Crystal ball-gazing on life under Libs

TUESDAY night's Budget flooded my inbox with questions from people worried about how the latest changes will affect them.

Tony Abbott

TUESDAY night's Budget flooded my inbox with questions from people worried about how the latest changes will affect them.

Now, I'm not a betting man, but if I were Tom Waterhouse I'd wager we're going to have a Coalition government come September.

Tony, like Tom, knows what punters want (the opinion polls are Tony's form guide) - and it was on display on Thursday night in his Budget reply.

Today I'm going to take the most common questions I received about Tuesday night's Budget and put them through the Liberal policy filter.

PARENTS TO BE

I'M four months pregnant with our first child and I heard the baby bonus is going to be scrapped. I'm really worried this is going to force me to return to work almost straightaway. What can I do?

THE fact that you're relying on a one-off government payment should be ringing alarm bells in your head.

If for some reason you haven't heard them, let me ring the damn bell for you: you need to protect your family.

Sit down with your partner and work out a realistic game plan for the next 12 months - and beyond.

In all likelihood, the baby bonus will still be around when you give birth - but that's not the main game.

What was lost in the media beat-up surrounding the axing of the baby bonus is that parents have a choice between getting it or receiving paid parental leave (though you can't get both).

Most families are better off choosing paid parental leave - and, under the Liberals, this payment is going to get much better.

Abbott's paid parental leave scheme promises that mums will get full pay for 26 weeks (meaning high-earning women will get paid close to $3000 a week for six months).

It's one of the most ridiculous pieces of policy largesse I've seen in years - and that's saying something. (Tony should take off his economic conservative's blue tie and call this stinker of a policy what it is - a multi-billion-dollar bribe to shore up the female vote.)

The problem is that, increasingly, policy is driven by the politics of opinion polls and the 24-hour news cycle - and it can change quickly. But you're playing the long game.

Do not rely on the kindness of strange people in Canberra to pull you through.

THE GRADUATE

I GRADUATED from uni last year and I'm still living with my parents. I have a HELP debt of about $30,000 but I'm trying to buy my own house ASAP. I earn $75,000 and want to know -- should I save for my house or pay off the HELP debt early?

SAVE for your house, don't pay off your HELP (or HECS, as it used to be called) early.

The age-old argument of whether to pay off HELP debt is now officially dead. That's because, on Tuesday night, the Government proposed to remove all incentives to pay back your debt early.

Given Abbott is backing all the Government's cuts, it's highly likely this will become policy.

Based on your income, your compulsory HELP repayments will be about $5000 a year - and, while they are indexed to the cost of living, you never pay interest on the loan.

My back-of-the-envelope calculation suggests you should have your HELP debt paid off in about six years (maybe earlier with pay rises).

Here's a strategy to get you into your first home in three years:

Your take-home pay after tax and HELP withholding is more than $1000 a week.

Given you're sponging off your parents, you should be able to save $620 a week.

Open an FHSA (first-home saver account) and whack $6000 a year into it.

The Government will give you 17 per cent interest a year as a bonus, and you'll also earn interest on the savings.

Get your payroll team to automatically direct $120 of your pay into your FHSA account and $500 into an online savings account. After three years, you'll have a healthy deposit of more than $100,000 - ready to buy a home - and you'll be in the habit of setting aside a substantial part of your income that you can use to pay down your mortgage

THE WORKER

I'M paid a package of $100,000 a year, inclusive of super. I heard that, with the superannuation guarantee payments increasing in July to 9.25 per cent, I will get less take-home pay. Is this right?

YES. Your take-home pay will reduce to cater for the increase in super payments.

Given that super will ramp up to 12 per cent eventually (the Coalition will delay the phased increase by two years), that's a big whack.

Regardless of which way the wind blows in Canberra, make sure the next time you negotiate with your boss it's as "wages plus super".

THE RETIREE

MY HUSBAND and I are about to retire and we plan on relying on an allocated pension plus the age pension to provide us with our retirement income. I heard that allocated pensions are going to be "deemed" by Centrelink and wondered - how will this affect our pensions?

FIRST, let's explain deeming for the kids in the back row who haven't been paying attention.

Centrelink has an income test to determine how much pension people can get access to - the lower the amount, the more you get.

As the name suggests, most retirees are retired, so their "income" is generated from their financial assets.

I know what you're thinking: you could "invest" your assets in a basic bank account, earn bugger all, and claim the full pension.

Not so fast! Those canny cardigan-wearers at Centrelink have got your number. They get around this by "deeming" what income you can reasonably expect from your assets, and use that to decide how much pension you'll get.

The current deeming rates are 2.5 per cent and 4 per cent (depending on how much you have and your relationship status).

Here's the thing: currently allocated pensions are not subject to deeming - but it was announced in the Budget that they will be from January 1, 2015.

Anyone who has purchased an allocated pension before this date will lock in the favourable assessment indefinitely - make sure you talk to your fund before then.

Tread Your Own Path!

Are you trying to win a money argument with your husband? Are you in need of a money makeover? Not sure what (or where) to invest? Drop me a line at my website www.barefootinvestor.com and I'll do my best to give you some answers each week in the Sunday Herald Sun business section.