Are You Shafting Your Partner on Retirement Savings?

I keep coming across families and couples where one partner is not working. That’s cool, life happens, we’re not obliged to be non stop working machines. They are not working due to disability, other responsibilties to family (like taking care of elderly relatives) or they’ve taken years out of their career to raise young children. For whatever reason your partner is out of the workforce you cannot afford to neglect their retirement accounts.

At the very least you need to work out how you can contribute the $20.06 a week to Kiwisaver to at least get the full $521.43 member tax credit for the non-working partner. This is a guaranteed 50% return on investment and it would be foolish to ignore the chance to collect this.

Lets be honest, in New Zealand its most often woman who undertake the full-time care of children. But regardless of who takes on the responsibility those years not contributing to kiwisaver can really cripple your retirement savings. Looking after a family is unpaid work. Long hours, no financial compensation and sometimes the clients like to vomit all over you.

In New Zealand women live longer than men and need more funds to service their retirement yet so many families are neglecting retirement savings for non working women (not to mention when they are working they are often earning less so even more of a reason to make sure those retirement accounts are contributed to!!)Mothers need retirement savings too

Living off one income is hard but there are lots of ways to find an extra $20 in the budget. You owe it to person giving up their income to care for the family, you owe it to yourself and you owe it to your children. Assuming you are still together when you retire there will be more in the pot for the both of you, more money will mean a less stressful retirement.  You also taking care of your children by saving properly for your retirement, you wont be a burden to them, you wont cripple them financially by having to ask them to pay for any of your expenses in your old age.

 

 

September Spending

Graph of September Spending

Ah September, I attempted to be more mindful in my spending and reduced the grocery spend considerably. However beer expenses were up up up!

What I do like about looking at the graph is that our expenses after mortgage and savings are roughly a third of total expenditure. So once the house is paid off we’ll be able to really ramp up investing and our retirement expenses probably aren’t going to be as high as we think.

The Good

I managed to save a bit more money this month, I transferred money out of my checking account most days into my savings so I wasn’t tempted to spend it. Grocery expenses were down helped by more careful spending and a $100 voucher I got in exchange for taking part in a nutritional study.

The Bad

Spending money category or I may as well call it, the beer category. I bought a delicious amount of beer. Not only for drinking at home but I also went to my favourite bar’s 3rd birthday celebrations (free food and lots of special brews on tap for the occasion). Then there was my husbands album release party. Yep, my husband is among other things a musician and in his spare time he has been recording this album. He plays all the instruments, sings all the song, writes all the songs, does all the recording and he designed the cover! He doesn’t have a record deal or anything but we threw a a big party for all our friends and gave away loads of CD’s. I spent about $250 on the party. Worth it, it was the best fun we’d had in ages. Other spending money includes Netflix $12.99, Steam $5 and $80 booking a food and craft beer matching evening. I’m starting to think I should break down the spending money category a little further, but I don’t think I want to admit to myself just how much money I spend on beer.

Spending breakdown

The not so bad

Giving – It’s way down, I’ve only donated $174 so far this year, but I usually give more around Christmas. I don’t have an amount in mind that I want to give, its kind of ad hoc at the moment. I would like to be a bit more consistent with my donations.

Household goods – I bought two rugs online, we have hardwood floors and the rugs were on sale. They certainly make the place look more inviting but it was hardly a necessary spend.

Holiday spending – I booked a bus tour of craft breweries North of Auckland. It’s organised by my local craft beer club.

Transport – I used the bus a bit more last month and I had 2 Uber rides (both from events with beer consumption so I wouldn’t have to drive).

So many beer related expenses.

 

Burned by the $100 Pizza – A Split Bill Tale

Social outings can be disastrous when you’re trying to watch your spending, especially restaurants and bars. Most of the time I am a happy little introvert who likes staying in anyway but sometimes there are occasions you just don’t want to miss.

My family asked us out for dinner last week, I had been watching my spending so I did have some money left in my checking account. I was delighted that I could afford to go. Spending time with people I love and eating yummy food is a favourite activity.

My aunt chose an affordable restaurant, a gourmet pizza place. We checked the menu ahead of time and decided we could share a grilled duck and onion relish pizza (OMG yum) plus a glass of wine each. The total would come in well under $50 if we didn’t get tempted by any other tasty dishes (or the second glass of wine!).

At the end of the meal my Aunt announced that we will split the bill equally amongst the adults. I’m astounded as she often talks about her finances and I thought maybe she was watching her budget too. Even worse I feel too shy in front of my family to say anything. I caved and paid my share of the bill which came to ~$95 and some change. I have just paid $100 for a pizza and 2 glasses of wine and I feel terrible.

$100 Pizza split between 2 people
The most expensive pizza meal I’ve ever had. Ever.

So whats the solution? In this instance I will let it go because whats done is done, it was a special night out with some pretty amazing news being announced. (So I want to remember the night as a celebration!) Certainly I don’t want to be remembered as quibbling over the bill. However I learnt some important lessons.

For any transaction, know how you will be charged and don’t let others decide how to spend your money for you.
Lesson learned.

In future I will call ahead to the restaurant and see if they allow individual bill. Some places have let me order at the counter and bring my meal to the table with the rest of the group or pay separately at the end. I’ll also be upfront with family at the beginning of the meal. “Hey I’ve only got $50 for eating out tonight so I’m just going to split a pizza.” A little communication goes a long way.

It did get me thinking, what if I have been guilty of doing this? Have I ever put someone in the position of spending more than they wanted to? Perhaps I could be more sensitive to my friends and the social activities I suggest. For example I plan for spending some money every month on craft beer. I love it, I brew it, it makes me happy but I possibly have friends who get a little annoyed when I recommend going to the latest craft beer place, the beers are way more expensive than standard brews.

We all have different priorities for spending money and my must do craft beer experience is someone else’s $100 pizza.

August Expenses – Prepaying a Future Holiday and Eating all the Foods!

At the end of month I started to feel like my spending wasn’t really in line with what I wanted for myself. I slipped back into buying a lot of lunches and drinking in bars on weekends. Living large baby! I was also putting some of these purchases on the credit card and come pay day I was transferring way more than I was comfortable with to get the credit card balance back to zero. Time to be real with myself. I cannot afford to live like that and have the financial secure future I imagine.

There is $500 of easy money that could have gone into investments this month. Instead it mostly went in my mouth. (It was all delicious stuff to be honest). Between that and the grocery bill I do believe I can find an extra $600 next month to go into savings. It’s hard being focused all the time and its easy to just slip into the buy “whatever you think you need in the moment” mindset. With a little more thoughtfulness I’m sure I can do better.

I spent a lot on Fuel last month but I still have 3/4 tank as I’ve been catching the bus a few days a week.

I prepaid a trip to Nelson for the New Zealand Homebrewers conference in March next year. Even using airBnB accommodation costs are so high! Still it was 30% cheaper than a motel.

Still throwing money at the rental property to pay for a $2,400 heating unit.

And my last thought is thank fark I earn a decent wage and my extravagant spending habits don’t get me into trouble.  I often worry that New Zealand is becoming a low wage economy and I see lots of big corporations paying their workers very low wages, not even a living wage. They all do it and slowly but surely they are eroding the middle class and therefore their own consumer base. Companies want their workers poor and their customers rich, well guess what, your customers are your workers.

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I’ve Paid off my Maxed out Credit card – Twice!

Some lessons in life are hard to learn. So hard that you have to learn them twice. Credit card management is definitely one of them.

The first credit card I got was handed over to me with little ceremony when I was a student. It was my second year and I’d moved out of the halls of residence and into my very first flat on Cook st.

My campus had a branch of the National bank down by the (man-made) lake (full of huge eels that would eat the baby ducks) and students were eligible for an interest free $1000 overdraft and a credit card with a $500 limit. For a broke student it was just free money, I figured it would be easy to pay back once I graduated and started earning my kick ass amazingly high wage. (Yeah right, turns out science graduates aren’t nearly as in demand as I thought).

Some of the $1000 went on text books, I bought a woolen electric underblankets (it was a cold town!) and heaps of beer, takeways and …….. well I can’t really remember where the rest of it went. It just went! I probably bought CD’s and cool posters for my room.

Poster- Picasso Print

It wasn’t long before everything was maxed out. Each week my student allowance came in plus a little side income from working in a lab downtown. I paid my rent and everything else went into the overdraft but before the next pay day the overdraft was maxed out again. It wasn’t till a I finished university and finally got a full time job that I was able to pay it all back. Each fortnight I had to call the bank and ask them to reduce the overdraft by a measly $50. I learned the overdraft lesson and never used one ever again. The weeks dragging by and the embarrassing calls to my banking manger left a lasting impression.

The credit card however had no such lesson, the payments to visa were to this vague external entity. I never met anyone from visa and I never had to call. In fact I think they even increased my limit once I started working full time.

Fast forward to 7 years later and I was still always carrying a credit card balance. I thought it was normal. By now I had a limit of $3000 and things were getting dangerously close to that limit. The first hint that I wasn’t exactly managing things was when I made my first call to visa. I wanted a limit increase for a trip to vegas “just in case”. Just in case what I’ll never know because they turned me down. I had made a large cash withdrawal the week before. I mistakenly paid too much off the card that fortnight and hadn’t calculated enough reserves to make rent! The bank wasn’t too impressed with my money management skills.

After the trip added even more debt to my card I decided I had to tackle the debt. Each pay day I paid the bills that had to be in cash (e.g rent) then every single left over dollar went on the credit card. No cash left in checking, everything was now on the credit card. It was a huge payment and each payday bought the promise of progress. But I still had groceries and petrol to buy so I would use the credit card. It was a 3 steps forward 2 steps back kind of deal but I got there in the end.

The second time I maxed out my credit card was way worse. It involved spending money on family, spending more than I earned on day to day expenses and having nothing to show for $12,000 worth of debt. Yep twelve grand. It happened over several years. I didn’t buy myself clothes or gadgets or things like that. But I bought movie tickets, takeaway pizza’s, groceries, dinners out and a trip to the Gold coast for my partner and their children. So in the end I had massive debt and no assets to show for it. Deeply ashamed I hid my debt from everyone. I carried on as if everything was normal with this huge debt anxiety in the background.

This time I transferred the debt to a credit card with 0% interest for the first 6 months. After 6 months I transferred to a card with the same bank with a low interest rate (about 1/2 the standard rate). It took me about 3 years to get it under control. During those years I paid my mortgage and invested in kiwisaver. I bought shares but I didn’t mange any cash savings. Once I got the balance down to $1000 I started to save cash. Actual cash reserves. Looking back I was lucky to have a good paying job and to manage the rest of my money so I never got behind in repayments. It never became an “issue” or stopped me from being able to afford rent, power, food etc. It could have been a lot worse.

Now I pay the balance in full on my card every time I get paid. Transfer over enough money to zero that balance and sometimes it hurts the checking account a little because I’ve spent more than I thought. Even now spending on the plastic doesn’t trigger the feeling of spending my own money. Its a future me problem not a today me problem.

So thats my consumer debt story, going through the painful repayment process taught me a lot about money and how I interact with with it. So for that I am grateful. (Obviously I would rather not have spent the money and have it investments but we’ve always got to look for the silver lining).

 

 

 

July Expenses – SPEND ALL THE MONEYS

Oh sweet July, thank you for my tax return which allowed me to pay $4000 off my mortgage in one hit. BEST FEELING EVER.  It was a one off so not accounted for in these totals.

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Everyday expenses, are a little up this month since I was trying to remain in holiday mode (futile). Being back in winter and at work is all too bleak so I treated myself to some things. After about 3 years of buying bugger all clothing I splurged again this month on a couple of jackets, a winter and summer weight one both nice enough for work as well. As for the Household goods category, I replaced a duvet inner that had to be over 20 years old and was starting to fall apart. I bought a space heater for the teens room downstairs as its been pretty cold (ah I’m so nice. She has her very first job interview tomorrow). Car registration was due (annual car tax I guess for those non NZ’ers) it includes medical cover in the case of an accident and road maintenance .

So the odd transport cost because I caught an Uber home from my bosses 65th birthday. Spending money this month was contributing for a gift for previously mentioned boss. (She is awesome, she built her own house!). A movie date with my husband and loads of craft beers. Anyway I feel pretty spendy this month. I am trying to throw some money into my investment properties so I can get some improvements done. The Hamilton property needs heating installed which is planned for next month.

Utilities – I got a bit ahead on the power bill, so I didn’t have to pay much this month.

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As you can see I don’t exactly fall into the frugal category when it comes to spending. Sometimes I struggle with that and beat myself up over it. Other times I really need that little luxury in my life and no guilt over dinner out.  I’m sure it would be a different story if we had consumer debt or student loans to worry about, but thankfully we only have the mortgage to worry about.

May Expenses – Less than last month so that’s good!

Another month has rolled by and so the time has come to share my expenses with a bunch of strangers on the internet. How exciting for you!

 

Circular graph of may Spending.
May Expenses
~$270 less than last month!

So lets break it down

Mortgage – nothing new here, recent twitter poll suggests I should use my upcoming pay rise to increase the payments. I was more for spending it on beer but whatever.

Savings – Still saving a grand a month. I wish it was more. Once the bloody mortgage is dust I’m gonna be savings heaps!

Groceries – Feel like I spent a lot this month but it works out as ~$75 per person per week. My colleagues think this is about right, but they are also big spenders.  ¯\_(ツ)_/¯ Not really sure how much more I can cut from this category. (Or if I even want to make cuts!)

Everyday expenses – Well I visited my Mum which takes a whole tank of gas. Sorry mum I love you and everything but it costs me $80 a visit. Please move closer. I got an ear infection (fun!) and had to go to the doctors and buy medicated drops. On the winning side restaurant spending was cut by half as I made more of an effort to be organised with food! e.g. Packing lunches and having back up meals in the freezer.

Now I know spending money is kind of a vague category into which everything else just gets dumped but I don’t want a thousand little categories in my budget and I’m gonna tell you all the things anyway. This month I paid to have our teen boarders glasses repaired $45, Mothers day gift for my mum $40, loads of craft beer for a BBQ at my Dad’s house $38, I bought an art print $20 (that I still need to have framed) and I bought a few craft beers at various weekends. A lot of money spent on beer this past month.

Hobbies – I brewed a toasted coconut oatmeal stout, so hopefully that will cut down on the beer spending next month. I do need to get a refill for my CO2 cylinder and thats gonna cost around $4o but it lasts about a year.

Everything else – All pretty normal except for my annual credit card fee. I’m going to ring the bank and see if I can get that waived, I have a lot of lending with them so they make plenty money off me already. I topped up my rental property accounts to make sure there’s enough money for expenses. The household goods category included a new frying pan and an impulse buy of new winter blankets for everyone. Thrilling stuff.

My monthly expenses for May

So there you have it, don’t forget everything is in New Zealand dollars! A very exciting currency from the bottom of the world.

April Expenses – You know you want to be nosy!

Screenshot 2016-05-01 13.31.02

Ah yes another fine month of spending all my money. Although I managed to spend less than last month so thats a win.

Home Repairs and Maintenance – This month we had to get the home ventilation filters changed. We have HRV for home ventilation and they charge a lot for servicing every two years. I could do it myself, its a simple matter of climbing in the roof around all the insulation and changing two filters….but I don’t. Also I bought a voucher on Grabone to have our heat pump serviced as well. Once again probably something I could do myself.

Spending Money – Stepsons birthday! His band played at a local bar and I shouted him and his brother quite a few rounds of drinks. I bought a car charger for my cell phone and gave the kids some money for gas. Confession……I also bought a lotto ticket!

I did not win.

The disappointment was not worth the $9.60

Restaurants – Shameful amount spent on eating out of the house. Its amazing how quickly that adds up. $30 for pizza one night I was to tired to cook and $30 taking our teenage boarder out to lunch during her term break. Then $140 over the month on snacks and work lunches. These Damn food trucks have started parking up near work. Delicious.

Clothing – One pair of work pants for me and a pair of work pants for other stepson. Including the cost of posting them to him.

Property Expenses – Exciting times, I am buying a house in Hamilton, quite possibly the cheapest house in Hamilton and possibly only the 3rd worst house in Hamilton. (Its definitely a do up!) Some of the costs of due diligence are in this category (e.g methamphetamine test, deposit for lawyer).  My lovely mortgage broker Megin has negotiated some cash back on the mortgage so I should be able to refund myself these expenses.

And the rest is all pretty standard stuff. I spent very little on petrol this month. So thats a win! And I may have found a free parking spot close to work. So hopefully I can cut down on that expense.

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Between the restaurants and spending money categories I am spending $100 a week. Its like I have a $100 a week allowance for whatever I want. What do you reckon? Too high? It works out at around 6% of the total spending (but the mortgage payments really skew the total monthly spend).

22.18% effective tax rate and Health care in New Zealand.

So my effective tax rate is currently sitting at around 22.18%. And we have a goods and service tax on almost everything we buy of 15% (housing is exempt). Those taxes cover a lot of services.

That is life in New Zealand.

After reading about so many people worrying about what they are going to do for healthcare after they retire I feel absolutely lucky to live in a country where healthcare is relatively affordable. Healthcare is largely covered by the government. (Via taxes of course.)

If you have an accident and need to see a doctor the cost is almost nothing and all the treatment thereafter is mostly covered. Accident insurance is included in the taxes that come out of your wages and if the accident is so bad that you can’t work you can get 80% of you previous salary in compensation until you are either rehabilitated or retrained for work. Accident bad enough that you need hospital care? No problem its covered. The accident can be at home, work, doing sport or whatever, you’re still covered.

A doctor visit for a medical reason ranges from free (under 13yrs are free) to about $80. (You’ll pay more for seeing a doctor after hours or on the weekend and cost varies a lot by location, e.g poor areas have cheaper fees). Most medicines are subsidised and cost around $5 per prescription.

Referrals to specialists are triaged on need. If its urgent you will get seen quickly, if not you may have to wait a while.

Likewise with any surgery in the public system. You get seen according to need. There’s not a lot wrong with that. Most New Zealander’s are fairly accepting of this kind of system. We love fairness! We don’t like seeing people get special treatment because of “who” they are or because of how much money the have. Now granted, the system aint perfect, a lot of people wait longer than they want. But its the best we can do with what we have.  It could definitely do with more funding of course! Those funds have to come from taxes and the country has to bear the cost a the end of the day. There has to be balance.

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Now I also have private health insurance ($21.01 a fortnight for surgical and specialist care, cheap as! It a not for profit organisation) but I only have it because I might want a private room in a fancy private hospital. Or I might want to be seen by doctor ASAP if I’m freaking out over something. It doesn’t let me skip the queue in the public system, rather there are some doctors that operate outside the public system and I can pay to see one of them privately. My money doesn’t disadvantage anyone in the public system, rather it benefits them, because I am one less person the that they would have had to queue up with for treatment. The government has considered incentivising private health insurance to reduce the pressure on the public system, but so far nothing has changed.

I’m considering dropping the insurance. The older I get, the more costly it is and is it really that necessary? I’ve started a small savings fund for health, and every five hundred dollars I save I add that as an excess (I think Americans call it a deductible) to the insurance and so my fortnightly fee drops. Eventually I hope to have enough in the fund to cover the costs of anything I might want to have done privately.

One school of thought is that if you have the money, you should pay for private treatment and ease the burden on the public system. Or even if you have the money why would you even put yourself at the mercy of the public system? To be honest, the public system has some fantastic doctors. I work in a little non specialty of healthcare and even I see specialists (earning very big dollars!) are having hip replacements on the waiting list via the public system. The care is just as good or in some cases better than private. You may not get a private room or the fanciest food but you get great surgeons and nurses.

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So I have to make a call, yes I can afford private healthcare insurance, but public is just as good. Private will be faster and public I’ll have to wait my turn. Its for the good of the country if I pay for private insurance, but I pay my share of taxes so why not go public…… What’s a responsible citizen with dreams of financial independence to do?

You Need a Mall Diet

The need for a new pair of work pants drove me to the mall on a Thursday. Chatter from the co-workers had led me to believe that there was usually a sale on Thursday at one of the department stores and yay they were right. 20% off woohoo. So with work pants purchase achieved I decided to have a little browse, a little wander, around the rest of the mall.

What was I thinking? Oh my, all the pretty things. Shoes, I could use another pair of shoes and winter coats are in stock, gorgeous woollen pea coats with wooden buttons. The lights were bright and the smell of doughnuts was wafting up from the food court. The new homeware store had some new funky looking cushions on display and all of sudden I was thinking about buying a new couch. I WANTED ALL THE THINGS and I hate that it made me feel like that.

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Ah the land of false desires……..

Does this ever happen to you? You go to the store to purchase something specific and find that your desires are being stimulated by all the bright lights and pretty things. When I’m at home, or work, or with my family I don’t even think about shopping or things I want. Its only if something breaks, or wears out that I begin to ponder a trip to the shops.

Lets face it, malls are desire stimulating machines, they are designed to make you browse and lust after items. Craftily staged window displays or furniture arrangements make you long for something as attractive in your own home. Theses are desires for items I didn’t even know existed until I went to the mall. How can you have a burning desire for something you didn’t even know existed until just now?! I wasn’t sitting at home yesterday thinking “damn my life would be way more complete if a I had an antique copper frame kitchen pendant light”.  The mall is a crazy place it makes me greedy and wanty!

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Attack of the mall drones. Don’t be a mall drone.

And thats why I have to severely limit my trips to malls. I am happy and content with my home and what I have until I go to a mall.

If you find yourself swayed by pretty things, if your credit card spending is out of control, then you need to go on a mall diet. We’re talking complete mall restriction!

5 ways to put yourself on a Mall diet.
  1. Shop for groceries at cheap supermarket not attached to mall. I visit our local Pak N Sav which doesn’t really have any other shops nearby. Shopping for food is a necessity so don’t let it become contaminated with the expectation of having a browse of other shops.
  2. Change your commute so you no longer drive past your favourite shops. It may take you a few minutes longer, but out of sight is out of mind.
  3. Only allow yourself to shop for replacement or worn out items. When you go to the mall you are ONLY there to find and purchase the required item. If you see something else you want put it on a list and go home. Decide later in the week if you really need the item.
  4. No more going to the mall for “fun”. No recreation browsing or window shopping. No going just to see whats new. NO. Find yourself a hobby that’s better for you than just looking at stuff you might want to buy. Shopping shouldn’t be anyones major hobby let alone something you do when you are bored.
  5. Don’t meet friends at the mall, if you want to meet for coffee or a cheap meal find somewhere stand alone, better yet, invite them to your place! There are hundreds of ways to hang out with friends that are not shopping related.

If your focus is becoming financially independent then with a mall diet and a bit of reflection eventually you’ll become immune to malls. Your desire to shop will drop away and the mall will become a rather boring place.