For all the work I’ve been doing on money and mindset recently, I still struggle sometimes with it all.
The last few years have been awesome for my income growth and financial security.
And yet the thought keeps rearing its head: I don’t deserve this. How long can this last?
What I’m doing to counter these doubts:
Reminding myself there is room to grow
I know it’s possible to do so. Salary surveys and job listings out there prove it. As do people I’ve worked with who earn more. (Of course, this leads to another dangerous path that lies in the complete opposite direction – why don’t I already make that much?)
Remembering that me having less doesn’t make the world a better place somehow
The starving artist, nobility is poverty mindset dies hard, I guess. And it’s ridiculous. Me struggling would do nobody any good. I try to remember to give back by donating every month, as well as trying to somewhat regularly give blood, meet up with my mentee, and I’ve also recently joined a local nonprofit board. (Another trigger for imposter syndrome right there!)
Reviewing how far I’ve come
I’m horrible at tracking my accomplishments. But I recently updated my CV and LinkedIn (you don’t even want to know how long that took me) and when I’m feeling down on myself professionally, I look back at some of the stuff I’ve done for reassurance.
How do you cope when you feel like you don’t deserve what you’ve got?
But I do regret not asking for a raise earlier. The job that I held the longest? Prime opportunity! And sadly, a missed one.
3 (bad) reasons I didn’t push for more
I justified not asking for a raise or higher salary to myself for years. But you don’t get what you don’t ask for, and who doesn’t want more money?
I didn’t feel underpaid
I feel fortunate to have earned market rates. I never felt lowballed. I’ve never been through the wringer of learning that a co-worker made tons more money than me for doing the same job. And so I’ve never felt that particular burning motivation.
Sure, I felt I was getting fairly paid … but would more money have hurt? Definitely not.
And I think, in hindsight, there’s a fair chance I could’ve gotten more if I’d only asked.
Not having HR, not having reviews or any sort of structure around performance … none of that is a good excuse. But also…
I was scared to ask
Asserting myself doesn’t come naturally, and unlike my parents who have no shame in bargaining for a deal, I can’t even bring myself to haggle at markets where it’s expected.
And my anchor points, deep down, I think skew low (baselining off things like the hourly rates at my first part-time jobs, the low-paying field I then went into, what my parents earned when I was growing up etc).
I just wanted to fly under the radar and do a good job, in a dying industry. I didn’t want to draw attention to myself. Ugh.
I thought it just seemed like a bad idea
Being employed in a industry struggling to make a profit, I felt lucky to have a job at all. I felt competent, but not outstanding.
I didn’t think that I had any concrete reasons to point to that proved why I deserved more; no ammo with which to back up a request for a raise.
The former may have been true, but what’s the worst that could have happened?
As for the latter, I’m pretty sure that was just imposter syndrome talking.
I can’t even tell you how searingly awkward it was to negotiate that first salary offer (err, and the next one…) and ask for that first raise. I wince when I recall them! But I was crazy proud of myself afterwards, not to mention a little bit richer.
Literally a couple of (painful, awkward) minutes could net you thousands more a year, and that compounds over time.
Their budgets are bigger than yours
A few grand might make a big difference in your life, but probably won’t affect their bottom line to the same degree. There’s usually some wiggle room, and you know what? Employers won’t be surprised if you negotiate – they expect you to advocate for yourself.
It sets a precedent for the future
Raises build on what’s come before. The more you earn now, the bigger those 2%, 3%, 5%, 10% bumps will be later on.
Raises aren’t a sure thing
You can’t count 100% on regular raises once you’re in. You’ve got the most leverage at the offer stage, so that’s the time to make the most of it.
Particularly when it requires a decision from you.
I first started investing on my own through RaboDirect’s managed funds, because I already had online savings and term deposits there. It was pretty easy to buy online, aside from the security layers required each time you log in that is! And after, I don’t know, 10 years or whatever, I guess there’s a bit of sentiment there.
Obviously nowadays we have a lot more choice as small-time retail investors, and more passive investing options. Case in point: I started investing through Smartshares last year. Granted, there are hardly any online capabilities there (quite frankly, I would have no idea at this stage how to go about selling my holdings) but that money’s for the long term so I’m okay with that.
Options for existing RaboDirect investors are to hang in there until March, when all our units would be sold and cashed out; or to transition over to InvestNow. That would mean giving consent for RaboDirect to facilitate the opening of an InvestNow account (as I don’t currently use InvestNow) and the eventual transfer of my investments over to that platform.
Pros of InvestNow seem to be low fees, access to Vanguard funds and a modern digital platform. That said, I might also need to investigate Superlife more closely (blogger The Smart and Lazy has done a quick comparison of some of Smartshares/Superlife/Simplicity/InvestNow here).
I suspect I’ll wind up doing that – path of least resistance, as well! – but if you’re in the same boat, I’d be curious as to what you’re thinking!
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 feelings, 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 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 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 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! Find out how to conquer all of these – and much more – in my new course, Money Groove.
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.
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.
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!
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).
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.
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)
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.
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.
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.
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!
(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.)
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’.