Avalon is away :(
I will probably not be blogging till next week due to illness. At which point I hope to be back to my normal troublemaking loudmouth self.
Until then, im off to bed with some chicken soup.
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Banks are the enemy :)
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Clean, Green, 100% Pure – Sewage :(
North and South has an interesting editorial this month, about the fact that even though there really hardly anyone living in New Zealand – we have an appalling problem with sewage pollution.
It may look sparkling clean over here in the photos, but its not. Not by a long shot. Our beaches – lovely though are – are apparently full of crap. Masterton council wants to discharge effluent into the local Ruamahunga river. Children swim in it in the summer. Riversdale beach – by favourite spot – has such a problem with antiquated sewage systems that every house will have to convert their system to the new reed bed sewage system. As soon as the council makes up its mind to build it (10years an counting) – until then – the beach stays polluted.
The article concentrates on the sheer unadulterated stupidity of Horowhenua District Council, who spent a whopping $10,000,000 on sparkling new “environmentally friendly” council offices. And have just pleaded guilty to dumping 8.5 million litres of sewage into the local river.
Classy!
This is the tip of the iceberg, and sooner or later people do actually twig that the “100% pure” slogan is just that – a Marketing Slogan. Why New Zealand gets to practice misleading advertising practices and gets away with it is beyond me – but I guess countries are not subject to fair trade laws.
So just be clear when moving here – we have awful sewage problems, and our beaches rivers and lakes are actually quite polluted. One thing they are not is Clean, green or 100% pure. Sometimes it feels like the only thing that stops the country being 100% Sludge is the fact that theres so few people living here.
You can get copies of North&South at Kiwifruits in London. We actully used to get it frequently before we moved out here, and it was really helpful in seeing some of the real life that goes on over here. Its not all fluff!
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Avalon’s Money Thread: Tree Hugging and the concept of money.
There is a theory that when you start to respect money and look after it, it kind of decides its likes your company and you get more of it. I now its sounds a bit odd but it really seems to work. Once I got the ball rolling and stopped overspending, the amount of money we had just kept going up. I know that may sound obvious but if it’s really that simple, why are so many people broke before payday?
It’s actually the compounding of interest that makes this work (and conversely makes debt spiral out of control so easily).
So you have $100. That earns $1 interest the first month. But if you don’t spend any of it, the next month you earn $1.01! You just got a pay rise! Your money is multiplying because you looked after it.
I’ve been reading a book lately that had something to say about this which kind of had the effect of walloping me round the head and made me look at it a very different way. I hope it helps.
Basically you can have security OR you can have freedom. Seldom do they go together. To see this in action you have only to look at what is happening in the States, the UK and Australia. The book was actually talking about financial security. You can have a good job and the security that comes with a steady paycheck, but it won’t often give you financial FREEDOM. For that you often need to step outside the box. It can mean changing a lot of preconceived ideas about money and that is scary
Mind you, so is emigrating. As soon as you actually decide to do this, you are stepping out of the box. You are daring to actually do something which most people only dream of. But most people live life in an “it’s alright for you” kind of daze, if only they had your money / family / background they could do the same. You are not doing that, you are going for it. If you can do that, why not make a change in your financial “box” as well.
Also, for many of us we really need to change the way we think about money. It’s not an evil thing and having it wont turn you from a nice loving, giving person, into a greedy megalomaniac who would sell their own family for a fast buck. Conversely, being poor as church mice, won’t necessarily make you a decent human being either.
Either you are a good person on your own merits or you are not.
Your bank balance doesn’t alter that.
But the tree hugging principle says that if you think only evil greedy people have money, you won’t be able to keep it, because it’s going to make you feel bad. If this applies to you, then please just think about it. Most of the people I’ve met on this journey some of whom are seriously good at this all started in the same boat as we did, flat broke and depressed about it. The only thing that made a difference is that they felt they were worth the effort and did something about it. Their wealth has not made them different people – it’s just made them wealthier people. They have been incredibly generous with their time and in sharing their knowledge.
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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Avalon’s Money Thread: Am I a Big Spender?
Filed under: Avalon's Money Thread, Cost of living, General Budgeting
So in reality, do you just take out a certain amount of cash and try to make do with it? I try to do that, but almost always something unexpected comes up, such as filling a gas tank or topping up my bus card… Something that you can’t really delay. So can you tell me how do you control yourself?
Firstly you CAN work on a cash only budget and this works well for over spenders. But that is really talking about people who literally spend spend spend. A cash only budget is where you take out a set amount of money each week and that’s IT, is said to help by making people AWARE that they are spending their money. When you use Credit cards, you never see the real money so for many people it helps when they have to count out $20 bills to buy that $400 coat! This can be really helpful in getting over any “consumerism” habits you may have. Moving to New Zealand of itself won’t necessarily turn you into a non-consumer. Learning to spend less money isnt something you get by osmosis from Kiwis – who overspend as much as anyone else.
When you look at what you are spending the money on, ask yourself:
“Do I NEED this or do I WANT this”?
If you WANT it, it needs to wait till you have the spare money or it comes out of sanity allowance. If it’s a NEED, then budget for it. Then when looking at items you are going to buy, look at the PRICE but also look at the VALUE. Ask yourself:
- “Is this thing WORTH what they are asking for it?”
- “Can I buy it cheaper elsewhere” and
- “Would I rather spend that money on something else”.
You would not believe how much money I HAVEN’T spent by asking those questions. Except on coffee which in any universe is worth any amount of money charged as far as I’m concerned especially when a friend and a natter is involved.
How do I control myself???
Well, when we were in debt I woke up and realised just how much the banks were making out of me. And how ill I was getting because I was so worried about how I we were going to pay the bills. Now I don’t remember the last time I couldn’t sleep because I was worried about how to pay a bill. THAT is what keeps me going, and stops me buying stuff I really don’t need, gets the library books back on time and makes me do crazy things like “budget days”. After a while I even got to enjoy it!
Just had another thought about this. I got my Moneysaving expert email today and it’s talking about debt. I know I’ve just mentioned credit cards on here but I just need to say that if you are struggling to cope with money, DONT get a credit card. I use one ONLY because it saves me money to do so, I get cashback rewards and it costs me nothing to do so. I ALWAYS pay off the full balance every month, so I pay NO INTEREST. (This makes my Mortgage cheaper because I have a revolving credit mortgage)
If you cannot do that, using a credit card can be VERY bad for your finances. Interest charges are too high and if you can’t pay the full balance, your debt spirals out of control way too easily.
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Avalon’s Money Thread: How do I start budgeting?
Filed under: Avalon's Money Thread, Banks, Cost of living, General Budgeting
If you need to do this (or want to) then pretty much the first step is to look at what you already do. There are lots of ways of doing this. I always keep accounts anyway and this is by far the best method. I use Quicken, but there’s also MS Money, you could use Excel Spreadsheets, or even old-fashioned paper and pen ( if you still remember how to use them). If you don’t keep accounts now, then consider it because if you are in a tight money spot, it’s worth its weight in dollars. But in any case in order to know what you are spending, you need to list all your outgoings for the last year, or as far back as you can go.
Sit down, grab a cup of coffee and some Tim Tams, probably a calculator and a sharp pencil too, and get to it. You can get the information you need from bank statements, any receipts you have, your past 12 months bills, and pay slips (because you also need to check how much you have coming in). If you keep accounts, all the info is there (or print it off if you use Quicken)
There is actually a good spreadsheet you can put it all in at moneysaving expert:
If you don’t want to use that, list everything under as many headings as you need: things like Mortgage /Rent, Food, Petrol, Cinema, clothes, whatever headings you need. One important thing to be aware of – you need to be ruthlessly honest about how you categorise your spending. If you only have six headings – its not enough. We currently have 60 heading that we use in our budget.
The next step would probably be to “analyse” all the stuff you write down and then look at where and why you spent that money. It’s probably time for a top up on the coffee and some more Tim Tams (I think trying to budget is hard enough without worrying about calories as well). Look for things that are costing you money that don’t need to. Easy ones to start with off the top of my head are: Bank fees (have a friend who was paying $15 a month to take $20 out each time from another bank’s ATM rather than walk an extra 5 minutes to the banks’ own ATM), papers and magazines (I know they are fun but you read ‘em in 10 minutes and that’s it), library fines (again costing a fortune in some cases as opposed to getting books back on time). Doing this can be a bit depressing – the Tim Tams should help with that- but you may just spot a few things.
Look at your bills, and see if you can cut them. Are you on the cheapest electricity supply? Can you get your phone bill cheaper? (I’m just changing to Ihug, which should save me nearly $100 a month!) Are you on the best mobile plan (and if you both have mobiles, are the both Vodaphone or both Telecom because it’s expensive to call from one to the other)? If you are in the UK, use moneysaving expert to check for cheaper suppliers.
Now you have the bones of a budget. Use the headings you have from the first bit of this exercise and look at how much you are overspending. That is, are you spending more than you earn? If you have managed to work out cheaper suppliers for most of your big bills, then what’s left covers your other spending. If you need to cut spending more, then decide on what is important to you and what you can fairly easily not have without as much pain and suffering. I could probably manage going out to eat less, but if someone took my coffee budget away there would be hell to pay. By this point, you should now be getting an actual “budget” or spending plan (in the way that saying a diet is an “eating plan” is supposed to make it easier to eat a lettuce leaf and a carrot instead of chocolate cake). This is the goal to stick to, what you should aim to be spending on average on all your requirements. Changing habits is not easy but apparently it actually only takes 28 days for something to become a habit. .
And for bills: work out your average monthly bills and put that much aside into a savings account each month, so you always have money to cover them (or do this fortnightly if that’s when you get paid as you may do in New Zealand). Make sure there are no fees for your savings account. When a bill comes in, pay it, and move the money from your savings account to your cheque account to cover it.
Next I have to say that I really think the sanity allowance is a must. This is a “Bellism” which gives both of you an allowance each payday. Small but something you can spend on whatever you like, without justifying it to the other person. You want to spend it all on chocolate that’s fine . You each have to have the same amount, one of you cannot get more than the other and until you find your feet, this is where all your treats come from. We can budget for meals out and things like that, but if you can’t, use the sanity allowance for coffees, or cinema. It really up to you to decide what has to come out of that allowance and what you can afford to “Budget” for.
And something about budgets: don’t always think of it terms of “what I can’t afford because I don’t have the budget for it”. Use a budget TO BE ABLE to afford what you want. If you want to be able to go out for a meal once a month then think about what you can do to wangle the money from somewhere. For example: if you are paying bank fees, just think what that could pay for if you worked out how to stop it!
Don’t see the need for a budget as a bad thing because it really isn’t.
I found the first week was the worst, when you start to look at exactly how much money you spend and what on. It’s incredibly daunting at first but please believe me once you start, you may even find it utterly liberating. Its one thing to buy yourself a jumper and then panic because you don’t really know where the money is coming from to pay the credit card bill, but imagine what its like going out to buy a jumper because you KNOW you have the money set aside for it. You may not buy as many jumpers, but the ones you do buy; you are not going to be in a cold sweat over!
Reading through that makes it sound like I think it’s easy but I do know its not. But it’s possible. We have “Budget days” probably every 4 months where we sit down and look at ways to improve what we do (but then I’m a bit daft in the head when it comes to this ) the last day we shaved about $150 off our spending plan
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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What can Mafia Wars teach you about money?
Following on from the post about what Farmville can teach you about money, we thought it was time to consider what Mafia wars can teach you about money. Apologies for anyone who doesn’t play Mafia wars, since this may not mean much to you. What can I say? It’s a good game and I’m somewhat hooked.
1. Bank fees are just another word for extortion.
Obviously, having just robbed someone and earned $$$ you can’t just walk into your local bank branch and deposit $1.2m. All deposits in Mafia wars encounter a 10% laundering fee. Not unlike a normal bank account, where they’ll charge you every month for the security of keeping money in the bank, rather than having it in your pocket. Which in Mafia wars is a bad thing, since if people attack your character and win, they get a portion of the cash you have on hand.
2. Invest in property.
So there’s me spending loads of time & energy doing jobs in Cuba & Moscow, spending more energy to earn more C$ or R$, so I could afford the kit to do the next job, doing that loads of time to have the cash to do another job, eventually building up enough money to buy a business. The income of which I then use to buy more kit to do the next job.
And there’s Avalon, not playing Mafia wars for a few weeks, logging in now and then, sticking with New York, and banking $20bn+ every few of days. A very passive income.
So you can spend all the time and energy you like in the world, but if you really want to sit back and watch the $$ roll in, invest in property. New York property easily outpaces the businesses you can buy in Cuba & Moscow, since there’s no limit to the number of NY properties you can own. While in Cuba & Moscow you can only own one of each type of business.
I’ve not worked out the payback of business, since you pay different amounts of money to upgrade it in different ways. Payback on NY properties is about 70 days though. So if you’re after that Trillion dollar achievement, buy lots of property and the sit back for a few months.
3. It doesn’t matter how many toys you have.
Yes, it may be great to have the large motorcade of flash cars & boats etc. You still have to pay the running costs of your basic clapped out motor pool. Which is where the passive income from property comes in again. Without the passive income then your fleet of normal vehicles costs you money each hour out of the bank.
Of course you could always sell them. Depreciation bites though, since the $90k new BMW cruiser will only sell for $45k after you’ve used it.
4. Boats; just cost you money
You need a couple of speed boats to do some of the jobs in Mafia wars, however while they cost you a lot of money every turn to keep, they don’t add to your attack or defence. Once you’ve done the required jobs, i.e. got over the novelty, they’re just a drain on your money. Just like real life then! 
Avalon’s Money Thread: Can I Invest In new Zealand?
Filed under: Avalon's Money Thread, Property & General Investing, Retirement, Pensions and Kiwisaver
This is an area that I’ve personally experienced a big difference in from being in the UK. I’ve honestly been bowled over by the sheer opportunity available here to invest in our future. This is usually outside what I guess would be considered normal in the UK. Many more people “do their own thing” rather than relying on a “pension scheme”.
The main principle of investing for a future is:
PAY YOURSELF FIRST
or
SAVE FIRST – SPEND SECOND.
The aim is to set aside 10% of your income for your future. (Add that to your budget!)
Investing and wealth creation are huge industries here. And something I found amazing was the number of free seminars available. I think you should always be careful about seminars if anyone is pushy and asking you to sign up for an expensive course, walk out. Not that it’s always a bad course but you should “never sign anything” without sleeping on it first! Some seminars you need to pay for but still be wary. If you are the sort of person who easily gets signed up for stuff, don’t go. Or at least don’t take your credit card or you may end up with that much-hated timeshare in Lanzarote! (Which let’s face it – is not going to be a whole lot of help to you once you are in New Zealand.)
Company pensions are available but most companies will not pay contributions into them because they have to pay Fringe Benefit Tax to the government in order to do so. Also, any contributions you make are done after you have paid income tax on the money earned. So you do not even get that tax benefit. Kiwisaver is a new(ish) Superannoutaion scheme which you join automatically when starting a new job, and have to opt out of if you do not wish to be a member.
About the only benefit is that when you finally do take the pension out you aren’t taxed on the income.
A lot of Kiwis seem to go it alone with investment planning and do it with residential property. Property is big; shares not so much as people got badly burned in 1987 and won’t look again. Besides there are nice tax advantages (at the moment) to buying property and holding on to while renting it out. If you want to buy property and “do it up” a la Property Ladder you will get taxed on the profit but if you “buy and hold” you don’t get Capital Gains tax! (Yet)
If you want to get into investing in property, the best place to go is a forum called Property Talk because there’s just too much info and they are active investors.
Do be aware that most people “negative gear” property, which means they make a loss week to week. (We are in this position). This is because the Government pays you some of that money back if you are a taxpayer. But you do need to have spare cash to “prop up” a property if you are going to do this, and it does limit how many properties you can buy.
I will be looking at property for this year but I also invest in shares now. I do this by buying Direct Shares rather than what most people do which is to pay money each month into a Managed Fund. The difference is that I save up $5000 at a time and then decide on a company to invest in, and buy shares in that company. Whereas with a managed fund, I would put say $500 a month into a fund, and then the fund manager takes all the other $500 that everyone else paid in that month, and he picks a load of shares to buy with all that money (having taken some of the money out for fees). I read somewhere recently that if you throw darts at a list of shares you would probably pick just as well as the fund managers do!
Is it risky?
Well yeah, to a point. But I work with a company that advises me on which shares to buy and they use a method called Value Investing. This means ignoring the share price. Most people buy shares because they are “popular” and this means the price is higher. Value Investing means looking at the company and deciding what the company is worth. Then buying shares in that company when the share price is lower than it should be. Basically it’s buying shares at a sale price. It does require education, but then to be honest I’m now a firm believer in the fact that if you want a good financial future, you have to get educated about money. I find it odd that we are not allowed to drive a car without some education but we are allowed credit cards and allowed to invest without it!
We work with a company called Wise Planning But I strongly suggest that if you want to look at this, go to an evening seminar first. The program we did was expensive and you really need to work hard at it and I wouldn’t recommend it for everyone. Be assured that the one thing Wise Planning wont do is any Hard Sell which strangely is exactly why I joined them, so you can be sure your credit card is safe and you won’t end up with said timeshare in Lanzerote!
(Update: Wise Planning hiked thier fees up by a ridiculaous amount, and I now wouldnt recommend them, as the owner of the company was actually quite snotty and rude to us when we objected to a 100% fee hike with no warning. but if the Introductory seminar is still free – then it’s worth going to.)
The main thing that makes investing risky is ignorance. If you don’t understand what you are doing and the exact risks involved, you shouldn’t do it. There has to be an amount of personal responsibility taken for your future so if this is all gobbledygook, then read some and understand it.
Update: We headed firmly aware from share investing and into property, which for me was much more fun, much more interesting, and easier to understand. Ive made a lot of friends along the way, and learned huge amounts, not just about investing. Its worth joining a local Property Investors Association if you want to go to into this – they hold monthly meetings were you can network and learn.
Whatever you do, if you want to invest – make sure you get some advice. A lot of people have lost an awful lot of money in the last few years, and while no amount of knowledge or advice could have stopped all the problems, many people have lost everything because they just “invested” in something without understanding what they were doing or what they were signing.
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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Please be polite.
I guess I thought it went without saying that this being a blog, people were welcome to leave comments. This is one of the things that blogs are there for, and indeed depend on.
But I also thought it went without saying that people need to be polite, and hurling abuse at me and my family is utterly unacceptable. I’ve thought a lot about whether I needed to post this or not, but it seems for a few people – it does need to be said.
If you disagree with something I say, or believe, then feel free to say so, but please be polite about it. You do not have to verbally beat the crap out of me, my husband or my family in order to get your point across. And if you think you do, then honestly, you don’t really have the intelligence you need to make a point.
Make your argument – preferably backed up with some facts, rather than drivel you have just made up, and let me know what they are. If you yell at me and abuse me, I won’t change my mind, and I will just think you are a twat. I will take the piss out of you, and then I will block you from commenting further. Plenty of people are able to comment on here in perfect disagreement with my views and not be nasty about it. But there are always one or two pillocks out there that can’t handle people with different opinions.
If you just want a fight, and to act like an obnoxious little moron – please find somewhere else to get your jollies off. This is not a place where that kind of behaviour is tolerated. You would not likely come into our house and abuse my family so don’t do it on here just because you are hiding behind a computer and it makes you feel big and brave.
I write this blog rather than living on the forums, because I want to be able to give out information without being beaten up every five minutes for not always having the same point if view as the people in “control”. Sometimes what I say may not agree with your personal point of view, but hey – I’m not living your life. I live MY life, and it should not offend you if it is not the same as yours. The damage done by abusing me lasts a long time.
If you find my views offensive, or cannot grasp why I would choose to live life the way I do, then that is fair enough. Stop reading my blog. But if you do choose to keep reading it – please don’t rip me to pieces because it’s not what YOU believe or would say.
Basically, the abuse and absolutely horrid things that Stuart Eaves says about me and my family are so far out of order it’s not remotely funny. I do not understand why any intelligent person would say those things and for one minute think it was OK. It’s not, and you would need to be a very shallow and vindictive person indeed to throw that kind of prejudice and venom at anyone.
I cannot adequately express my disgust for people who believe for one minute that my parents are here for any other reason than that we all love each other and do not want to live 12,000 miles apart, and I feel somewhat sorry for Stuart that his life is such that he cannot grasp this concept.
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Avalon’s Money Thread: What’s all this BBO & BEO nonsence on house adverts?
Do agents always list that the price as BBO or BEO in the ads next to the price (if it applies) or do you only find this out when you make enquiries. From reading this thread and the suggested links it seems that most houses have the BBO or BEO and yet we are not seeing it in the net ads, are we looking in the wrong place?
Many properties don’t have any prices on them. In that case all you really have to go on is the GV/RV (Government or rating values). That’s the value on which the rates are worked out.
The Prices are set as:
Auction
A public sale of property in which prospective purchasers bid until the highest price is reached (or not as often happens).
BBO / BEO
Buyer Budget Over or Buyer Enquiry Over (sort of a guide but as with a lot of this – often nothing like what the seller actually wants). You are supposed to make an offer above this – but theres no law that says you have to.
MWP
Marketed Without Price. Utterly pointless, and I have little respect for agents that use this term.
PBN
Price by Negotiation. Often in my experience the seller then refuses to negotiate.
POA
Price on Application (always says to me “overpriced” but that’s just me!)
Tender
Make a formal written offer for a property by a set date. You often get a “Tender Document” to fill in, but you dont have to use that. This is like a “Dutch Auction” in the UK.
GV / RV
well yeah, but how does that help? It may have been from 2-3 years ago, and still doesn’t tell you how much people want for the place.
A Set Price
My preferred option. It tells you just what you need to know and I’ve noticed you often get this with lower priced properties.
If the ad says tender or auction your only way of getting a guide price of what the seller wants is to phone the agent and try and get a number out of them. I found that this was in no way helpful, even if they did tell you a number. Often they are trying to just get your interest with a silly low number which the seller would never accept and is often nothing like what the agent told the seller the house was worth.
That’s why we got a valuation before we made an offer. This place was advertised with a price (I stopped going to see houses without prices). They wanted $650K, but the valuation came in at $606. So we knew ahead of time that if we could get it at that price, we would not be overpaying.
Also, something that has come up recently regarding investors bringing potential tenants round when you SELL a house here. It’s actually quite common and often investors will put a clause in their offer to the effect that they can bring round potential clients during the settlement period. If you are in this position, bear in mind that if it is in the S+P agreement you need to abide by that, but if it isn’t, you don’t. This is another of those things where I think the advice of a solicitor is worth every cent. They should guide you through every item in the S+P agreement whether you are buying or selling.
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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