The 47 Rules of money
Filed under: Avalon's Money Thread, Banks, Cost of living, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ
This appeared in the Herald on New Years Eve, written by Diana Clement. I really like her articles about personal finance, and shes well worth a read. Unlike Mary Holm, she writes about general finance and makes an awful lot of sense, rather than just bleating on about how wonderful Kiwisaver is and how bad eveything that isn’t Kiwisaver is.
She has written her 47 rules of money, apparently in line with 47 years of life. I have to agree with just about all of them – and actually practice many of them. So here they are – with an occasional comment!
General:
1 Track your spending. You can’t budget if you don’t know what you’re spending.
- Probably the single most important thing you can do with your money.
2 Needs and wants are often confused. This is perhaps the biggest financial mistake that people make.
3 Talk money with those linked to you financially. Whether it’s parents, partners, children, employers, or business associates, get financial discussions out in the open.
4 People are too quick to judge others’ financial decisions, me included. But that needs to be balanced against my next rule, number 5.
5 People will justify their bad financial decisions to the end of the earth. “I did all the right research,” one finance company investor told me as my eyebrows went through my hairline.
6 Monkey see monkey do. Children learn about finances by watching their parents, not listening to hypocritical lectures.
7 You can earn a good salary and still be poor. Budget advice services sometimes see people with six-figure salaries who still can’t make ends meet.
- This is one of the biggest fallacies many people believe about money – people who earn more cannot be poor. It just doesn work like that.
8 People can and do lose all their money. A couple of times a generation a collapse such as Black Monday arrives with disastrous effects for thousands of people. Others fall for tricksters such as the off-the-plan apartment salespeople or Ponzi scheme promoters.
9 Entrepreneurship is good. Grounded but entrepreneurial people do well financially. They may not succeed in making their fortune first time around, but often do if they persevere.
10 You can be a capitalist and still have a social conscience. I admire philanthropists.
11 You don’t have to have a high-paying job to get wealthy. I once interviewed a successful property investor who worked by day on the shop floor at Noel Leeming and made his real money after 5pm.
12 Don’t blame your parents, your children, your partner or your education. Responsibility is good when it comes to finances.
13 Even beneficiaries can save. Some people live within their means no matter how little they earn. Saving money is a choice.
14 Some people want to be poor. They think they’re poor and that they’ll always be poor and sabotage their financial future.
15 Pay your taxes on time. The IRD has a big stick.
- And endless funds (paid for by you) to chase you with!
Spending:
16 I regret frittering money on coffees and unnecessary eating out. It would be better to direct that money towards savings.
- Um, Ok – can’t agree with that one clearly!
17 Spending money on experiences is good spending. I am eternally grateful that I sold all but one of my shares at age 22 (by coincidence in August 1987) and went backpacking through Latin America. It’s good spending if the experience enriches life.
18 Braking wastes fuel. This was one of those wonderful chestnuts that it takes a few seconds to get your head around. If you drive too fast and brake regularly, you’re using petrol on wasted momentum. Driving well can save 10 per cent of your fuel bill.
19 It’s moronic to incur fines. Like the maniac driver in a big red American-style pickup truck who overtook me on State Highway 2 on December 17, just to be pulled over and fined.
20 You can get rich one dollar at a time. Every dollar is precious. Think before you spend it.
Debt:
21 Save before you buy. A bit of a radical concept in 2011, but it can change people’s financial future.
22 Interest-free hire purchase deals are for suckers. You still pay an establishment fee and the majority of people fail to clear the debt on time and pay interest anyway.
23 Credit cards make you look rich. Anyone can live well for a few years, but the debt catches up.
- I would add to this that often when you see people splashing the cash around, and you feel sorry for yourself because you can’t do the same – you might want to spend some time wondering if that’s really their money – or a credit card they can’t afford to pay off. They may not be as rich as they look.
24 The only “good debt” is mortgage debt. Provided you don’t over-leverage yourself.
25 Interest payments on personal loans, credit cards and HP are “idiot tax”. Why throw money away unnecessarily?
26 Having a credit card debt need not be the norm. A credit card limit is a safety net, not personal money to spend.
Investments and financial products:
27 Beware of investments discussed at barbecues. When the whole world is piling into an investment such as property, gold, tech shares and so on, you’ve almost certainly missed the boat.
28 Buy property young, preferably in your 20s. Move heaven and earth to get the deposit. Rent is wasted money.
29 Any offer that comes over the telephone isn’t worth having. Just ask the people who were cold called by Blue Chip, timeshare schemes, or horse betting scams.
30 Having life insurance is a good idea. Paying that monthly premium feels like dead money (excuse the pun). The payout when you die can give your beneficiaries choices at a difficult time in life.
31 An entire class of investment can crash and burn. Who remembers: Equiticorp, Chase Corporation, Renouf Corp, Judge Corp and more that collapsed like a pack of cards after the 1987 crash? Then there were tech stocks, mortgage-backed securities and finance company debentures.
32 Shares can be “safer” in the long term than bank deposits. The argument, which I first read on the Motley Fool website, is that over 10 or 20 years good share investments will keep pace with inflation, while bank deposits will be eroded.
33 KiwiSaver is good. This is a red rag to many readers. Government-led retirement programmes get people saving for their future.
- Ok – one point out of 47 – at least it’s in balance!
34 Insurance policies are full of gotchas. For goodness sake READ EVERY WORD of your policy.
35 Property investment isn’t always as safe as bricks and mortar. It can turn to custard. Mortgagee sales happen all the time – especially with investment properties.
- A lesson many people are learning the hard way – you still need to watch your money, be sensible, and understand the basics. It is NOT easy money, it is NOT guaranteed, and it is NOT always a fast road to riches. (You will also meet a lot of arseholes willing to screw you over (Mr Agile Property management AKA Eric Voice) among some of the friends you will make.
36 Markets overshoot and undershoot. If a market’s fundamentals (such as the yield on investment property) are out of historic kilter the market is probably brewing a bubble.
37 The best time to buy is just after a crash. Buy fundamentally good investments when everyone else is bailing out of the market.
- I so wish I was flush with cash right now. One of the painful side effects of buying property at the hight of the market is not having cash to buy in the crash!
38 Beware of investing just to save tax. Is the investment actually any good or is someone desperate to sell it to you?
Financial advice and salespeople:
39 Take your advice from people who have been through several cycles. Johnny-come-latelies going through their first financial cycle underestimate the risks.
40 Your money is your responsibility. Yes, employ a financial adviser, mortgage broker, accountant and other professionals, but make sure you understand what they tell you and double-check that your money is adequately spread.
- Abso-fragging-loutely. NO ONE will care as much about your money as you do. Unless they are looking to take it off you.
41 Seminar presenters aren’t always financial experts. They probably make their money from seminars, not from the actual investment they’re preaching about.
42 Credit rating agencies don’t always get it right. Some companies deceive the agencies, others are part of an industry that may not be well understood by the ratings agencies.
43 Don’t believe the get-rich-quick conmen. You should aim to get richer slowly, but steadily.
44 Government subsidies are a magnet for spruikers. Sharks swarm around government money. Just look at the people selling insulation, heating, and ventilation or those who have been caught selling KiwiSaver door-to-door.
Others:
45 Passive cash-flow rules. Finding ways to make money that don’t need your hourly input makes sense.
46 Telling the truth infuriates some readers. Suggesting that people can change their financial ways brings in a flurry of outraged emails.
47 You can learn more about money. The easiest and cheapest way to improve your knowledge is to get a book out of the library.
- Or – ahem – buy mine!
And I’m adding one of my own:
48. Have a Sanity Allowance. Pocket money is not just for kids, and it will save you a whole heap of money and arguments. Along with tracking our money and actively managing the money – this would be the most useful thing I ever learned about dealing with finances.
New Zealand interest rates coming down.
Filed under: Cost of living, Economics, Interest Rates, Credit Cards & Mortgages in NZ
Last week the Reserve bank held the base rate steady – and this week, some of the main banks have cut thier mortgage rates. It means that Fixed Rates are coming down towards the floating rates – though the long term fixed rates are still way too high for me! Im using ASB rates for ease – but Westpac and Kiwibank have also dropped the rates.
As at 12:25:54 p.m., Thursday 15 September 2011
- Housing Variable 5.75 % p.a.
- Housing Fixed (6 Month) 5.85 % p.a.
- Housing Fixed (12 Month) 5.90 % p.a.
- Housing Fixed (18 Month) 6.10 % p.a.
- Housing Fixed (24 Month) 6.30 % p.a.
- Housing Fixed (36 Month) 6.70 % p.a.
- Housing Fixed (48 Month) 7.05 % p.a.
- Housing Fixed (60 Month) 7.40 % p.a.
- ORBIT Home Loan 5.75 % p.a.
As at 09:47:18 a.m., Wednesday 2 November 2011
- Housing Variable 5.75 % p.a.
- Housing Fixed (6 Month) 5.75 % p.a.
- Housing Fixed (12 Month) 5.80 % p.a.
- Housing Fixed (18 Month) 5.80 % p.a.
- Housing Fixed (24 Month) 6.00 % p.a.
- Housing Fixed (36 Month) 6.30 % p.a.
- Housing Fixed (48 Month) 6.70 % p.a.
- Housing Fixed (60 Month) 7.10 % p.a.
- ORBIT Home Loan 5.75 % p.a.
For New Zealand – these are REALLY low rates – but still way higher than you may be used to.
Today’s good news – interest rates aren’t going up!
Filed under: Banks, Cost of living, Interest Rates, Credit Cards & Mortgages in NZ
The reserve bank have done what all the economists said they would do and held the base rate. Well at least they said that this month – last year they swore blind it would be different and rates would be climbing by now. Wouldn’t it be lovely to have a job where you could be wrong so often?
By the evening, Kiwibank had dropped its rates – which means there’s a fair chance that the other banks will follow and our mortgages will drop a little.
Kiwibank have actually brought their 6 month and 1 year rates in line with the floating rates.
I await ASB’s rate drops eagerly.
Why DVD’s are so expensive on Trade Me.
Filed under: Cost of living, Interest Rates, Credit Cards & Mortgages in NZ, Life in New Zealand
{Rant on} Because only DVD’s that have be bought and paid for in New Zealand (at hugely overinflated retail prices) and thus have a New Zealand Classification sticker on them are legally allowed to be sold on Trade Me.
So if you buy a cheap DVD from the UK or US, and them resell it on Amazon at an equally cheap price -
you are breaking the law.
The Films, Videos, and Publications Classification Act 1993 states that a film, video, DVD, or restricted game must not be offered for supply to the public unless it has a New Zealand label affixed to it. The words “supply to the public” include sales, hires, exchanges and loans. A seller who breaches this obligation is liable to a fine of up to $3,000 (or up to $10,000 if the seller is a company).
We found this out after some Arsehole reported my brother – who sells a lot of Dr Who DVD’s on Trade me. So now – thanks to said areshole – Dr Who Fans can join everyone else in New Zealand in being right royally screwed by being forced to pay 2-3 times the correct price for the DVD. Because one of the really big issues is that here in New Zealand – you cannot use an EftPos card to buy over the internet. So an awful lot of people who do not have access to credit cards or the “new fangled” debit cards which are just being rolled out here, have to buy in-country and pay over the odds.
And people wonder why downloading is so popular here. Even with that I continue to be amazed at how willing people are in New Zealand to be ripped off and overcharged. It’s kinda like it’s something to be patriotic about.
So what do you have to do is you want to sell a UK dvd on Trade Me?
Pay. Lots.
$27 + Gst to the Film and Video Labelling Body for each title you want to list. Then you have to pay 7c for each lable. So if you want to sell 100 copies of Dr Who and The Daleks (which for some truly perverse reason is not yet classified in New Zealand) it might make it worth it. But if you are selling the one copy you have – forget it unless you want to charge $50 for it on Trade me.
Sometimes I dispare of the utter futilty. This is not about DVD regions, its not about trying to prevent Pirating – its just another excuse to gouge more money off people for absolutley no reason.
Congratulations Arsehole whoever you are – line up to get screwed. You deserve it.
{Rant off}
Are you the 99%, 53%, 1% or who cares what %?
Filed under: Banks, Cost of living, Economics, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ
The “Occupy Wall St” protest has hit New Zealand this weekend – “occupying” Auckland, Wellington, Christchurch and Dunedin. I have tried to get my head around this – and I have to say I am failing miserably. When I started seeing “We are the 99%” posts coming up on my Facebook feed – I took a look at that and understood what they were saying.
We are the 99 percent. We are getting kicked out of our homes. We are forced to choose between groceries and rent. We are denied quality medical care. We are suffering from environmental pollution. We are working long hours for little pay and no rights, if we’re working at all. We are getting nothing while the other 1 percent is getting everything. We are the 99 percent.
I get anger that banks and financial institutions had screwed up, lost an awful lot of money, got bail outs, and yet still managed to find many millions of dollars to pay huge bonuses to the people who screwed it all up, while people lost homes and jobs.
Well who wouldn’t be pissed at that? I find it astonishing that governments are bailing private companies out, but there’s not a penny for us if we hit the skids. No one bailed us out when IBM got rid of hubby. We had to manage that ourselves – as does everyone. We have friends who have lost everything – no one bailed them out.
But I am also somewhat confused about why the blame is only being shoved on the corporates – and not those of us (ie just about all of us) who have spent the past decade or 2 spending vast sums of money we don’t have (ie debt) on cars, various iGadgets,clothes, shoes, posh food, holidays and houses. We have to take some responsibility here. Blaming the big bad corporation doesn’t change the fact that as a whole the western world gorged itself on debt and consumerism. No one forced us to buy iPhones. (I wonder how many people occupying Wall St still have smartphones, and are updating Facebook with their adventures via the very items the corporations sold us, and we willingly bought with money that the banks invented for us to spend, increasing the debt balloon that they now say is the source of all ill in the world).
But what has got me really confused was this has morphed into a strange anti-government, anti-money,anti-whatever-we-can-think-of-to-be-peeved-about-as-long-as-we-can-blame-the-anyone-who-is-richer-than-us sort of movement. Everyone is supposed to have a voice – no one is considered to be worth more than anyone else. This to me is an alien concept – in $ terms of course people are worth different amount – please never let a brain surgeon work on me if you only pay them the same as the cleaner. In human terms – I will always value kindness and decency in someone more than I will value someone being an arse.
I saw this video of the “assembly” in Atlanta – I gotta say – if that’s the alternative to the current political system we have – no thanks.
I am way too independent to sit there and parrot back what I am told to say – what are we? 5? Repeat after me “You are all individuals”…
So – are you the 99%? Probably not.
Global Rich List puts your income into world wide terms. And you may be surprised at how little income it actually takes to get you into the top 1% of earners in the world. Global Rich List doesn’t work for NZ$, but just £25,000 a year or $49,000 USD gets you there. At current exchange rates that works out at $49,500 or $61,500 NZD.
The New Zealand minimum wage is $27,040 a year which (using the UK£ to work it out – £13,600) puts you in the top 10.5% richest people in the world. And yet on that how many people still have mobile phones and internet access?
The median wage in New Zealand is $49,000. That means that 50% of wage earners in New Zealand are actually among the top 1% of earners in the world.
Those of us who pay for those of you who whine about all of that… or that… or whatever.
Ok – so this made me laugh. Can’t see this lot repeating back what they are told 3 words at a time and looking gormless.
So I won’t be occupying Wellington. To be honest I am too damn busy dealing with our current financial situation, budgeting our money, saving where and I can and spending what I have spare on stuff produced by people who also earn money. Some of them earn less than me, some of them earn more than me. Some of them are worth that much, some of them aren’t. I make that decision myself, and decide for myself where I will spend money, how much to spend, and whether to take on debt. If I take on debt – I take full responsibility for that decision, and for any mistakes I may make.
And I have absolutely no idea which % I am.
I am not a number – I am a free man .
Why are Visa and Mastercard forcing you to have contactless credit cards?
Filed under: Banks, Interest Rates, Credit Cards & Mortgages in NZ
ASB contactless credit cards are a faster and simpler way to pay for your purchases. Now you can fly through checkouts at participating stores, paying by just tapping your card on the terminal.
This new technology sends payment data to the terminal at the checkout with just one quick tap to the terminal. Once your payment has been confirmed you’re ready to go.
Problem is – it seems that these cards are being sent out automatically to people. And many of those people are phoning the banks and trying to get an old style card back because they don’t want a contact-less credit card. We don’t want one either – the security holes in this system are big enough to drive fly an Star Destroyer through)
The problem is they are being refused. That’s right – you have NO CHOICE except to have a credit card that allows funds to be taken out of your account without you ever having to swipe it, push the chip into a machine or type in a pin or sign for it.
Given that banks and Credit Card companies has thus far failed to find a way to stop your average common or garden credit card fraud – you would think they would be loathe to invent a system that is wide open to mistakes, abuse and the emptying of your account.
And the worse thing is that if this does turn out to be watertight as a sieve – most people wont even notice because most people never look at their credit card statements. It should be noted that although I have posted up a picture from ASB and quoted their website – this is not something ASB are forcing on us (or any other bank for that matter). This is being driven by the Credit Card Companies – though I have to say that the banks probably have the power to tell the to get stuffed if they wanted to.
Time for an RFID Blocking Wallet???
New Zealand Interest Rate changes
Filed under: Banks, Economics, Interest Rates, Credit Cards & Mortgages in NZ
The reserve bank has held our base interest rate – and now it seems most of the “experts” how claimed the rate would be rising by the end of this year have changed their minds and now claim it will be march next year.
Apparently they will have to go but then some say they shouldn’t. Some say they should stay the same.
Helpful.
Interesting, I checked the ASB home loan interest rates – and they have gone down recently:
As at 01:33:46 a.m., Thursday 4 August 2011
- Housing Variable 5.75 % p.a.
- Housing Fixed (6 Month) 5.85 % p.a.
- Housing Fixed (12 Month) 6.15 % p.a.
- Housing Fixed (18 Month) 6.40 % p.a.
- Housing Fixed (24 Month) 6.65 % p.a.
- Housing Fixed (36 Month) 6.95 % p.a.
- Housing Fixed (48 Month) 7.35 % p.a.
- Housing Fixed (60 Month) 7.75 % p.a.
- ORBIT Home Loan 5.75 % p.a.
As at 12:25:54 p.m., Thursday 15 September 2011
- Housing Variable 5.75 % p.a.
- Housing Fixed (6 Month) 5.85 % p.a.
- Housing Fixed (12 Month) 5.90 % p.a.
- Housing Fixed (18 Month) 6.10 % p.a.
- Housing Fixed (24 Month) 6.30 % p.a.
- Housing Fixed (36 Month) 6.70 % p.a.
- Housing Fixed (48 Month) 7.05 % p.a.
- Housing Fixed (60 Month) 7.40 % p.a.
- ORBIT Home Loan 5.75 % p.a.
I’m still not fixing from my flexible rates.
The Mortgage Pig
Filed under: Avalon's Money Thread, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ, Property & General Investing
I was on the train today heading to the Wairarapa for the weekend, and I was mulling over our latest money saving exploits. And I was thinking about Fred’s comment and how we actually attempt to make sure that saving are just that – real savings – and that we don’t waste the money elsewhere.
Because of course Fred is quite right – it’s all very well not spending money on something – but if you then spend it on other stuff – you really haven’t saved anything at all.
That’s where the Mortgage Pig comes in. This was an idea I came across on the MoneySavingExpert forum – and seems to have been “invented” by Aliasojo.
I decided a while ago that I really wanted my mortgage paid off. It wasn’t very large to start with admittedly, but it wasn’t coming down as quickly as I would have liked.
As the mortgage was one of those background constants that just gets paid every month without thinking about it, I figured that if it was in front of us and on our minds more, we might make more of an effort to collect more money to chuck at it.
So……I got a mortgage pig.
It’s a large green pig which sits on my kitchen worktop in a very central position with a ‘speech bubble’ printed on A4 paper and stuck to the wall above it. The mortgage pig explains (in the speech bubble) who he is and why it’s a good idea to check whether you really need that bottle of wine or takeaway and if it might be better to give the cash to him instead. It also a bit to remind us why we wanted to pay off our mortgage and lists the things we want to do in the future.
Now we don’t use cash. And while we have used a physical piggy bank in the past – because we don’t use cash – it takes too long to save anything. So we have a “Virtual Mortgage Pig”. It’s not large, it’s not green and it doesn’t have a speech bubble explaining what it is. Instead, we have a category on Quicken called Mortgage Pig. When we make a saving, get a bit of extra income (such as share dividends, trade me sales), or we use our ASB points to buy stuff instead of money, we transfer the money to Mortgage Savings. Now that our personal mortgage has gone and been replaced by a business mortgage – the Mortgage Pig savings get paid to our Investment Savings Pot.
At the moment, not all our “savings” will make it to the Pig. That’s basically because the past year or so have been very hard for us financially, and to be perfectly frank – savings we make in one area are pretty much eaten up with price rises in another. Right now it feels like Standing Still financially is a battle of epic proportions – let alone trying to get ahead!
Should we have any money left at the end of the month – that too would be a Mortgage Pig saving – and get shoved into to the Investment Savings. These savings are what keep our rental business afloat. Given how much money we lost on because of our issues with Agile Property Services’ negligence and failures to manage our properties – that account is in pretty much a mess. But with some hard work, and some tough management – we are clawing back the losses he caused. It does help that the tenants we now have are paying rent like clockwork, and I am not having to pay it for them. Ill be blogging more about that later – but every time I start I just get too furious at the trouble the Property Manager caused me – and his refusal to get some balls and deal with me.
So yes – it doesn’t really matter how you do it – but you do need some way of locking in the savings. Like I said – ours is for mortgages – which is the best use of money you can make. If you haven’t got a mortgage – then it’s really up to you. I really like the idea of the Mortgage Pig. It’s a bit silly, it’s a bit fun, and you can basically run it however it suits you: from putting all spare change in – to literally deciding not to buy a takeaway and gettimg cash out to put in the pig instead. Remember there is no “one true path” and what works for me may not be good for you – but there is certainly no harm creating your own version of “The Mortgage Pig”.
Thanks Fred 
Banks are stepping up to help Christchurch
Filed under: Banks, Interest Rates, Credit Cards & Mortgages in NZ, Life in New Zealand
As soon as the government announced it’s package to help people in Christchurch, ANZ was on the TV with an advert outlining it’s 1,000,000,000 package to help affected people in the red zone.
We’ve created a $1,000,000,000 kick-start fund to provide lending to home owners living in the Government’s designated residential red zone.
A heavily discounted variable rate – currently 3.70% p.a. – will be available to eligible residents for the first year of lending – no matter where you relocate in New Zealand.
What does the fund provide?Eligible residents will get a 2.04% discount off ANZ’s variable home loan rate for the first year of lending up to a value of $500,000.
Who is eligible?Any home owner living in an area of Christchurch which has been designated as part of the Government’s designated residential red zone. What do you need to do to qualify?
- You must be eligible for and take up the Government scheme
- and deposit the net proceeds of the Government payout into an ANZ call account within two months of receiving it
- At the point of taking up the lending, you’ll need to direct credit your salary directly into an ANZ transaction account
- The loan must be drawn down by 31 December 2012.
Kiwibank have a similar package to ANZ:
If you accept the offer from the Government and wish to purchase or build a property elsewhere, we’re offering:
a 2% p.a. discount on our variable rate for a year from drawdown – this means that the rate will be 3.65% p.a.
no application fee for new home purchases
no fixed rate break costs or early repayment fee if you already have a Kiwibank home loan.You’ll need to:
contribute the Government’s net payout towards the property purchase price, and
have your salary direct credited to a Kiwibank account.The maximum loan amount is $500,000, and the loan needs to be drawn down before 31 December, 2012.
ASB have also updated there aid package, but to be honest it really is pretty weak compared to ANZ.
Westpac and BNZ haven’t released an up to date package for people in the red zone – which is a pretty poor show really. So ANZ and Kiwibank are the winners here for taking some decisive steps – good on them.
Paying off debt – still too hard for most people :(
Filed under: Banks, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ
According to a piece on the herald today, Kiwi consumer debt (that doesn’t include mortgages on property) still stands at a whopping $11.96 billion. That’s $11,960,000,000. Now the Stats NZ population clock stands at over 4.4 million, but census information says there are 895,000 people here under the age of 15. Which leaves an “adult(ish) population of 3.5million give or take. Which means on average every one over the age of 15 would be carrying a debt of $3417 each, all at high interest rates. This is debt on credit cards, store card and hire purchase.
That’s actually quite a lot really.
And according to the article, the most that people are thinking of doing to sort this out is not get further into debt. But there are very few people thinking of paying it down.
Now for the moment, we also have some consumer debt on a credit card – expenses from setting hubby up as a contractor. As you know, we swapped this to a “low” interest credit card, saving us about $250 a month in interest, and that is being paid off rapidly, and will be gone by the end of September. To be honest, I felt really unconformable having the debt there, and it just didn’t seem to be getting lower. So we took steps and have budgeted $2000 a month to pay the card off. Now most people will not have the income to do that, especially here in New Zealand. But the bottom line is – debt has to be paid off somehow.
It doesn’t have to be $2000 a month, but it does have to be more than the minimum payment, and having consumer debt means if nothing else – you have to stop buying things you cannot afford.
Its a pain – but its true.
Apparently the interest we are collectively paying on our credit cards (at an average of 18%) is $650 million in a year.Now shared amongst the same 3.5 million of us sharing the debt, that works out at a reasonable sounding $185 a year each. But when you consider that you pay that for the privilege of having the debt, and you actually don’t have anything to show for it – its a bit of a waste of money isn’t it?
Believe me – that $2000 debt repayment could be much better spent on us having some fun. Though actually because I’m completely sad – once the credit card is paid off, its going to be used to pay down some of our business mortgages. We may however be able to use 1 month of it to fund the purchase of a new laptop. In the meantime, I gain a huge amount of pleasure from denying the banks a fair chunk of interest each month.
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