Aussie Debt Solutions

Using higher profit to reduce debt
The average debt of indebted Australian farms is probably just over $2 million with average farm profit at perhaps a bit under $200,000, up from $100,000 in 2021.

This provides a golden opportunity for farmers to pay down debt before interest rates head higher.

For those farmers carrying past tax losses, the whole of this year’s profit will be available to them. If half of it could be allocated to debt reduction it might help them to clear debt faster. By reducing the interest charged, extra loan repayment accelerates debt repayment.

Farm management
Farmers are highly skilled at stock, pasture and crop management. But for many, that occupies so much of their time and effort from sunup to sundown, that they do not have time for the vital area of financial and debt management. It is not difficult, but it does require skills too. It does not just “happen”. If the farm borrower does not manage a debt, the bank will do so in the way that delivers it the highest profit. If the money is not properly managed on farm then family drawings and loan management can both suffer as a consequence.

Bank De-regulation
We hopefully run our farms to earn income. As a 4^th generation farmer born in the city, I ended up in Chartered Accountancy before running Merinos in the centre of NSW and beef cattle in the Southern Tablelands. Being heavily involved in NSW Farmers, I became aware of the devastation that followed bank de-regulation. Since then the banks have had legislation passed to protect them from prosecution and compensating the customers they treat so badly. So I dumped my accounting and tax  practice to focus on helping farmers battle the banks.

I have been staggered at the dishonest bank practices I have encountered all over Australia. No matter what state or territory, farmers have been cheated and defrauded on a huge scale as the Banking Royal Commission revealed. That has not stopped and will not stop. Only borrowers can stop it.

I have never given my sheep, cattle or bank control of my farming enterprise. I don’t imagine many farms want to do that. The problem is that when the seasons don’t go well, workload increases and ability to repay loans can decrease, sometimes causing catastrophe. Then a bank, if allowed, can start exerting more control and extracting more of the farm profit for itself.

Loan management
There are three aspects to loan management.

1 is to earn substantial profit and let the bank see that, so it does not worry about the loan security. Quite a bit of farm profit can be held in the grain silo or in stock born on the place. That usually does not feature in the tax figures but it is worth letting bankers know about it. On my place a calf was valued at $20 for tax, yet the female retained might grow to be worth $4,000. 100 of them would make a $400,000 difference to profits and 1,000 would make a $4 million difference. Yet that profit is only seen when they are sold.

2  is communications with the lender. These are extremely important but often forgotten. Imagine if you have loaned $2m to someone and then you don’t hear from them for 5 years. If a payment is missed, your heart is suddenly in your mouth. Whenever there is a really good result on the farm it will pay to quietly let the bank know about it – a big profit, exceptional prices received, great season. That builds relationships which can pay off handsomely in the next bad season when a repayment holiday is needed. As soon as there are problems that might affect repayments, get in touch with the bank and let them know. Never promise a repayment that you might not make. That is the greatest sin in loan management.

3 is to plot the loan from start to finish. We like to set up a spread sheet with a line for each repayment date and a column each to show the date, last loan balance, interest charged since then, payment made since then and loan balance after the loan repayment has been made. It is then easy to see how the loan is decreasing over the years until it is repaid.

4. As soon as the loan has been cleared contact the bank and ask for the title deed back and a mortgage discharge. Do not let the bank talk you out of that, because as long as the bank holds your title deeds and a mortgage your property is at risk. It could be lost by something as simple as a guarantee, hackers or bank fraud. Banks love to hold the deed as they can then talk the borrower into another loan to make them money out of farming.

5 Then run debt-free until the next time you need to borrow for a major capital purchase. It is best not to borrow for farm operational costs, particularly on overdraft. A single bad season can send the farm into a debt crisis.

6 The best long term solution as well as storing feed on farm, is to store money away in the bank so that the next time you need money you can use your own instead of borrowing. It is more profitable. Savings also need a serious management plan to accomplish because there are many calls on every dollar received. Careful planning can create large savings as well as meeting all other necessary demands for cash.

But a caution.
Everyone’s situation is different. When you borrow, check with a banking consultant to ensure that you are doing the right thing and will manage the loan to make money for your self and the family, not just for the bank. That consultant needs to know your profits for the past 5 years, your plans for the next 5 and the impact that your annual principal and interest payments will have on your cashflow. Negotiate terms that suit you, not just the bank!

Meanwhile, have a Merry Christmas and may the New Year be a happy and prosperous one.

Greg Bloomfield, GBAC

“Why would anyone invest their money on term deposit with the major banks at 3.35% when the government also guarantees term deposits placed with Macquarie Bank at 4.1%, AMP at 4.1% and Rabobank at 3.9%”, asks banking consultant GBAC?

With business and farm loans, GBAC offers it’s Loan Apps for borrowers wanting the best rates as well as best  charges and terms to suit the specific enterprise. Bargaining with the banks is the only way that GBAC believes borrowers get  fair go. Brokers serve the interests of the banks that pay them. GBAC and Loan Apps serve the customers because the bank customers pay them – a lot less than the banks pay the brokers.

GBAC invites readers to phone  to chat about what works best.

Difficult debt is descending on many borrowers. Many risk losing their homes, farms businesses. Let’s save them, but first ask why it has happened and who benefits most. Bankers perhaps?

Teachers taught writing in the 1940s & ‘50s but can’t teach it now!! Few can read & understand their bank loan contracts.

A regulated casino is deemed not fit to hold a licence; pays $100m and is allowed to continue operating! Corruption or fair? Banks who give loans to cover losses, receive profits in deposits.

Medicare (taxpayers) robbed of $8 billion! Bankers who lend to government benefit.

Political donations and fundraisers deliver favours to donors (like big banks?). Pure corruption! What about 100% government funding, for those who do not accept any other funding.

Pork barrelling pleases voters and politicians but disadvantages those in safe electorates! What about a ban on grants in 12 months preceding election? And make bank loans declarable by politicians voting on matters that benefit banks.

Federal politicians pass Credit Act to prevent skilled consultants not in the pay of the moneylenders (bankers) from rescuing destitute borrowers facing foreclosure. More corruption! Who benefits? Bankers!

It can be – because voters have failed to direct their parliamentary representatives to Advance Australia Fair, leaving MPs and voters at the mercy of the self-interested and corrupt ( bankers?).

Time to take control voters!! Join FairGO’s Voters Network and guide government through your elected representatives (MPs) so that vulnerable borrowers get treated fairly. Aussie debt solutions lie in parliament.

In Australia bank de-regulation has allowed banks to take advantage of borrowers without any rules to regulate those moneylenders.

Imagine driving on country roads and major highways without any rules. Borrowing from banks is much the same. Banks have taken control and because they bleed borrowers dry, they are rich enough to fund many of those supposed to be helping borrowers. Those receiving bank funding will never help the borrowers if it reduces bank profits.

So the challenge for farm and business borrowers is to find the right debt solutions. Aussie debt solutions are unique because of our seasons and the development around the edges of the country and sparse development inland. For farm borrowers the seasons are critical in loan management.

What are the options?  There are lawyers. In my experience as Chartered Accountant with lawyer clients, most lawyers know little about loan finance and little about farming. Their solutions are standard legal ones rather than farming ones.

There are accountants, but most accountants focus on preparing financial statements and tax returns which is a highly skilled field on its own. They often get clients referred by the bank so they mostly do not want to offend the bank.

Then there are a lot of “shonky” operators who claim they can solve debt problems by “consolidating debt. That can be moving all the eggs from a number of baskets into one big basket which, if dropped, means scrambled eggs . Or they talk about tightening your belt and bankruptcy.

GBAC has been advising farmers in every part of Australia, for decades. Greg Bloomfield started his career with Price Waterhouse in Sydney and early on was dealing with some of the biggest names in agriculture. His grandfather and great grandfather had been farmers.  Greg became  partner in a medium sized city firm of Chartered Accountants, then established his own firm, GBAC.

In 1980s he acquired a 9,000 ac sheep property in the NSW Central West and bred Merinos from Haddon Rig Rams. In 1990 he purchased a 3,300 ac  beef cattle property in the Southern Tablelands of NSW that had been settled by his great grandfather. In 1986 he invented the Votergram service that gives every Australian a very effective voice to parliament. He was head of the largest branch and  District Council in NSW Farmers. He formed FairGO to help people influence government decisions.

In 1987, when banks were de-regulated he invented Loan Apps, then called Moneygrams. They enabled borrowers to easily bargain for better loan rates and charges and cost $100. One of the first farm users saved $300,000 on his loan costs over the loan term.

Seeing that many people used his service to apply for loans were doing so because they had a problem with their existing loans and needed to refinance, he decided to devote himself to assisting them exit their old bank on the very best and most profitable terms. GBAC’s biggest debt write off was $5m and in two other cases it had 100% of the debt written off.

He was unhappy with the way banks treated  borrowers for a reason. His widowed mother, with 3 young children and no financial skills at all, had been allowed by a Big Four bank to guarantee a relative’s business loans, on the security of her home. The business failed and the bank took the family home.  Greg never forgot! So when banks were de-regulated in 1987 he converted his Chartered Accountancy practice into a bank loan consultancy.

At the same time as running his Chartered practice Greg also ran a couple of businesses to provide funds for the family. So he got  to actually run his own businesses and farms as well as consult others. There is nothing like doing it yourself to learn how it should be done.

That is why GBAC has a focus on farm and business debts. He and his firm are highly skilled at analysing what the bank has done and “persuading” it to write off some of the debt to compensate the borrowers for not looking after them properly as banks did before de-regulation.

When Greg considers loan solutions or debt solutions he is looking first at the problems and then for solutions that suit the particular business or farm.

Businesses are usually affected by the general economy, health of owners and succession plans.

Farms are affected very much by seasons and commodity prices, as he learned on his own place.

Loans are easier when the season is like this-

More difficult when it is like this-

Both are affected by government policy. Greg wants the outcome to suit the particular business or farm. His farm apps enable very competitive refinancing and his Votergrams allow him to report improper bank practices to each of the 225 Federal Members of Parliament for their action, like the Banking Royal Commission.

Treat banks like bulls. Never turn your back on them. If they give you a hard time, send them to the butcher. Never  let your home or farm be sold up on you without a very serious fight. When you want good fighters in your corner, give GBAC a call on 0428 417 496. They will be very happy to oblige.

Farmers affected by floods facing loan difficulty or default could ask their bankers to give them 1 year’s complete repayment holiday followed by 2 years of interest only payments to aid recovery. That should be put in a formal letter of variation signed by the bank and borrower which does not vary any other term or the previous loan agreement.

Borrower Beware – one bank, in making a variation put a clause in the middle of the variation agreement reducing the term of the loan from 15 years to 15 months, spelling disaster for the farmers. Never trust the bank!

Bank multi-billion-dollar profits can well afford to support flooded farmers. In fact all farm loans should have a clause that allows a similar repayment variation after any flood, fire or drought with a proviso that every quarter of the loan term ( 4 years in a 16 year loan, 7 years in a 28 year loan) the scheduled repayments must have been made. That gives farmers flexibility in bad times and allows them to make it up in good times, whilst keeping the bank happy that the loan will be fully repaid on time.

Under no circumstances should any flood-affected farmers let the bank sell them up because they cannot make loan repayments on time.

If they try give me a call at GBAC on 0248417496.

Greg

Farm loans are much like farm fences. The make buying or running a place easier. They take a good bit of work to set up and if you look after them well they are very effective at doing the job.

But if you neglect them, just like fences, your finances can get all boxed up just like your stock can.

When a branch falls across the fence or a roo knocks it down, the faster you fix it the better.

With a loan, when a fire flood or drought makes payment difficult, the faster you get onto your bank and explain that the better. When commodity prices, government decisions or sickness strikes the same applies.

When the cattle know where they are headed they usually go there with little trouble and when the bank knows what you are doing it usually goes along with little trouble too.

It is when the cattle have no idea of where you want them to go and the bank has no idea why you missed a payment, that problems set in.

If you manage your bank as well as you manage your stock you will mostly have little trouble until you loan is cleared and you have the title deeds back safe and sound in your own hands.

If you do have problems give me a call at GBAC , 0428 417 496 and if I can offer a constructive suggestion over the phone I will. If you need more help than that we will be happy to give you our professional help as we have done for farmers throughout Australia since banks were de-regulated.

You probably know that banks are no longer the source of good financial advice and customer care. Today loyalty is out the door and everything is about profit for the bank and multi-million dollars salaries for bank executives, extracted from customers in fees and interest.

Banks trap farmers into unaffordable loans then financially abuse them, applying the heat of the old branding iron while the borrower is held firm in the cradle. Never be bullied by the bank and don’t think debt problems are your fault. It is the banker who is the expert in loans and does it every day. It is not the farmer who takes a mortgage loan once or twice in a lifetime that has the expertise.

I’ve run my own sheep and cattle and battled with my share of debt as well as running my own national  Chartered Accountancy practice which I converted to a bank debt consultancy when banks began to rob farmers.

Always happy to help where I can. 0428 417 496

Greg Bloomfield

How you judge a bank is very much dependent on what it is you want from the bank.

If one is investing in the bank by buying shares on the Australian stock exchange then two major factors are relevant. The first is the profit that the bank earns and the second is the net assets that back the share price. It’s prospects of earning in the future will also be relevant to how its share pricing is judged.

But if one is wondering whether it is a good bank with which to put one’s banking business or from which to borrow, then the lower the profit earned by the bank the better it is likely to treat its customers.

Best Bank is Bendigo Community Bank

I deal with most major banks in Australia and the one I have found to be by far the best is Bendigo Bank and specifically its Community Bank which tends to share some of its profits with the local community. Customers can own a share in their bank and that is a good investment because it earns money and respect. The service I receive from Bendigo Bank is so far ahead of the service I receive from the big four banks, that it is impossible to really compare them.

When I walked into NAB a while back I realised that I was not very important to them. Staff turnover is so great that there is no continuity of capable people in the branch with which I could deal. I have seen alleged appalling behaviour by a nab broker that does not seem to worry the bank too much. Commonwealth still looks after customers very well and does not seem to lend customers into trouble as much as it did when banks were first deregulated. ANZ has been good at executive level dealing with bad conduct that has damaged customers, but its local branch was so hopeless to deal with that I just gave up and left. Trying to deal with ANZ credit cards over the phone today was just a nightmare. Its phone service is as bad as its in-branch service. Computers doing the job people should, in order to cut costs and services to maximise profits.

Westpac offers ridiculously low interest rates on term deposits to existing customers compared to new ones, so we give it a miss for clients who have banked with it for years. I don’t deal with it now either.

When I walk into the local Bendigo Community bank most of the tellers greet me by name. They told me years ago that their aim was to know each customer’s name by the third time the customer came into the bank.

The service from Bendigo is absolutely exceptional and I cannot fault it. When negotiating with its subsidiary Rural bank its negotiators were again light years ahead of the counterparts of the big four banks and treated the customers for whom I was negotiating with great respect and fairness.

Profit is important but so is caring for people

Today I read in the paper that the stock market was disappointed in Bendigo and Adelaide’s profit margins. As a person who has bought a very small number of Bendigo and Adelaide bank and big four bank shares, I was not in any way disappointed. In fact I was delighted, because I knew that the reason the bank had not produced the gigantic multi-billion-dollar profits of the big four was that it cares more about looking after  customers, than it does about making money out of me. It does not pay its CEO $1m a month like some.

Competition is the key to the best banking service

People don’t ask me to advise them on which bank to bank with. When new clients come to me to find a bank loan I use our Loan Apps to contact every bank that I think will help the customer. Then the customer can negotiate with each bank that responds so that they get the very best loan that suits them and a banker with whom they are happy to work. It is better for everyone who is looking for a loan to ask every bank that is likely to be interested and then play one off against the other to end up with the very best loan. That is a system I developed in 1987 when banks were first deregulated and decided to put their profits a long way ahead of their customers. I remember one of the first people to use our Loan App system saved $300,000 in interest on their loan.

So, as with many things in life it is what one is seeking to gain that determines the criteria by which one should judge the various options. The fields in which I deal are banking and politics. In both, that system of judging is vitally important if one is looking for the best outcomes. Today many people choose the bank simply because they have been with it for years and it is not too bad. In exactly the same way many people vote for the same political party because they have been voting for it for years and it is not too bad.

In both cases I have seen that people get better results when they judge critically on actual past performance rather than tradition. Joining the Australian Voters Network puts most people into a winning position with banks and government due to the support they receive.

Prior to March 1986 the only voice Australian voters had to government was via their local MP. Even if those MPs were inclined to do what was asked, they often did not have the power to do so. Voters became very disillusioned with democracy. The “Yes Minister” bureaucracy ruled with an iron fist. Banks were about to be de-regulated and do the same to customers.

Then in March 1986, a Chartered Accountant by the name of Greg Bloomfield launched the Votergram service. That allowed every individual Australian and organisations of Australians to directly contact each and every Member of any Parliament in Australia. Suddenly “government by the people, for the people” became a reality.

Big business has over 1,000 highly paid lobbyists working full time to make government do what it wants and it spends millions or perhaps billions making that happen.

Yet for a relatively small $120 any Australian can still directly reach and influence each Member of Parliament to persuade them to do what is needed.

That way Australians have in the past got an operation or hospital bed for a sick or injured relative, respite care for someone disabled, a new facility for their child’s or their own school. Or on a broader scale they have had government enact environmental legislation, food safety laws, cut the road toll by 65%, stop smoking on commercial airlines, fund community pharmacies to the extent of $1.5 billion a year and keep the NSW snowfields available for community ski lodges.

What Greg and the Votergrams organisation did not know in 1986 but does know now, is that democracy depends on continuous input from the voters themselves. That is because they have elected to parliament “Representatives” not “leaders”, though some MPs with leadership skills will become leaders. To represent the voters well, each representative needs to know what is wanted because if they do not know what people want, they cannot do it.

Because parliament is a voting forum even though not all decisions require a vote, it is essential for voters to contact every MP individually to ensure that they do know what that voter wants done.

Democracy is a magnificent system of government, but unlike a monarchy or dictatorship, it allows  and depends on voter input to guide what it does.

If you do not do that, someone else will and their goals may be strictly personal gain rather than a fair society. Australian Government can be and is, guided by those voters who use Votergrams.

Politicians are not the rogues painted by the media to whip up controversy. They are ordinary Australians trying to do the very difficult job of pleasing the vast majority of 17 million people.

You can do your bit by using Votergrams to tell them what you, your community or Australia needs in respect of any matter or issue. Your power to guide government comes from your ability to vote in elections and to influence the votes of others where they count most.

Ask the bank why it wants to approve your loan within 10 minutes. The likelihood is that your loan will be approved by a computer with very little human input. And you know what happens with computers when they play up!!! The fact is that the bank’s computer cannot tell with any accuracy whether or not you can cope with the loan for which you have applied. To some extent that is because the computer only gets to receive a small bit of information about you. The bank will rely on its ability to sell up your home, farm or business if you do not obey all the loan conditions it has signed you up to.  Aussie Loan Solutions are designed to put you on the winning side of the contract.

The real approval that is needed is for you to approve the lender as someone who will treat you fairly and to approve the loan contract terms as terms that you feel are fair and reasonable and with which you can comply. There are many unknowns in every long-term loan transaction, whether you are seeking a business or farm loan with a term of perhaps 15 years or a home loan with a term of 30 years. Those factors include age, health, weather, your income, family circumstances, the national economy and government regulations. For these reasons it is more important for the borrower to do the approving than for the bank. Whenever I have needed to borrow money I have been focused on the need to get the money and under those circumstances it is easy to forget to do my own “due diligence” to see that the loan is going to benefit me more than it benefits the lender.

The reason that bankers want to approve your loan in under 10 minutes is that they believe that will prevent you from going and checking out what is on offer from other lenders. When banks were first deregulated I invented an app we called a Moneygram which enabled borrowers to check with a number of banks to see what sort of loans were available. Today we call them Loan Apps and they are just as effective now as they were then. There is nothing like having three or four banks offering you the loan that you want, to enable you to see what they are offering, checkout the terms in each of their loans and decide which of them you feel will treat you most reasonably. There is only one time you can do that effectively and it is before you take out the loan and spend the money. Once you have taken and spent the loan you are captive to the lender usually for a very long time. You would be staggered at the loan terms we have discovered in some borrowings that have caused massive distress to the borrowers and threatened their mortgaged properties and their lives.

We have developed specifically Australian loan solutions and these can apply at the beginning when you are applying for an exciting loan to help acquire a substantial asset for the future and can also be applied when such a loan has turned into a life destroying debt that is driving you to despair. It is not necessary to take out bad loans or to suffer from overwhelming debt. But it does take some time effort and money spent on solving the problems. Problems mostly do not just go away and financial problems tend to get worse over time. Therefore the time to call for help with a financial problem is the moment it appears as a problem.

In the 35 years that we have helped people all over Australia deal effectively with their debts and borrow better than the average loan, we have learned a great deal. Perhaps the most important lesson is to understand that you do not need to “trust” the lender that you have approached. Trust is akin to laziness in that it expects the other side to do your homework. The banker’s job is to earn the maximum profit for the bank and if you look at the multi-billion-dollar profits of Australian banks you will see that they are very successful and you will realise that most of that profit has come at the expense of the bank customers. Your goal however is to get the very best loan possible that will enable you to own and operate an asset that will increase in value for the future. Loans are very long term. It therefore pays to check them out very carefully before you give them your seal of approval, because whatever is in that loan contract you are likely to have to live with.

When you want to enjoy good Aussie loan and debt solutions please get in touch and see whether we can make it work better for you.

We’ve lived in our house for 55 years. Most home owners will live in their “forever homes” for that sort of time too.

For a first home buyer where the land is worth $1.5m the current NSW stamp duty is around $67,500 paid over a 30 year mortgage @ $2,250  year.

The rate could easily be halved to make it $34,000 .

Under the new government proposal, annual Tax on Housing  for a first home buyer of a property with $1.5m of land would be: $400 plus .3% of $1.5m ie $4,500 = $4900 a year. Over 55 years they would pay about $270,000, or 4 times as much as they do now.

What a clever political strategy, painted as lowering the cost of housing by increasing it.

For richer people buying a home with a land content of $3m, stamp duty would still only be $150,000, paid over their mortgage term. $120,000 less!

The Housing Tax is heavily biased against younger, poorer people in favour of richer older people.

Good for government, bad for voters. A real win for property developers as the initial home cost plus tax is lower and  buyers will probably not think of  the nearly $5,000 a year in tax they will be paying for life on top of their mortgage.

I urge young and poorer people wanting to buy their first home to join Voters Network for lower, not higher home cost. There are many ways to cut home costs. Voters Network can help buyers understand them.

Greg Bloomfield, retired FCA, CPA