Tax Changes – boring but important.
Filed under: Cost of living, Economics, General Budgeting, Property Investing
In fact so boring and dull, I’ve been putting off writing about it for weeks. But I figured I really ought to get it done, because it could make quite a difference to whether emigrating here is affordable for you or not.
Kiwi’s generally think they have really high tax levels. Coming from the UK, I have always thought they are wonderfully cheap, and its one of the reasons I have always thought you could do financially well here.
So, I’ve already written about the taxes that should be going down – basically the top income tax rate. The finance minister has now “suggested” that the top tax rate will drop from 38% to 33%. That in itself will make a huge difference for many skilled migrants, even if it isn’t going down to the 30% that the Tax Working Group wanted. Company tax looks likely to go down from 33% to 30% – good if you are thinking of running a business, but won’t do anything to fix the fact that people supposedly use companies to hide income for tax purposes.
So the question remains – what’s going up?
Because make no mistake – these are not tax cuts. These are tax cuts equalled by tax increases. For every 1% drop in Income Tax, there has to be a 1% increase elsewhere. Whether people think its fair tends to depend entirely on whether they are paying or saving.
GST
The main increase is likely to be GST – up from 12.5% to 15%. Which basically means you get to keep more of what you earn, but pay more of it out when you spend. So depending on your spending habits, and ability to save money, you may in the end come out better off. At least this is a tax you have some control of. While your fixed expenses are – well – fixed, and they will go up – you can determine how much tax you pay on your non.-essentials by budgeting and shopping around.
Closing a Working For Families Loophole
There’s also talk of making sure that property investors can’t use their tax losses to lower their income and get access to Working For Families benefits. I’m personally a fan of that. Although we lower our income by claiming tax losses, as far as we are concerned we still earn $150,000 – we just plough a lot of it into our investments. So it actually wouldn’t occur to us that we were eligible for WFF (if we had kids).
Property Investor Taxes
Most of the tax hit that Property Investors were going to get look like they have gone. We are still going to take a hit somewhere – but not as much as the people in the Tax Working group (all of whom work in the Share Investment field) would have liked. Which means that a lot less people are about to be bankrupted. It looks like the main rise will be that you wont be able to claim depreciation on the building. It could make investing a property harder for lower earners, but we wont know for definite.
And so far – that’s about it.
Like most things – a report from a bunch of academics and vested interests comes out (at huge cost to taxpayers) which says a load of “academically sophisticated” ideas about reducing tax (I hope they took their own sandwiches to their meetings!). But when you boil it down to what might actually work – you aren’t really left with a whole lot.
We won’t know for definite until the budget in May, at which time everyone can work out whether they win or lose.
For us, while we are highly likely to lose a fair amount in any property tax changes – we also make a fair amount by our income tax going down. The GST will cost quite a bit on our fixed expenses – which is a pain because I’ve just reduced our fixed outgoings by a huge amount lately – and it will make me feel a bit deflated for a while.
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Kiwisaver Problems: keep your eye on your provider.
Filed under: Avalon's Money Thread, Cost of living, Future Finances, General Budgeting, Investing in general, 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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What can Evony teach you about how money works?
We’re fond of games, and personally we learnt a lot about property & money from playing things like Cashflow, Hybrid Property Game & of course Monopoly.
So to continue our series in things to learn about money from unlikely games you just wouldn’t expect, we are proud to introduce; Nine things Evony can teach you about Economic theory, tax & the art of war.
For anyone who doesn’t know what Evony is, it’s an online real time game, similar to Civilisation. You build up a city with infrastructure, have to defend it from other (real) players, go and invade valleys for resources, or other cities for plunder. The game keeps going in real time even when you’re alseep. So you need to hope you have enough defense to see off any attacks while you sleep.
It’s very addictive. (And while it may well have the tag line “Free Forever” it can be bloody expensive if you want to buy Game Coins.)
In the game you get gold: from taxation, plunder or selling resources to other players that you ‘harvest’ from the land.
Resources you can harvest are;
- food, needed to feed your army, and workers;
- lumber, needed for building & weapons;
- stone, more building;
- iron, yet more building and some other weapons.
You can buy & sell these resources from other players through a marketplace if you wish.
So, what can Evony teach you about money?
1. Gambling & The Wheel of fortune.
Each day you get a free spin on the wheel of fortune, where you stand a chance of winning a random item which is useful to you in the game. Annoyingly the main screen keeps popping up all the really useful things you just wish you could get your hands on, that ‘other’ players have won on the wheel. Only they are the exception, not the norm. Unless you are a guy called DeMontfort, in which case you are an exceedingly lucky git!
So just like with the real lottery, you keep hearing about all the great thing other people have won. Except when you play, you only win crap. Having used my daily spin for a couple of weeks now, I’ve yet to win anything really useful. Mostly I’ve won resources, which I was building anyhow.
A bit like a free ticket for next weeks lottery.
2. Taxation
You need Tax revenue to pay for Academic research, buy resources in the marketplace, and pay the salary of your hero’s. Two things define how much tax revenue you get, your total population and your taxation percentage. The higher your taxation level, the less popular you are, and the lower your overall population, hence a reduced tax take.
Low tax(naturally) gives you low tax income. High tax (also) gives you low tax income.
Why governments need to spend millions on “working groups” to tell them this I have no idea. They should play Evony and save the money for really important stuff. Like expenses claims.
There is a balance between population and taxation levels, which is around 50% tax. Not that we’d like the Tax Working Group to suggest this to NZ govt., and just look at the starting exodus of people from the UK because of impending 50% tax rates. Tweaking your tax rate for optimum income isn’t necessarily the best policy if you want to grow your city.
Unfortunately in the game, a 50% tax rate means that you have to invest a huge amount of time & resources building housing for people, and only 50% of it is occupied. Lower your tax and more of your housing stock is occupied, and you have more people available to work in the fields or join the army.
So just like real life, low personal income tax attracts people to your city, who then work in productive functions. As a Govt. you then have to balance your spending so you don’t run out of money before you’ve built that shiny new Town Hall.
3. Plundering – a great historical tradition going back millenia. Today we call it war.
If you can’t, or don’t want to, harvest the resources you need from your own lands and build a sustainable economic base for your city then you can always steal it off of someone else.
Only you need an army to do that.
So you need some ‘basis’ things like; resources, buildings, academic research, idle population and a hero before you can do that.
Plus you’ll need defenses once you nick the stuff, so the other player can’t nick it back.
If you’re lazy with either attack or defense, you’ll lose the fight, your soldiers all die, and you have to replace them. Back to needing to harvest resources again.
4.It’s all about budgeting!
The game is all a big balancing act, which we more commonly call budgeting. If you have low taxation, then you need to plunder for gold. If you don’t invest in your own infrastructure (resources), then you need to plunder for the resources you need to build. And of course the bigger you want to build things, the more plundering you need to do. The more plundering you do, the further away you have to travel to do it, until in the end you invade a city because it’s building a catapult which could reach your city within 45 minutes.
All of which can be minimised by budgeting well, spreading the investment of your resources back into making more resources, building more housing, or increasing infrastructure. All the time keeping people happy.
5. Hero’s – today we call them leaders, less politely we’d call them politicians.
In a very odd parallel here, you recruit your hero from an inn.
Where they hang out until someone gives them a job.
Only then, they demand a feasting hall be built in their honour, and they hang out there while you pay them a salary for, well, feasting.
The more hero’s you have, the bigger your feasting hall needs to be. Which takes time, gold, resources etc.
I don’t need to say much more on that do I? 
6. Hero’s – part 2.
- In order to enhance the speed at which your people build things, you need a good mayor with high political acumen.
- In order to enhance the speed at which your academics under take research, you need a highly intelligent hero.
- In order to train your armies quicker and win more battles you need a hero with high military skill. Ideally you should have two of these, one to head off and fight a battle, while the other stays at home training more armies.
Typically these three attributes are not found in one person, and ideally you actually need four hero’s to make your city run well. For example if you demote your mayor, so you can send him off to battle, then the population slows down their working speed – i.e. while you leader is off fighting a war in another country productivity goes down.
Amazing how well this matches real life through the centuries eh? Of course if you want to fight lots, either for plunder or conquest, you’ll need more military leaders. Which require a bigger feasting hall, larger inn’s and higher salaries. And if you want to ‘entertain’ a foreign ‘dignitary’, we call them leaders who have been taken hostage in a fight, you need a bigger feasting hall! (yet again)
Basically, provide your politicians heroes with lots of perks, particularly alcohol, and they will love you and do what you want them to.
7. The Marketplace: commodity trading is a great way to make money.
The marketplace allows you to buy and sell the four basic resources with other players. Prices fluctuate a lot, even during a day. However, just like a real economy & stock market you can place an order for a quantity of food at the price you’re willing to pay, and wait for a seller to come along and accept that offer. Just like real stocks, you can see the highest prices people want to buy stuff at, and the lowest prices people are willing to sell at. A very active market has a small, or non-existent difference. A slow market for resources not in demand will have a big difference.
So just like the real economy, you have a price at which sellers are willing to accept for their item (let’s call it a house), and a price buyers are willing to pay for that same item, and eventually there has to be a compromise in price by one party for the sale to happen. And just like the real economy, you have lots of people selling food, so the price is low, and as a buyer you can ’shop around’, i.e. wait, until a seller comes along who is willing to meet your (low) price.
8. Academic research.
Part of the game requires you to research scientific advances to help you progress in the game. i.e. build things quicker, get a better defense, attack or movement speed to your armies. So just like the real world, where academics need research grants from Govt., here you have to pay gold & food for those academics to figure out how to make a faster wheel. And just like the real world, with a highly intelligent academic honoured in your feasting hall, academic research progresses faster. Academic research is one of those thing to invest in early, so when you’re trying to build a really big something, it only takes a day or two instead of weeks (real time!)
9. Alliances
Alliances are very important. A good alliance will come to your aid when you are being attacked by sending troops to help defend your city, or other troops to attack the city of the person attacking you. A really good alliance will also make donations of resources when you need them, to help you build your city or army. They’re also there to give sage advice. So whether it’s friends, neighbours, work colleagues, fellow countrymen, other countries you know well, or countries you can’t even spell – joining an alliance and working together means you all benefit.
Bake a bigger pie.
Failing that, your alliance may plunder the pie’s of other alliances, but teamwork always gets you more pies in the long run than playing fighting alone.
Tax Working Group – Why?
Filed under: Economics, For the numpties amongst us, Future Finances, General Budgeting, Investing in general, Jobs & Work, Property Investing
(Other than whacking “rich pricks” over the head with a big stick for being greedy of course.)
Well, for a start – the National Government claims it doesn’t actually want to increase overall tax. And if you believe that – I’m the tooth fairy.
What they want to do is move away from taxing income, to taxing capital – or wealth. For the purposes of this – you need to understand that Wealth is not about how much you earn – it’s about how much you own. So if you have scrimped and saved and accumulated assets that are worth money – they want to tax you on it. Because as previously discussed, it’s not fair that you scrimped and saved to accumulate wealth.
And if Income Tax is too high – it discourages people from getting better jobs and earning more money because they will lose too much of it in tax. And that of course means they have less money to spend. And economies don’t grow if people don’t spend.
The other main goal is to “align the tax rates”. This is because at the moment, the top rate of personal tax is 38%, whereas tax on trusts is 33% and tax on companies is 30%. Which means that taxpayers who would normally be charged 38% can “hide” their income in trusts and companies to reduce their tax.
So dropping the top tax rate to 30% should stop us having to do this.
To see why in theory they need to do this – you need to look at what happened when Michael “I hate rich people, even though I earned a whopping $276,000 a year plus tax-free expenses” Cullen, introduced the 39% income tax bracket.
What this shows is that the year after the tax was introduced, there was a huge spike in the number of people paying tax on 60k a year income, because they used measures to legally reduce their incomes down to that level.
So in trying to tax “rich” people – they kinda failed.
Now – the new government wants to make it “fairer” and stop that happening. Unfortunately there is every chance this too will fail – because in general – the richer people are, the more they can move and are prepared to make choices about where they live and what taxes they will pay. And there’s always loopholes.
Like us for example – who moved from the UK to get away from 51% tax on our income and new and more colourful taxes being imposed left right and centre.
So in general terms, lowering the top tax bracket is a good thing. I just can’t get my head round why taxing people who have invested is a good thing to replace it with. It’s kind of a big incentive not to be financially stable and able to support yourself in retirement.
Personally – in the perfect word in which I am the benevolent dictator for life – I would insist that Governments have to stick to strict budgets, have to stop throwing money away, and treat the money they take in taxes with some respect, and the taxpayers as something other than a constant deep well of extra funds every time they fail to stick to their budgets. Like setting an $11 million budget to refurbish the Supreme Court building and then spending $81 million instead because taxpayers won’t complain.
Which is like budgeting to retile your bathroom, and deciding instead to knock your 3 bed house down and build a 70 bedroom mansion instead, and demanding the overspend from your boss.
The thing about this is that if we as the people overspend each month – we cannot in fact go to our bosses and demand that they pay us more. But the government can do that with tax – because if you don’t pay it – they can send you to jail.
So while the “why” may be sensible and in some ways a good thing – it’s kinda fixing the wrong problem. We don’t need to give them any more taxes – they need to stop wasting the money they already screw out of us.
Please bear in mind that the Tax Working Group changes are recomendations – and may not happen.
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How shall we pay it back? By having a plan!
Filed under: Cost of living, Economics, For the numpties amongst us, Future Finances, General Budgeting, Hubby's Views
I was working on an event about CFO’s the other month, and needed some humour to illustrate advice you don’t want from current or former Financial Chiefs. With much joy, I found this;
And the following interview conducted by the BBC, of a UK Govt minister talking about how the UK Govt. is going to pay back the 606Bn UKP debt it’s due to rack up in the next couple of years. As I can’t find the link anymore you’re have to forgive the slight paraphrasing. The interview really did go something like this;
BBC Interviewer -- How will you pay it back?
MP -- by having a plan!
BBC -- and what’s the plan?
MP -- The plan is to pay it back!
BBC- Yes, and what is the plan?
MP -- The plan involves passing legislation saying that we’re going to do this, it’ll have targets!
BBC -- Yes, and we have targets for everything including NHS waiting lists, University education etc. and none of them have been met.
MP -- No they haven’t, and that’s because of the 18 years of Conservative Govt ruining the economy, but this is different.
BBC -- How?
MP -- Because we’re the Govt, we say we’re going to do it and we have a plan.
BBC -- Yes, with respect minister, having a piece of legislation doesn’t tell any of us how you are going to find 606Bn pounds over the next four years (assuming you win the election), to pay back this debt. How can you possibly pay back this much money without making savage cuts to public spending?
MP -- Well, it’s quite simple -- we have a plan. To pass legislation. Which will have targets. And we wont need to cut any public spending, because public spending is what will drive the economic growth to bring us out of recession.
BBC -- So lets be clear, you’re not going to cut spending, you’re not going to raise taxes significantly, where is the money going to come from?
MP -- As I said, it’s really quite simple, we’re going to have a plan.
BBC -- And the plan.. -- oh forget it.
How much to spend at Christmas?
You can tell its Christmas here, not by the snow, of which there is a distinct lack, or the cold, of which there is no lack. No – the sign that Christmas is only a few days away is the number of news reports about how much we are spending, (or not) and how fast we are spending it.
It seems that “average” kiwi is spending about $500 on Christmas this year. Of course – there’s absolutely no information on how they averaged it – but $500 doesn’t sound like a lot.
Worryingly – we are having a rather “frugal” Christmas this year – basically because we are saving up to get the area around our swimming pool extended, and we didn’t have quite enough to do it this year. And yet we have still spent just over $500 each, and that doesn’t include about $150 on extra Alcohol and food. And of course – the amount is low because we made the most of the awful exchange rate, and bought the books at Amazon.co.uk – which saved a few hundred dollars.
Mind you – we have spent considerably less than usual, and mostly of that’s down to the fact that we really don’t “Go Christmas Shopping” anymore. None of us are what you could call Shopaholics, and the mere thought of having to shop along with hoards of others just tends to turn us all a bit queasy.
The biggest thing though is our recent aversion to “stuff”. Having got rid of so much of it before emigrating – we all just have a hard time accumulating more of it. Instead, we use Christmas as an excuse to spoil each other with books – something that we don’t buy anywhere nears as many of during year now that live in a world without “3 for 2″ offers, and discount books.
So on the upside, I still have about $1000 left of my Christmas savings (I save $200 a month towards it) – which will mean I should be able to afford the concreting in time for next summer. In the meantime, I have a few days of cooking scrummy treats for the family, and not panicking about where to park.
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“Made to make your eyes water” Life Insurance Premiums.
Filed under: Avalon's Money Thread, Cost of living, Future Finances, General Budgeting
We are still on the hunt for decent life insurance, given that we had to pull the cover from ING, and would like to pull the cover from ASB as well.
If you are moving here from the UK – whatever else you do – make sure you have Life Insurance and Critical Illness Insurance in place before you leave and make sure you will be covered once you emigrate.
Because I can almost guarantee you will die of a heart attack one you see what you are expected to pay for it here. Its outrageous – a bloody rip off.
I explain this in more detail in the book, but basically – in the UK the premiums are set according to your age when you take it out.
Here they just go up and up and up. And up some more. And then just when you really need it – from about age 65 onwards – you would need to be a multimillionaire to afford the premiums.
We are currently looking for about 1.4m in cover. Now I know that sounds like a lot of money – and possible you might thing it’s a bit arrogant to think that Hubby would be worth this much (I am worth considerably less which is a bit depressing). But this is because we have rental properties, with mortgages on, and they need to be paid off if Hubby croaks).
If we get stepped premiums – which go up every year – then we pay about $1500 a year for the premiums ($125 a month). If you get level premiums (which stay level till age 65 and then “wallop” you with a hike you just would not believe) then we have to pay over $6000 a year ($500 a month). The stepped premium hits a truly bewildering $44,000 a year by the time you get to age 64.($3600 a month).
Compare this to my UK life insurance (which includes Critical Illness cover) costs £10 a month, and will do until the day I die. Even if I’m 127 years old.
We worked out that till age 65 – the difference in payments in level and stepped over that time makes nearly $60,000 more to get stepped premiums.
However our Insurance Broker sat me down and told me I should revisit my views on this – and look at the cost NOW. With our budget being squeezed to within an inch of its life because IBM is too tight to give even cost-of-living pay rises (but can pay $80,000,000 for a new data centre) we simply cannot afford $500 a month on premiums.
So the plan now is to take stepped premiums, and as we pay down mortgages – reduce the cover and thus try and offset the rise in premiums each year. Still – it annoys me that Kiwis so easily get ripped off.
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Avalon’s Money Thread: Working out our net worth.
Filed under: Avalon's Money Thread, Banks, Economics, General Budgeting, Investing in general, Mortgages in New Zealand, Property Investing
We’ve done the budget, we’ve made some decisions, our personal Fixed Rate mortgage comes up for renewal in January, and we have decided to rejig the way we pay our mortgages.
All that was left to do was to track what our Net Worth was – which given the economy was a highly daunting task to be honest.
Your Net Worth is basically the value of what you own (assets) minus the value of you owe (debts). Unlike a Budget, which tells you what you are going to do over a month or year – your Net Worth tells you how much you have right now. Today.
It’s not difficult (especially if you have your accounts in order and your paperwork filed)– just a bit depressing at the moment. Because I like spreadsheets, and I’m lazy, I just copy the same spreadsheet from last year and fill in the numbers – its quite straightforward. In fact the only difficult bit to be honest is grabbing the bits of paper that contain the info you need.
On one side I have a list of all the assets: property, banks accounts, savings accounts, shares, pensions, car, and household goods (Insurance value is the best way to determine that).
On the other side are the mortgages, credit cards and any loans.
Take one from the other, and what is left is how much you are worth today.
In our case – about $250,000 less that we were 2 years ago.
I kid you not.
So why am I not crying into my coffee right now?
Well, Net Worth is a really good indicator of how you are doing financially. But it has to be taken in context. Most of that “wealth” is paper money. It doesn’t really exist. I don’t have $250,000 less dollar coins than I had – it’s just that my properties have gone down in value. In time – the value will go up again, and so will my “wealth”.
It becomes an issue if you want to borrow money and maximise how much money the banks will lend you – as they want to know the value of your assets. When I spoke to the valuer to get ours revalued – he said that he’s never been busier with banks insisting on clients getting up to date values on all their properties. While this can be annoying – I have to say I think I’m actually with the banks on this one.
I spoke to ANZ the other day about the possibility of refinancing a rental (the funds to be used to reduce personal mortgage – so no extra lending overall). They won’t lend more than 70% of the value of a rental, and my mortgage was for 75% already. The thing is, while doing this is defiantly for the banks good – it also prevents us as buyers from over extending. I think we personally got lucky that the recession hit so fast just after we bought our 3 rentals and couldn’t buy any more. It prevented us going mad, getting caught up in a storm and going belly-up which has happened to an awful lot of people.
We have “protected” as much as we can of our net worth by paying down as much debt as we can as fast as we can. So while our assets are worth much less, so are our debts. There is actually a lot you can learn from a recession, and if you can get through this and come out the other side – then just think what you will be like when the economic climate improves.
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Applying for a new credit card.
Well, it was easy enough to apply – just fill in an online form at Kiwibank.
If only.
So first off – why on earth would I want a new credit card? I’m not a fan of them, and yet I already have three. The problem is the major rip-off that is most reward schemes in New Zealand. The misleading “Flybuys” that so many people go to great lengths to accumulate will only let you actually transfer points into Air New Zealand Airdollars if you own a BNZ global plus credit card. As we had to give ours up – due to BNZ allowing other people to use our credit card details with impunity, and then getting shitty with us when we dared to object to their incompetence –we are no longer able to use “Fly”buys to – well – fly anywhere. (And the other things you can buy with them are a waste of time anyway.)
However we did quite well with our ASB cards. ASB run a rewards program, which costs $10 ever six months, for each person on each card (so with 3 joint cards that’s $60 every 6 months). Because all our spending goes on Credit cards – we were making enough points for that to be worth it.
Except ASB, in the way that only banks can be stupid enough to do – keep altering the scheme to make it less attractive. First – they stopped allowing you to use your points to pay your bank fees – which is something I thought was brilliant. (I really don’t want a bleedin’ toaster – but a cut in bank fees is worth real money). Then, just recently – they have decided that we can no longer change our True Rewards in Airpoints Dollars at Air New Zealand. So we have arranged with our manager that next time our TR fees becomes payable – we are removing it for two of the cards as we don’t do enough business on them to make it worth the cost.
Step in Kiwibank.
They are now offering a GoFly Credit card – where for every $150 spent you get $1 in Airpoints dollars. With a platinum card – you get $1 for every $90 spent.
Magic.
And the best bit – although the card fees are slightly higher – you don’t pay extra to join the reward scheme (they can set up an Airdollars account for free – saving the $50 that Air New Zealand want to scam you for). So we are going to pay a whole dollar more ever 6 months on our fees. I think I can live with that.
Really – the only downside was the application process. I filled in the online form, but it won’t let you apply for joint accounts online. So I applied in Hubby’s name (as he is the one with the income), and then phoned to add some details to let them know this would be a replacement card rather than an application for extra credit. Only Kiwibank at this point need Hubby’s Permission to speak to me.
WHAT???
I’ve just applied for a credit card for him – and now he needs to give permission? Because it’s HIS account – not a joint account. Well – can we make it a joint account I asked – since that’s what we really want in the first place? No – not without his permission.
Thankfully Hubby was here – so I threw the phone at him and asked acidly if he would give Kiwibank “permission” to speak to such a lowlife as myself. When he stopped laughing – we managed to get the account application converted to a joint one – where now I am considered eligible to be spoken to.
Sheesh – banks. Hate them all.
We should know by the end of the week if Kiwibank consider us worthy to have an account with them. If they have any brains they will – because we are looking at alternative banks for our mortgages all the time – and this is a way of showing us that they are a bank worth doing business with. It never ceases to amaze me how much the New Zealand banks see their customers and potential customers as if they are something they have just stepped in – rather than the source of their much needed income.
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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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