The intersection of capability and circumstance (in personal finance)

financial capability nz

A few months ago I accepted a new position that perfectly suits my nerdy, money-loving heart – one with the overarching aim of helping people get ahead financially.

Very early on, I got to attend a particularly enlightening conference (the video below comes from that) and also a community workshop in a lower socio-economic area of Auckland. Let’s just say the challenge is huge. More than ever, I’m coming to understand the complexity of the issue: it’s not just about individual efforts and bootstrapping, it’s about human nature and psychology – and of course, the wider system.

In a country like New Zealand, where the cost of living is pretty astronomical, budgeting can only take you so far. Where housing costs are out of control, home ownership is spiralling out of reach, the rental market is squeezed and the condition of rentals is a public health issue. Where public transport is pretty abysmal, and low-income households often lack access to a vehicle, and therefore, supermarkets and healthy food options. Where certain cultural norms mean that family can either be a boost or a drag, holding individuals back from getting ahead. Where high burglary rates mean frequent setbacks, unless you can afford excellent insurance. Where people being locked out of the property market today is going to have huge ramifications when this generation reaches retirement.

True, some people don’t have huge lofty goals and aren’t particularly interested in ‘getting ahead’. But we can’t get away from the fact that we live in a capitalist society, and you need money to exist in it. Inflation is a fact of life; things are only ever going to get more expensive. We’re already a low-wage economy, and if your income remains stagnant, you’re going to wind up at the wrong end of the inequality gap – a yawning gap that’s only growing. I for one don’t want to wind up being a burden on society. So I was really happy to see a session on upskilling and increasing your earnings as part of that community programme, because spending is only half of the equation. It doesn’t matter how good you are at budgeting, if you don’t have enough money coming in, you’ll never get ahead.

 

Sure, let’s build financial capability so people are better equipped to deal with whatever circumstances life may throw at them. (Pretty much everyone can and should be doing better, to varying degrees.) But it’s about more than that. Health, family, educational, church systems – all contribute to financial wellbeing. IMO so much hinges on those early years; if you start out behind it’s a lot harder to catch up and overcome setbacks. And the worse that things are for you now, the harder it is to think about the future.

(For one of the best posts I’ve read on this topic, head over to Frugalwoods.)

I’ve been fortunate on the health, employment, family fronts. Not everyone has the luxury of that kind of head start. You need to be able to get ahead of yourself in the first place, to get ahead of your paycheck, build up a buffer, get a reliable vehicle, secure your housing situation.

And yet, I came on board at a personally tumultuous time, financially speaking. By the CFSI’s reckoning, I was probably a bit closer to Financially Tenuous rather than my usual Financially Striving. It was so, so hard to come into work every day, think about personal finance, listen to coworkers’ tales of buying houses, all while shit was falling apart in my own life. Despite that, I’m so happy to be doing what I’m doing. I feel like it’s the perfect time to join the fray – financial capability is on the political agenda, recent legislative changes have improved consumer protection around credit and disclosure, and we’ve only just begun.

Making your travel money go further

You all know travel is my big splurge. For me it’s about value, not penny pinching – getting the most for my money and enjoying the experiences I choose. There are zero trips in my planned future but I’m hoping for lots of summer chilling close to home – Auckland is full of great beach and bush spots that cost nothing except petrol to get there!

Flight Centre has come up with a list of things that £10 can get you around the world (incidentally, their Auckland pick is something I haven’t done!) and it’s interesting to see how others compare.

For £10 (or NZ$20) I’d march you over to a bakery for a pie and then take you out for ice cream. Just sayin’.

5 of my favourite quotes about money

Oscar Wilde — 'When I was young I thought money was the most important thing in life, now that I'm old - I know it is!'

Oscar Wilde — “When I was young I thought money was the most important thing in life, now that I’m old – I know it is!”

Robert Graves — “There’s no money in poetry, but then there’s no poetry in money, either.”

Robert Graves — “There’s no money in poetry, but then there’s no poetry in money, either.

Jane Austen —"A large income is the best recipe for happiness I ever heard of."
Jane Austen —”A large income is the best recipe for happiness I ever heard of.” 

William Shatner — "If saving money is wrong i don't want to be right."William Shatner — “If saving money is wrong, I don’t want to be right.”

Euripides — “Money is the wise man’s religion.”

Euripides  — “Money is the wise man’s religion.”

Link love (Powered by emotions, Mariah style)

If there’s one good thing to be said about angst, it provides excellent creative fodder. To everyone who’s commented, tweeted, emailed recently – I shouldn’t be surprised when these things resonate. Nobody is special. Pretty much everything in the human experience is universal, and someone’s been there, done that.

This week’s links

It’s been an emotional week around the world. But as Prudence says, let sadness be turned to love, fear to peace, paralysis to purpose.

Zen and your finances

Myers-Briggs personality types in the personal finance blogosphere

A daughter’s tribute

What are your weird frugal habits?

A healthy way to aspire to a better life

You have enough

 

What is happiness, anyway?

A is for Angst

“Are you happy?”

For someone who professed to be terrible at giving advice, he was a ninja of tact. When in doubt, and pressed for an answer, simply rebut with a question in turn – it’s a fail safe tactic. Particularly when you’ve been put on the spot by someone you don’t know all that well. Oops.

The problem with the ‘are you happy?’ benchmark  is that happiness isn’t static. If we all did what made us happy in the short term, well, the world might be a very different place. It’s called adulting.

“Happiness is fleeting and at times elusive. We won’t always grasp it, and we’ll forgive ourselves if we don’t. Our lives might not always be happy, but they will be full with experience and with one another.”    (via A Practical Wedding)

The struggle

I’ve been finding happiness in the little moments. But I don’t know if those are enough. I don’t know if that makes up for the overall instability of our current existence – because this is my LIFE, and I’m the only one who has to live it and the only one who can take full responsibility for it.

I can’t tell if I’m cold or codependent (that probably changes from moment to moment). I can’t tell if I’m expecting too much and need to learn to roll with the punches or if I’m an idiot for sticking it out so long. I feel like I could paint at least two very different pictures, two very different interpretations, of the past few years, and I honestly don’t know which would be the more accurate. I don’t know where to draw the line, because there is no clear demarcation for these kinds of things.

From a wholly pragmatic perspective, I should have walked months ago. I tried, sort of. But I’m very good at that womanly thing of Putting Others First. Too good.

The question I’ve been asking myself a lot is: How do you know? There are things we’ve been taught are dealbreakers in relationships. But for most of us, it’s not that clear cut. So many times I’ve just wished for someone to tell me what to do, and be done with it.

What is expecting too much? What is expecting too little? Am I settling? Am I being unrealistic?

I ain’t saying she a gold digger, but I do require an equal partner.

Truths to live by

It’s insanity to keep doing the same thing and expect different results.

Do not expect other people to change.

I am the only person responsible for my own happiness.

(Oh, and the sunk cost fallacy – throw that in there too.)

Words of wisdom

I’ve been finding a lot of comfort in a lovely comment left here some months ago:

“I used to go to sleep some nights thinking I was going to wake up the next morning, pack a suitcase and head to my mom’s and start the separation process. … I also would give myself ultimatums like ‘if it’s not better by this date I’m leaving’”

I remember reading somewhere – I suspect in a post about unconventional relationship advice – that you must be willing to walk away. Now, I know it’s commonly thrown around that people just aren’t committed enough today and that they give up too easily or expect perfection. But to be frank, I’ve yet to see a single example of this in the lives of anyone I know. We’ve all got the opposite problem – we don’t know when to walk away. We hang on for all we’ve got.

I thought I was willing to walk. But it took months to actually muster myself to that tipping point and look over the edge.

And I can’t lie, the terror I felt was almost paralysing.

Being there, though – that was a turning point. I was making plans. I was saving listings on TradeMe. I went and looked at another place to live. It wasn’t just an option; I was committed to leaving. (Not necessarily the relationship, but definitely the living situation, for many pragmatic reasons.)

What changed my mind? So many little things, barely on the spectrum at all, really – a toothbrush, an unexpected encounter – but enough in aggregate to drive me into even deeper contemplation. Ultimately, a third path started to crystallise. I ran scenarios, crunched numbers. I thought I found a way to get what I wanted, without having to shake up my entire life right now. A win-win, as they call it. There’s nothing quite like feeling backed into a corner, and finally seeing a sliver of light in a new option as it reveals itself.

Moving forward

The most important thing is not my marriage. It’s ME.

I certainly haven’t been acting like it. But once I finally cemented this in my mind, things became a lot clearer.

Again, this is my life. I only get one, and I’m the only one living it. There are things I cannot control in it, things that have made life quite miserable. But there are other things I can control, and can change, to mitigate that. Sour as that lemonade is to swallow, it’s not as bitter as the lemons.

So, I’m making plans to achieve the things I want. My number one priority is myself. The status quo is unsustainable; a 2016 without progress is unacceptable.

Hopefully the future still involves us growing old together – but if it doesn’t, I have made peace with that. That might sound depressing, but I find this freeing.

Happiness is having a plan.

TL;DR: Money is the most important thing in the world. Don’t believe anyone who says it isn’t.

(Sorrynotsorry if that offends your romantic heart.)

On guilt (and a litany of confessions)

The last few months have brought a lot of tears.

I left a job I loved for a job that I also love, in different ways. I cried a lot about that. I carried a fair bit of guilt about it. But when it comes to career moves, I’ve never regretted saying yes, even though at the time I never felt quite ready to move on just yet. I feel so stupidly lucky to have had not 1, not 2, not 3 but 4 dream jobs in a row, and to tick off working in two areas I really wanted to try.

I’ve realised I’m perhaps not the best at judging others based on first impressions. (Ironic, since I give off a terrible first impression myself.) I feel a little guilty for pigeonholing a few people so quickly, whom I now have lots of affection for.

I couldn’t stop comparing myself (and coming up short) against a couple of peers who I can’t help but feel a bit of rivalry with. I would always feel guilty for feeling a bit smug when they stumbled or came up against hurdles.

I’ve spent so much time pondering what I want and need from a partner. I felt a lot of guilt around balancing my own needs with our needs.

I developed the most inconvenient crush. I felt crippling guilt about this one. I’ve had them before – a guy at uni, a former boss – but in this instance things were different for many reasons. Not to the point I would ever have acted, obviously, but this one just kept growing for some time.

I realised I should have opened up more to friends. I can’t help but feel some guilt for being so selfish, and realising now that we were all separately, quietly, struggling. Maybe we would all have benefited from sharing.

I’m now in the phase of life where people around me are starting to divorce. I feel a little guilty for still being married and also, conversely, for the envy I feel – how much simpler in some ways a single life would be.

I feel guilty for the small, buried part of me that for the longest time conflated divorce with failing. As firmly as I am against staying married when things aren’t right – and hell, so many times I wasn’t sure I was going to make it myself – deep down I would have considered it a personal failure. But I’m glad to be able to say that this is one judgemental quirk I’ve now managed to put to rest, even if the catalyst for this is a sad one.

Bit by by, I’ve let go of all this guilt. It is exhausting to carry around. Ain’t nobody got time for that.

Link love (Powered by far too much junk food)

This post is brought to you by Budget cheap car rental Auckland

That girl with the weird name, Essena O’Neill, has been blowing up the internet, ripping the lid off life as an Instagram celeb. Normally I’d be part of the cynical backlash, but right now, her original point is resonating so hard with me.

It’s really embarrassing to admit, but there’s this girl I know through mutual friends. She’s younger, hotter and a makeup artist to boot, and constantly posts amazing selfies. We aren’t Facebook friends, but every so often I look her up, stalk her profile and come away feeling terrible about myself every single time. Call it self-flagellation. And while I rarely click into the Discover tab on Instagram, when I do it’s always filled with girls showing off their perfect bodies – clearly these aren’t straight up photos, but they just feel so much more real than, say models in magazines. And I’m 27 freaking years old. I’m so glad this stuff wasn’t around when I was a teen.

Social media is awesome, but it definitely goes two ways.

More links

The dream of disposable income

Gratitude in the face of failure

What are you REALLY good at?

Being a feminist earning less than her partner (the polar opposite of my problem) or stuck in a gendered marriage

When borrowing for a car is the smart thing to do

A photo posted by egesther (@egesther) on

Taking out a car loan when your partner is basically unemployed and you’re living on one income. Sounds like the worst idea ever and the start of a judgey Reddit thread, right?

Yet that is just what we did.

I kept trying to hold out until T got a steady job, but eventually both the safety and reliability of our car deteriorated to alarming levels. We’re a one-car household and public transport will never be a viable option for BOTH of our commutes so it’s vital that we are able to rely on our vehicle. T needed to be able to get to job interviews and to start work at the drop of a hat.

It was a bad catch 22 – needing a car to earn money but needing money to pay for a car. I’ve said before that our strategy of buying cars we can afford in cash has not worked out well in the past – thus, the loan, despite the terrible, terrible timing.

Our car-buying process

The last (and only time) I discussed our car issues with my mother, her advice was succinct: go for something in the $10k plus range, as cheap cars have always turned out to be money pits for us. Both her and my dad did and I don’t recall them ever having issues with their cars growing up. The difference of course is they had the cash to do that, and we don’t.

Much as I’d like the peace of mind of a brand new car, there just weren’t any good finance deals around (Subaru had 0% and 3 lump sum payments, Mitsubishi had some good driveaway prices, but not for models we had any interest in). So we took a punt on the used market again, just higher up the price ladder. The one small comfort was that we know more about cars than ever before and T knows car sales from the inside out now.

Looking in the $15k range (give or take) we were looking at cars falling roughly along two lines: 4 to 6-year-old cars with 80,000 to 100,000 plus km through to 10-year-old cars with 50,000 plus km, and everything in between. Basically, the best case choices split between newer model, higher ks and older model, lower ks. The older cars are usually Japanese imports, while the newer ones are occasionally New Zealand new (and thus with a full history).

T zeroed in on a few different specific models; narrowing down our choices made things easier in some ways and harder in others. He loves driving, does 99.9 percent of the driving, and needs to be happy with whatever car we have (and let’s face it, it’s really the only decision he gets majority say in – I’m the boss on everything else). It’s got to be big enough and hardy enough to handle him – a little 1300cc is not going to work for space or engine power.  Being a gearhead he’s very specific about particular models and year ranges and knows all the little differences – features and problems alike.

In the end we set our sights on a Mazda – possibly an Atenza but ideally a 6 (the Mazda 6 is the NZ version).

The Subaru Legacy was another contender, but it’s difficult to find a lightly used Subaru without ridiculously high mileage, and being the most stolen cars in NZ, insurance is higher on them.

(Toyotas are famously awesome for reliability but expensive as they don’t tend to depreciate as fast. Also, he doesn’t like any of their current models – last time we were car hunting he would have killed for a Caldina wagon but apparently the later years are definitely off the list.)

Random thought aside: I feel like I don’t seem to see many Hondas or Nissans around Auckland anymore. Growing up there were tons of Civics, Integras,  Accords, Pulsars, and Primeras on the roads – these days the models have changed of course, but anecdotally the makes just don’t seem as common.

Closing the deal

So, what did we have to compromise on? In the end, we went for newer with higher mileage – a 2011 wagon with a little over 100,000 km. It’s an ex-lease car with a full service history that’s had regular maintenance, all documented.

(I gotta say, it took a while to get used to the quiet engine. None of the rougher rattling, shaking or ticking kind of sounds we’re used to.)

I’d read a little bit about negotiating with sales people at dealerships online, but it was truly bizarre sitting through the process. It actually happens – writing down the price you want to pay on a sheet of paper, then sitting and waiting for the rep to take the offer to the manager. I was super tense the whole time, convinced they were out to get us, but it really wasn’t that bad. I’d even go as far as to say that the rep didn’t really seem into it – maybe their commissions are small. He was definitely not overly pushy.

If I recall right, we got a little over 10 percent knocked off, paying $16,000. Compared to what similar cars, even private sales, were going for, it was a very good price.

Getting finance

It’s funny how things work out. I was determined to shut down any attempts to sell me on dealership finance, and yet…

1. The AA completely disappointed me. In their pre-approval email they gave me absolutely no details beyond the fact that I was pre-approved for a loan. I had to hit reply asking what my interest rate would be, and it wasn’t the best one they advertise.

2. My bank was the complete opposite – what a great experience! I was actually almost excited about the whole thing. A banker called me up, went through every little detail with me, took the time to make sure I understood everything, and was incredibly patient.

3. But the dealer in fact bettered the offer through their finance company. (There was slightly less flexibility around making extra repayments – however, given our situation, it was highly unlikely we’d be in the position to make extra repayments any time soon.) Also, going through them meant the whole process would be quicker, which was a bonus.

Incidentally, I had to laugh at this:

For every instance of a car loan “horror story”, how many people have no trouble or regrets about financing their car? You aren’t going to have a bunch of threads titled “Two years ago I bought a nice car, negotiated a good deal on it, put down a sizeable down payment, had excellent credit and secured a low interest loan and I couldn’t be happier!”.

(Yes, I have become a Reddit addict. Reddict?)

Plenty of my PF blog friends have borrowed for cars in order to get something reliable and on the newer side, and done so responsibly. Ideally nobody would ever take out a loan for a car, but we don’t live in an ideal world.

I won’t say it’s the best financial decision I’ve ever made, but it’s definitely far from the worst one.

I set the car loan up as an 18-month loan, so payments were rather high with the aim of killing the debt all the quicker. But halfway through, thanks to my new job, I decided to pay it off. That monkey is now off my back.

BONUS: having a car this new reduces our annual registration costs by heaps.

Link love (Powered by itchy feet)

NZMuse - Link love roundup with awesome reads from the week
Literally. I’m a magnet for insects. It’s been a week since we were in the Coromandel and only now has the swelling and itching dissipated!

This week’s links

There are two ways you can squeeze your budget 

The life you want – no matter it looks like – costs money 

On not giving up, even when times are tough and stressful

The six pillars of mental stability

The underrated art of coping

Would you go back to a former employer?

The three types of interview questions 

Rebuttals to the relentlessly chirpy sex-positive movement, take one and take two