Avalon’s Money Thread: Revolving Credit Mortgages.
These are sometimes called Line Of Credit (LOC) mortgages, and are very common here. They are most like the One Account in the UK, in that it’s a mortgage and current account rolled into one. Basically it’s a current account with a whopping great overdraft. The benefit is that if you get paid your salary directly into it, it can reduce the amount of interest you pay on the loan.
However there are some serious downsides especially if you are not too good at looking after your money. They are notorious for not getting paid off, as it’s all too easy to keep dipping into for buying cars, boats, shoes or coffee.
Also, because they are usually a few % more than fixed rate mortgages – you need to have a certain amount in there at all times to offset the higher interest rate. There’s actually a calculation you can do to work out how much of a balance you need to keep in.
I would say if you are thinking of a revolving credit account you do need to be very good with organizing your money, as it’s all too easy to end up with the OD limit never going down. So you never pay off that part of the mortgage. Some banks have these types of accounts where they do drop the limit each month so if you wanted one, but feel concerned look for that. Otherwise the way I deal with is:
I use Quicken to run my accounts at home. Doesn’t really matter how you do it but have some way of keeping track of your mortgage (don’t rely on the bank to tell you). In Quicken I have set up a “savings goal” and each month I move money into it. This is always the amount of money I “should” have paid on the mortgage if it was a normal one, minus the interest for that month. So for example: I should pay a total on $902 a month for a $100k mortgage at 9.05%. My interest for the month is around $300, so I pay $602 into the savings pot. When I have $5000 in there, I “move it back out” and ask the bank to reduce the overdraft limit by $5000. I have then paid off 5k. I know this may sound weird because the savings pot only exists in Quicken or on a spreadsheet, but it works.
You also really need a credit card. By putting as much on the credit card as possible, you keep the balance in the revolving credit account as high as possible for as long as possible. But always make sure you know exactly how much you can spend on the credit card without getting into trouble. For this to work well, and not get into debt you need to be able to pay off the CC each month in full. If you don’t think you can do that then it may not be a good idea to have this kind of mortgage. Do not use the CC for buying consumer items that you do not have the money for. That way lays ever-increasing mortgage debt. Maybe just have a very small limit on the credit card. You need the equivalent of 2 months spending as a minimum limit.
Avalon’s Money Thread is a series of posts which were originally written in 2007 for an Immigration Forum. They came about by answering questions that forum members asked, about how to cope with the often difficult financial situation they face in New Zealand. They formed the basis of what was eventually to become the book Avalon’s Guide: after another year or so of drinking way too much coffee and finding out way more about taxes, money and investing that any sane person should.
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When the PM has a laugh :)
John Key, current Prime Minster of New Zealand, went on The letterman show in the US and ran thorugh a 10 Ten Reasons to Visit New Zealand. Its a bit painful in places -- but good on him I think for having the guts -- and for not taking himself too seriously.
One of the thinks that impressed us when we were waiting to emigrate was that the then PM, Helen Clark, was also doing the rounds of foreign TV. She was on the UK news also selling New Zealand to the world as a destination.
Can you see our (UK) Prime Minister doing that???
So here -- courtesy of You Tube -- is John Key doing his bit for New Zealand:
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Think different
I finally managed to find today the original source for one of my favourite posters. It’s made from the Apple ‘think different’ marketing campaign.
The image conveys so much more though. Here’s to the crazy ones.
An Inconvenient Truth
I had the pleasure of seeing the AIT presentation given live earlier this week. While I’ve seen the film {one of those doco’s I dragged Avalon to at the cinema despite her better judgement, and she loved it}, got the DVD, book, screen saver and reminders about “twelve things to do”, it was really good to see the pitch given live.
Phil Tate from NZ Post has gone through the official training, and is now on a mission to bring AIT to the wider community. I personally find it shocking that for all the information there has been on this topic over the last few years, we still get lost in the ‘it’s only a sun spot cycle’ debate. What utter claptrap. Plus it offends my sensibilities as an Astrophysicist. Having also just watched a TED session showing iceberg collapse, this was very timely for me. Phil’s iteration of the presentation has some useful NZ focus.
So what did I learn? Well, don’t move to the west coast of NZ. It’s going to get wetter, with more rainfall, which is also likely to be more unpredictable. And that’s the nub of things, this isn’t about ‘global warming’ its about climate change. Things are going to extremes, and it’s going to be a long while, or take something we really don’t want to happen, for this to self-correct. See James Lovelock’s material on Gaia for a reasoned perspective on this, which does involve nuclear power and not all having to live in grass huts as some of the green movement would like to make out.
Meanwhile the east coat of NZ, is likely to get less rainfall. That’s not so good either with the large Wairarapa farming community suffering badly already from the, it has to be said, brief droughts we’ve had the last couple of summers.
We’re better off than the Aussies though. They have been coping with a protracted drought in the Murray Darling basin for years now – and this one of the main grain growing regions. I can see environmental refugee’s making their way to NZ from Aussie in the not too distant future. Already you have limits on the length of time you can take a shower for in some Aus cities, and forget being able to water the garden for half an hour.
Much as I may have reservations about the Emissions Trading Scheme (ETS) as being a way of just taxing people, and not actually tackling the problem, it’s quite clear that the economic impact of a drought in the farming communities is huge compared to changing a few of our habits and thinking about our personal environmental impact.
And we’re much better off than the folks in the paradise that is the Maldives. Their Govt. is on the look out for a new country.
Straight as that, I kid you not.
Unfortunately I missed the Q&A, having other work interrupt me. Still I look forwards to seeing the full presentation properly in the near future.
Take action, do something now. This isn’t one of those problems that ‘someone else’ is going to solve.
It’s a budget day today.
Filed under: Banks, Cost of living, Interest Rates, Credit Cards & Mortgages in NZ
I don’t think it’s a huge secret that we have splurged a bit this year –after being very careful with our budgets and spending for several years. There has been some work on the house to do, spoiling ourselves outrageously with a new TV and sound system, and spending a small fortune on coffee, eating out and hotel stays in an effort to deal with the stress of handling jerks at Immigration.
We have managed to do it by taking a Mortgage Holiday – basically we are so far ahead on our mortgage payments that we decided to take a break and relax for a while.
But that has to end, and we now have to get back to the serious job of telling the banks to get stuffed. So we need a budget day – to get back on track and see where we are and what we need to do.
It can be very scary having days like this – especially if you have the feeling of impending doom that goes with knowing you have spent way more than you have earned – but it’s got to be done.
So we started out by looking at what we actually spent over the last year. It’s a quick enough job for us, as we can print the information off our accounts and then just add it into our spreadsheet. You can download a copy of that from here if you want to.
(Note: sorted.org.nz has a budget sheet you can fill in, but a friend of mine used it lately and it actually wasn’t that impressive. A good alternative to mine is available on Moneysaving expert).
Honestly – it wasn’t actually that bad. Almost all of the overspend was on the “Splurge”. When we take that into account – even though I have not been as careful with money this year as usual – we were still not far off target.
Our biggest issue for the next year is that like a lot people, our fixed bills are going up, and yet our income is not. We have had to take out some extra insurances, IBM are now too bloody tight-fisted to pay for home internet for their staff, electricity – well – when did that last go down in price – and our Doctors bills went through the roof thanks to the jerks at INZ.
Oddly enough – and to my utter shock – our transport costs came down by about $400! That’s mostly because petrol has come down, and Hubby works at home as much as he can (and IBM have not yet made that against company policy).
Once we saw how bad (or not) it was – we then made some decisions about what we feel we should or could cut back on. As usual – we have checked our electricity and phone supplies, and we are not changing them right now.
We have also set a date to do a review in 2 months time to check on things. We wouldn’t normally have to do it so soon, but this is because we have been lax this year – and need to get to grips with things. For us, this is also the first time since we came to New Zealand that we will have the same spending requirements over the whole of the next 12 months. In the past, when the family have been here – they share the bills, but when we are on our own – we pay for it all. From here on in, the bills should be the same all the time, and that will actually make it easier for both us and my parents to keep on track.
Anyway – we are done – and I’m off for a coffee.
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FAQ – The Immigration Advisors Licencing Act
Given the publicity surrounding the recent Herald Article, there have been a lot of questions coming in either directly or on other blogs and forums about this issue. I thought it would be worth clarifying a few things, and answering some of those questions in one place (thus saving my fingers from more hours of typing!).
How did this happen?
I became aware that the new Immigration Advisors Licensing Act (2007) (IALA) could affect blogs and forums when the owner of the Move2NZ forum was sent a warning by the IAA. The forum owner had spoken on TV3 about a problem facing many migrants with work visas, and in what can only be described as a pathetic fit of pique – a Licensed Immigration Advisor made a complaint to the IAA about the forum owner passing himself off as an “Advisor”.
I contacted the IAA asking for advice and guidance and got the run-around. There is no advice from them other than “you cannot give advice” and “advice means giving advice systematically”.
Surely you are OK if you don’t charge for advice?
No you are not. The IALA specifically states that it is illegal to give “immigration advice” even if its for free, unless they have licensed you to do so, or you are exempt from being licensed.
So who is exempt?
It’s a short list, including MP’s. Immigration New Zealand staff, lawyers and their staff, and staff at Citizens Advice Bureaus working under the guidance of a lawyer.
Specifically – there is NO exemption for people posting on forums, writing blogs, or just generally chatting to friends about the immigration process.
Have the IAA sent me a warning?
No – the IAA have not sent me an official warning telling me that either myself or my website are in breach of the IALA.
Have the IAA threatened to shut Avalon’s Blog down?
No – the IAA have not asked me to remove my blog or threatened me in any way.
So what have the IAA done?
All the IAA done is to give me one example of a blog post that breaks the law, and one example of one that does not break the law. I haven’t got the faintest idea what the difference is – and the IAA are not prepared to be specific.
On saying that I wish to acknowledge that the lady at the IAA I have been dealing with has been as helpful as she can be- given that she too is working with a badly written law. The fact that we have this law is not in itself the IAA’s fault. However the fact that they sent a warning to Move2NZ without it seems properly investigating this situation (The warning was received 3 days after the TV interview) shows that they are being lazy and incompetent in handling the law. They have also refused so far to tell Move2NZ exactly what they did that was in breach of the law.
Why don’t you just get a licnece then?
I tried – and I can’t.
The most corrupt thing about this law is that you have to working as a Migration AGENT to get a licence – ie someone who fills in applications for migrants on their behalf and sends them to Immigration New Zealand and acts as a go between.
You need to be able to produce Client Files to prove that this is what you have done. If you do not work as an an Immigration AGENT – you cannot get a licence. You can however be prosecuted under the law if you give ADVICE.
Am I promoting a book?
For some bizarre reason the fact that there is a book for sale on this website worries one or two people, given that I have just had a lot of press. They are concerned that I have made a fuss in order to sell my book. I would just like to point out that if this was my intention – it failed spectacularly .
Writing the book, as with posting the info on the forums and running this blog is a hobby. Which is one of the reasons I find this law so offensive. You wanna buy the book? Great – and thank you. If not – fine. You are still welcome to see the rest of what I have to say for free, you are welcome to comment on here, and you are 100% welcome to think the IAA is a complete waste of space and the law belongs in the bin.
The vast majority of traffic and interest that I have had on this issue isn’t actually coming from Migrants – it’s coming from people who are offended at a law that prevents freedom of speech. So at the end of the day – they won’t really need my book, or be terribly interested in it. I’m fine with that.
In the interest of openness – I have made $24 (NZ) in income from book sales this week, and $2.90 (US) in Adsense income. My lawyers bill for preliminary advice regarding the IALA stands at $144 (NZ). I hope that helps put peoples minds at rest .
Aren’t I worried that I now have a huge target on my back?
Honestly – yes.
I still have one member of my family to bring to New Zealand as a resident – and I know full well that I could be making life difficult for us all. I can only hope that the Immigration Minister will in the end not allow INZ to use my stance on this law against us. On saying that – the target was pretty much there the day I started our complaint against INZ. I have lived with this feeling of abject terror for all of this year so far.
I have absolutley no reason to believe that the Immigration Minister would not deal with me fairly should I need to go to him. His office was hugely kind and helpful to us when we went to them for help over my parent’s application.
What am I doing about this?
Keeping going!
I will be writing a letter to the Immigration Minister asking him to get the law either scrapped or hugely re-written, so that people can go back to advising each other, answering questions on forums, discussing Immigration process and generally being helpful to each other without fear of prosecution. And hopefully New Zealand’s reputation can be repaired before the law is supposed to prevent people all over the world from the same stupid (and completely unenforceable) threat.
I am also hoping to produce a standard letter that anyone can print off and send in, objecting to this law and asking for it to be changed.
And I am going to continue giving interviews to anyone who cares to listen.
Won’t the IALA stop people from giving bad advice?
It sure as hell will not stop migrants from getting bad advice, and advice that can and will potentially cause them to be overstayers. For a start – Immigration New Zealand itself regularly gives migrants the wrong information. This is borne out time and again by migrants telling their stories (which is not yet illegal). I myself have friends who became Overstayers because of duff advice handed out by their immigration New Zealand case office. The IALA does not apply to them.
MP’s are also exempt from the law – and they too often give out incorrect immigration advice and information. You can see just how much our own MP screwed up by reading our story in Family Sponsorship Saga.
And licensing Immigration Agents will not automatically make them honest or competent. There are already stories coming out into the open of “Licensed advisors” misleading migrants, getting the wrong visas, and screwing up applications.
There you go – I hope that gives some clearer background and helps put some of things in context for people.
Lastly I want to thank everyone who has offered support and help in this. It has been a very humbling week for me, and I am immensely grateful to everyone who is prepared to help and speak out.
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Humour for hubby :)
This has nothing to do with the IAA, INZ or NZ. Its just funny, and my hubby will appreciate it. And its nice to insert a breather from the serious stuff once in a while.
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What has been the effect of the Immigration Advisors Licensing Act.
Other than giving me a really exciting and tiring day yesterday of course.
Well, first of all – lets look at what the act is supposed to be doing:
Purpose and scheme of Act
The purpose of this Act is to promote and protect the interests of consumers receiving immigration advice, and to enhance the reputation of New Zealand as a migration destination, by providing for the regulation of persons who give immigration advice
So – does it do that? Im my opinion – it fails with spectacular gusto. The only people being protected by this law are the Immigration agents – of which there are now only 296 in the world.
That’s right- there are only 296 people in the whole of the world who are actually licensed by the IAA to legally give “immigration advice” (whether or not about New Zealand by the way). Which is only 296 people who are eligible for the lucrative money that is available from this market. They are spread over 217 companies. Not only that – but according to an article in Law Talk 3rd August 2009, some of those people who were licensed, are actually exempt and don’t need to be on the list. It seems the IAA screwed up a bit, and accepted licensing applications from Law Firm staff, whom they should have known were exempt from the act.
According to an address by the then Immigration Minister Clayton Cosgrove – in August 2008 there were 400 people who attended licensing workshops in New Zealand. I wonder where they all buggered off to? The IAA have been accepting application since May 2008, and so far – we have less than 300 that have licensed. 1n 16 months. Sterling effort!
Mr Cosgrove also said:
The Act has brought in significant changes. Before the new law, anyone could call himself or herself an immigration adviser. In the past, a small number of incompetent and/or unethical practitioners damaged the reputation of the industry.
And for that small number – rather than doing something sensible you thought it would be an idea to trash the Reputation of New Zealand as a free and democratic country? Good work! I hope you are proud of your efforts to deal with a “small number” of rip off merchants.
So – is it cleaning up the actual problem?
Apparently no – but its hard to say. There was a piece in the Press a few weeks ago which claimed that 300 complaints had been made “about people giving immigration advice, including misleading or dishonest behaviour, excessive fees and holding of passports.” Its quite an interesting article – with a lot of bitching within the industry – but I do wonder where that 300 complaints comes from – given that the IAA only claims to have sent out 18 warnings – and one of those we know was completely unwarranted. Mr Smedts of the IAA claims they are investigating 5 licenced agents as well, and it is also claimed in the article ” but some of those with licences should not have them and needed to be “weeded out”. ( That was from an Immigration Lawyer.)
The article also says that there were only 25 offshore agents licensed by August this year – so if you are looking for an Immigration Agent from outside New Zealand – you could well be stuffed!
You see – this law actually extends its reach offshore from next May (2010), which means that all offshore agents also need to be licensed – and they aren’t doing it. I honestly don’t know why – but I suspect it may take the form of a big raspberry to New Zealand for being so bloody arrogant. It appears that Offshore Agents are not too impressed. Mind you – it seems thousands of onshore agents thought it was a joke too.
And my pet peeve – the New Zealand government actually feels it has the right not only to gag its own citizens – but it will of course be illegal to Blog or post on forums even if you do not live in New Zealand. Nice!
So – does it enhance the reputation of New Zealand?
I don’t think so – unless New Zealand was looking to gain a reputation as a place where migrants give up their right to free speech – whether they live in New Zealand or not. If that was the intent – then hey – good job! Otherwise – bit of a numpty if anyone thought this was a sterling idea.
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The New Zealand Bill of Rights.
Contents › Part 2 Civil and political rights
14 Freedom of expression
Everyone has the right to freedom of expression, including the freedom to seek, receive, and impart information and opinions of any kind in any form.
Contents › Part 1 General provisions 7
Attorney-General to report to Parliament where Bill appears to be inconsistent with Bill of Rights Where any Bill is introduced into the House of Representatives, the Attorney-General shall,—
(a)In the case of a Government Bill, on the introduction of that Bill; or
(b)In any other case, as soon as practicable after the introduction of the Bill,
— bring to the attention of the House of Representatives any provision in the Bill that appears to be inconsistent with any of the rights and freedoms contained in this Bill of Rights.
With thanks to Kiwi Immigration Watch for the heads up. It seems that the IALA does in fact breach the Bill of Rights, and we do indeed have the right to free speech in New Zealand, despite the best efforts of some people to gag us.
NZ Herald article
Filed under: Getting to New Zealand, Hubby's Views, Life in New Zealand, NZIS & Immigration issues, The Book and Website
Just in case any of our regular readers didn’t spot it, the NZ Herald wrote a story this morning.
The close of the article, with a comment from the IAA makes it all sound so simple.
“Are they [anyone writing about immigration] giving advice as defined by the act?” – well no that misses the point, the act says it’s ‘advice’ if it’s information given in a ‘systematic way’. Only the IAA just wont define what systematic means.
“get licensed” – yeah tried that, they refuse to license people who aren’t ‘immigration agents’ on account of we don’t have case files and customers that we’ve acted as an immigration agent for.
Anyone else spot the difference between an immigration agent and someone writing about immigration matters yet?
Of course, the NZH article itself might be considered ‘advice’.
[edited since I typo'd]
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