• That money mentality

    that money mentality

    <image via 68751915@N05 on flickr>

    A couple of posts recently about debt, poverty and money management have  spurred me to revisit this post I started some time ago and bring together various threads I’ve been reflecting on of late. I think, especially if you’re from a comfortable background, it’s difficult to understand what vastly different lives some people lead – I know it was for me, but after having observed one of these families up close, I wanted to share my observations.

    It’s weird being 18, and a student, and yet being asked (and able to) lend money to an older grown adult. It’s weird being 22 and ferrying those people around, because they have no access to a car. (True stories).

    What is the difference between a person who lives in overdraft week-to-week and someone with a surplus? Why are some people savvy with finances and some are not? Is it instinct?

    I grew up being taught to always save (not for anything in particular, but for the sake of it), saving all the money from my paper route, and having my parents also pitch in. I had money invested for me. “We can’t afford it” meant “It’s not in the budget” or “I’m not spending that much on ___”, not “We literally do not have the money for it.”

    It was an eye-opener to be introduced to a way of life where:

    – jobs are more common than careers, yet still not as common as welfare

    – you’re always short a few dollars

    – everyone in the family has bad credit

    – nobody knows how to check their credit reports

    – nobody has a savings account

    – you pay the same amount toward their power bill every week because it’s easier than figuring out how to pay it at the end of the month

    – everything is bought on hire purchase

    It’s about the way you’re brought up.  Is it any wonder that when someone from a background like this gets their first job, they go out and spend it all? Maybe give a little to their family to help out with essentials. Buy the things you need to get started in life (but probably not at the best prices), plus the things you may have wanted before but couldn’t afford.

    You know nothing else. Kids don’t talk about money, after all. What do they know about it? And they don’t teach personal finance in school. There are no role models for success. Maybe the first you hear of another way of life is when you get to be 20-something and hear of others taking overseas trips and buying reliable cars – all through the power of savings. Of TVs bought with cash, not on tick. Of daring to have dreams, within reach.

    And it goes hand in hand with values and a general way of life. One where education and reading are not necessarily prized. Where it’s going to be entirely up to you to break the cycle.

    There is a fabulous comment on this One Dollar Diet Project post I wish to quote:

    “I know that it’s ridiculously hard to get out of a situation if no one has ever taught you that it’s important or possible. It’s hard to save any money or advance at all when there are friends and family around you who are not; so you share when you have money or goods, and they share when you can’t, and no one ever gets enough to advance because it’s better for all to have some, rather than one to have all. And if no one is there to teach or set an example, saying “If you’re selfish for a little while, and you keep your successes for yourself and move up, then you can truly share with others.” 

    This is very true. At least from what I’ve observed, it’s about communal spirit, and sharing everything (what little?) they have. Family member needs something? If someone else can help out, then damn straight they will.  Everyone pitches in. But if you’re sharing everyone’s successes subsequently no one ever really does spectacularly well because it gets spread around. (Perhaps another example of tall poppy syndrome, which we so love to trot out in NZ?)

    “Too many times it’s lack of the basic necessities that keep the poor poor. Housing, medical care, food, education, child care, transportation: how do you choose which ones are a priority, or are you even given the choice?”

    And then of course, getting out of that cycle takes incredible individual drive, and it takes education (if you haven’t checked out PlaySpent, you should – I’ve never had to make any of the tough choices posed there, and I can’t imagine being truly faced with them). Though I would like to note here another observation – of the immense importance placed on birthdays and Christmas. No matter what, the kids always get presents, and LOTS of them. Personally, I think that’s commendable, but shouldn’t be a priority if you’re not otherwise stable. I didn’t get presents at birthdays and Christmas – even though my parents could afford them – and I turned out fine, I think…

    It was difficult enough for me to figure out the best way to manage my money at the age of what, 20? And that’s without even having come out of a debt-ridden or shopaholic phase. It was easy enough when it was just me, in high school – while my income was ridiculously low so were my expenses. Then T and I moved in together: cue more income, bigger expenses and a more complex budget. I would venture a comparison to trying to lose weight, or dieting – something countless people have tried and failed at time and time again.

    How do you do it at 25, 30, 40 – and coming from an ingrained background of living hand-to-mouth? And what if you’re not – sorry, this is probably not quite the right word – intellectually inclined? When all you have outside of work is knocking back beers, and you’ve been doing it for as long as you remember – are you really going to start taking an interest in spreadsheets and number crunching?

    I don’t mean to say that it’s hopeless, or inescapable. Far from it. I know some of you know all this already having lived it yourselves, but for the rest of us, I’m just seeking to offer some insight into a different mindset – and why in theory it seems there’s no excuse to be broke, it’s not as easy as we’d like to think. I truly believe it can’t be understood unless seen firsthand.

    Even though my fiance and I are the same age financially I am far better off – and that’s partly due to bad decisions on his part, but also a run of bad luck. (I’d say the number of incidents are about even – but I won’t list them in detail as it’s really not my place).

    You’ve heard me talk about how fundamentally I’m the saver and he’s the spender enough times; well, the only consumer debt he’s ever actually had was a small car loan. The vast majority of his debt was not incurred by him, but he was stuck with it. (Again, probably not my prerogative to explain). He’s never even had a credit card of his own. I can understand why he might feel bitter about money and even life in general, sometimes. To me, there is no better personified example of what upbringing + lack of education/knowhow + a couple of unfortunate setbacks courtesy of fate can yield – and how having a financial role model/coach can help turn things around.

    It’s strange being 22 and better off than all of your folks. It can be a great source of guilt, when they’re essentially good people trapped by a cocktail of bad luck, circumstance and poor choices.

    But guilt is a useless emotion. Good people don’t have to be broke to be good. You only get one life, and if you don’t put yourself first, getting sucked back under will make it that much harder to climb out again.

  • Hurrah for work benefits!

    I’m ecstatic!

    Got a cheque today for $390 for my glasses from work. They cost me 474, which means they were virtualy free…..relatively! They cost me less than $100 out of pocket, which is basically free.
    Not sure why they cut me a cheque rather than just direct depositing it…it’s not like they don’t have my details.

    I still can’t quite believe I got reimbursed at all….let alone to such a large percentage (I’m sure I read there was a $150 limit somewhere…

    So I’m gonna use $100 to pay our water bill, $30 for my Christmas present (finally decided to splash out and get me that awesome makeupcase….$30 from almost $200. I waited a bit long, there was a pink version for $20 earlier, but whatever). Then the rest goes into savings, as it’s looking pretty low. After the almost $500 I paid for my glasses, plus $350 for the boy’s present, and the $400 I lent him for clutch repairs, and I haven’t been paid yet for my four freelance articles…….

    As if I needed a reason to love my company right now..
    And this is why I want to be in a job with great benefits. As my mum says it’s better to start out in a large business, get contacts, get experience, get benefits, progress up the ladder, then later on move to a smaller more intimate place where you can really shine with your invaluable experience in a smaller team.

    If teh boy ends up officially resigning from his non-job he’ll lose his free health insurance, so I will probably go see the Southern Cross rep at work (she comes in once a month) and see about getting coverage through work. If it’s reasonable then I would probably go with that. (But first, gotta sort contents insurance, which I’ll probably do after the new year now.) If it’s cheap, say a few bucks a week (I have NO IDEA how much basic coverage might cost, so talking out my arse here) I’d jump on it. Not so much for me, but the boy, who’s much more prone to injury at work, has a bad back and may need dental work soon. It’s a great thing to have if possible, as big medical bills aren’t something we can afford right now.

  • Displeasure……warning, rant!

    So Bollard’s called for electricity providers, among other companies, to drop their prices.

    Not likely! We just had our power prices increase last month and I don’t see our company reversing that right now.

    The boy’s car loan rocketed 2% in the course of a few months as interest rates bounced around. Now that the OCR’s fallen to 5%, there’s been absolutely no decrease in his interest rate (I think it was around 7.5 when he first took it out).

    coin

    I’m not impressed with Vodafone. If we had any other options other than Telecom, Id be changing in a jiffy. Not only are they charging to send out paper statements (doesn’t apply; we’re on prepay), they’re charging $1 just to speak to a human CSR. Ha! What a joke. Everyone knows it’s damn near impossible to even get through to a person, let alone charge us for it! You can call their service line on 0800 from a land line phone, but wait – you still need to have that $1 on your cell phone.

    Of course that doesn’t really work when they f* up and don’t roll your Text 2000 over, resulting in you having zero credit because it all went to texting that should have only cost you $10. So when you ring to complain, you’re stuffed, because you can’t afford to speak to them!!!

    And no, topping up is not an option. Don’t even go there. Times are tough, it’s hard enough to top up once a month, let alone any more than that.

    You’ve also just gotta love how they now have $5 IOUs….but charge a 20c fee everytime you use it.
    Now if that doesn’t get your goat what does?

    Now that banks have started charging for basic automated services – how ASB kindly offers to save your bill payee’s info for next time, for a $2 fee – looks like everyone else will be too.

    Come on telecomms competition!

  • Another uni gripe

    First, their ridiculous method of handing back exams (cram in students from all three years on one level on WT, let three or four in at a time, hunt down their papers, wait for them to decide whether they want to appeal or not, let them out, let a new person in. Anyone who can’t come in during this three hour block, well shit outta luck).

    Today I walked up to uni at lunch (10-15 minute walk) to retrieve my photography portfolio off the walls of the art department. I got up to the seventh floor. I got no further. Construction zone signs and warnings were EVERYWHERE. Do not enter. Danger. Authorised personnel only (don’t you love that one?). Looked like they’d stripped the walls from where I could see. SO god knows where my prints are now, if they still exist. I’m pretty steamed about my wasted lunch break and not being able to get my work back! I was hoping to post my photos up here, but whatever.

    At least taking that paper didn’t bankrupt me like I thought it would. I would never have signed up if I didn’t still have my old SLR from school. As it is I think I only spent about $100, which yeah, is a lot, but not too bad considering I bought both black adn white and coloured paper plus 4-5 films.

    Speaking of money, the boy’s going to Work and Income to see if they can do anything for him tomorrow. The boss told him they have a small project and he’ll try and get him onto it. Not convinced. It’s in their best interests to keep stringing him out as long as they can and hope he stays with them till the new year.

  • Ranting

    Marginally more composed now.

    B+ for journo. Can’t actually remember what my other two marks were; i’m thinking an A and A-. So hopefully an A- average overall. Pretty annoyed with myself for making a couple of stupid mistakes, and for having had my moment of clarity AFTER the exam in regards to one story, but oh well. I’m on tenterhooks now but we’ll just have to wait and see.

    Onto more pressing matters.

    Second full week of nonemployment for the boy. this disgusting cutback of hours is worse than being laid off. at least with redundancy good ol Key’s package would kick in (although it hasn’t been actually organised yet, as such) and unemployment would be available.

    God, sometimes i feel about twenty years older. with every new development i feel further and further removed from everyone i know, who mostly don’t REALLY know what it’s like to be dealing with all this and definitely not to this extent. of course most of these are joint problems and not really mine, but that’s what relationships are about, aren’t they?

    as it is we have to try and get an appointment with work and income, along with the presumably thousands of others struggling and wanting the exact same thing. then trying to show that an average income of 2-300 a week doesn’t cut it especially with two straight weeks of no work. it’s bad for the wallet and it’s bad for the soul. i can’t singlehandedly support the two of us. our assets are separate and should be counted as such. however the fact that i have any money in the bank probably precludes the boy from qualifying for emergency help.

    if nothing else, this experience has totally cemented my belief that we need to work to feel valued and have motivation. sitting on your ass all day simply stagnates you. i don’t know if i totally support making single parents go back to work, but i certainly believe in working for the plain old dole.

  • Money money money, always funny

    I think a lot about money. Probably as I don’t have a ton of it especially lately. I’m okay with being the breadwinner for the time being; not so much the SOLE earner like this week.

    A few weeks ago the boy had a spare bit of cash and so when we were out and about he asked a few times “Should I pay?” and it was really, weirdly nice of him to offer. I look after all the money and usually control the cards, so whenever we go somewhere, buy food, clothes, go to a movie, it’s me who pays (or does the physical act of handing over cash/swiping the card).

    It’s actually how my parents do it. Seeing as my dad’s self employed and doesn’t give two hoots about making money and would live the rest of his life without buying any material goods (and didn’t even believe in having house insurance because ‘someone’s home all the time’…) it falls to my mum to manage the finances.

    In our case I’m much, much better with money. I usually track my spending and I know where everything goes, how and when to pay bills, etc. he’s more of an impulsive spender who used to run up huge amounts on absolute crap. Although I have trained him and his spending habits are a lot better now – he thinks about purchases and makes more careful decisions. The other week he decided not to buy something at the markets and bought a better quality version somewhere else!

    But I guess what I’m trying to say is I wish he was a little more financially minded. I’ve got out a few personal finance books from the library; hopefully he’ll find one that speaks to him. It’s nice to sit back and be looked after and every so often have your boyfriend “pay” for something. Even when it’s your money, combined.

  • Grr

    Kinda annoyed as a few of the groceries we bought this week we bought due to the markdowns, only to realise when I got home to entered them into my price book that the discounts didn’t come through at the checkout.

    Still, there’s only myself to blame – I need to be keeping an eye on the till so these things don’t slip through, especially now CD has those massive screens that they so kindly face towards us.

    I’ve only been keeping my price book for about two months, but already I’ve seen bread, noodles, beans, rice, pasta sauce and muesli bars go up (and probably other, less staple items too). Even if each thing went up, say 30c (which is pretty realistic), consider how fast prices have been rising, and consider how many different things you buy in your weekly shop.

    How on earth are we ever going to get ahead?

    At least we can still afford to eat meat.

  • I’ve really started to detest going to the bank. I invariably get harassed about Kiwisaver – am I in it, if not why not, these are the benefits, blah blah blah.
    It’s my freakin’ money, what little there is, and it’s my choice what I do with it.
    I was super keen to join, but I figured I would put it off till next year (or possibly after graduation). Definitely at least until my taxes and student loan are paid for. (although with what National wants to do to KS it’s lost a bit of its lustre, though I’m sure it will encourage more people to join which is good). But I am super, super glad I waited. With everything the way it is, all my income is going to be needed to pull us through the summer. If work continues being this sporadic for the boy. If the company doesn’t get their act together and start the apprenticeship next year it will definitely be time to look elsewhere – although how easy that may be remains to be seen.