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Five scary beasts to beware of in personal finance and how to get them under control
By Amanda Morrall
As a kid Halloween was one of my favourite occasions. It wasn't just the pillowcase full of sweets either. If we were lucky enough for the snow to have held off, walking up and down the streets dressed in costumes with the crisp fall leaves crunching under our feet, bare tree branches casting ghostly shadows in the street and giant carved pumpkins greeting us at doorsteps was pure magic. I appreciate Halloween is regarded as a crass North American import so thought I'd look at five frightening things related to personal finance instead.
1) Fees
Before I started taking an interest in personal finance, things like fees didn't concern me too much. I had a somewhat cynical view that if you had to employ the services of any party in the financial services sector you were going to get creamed in fees no matter what and that the differences would be marginal, so why bother reading the fine print. I remain jaundiced about this today however given the close attention we pay to the subject, I have discovered just how big, and dramatic in some cases, the fees can be and why it pays to understand just how much you are paying, particularly when it comes to fees that keep ticking over, like KiwiSaver for example.
Find out what you are paying, square that with performance, and compare it to others similar funds.
When you look up your fund on our data base, you will find a break down of asset allocation and also fees. If you want to see how that compares to others in the same category of fund, click fund type in the top box and you'll get a list of equivalents where you see their fees as well.
Fees outside of KiwiSaver also count, so never gloss over this matter. Here's a link to our fee calculator which shows just how scary high fees are over the long run.
2) Debt
Related Topics
In a past life I used to be somewhat indifferent to debt as well. I disliked it but accepted it as a normal part of modern life. Today I am more mindful about the fact we have a choice about taking on debt.
Here's some resources to help you manage your debt.
Interest.co.nz's mortgage calculator
Sorted.org.nz's debt calculator
Janine Stark's cure for debt and depression.
3) High interest rates
High interest rates are great - if you're a saver with money in term deposits. If you're a borrower, they're killer. Regardless of which side of the equation you stand on, make sure you're getting the most bang for your buck.
Borrowing - compare here.
Saving - compare here.
4) Credit cards
I don't much like credit cards either although I do appreciate that there is an upside if they are well managed. In most peoples' hands, they're an excuse to spend what they don't have. The scariest part is what you end up paying for impulse purchases that are paid off over time by drip feeding your debt. To find out the shocking cost of paying the minimum off each month, run your numbers through this baby.
5) Unfulfilled dreams
The most frightening thing by far in my opinion, or maybe it's just the saddest, is folks who languish in jobs that don't fulfil them or help them to realise their full potential. Here's a great article from Lifehack.org about finding your passion and building a business around it.
To read other Take Fives by Amanda Morrall click here. You can also follow Amanda on Twitter @amandamorrall
10 Comments
debt is inevitable for most
debt is inevitable for most people in nz.
it's what you buy to create debt is the problem.
i don't mind paying high interest if i'm buying what i consider to be assets eg shares in forestry blocks or on the nzx.
however i dislike paying high interest on debt for the purchase of a car or some household appliance
"Defence Minister Dr Jonathan
"Defence Minister Dr Jonathan Coleman arrived home from the Middle East this morning to confirm the Government has offered refuge in New Zealand to 23 interpreters currently employed by the Provincial Reconstruction Team in Bamiyan." herald
Way to go minister...let's see now how does it work...with extended families allowed to come too....that'll be...oh about 36500 Afghans arriving to live off welfare...!
With their breeding capacity
With their breeding capacity of 10 children per family, you can say that's welfare in perpetuity.
The thing that I hate about
The thing that I hate about it, is that they go to the top of the list ahead of our own people waiting for state housing.. Still if the Greens had their way, we would be opening the doors to thousands more, just so we could look like a giving country to the rest of the world.
God we're a soft touch here.
My grandfather told me, "Debt
My grandfather told me, "Debt is like an enormous boulder, if it's pointing downhill you don't have to do anything for it to go a long way. But if it gets above you and start rolling back on to not only will it crush you, it will destroy everything you have on the way."
Brilliant!
Brilliant!
I was probably mid teens at
I was probably mid teens at the time and it obviously left quite an impression.
#4 credit cards are a win if
#4 credit cards are a win if you pay the whole thing off every month. And the credit card company hates you, which is fun,
#5 The reality is that there are only so many fun, rewarding jobs out there and lots and lots of jobs that are repetitive, dull, and totally unsatisfying in our modern mass-production world. While having a job you enjoy is something to aim for, it is also something of a privilege, and not something that can be achieved by everyone. So articles about doing what you love can be demotivating to those less gifted with intelligence, skills, or entrepreneurial spirit
I'm surprised you didn't cover the big news story of the day in New Zealand today - the first copy of Windows 8 was sold to Greg Daniel at one second past midnight at the Wairau Park branch of Harvey Norman in Auckland.
It all happens in New Zealand!
Labour critics say that
Labour critics say that higher welfare spending is essential because of the effects of the recession. But then theirs is the party that increased the welfare bill by 60 per cent under Blair and Brown, and thus founded a client state of people whose dependency on handouts persuaded them to vote for the party that had feather-bedded them.
Read more: http://www.dailymail.co.uk/debate/article-2223822/Undeserving-state-funded-minority-longer-enjoy-lifestyle-hardworking-people.html#ixzz2AWCvzLK9
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Another rant.......No mention
Another rant.......No mention of race based problems...today.
This one is about over priced BENEFICIARIES.
Though.....this one is home grown too.......but sounds totally foreign...to me.
That other English prat is on the telly expounding on why HIS properties... he owns are overpriced.
He is also unaware how to build low cost houses, people can actually afford.
(even if we...elderly..... lend em money at cheapest interest rates ever.....and holding.)
(Economics 101...for beginners, but what the heck would he know)
(I bet Hugh could tell him and his CRONIES......what for...and why.).
All poll-lies and bwankers....Dumb and dumber......as thick as a board, as dumb as a brick. As wet as a leaky home.
(Or are they...just complicit in fraud..maintaining...ponzis......methinks...so)
English wants people to invest in Houses as this is the No Zealand way. (He did & does)
Any downward pressure, the ex-sperts will lose their shirts. (Like him).
People do not buy houses as HOMES.
(They gamble on the future returns....theirs..classic ponzi)
They buy em to beat inflation and skite about the over priced shite....they think will solve this already over priced...........ponzi problem.
(TOO MUCH DEBT....to ever repay)
English doesn't want to know the reasons why people do not invest in small houses people can afford....as they are now 6 times median average salary.....anyway he can sustain em.
(NOT HIS SALARY...OF COURSE....THAT IS SET IN STONE, CONCRETE, GOLD PLATED, AS IS...HIS PENSION, so gotta pork the system, whilst the ponzi lasts).
I wonder why a shack here is the price of a nice home elswhere...in this crazy old world of ours.
Nothing to do with
FEES,
RATES,
RULES, (Getting dumber and dumber).
OVERPRICED CRAP PRODUCTS , ....HAIER ...etc........
REGULATIONS, no work yerself....must have an over rated.....erk.
BUILDERS CRACKS,
BUILDERS SUBS & SUBBIES,
MARGINS,
LEVERAGE, INSURANCE,
PLUMBERS PLUMBING THE DEPTHS,
COUNCILS GOLD PLATED FEES,
CONNECTION COSTS,
DRAINAGE COSTS....
ALL COMPOUNDED...AND ...on..>F>>>>>>>....>>>>INFLATED...lands cost by LAND BANKERS.......PLUS GST....plus PROFIT.
Real Estate.....cannot lose....when holding the purse strings.....and over taxing the poor bleeders...to death.
Then he has the gall to.... invite in Rich Foreigners to out bid locals. (Go figure)
Any old rubbish....will do for us ....mere mortals.
Dumb and Dumber......yes we are.
Calculated ........yes...he does......
But so can I.
INFLATED....one and all.
GOVERNMENT VALUATIONS.......yeah...right.
INFLATED VALUATIONS....YEAH RIGHT.
COUNCIL VALUATIONS...YEAH RIGHT.
COUNCIL FEES...YEAH RIGHT.
COUNCIL SALARIES...YEAH RIGHT.
MAYORS PERKS...YEAH RIGHT.
CRONIE PERKS...YEAH RIGHT.
INFLATED INSURANCES...YEAH RIGHT.
SPECULATORS VALUATIONS...YEAH RIGHT.
SPECULATORS RENTING OUT CHEAPIES......YEAH RIGHT.
IMPORTED CRAP MATERIALS...YEAH RIGHT.
LAND BANKED DIVISIONS...MULTIPLIED...YEAH RIGHT.
IMPORTED BUYERS...YEAH RIGHT.
LOW INTEREST FOR LOCAL SAVERS.......YEAH............OH SO WRONG.
Ponzi must be kept going.....whatever the cost....and to whom.