Tag Archives: money

Financial stocktake: Assessing the damage

Financially derailing fun:

  • Going down to one income
  • Traffic tickets
  • Illnesses (all bets are off when I’m sick, I will drop money on comfort foods like nobody’s business)
  • Actual health/medical expenses
  • All our annual insurance bills
  • Moving house
  • Depression/head burying/general laxness

Looking back, we just never really had a chance to get set up properly after coming back to New Zealand and have been on the back foot ever since.

T’s bringing in money again but technically it could stop at any time. (Also been having unpleasant dreams about being forced to move out of this house, sigh. This underlying feeling of insecurity is no fun.)

We’re still bleeding money post-move, what with work tools, long overdue dentist visits and a new line category: sports. (Coming off the year we’ve had, the physical and mental health benefits of the latter were WAY more important than waiting a full year for the next season to come around just for financial reasons.)

And now, to tackle the credit card balance that’s been accumulating. It’s a weird feeling, this. (Yes, we could take from savings to pay it off, but I am not giving up a cash buffer. Not without a second reliable income, no way Jose.)

Would you pay for this? (Also: we’re going to Japan!)

We're going to Tokyo!
By: Luke Ma

I subscribe to a handful of travel deal newsletters, and among these is Jetstar’s weekly Friday flight alerts.

Normally I scan the subject line and delete right away. But one day in November last year, the phrase “2 for 1” caught my eye.

Even with all the add-ons that budget airlines slap you with, a 2 for 1 fare puts you well ahead! And thus, we’re going to Tokyo in September.

Assigned seats

Would you pay $5 to guarantee you and your travel partner could sit together on a flight?

Personally, I wasn’t sure at first. After all, on our flight from Reykjavik to New York, we didn’t get to choose our seats (either we checked in too late, or I missed that step somewhere along the line) and T and I wound up sitting several rows apart. And that was totally fine. It must be said, though, that this was toward the latter part of our trip , so we’d already spent a ton of time together.

But $10 (for both of us) per flight in the grand scheme of things is not a lot, so I stumped up.

Extra legroom

I am slightly toward the tall end of average for a woman and even I feel claustrophobic in economy class. So I have lots of sympathy for T.

I think it was on one of our short European flights that we got to change seats with another passenger in the exit row, and enjoy extra legroom for free. Let me tell you, that was a revelation!

Anyway, I balked at the $45 price tag for seats in the rows with extra leg room, but T‘s best sad face convinced me. And since it’s not possible to sit together and have only one person get extra leg room, that came to $90 per flight. (I would sit apart to save money, but apparently that wasn’t acceptable.)

It might even be worth it for me. I gotta say, the older you get, the more you’re willing to pay for comfort.

Hot food

The in flight meal menu looked absolutely dire. And this is where I drew the line. No way am I paying for what looks like a terrible attempt at a meat pie, or chicken and rice. Instead, we will fuel up and stock up at the airport before we leave.

My beef with capitalism: Inequality’s a bitch

The problem with inequality

Economics is not my strong suit. Nor can I say I am particularly interested in it. I’m a micro person, not a macro person; a creative trying to get by in a capitalist world.

But even I can’t fail to note that the wealth gap is growing, not shrinking.  Yep, even here in little old New Zealand.

I like this dummy proof breakdown:

“New Zealand, which had the developed world’s biggest increase in inequality from the mid-1980s to the mid-2000s, has seen more economic damage than most. According to the OECD’s calculations, our economy grew about 30% in the last two decades – but it would have grown by 45%, or half as much again, if inequality had stayed at 1980s levels.”

Inequality matters. It’s a no-brainer. It’s a drag on the economy, and I think the saying that “you’re only as strong as your weakest link” is perhaps relevant here.

“When families lack the income they need to pay doctors’ fees and keep healthy, or to fix their car so they can travel to a new job, or to give their kids the equipment and clothes they need to succeed at school, it’s obvious that economic growth will suffer. You could argue that these are problems of poverty, not inequality, but really the two are inseparable; the reason some people have so little is that the fruits of economic growth are going largely to our richer citizens.”

As someone who ostensibly belongs to the middle class, occasionally I feel a tremendous sense of guilt that I have it so much better than many other people, and gratitude to be lucky to be where I am. But the other 99% of the time I spend fretting that we’ll never be able to really get ahead.

Bridget at Money After Graduation sums up my feelings perfectly:

“Wealth inequality is a growing, terrifying problem and I don’t want to be on the losing end of the deal. I’d rather we live in a more equal society when it comes to wealth distribution, but so long as we don’t, my singular goal is to get as far away from the bottom as possible.”

When necessities take up more of your income, you may even need to borrow to afford them. I don’t believe in ‘broke yet happy’. I think it’s something people tell themselves in order to feel better. Nice idea – in theory.

So, what are we supposed to do? Same old, I guess. Hustle, hustle, hustle.

A key piece of the inequality puzzle in New Zealand boils down to that most basic of needs: shelter. The way I see it, so much of this hinges on property – stability, security and quality of housing. The status quo is a disaster in financial terms – and in health terms, for renters.

It’s good to see that our go-to economist for all stories on renting vs buying is finally starting to discuss the pragmatic downsides of renting in New Zealand. While the actual quality of rental housing isn’t a talking point (and thus, the problem with mainstream media and the limited perspectives of the typically privileged people within it) he acknowledges New Zealand has some of the most restrictive rules in the developed world for renters.

“New Zealand is strangely different in that we have made this almost special provision around renting of residential property versus other types of renting.” – NZ Herald

“The rental market is designed for students flatters. It is no surprise that it is the young couples with children who are most unhappy.” – Stuff

But the level of chatter around the state of rental housing is growing.  Research shows that private rental housing is in worse condition than houses that are owner occupied, however, in a tight market, you have to take what you can get.

“One potential tenant, looking at a property, asked if the holes could be fixed and rodent droppings cleared before she moved in. “[The landlord] said: ‘If you don’t like it, there’s other people that want to live here’.”

Is it any wonder the typical tenancy lasts only just over a year?

Amazingly, here’s a rare mainstream newspaper editorial that hits the nail on the head.

Housing in New Zealand is not only scarce and expensive; for too many people, it is also downright unhealthy.

“Our national housing stock is of poorer quality than most OECD countries. In particular, too many houses are damp and cold – which means they contribute to our grim rates of infectious and respiratory diseases.

This is deplorable in an advanced country, and like our other housing problems, it needs to urgently change.

Extensive work has already been done, so there is no excuse for delay. Most recently, results from a pilot study on 144 rental homes showed 90 per cent failing the warrant. That number needs some qualification – some houses failed for such easily remedied reasons as flat batteries in smoke alarms. But other results were more deeply concerning – like the third of rental properties that lacked any form of fixed heating.

No-one in New Zealand should have to live in a dog of a house.”

In order for renting to life to work you need to be able to save and invest what you’re “saving” by not having a mortgage. The problem is, rents are not going anywhere except up and up.

  • Renter demand in Auckland is forecast to increase by 63% over the next 20 years and it is unclear whether “mum and dad” investors will be able to meet this demand
  • Rental affordability is a critical issue for low- middle income households in Auckland, and people who enter retirement renting are likely to face ongoing hardship

The prospect of continuing to have to pay rent throughout retirement is scary. I can kinda understand why suicide at 65 starts to look like a pragmatic option.

Recently, an acquaintance posted a photo on Facebook . In it, he and his girlfriend stood on the deck of their new house, all smiles. Of course, like all our other home-owning peers, they only managed this because their parents stumped up cash for their down payment. Heck, if mine offered, I’d swallow my pride and take the offer.

But is this what the future of our country looks like? Only the well off buying homes for their children and passing the privilege of living in a decent property on down the generations, while everyone else remains stuck in cold, damp rentals and suffering all the ill effects that poses?

Surely we can do better than that.

Three big money lessons I learned this year

I’ve been back in full-time employment for a whole year now, and I’ve been thinking about the place work occupies in my life.

I do not want my life to revolve entirely around work … but that said, I would much rather focus on work than the domestic front. Paid work can be frustrating (and a whole bunch of other adjectives) but I find it so much more personally fulfilling than doing household type work.

If money were no object, I would literally never cook or clean. I would pay to have all that done. Not because I think my time is super valuable, but because I simply don’t enjoy those tasks and I am not very good at them. Eating good food made by others = one of my biggest joys.

On a macro level, here’s what else I’ve been contemplating, more  generally.

Your pay does not always reflect your worth

It’s common sense, and we all know this. You are more than your paycheck. But this REALLY hit home for me this year, having moved out of a field that is notorious for underpaying and overworking.

It seems crazy to me that people like the Starbucks barista profiled by the NY Times work so hard and get paid so much less than I do. Or that some construction foremen can earn less than me when that is objectively a much harder and more important job. And don’t get me wrong, I’m hardly rolling in it; I’m only now making the equivalent of a starting salary in many other fields. Yes, sometimes it’s because the higher-paying role genuinely creates more value/ROI for the business – but not always.

There is a LOT of money floating around out there

I have written about countless funded startups and interviewed both investors and entrepreneurs. T has sold stuff to people with (in my humble opinion) way too much money.

It’s clear to me that there is money to be made – if you can tap into it. That means getting into the right industries in the right kinds of roles.

Money affords happiness

There’s no such thing as ‘broke yet happy’ in my world. Never has been, never will be.

I earn more now. That reduces my stress levels. It enables me to live a more enjoyable life.

I hate scrimping. Don’t get me wrong, I am really frugal by nature, and I suppose that’s why I hate to have to cut back beyond that.

For years I thought T would outearn me – but that’s not how life has worked out.

Strangely enough, an unexpected benefit of what I do these days is that the things I struggled with previously – the external/outward facing stuff, coming up with story ideas – aren’t factors anymore. And for the first time I feel like I have the means to support (financially speaking)  the creative things I love – bands, publications.

New Zealand can offer a great lifestyle, but it’s not a cheap place to live, particularly in Auckland. If I have the opportunity to earn more to fund a better life, then that’s not a route I’m going to turn my nose up at.

Also: at some point, I would like to work someplace that pays bonuses. Just to see what it’s like.

So, I just learned something really shitty…

The Disputes Tribunal – essentially small claims court – cannot deal with cases where “someone knows they should do something but simply refuses to (for example, to chase a debt that someone agrees they owe you)”.

Why this sucks: Since T quit Toxic Job, we have been waiting to be reimbursed a couple hundred dollars in expenses. These were incurred on behalf of the company on our personal credit card shortly before he left.

It has now been over four months. We have been constantly following up. There are two bosses; let’s call them Aaron and Ant. Aaron is the sane, decent, normal one, and who unfortunately is/was also the less hands-on one. After initially contacting Ant, T has mostly been emailing Aaron lately – since he is infinitely more reasonable – and Aaron has been apologetic and understanding. Though, let it be observed, not to the point of ACTIONING THE REIMBURSEMENT.

Based on the vibe T is getting from him, and the fact that T’s ex-colleague/buddy (we’ll call him Rich) just interviewed for a job at the competition, it seems like shit is going down over there. Rich is young, a small town boy, a bit of a pushover really, who has put up with Ant for months. So for him to have finally had enough and be looking elsewhere, it must be bad. (On the plus side, since he got the new job and starts in January, it’ll mean no more talk about Toxic Job when he comes around to visit in the future. That was the worst part about the friendship IMO – dwelling on all that drama.)

I have financially written off that money, but I cannot let it go emotionally (though I really should for sanity’s sake) and I refuse to give up on the principle (and T is fully in agreement on that count). Being an asshole and driving away all your staff is one thing; cheating them out of money that they are owed is another.

I’d had the idea in the back of my mind that Disputes Tribunal would be the next step, but apparently it won’t be. The fact that money is owed is not actually in dispute.

I know that unpaid wages would fall under the Employment Relations Authority; I’m assuming money owed for reimbursements would probably be in the same boat. Need to look into this further, but it’s a headache I really do not need right now.

Allrighty, vent over. Any advice gratefully received.

Are low interest rates a good thing?

Are low interest rates a good thing?

As a saver without a mortgage, I’m all for rising interest rates.

But overall, I can’t help but think that overall, maybe low interest rates are actually a good thing.

After all, how much are you ever really going to have sitting in a savings account? Long term money is going to be put into stocks, etc.

On the flipside, the biggest purchases you’ll ever make are likely to be materially affected by interest rates. Property. Cars. (yes, in a perfect world we’d all only ever pay for cars in cash, but we don’t live in a perfect world). If you borrow money to start a business. If you have a student loan (and leave New Zealand, incurring interest – or live in a country when student loans are never interest-free).

Just a stray thought.

Why I’m way more worried about buying a house than retiring

Why I'm more worried about buying a house than retiring

New Zealanders have not traditionally been great at saving for retirement. (I doubt we are the only country in this boat.) KiwiSaver was only introduced in the last 10 years and still has a lot of skeptics.

Honestly, if I’d never come across personal finance forums and blogs, I wouldn’t be particularly worried about retirement savings. I might have left my contributions at 4 percent and never increased them.

But here’s the thing. Governments have proven they are unwilling to tinker with NZ Super. And the only parties willing to do anything about the state of rental housing have wound up on the wrong side of power.

To me, then, the logical and pragmatic thing to do is to continue to pursue home ownership. I’m not counting on the government to do anything about quality, affordable housing, either rented or owned. Current policy encourages buying – the latest change would double grants for first-time buyers who are building a new house, not unlike the Homestart first home buyers grant in Perth – and nearly 10 years of renting has well and truly turned me off renting in New Zealand. I see buying as the more likely route to securing a healthy and stable future for me and my own. Our chief human rights commissioner summed up things pretty succinctly in a recent speech: “…If you can do so you will do what it takes to ensure your family live in an adequate home … many people are not fortunate enough to find a landlord that they would trust to do that.”

Since the government seems far more likely to cater for me in my twilight years than ensuring healthy housing in my best ones, I’m going to prioritise getting into a house over retirement for now. I used to be pretty set on not touching my Kiwisaver account for a down payment. (I don’t personally think it’s a great idea to enable people to withdraw even more money from their Kiwisaver accounts to buy a house, as new rules will soon allow.) But I’ve changed my mind. I’m not going to rule out drawing on it – that’s drawing from, NOT draining it, to be clear – if that’s going to mean the difference between owning and renting.

I’m tired of the terrible quality of rentals. Mushrooms and mould do not belong indoors, ever. As property owners get richer selling houses to one another, people priced out of buying have to make do with substandard rentals and no legislation to protect them from shoddy, unhealthy properties. For a country that’s been at the forefront of things like gender and marriage equality, it’s well past time we got onto the basics of housing equality.

I’m tired of being on the wrong side of rising prices. Just a few years ago when I graduated, $360 a week could get you 3 bedrooms in my area. Now it only gets you 2 on average, and I guarantee in another year or two, it will only get you 1 bedroom (and a lot of the smaller 1-bedders forbid couples. AWESOME). This is an untrendy fringe area; prices are much higher in more central suburbs. Our city is growing and there’s not enough housing. Auckland is the Sydney, London, or New York of New Zealand. I do not see this trend reversing. I think high (and rising) prices are the new normal – here to stay.

I’m tired of the uneven playing field. I have the privilege of having the kind of job where I can duck out of work during the day to go to a viewing, but even I can’t do this all the time, and you need to do this at the drop of a hat when you’re actively hunting.

I’m tired of the instability. At any time a landlord can decide to cash in and sell out, displacing you, (and of course increase rent).

Like marriage or having kids, home ownership will be bloody hard … but I believe with all my heart it beats the alternative here.

Not every rental is crap and not every owned house is warm and dry – there are always exceptions. But in broad terms, there is a divide. When you’re an owner, you have the option of taking action to address the root causes of issues with your house. I can’t wait to have (or install) decent insulation and maybe even a heat pump. When you’re renting, you simply have to put up. I personally tried to do my bit for the cause by going beyond the numbers and highlighting the quality issues in a recent magazine article on renting vs buying, but what we need is sustained mainstream coverage.

There’s a reason multiple political parties put their support behind standards for rental housing this year. There’s a reason people are talking about this issue (though as has been proven, Twitter/the internet are far from representative).

What do you get for $250k, $500k, $750k or $1m in Auckland?

(I know I promised no more real estate masochism, but I put this together weeks ago! Scroll to the bottom for the other blogs taking part in this real estate roundup)

A little context first, perhaps.

Our CBD is more a place for work/leisure rather than living. There are apartments in town, but in many cases they’re cheap and nasty shoeboxes, with some nice luxury ones at the other end of the spectrum and not much in between. While the Auckland real estate market has soared, apartments have not appreciated in the same way. (Banks have relaxed the rules in the past couple of years but generally you needed a 30-50% deposit when buying an apartment. )To get an idea of how our housing market has grown, there’s a great interactive chart over at The Economist – aside from the craziness that is Hong Kong, NZ is basically on par with Australia and Britain.

The most sought-after places to live are the areas immediately surrounding the CBD. Years ago these were worker bee neighbourhoods, with houses packed up close against each other in narrow streets. A generation on these villas are now the domain of the wealthy and go for seven figures – gentrification! Woot!

Outside of the CBD, standalone houses remain the norm here. You’ll find the odd apartment block or terraced house complex here and there, but in many cases they’re hideous and poorly built. ‘Leaky home’ syndrome also affects a lot of the new standalone homes built in the 1990s/2000s boom.

Finally, very few properties actually get listed with an asking price (as you’ll notice on a few of these links) and most are sold at auction. There’s a lot of guesswork involved if you’re buying a place in Auckland, and council valuations are more often than not just a starting indication – places sell for well over those prices.

Auckland is pretty sprawling, but I’ll be focusing here on the inner city suburbs surrounding the CBD, as well as the CBD itself – roughly within the Outer City Link bus route. This provides a better reflection of the areas where people most want to live. (We don’t really delineate between ‘neighbourhood’ and ‘suburb’ here, certainly not as clearly as some of you might be used to.) According to Google Maps, this area is within about 10km of the CBD.

auckland

$250,000

In the CBD, you’ll get a 1, maybe 2 bedroom apartment. The nicer ones might be 50 sq m with one bedroom; the more cramped ones 40 sq m with 2 bedrooms. (There is a listing – that I will not dignify with a link – for a 3 bedroom apartment crammed into less than 50 sq m … that’s half of what a 3 bedroom dwelling should cover.) A carpark is a maybe at this price. Here is a reasonably typical example.

You might find the odd apartment in the fringe suburbs – there aren’t many of those (less than 10 at this very moment, one with ‘weathertightness’ issues). At this price point they’d be 1 bedroom.

$500,000

This would get you a somewhat decent apartment, with carpark even, in the CBD or surrounds. Like this.

In the inner suburbs $500k will barely stretch to a small , 1-2 bedroom unit in a block. These most often come in rows of 4. Here’s a typical example, as pictured above.

$750,000

In the CBD, you get a pretty nice, roomy apartment. Maybe this one?

In the inner suburbs, this is still entry-level territory. You’ll get nothing special; houses in this bracket might even still be do-ups that need work.  Example here.

$1,000,000

There are about five CBD apartments listed in this price bracket (but yes, they are lovely).

In the inner suburbs, it’ll get you a classic 3 bedroom bungalow or villa (here’s a do-up, and here’s a renovated one), or a newer build house. Or a condemned hovel on some prime land.

Why not rent instead?

Alas, while renting might be cheaper, it might literally kill you. The standard of rental housing here is ridiculously low. See my most recent rants here, here and here.

REAL ESTATE COMPARISON IN OTHER CITIES

CANADA

U.S.A.

Three things I’m grateful for right now

Trying to be grateful...

So, here’s the reason I’ve been feeling down in the dumps lately. We made a decision that T would leave his job with nothing lined up (a first for us and an extreme move, yes – a topic for a separate, upcoming post).

That’s put us back to one income. We are definitely not living for today OR saving for tomorrow. Thus = unhappy me.

Rather than run down the street screaming, as I felt like doing at one recent low point, I thought I’d focus on the few things I’m currently grateful for.

(And I’m going to bite the bullet and book in a haircut – I’d been putting it off until he got back to work, but that is just ridiculous considering my haircuts are $30.)

Interest rates are on the rise

I’m currently earning 2.75% in my online savings account with my main bank, and 3.40% in my other savings account with my online-only bank.

Cheap rent

When we were searching for a place after returning to NZ, we were a one-income household. Not knowing when T would find work, it was important we live somewhere that I could afford alone. Since he’s been out of work for about half of this year, this has proven a good move, even if this place is like a deep freezer in winter. Low absolute rent also means it will be easier for us to save for a down payment … at some point.

Our rent is going up $20 a week next month, which I’m not happy about, but I’ve already been watching listings and there isn’t a lot of choice out there. We have a fantastic location and while it’s freezing and we don’t have a full kitchen, at least it’s not damp. Summer will be okay here and I think I can survive one more winter. Beyond that, we will either be on track to buying and decide to stick it out a bit longer, or give up on ever buying and fork out for a decent rental (whether agents/landlords will deign to choose us as tenants is the other hurdle, of course).

Side income

Being down to one income has meant more or less giving up on saving during this period. Yay for side income, which goes into my higher interest online savings account/mutual funds and stays there.

What are you feeling grateful for today?

Things I WON’T do to save money on travel

Camp

I don’t consider myself high maintenance, but I do have a minimum comfort level and camping does not meet it. I’m fine with hostels and seedy motels (“How do you always find the most ghetto places?!” T complained to me when we went wandering around east Berlin in search of our hostel) but I’m just not a tenting person. On a scale of 1 to Major Pain In The Ass, setting up and packing down tents rates just above scrubbing the toilet for me.

Hitchhike

First, the realities. I mainly travel with T, and nobody is going to stop to pick up someone who looks like him. I wouldn’t! Even our host in Munich, who’d been urging us to think about hitchhiking around Germany, demurred once we actually turned up and he met us in the flesh.

Even so, I don’t like uncertainty, and relying on passing cars to pick you up is about as uncertain as it gets in travel. (I remember waiting for ages one day for our Couchsurfing guests to arrive and wondering if they were going to turn up at all. Turned out they were at the mercy of hitching, and didn’t have a way to contact us to inform us.) Also not super keen on standing outside for potentially hours on end in any weather conditions to save some money.

Taking flights at crazy times

Super late flights may be a little cheaper, but that’s not the end of the story. There’s nothing worse than arriving  in a new city trying to find your way around in the dark! Public transport may not be running by the time you arrive, so you might have to take an expensive taxi, potentially negating any flight savings. In small establishments the front desk might close at 8pm. And it just screws up your schedule and body clock in general.



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Where do you draw your lines?