thewest.com.au Monday, March 31, 2014 Forty, indebted and ......Mar 31, 2014  · the kids, biting...

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Apparently, life begins at 40. Butthe party doesn’t last long. Soonafter, you sink into a well ofdepression.

So says a survey of twomillion people from 80countries. Our 40s is the peak ofour unhappiness.

Age 44, on average, is us at ourgrumpiest. We hit middle ageand get morose at our life beinghalf over. (Or perhaps that ourmiserable existence is only halfdone.)

Why? Mostly because ourteenage kids are feral monsters,work’s a drudge and the hoursare painful, the mortgage is stillmountainous. Financially,professionally and at homeeverything is harder than wethought it would be at this age.

You had dreamed of beingsomewhere by now. Just nothere. Bugger!

I’m 40-something. My workhours are stupid. My mortgageis an Everest, and growing, careof an addiction to propertyinvestment. But, personally, I’mnot feeling like drinking myselfinto a coma like Nicholas Cagein Leaving Las Vegas. (I just didthat for fun in my 30s.) Perhapsit’s because I started late and theDebtKids are just school-age andstill believe their dad knowseverything.

Maybe.But I would also credit it to

some words of wisdom I got onthe eve of turning 40. It wasfrom a lovely lady called Sue,who among the birthday wishesin an email, typed a line I’llnever forget.

“Your forties is when youmake it.”

A bizarrely simple statement.But incredibly right. I’d writtenan 80,000-word book (Debt ManWalking) based on thatsentiment.

And Sue had just summed up

my book in seven words.For most, the strain of life in

your 40s is what sets you upfinancially for your 50s andbeyond. The long hours, thesacrifices, taking on a biggermortgage to upgrade orrenovate, the struggle to paydown the mortgage, educatingthe kids, biting the bullet to buyinvestments . . .

No question, your 40s is hardwork. But depressing? Really?

The study was global. And thestatistics say it’s a worldwidephenomenon.

Sure, it can be hard whenyou’re in the thick of it, but keepan eye on the medium term. Thestudy said we get over it by 50.

For those on the wrong side of35, and approaching the“darkness” of being

middle-aged, or now living it,here are five things to focus on.

There’s not a Porsche, anaffair or a gym membership insight. It’s about understandingthe truth of Sue’s words: “Yourforties is when you make it”.The toil of this decade willdeliver, eventually, in spades.Suck it up. The sacrifice will beworth it.

One: Your home will becomeyour castle. Your huge mortgagewill reduce and your home willincrease in value. It will fortifyyour finances. You’ve got hugedebt because you can.

Two: You are nearly at thepeak of your career. The secondhalf of your 40s is when, theaverages say, you’ll be earningyour highest salary. Make themost of that, without wasting it,

because you’ll eventually spenda long time not working. Invest.Invest. Invest.

Three: Your investments willstart to pay off. If you’ve boughtquality shares and property,know that they will reward youwith capital growth and agrowing income stream in thenext decade and beyond.

Four: Ride the super wave.When you entered your 40s, youwere lucky if your super wasone year’s salary. By the timeyou turn 50, it will be more likefour times your salary, thanks tocontributions andcompounding. Superannuationwill, magically, turn intosomething worthwhile.

Five: Your babies, who arecurrently monsters, willblossom into adults, maybe even

ones who like you. Themono-syllabic grunts will slowlydisappear. The education yousuffered to give them willproduce some fish. They will getnice jobs and find nice partners.They might even leave home.

It all happens because of your40s. Don’t blow it.

Make sure, while you’re onyour knees sweating to pave thepath of your future finances,that you smell some of thoseroses in your castle garden.

And, though I’ve made somelight of it, depression is bloodyserious. If you’re feelingoverwhelmed, see your doctor. Bruce Brammall is the author of DebtMan Walking (www.debtman.com.au),a licensed financial adviser andmortgage broker.bruce@debtman.com.au

Forty, indebted and grumpy— just keep hanging in there

THE DECADE THAT COUNTS

■ Bruce BrammallDebtMan

Not in my garage: There may not be a Porsche, a gym membership or an affair in sight but remember, your 40s, will deliver in spades. Hang in there.

5YOUR MONEYthewest.com.auMonday, March 31, 2014

Thousands of WA families will befacing a $5-plus hit on their week-ly budget tomorrow thanks to in-creasing private health insur-ance premiums.

According to research groupCanstar, the average increase inannual health insurance costs forWA families will be $319 to $5472.

The pain will be made worse because the Federal Governmenthas limited indexation of thehealth insurance rebate so themaximum 30 per cent rebate willcover just 96.8 per cent of newpremiums.

Canstar chief Steve Micken-becker said people should notreduce their level of cover but in-stead shop around for the bestdeal, most suitable policy.

He cited a 50-year-old being co-vered for obstetrics or a 30-year-old being covered for obstetricsas potential wastes of premiums.

Health hikehits hometomorrow■ Neale Prior

When I first heard the word“in-specie”, it sounded to melike something out of the stuff ofnightmares.

The actual meaning of thephrase was more mundane thanmy overactive imagination hadanticipated.

An in-specie contribution iswhere a contribution is madeinto a self-managedsuperannuation fund that is notcash but ownership of an assetbelonging to the fund member.

So if you are short of cash buthave assets, you can makecontributions to your SMSFusing your assets. However, notall assets can be contributed to aSMSF. The superannuation lawallows only two types of assets,listed securities and businessreal property.

Listed securities includeshares, units, bonds, rights andoptions listed on the AustralianSecurities Exchange or otherstock exchange. Business realproperty is land and buildingsused wholly and exclusively inany business.

The reasons these assets canbe contributed into a SMSF isbecause the SMSF regulator, theAustralian Taxation Office, caneasily monitor them. It’s easy towork out the market value ofthese from various sources.

The government also realisesthat small business ownersusually put all the money theirbusiness makes back into thebusiness. Usually when theyretire, they sell the business anduse the proceeds for theirretirement.

Therefore, if members of aSMSF own the land and buildingfrom which they operate theirbusiness, the land and buildingcan be contributed to the SMSF.The property can then be leasedback to the business.

The super law also requires

that if an in-specie contributionis made to a SMSF, the truemarket value of the asset isrecorded in the SMSF’sfinancials. The law defines“market value” as an amountthat a willing buyer of an assetwould reasonably be expected topay to acquire the asset from awilling seller if the followingassumptions were made:� that the buyer and seller dealtwith each other at arm’s lengthin relation to the sale;� the sale occurred after propermarketing of the asset, and; � that the buyer and seller actedknowledgably and prudently inrelation to the sale.

The tax office has published adocument titled ValuationGuidelines for SMSFs as well asanother document titled MarketValuation for Tax Purposesabout how to value assets.

So don’t just record anyamount or an amount that youthink the asset is worth. As atrustee of your SMSF, you willneed to provide evidence to thetax office that the value of the

asset you arrived at was basedon objective and supportabledata.

If you are not sure whether aproperty would meet thedefinition of a business realproperty, please talk to a SMSFexpert.

Don’t assume that propertiesyou own as investments can bejustifiably claimed to beproperties in a propertyinvestment business.

If you try to claim a propertyis business real property, toform the basis of an in-speciecontribution — and you arewrong — it could become thestuff of your nightmares.

In my next article I willexplain how an in-speciepayment to a member of a SMSFsatisfies the member’ssuperannuation benefitentitlement. Monica Rule worked for theAustralian Taxation Office for 28years and is the author of The SelfManaged Super Handbook. She is anaccredited SMSF adviser.www.monicarule.com.au

A different kind of SMSF contribution super

■ Monica Rule