• Financial independence is sexy

    When T got his tax refund last year, he told me he thought about going out and buying something straight away.

    But he didn’t. He could get something better later on if he saved that cash, he said.

    Hearing that? Best present ever. Bugger jewellery and don’t even think about buying me flowers. Having your finances in check? That’s hot.

    Our joint finances have taken an interesting journey of twists and turns. He didn’t have his own bank account when we first moved in together, but hastily starting a new job meant he needed to put down an account number for payroll, so mine it was. Wholly merged finances eventually evolved into a separate account for him, but all the money still flowing to me to handle. Then he started independently dealing to his own spending funds out of his account before taking over full control, giving me a set amount for household expenses every week.

    Now, we’re back to him handling his own fun money, with me taking care of the rest. And this is how it’s going to stay. He’s not one to micromanage, and doesn’t really like to think about money at all. Me, I’m happy to spend a few hours a month running numbers and shifting funds around. And let’s be honest: me pulling the purse strings can only be a good thing on the savings front.

    How long did it take you to settle into a joint financial groove (whether you have merged, separate or in-between)? Was it painful?

  • I is for investing. Also, idiocy

    T recently informed me that he can buy shares in his company. And as dorky as it sounds – that got me really amped.

    It’s been increasing revenue every year, expanding throughout the recession, and launching new brands and stores – both in Australia and New Zealand. He tells me it’s also on the brink of acquiring a pretty significant chain, so IMO, if we’re going to get in, we should get in quick.

    Meanwhile, I’m writing about Kiwi companies doing amazing things and experiencing good growth (my job, obviously – not on here), and I can’t help but want to be a part of it! A lot of them are still private, but there are certainly a few that I could invest in.

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    The questions really, then, are: Can I afford to? How much would I need to get started? How long would I expect to tie up my money for/how much would I hope to make? And of course, due diligence: are they really solid bets?

    I wouldn’t plan to put a ton of money into this – I have too many other short-term goals already vying for my pay – but I obviously want to get in to turn a bit of a profit, not lose cash. And rushing into decisions is a sure sign of foolhardiness.

    Better go get some books out on investing, then.

    Do you ever invest in individual companies? How did you go about getting started?

  • Living well on what you make

    In which I copy Serendipity’s lead!

    Do you avoid a lot of the expenses that many of your peers spend money on, such as technology and meals out?
    I don’t spend anything, generally on alcohol. Very little on clothes and technology – I replace my phone every few years (my latest one was free through work) and I did buy a GPS last year which unfortunately got stolen and I haven’t replaced. A smartphone should suffice, I think. We do like our food and eating out is our main entertainment – but I think we spend a pretty reasonable amount on that (usually around $160 for two, plus extra that T spends out of his own money).
    What’s your typical meal?
    Oh so many! We used to eat a lot of pasta (but not so much now). Dinner could be anything from steak and salad to curry, stirfry, nachos, chili, fried rice, roast, fish … you name it.
    What about clothes?
    I usually go through sprees – I’ll go months without buying anything, then stock up on a few things and blow a couple of hundred dollars in one go. Last year T and I spent less than $1000 combined on clothes, skincare, haircuts and grooming.
    What about going on dates?
    After nearly six years together and about five cohabiting, we don’t really do ‘dates’ as such. My year of working Wednesday to Sunday was tough on us, but now that I have weekends back, those lazy weekend mornings are lovely, and I’m trying to make a regular date night once a week where we go out to eat somewhere new.
    Do you indulge in any luxuries?
    Travel? Either that or concerts. And quality food, sometimes. Mmm, cheese.

    Do you have health insurance?
    Negative, I live in New Zealand.

    Do you have any savings for emergencies?
    About $10,000.

    Do you anticipate or look forward to having a higher salary one day?
    Yes, although realistically, I can’t expect to make much more in this industry. So…we’ll see. I’m not sure I’m willing to give up work I really like in order to boost my income.

    What about retirement – do you plan on ever saving enough to retire?
    I sure hope so. Home ownership is one of my big dreams, and I’d also like to be mortgage-free when we retire (and presumably sell up to downsize once old and decrepit.) Is 4% enough? It’s going to have to be, for now, although I want to up that to 8% in time.

  • Slash and burn: Cost-cutting

    I’ve been thinking about minimum living costs lately. As in, that threshold below which it’s very hard to cut costs any further. (If I made $60k a year, I could easily save half of that; if I made $40k, I’d be lucky to save 10 percent, because beyond a certain point, it’s impossible to escape the realities of rent, transport costs, food and the other necessities.) For us, a realistic threshold is $2500 – but that number is about to go up.

    That’s right. Rent is going up! Boo. It’s increasing from $250 to $280 a week, to be precise. (Gosh, we’ve been here 18 months already!) That means $560 a fortnight, and with my income slightly down, we really should tighten the belt.

    Our power bill is also way up, and that’s because our usage is up compared to the same months last year. It’s certainly not due to heating because this winter has been one of the mildest in a long time. I’m guessing it’s down to a) gadgets being plugged in all the time – MySky, computer, etc and b) cooking and baking more, including use of the oven and crockpot. I can’t, or won’t, do much about the latter, but I’m definitely cracking down on turning switches off at the wall. That includes our outdoor sensor light, even though it’s nice to get home and not have to fiddle with the lock in the pitch dark; T puts it on when he leaves at 5am and I turn it off when I leave after 8am.

    Our phone bill is down, thanks to a new internet package. On the other hand, while my cellphone is now paid for by work, T’s smartphone plan costs more than his prepaid one, so it probably evens out.

    Could we give up Sky TV? I guess we could, at least once our 12-month contract is up. T loves it almost as much as he loves me, though, and it’s also relatively cheap entertainment. I can’t tell you how much we used to waste on late DVD fees (and no, we don’t have Netflix or the like here). In dire straits, I’d cut this without a thought, but we aren’t there yet.

    Where I reckon I could further cut costs is clothing. I really don’t need anything else, and the good thing is that I don’t walk past clothing shops (including my favourite secondhand store) everyday anymore. I mean, you’ve probably noticed I wasn’t big into retail therapy anyway, so removing the temptation has hardly fazed me. So unless I come across a charcoal cardi, or tops in deep purple or red, the plan is to not buy any clothes until next year (Fabulously Broke and Krystal have done shopping bans; so can I!)

    And we can get stricter about our eating out and grocery budgets; while I still budget weekly, looking at our monthly spending is a better way to gauge how we’re doing, and my online banking makes that really easy to do. And I might reinstate weekly grocery recaps to help keep us under budget. (I’ll try to make them somewhat interesting…maybe menu plans to accompany them? I don’t know if I can manage to photograph our haul all beautifully stacked like some of you do, though; once we bring the bags in from the car, it’s a matter of getting the unpleasant task of stowing it all away done as quickly as possible.)

    I also think it’s time to repeat November’s challenge, although I’ll have to set aside travel expenses in August because we’re off to Wellington for a weekend.

    What’s your living threshold number, or when was your last rent hike?

  • Playing poor

    Free Cash

    Image by FatMandy via Flickr

    Tons of you urged us to pretend to T’s family that we are equally broke following the latest saga with them. I love this in theory and believe me, it’s crossed my mind many times – but it’s impossible.

    For one, T is pathologically honest. Also, he sees his family a lot. As in, pretty much every week, often more than once (I don’t understand it either, seeing as visits are often short and IMO kind of pointless. But I guess that’s the kind of family they are, where facetime and frequency are important). Moving away isn’t something either of us want to do, either! Possibly for a couple of years, but this is our city and where we see ourselves longterm.

    For another, it’s simply not logistically viable. We have a car. We go on the odd holiday (in fact, just returned from our first trip abroad together). We have gadgets (Xbox, smartphones, digital cameras). We even go to concerts from time to time. This is all pretty obvious. If we’re not a total mess, then we are already miles ahead. Trust me when I say the bell curve in this case is rather low.

    And while I’m not flashy, he likes his toys, and he likes to show them off. Thinking back to when he had his motorbike, for example; hiding that would have meant not talking at all about the single biggest most exciting thing in his life and not riding it over to visit his mother/sister/nieces etc.

    So while we definitely live modestly – within our means rather than beyond –  meaning they don’t know the extent of our financial situation, there’s just no way to pretend that we are as broke as any of them. So if we can’t hide it, what to do? I suppose we’re fortunate in that it’s mainly only one family member who tends to need bailing out, and that T now says enough is enough. I honestly do think this is enough for more than just a brief reprieve, but I’m not under the illusion that this will be the end of it.

    Have any of you successfully – and completely – concealed your financial status from relatives?

  • Stupid tax

    Talk about amateur hour. First time booking flights – and I manage to book a return flight on the wrong date.

    See, I’d been wanting to go back to Wellington since our March trip. So when Jetstar had a $37 fare sale, I jumped on it immediately. I even paid by bank deposit – not by Visa, despite my love of reward points – because airlines now charge extra fees for paying by credit card.

    When my payment cleared a couple of days earlier, my itinerary was emailed to me. And somehow, I’d managed in my Friday afternoon frenzy to overlook the fact that I’d booked our return flight a week after our departure, not a day later. This had to be an overnight trip. Crap. I know how it happened, too – I was scrolling back and forth between dates, trying to get the best flight times during the sale window, and the Jetstar interface isn’t the most responsive – but I just can’t believe I didn’t notice the date discrepancy while checking out.

    I managed to find $37 seats again, but I had to pay for them once more. Plus a booking fee of $8, because for some reason I couldn’t pay by bank deposit this time. Our cheap seats didn’t end up so cheap after all once that$80 was tacked on! Also, our homebound flight is now a morning one, meaning we arrive Saturday just before noon and check out right after breakfast. We weren’t planning to do tons down there but it would be nice not to be in a rush to leave. I thought our original 24-hour itinerary was nigh on perfect. I can’t help feeling like it’s almost not worth it, but since it’s now paid for, I guess we’re sticking to the plan.

    Paying “stupid taxes” hurts! (Both the wallet and the ego.) Tell me your tales of stupidity!

  • Your credit is like your virginity

    Logo of the band Rejected

    Image via Wikipedia

    …easier to preserve than to rebuild.

    Kids, we all know you should never cosign on anything. You do not want your name on any account that you are not personally paying for.

    Well, some people learn lessons the hard way. Like when they finally talk their fiancee into letting them get an iPhone. And then get turned down for an unexplained mark on your credit record. Huh? Well, it could only be that internet account you put your name on at the request of your sister (remembering folks, that if such people had decent credit themselves, they wouldn’t need to ask such a thing of you).

    I just knew when he came home last year and told me what he’d done that it wouldn’t end well. But by then the decision had been made and I couldn’t do anything about it, and soon I had other things to worry about. I hope now that he’s made pretty much every mistake in the book, that the shame of that denial under the harsh fluoro store lights will be enough to make him remember to never never take responsibility for anyone else’s accounts in future. It baffles me how someone who has no problems putting his interests first in the business world cannot say no to his family. (Or that they don’t turn more often instead to his brother who has more cash, yet blows it all on cars.)

    Have you ever made the mistake of letting someone else use your good name? How did it work out?

  • Maybe it’s a fool’s game, but it’s my game

    Credit cards

    Image via Wikipedia

    ** Huzzah! I’m in this week’s Carnival of Personal Finance. Thanks to Well Heeled for hosting. **

    Spending $25,000 on a credit card over two years is unlikely to earn you even $180 on reward schemes, a survey has revealed.

    I consider myself a savvy credit card user, and stories like these annoy the hell out of me.

    Unless you spend heaps on your card…and fully pay off your card at the end of each month, most of these schemes won’t be worth it.

    Well, no shit, Sherlock. That’s the credit card game, isn’t it? Don’t spend more than you can repay, and you win. Plus you get points or cashback. There’s nothing good about the alternative.

    Sadly, unless you manage to be completely self sufficient – work for yourself, grow your own food, generate your own power and so forth – you need to spend money.

    I will admit, I’m not making oodles of money from CC rewards. In fact, I would need to spend $27k to earn $180 in rewards. But I certainly am making something for nothing. If I must be ripped off by supermarkets, petrol stations and the like on a regular basis, I’m going to claw back every cent I can.

    Let’s say $150 a week goes on the Visa (a ridiculously low number. That’s full groceries plus bus topup, or perhaps petrol plus a supermarket shop minus meat and veggies.) That earns $1. That’s $52 in rewards for $7800 spent in a year for doing nothing but LIVE LIFE. Or perhaps a more realistic $200 a week, earns $67.60 a year. That does not include the countless other expenses which crop up over those 12 months. Insurance. Clothing. Mystery shops. Concerts. Other dining out. Presents. Travel. Car registration and repairs. Purchases made for people we know who don’t have their own credit cards. Oh, and I can now pay Sky TV by Visa for no extra charge.

    In fact, I put everything I possibly can on my credit card, and only regret I can’t do the same for rent. At a guess that might double or triple what we put on the card, and thus earn rewards for. One has to feed, dress and transport oneself, and this one would rather get something out of it. In the meantime, my money earns a little bit more interest in my account, which is calculated on a daily basis.

    Quite frankly, I would find it near impossible to live without a credit card. I buy stuff online semi-regularly, from contact lenses to guitar strings to daily deal coupons to event tickets to hotel bookings. (Well, some of those are more regular than others.) My other options would be to, uh, ASK someone with a credit card to do it for me, or get one of those Visa Debitplus cards. In which case, I may as well get a real Visa, with a rewards programme. I don’t doubt Visa Debitplus is a fabulous option for many people, but it offers me absolutely nothing. The idea is you use your own money, but you do get charged a fee for it. I’d rather use the bank’s money for a month and earn wayyyy more than enough rewards dollars to cover the higher fee. And I won’t even get into the other benefits that some credit cards also offer.

    I get it. It sounds like too much trouble for some people, especially given our relatively crappy rate of return. Especially for those who have fallen into the debt trap using credit cards. But others, like me and my mother and many more, can handle ourselves. And who else would book tickets online for our friends and family with shot credit and who don’t have a Debitplus for whatever reason? If you can handle money responsibly, there’s a bit of free money in there for you.

    Please. Trust us. We’re grownups and we know how to play the game. Maybe the majority of Kiwis don’t, but there’s no need to treat us all like imbeciles. Or is there?

  • Dealing with a partner’s debt

    Dealing with a partner who's in debt

    Hands up those with a partner saddled with debt. Do you ever resent him/her for it? Do you feel like it’s holding you back?

    It’s okay. Our feelings are ours and they are legitimate. And sometimes you just need to let them out and acknowledge them.

    Sometimes I wish I were the indebted person. I make more. I could pay off more, faster. What’s more, I’m not naturally a spender. (Maybe you snort at that having followed my blog for awhile. But my personal spending tends to fall along the lines of concerts, travel and eating good food. I don’t have a latte factor. I agonise over purchases. I don’t have or need a personal allowance. I would rather save my money than fritter it away on milkshakes and burgers or CDs or shoes.) In short, I would throw everything I had at debt until it was gone. But T is not like that.

    Don’t get me wrong. The debt is not massive, it’s only in the four figures. And about half of it is to me. The rest isn’t even incurring interest. Not from ongoing living costs when I supported him (I chose to do that myself) but the other things – money lent after a long-ago car accident, car repairs, car insurance. Okay, mostly car related things. And a few other bits and pieces.

    You know how I like to browse real estate listings for fun/self-torture? He likes to browse listings for motorbikes. That’s the next thing he wants to buy. The big thing. And of course he’s always finding amazing deals that if only he had the money he would buy right now. To which I can only say, you just spent hundreds of dollars on car audio! Obviously having doof doof sounds on your commute was more important than anything else to you, so you’ll just have to wait. The right bike will come along when you’re ready.

    Of course, he could save for it faster if we directed all his spare into savings and none toward repaying me. And that’s a decision he leaves to me. That’s kind of a crap choice. Basically, it’s a battle of selfless vs selfish.

    Sometimes I think maybe I should just write it off and we can start with a clean slate. But that’s not fair to me. That’s money I’ve worked hard for. Money that I chose to lend knowing it would be returned eventually. (And yes, money I could afford to give in the worst instance.) Maybe I should forget my random notion of insisting he maintain a $2k EF, because realistically, I would not drain it. As a first step, I would front the money, because dipping below that number is such a psychological blow. (I KNOW. IT’S NOT EVEN MY MONEY. WTF IS WRONG WITH ME?)

    Even if it’s not yours, debt sucks. It hinders individual goals and joint goals. For him, it means no bike – for now. And for me, it means travel can’t happen as soon as I’d like.

    I veer between wondering WHY AREN’T WE FURTHER ALONG YET??!! – after all, he’s been out of school for five years (didn’t go to uni) and sometimes it feels he has nothing to show for it. Meanwhile, I often feel similarly. But I have to remember I’ve only been working FT for a year, and I just paid for a car in cash. He’s sustained stints of unemployment, and yes, paid off other debts in that time. (The most frustrating thing is that very, very little of it was actually incurred by him. But let’s not get into that.) It hasn’t all been smooth sailing. Yeah, I veer between that and trying to reassure myself that we have years and years ahead of us. But do we? In 10 years I would like to have bought a house and started a family and done my two big trips: the US and Europe. Blarrrrrgh.

    I don’t want it to sound like we are clashing financially. In fact, it’s all going pretty swimmingly, albeit slower than I’d like. Joint pots with a separate allowance for him is working great and while initially that made me nervous, he’s been really good about communicating on money matters. But every so often, when progress feels nonexistent, you need to have a verbal retch. Ya know what I mean?

  • Money for couples: The contributions conundrum

    MONEY FOR COUPLES - managing joint finances and budgeting together

    Joint finances for couples

    When it comes to finances for couples, most people fall into two camps: The 50/50 split and the proportional split. (I’m excluding couples where income disparities are massive, for example, when one makes double what the other does – there seems to be general consensus that proportionate contributions are more appropriate then.)

    I decided to go with the latter in our case for a couple of reasons.

    For one, I make more. It’s not a huge amount, but it’s more than small change.

    And secondly, his income varies. Generally he works quite long hours and sometimes does Saturdays, but that’s not always the case. The difference between a 40-hour week (or less on occasion, as once their systems were down and everyone sent home) and a 55+hour week is significant.

    Since I’d been covering all our expenses for a few months prior to this anyway, the easiest route was to continue doing that, and just bank his contributions – barring an extra $10 a week into our “irregulars” account – directly into my savings.

    My driving guideline is pretty simple: What will leave us both better off?

    Flexibility, I think, is key. On weeks he brings in less than usual, then he puts less towards our expenses. It might come down to a choice between saving or debt repayment. And because the debt we’re focusing on is, well, to me, savings comes first. It’s not super-urgent nor is it accruing interest.

    We recently got a $320 AECT dividend, and while I decided to leave my half as a credit on our power bill, his went toward his EF. His circumstances mean that building up that safety net is paramount, while it’s not so much of an issue for me anymore.

    I do all this with an eye to the future – like I’ve said numerous times before, we’re planning for a future together, and although not all our money is merged, one day it most likely will be.