Why you really ought to take out shipping insurance :)
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“Made to make your eyes water” Life Insurance Premiums.
Filed under: Avalon's Money Thread, Cost of living, General Budgeting, Retirement, Pensions and Kiwisaver
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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7 Things you should be doing with your money in any economy.
Filed under: General Budgeting, Retirement, Pensions and Kiwisaver
It’s all going to hell. Times are tough. You may have to take a forced day off to prevent redundancies.
Ok, what should you do with your money? Where do you put it? How do you save money when you cant even afford your bills now?
Well, one of the books I read when I was starting out on my moneysaving and investing path, was The Richest Man In Babylon. This book tells a series of tales about a slave in ancient Babylon, who became very wealthy. Each tale relates to a different law of money. The really cool thing is that if you basically handle your money according to these rules – you will be OK.
Now this may be a tough time to change the way you handle your money – but I’m gonna be honest with you – there is never a “good” time to accept that you have been doing things wrong. When we did it – we fought for about two months while we tried to justify to each other why it wasn’t our fault that we were in debt and drowning.
So here are the 7 rules from the Richest Man In Babylon. I suggest reading the book – it’s a classic.
7 Cures for a Lean Purse
FIRST CURE: Start thy purse to fattening
Save 10% of your income
SECOND CURE: Control thy expenditures.
Spend less than you earn. Budget and track your money.
THIRD CURE: Make thy gold multiply.
Invest: understand compound interest.
FOURTH CURE: Guard thy treasures from loss.
Make sure you are insured.
FIFTH CURE: Make of thy dwelling a profitable investment.
Pay off the mortgage and own your own home – don’t rent forever.
SIXTH CURE: Insure a future income.
Make sure you have some sort of retirement fund.
SEVENTH CURE: Increase thy ability to earn.
No point working for the same salary forever – it is effectively working for less. Upskill and earn more.
Why you need to take note of the Victoria Fires.
Even in the UK, you will probably have seen the harrowing images of the bushfires in Australia. I wonder though how any people really take too much notice. You see, I remember seeing the news reports about wildfires in Australia and California when I lived in the UK, and it all seemed so – well – distant.
This week – not so much. Because at the end of that day – it could happen here. We too carry the risk of losing our homes to bushfires. On my Facebook page – there are a number of friends, including me – who are glad to see it rain. Given that a lot of us come from a very rainy UK – you could be forgiven for thinking we have indeed gone barmy. But we need rain. The ground in the Wairarapa, and all over New Zealand is tinder dry. Our gardens are dry and brown, the paddocks are straw, and the wheat has the lovely golden colour. And it will go up in flames instantly is some twat lights a fire for “fun”.
There have already been 2 serious fires in New Zealand over the past month, as the temperatures soar: one near Nelson, and one in Hawkes Bay.
If that wasn’t close to home enough: we had two fires on the same day, just miles from our house, a while ago. One was contained fairly quickly. The other was a Scrub Fire on the hill in front of our house. Thankfully for us – there is a river in a ravine between us and the hill – but it was a bit too close for comfort. The fire was lit by the farmer who owned the land: he had been stripping back the trees and vegetation on the hill, I presume ready to plant something else. The fires were apparently lit to clear the rubbish, and then all of a sudden – the wind changed direction. What was a legitimate and controlled fire, became a fire that got into the woods and undergrowth, and took over 8 hours to get under control.
Fire teams from all over the area came out, and yes – we did have the Helicopter with the buckets flying down into the river (thankfully there was water in it at the time – not so much now). The fire crews (volunteers) work for free – the farmer pays for the helicopter! We spoke to one of the Firefighters afterwards; he told us that there were a huge number of problems they had in fighting the fire. The main one being lack of water and there is no mains access up on the hill. Water had to be tankered in – in exactly the same way as we do if we run of rainwater in our tanks here.
Coming to New Zealand for a new life is a fantastic idea, and I encourage anyone even vaguely thinking about it to give it go. Just be aware that while on the surface, life might be quite similar; sometimes it’s very different. Simply understanding that you cannot just light a bonfire when you want to; and that fire-bans can be put in place. Be aware of the rules, and don’t end up losing everything. And get your house and contents insured. Just in case.
No insurance company can replace what the people of Victoria have lost. It will, however give them something to start again with.
We need to get our butts off the couch (or from in front of the Laptops) and get ourselves a pump for the pool. Our best access to water is to get it out of the swimming pool: but buckets just wont do it. We have been meaning to do this since we came here – and just haven’t got round to it.
This month has been a bit of a wake-up call.
How much is your life worth?
Filed under: Cost of living, General Budgeting, Property & General Investing, Retirement, Pensions and Kiwisaver
Yesterday we went to have a chat with our Financial Planner – Alan at FSB4. We really had to sit down and tackle our insurance policies: Life, Trauma, Critical Illness and Income Protection. None of which even I can consider exciting – but has to be done.
Now – generally when we have sat down with people about this – the conversation usually runs along the lines of the Sales person asking who much cover we want, and then getting us quotes for what it will cost us.
This one however –went a little differently (and I always like Different).
Alan asked us what we needed to cover.
So we had to go through all our mortgages, how we wanted to be “sent off” when we pop our clogs, how many people we wanted to supply flights for to send us off (Tough – you are on your own – pay for your own flights if you want to say goodbye!), any bequests, for how many years we wanted to not have to work if anything happened, and a really cool “Recovery fund” which is basically money we can use to help us “get over the trauma” of whatever goes wrong.
It was a VERY BIG NUMBER.
And – it’s going to COST A LOT.
How many suitcases stuffed with money we will need to spend to buy the level of cover we need – is being worked on. But I may have to add a shot of brandy to the coffee that Alan had better be buying me when we have that conversation.
Now – here’s an interesting thing: turns out we have “a lot” of investment properties (that’s 3!), and basically in times past – when people died – they just sell enough properties so that they can live of the rent. Only that ain’t gonna happen now – because prices have tanked. So one way or another – we actually need to make sure we can pay off those mortgages if Hubby is no longer able to earn.
We were woefully underinsured when we sat down and worked it out. At a rough guess – our Life Insurance is probably about half what it needs to be.
And also at a rough guess – we may need as much as an extra $500 a month to pay for it. As good as I think I am at budgeting – that is gonna be tough. We were due to do one of our Budget Reviews at the weekend, but I have decided that we may as well wait till we have some firmer numbers about the cost of this – and then at least I know what to aim for.
At that point – we have to prioritise our insurance requirements (because I’m not giving up my Coffee Budget for life Insurance – no way!).
Insurance and risk planning are things that tend to get forgotten about – but it doesn’t hurt to occasionally sit down and work out just how many $$$ your life is worth. It is probably an awful lot more than you think it is.
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