31 December, 2010

Death and Taxes... Mostly Taxes

We are a little nervous about the regular tax rates on income in Australia.  The base tax rate for my income bracket is 40%.  YIKES!

With that big of a chunk removed, there's no way we can afford to live there.  But, rest assured, dear reader - there are tax credit for children.  And do we have a bus load of tax credits.

It turns out that, with our minions and Erika not planning on working, we effectively cut our tax rate from 40% to 19%.  I figured this out using a calculator on one of the Australian Government web sites.  The scheme is complicated, there baing a Part A and Part B tax credit for kids.  I couldn't figure it out from the wording of the law (go figure, their tax code is as hard to read as the US tax code), but they had a helpful tax calculator.
One of the things that I'm going to have to get used to is the word "fortnight".  A fortnight here is when you build a castle with pillows and blankets in the play room and spend the evening in it.  (Fort Night)  The government of Australia is fond of using it as the term for a two week period.  So, that's about 2/3 of a score of days.

The web site calculates our income for a fortnight and then calculates child "payments".  I would think a credit would be easier to deal with, and perhaps that's what they mean.  The web site, however, uses the term payments, so I don't know if you get a check issued weekly or if it is simply an offset to your income taxes.  I do know that you can receive it every fortnight (see, getting the hang of that) or as a lump sum at the end of the year.

I think that for our first year down there, we may need to hire a "tax expert".  I hope that have TurboTax AU.

Housing Bubble Bust

We are so underwater in our house right now, we need SCUBA gear to take a shower.

For the uninitiated, underwater is the lovely situation when you owe more to the bank on your house than it is worth.  Basically, if we sold it and paid off the bank, we'd lose money on the transaction.  We are about US$140,000 under water right now.

A well thought out plan might include some thinking like this:
"Hey, dear, let's sell the house and use the baskets of money we'll make in the transaction to move to Australia."
We're not in that boat, obviously.

Our plan here it to simply surrender the house.  We're going to walk away from it.  This is a harsh decision for us.  It smells like failure.  We are walking away from over US$250,000 in payments made.  If we can live in the house for five months or so after we tell the bank that they can have their house back, we can pocket some US$15,000 in mortgage payments.  We're not PLANNING on this, but it might be an option.

We do not know if your credit rating follows you over the Pacific Ocean.  If it does, we will be renting property for our first years in our new home.  While this situation is not ideal, it is no worse than the situation we're in now.

Looking at housing costs in Australia, the cost of renting a 3-4 bedroom house is about 2/3 to 1/2 the cost of housing we're paying now (AU$1,400-AU$1,900 per month approximately) in most cities except Sydney.  Sydney is significantly more expensive for any house that is not an hour outside of the Central Business District (CBD).

In Perth, for example, I found this house for AU$450/week.  It is on a cul de sac, has four bedrooms and a fenced in back yard.  It is, however, right near a major thoroughfare.  But at AU$2,070 (average) per month it is 2/3 of what we are paying for housing now.

One thing I've noticed is that the rental prices are all in $/Week.  NOT $/Month.  I don't know if you pay weekly or monthly.  I suspect that this is a marketing ploy to make the properties look cheaper.  Much like a retailer might charge $2.99 to make the price look much better than $3.00.  A lazy person might say $400 x 4 weeks per month = $1,600.  But there are, on average, 4.6 weeks per month.  And we don't add that 0.6 weeks in our head.  I don't know.  But I'll find out!

Do you have any insights on credit scores transferring to Australia or know about renting houses?  If so, let us know!

30 December, 2010

The Journey of a Thousand Miles

"The journey of a thousand miles begins with a single step" ~ Confucius

I have lived in Minnesota my entire life.  Not once have I put down roots anywhere more than 60 miles from the spot in which I find myself this very second.  I live about three miles (5K) from the house I grew up in (ages five to about twenty four).  This should tell you a great deal about me.

My wife, Erika, is a different story. At the ripe old age of 23 she packed up everything she owned in her car and, without a job, an apartment or a friend, she drove 700+ miles to Minneapolis to start her life.

I have always been insanely jealous of, and simultaneously insanely proud of, her courage and spirit.

There is nothing wrong with living in Minnesota.  We have seven spectacular children.  We have wonderful family that we love dearly.  We have profound changes in the seasons.  We really like our house.  I enjoy my job, church, neighbors, friends, hobbies, parks, etc.  But staying this long (15 years) in one place is not in Erika's heart nor in mine.

So we're moving.

Yeah, we could have decided to pick up and move to Florida, Texas, Iowa, Oregon, etc.  But, we're a family of great adventure.  We're moving to Australia.

The downside of this move is that we're leaving behind many people that we love dearly.  Topmost on this list is my oldest son, Josef.  Joe is eighteen and has joined the US Air Force.  So, he will be moving away anyway as part of his new life.  Also are my parents - who live just three miles (5k) down the road.  Their health is not the best and they may not be around the next time we can all afford to come back to this state.

In the spirit of ALL of my ancestors, we are striking out to a new contient, a new life, despite all of the joys and comforts of home.  I have a great grandfather who stowed away on a ship from Poland to come to this country.  Maybe I'm channeling him.  Who knows.

Anyway, this blog is my/our journal of packing up your life and moving it to the most antipodal spot on the planet.  Mayhap you'll be encouraged by our story and be inspired to do the same.  Mayhap you'll learn a valuable lesson here and decide to stay home.  We don't know where and how our story ends right now, but you're welcome to read along with our story and we can find out together.

Step 1: Credentials

We filled out the passport paperwork for our kids last night and we contacted several Australian visa agents living in the United States.  I'm sure that we'll have a ton to say about each of those steps in furutre posts.  But this was out 1st step of a thousand mile journey (or more like a 14,000 mile journey).

Life is a grand adventure.