Should you be forced to save?
Filed under: Banks, Cost of living, Economics, Property & General Investing, Retirement, Pensions and Kiwisaver
Forced savings – in the form of compulsory superannuation (or – shudders – compulsory Kiwisaver) is back on the agenda in new Zealand. Because apparently, not enough of us are doing as we are told and opening up Kiwisaver accounts. So we need to be made to do it.
This comes out of the Tax Working Group, now we have to pay some more academics to sit around and tell us how we need to save for retirement and how we need to do it. I hope they get different people from the ones that just beat the living crap out of any Kiwi that was using Property to try and fund their retirement. Apparently that doesn’t count as retirement planning, cos it’s not shares or managed funds.
So when they talk about “Forced Savings” just be aware that what they really mean is “Forced Stock Market Investments”.
I’m not impressed – if you couldn’t tell. 
I personally believe that forcing people in a low wage economy like this to give up at least 2% of their after tax salary is just not on. The “theory” is that if we all do this – then it will cause investment in businesses (through the sale of shares) to increase, and those businesses will then be able to pay the staff more.
Anyone actually think your wages are gonna go up?
Because heres the thing (speaking as a complete non-economist here of course):
Buying shares on the stock market does not actually put money into the business. It puts money into the pocket of the guy selling those shares. If that just happens to be the company floating shares – then yeah – you just invested money in that company. Otherwise, some guy on the street sold some shares and you bought them.
BTW, we recently found out that if you work for one of the banks, which just happens to be a “Default Provider” of Kiwisaver (where you money sits if you don’t bother to actively choose a fund), they take their “Employer contributions” out of you salary. So basically, they don’t actually contribute to their own staff’s Kiwisaver fund.
Why is this not illegal, and why is it still being allowed? And how the hell does such a company get to run a default fund???
So regretfully – still not a fan of Kiwisaver, and would still like the government to keep its grubby little paws of my money thank you very much!
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Grabbed One.
Filed under: Avalon's Money Thread, Cost of living, General Budgeting
Theres a new (ish if you are in Auckland) money saving website thats come to New Zealand, and so far – looks good. Its called Grab One, and I found it via Facebook (fount of all things time wasting) via some friends.
So what’s the deal?
Well, you sign up to Grab One, and then when they have a deal – you can choose to accept the deal if its something you like the look of. Now usually, theres going to be a minimum number of people required to sign up for the deal before it becomes “live”, but if you are one of those first people, you will need to give credit card details, and if the deal goes live, you will have bought the deal. After that, if there are still some places left on the deal, you can buy or not as suits you.
Is it worth it?
Well, today was the first day that Grab One had a deal in Wellington, so its the first time i got to try it out.
As we are intending to go to the cinema at least every other week, and as the Embassy Cinema is 5 minutes (slow) walk away – I though this was well worth a try. I mean $3 for a cinema ticket??? Even on Cheap Tuesdays its $10! The downside is that you can only buy one deal per person, but this did allow me to buy a second ticket as a gift – which I thought I had better send to hubby. So that’s 2 tickets to the Embassy for $6, saving us at least $14.
Now there are some conditions: you can’t use it Friday or Saturday evenings, you cant get Platinum seats at the embassy ( those are the bigger leather couch like seats) and you cant use them for deluxe seats at the Lower Hut Cinema (which have reclining backs). But all those conditions were clearly laid out – in normal sized print, and were really easy to understand – so top marks for not trying to hide anything.
So I guess if you can get money off something you were going to buy anyway – this looks absolutely brilliant. But as with all “money saving deals” it only actually saves you money of you were going to buy it anyway. If you start buying things just because they are on offer – then its actually not saving you money – its making you spend it.
How do you find out about the deals?
There are two ways: sign up for email alerts when there’s a deal in your area, or join the Facebook group and get the alerts as posts on your Facebook newsfeed.
This is currently running in Auckland, Wellington, Christchurch and Waikato Region, and looks like they are expanding across New Zealand.
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Briscoes: You’ll never buy better?
Filed under: Avalon's Money Thread, Cost of living, General Budgeting
It’s a really annoying jingle and an even more annoying tagline – more so becuase it’s highly dishonest. Briscoes is a chain of homeware stores across New Zealand known for its permanent sales (advertised as “get in quick – 2 days sale”).
The thing with Briscoes is that from what I have seen – the sale price actually brings it in line with the retail price in most stores. We found this when I bought a coffee machine. They had it “on sale” for $499 down from a supposed RRP of $899. Except when i was doing my price checks, I couldnt find any other store that sold it for for more than $499. We ended up buying it at Moore Wilsons.
We have done the same price checks today, and out of 10 separate items, only one of them came out cheaper at Briscoes – a Tefal frying pan which would normally have been the same price as in Moore Wilsons, but had 40% off in Brisoces, and this time Briscoes weren’t exaggerating the price before discounting.
Just be aware of this kind of thing. I have found time and again that “sales” “bulk buys” and “special prices” of all descriptions are a con over here. Why the commerce commission allows it I have no idea – but it really will pay you to check your prices before buying.
Today we saved about $50 on three items where there was a cost difference, and will save another $150 on a few items that I know are cheaper in Wellington stores. Its a start.
Unfortunately I cant actually spend that on coffee!
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Arghhh – having to pay interest on the credit card!
Filed under: Avalon's Money Thread, Cost of living, Interest Rates, Credit Cards & Mortgages in NZ
Well, for the first time in five and half years – I cannot pay off the whole balance on our credit cards, and we will be paying interest.
This is quite depressing.
I guess I should be happy that its only likely to be a few months where we have to pay, and that we have been able to organise our finances so well for so long that we haven’t had to do this thus far while we have lived in New Zealand. But still – its damned annoying.
Especially since the interest rate is a whopping 19.95%
So – from here on in – hard nosed budgeting and spending restrictions to get us back on track as fast as possible.
Why has this happened?
Some really big bills I’m afraid. Despite the emergency fund, which I still have some left of, we have had some really big expenses come through and no income. The emergency fund is coving our living expenses and top ups on the rentals, but it cant cover:
- Some large medical bills.
- Set up costs for Hubby’s contracting business.
- Legal fees
- Buying furniture for an apartment in the city. (and yes – even though we have 2 houses worth of furniture – it still turns out we need a few things – that was a depressing moment!)
Hubby has income coming in now, but almost all of it is paying the setup costs: new computer, travel, phones, internet bills, city pad – it all adds up.
And at least this time I actually know what I’m doing. I know how to work through the budgets, I know how to cut costs, and I know how to stick to the harder decisions. One thing I am sure of – that debt is not going to be there long. Ill be paying money into it as soon and as often as I can.
I’m just not sure how to cut my coffee budget
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What is Swedish Rounding?
In new Zealand our smallest coin is now the 10c piece. Which means if you want to buy something with a price of say $1.99 you can’t get change and effectively get overcharged.
Swedish Rounding basically says that if it’s 5 or under at the end the shop will round down and it’s over 5 they will round up. It’s often dependent on the individual shop as to whether the 5 ( being the midpoint) rounds up or down
So what’s the problem?
Normally it really doesn’t cause a huge issue – for me it’s the principle of the thing that no matter how you pay for something the price charged should be the price you saw on the item. In effect this means that all prices would need to altered to be multiples of 10c which I an damn sure would mean everything goes up in price rather than down.
A good example of this is the the old 45c stamp for standard post in New Zealand. A few people got uppity (fairly I feel) that they tried to buy a single stamp – not needing more than one at the time, and found it cost them 50c. Funnily enough now there is no 45c stamp – the price went up to 50c.
Of course if you pay on an eftpos card or credit card it becomes irrelevant as the amount charged is the exact a
amount of the bill. Oddly shop staff often tell you the bill is a round dollar amount, but what gets charged is the exact amount. I have come across two notable exceptions to this. One was a chain healthfood store who tried to round up from $5.95 to $6.00 and got told to sod off. The other was Radius Pharmacy on Lambton quay who rounded up from $26.95 to $27.00. I didn’t notice that till I got home and did the accounts (many stores actually don’t show you the amount they plug into the cc machine which in itself was a bit naughty). I just assumed that as normal they were telling me the rounded amount but would charge the right amount. I’m not shopping there again
Okay it’s small change. Shops would have to round up 5c seventy or eighty times before I’ve lost the cost of even one coffee. And even then you should find that you get rounded down and save as often as you round up if yo are buying a bunch of things together. With single items though – well – how many things are priced .34 rather than .99?
But what about people on low incomes? And bear in mind that as a migrant that might be you. Low income people tend to pay cash more to avoid the eftpos fees, and don’t have credit cards. So already they are more at risk of getting rounded up than I am with my credit cards. $3.50 lost may not be much to me personally in the long run (though I still to object to it) but for many people that actually could make s huge difference. I wonder if anyone has ever sat down and worked out whether the amount saved by rounding down is the same or more than the amount overpaid by rounding up?
With a Hat Tip for Wafu for his comment which gave me the idea for this blog post.
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What does your credit card bill say about you?
Filed under: Cost of living, General Budgeting, Life in New Zealand
For some bizarre reason this morning, hubby had a flick through the credit card bill that arrived yesterday, and noticed that there seemed to be a marked preference for spending in a certain type of shop.
So for you amusement – here are the types of items you can see on our credit card statement.
Supermarket – 15 Items
Business stuff – 2 Items
Medicines & Health care – 2 Items
DIY – 2 Items
Health Insurance – 1 item
Clothes – 1 Item
Cinema – 1 Item
Utilities – 2 Items
Books & DVD’s – 7 Items
Online Gaming – 4 Items
Cafes and Restuarants – 21 Items
Ooops. I’m off for a coffee to drown my sorrows!
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Cheques – not quite as you know them.
You know – I haven’t actually written a cheque in over 5 years. I just don’t use them here. With most people taking Eftpos, or direct credit via Internet banking – its actually quite rare for most people to need to do it. On the odd occasion that cheques are needed – I get cash instead (I don’t even know where my chequebook is!)
However, there is something you need to bear in mind if you do choose to use them here. Apart from for some really bizarre reason there’s a tax applied to their use, and you have to pay the bank for the privilege of getting a chequebook. Ok, that last bit’s probably not a huge shock.
Cheques in the UK are automatically “crossed” by the bank. That’s those 2 lines that you find with the words “AC Payee” or “Account Payee”. In New Zealand, they don’t have that. Now this is a basic security detail. As basic as it gets. That note on the cheque means that it can only be paid in to the account of the person you wrote the cheque to. It can be paid into someone else’s account.
The Banking Ombudsman has just highlighted this issue in an article in the Dom Post. It seems that people are crossing their cheques “Not Negotiable” which does not offer the same protection “Account Payee Only”.
The ombudsman notes that Banks could just sort this out by pre-printing the phrase, but stops short of telling them to get a grip and actually do it.
So be aware: NZ banks are failing to operate one of the easiest security measures they could use, and they charge you for the chequebook. If you do use them when you get here, make sure you cross them properly, because apparently the banks aren’t refunding funds that go missing.
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Kiwisaver Problems: keep your eye on your provider.
Filed under: Avalon's Money Thread, Cost of living, General Budgeting, Property & General Investing, Retirement, Pensions and Kiwisaver
I always thought putting the Inland Revenue in charge of Kiwisaver was a daft idea. Seems I may have had a point. The IRD passes on your information to one of the default providers, and then thats the end of what they care about. It seems that a lot of the default Kiwisaver providers (these are the ones you are automatically enrolled with if you don’t make your own choice), have got the wrong information, and cant get in contact with the people whose funds they are running.
It worries me that there appears to be an awful lot of people who are completely unaware that they have a Kiwisaver fund. There are 200,000 people who cannot be contacted by their fund managers.
The problem means people may not receive the letter telling them who their KiwiSaver provider is or the annual statement on their Kiwisaver balance and annual report explaining the returns of their fund.
McAllister [from ASB Group Investments - the larges Default provider] said some people could be in KiwiSaver for more than a year and still not know because it was new and they did not know what to expect from their provider or Inland Revenue.
“It appears it’s an IRD problem. It raises questions about how accurate IRD’s information is.
You need to be aware about Kiwisaver. You are automatically enrolled into a fund, whether you like it or not, and have to opt out if like us you think Kiwisaver is crap.
Make sure you understand what is at stake here – as immigrants you will face this the minute you start a job,a dn you have 2 weeks to make up your mind about staying in Kiwisaver forever or opting out. Do your homework.
More information on Kiwisaver can be found in Avalon’s Guide: 13 things you need to know, and 17 things you really need to know!
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Bank Guarantees on loans
Filed under: Banks, Interest Rates, Credit Cards & Mortgages in NZ
When you take out a mortgage to buy your home, the mortgage is “secured” against the house. Most people get that, and understand it – it’s the bit that says “You can lose your home if you do not keep up the repayments on your loan” sort of thing.
But on top of that – you also get what is called a Personal Guarantee. Which says that even if we take your home, and you find some nifty way to try and get round paying us what you owe us, you personally guarantee that you will pay us what we want – even if its 20 times what your house was worth. Or something to that effect. Strangely enough its a nightmare of small-print and legal waffle.
And it’s the bit we seem to have no end of problems with in our dealings with ASB. I dread trying to organise mortgages with them now, because I can almost “guarantee” that there is gonna be a problem with the Guarantees.
We have yet another problem with them right because Ive actually paid off one of my mortgages.
Which is obviously a bit of a big thing for me. (Blog will be here as soon as I have the statement to copy and prove it!) It seems the ASB loan department have finally looked through the file, and worked out that one of the trustees in our Family Trust changed about 3 years ago. They were told, but it looks like everyone ignored it. Now they want us to sign another guarantee to replace that one.
For a loan that we have paid off.
Bloodsuckers!
So, as I am already a bit disgruntled with the loans people for screwing us around a few weeks ago, Ive said I wouldn’t do it unless they covered the legal costs – as Lawyers are needed (they are the trustees that changed). ASB have agreed to pay $250.00, so I’m instructing the solicitors that if it takes more than that, they need to stop working on it and tell me. I’m not paying for another bank stuff-up. They wont reduce my bank fees, so I’m not in the mood to indulge them right now.
I’ve also said that I need it in writing that the old guarantee is canceled, and that they are only wanting us to guarantee the amount of the outstanding loan – a rather large $210,000.00 less than the original guarantee.
Banks will try and sneak in a silly amount, but you can tell them to make the guarantee for the size of the loan only – it will have a clause in there that they can come after you for any associated costs and interest anyway.
I wait with baited breath to see what they will do.
One of the things to note about this situation, is that you may be advised to set up a family trust when you come to New Zealand. Usually on the premise that it protects your assets such as your home. But then the bank makes you sign these guarantees, and they bypass the whole family trust anyway. SO don’t be fooled. We are happy to have a family trust, because we have a business and investments, and it will to some extent protect the home my parents and brother live in if we stuff up. But every business loan we have has one attached, so if you go belly-up, the banks can come after us – there no hiding.
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Tax Changes in New Zealand: What’s Going Down.
Filed under: Cost of living, Economics, General Budgeting, Jobs & Work
I thought I would start this with the (possibly) good news.
In fact this bit is really good – if the new Zealand government were do it, it could make life very cosy indeed for Skilled Migrants who can earn relatively high salaries. (Right up until New Zealand companies screw you over by saying that you don’t need to earn as much now anyway).
Top Income tax Rate could go to down to 30%.
At the moment if you earn over $70,000 (by no means what should be considered a high salary) you pay 38% tax on every dollar over that level. Now this is being touted as saving someone about $20 a week – which really isn’t a whole lot.
But what happens if you earn $100k a year?
I’ve worked out that if just the top tax bracket comes down from the current 38% to 30% then you end up paying $406 a month less in tax. So instead of your take home pay being about $5,831 it would now be $6,237.
That’s an extra 116 coffees a month!
(Rough calculations only – this does not include ACC or Kiwisaver deductions.)
Also, trust and company tax rates may be going down – but it’s a bit unclear. The Tax Working group says it wants to make personal, trust and company tax rates all the same to avoid people being able to siphon off income into lower tax bands. So dropping the personal tax rate to 30% and then dropping the company tax rate below its current 30% doesn’t actually make that happen.
Why is this happening?
Because looking at this graph below shows that until you earn over $240,000 a year in New Zealand, you are better off from an Income Tax point of view moving to Australia because their income tax rates are cheaper. This of course completely ignores whether the cost of living is higher in Australia – but its something that is causing a lot of Kiwi’s to move.
In fact – this whole tax report seems to start with the theory that personal income tax rates must come down. That takes up roughly 5 pages of the report. The other 74 pages are all about the taxes that need to go up in order to pay for it.
There’s a surprise.
We will apparently know exactly what the income tax rates will be in May this year – at the budget. When we will also get the bad news about who amongst us has to pay for it all.
I don’t think that’s going to be a good day for me.
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