Tag Archives: money

Why you won’t find jam in my house

By: Larry Jacobsen

You won’t ever find jam in my pantry.

The reason goes back to that very first year I lived on my own.

I studied mostly, and I worked where I could, and my budget was incredibly tight. It looked something like this.

$165 living costs (rent and all inclusive bills)
$30 groceries
$20 for bus fare

I had about $20 left over every week.  A bag of chips or a block of chocolate was a splurge. (Things like the time I slammed my hand in a door and had to go to the doctor in a rush threw everything off.)

I ate a crap ton of jam sandwiches. I packed them in brown paper bags. I had a sweet tooth, and figured there was fruit in the jam so it must be somewhat healthy.

(Yeah, I relate everything back to food, but what did you expect from me?)

As my budget eventually loosened up my lunches became more varied. I stopped eating jam outright. I’d overloaded to the max and I couldn’t stomach it any longer. Plus, it reminded me of my brokest days.

I don’t eat jam anymore, though the day may come when I buy it again. I might even try making it – I have an overachieving guava tree and more guavas than I know what to do with, though I don’t particularly like the fruit.

What do you associate with your broke days?

3 ways that being lazy saves me money

How being lazy saves me money

I kill it every day at work, but outside of the office my middle name might as well be Snorlax.

I hate gyms with a passion

They are a strange and foreign environment. I spent a year in an apartment with a free building gym and spent about 10 minutes in it, total. I know better than to waste money on a membership I’ll never use. If I must exercise, I will run and hike outside.

I can’t be bothered with contact lenses anymore

In summer maybe, but even then, not full time. Between battling dry/sensitive eyes and the hassle of putting on makeup (a necessity to liven up my face sans the visual dominance of glasses) it’s too much work for the sake of vanity.

I procrastinate like it’s my actual job.

I haven’t had a haircut in six months and counting. Haven’t been to the optometrist or dentist for two years. The latter is definitely NOT good and I’m going to rectify that soon, I swear.

Life with a mortgage (is surprisingly sweet)

Life with a mortgage is pretty sweet

Living with a mortgage ain’t half bad.

My contents insurance, which WAS around $1200 a year when I was renting, plunged to about $400 when I bought my house. Car insurance decreased by a few bucks too. Unexpected fringe benefits of home ownership! My jaw literally dropped when I heard the new figure and I had to ask the rep to repeat it back to me.

My house insurance is about $1250 a year. And since I got a $1200 cash gift from my new bank when I confirmed my mortgage, it’s basically free for the first year.

Council rates (the equivalent of property taxes in some of your countries) are pretty darn affordable. Mine are just under $1500 a year. This is typical for houses in this range; when house hunting I saw probably up to a $500 variation in annual rates between all the properties, based on their value.

And YES, before all you (non NZ) lovers of renting jump in, I’m prepared for the costs of maintenance – I will be referring back to my pre-purchase house inspection report plenty over the coming years, which was brimming with recommendations around everything from insulation to safety glass.

Replacing the deck and repainting the roof will probably be the priorities – but a new kitchen just might come first. There’s no rangehood, no splashback (both noted in the report as matters to remedy) and everything just generally needs an overhaul. Might even knock through a wall and make the whole living and kitchen area open-plan with an island.

How much am I paying?

My 30-year mortgage is structured in three parts. Here’s what it’s costing me per fortnight:

  • $77.83 ($30,000 floating loan @ 5.29% – was 5.44% at drawdown but rates dropped since)
  • $492.24 ($215,000 fixed loan for 2 years @ 4.35%)
  • $474.30 ($200,000 fixed loan for 3 years @ 4.65%)

So I’m paying the bank $1044.37 every fortnight, plus I’m also repaying my family at $200 on top of that: $1244.37 all up.

Thus far I’ve also knocked another $3,000 straight off the principal with extra lump sum payments but now I need to turn my attention to a few other financial priorities.

Mortgages in NZ

So, if any of that sounds weird, here’s a simple intro to mortgage options in NZ.

Or if you’re not much of a video person, let me try to run you through how things work here.

Fixed vs floating: There are fixed mortgage rates and floating (variable) mortgage rates. Fixed rates are typically lower.

The minimum term you can fix for here is generally 6 months and the maximum 5 years. Lots of people (like me) split up their mortgage into a few separate loans, some floating, some fixed. Floating allows you to focus on repaying the loan without penalties, while fixed gives you some certainty around rates (but with less repayment flexibility). And thus, a combo can offer the best of both.

Then there are a few more types of mortgage accounts available with floating rates:

Revolving credit loans are basically a giant overdraft, with one account acting as your loan, chequeing and saving account all in one. Your pay goes straight into the account and the idea is to leave the money sitting there as long as possible (eg putting your expenses on a credit card and paying them off at the end of the month). By keeping the account balance (and thus, loan balance) as low as possible at any time, you save on interest because the bank calculates interest daily.

Obviously this requires discipline and organisation, though you may be able to set it up so that your credit limit reduces over time, making it easier to stay on top of things and ensure you’re making progress. When it comes to refinance/rollover time I imagine I’ll choose revolving credit for part of my mortgage.

Similar but different, an offset mortgage is linked to your other accounts with the bank. Your mortgage interest is offset by the amount you have in your other accounts. For example, if your mortgage balance was $500,000 and you had $20,000 between your savings and chequing accounts, you would only be paying interest on $480,000. But compared to revolving credit, offsetting is not offered by as many banks.

And in case you missed it: my step by step guide to actually buying a dang house, from getting preapproved to settlement day.

5 ways I’m accidentally frugal

5 ways I save money by accident

I have a penchant for good food and travel, but by happy accident, there are lots of ways in which I manage to save money with zero effort.

I don’t really drink … anything

Alcohol, coffee and soft drinks don’t really agree with my digestive system. I don’t know how much NOT buying any of these on the regular saves me but I bet it’s a reasonable amount. Plus I’m a lightweight so if I do drink one is always enough.

I’m unfashionable

I have no sense of fashion nor interest in it. Every so often I go through a spurt of wanting to be stylish and plan to start accessorising and planning outfits more carefully – which never lasts very long before I revert to my lazy ways. There’s no point trying to fight my inner nature.

I’m kind of antisocial

I have friends, I swear, but I’m hardly swamped with invitations out every week. (Years ago I figured I needed to start making new adult friends and swore to start going to Meetups: then I realised I find it hard enough to keep up with my small circle and if I can’t even maintain my current friendships I shouldn’t add anymore.) My social calendar is sparse and I like it that way. More time to cuddle up with the dog and a book at my cosy place.

I love carbs

Seriously, I could basically live off potatoes, pasta, bread and rice.

I hate driving. And parking

Having a car is a necessity here but it’s also expensive! There’s no reason for us to have two vehicles and being a one car household definitely saves money. It’s occasionally inconvenient but those instances are rare.

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and Femme Frugality*

How To Worry Less About Money: 3 things I took away

How to worry less about money - book review NZ Muse

The most refreshing thing about How To Worry Less About Money is the author’s unflinching observation of how money affects relationships. In this book, John Armstrong relates this back to his own marriage.

“My own experience is that money worries can cause terrible conflicts in relationships. I fear I have damaged Helen’s life by not making more money. And there are stylistic clashes: I like being lavish; she’s much more restrained. For instance, I like the idea of going to fancy restaurants; she prefers the modest family-run place round the corner, or chicken soup at home. (And this is all the harder to deal with because our earnings point in the opposite directions to these personal tastes).”
Well, I’m the Helen in my life, and I can vouch for the fact that I have felt resentful many a time. I wish that weren’t true, but I am human, and perhaps not always a very good one. This is us, down to a T, especially the incongruence between tastes and earnings.  I would be curious to hear Helen’s viewpoint.

Money and marriage

Armstrong points out that in the world of Jane Austen, having enough money is taken very seriously (and rightly so!) as a necessary condition of happy marriage. Money reduces the fragility of a relationship, and makes people more relaxed. Money buys luxury, privacy and  stimulation. Money is for some people an aphrodisiac.

All of these things resonate so hard (perhaps not exactly the last one, but financial stress is a huge turn off and therefore lack of money is definitely a turn off).

Alas, there are no true solutions offered up, despite the practical promise offered in the title. This is a philosophical read about how we think about money, relate to it, the space it occupies in our minds and lives.

It’s a book about money worries, as opposed to money troubles.

Money troubles vs money worries

Money troubles, Armstrong contends, are urgent. They call for direct action and can only be resolved in one of two ways: either you gain access to more money or you go without something else.

Money worries, conversely, are about imagination and motions, not just what is happening now. Money worries often say more about the worrier than the world. They’re about what’s going on in your head not just in your bank account.

The meaning of money

When you strip money right back to the fundamentals, it is just a resource – a means of exchange.

“In other words money is an instrument … Ultimately the task in life is to translate efforts and activities that are inherently worthwhile into possessions and experiences that are themselves of lasting and true value.

“That is the ideal money cycle. Our relationship with money becomes unhealthy when we remove it from this cycle. That happens when we stop seeing money as potential possessions and experiences – but rather see possessions and experiences as potential money.”

We’re all bombarded these days with the reminder to DO WHAT YOU LOVE. Armstrong acknowledges that we need to make enough money to meet our needs and we also need to do things that help us make sense of who we are and contribute to collective good.

You can escape by not caring about meaning. And you can escape by not caring about having much money.  But a lot of people care about both.”

* * *

If you know roughly what to expect going in, this is a great read. I related to so much of it, I was constantly nodding along and found myself bookmarking what seemed like every other page.

If you’ve read it, what did you think?

The power of extra mortgage payments

Lots of personal finance bloggers, especially after becoming debt-free, say saving is boring.

I don’t get it.

I love watching my money grow and the numbers tick up. There’s nothing better – except cheesecake, maybe.

I’m a bit of a hoarder in real life, so maybe it’s not surprising that I also like to hoard money (real or otherwise – sometimes I think wistfully of all the Neopoints I had banked back in the day).

I was so resentful of my consumer debt, basically because I didn’t actually get anything out of it. It was all incurred while supporting an unemployed partner – less consumer debt and more keeping up with bills, really.

But now that I have a mortgage, I just might be changing my tune. It’s a different story as I deliberately took on this debt, plus the payoff is so much bigger.

I don’t mind my mortgage as I wouldn’t have a home without it, but I’d like to minimise the massive effect of compounding interest working against me.

The $3,000 in extra lump sum payments I’ve made? Apparently saves over $9,000 in interest over the long run.

I get it now…!

How much does it cost to get a dog?

I think it goes without saying that pets are a quality of lifestyle choice. They’re never going to save or make you money. And yet they’re worth it all.

We adopted Leila in the spur of the moment.

The plan was always to get a dog, but actually going to the SPCA one weekend – before the purchase of my house was entirely completed – was done on a whim. We fell in love with her and filled out the paperwork that day.

Once I got the house keys the following week, T set about making sure the yard was ready and the fence hole free, arranged the property inspection and went back to visit her at the SPCA in the interim.

And then, the day we physically moved into this house was the day we picked up Leila and brought her home. It was a manic time and it would have probably been easier to wait a while as per my original plan!

While I haven’t been tracking everything closely, here’s  a rough guide to our dog set up costs.

Dog adoption fee – $265

It cost $265 to adopt our dog from Auckland SPCA. She was an adult dog; puppies cost a little more. She was up to date with her vaccinations and won’t need more for many months.

Collar, leash, bowl, bed, brush – $140

Kind of a rough guess here, but ballpark? We need to replace her collar as it has stretched out over the past few months. She also has her own designated armchair which she sleeps on (a crappy old one that is still usable but not comfortable) and is probably a huge step up from her now-chewed bed.

Kennel – $170

We sprung for a cabana style kennel – it’s lightweight and easily portable and made of similar material to the bed she had at the SPCA. While she spends most of the time indoors when we’re at home, during the work day she’s roaming around outdoors. There are a few trees for shade and our deck is mostly covered but it’s still quite open, and now that winter is here…

Obedience classes – $70

Perhaps not strictly necessary, but probably a good idea. She’s well behaved but far from perfect, and as a first time owner I have lots to learn. Thankfully, she’s not the worst dog in puppy school! And if we put her into agility training later on, she needs to have completed this course first.




 

How much your dog costs to feed is going to vary. Leila eats about 2 cups of dry food a day. We started with a 15kg bag of kibble which was on deep discount – it cost about $30 but is normally closer to $50. I imagine this would have lasted 2 months if this was all she ate, but there’s still a bit left. We mix up her diet a lot, with some raw meat (which she absolutely loves), canned food and dog roll.

Dogs need stuff to occupy them too, and you can spend as much or as little on toys as you want. I’ve made her a few toys out of household odds ends – mainly old clothes and rags, sheets etc, and she’s claimed a small stuffed toy that used to be mine, as well as random balls that we had lying around. We’ve probably spent about $100 (ouch) on toys. There’s a Kong food toy, a Kong tennis ball (because she decimates normal tennis balls), a food puzzle ball toy, a tug rope monkey, a fake chew bone and there was an orange rattle toy that also got destroyed.

Flea treatments can be bought at the supermarket and they do go on sale! I bought a 3-month pack for about $30.

We still need to enrol her with a vet, and do something about her claws and teeth which are probably due for maintenance. Sigh.

 

Financial privileges I have (and haven’t) had

FINANCIAL PRIVILEGES I HAVE HAD

It’s so easy to get caught up in focusing on what we don’t have. (Guilty as charged, on a daily basis!)

For example:

  • I left home young – no cellphone, no computer, no car, just some clothes, books and my guitar – and became financially independent at 17
  • I don’t work in an industry known for being lucrative and my skills skew more creative, less practical
  • I don’t have an equal financial partner; our relationship has spanned multiple bouts of unemployment/underemployment that add up to probably tens of thousands spent supporting us solely on my income

But I’ve also had so many financial privileges in my life. I don’t know where I would be without these things today.

Let’s see:

I grew up in a financially stable home

I never wanted for anything. I have financially savvy parents and money was never a taboo topic. I came away with an understanding of the importance of saving, and I  was encouraged to focus on the future and think about career paths.

I received a full tuition scholarship

My merit scholarship paid for my university fees. Between the student allowance and paid work, I was able to cover my living costs and graduated basically debt-free. Otherwise, 12 cents out of every dollar I earn today would be going toward student loan repayments.

I’ve never been unemployed

Despite entering the workforce during the GFC, I have always been employed. The work I do also aligns well with freelancing/side hustling.

The stockmarket has been kind to me so far

It even helped me with my house deposit. I never intended to use that money for a down payment – it was invested for the long term originally – but it worked out well.

I’ve benefited from family support

This ties back in to my first point, too. My parents looked after me during my separation, offered help with the purchase of my house and were in a position to lend me money towards it so I could buy something decent.

What financial privileges have you had?

*Part of Financially Savvy Saturdays on brokeGIRLrich, Disease Called Debt and Frugal in SA

All else being equal – wouldn’t you rather have the money?

Wouldn't you rather have the money?

Money can’t buy everything, it’s true.

But when going through hard times for whatever reason, I know I’d rather not add financial stress to the fire.

Seriously: would you rather be suffering while broke or suffering while  financially secure? It’s a no brainer.

Going through a separation or divorce? Imagine adding the constant stress of struggling to pay the day to day bills, on top of all that.

Going through health issues? Wouldn’t you want the option of the best treatment money can buy?

Hard times are hard enough without having to worry about finances. Having money reduces that burden; shrinks the heap.

All the health and marital woes I’ve gone through stem directly from financial stress and struggle. The one thing I was grateful for during that time was that at least I wasn’t trying to do it on a journalist’s salary at that point. Literally every problem I’ve been saddled with in adulthood could have been solved with money in one way or another. (Yes, I’ve been fortunate in that regard, and I do acknowledge this.)

To everyone who says that the hardest experiences they’ve gone through were when they actually had plenty of money (subtext: and it didn’t do me a damn bit of good!), here’s an honest question for you. I ask: would you rather have endured those shitty times WITHOUT the money?

Of course you would give up the money to make the Bad Thing go away, that’s a given. But that’s not the question here; it’s not would you rather be free of the Bad Thing and in exchange go back to being broke? The question is, if the Bad Thing was unavoidable, would you prefer to deal with the crisis while being financially stable … or not?

Take life insurance, for example. It can’t make up for the loss of a loved one, but it can alleviate or eliminate major worries during an already difficult time.

It’s incredibly freeing to not have to make decisions solely based on the dollars and cents. To have the option of thinking about overall value, rather than just the bottom line.

Life is expensive. Having money means having choices.

*Part of Financially Savvy Saturdays on brokeGIRLrich, Disease Called Debt and Frame to Freedom*

How’d she manage to pull off buying a house? (blood sacrifice and dark magic, duh)

How I bought a house in Auckland on a single income

It’s too easy, for those of us who have somehow managed to scrape into the hallowed ranks of Auckland homeowners, to fall into the trap of blaming everyone else for their own poor financial choices and unrealistic expectations.

I’m determined not to do that.

I know that simply cutting back takeaways is not going to get you into a house.

I know that rents keep rising; when I was at university $350 a week got you a three bedroom rental in the humble suburb where I grew up, and today it gets you a one bedroom.

I know that prices and incomes are all out of whack, and yet, the way things are here, it generally makes sense to buy if you can.

Basic housing – dry, warm, healthy, affordable even – is a luxury in Auckland and it shouldn’t be. Renters are treated as second class citizens in every way. The quality of rental housing is abhorrent. There’s no stability. I note without pleasure (okay, maybe a LITTLE grim pleasure) that relatively well-off media commentator types who once often spoke out about what a waste of money it was to buy a house have now started families and oh, promptly gone and purchased property to live in.

I’ve put off writing more about the nitty gritty of buying my house – the financials, that is.

In a way, I feel like I haven’t truly earned it. And maybe more importantly, I’m nervous about the inevitable judgement that’s going to come my way.

Do I owe anybody any details? No. But might transparency benefit someone else out there? Maybe. And if the struggling house hunters who opened up about their finances for the Herald’s Home Truths series can do it, I probably should too.

Here it is.

Based on my pre-approval, I set out to buy a property $500k or less, using the Welcome Home Loan scheme (allows first home buyers to get in with 10% deposit, subject to other conditions). The majority of my deposit came from my KiwiSaver. (It’s never been affording mortgage payments that poses an issue, but rather the down payment.)

At this point I was temporarily staying with my parents, and they were helping me house hunt. There wasn’t a lot in my price range at all, let alone properties that were actually fit for residence. The two places in my budget that I wanted to make an offer on (though I was pipped to the post on those) … let’s say my dear mum wasn’t very impressed with the properties.

But as I told them: beggars can’t be choosers, and I’m a beggar in this market. My criteria is whatever I can afford, and within that, whatever I think I can live with. I was prepared to compromise on various things as required – basically anything, although not everything. Slim pickings weren’t necessarily a negative. I’m chronically indecisive so a narrow range of options was actually a good thing for me.

They also offered to help out, moneywise. I was very appreciative of the offer – and also very reluctant to accept it. My preference was to buy within my original budget, on my own steam, but together we started looking at some more expensive properties as well.

The more we looked, the more it made sense. The phrase ‘cutting off your nose to spite your face’ comes to mind.

The prospect of them topping up my buying power went against my core principle of Doing Things On My Own. And yet they genuinely wanted to. Rather you pay us than the bank! It would mean a better house – still absolutely in entry level territory, but more liveable and better located. And importantly, potentially a forever home. I’ve moved so, so much while renting and it has been exponentially more soul destroying each time. I always wanted to buy a house and then never move again if at all possible. I just can’t imagine dealing with the stress of moving PLUS throwing the logistical headache of both selling and buying into the mix. Obviously people do it all the time, but I can tell you right now that climbing the property ladder is not for me.

The final price for my house was $595k, so with them making up the difference, means I owe them close to $100k. A little less than that now, after a few months of repayments.

So in the end, I didn’t take a Welcome Home loan, just a regular one – but it worked out for the best. As a result, the rest of the loan process was a lot simpler and shorter (less paperwork). And I didn’t get the $5k government HomeStart grant, but that would basically have been cancelled out by the Housing NZ premium applied to the WHL anyway. Turns out that’s a bit of a wash as a single income home buyer…

Withdrawing KiwiSaver money for my first (and hopefully last) home puts a major dent in my retirement savings, it’s true. But I’m comfortable with that choice, having pondered it for a couple of years, and still being young with time on my side. Saving for the future is important – but so is having a stable and healthy living environment in the present. (One word: mushrooms.) And while I don’t see my home as an investment, having a paid-off house will be a huge benefit come retirement. There’s a lot of talk right now about how Generation Rent will be at a disadvantage in this regard, and for good reason. Having discussed this with people at work who know much more about finance, mortgages and the economy in NZ than I do, I feel confident in this decision being the right one for me.

Probably more painful – emotionally anyway – is the fact that I accepted family help. Now I’m just like basically every other Auckland homeowner my age. Even as a loan rather than a gift … this makes me one of those awful privileged millennials tapping into the Bank of Mum and Dad. Let me tell you, that stings.

But pride ain’t everything, and I’ve said before that I wouldn’t look a gift horse like this in the mouth should it cross my path. I’m happy (understatement: DELIRIOUSLY HAPPY) and apparently so are they. A win-win, I suppose. Heck, for health reasons alone, I can tell you it has been so, so worth it already! I rub rosehip oil into my stress scars each night (from the chronic eczema that literally evaporated once I moved into my house) and I know I made the right choice. I pinch myself most days, wondering if this is actually my life, and feel so grateful to be here.