February Expenses and Savings!

Oh man, the things I did this month. WAY MORE SPENDING! But also so much AWESOMENESS!

Took a plane to Christchurch to watch my brother in the Coast to Coast. It’s a mad event where people run/cycle/kayak from one side of the South Island to the other (IN ONE DAY!). It was an amazing day and quite emotional. I was really proud of my brother but it was pretty hard watching him at some of those checkpoints, I could tell he was in a bit of pain but he just kept on pushing. It was a 14 hour day of racing. I wouldn’t have missed it for the world it was really inspirational.

dbikesupportteam

dylkayakdylfinsh

My brother had a very deep connection with my Grandparents. Both have since passed and my Grandmother suffered through an oesophageal cancer. This was the second time he’s done the coast to coast and each time it was to get donations for the Cancer Society. His goal was to raise $24,000 he’s pretty close at $15,657. I would not be surprised if he raced again just to get to his goal. He is that kind of guy.

So a weekend away certainly added to the budget, but I don’t regret it at all. I also had a few other unexpected expenses. Last months water bill was double the usual! Why? Well it was A BLOODY LEAK. Under the concrete floor of the garage. Re routing the line coast $864! Also my laptop seemed to be dying a spasmodic beachball death but a new hard drive seems to have solved things ($173). Cheaper than a refurbished laptop thats for sure. There’s years left in this baby. Woo! Thanks to husband for perseverance on that one! So many OS installs.

Oh and I went to the dentist : /

So here’s the damage.

Screenshot 2016-02-29 20.34.19

I had to top up the rental property mortgage this month. But that was only 2% of the budget.

Oh and we took on a youth. Yep we have an 18 yr old living with us, they are paying a small contribution towards expenses but really its about helping them get some qualifications (high school GED I guess for those in US). We have free second chance education for anyone under 19 who dropped out of high school. So extra groceries and what not to keep the youth comfy. (Apparently they like the nutrigrains and mac and cheese)

Screenshot 2016-02-29 21.27.09

 

Spending money – yep a large category. It was buying YNAB, a new laptop hard drive and some craft beers. That’s it!

Clothing – I gifted my husband some new undies. No regrets.

Holiday spending – Damn I ate out A LOT on that weekend away. Sometimes cause of family pressure. But it was worth it. I also pre booked some tickets for next months Beerfest getaway.

Restaurants – One Saturday date night at Deep Creek brewery for husband and me plus two pizza nights, one at home and one at a friends for our D & D night.

Bonus month because I ended up doing two weekends on-call for extra monies. (Usually only once a month) So income was up a bit.

Still managed to save heaps despite the speedy month! It feels like even a small amount of discretionary spending easily leads to a budget blowout. $8326 is just such a massive amount of money.

 

I think I just made my first rich person mistake…..

So I have a stock tracker app on my phone and I track stocks online with my brokerage account.  I mean, you check our investments EVERYDAY RIGHT?!

No?Preview

Just me then?

k.

Anyway something wasn’t feeling right, my phone was tracking MELCA (Meridian energy installment receipts wtf) and the price never seemed to change. It was weird. I thought it was just a glitch in the app.  I finally got off my lazy ass and decided to double check, I went to the online share registry and discovered I had actually purchased MEL (Meridian energy ordinary shares).

Anyway the shares are worth $1000 more than whatever the hell I was tracking.

Best one day gain ever.

So there you go, my first ever rich person mistake! Thankfully in my favor!

 

Why I’m not maxing out my Kiwisaver and why I’m not worried about it.

*For the rest of the world Kiwisaver = 401K, retirement fund type thing.

I only put the minimum contribution into kiwisaver. A measly 3% of my income.

ShockHorror

GASP! – but how will you ever save enough to retire?

Well there’s more to retirement than Kiwsaver and there’s some really good reasons to not put all my savings in there.

  1. Can’t touch it till you’re 65. It’s completely locked down for most people. There’s a couple of exceptions, if you are buying your first home (Doh did that before Kiwisaver was even a thing), if you are terminally ill (holy heck hope it doesn’t happen to me before I’m 65) or if you are in a desperate dire “exhausted all your options” financial meltdown.  None of these are scenarios I’d actually like to be in!  I want to retire early so I’m going to need access to my funds from age 45-50 so I can’t have everything tied up in Kiwisaver. This is the biggest downside to Kiwisaver for me, It just doesn’t work for early retirement.

    Supernatural-Dean
    Oh Kiwisaver, why you let me down.
  2. Double contributions doesn’t equal double returns.  Another shocker but let me show you an example. Lets take a 25 year old woman earning $45,000 a year. Here are her projected Kiwisaver returns at the different standard contribution rates using the get sorted kiwisaver calculator.

3%     $244,562 – minimum contribution

4%     $284,560

8%     $444,055

As you can see moving from 3% to 4% doesn’t give you a 33% increase in your final figure. Nor does going from 4% to 8% double the return. That’s because of the magic of the employee match at the 3% rate. Currently employers only match the minimum 3% contribution rate. They will contribute monies equal to 3% of your wages to your kiwisaver account. NICE! 100% return straight away, can’t complain about that.

Another reason why returns don’t double is the way the tax rebate works. If you save $1042.86 annually into Kiwisaver you’ll qualify for a tax credit of $521 which will be added to your Kiwisaver account at the end of every financial year. This is a great bonus to my savings but there’s no increased rebate when contributing higher amounts.

So whats the answer?

The solution for me is to put my money into other investments but in a similar automatic way. Automatic payments on payday shift my money into brokerage accounts and savings accounts safely away from my spendy fingers. I contribute monthly to index linked funds (with no buy in costs or brokerage fee and overall low fees) and these are diversified across New Zealand, Australian and International sharemarkets and I can access them as soon as I’m ready to retire.

GIF-Okay-OK-Agree-Agreeing-Yep-Aw-yeah-Yeah-Fuck-yeah-yes-John-Krasinski-Jim-Halpert-The-Office-GIF

But I keep the Kiwisaver going because the employer 3% match and tax credits are too good to pass up.

So You Want To Buy Some Shares……..On the New Zealand Share market.

 

I’ve noticed that for many of my friends and family buying shares is a mysterious and complicated process. They are more comfortable buying a house than trying to navigate the stock market! Not to mention the fear of losing all their money and the bad reputation shares have as an investment in this country (a hangover from the 87 crash). The irony is over 2.5 million New Zealanders have signed up for Kiwisaver and most will have some component of their retirement savings in the form of shares.

Screenshot 2016-02-21 13.23.10
NZX50 over the last 12 years or so

Choosing stocks yourself can be a difficult task, there is a lot of research available that you have to wade through and buying based on “gut” feeling alone isn’t really recommended. So its no wonder that most of us leave it to the professionals and get lured into investing in managed funds (whether in Kiwisaver schemes or not). The downside is that the purpose of these funds is to make money for the fund manager and they tend to do this by charging you lots of fees that eat into your profits (this is just my cynical view on it!). There is a good alternative to managed funds available, they require little management and charge the lowest fees. They are called index funds and are a very good entry point for investors who don’t have the time or the inclination to get deeply involved in researching companies, tracking balance sheets, following business news and all the other work required in picking your own stocks. They basically mirror the stock market and they are diversified covering loads of companies.

In New Zealand I’ve used Smart Shares and Superlife to buy low fee index funds. The Smart Shares are also traded on the sharemarket.

If you’ve got a handle on index funds and want to spice up your investing life with some individual stock purchases it really is quite a simple process. Its no harder than setting up a bank account or applying for credit. Here is a little information to help you get started and familiarise yourself with the process.

  1. Set up a brokerage account – This is the hardest part, if you are already with a bank that offers the service then its a bit easier. Basically you need to have verified copies of identification (e.g passport, drivers license signed by a justice of the peace or similar), a copy of a bank deposit slip AND proof of address (e.g a govt letter, council bill, power bill with your name and address). Gathering these is easy but it takes time and is a pain in the ass.
    You’ll also need to figure out your tax witholding rate. In NZ all the taxes are collected as dividends are paid out so the only obligation you have is to keep your witholding tax rate up to date. How handy is that! And no capital gains taxes for most investors (you have to be acting like a real bad ass day trader to attract the IRD’s attention, if you’re buy and hold you’re sweet).
    Now you’ll be asked to open a brokerage bank account, this is where you’ll put the money used for buying shares and it’s where the cash will end up when you sell shares. You can even have your dividends paid directly into this account (much better than having to deal with cheques). I’m with ASB securities, I’ve found them pretty chill to deal with. There are other brokerage companies that offer the same services, so do some research. You can start the application process online.ASB_Securities___Share_Trading___Home
  2. Common Shareholder Number CSN – You’ll be assigned one of these numbers after you sign up for a brokerage account. It’s how they track which shares you own. It’s your unique identifier. It will be sent to you old school styles in the mail. You’ll need to keep this in a safe place.
  3. Faster identification number FIN – You’ll also be sent a FIN. This is like your pin number for trading, 4 digits and easy to remember….maybe. Actually keep this in a safe place too. Again this will come in the mail.Other fun things to know!

The share registers (places that keep track of what shares you own) in New Zealand are Computershare and Link Market Services. Different companies use one or the other for taking care of the shares. You can get logins for both companies once you have a CSN (Common Shareholder Number) and they will send you snail mail or you can sign up for emails. They will send you mail every time you buy and sell shares letting you know your holdings. They keep records of dividends too.

OK I have a brokerage account now what?

  1. Put money in your account! – You need cash to buy those shares so set up some payments and get saving.
  2. Pick a stock – Once you’ve done your research and you are ready to buy you’ll need is the companies stock code. e.g. Auckland International Airport is AIA.
  3. Click on the buy button. – Somewhere on your brokerage site will be a button to buy, all you need to do is find it. Keep your stock code handy and enter it on the buy screen.Buying shares online
  4. What’s your price? – Buying shares is kind of like an auction, you decide what price point you want to buy at. In a way you are saying to the market how much you think the stock is worth. So you can put a limit order in for slightly less than the share last traded at to grab a discount. You can put a limit order in for any set price, you get to decide! However someone has to be willing to sell the shares at that lower price. If no one wants to sell their shares your order may sit there for a while.
    The other option is to buy at market. Your order will go for the current price offered by sellers. This is a faster way to buy.Place_an_order_-_ASB_SecuritiesThe opposite applies when you come to sell. You can set a limit sell order to make sure you get the price you want or you can sell at market.
  5. HANG ON, WAIT A MINUTE!How many shares should I buy? Well that’s a good question. What’s your budget? Lets say you have $3ooo. You can simply divide the $3000 by the share price and you can get an idea of how may shares you can afford to buy. Most brokerage accounts in NZ also charge a $30 fee (OUCH!) for each transaction. So you’ve got to take that into account. Buying only $300 worth or shares and paying a $30 fee doesn’t make much sense. Your share would have to increase in value by 10% to recoup the brokerage cost. If you can save up $3000 it makes the fee only 1% of the transaction, a much less painful figure.
    $3000 minus $30 fee divided by share price….. gives you the number of shares you can afford. If you set a limit price you know exactly what you are going to pay. If you set a market price you might want to make sure your brokerage account has a little cash buffer to account for any price movements.
    However that’s not all you have to consider. There is a minimum limit, you can’t just buy 1 share here and 2 shares there.

     

    Minimum purchase amounts for Shares on the NZX.

    2,000 Where the price does not exceed 25 cents

    1,000 Where the price exceeds 25 cents but does not exceed 50 cents

    500 Where the price exceeds 50 cents but does not exceed $1.00

    200 Where the price exceeds $1.00 but does not exceed $2.00

    100 Where the price exceeds $2.00 but does not exceed $5.00

    50 Where the price exceeds $5.00 but does not exceed $10.00

    25 Where the price exceeds $10.00

    e.g if a share price is $1.23 you would have to buy 200 shares for $246. If the price was $8.45 you have to buy 50 at a price of $422.50. Easy! Its just a little bit of basic math. For the most part you’ll probably want to buy parcels of shares larger than $1000 to minimize the impact of brokerage costs.

  6. Ok I’ve set a price and number of shares – Sweet, confirm the order and sit and wait…. if its successful you’ll get an email confirming the purchase. You’re the proud owner of some shares! Or maybe the offer will be too low and nothings gonna happen. If you really believe that the price you are offering is fair just sit and wait the marker may move and meet your offer. Orders made via ASB securities are valid for 30 days and the price may just drop to where you want it. You can amend your orders, cancel orders, create new orders at anytime so don’t panic.
    I hope this post has given you a little more confidence and given you some insight into just how easy it all is. At the very least maybe I’ve demystified it a little. There are plenty of optionS out there for you to get exposure to the share-market without doing it yourself but its easy enough to give it a go. Having a few percent of your total investments in individual stocks that you picked yourself makes it that much more interesting and satisfies my desire to meddle. I leave 98% of my investments alone but I can buy and sell my pet companies, feel like I’m doing something for my future without jeopardizing the majority of my investments.




Your Poverty Helps No One

“Your poverty helps no one” – I think I heard a property investor say this on TV and it really resonated with me.

Occasionally I read a bit of backlash against the middle class acquiring wealth. Terms like greedy and selfish are thrown around from time to time. If leaned towards conspiracy theories I’d say its a part of the upper-class scheme to keep the middle-class blaming the poor and the poor blaming the middle-class while they get away with doing whatever they want. When I let it slip at work one day that I own some shares someone jokingly (but maybe not so jokingly) called me elitist! If you are a property investor and own more than one house then you are “stealing” someone’s dream of home ownership.

poverty

As the title says “Your poverty helps no one”. Staying on struggle street is not some noble cause. I’m hardly “sticking it to the man” by refusing to play his game. If anything they want us to stay out of the game! The man wants us to stay in debt and to never try get ahead.

In my mind, trying to do better in life isn’t a bad thing and I reckon by being financially independent and retiring early I can actually help many people around me.

If I can afford to retire and still maintain my spending habits then not only does my job become available for someone else but the economy still has my input as I continue to buy things and consume. There’s plenty of hungry eager young people ready to work, the sooner I leave my job the better in their eyes! Who needs some old bastard clinging to their supervisor job till 3 years past retirement and a host of millennials secretly hoping those lunchtime cheeseburgers and onion rings will finally work their magic. Free up the jobs earlier for the next generation!

cheeseburger
mmmmmmmmm cheeseburgers

If I don’t have to work I can help out my family with childcare allowing the young families to get back to economic productivity faster and provide quality one on one interaction for a young person instead of constantly going to a crowded day care. I may also begin the financial independence indoctrination on the sly.

I invest heavily in my own country meaning company profits stay in the country and are not going to off shore investors. My investing helps keep money from flowing off shore, that’s got to be good thing.

If I don’t have to drag myself to a job all week I’ll have time to volunteer for organisations that do great work in the community enriching everyone’s lives.

I don’t need welfare or other safety net services, I have funded my own safety net. This leaves more resources on the table for those that need it.

Sure I’ve convinced myself that FI is a good thing, but envy can make people think some strange things. So for now it’s a stealthy path to FI but I won’t be feeling guilty about it that’s for sure.

5 things to make Mondays better.

nicage

If Mondays don’t make you want to retire early then maybe you’re a liar 😉 Or just one of those really well adjusted people who love their work or can find satisfaction in any job well done and have the mental fortitude and social skills to deal with annoying people….(so what’s it like being a rare and magical unicorn?)

Anyway if you need help with Monday’s (at least until you have enough money invested to QUIT WORK) I’ve spent the last few years working out mental tricks to help me get through the day.

1) I am already retired but they really need me so I’m working this one Monday for free.

Yep, I pretend I’m working for free, saving the day by turning up, being a rockstar for one day and never coming back. I breeze in pretending I have the gratitude of all my coworkers and managers just for turning up. I do my best work, everything a glittering example of why I’m the very best! Then I leave working, having saved the day, feeling awesome.

 2) Stoicism

The ancient greek art of pretending everything could be way worse than it is, so this Monday is really no discomfort. Well I’m paraphrasing quite heavily. I found it a guide to being happy without wanting for anything. Reading this book helped me for a few months before I went back to my feeling of dreading Mondays. I probably need to read it a couple of times a year for it to really stick. This book is quite a good introduction to stoicism and how you can use it to curb desires for excessive comfort and material things. A Guide to the Good Life: The Ancient Art of Stoic Joy*

3) Abundant fake smiles.

2016-01-19 13.16.40
Before!

Sure it makes you look a little manic, but doing is being. Yes the facial expression you wear can re-inforce your mood. So if you’re wearing an unpleasant expression you’ll feel even worse. So I slap on the fake smile until I feel better. Eventually that fake smile turns into a genuine smile and by the end of the day I feel pretty good! And the people I work with feel better too, I’m much nicer to be around.

2016-01-27 12.46.09
After !

4) They can’t all be bad – Hunt out the non-jerks.

A couple of my coworkers are pretty negative, but on the other hand there are a lot of brilliant people as well. So if I’m having a bad day I check in with one of these people see what they’re working on, if they’re not too busy I ask if they will show me it and tell me a little more. I learn something and feel refreshed and more enthusiastic about my work in 5 minutes. I wonder if these people know how much they lift me up when I need it.

 5) I’m here to grow and learn.

There must be an opportunity somewhere to learn something be it technical or even personal. I have to remind myself to hunt out the parts of the job that force me to improve myself. I don’t avoid the challenging tasks that others would rather fob off onto other team members. I sign up for any extra training offered and try to get as much out of the job as they get out of me. So my job improves me as a person and then I feel like its more worthwhile and satisfying.

Anyway I hope these thoughts help you get through your Monday where ever it may be. So until we all retire, Happy Monday everyone!

 

*Affiliate link

 

The Pak’nSave Christmas club card that has a better ROI than your bank

stickmanchristmas

“So I’m wondering how my local supermarket can offer better returns than the bank. I’m guessing it comes out of its margin on the groceries.”

Pak’nSave have a Christmas club card that gives you 6.4% simple return (not compounding) after 10 months i.e any money loaded on to the card between January and February will be worth 6.4% more when you access it in December (money loaded after Feb has a lower rate of return). My current budgeted monthly cost for groceries is $800. If I load that on to the credit card now it will turn into $851.20 in December. That extra $50 is enough to cover some of the treat items I end up buying for Christmas, certainly enough to keep my ham fiend of a husband drowning in glazed pork for the season.

To put it in perspective $800 in my banks saving account (which has monthly interest and compounding) would grow to $806 with the extremely generous interest rate of 0.75%. But that is before tax, so lets say more like $804. Not exactly thrilling.  Or I could put it in my Rabosaver for a whopping 2.25% return netting $818. (Again its before tax though!)

All these calculations make me think I’m mad keeping anything but the bare minimum in cash, its not really earning its keep!

Currently New Zealand also has super low inflation the and buying power of a dollar doesn’t change much over the year. This makes me feel better about keeping a months grocery budget tied up in a gift card for 10 months.

Pak’nSave has one of the best Christmas savings clubs I’ve seen for a couple of reasons. You can spend the money at anytime, if you need the money before December you can spend it at the store. Sure you can only spend it at Pak’nSave, but you are not locked into a pre-determined set of goods like some of the Christmas hamper clubs, so you can buy what you usually buy. Another bonus is that the increased spending power isn’t taxed.

Down side is taking that $800 off the table for investing and budgeting now. Then in December that $800 that would usually go on groceries should in theory go back into savings with a net gain of $50. Or I could load $753 now and it would net $800 on the card for December groceries. Take a $47 discount or have $50 more to spend in December? Other risks include inflation running rampant and my $800 is only able to buy a loaf of bread (unlikely) or that PaK’nSave go bankrupt (very low risk). What if I lose the card? Well as long as you register it on their website you can deactivate lost cards and order replacements.

chirstmas_club_new_logo_1

Another of New Zealand’s supermarkets offers exactly the same returns with their scheme but they are much a more expensive grocery store than pak’nsave. Also they have a few fancier gourmet product lines that I’d rather not get tempted into buying!

What do you think? Is it worth loading it up with my December grocery budget?

 

Squirrel Money -WHAT KIND OF NAME IS THAT?! – A New Zealand Peer to Peer Lender

Squirrel have been around for a while in the guise of mortgage advisors and brokers. Despite the cutesy name they already had a fairly solid reputation so when they started peer 2 peer lending I was eager to see their take on it.

Squirrel have gone down a more conservative path by not lending to those with low credit scores. This means the interest rates on offer are not as high as a provider like Harmoney (up to 33% wut!?) but this does give squirrel one massive advantage. It can afford to guarantee all its loans, so should a borrower default, you will still get your regular repayment. They call this “Loan Shield” and its funded by a portion of the interest collected (with seed money from Squirrel to get the fund started). For the risk adverse this is the solution you’ve been looking for with Peer 2 Peer lending.

Screenshot 2016-02-03 17.59.27

Interest rates on Squirrel seem to be in the 7-9% range for 2-5 years. When investing you select an interest rate and a time frame rather than selecting individual borrowers. Because of the loan shield there is no need to diversify your lending into multiple small notes so the whole amount can be invested at once or split into different loan periods of 2,3 or 5 years.

Screenshot 2016-02-03 17.53.19

The minimum investment amount is $500. While this isn’t all that high it limits how easily you can reinvest profits and principal repayments. For example I have $35 dollars sitting in my Squirrel account from principal and interest payments, at Harmoney I could reinvest that straight into a $25 note. With Squirrel I need to take the funds out and put them somewhere else to be utilised or add more money to buy  another $500 note. To a small time investor like me this is the biggest downside. I don’t like my money not earning its keep! It is probably less of an issue when investing larger amounts.

So far I’ve only invested $1000 with Squirrel. Strangely all my loans were paid back in the first month and then frustratingly Squirrel closed for Christmas. GAH! But with the new year I have reinvested and I should get my first payments on the new loans around the 6th of Feb.

I think Squirrel is great for regular investors and the retired. I would certainly use it instead of a fixed term deposit.  With the loan shield and interest rates more than twice of what banks are currently offering I feel it offers good returns that seem fairly secure. Squirrel is also about to introduce a secondary loan market so you can exit the investment early by on-selling to another investor should you need to liquidate.

Pros:

Loan Shield – Guaranteed payments woohoo!
No loan shark interest rates –  No make you feel bad
Pays the tax for you as you go
Interest and principal paid back monthly

Cons:

Difficult to reinvest profits if working with small amounts
Narrower range of interest rates compared to other P2P lenders
(But still better than a bank deposit!)
Currently difficult to liquidate (will be easy soon!)

*By the way I’m not affiliated with Squirrel, these are just my thoughts on it.

January Work Selfie Highlights

As you can see I pack my own lunch to save money….mmmm leftover roast chickens.

Packed my own lunch for all of January! Think of the savings!

Living the good life, while saving heaps.

I’ve found they key to really feeling like you are living the good life is to get back in touch with nature. Nature isn’t trying to sell you anything, make you feel less than you are for not owning something and it has no secret marketing agenda. It’s a wonderful reset for a stressed and over busy mind.

2013-01-05 15.17.24

So lately we’ve swapped pricey brunches for bushwalks and lazy afternoons at the pub for a picnic and swim at the beach. Truth is we are blessed to live near a multitude of swimming beaches all within a short drive. Thanks to urban planning in the 60’s large tracts of bush remain house free and there are many well-maintained walking tracks to enjoy, the closest is about 150 metes from my front door. (540 hectares of parks & bush reserves!)

IMG_0871

Find the nature closest to you, it could be a park or a garden, a river walk, a lake a spot to sit and stare at the landscape, a friends backyard or even a few potted plants/herbs/vegetables that you can take care of.

Nature is mostly free and amazing. Sometimes it’s hard to drag myself away from the laptop, but cultivating a love for the outdoors has been a very enriching part of my life. I’m still not up to the level of overnight hikes or camping (I’d miss my cosy bed too much!) but I am quite happy to spend the whole day hiking to a lovely spot and back. To be honest I like the fact that day trips are cheaper too as I don’t need to buy/borrow any camping gear.

1IMG_1607

Visiting new spots creates new memories and has stopped the weekends blurring into one big hazy blob of watching TV, browsing the internet and drinking too much wine on Saturday night. Instead I have memories of birdsong, wildlife, great conversation uninterrupted by cell phones and a feeling of wellbeing that just can’t be bought.

2014-02-16 11.01.30