Tag Archives: money

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

 

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.



style="display:inline-block;width:728px;height:90px"
data-ad-client="ca-pub-9917171514873193"
data-ad-slot="9548006409">

Where do you draw your lines?

Why I’ll never buy men’s clothing in NZ again

online shopping nz - buying clothes from the us
By: Images Money

Know what’s always been next to impossible to do here? Shop for clothes for my husband.

I swore the next time we needed to buy anything for him, we’d buy online from US sites, since we know they actually cater to his size.

Although a lot of retailers won’t ship to New Zealand, or charge an arm and a leg to do so, NZ Post has this service called YouShop that gets around this. Basically, you sign up for an account. You’ll then get a US address that you can tell retailers to ship your order to. That address is a giant NZ Post/YouShop warehouse. Once your package gets there, NZ Post/YouShop will notify you, and tell you exactly how much it will be to ship over to NZ (and repack the parcel if, say, it’s been lazily/wastefully packed).

Making use of this, I ordered a few things from Dickies and a few things from Target (with help from Sarah!). Here’s how it shook down, roughly:

  • 3 x Dickies pants, plus a bunch of packs of socks to get the order over the limit to qualify for free shipping within the US
  • 4 x T-shirts from Target – the corny kind T loves, eg Batman, Star Wars, Flash and Iron Man

Total: approx $NZ150 for the items, plus $70 for shipping = roughly $220 in total.

If we were to buy 3 pairs of Dickies in NZ, that alone would add up to about $210. They are about $70 a pop! On the US Dickies site, they are US$30 at full price (we got them on sale at a discount), or about $NZ35 – literally half the cost.

And that’s before accounting for shipping within NZ, either.

So for the price of 3 pairs of pants, we got a bunch of shirts and socks as well, delivered to our door.

You may not be perfect, America, but you sure do cater to people who need to buy stuff.

Our gas heater may be killing me slowly

I’m curious: how much do your power bills go up in winter?

In the summer months we’ve been using 4-5 units of power a day, spending around $40 a month.

In May and June we used an average of 7 units a day, costing $55/60 a month respectively.

In July, that went up to 7.5 units and $70 – a wee bit worrying since we also started using our old gas heater partway through July rather than our inefficient little fan heater, which I thought would save us money on power. Apparently not! Add on the $30 it cost us for a gas bottle (which only lasted us the month) and we spent $100 in this area in July. (More than double our summer expenditure!)

As a reminder, we live in a tiny little house – our flat is one bedroom, one bathroom, with a small, long open space that’s about half kitchen and half lounge.

Add on to this the fact that while reading random things online, I found out that our gas heater may be slowly releasing toxic fumes into the house. It heats up super quickly, which is great, but being an ‘unflued’ heater gives off unhealthy gases into the surrounding areas.

I can testify that sometimes I get prickly eyes when it’s on, and in the past couple of weeks  that old tightness in my chest has returned, much like at our last house.

So, I guess after this gas bottle runs out, that’s it. We’ll be looking for a better form of electric heater for next winter.

It’s galling enough we have to shoulder the burden of heating this freezing place (the coldest yet of several extremely cold places we’ve rented) to a bearable indoor standard. But having our heating source slowly poisoning us? Gotta draw the line somewhere.

God, I can’t wait to buy a house.

Why I’m spending more on food, with no regrets

By: c_thylacine

My twenties have seen me become a lot more picky about food. I’m more concerned with taste and quality than price these days, even moreso after returning from our travels. Sorry to everyone who eats out with me – I know I’m a high maintenance nightmare these days…

Anyway, as a result my regular  grocery shopping habits  have definitely changed.

Healthier breakfasts

I’m a cereal fiend. But while I used to subsist off Cocoa Puffs, Chex and the occasional box of Nutri Grain, nowdays I buy more muesli-style cereal (the flakey type, not the oaty type). It’s a bit hard to swallow when these are often more than $5 a box, but it’s filling and healthy and I can usually find at least one variety on special in any given week.

Better bread

The so-called supermarket ‘bread wars’ have seen home brand bread loaves return to $1 a loaf, but I’m trying to stick to buying quality loaves for the most part. Better bread is way more expensive, but goes a longer way and is better for us. I’m talking brown, grainy and or seedy, rather than the cheap, super refined white stuff.

Fancier staples

I have a new pantry staple. It’s not as crucial as, say, flour or chicken stock or whatever, but it’s definitely a regular in the rotation. What am I talking about? Roasted peppers. A jar, as far as I can tell, doesn’t really work out much expensive than buying individual capsicums and then going through the trouble of roasting them. Having them on demand is amazing. (We once tried this with pre-minced garlic but weren’t really fans – fresh garlic definitely beats the convenience of the jar for us.)

Have you started eating better with age?

*Part of Financially Savvy Saturdays on Femme Frugality and brokeGIRLrich*

My top 3 money memories

nzmuse-money-memories

What purchases stand out most in your memory to you? A car? Wedding? A particular gift?

Running back through my memory banks, these are the three instances that jump out at me:

$6 fried rice Mondays

Back when I was in my first year at uni, Mondays were the day from hell. It was literally a 12-hour day, nonstop. I went to my first job in the morning, where I typed up documents and made photocopies. Then I’d rush down to Queen St and the underground International Food Court, where I’d buy a massive fried rice to get me through the rest of the day. After wolfing down lunch, it was off to classes, and then my second job from 4-8pm, loading newspaper content online.

That stall sold fried rice for $6 in 2007; now in 2014 it costs $8.50.

$700 guitar package

I worked my ass off during that year of high school, pulling evening shifts at a call centre and weekend day shifts at a cafe. What I could save now in a few weeks took me months back then, but I was so proud of myself. My reward: a red Ibanez RG170 and a 20-watt amp.

$30,000 RTW trip

Hmm, I’m sensing a pattern here… In the months leading up to our departure, I hustled into the nights and on the weekends bashing out freelance assignments to beef up the travel fund. The highlight was earning almost $1000 in a single day – a batch of five pieces I churned out in one sitting on a Sunday. But ultimately it all came down to one day last summer when I finally sat down and calculated the total we spent on the trip, and seeing that figure staring back at me. It’s an alarming number, for sure, but one with zero regrets attached to it. I know I’d much rather a $30k honeymoon than a $30k wedding.

Your favourite money memories … go!

Five material things that (would) make me happy

material girl in a material world

As a general rule, I am all about experiences over stuff. Stuff wears out, breaks, gets stolen.

But as reported in the Atlantic this week, some material goods actually CAN make you happy. And I’m definitely not going to argue with that. Here are the material things that make my life better …

My guitar

After nearly two years being guitar-less, I picked one up for $100 secondhand last month. I can’t tell you how much joy it’s bringing me. I’m never going to be much more than a dabbler, but I didn’t realise how much I missed playing.

Unlike my old guitar, it’s not a name brand, though, and for the first time I am finding out first hand what difference that actually makes. (Occasional fret buzz, less than smooth-looking neck/body joint, and prone to paint surface cracks.) But since I’m never going to be a serious muso, it’ll do just fine for now – and possibly for a long time.

Good quality kitchen knife

I can never go back to the days of sawing away at vegetables/meat with the kind of knife that now feels so flimsy I could practically bend it with my bare hands. No siree.

Expensive frypan

Likewise, I love my Circulon pan. Now I can actually make decent looking hotcakes, among other things!

A reliable car

Not something we’ve had the privilege of experiencing much, alas. Working on changing that.

A decent house

I dream of living in a house that’s properly insulated, warm and dry.  And hey, since dreams are free, let’s throw in a bonus heat pump. Still a way off…