce overspending (for example, if I know I will be meeting friends at the pub in the evening, I might decide to have dinner at home first then only have a drink when I’m there to avoid the $20-odd cost of the meal).
  5. Make a mini-FIRE goal – financial independence and early retirement (FIRE) is a stretch goal of mine, so to motivate myself I set a little financial goal for myself that week to help me along that journey – it might be an action related to a bigger monthly/yearly project to build new habits or simply something I’ve been wanting to try out to see how it fits with my life. It also helps to reinforce why I’m spending the time to do the things above.
  6. Get to bed early! – there is nothing worse for destroying self-control and laying the groundwork for credit card carnage than tiredness. With weeks seeming ever more busy, I find that if I don’t get a decent sleep on Sunday, it is extremely hard for me to catch up during the week. It definitely can be tough to get to be early on Sunday when you’re beginning to think about work, plan the week but still trying to enjoy the weekend. I find that making sure I get some decent exercise in, some sun if possible, limiting alcohol and screen-time and eating relatively early all set me up for an excellent Sunday sleep.


Is there anything you get up to on Sunday that sets you up for a stellar week? I’d love to know!

MoneyBrilliant: The all-in wealth tracker for Australians (aka the Aussie Personal Capital)

UPDATE: MoneyBrilliant has two plans – one free with limited functionality and one that is $10/month. Personally, I can managed my own finances with a spreadsheet and save the $120 – but some people might find that good value!

After months of being frustrated with Personal Capital being limited to the US, I found the Australian answer for tracking all your investments, spending and bank balances – MoneyBrilliant!

It allows you to link all your accounts from regular banks, credit cards, superannuation funds and managed funds to the app using Yodlee (bank level security application). With this info, the app compiles and categorises all your income and spending transactions, providing you with both a broad overview of spending habits and detailed information about specific categories of spending. This is great for tracking where your cash is going. Along with general spending, changes to investments are tracked and compiled into an overview of your net worth.

You can also set up budgets and financial goals and track your achievement of this. I’ve only just started using it, but by automatically compiling and calculating my financial data, it will save me heaps of time and give me real-time info about how well I’m going towards achieving my goals.

Here is what you’ll see on the dashboard when you log in. You can add additional features, and up in the top right hand corner you can see drop down menus to do more in-depth analysis and planning.


A little down the track I’ll update this based on more thorough usage. Check it out for yourself and let me know what you think!