I’m keen to see you succeed. So, here is a pre-deployment checklist from the Defence Force to help you plan and get your administration in order before you leave.
On the go? Here’s 30 seconds of take outs:
- A benefit of being on an overseas deployment is that it limits the amount of money you can spend!
- Deployment makes for an excellent opportunity to consider paying off debts such as pay day loans, personal loans, cash advances and credit cards. However, it requires some careful planning before you leave home.
- The ADF offers some great advice on what steps you need to take to maximise the benefits of a long-term deployment.
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Coming back from a deployment to a pile of bills in arrears is more than just an inconvenient chore to catch up on. Left too long, you could impact your credit score negatively, and in turn your capacity to continue to grow your property investment portfolio. Why? Your credit score influences a lender’s decision on whether they will risk lending money to finance your next property.
Here is a pre-deployment step by step plan to help you prioritise and plan your administration tasks before you leave Australian shores.
Step 1 – Plan to have a plan
Planning is the key to preventing poor performance. Have your savings plan and budget in place before you deploy.
A benefit of being on an overseas deployment is that it limits the amount of money you can spend! This limit makes for an excellent opportunity to consider paying off debts such as pay day loans, personal loans, cash advances and credit cards.
Step 2 – Redirect your property bills
Set up a conversation with your property manager to arrange that they receive the council rates, water rates and insurances directly. Your property manager will then pay the rates and insurance bills from your rental income – on time!
Deployment is an opportunity to start establishing a more passive set up with your property investments. Of course, you can never set and forget when it comes to your investments – you still want to be receiving optimal rental income. You’ll need to monitor the funds landing in your account and top up where necessary to cover any short falls.
Step 3 – Set up a hub account
Following on from Step 2, the best way to prevent a short fall at the end of each month is to create a buffer in your hub account. A hub account is a bank account separate from your personal expenditures. This account’s sole purpose is for your investment property. You can set up your hub account to receive your rental income and pay property expenses including your mortgage repayments.
Step 4 – Build a buffer to reduce interest payments and cover short falls
A buffer is extra funds from savings, over and above what you need to hold, in your hub account.
The gearing position is the rental income going in to the account, minus expenses going out such as your mortgage repayments, water and council rates, insurances and maintenance – the holding costs.
A popular way investors ensure any short falls are paid on time is to have a buffer in an offset account. The surplus or buffer in your offset account, offsets the mortgage reducing your interest payments and helping cover any short falls at the same time.
Step 5 – Set up a Power of Attorney (POA)
An Enduring Power of Attorney is a legal document appointing a trusted person of your choosing to manage your assets and financial affairs on your behalf, if you are unable to do so due to illness, an accident or your absence. You can find out more on the Australian government website about Powers of Attorney.
Make sure you appoint a responsible, organised person as your POA – someone that is calm in dealing with paperwork and legal speak and can make the time to act on your behalf while you’re on deployment or absent.
If you are unsure how to get this kicked off chat with your legal officer. They can point you in the right direction. In the Defence Force, appointing a POA to act on your behalf will make your life easier.
Step 6 – Set up electronic invoicing
Most local councils and utilities companies can email your bills to you. In fact, most prefer it as it saves them money – it is cheaper to send an email than go through a printer and mail outs.
Emailed bills are a great way to ensure you can make bill payments by the due date when you’re on a long deployment.
If you miss a bill payment while you’re away from home and it is more than 90 days overdue you could be at risk of getting a credit default notice against your credit file. This could affect your ability to be approved for finance for your next investment property.
It’s a good idea to keep an eye on your credit report at least once a year to ensure you’re all clear. You can request a free copy of your credit file request at Equifax.
An overseas deployment can be an awesome way to get ahead with your finances. It does take some forethought and planning to really make use of the financial benefits of being away from home for a while. Being limited in what you can spend, of what you’re earning means you can boost your savings plans, pay off debts and manage your affairs while you’re on deployment.
Check out the pre-deployment page on the ADF Consumer website > forceprep for more information.
Planning well will pay off big time!