• Class, relationships and money: What happens when opposites attract?

    hands

     

    What happens when Hillbilly Elegy meets Battle Hymn of the Tiger Mother?

    (Oddly enough, JD Vance, author of the former, credits Amy Chua, author of the latter, as a key influence in his life and success – she was one of his professors at Yale).

    There’s lots of talk about interracial relationships, but I’m just as interested – scratch that, I’m WAY more interested – in cross-class relationships. Ones in which partners hail from very different upbringings and class backgrounds. Class barriers are not as immediately visible as racial differences, but that doesn’t mean we should gloss over their power. We just have to work harder to identify and address them.

    We’ve always had contrasting views on and approaches to money and career stuff. I’d always thought these stemmed from our wildly different personality types – and that is an important factor for sure – but I’ve come to believe that the biggest influence that shapes our approaches is our polar opposite upbringings.

    While Jessi Streib’s book The Power of the Past: Understanding Cross-Class Marriages is hardly a definitive work on this topic (it’s based on interviews with a small group of white middle-class American couples, where one partner grew up blue-collar and the other white-collar), I personally found it hugely validating of my own experiences, and it even shed some light on things I hadn’t previously considered.

    The main gist is that white-collar upbringings are associated with a more structured, managerial, proactive approach to not just money, but life in general. These partners tended to spend only after research and budgeting; save for the future; actively manage their careers; and plan and organise their time. Their blue-collar partners generally spent for today; bought without thinking; let weekends unfold at home and went with the flow.

    In short, white-collar = planner, blue-collar = laissez faire. This was true of most, though not all cases in the book.

    She makes the case that the class we’re born into leaves an imprint. Yet even after years together, the couples overlooked the ways class shaped their ideas and choices (rather perceiving these as stemming only from personality differences). Almost every couple interviewed were drawn to each other because of those differences, however many later felt that these became things they lived with but did not love. “The things that you’re drawn to sometimes become the things that drive you crazy,” one observed.

    Money, unsurprisingly, was a key battleground. People like Aaron, who spent their childhoods imagining what they would spend once they had money. bought everything he wanted once he started earning. No longer bound by constraints, he used money to distance himself from his past. Despite leaving their original class behind, they retained the strategies they learned at home.

    The strategies that worked for their parents, who typically had limited means, were spending when money was available and having faith it would work out. Worrying was pointless, since they would always have financial difficulties and no amount of planning or fretting would change that. Low savings weren’t a cause for concern, as they had always gotten by on a shoestring. And that was at complete odds with the views of their white-collar partners.

    Of course, that’s not to say that this is a blanket, universal rule. Obviously, there are blue-collar families that are financially comfortable, and white-collar families that aren’t. And for some people, growing up without much can be a great incentive to build their own security.

    I put a call out for thoughts from people in similar boats – cross-class partnerships – and was pleasantly surprised by how willing you guys were to engage on this subject. One thing is clear to me:  the PF blogging world is its own microcosm – who have mostly experienced quite the opposite of the dynamic Streib writes about!

    Because he grew up with nothing, he’s arguably got more hustle than better-off peers.

    If I dated a fellow silver spooner, I may not see as much drive and ambition in him and instead just complacency and entitlement.

    We’ve also got quite a few hustlers who grew up with not much and paired off with more laissez faire, well-off partners.

     

     

    (That said, there may well be a lot of overlap with typical immigrant values/mentality – because that’s another common thread among many of the people who replied.)

    Savvy Financial Latina and her husband grew up at different ends of the socioeconomic spectrum. Her family immigrated to the USA when she was 7 years old.

    “On top of all the cultural differences (completely different discussion), my parents had money problems. They never spent more money than they ever had. Actually, they were always the ones with savings despite their low income. Family members and friends knew they could reach out to my parents for money. I learned quickly my parents were too nice and they have been burned (again another note). I would love to say even though my parents were poor, life was happy at home. In general, the lack of money combined with other life events, always, always caused a lot of stress in my family.

    “I grew up knowing I didn’t want to be poor because when you are poor you have no options. I wished many times Superman would come rescue me and suddenly transport me to a new life. I had to work really hard to get to where I am today.

    “On the other hand, my husband grew up in a fairly middle income class family. I say they were upper middle income class, but his family assures us they were lower middle income class. To this day, they don’t realize how blessed they are. As part of a “Jones” family, he always got what he wanted in life. Enough toys, vacations, etc.”

    While coming from different backgrounds has definitely influenced their individual perceptions of money, she says they’ve slowly moved towards more of a happy medium after many years together.

    “I’m definitely the more frugal person, always saving for tomorrow. I watch every penny, and although have loosened up to some extent, I still keep up with every penny. My main fear is not having enough money.

    “I earn more money. I view work as a means to an end, but work hard to get the most out of it! My husband views life in a more relaxed way and thinks there should be more leisure. He doesn’t see the need to climb the ladder. I view more work, ultimately, as a blessing. He views more work hours as bad. I’m always thinking 5, 10, 15, 20 years ahead. My husband doesn’t think he’ll live past 45 LOL.

    “I’m starting to loosen up a lot more. Especially when you compare me to 5-6 years ago. Now, I think the next couple of years will be finding a middle ground where we are saving enough for FI and enjoying life.”




    Here’s another story shared anonymously with me, where she and her husband are both savers and both make good incomes but essentially hail from different rungs of the ladder. While both of their families have always had blue collar jobs, her parents own a blue collar business that has enabled them to build wealth and given them many more glimpses of white collar life. His parents don’t talk about money period while hers do – all the time.

    “My mom never grew out of her poverty mindset despite the wealth mine have built, which in turn left me with some poverty mindset for a while. It’s really bizarre to my husband to listen to my mom talk about how broke my parents are all the time when they aren’t really.

    “My husband is only now starting to believe me that financial independence is a real thing…basically as we hit its early milestones. No one in his family has really ever retired, so it seems crazy to him as a possibility. If we wanted to spend MMM levels of money, we could quit working right now, both of us. But we don’t want to spend that little and my husband doesn’t want to retire before his parents. They already think it’s bizarre enough that just his income can support us – they have no concept of our household income and we mostly just avoid talking about money with them.”

    His parents have no retirement savings – something she says she spends a lot of time worrying about, while her husband tries to avoid thinking about it.

    Wedding planning has also highlighted the differences between their families.

    “My husband’s extended family mostly don’t have passports so they likely won’t come, with that additional cost on top of flights. His parents and siblings are coming but they’ve definitely been telling us how expensive it is, while my parents are trying to save the $20/night hotel parking cost by parking at our place (that’s a firm no, parents!) during the event. My parents think we don’t have enough things on the registry, his parents should be paying for more things, etc. Weddings bring out so many class differences. My parents think we picked too expensive of a venue while his think the food sounds delicious. Honestly I have much less patience now for my parents trying to say they’re broke with his parents actually being broke.

    “Vacation and travel planning is another difference. His parents and siblings all work blue collar jobs where they don’t know very far in advance if they can get the time off. So they pick dates before they book flights! This confuses the heck out of me because my parents would always adjust the dates to more reasonable prices so the dates were never final until they booked flights! My parents wanted to buy us a two week Christmas trip to somewhere warm this past year and it freaked the hell out of my husband. Their wedding gift being 10x his parents’ didn’t weird him out since that was a one off thing but he did not understand parents buying a trip for their grown children.

    “I could probably go on about this stuff forever. I didn’t think our class differences were that severe but it turns out they’re more subtle than I realized.”

    One thing is clear: it’s a journey but it does get easier – the beginning is the hardest. 

    As one blogger put it:

    Lots of trying to teach him long-term vision with money.

    Progress is slow, but it’s getting better.

     

  • The 3 paralysing emotions that will hold you back financially

    3 EMOTIONS THAT HOLD US BACK WITH MONEY

    When it comes to money, there are a few intense emotions most of us experience at some point that paralyse us financially.

    I’ve struggled with every single one of these, and if there’s one thing those battles have taught me, it’s this: we are our own worst enemies.

    The mind is a powerful, powerful thing and that cuts both ways. It’s up to us to harness that power and use it to our advantage.

    Regret

    Regret that you didn’t negotiate that salary. Regret for all the money you spent on things you didn’t care about. Regret for the money you wasted on deadbeat exes.

    As hard as these regrets are to stomach, there’s only one way forward: Accepting the past, learning from those mistakes, and moving on. We all move through this process at our pace, but sooner is better, and healthier.

    Fear

    Fear of losing an income source, of some financial disaster striking, of the unknown in general.

    Living in a state of constant tension and low-level panic SUCKS and it takes its toll.

    That’s where a solid savings buffer and good insurance cover come in – knowing you’ve got those safety nets to fall back on. And so too does making contingency plans.

    Some people don’t like to imagine the worst-case scenario, but I’m the kind who needs to confront my worst fears rather than hide from them – to ask myself questions like “Has it happened before? What are the odds of it happening? What would I do then?”

    In lots of cases, the catastrophes we’ve conjured up in our lizard brains are over-exaggerated. They have never happened and are not likely to.

    Guilt

    Guilt for all that you have now, all the privileges you’ve been blessed with … and the fact that yet you want more.

    But you know what I’ve realised? It does nobody else any good for me to struggle, to not have what I want, to play the martyr.

    By taking care of myself first and flourishing, I can then turn around and help others. Giving back is fantastic, once you can comfortably and safely do so from a solid position.

    Each of these are ultimately useless emotions, and I’m personally done with wasting my time and headspace on them! We’ll be covering all of them – and much more – in my new course, Money Groove. Sign up below to get the lowdown.

    *Part of Financially Savvy Saturdays on brokeGIRLrich.*

  • The accidental breadwinner

    HOW I BECAME AN ACCIDENTAL BREADWINNER

    I never envisioned myself as a high earner. And I’m still not. But somehow, I’ve found myself in the position of accidental breadwinner.

    I had no interest in the typical commercial career paths (I was one of like three Asians in the journalism track of my degree). Zero interest in climbing the corporate ladder. Money was not a consideration for me when I was thinking about careers. I didn’t set out to earn heaps and I didn’t aspire to it. I embarked on a creative path and didn’t imagine veering from it.

    And then, like so many other journalists, I left – for a new challenge, yes, but also for more financial security. I make decent though not crazy money, I enjoy my work and my life, and I can’t imagine any other way now.

    It wasn’t all smooth sailing. As it turned out, T happened to be unemployed at the point of each of my significant income increases. I suspect unconsciously this led to problems.  We could survive (although not thrive) on my earnings alone. The more I made, the less urgency there was for him to contribute … until it all boiled over.

    For a long time I kind of hoped he’d somehow land an epic job that would set us up for the future, take the pressure off me, let me sit back and relax for while (payback, if you like, for all I’d done for so long).

    I’ve come to terms with the fact that this is unlikely, and that odds are I’ll continue to be the breadwinner. It’s a strange concept to accept, a new way to see myself, even though it’s been definitively true for many years now. But it is definitely no longer a temporary thing. It’s just how it’s going to be.

    He landed a new job this year. I’m so proud of him. Stepped up of his own accord. He knew he needed to bring in more and set about changing that. #makingshithappen

    The extra money certainly makes a difference. Here’s to thriving, not just surviving.

    Our income differential is still massive though, and we’re not anticipating huge pay jumps that would change that equation. That’s fine.

    Ultimately, we’re both people who never expected to make much money. People who never ever imagined earning, say, $60k. While I’ve broken through that barrier and more – I can’t and don’t necessarily expect the same for both of us. What I can count on is myself, and continuing on the quest to get paid well for doing work I love, or as close to it as possible.

  • Online grocery shopping has seriously changed my life

    Groceries

    By: Tasha

    Life has never been busier, and while I’m hanging out for Pak n Save to join the online supermarket shopping revolution (come on Foodstuffs!) I’ve cobbled together a routine in the meantime with a couple of other online retailers.

    For meat: The Meat Box

    Finding quality, affordable meat has long been an issue for us. Supermarkets have been grim and uninspiring in this department, and even the butcher lately has been disappointing. Cue The Meat Box!

    The Meat Box is a local operation (we still get handwritten thank you cards with every delivery) and we’ve found it offers really good value for us. The prices are reasonable and the quality is great. We usually order one of the Couples Boxes and occasionally make up a custom box of individual packed meat items. The downside is they only deliver Tuesday-Friday and the cutoff time is 7am the day prior to delivery – so basically, 2 nights before in reality (unless you enjoy ordering groceries immediately upon getting out of bed?)

    North Island deliveries are $8, but there are special discounts from time to time sent out via email and Facebook. And you can get $10 off your first order by signing up for the newsletter!

    For other stuff: Greenkart

    Greenkart is another local operation that sells everything from meat and produce to dairy, packaged goods and personal care items. Not as extensive in range of products or brands offered as a supermarket, but possibly more so than your local dairy or corner shop. The weekly specials can be quite good too. Delivery charges range from $6 to free depending on how much you spend.

    The best part is the flexibility. You can literally order on the same day at a pinch! They deliver every day, and offer delivery options in 3-hour slots (eg you can request delivery between 9am-12pm). I usually just place my order the day before.

    Most relevant Facebook ad ever – so glad I saw it …I actually clicked and wound up eventually downloading the app! Yep, there is an app! Seriously. However, the interface for adding your credit card details is horrendous. I’m fairly tech savvy but it took me way too long to figure it out, and I nearly gave up. There’s a visual of a credit card and you have to tap the relevant parts on the fake card to enter your real digits, if that makes sense – complete with ‘flipping’ it over to enter your CVV number on the back.

    Now they just need to keep building out their product range further (new stuff is frequently added, so they’re on to it).

     

    (I also returned to Foodbox for a few weeks – lured in by their new Careful Couple offering.

    However, I’m not in love with the interface (there’s no itemised pricing; to work out what something costs I had to add or remove it from the cart and see how the total cost changed) and they charge $6 for the chiller box, which they’re supposed to pick up the next time, and refund you … except the driver never did collect ours.)




    Typically we still do a small supermarket run for things like milk, pet food, toiletries, cereal, pantry staples etc, but this lets us get in and out SO much quicker and reduces the mental load by a huge factor.

    This is obviously not the route to go if you’re trying to shop for food as cheaply as possible – you’d need to be driving around to small fruit and veg/meat/ethnic/bulk buy shops – but at this stage in life it’s saving a ton of time and hassle.

    What’s your grocery shopping routine?

  • The one expense that seems like a waste of money … until you need it

     

    THE ONE BUDGET CATEGORY YOU CAN'T AFFORD TO GO WITHOUT

    ONE EXPENSE YOU MUST BUDGET FOR

    INSURANCE MIGHT SEEM LIKE A WASTE OF MONEY ... UNTIL YOU NEED IT

    Insurance might feel like money down the drain, but having been caught out without it in the past, let me tell ya: I learned my lesson early on. It’s one thing my family wasn’t really big on, and so it’s been a case of self-education in my 20s.

    Contents insurance (for your crap)

    So important IMO, and increasingly cheap. I’m seeing affordable renters’ policies advertised in mainstream media now, which is a new trend, and a good one.

    Our flat was burgled while I was at uni and I lost a few things, most devastatingly, my laptop. Annoyingly, I had been pondering taking out contents insurance but decided we couldn’t really afford it at that point while scraping by on a student income.

    I took out a contents insurance policy after that incident and it’s served me well since, through multiple break-ins and claims over the years. The cost dropped to just a few hundred dollars once I bought my house, which was a nice surprise.

    Plus, if you’re still flatting, contents insurance can cover you in the event that you cause damage to the property you’re renting (just in case you inadvertently cause a fire, flood, that kind of thing).

    Car insurance (for your wheels)

    Even the shittiest scrap heap needs to be insured. If you own a vehicle, this is a must!

    At the very least, third-party insurance covers you if you cause an accident. Even the tiniest ding to someone else’s car – the kind you think can’t possibly cost more than a couple of hundred dollars to fix out of pocket – almost certainly costs way, way more. Trust me on that one.

    And of course, comprehensive insurance gives you peace of mind if you know you couldn’t afford to replace your car in a pinch.

    House insurance (for the most expensive thing you’ll probably ever own)

    After working my ass off to be able to have a place to call home, you can bet I want to protect it in case of fire, flood, earthquake or whatever else might jeopardise the roof over my head. (Also, the bank doesn’t give me a choice :P)

    Life insurance (for what you leave behind)

    To cover my mortgage in case I cark it. I don’t have dependents but this obviously becomes infinitely more important if there are kids in the picture.

    Trauma/disability/income insurance (for your moneyyyyy)

    More expensive than life insurance, but arguably more important. Financially speaking, your ability to earn is probably your biggest asset … and yet we often don’t take the appropriate steps to protect this.

    ACC is meant to cover you if you have an accident but I can’t say I have a lot of faith in them. As we learned, it needs to have a defined cause – we lost out on a full month of income a few years ago when ACC refused to stump up a few years back. And it doesn’t cover illness, which is obviously another huge threat to your income – they say that illness stops far more people from working than accidents do. Plus, if you’re made redundant, you may not be able to get unemployment benefits (if you have a working partner, as again, we know all too well, and there are probably other exclusions too).

    Insurance can help replace your income in the event of temporary or permanent disability, or illness. It’s not something we generally talk about, but I bet you more people than you think around you have income protection insurance (and a lot of those who don’t, quite possibly should). Redundancy cover, from what I’ve seen, is less common and quite pricey, but there are also rent/mortgage protection policies that can help cover your biggest cost, at least.




    I prefer to pay my insurance premiums annually, and they almost all fall sometime in the first quarter of the year.

    It’s a painful hit to absorb, but when I ask myself how I would feel if I wasn’t covered for at least the very basics, my gut instantly reminds me that I’m doing the right thing for peace of mind.

    *Part of Financially Savvy Saturdays on brokeGIRLrich.*

  • There’s nothing like being able to throw money at a problem

    SOMETIMES YOU JUST NEED TO THROW MONEY AT A PROBLEM

    Some things are much better solved with money than time.

    Some things can ONLY be solved with money.

    Most of the issues I’ve had have fallen into one of the above categories.




    When the dogs broke a window

    When we had to replace tyre after tyre after tyre due to pesky nails turning up in the treads

    When our pets required unexpected veterinary care

    When our vacuum died

    When I suddenly needed to get my wisdom teeth out

    When our reactive dog really needed expert help

    When we needed X rays done

    When we simply needed help with keeping the house clean

    When only prescription meds could help with skin issues

    When we suddenly had to move house

    When my glasses broke accidentally

    It’s interesting to me to look at this list and see how many are health/medical related. (Also, dog related. Sigh.)

    T has been seeing a chiro regularly and that’s a chunk of money for appointments that only last a few minutes at a time… but is well worth it.

    Lately it’s also become clear to me just how much some of my coworkers must spend on healthcare. For health insurance. For specialist visits. For private surgeries.

    As someone who never even goes to the doctor except in dire circumstances, it’s all so strange and foreign to me.

    Melanie recently asked what the best thing is that money has afforded us.

    Aside from the ability to sleep at night, like I told her, I would also add the ability to not worry about health costs. When you’re talking about your health, financial stress/constraints are the last thing you want to deal with on top of all that.

  • How often do you think about money?

    how often do you think about money?

    No, seriously.

    Constantly? Throughout the day? Daily? Every few days? Once a week? As little as possible?

    I’d have to say, more often than I can consciously count. Some aren’t really active thoughts as such, but general emotions related to finances, if that makes sense – feelings tied to broader money issues that are never far from my mind.

    Lately, of course, they’ve often revolved around the financials of having kids. Patently ridiculous given actual timelines, but the nervous nelly/overplanner in me keeps rearing her head.

    Here’s another thought…

    How often would you LIKE to think about money?

    For me, it doesn’t really matter, I don’t think. As long as the thoughts and feelings are positive.

    Therein lies the trap, of course. More often than not, those money thoughts come with stress and worry.

    How frequently do you really think about money? What specifically are those thoughts about?

  • How to use KiwiSaver to buy your first home

    how to use kiwisaver to buy a house

    Thinking about using KiwiSaver to buy a first home?

    Honestly, KiwiSaver or no, buying a house is kind of a nightmarish process. I was going through some files on my computer the other night and came across some finance documents from my mortgage application days. I couldn’t bring myself to delete them in case I wind up needing them for something again, but I definitely did not linger on them. You can bet I clicked away FAST.

    It’s been over a year, and thankfully the memories of that traumatic time have faded. But I thought I’d jot down the steps involved for anyone who might find it useful, before I forget entirely. And it seems like Auckland’s crazy runaway house price growth may finally have slowed. So if you are thinking about braving the market as a first home buyer, here’s a rough guide based on my experience of using the KiwiSaver withdrawal option for a first home.

    1. Apply for HomeStart grant preapproval (if you meet the criteria)

    The HomeStart grant is a feature of the KiwiSaver scheme that gives you a cash grant toward buying a first home. There are income limits (less than $85,000 for one, or less than $130,000 for two or more people), house cap limits ($600k for an existing house in Auckland or $650k for a new build; less in other regions of NZ), and you must have been contributing to KiwiSaver for at least three years.

    Other criteria apply too – eg you’ll need to live in the house for at least six months and have at least a 10 percent down payment (although that can include the HomeStart grant itself, and of course your own KiwiSaver first home withdrawal funds).

    With the HomeStart first home grant you can get $1,000 for each year that you’ve contributed to KiwiSaver, to a minimum of $3,000 and a maximum of $5,000. If you’re buying a new build, all of these figures double – $2,000 per year of contributions, to a minimum of $6,000 and maximum $10,000!

    You can get pre-approval for the KiwiSaver first home grant, which is valid for six months. And you can do it all online. I received pre-approval within a couple of days via email!

    Don’t leave it until settlement or you might miss out entirely – you need to apply, at a minimum, 20 working days before your settlement date. Get preapproved, seriously!

    Note: I did not actually wind up using the HomeStart grant in the end, so I can’t speak to the latter parts of the HomeStart process beyond getting pre-approved.

    If you meet the criteria for the HomeStart grant, then you will presumably also meet the criteria for the Welcome Home loan scheme…

    2. Apply for a Welcome Home Loan (if you meet the criteria)

    Welcome Home Loans are a government initiative for first home buyers who only have a 10% deposit. Not all lenders offer these loans. You can apply directly to the lenders listed on the site, or you can go through a broker (I used a mortgage broker recommended by a friend).

    Getting preapproved took bloody ages, to be honest. The Welcome Home Loan application has to go to Housing New Zealand and I believe there was a backlog at the time I applied, and I literally had to wait a month to hear back.

    Note: I did not actually wind up using a Welcome Home Loan  in the end, so I can’t speak to the latter parts of the process beyond getting pre-approved.

    3. Apply for a KiwiSaver first home withdrawal (anyone and everyone)

    You can basically skip ahead to this step if you don’t qualify for/want to use the HomeStart and Welcome Home Loan options. You would want to have sorted out your mortgage preapproval before this step, though.

    In my case, despite having jumped through all the hoops already, I wound up receiving some 11th hour financial help from family which meant I ditched the HomeStart/Welcome Home Loan path, and got a generic bank mortgage.

    As soon as you sign the sale and purchase agreement on a house, apply directly to your KiwiSaver provider for a first home withdrawal. Again, do not leave this until the end! Your provider will probably require 10-20 working days to process your request for a KiwiSaver withdrawal as a first home buyer. I think mine took almost two weeks. You can request to withdraw a certain amount, or the full balance (that said, you must leave a minimum of $1000 in your account, so you can’t totally drain it).

    If approved, your KiwiSaver provider will transfer the money to your lawyer’s bank account. It never actually passes through you.




    A note about deposits and KiwiSaver

    I didn’t realise this, but there are actually two aspects to the deposit involved in buying a house: the portion you pay the agent and the portion you pay the lawyer.

    What we generally talk about when we talk about deposits is the amount you need to put toward the purchase price, from the lending perspective (usually 20% these days, 10% under the Welcome Home Loan) – which you pay to your lawyer’s account prior to settlement day.

    But there’s also the vendor deposit – the money you pay to the real estate agent to secure the house. This may be payable upfront upon signing the sale and purchase agreement as in my case. In some cases you might be able to arrange to defer this until the day of going unconditional, but obviously from the seller’s point of view it’s in their interests that you stump up some cash upfront as proof of your commitment to the sale.

    Realistically, I don’t see how you could use KiwiSaver for the initial vendor deposit. Depending on the timeframes involved in your particular transaction … if most of your deposit is coming out of your KiwiSaver, this might pose an issue.

    You can’t use a HomeStart grant to pay the seller’s deposit, so that’s not an option. If you’re relying on using  KiwiSaver withdrawal funds for the vendor deposit, you’d have to negotiate payment upon going unconditional, and a long conditional period. You need to send in your sale and purchase agreement with your withdrawal application forms, but it takes time to process all of that (10 working days minimum with my provider, for example). If the vendor insists on a shorter conditional period (5 business days is common), make sure you have access to enough cash in a pinch! I saw a post online the other day where the buyers took out an overdraft for this exact purpose, because they got caught out by this.

    Here’s my attempt to visually interpret the cashflows involved during this process.

    Buying a house in NZ cashflow - transactions process between purchase and settlement

    For example, let’s say you have a 20% deposit, of which half comes from your KiwiSaver. First you might pay 5% to the agent, then 10% is withdrawn from your KiwiSaver and sent to your lawyer. You send the last 5% of your cash deposit to your lawyer. The remaining 80% is drawn down from your mortgage and transferred from bank to lawyer. This all adds up to 100% by settlement day and is finally sent to the vendor.




    There you go – that’s my take on buying a house with KiwiSaver as a first home buyer! As I said, I can’t speak to using the KiwiSaver Homestart first home grant/Welcome Home Loan all the way through, but I can tell you for sure what it would add more complexity and paperwork at the end. Be prepared!

  • I don’t want to live with less

    CUTTING BACK IS NOT ALWAYS THE ANSWER

    (This is not the post for you if you are used to regular raises, bonuses, shopping and living large. Obviously.)

    Sometimes I feel like the only person online who doesn’t religiously read and follow minimalism blogs. (And many of the mainstream PF blogs, for that matter.)

    Why?

    They don’t resonate with me.

    Decluttering and downsizing are not things I struggle with or aspire to.

    I am the person who rotates through the same 3 pairs of shoes every week.

    Who put up with only having 3 forks for nearly a year.

    Who has lived in painfully small places due to money not choice, and bought a small and dated house because it’s what I could afford.

    Who has always lived in a one-car, two-person household.

    When you tell me to get ahead by saving my pay raises, living in a small cheap place, ditching the car, cutting back on coffee and clothes … I bounce, cause that ain’t my life. Many of us don’t get raises, live in large places we can downsize from, have a car, buy lattes or shop for leisure. These are not practical options for everyone.

    I get it. Trimming the fat is an easy win for lots of people. They are the low hanging fruit. And they’re everywhere on the internet.

    There are also people who are doing all the right things, but can’t get ahead. Quite simply, if they want to change that, they need to bring in more. Cutting back is not realistic (any odd small splurge they can manage is what keeps them going, and is not going to materially impact their overall situation). Popular advice assumes a baseline that is way above where they operate from. I don’t know what percentage of the population they represent, but they exist. Particularly in a low-wage, high cost-of-living country like this. They are on the internet too, but you don’t see or hear about them as often. I’ve seen their comments and stories pop up more and more over the past year, and it breaks my heart.




    I often find myself short of things that are more need than want. I’ve lost so much over the years through various cycles of flatmates, and moving house. I got by for so long without a shower caddy, baking trays, and tons more little domestic touches that make a home. It made no sense to invest in anything of that nature while renting, and even after buying my house I struggled to spend money on those little things despite their huge ROI in terms of quality of life.

    I’m not saying I am perfectly ascetic. I have plenty of crap I don’t need lying around the house and it’s a battle as I have hoarding tendencies rooted in a scarcity mindset (what if we need it someday?!) Mainly free stuff. When freebies come into my home, be they books or drinking flasks or candles or whatever, it’s really hard for me to get rid of something ‘perfectly good’.

    I know just how little it’s possible to live on. I backpacked around the world for six months. Full time travel forces you to get pretty bloody minimalist.

    I’ve lived with less and I know that I want more. A life of abundance. (And yes, for me that means some stuff.)

    Could I cut down my possessions by 30, 50, 70 percent?

    Sure. But I’d really rather not.

    Could I live on a lower income?

    I have done. And I definitely would rather not.

    Every new job/salary bump has enabled me to save more and build the life I want. My best life costs money – a house costs money, dogs cost money, babies cost money.

    For lots of us, cutting back is not the answer.

    (But I still haven’t cut my hair in over a year. I’m still not sure when I actually will get around to it.)

  • Investing in P2P loans via Lending Crowd: An experiment

    Are you thinking about dabbling in some P2P lending?

    I have been, and last year I took the plunge with Lending Crowd after perusing this handy comparison of P2P platforms in New Zealand. Here’s a little recap of my experience so far.

    Signing up to invest in P2P loans with Lending Crowd was relatively straightforward. I did have to upload copies of my ID as part of the Lending Crowd investor application, but it was basically instant.

    Once you’re all approved, you need to deposit some money so you can start investing in loans – $500 minimum.

    Step 1: Click the Deposit Funds option in your Lending Crowd account. This will bring up all the details that you need in order to do a bank transfer – moving your funds from your bank account into the Lending Crowd account, and ensuring they are applied to your individual investor account.

    Step 2: Take those details and do the bank transfer.

    Step 3: Funds are sent to Lending Crowd, and applied to your investment account.

    Then the fun part: Choosing some loans to invest in!




    Loans go FAST on Lending Crowd. I started my application on a Friday afternoon, and could see that the one available loan on the market was close to fully funded. I checked in a couple hours later that evening, and it was gone.

    Luckily, I got an email early the following week letting me know that email notifications were now available. Sweet, I thought. I don’t have to keep logging in all the time to check if new loans have come on the market! I promptly signed up to get new Lending Crowd loan alerts by email.

    A spate of about 5 loans trickled in the next day. But I didn’t have time to actually log in until night time, and by then only 2 were left and both very were close to funded. I’ll sleep on it, I thought. But by morning, both were gone.

    The following evening I received another email, and logged in about 10 minutes later. In that short time, about $3k of the $16k loan had already been funded! I pitched in for $50 and left it at that.

    The day after that I received another email in the afternoon and logged in immediately (as in, within a couple of minutes). The $3.4k loan had already had $500 in funding. This was a B2 (highest risk )category with 18.74% interest rate!

    That was pretty much how it went. You have to get in quick to get in at all. I kept playing the game over the next few weeks. and committed all my $500 to various loans, mostly in $50 lots each. But by the end of the month, I had 3 buys reversed, leaving me with $150 still to invest. (I assume those loans did not wind up going through for whatever reason.) I had to find new loans to invest in, and so even though I created my account in late September, I wasn’t fully invested until about the end of October. I started getting my first repayments in November.

    So far, I have had one loan repaid early – in 4 1/2 months instead of 36 months. That loan was at an interest rate of 10.96%. I wound up earning $1.64 on that $50 loan, so it looks like I made 3.3%.

    According to my Lending Crowd dashboard, to date my net average return (an annualised rate) is 11.79%.

    lending crowd p2p investment returns snapshot

     

    I’m basically leaving that alone now and just checking in every so often. It’s been a fun experiment.

    What, if any, have your experiences been with P2P lending?