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Working for free; Volunteering; When it's time to leave the party; Fee grabbing super funds; Good debt, bad debt

Posted in Personal Finance

By Amanda Morrall

1) Working for free

Last week I kissed goodbye to $60. Okay, admittedly it's not a huge amount of money but still, $60 is $60 and would buy Mazzy a fair bit of kibble.

Why would a self employed, solo mother do something so dumb? Well, my rationale was this: The $60 I gave up (payment for teaching a yoga class at an outfit that was in its first week of launching and had no attendance on day one) was goodwill.

While they invited me to bill for my time showing up, my reasoning for not doing so was that I would like the opportunity to do more relief teaching there. Whether that will eventuate or not, I'm not sure but I do believe sometimes, a little freebie will go a long way to cultivating more moolah down the road.

Perhaps this kind of mentality will prevent me from becoming a wealthy gal one day but I don't think so.

Ramit Sethi in his latest blog, also considers the value of free labour (periodically) if it is strategically done.

2) Volunteering

Just as working for free periodically can be beneficial, volunteering can also be an enriching experience. New Zealand reportedly has really high rates of volunteerism which is awesome. For those of you curious to do more, here's a link that could help.

3) Knowing when to leave the party

I don't honestly think anyone can accurately predict when a bull market has hit the end of a run however there are several theories about it. Mark Hulbert of Marketwatch takes a critical view of the 200-day moving average as one of them in the following piece from the Wall Street Journal. 

4) Fee gouging funds

When it comes to superannuation funds like KiwiSaver, it's really easy to get caught up on performance. There's no doubt performance is important but so too are investment fees. Unlike performance which will go up and down over the years, fees are fixed (well you can bank on them creeping up over time). As you balance grows so does the amount of mone you hand over to your provider. Over the long-term, they'll take a significant bite out of your retirement fund.

Across the Tasman, where compulsory superannuation contributions are moving from 9 to 12% by 2019 investors there will be padding fund managers pockets in a big way. This piece from the Age is worth a read this morning as it explains very well the effect of fees and why you should care, more.

5)  Good debt, bad debt

Personally, I think all debt is bad but I've learned that I'm a pretty conservative gal. I don't like debt, full stop. That said, I do appreciate that when you borrow for a good cause (like starting your own business, owning your own home, retraining) that it is an investment. 

The following from the Globe and Mail looks at some instances of good and bad debt and why they are classified as such.

To read other Take Fives by Amanda Morrall click here. You can also follow Amanda on Twitter @amandamorrall or at www.amandamorrall.com

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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8 Comments

#5 someone pointed out in a

#5 someone pointed out in a financial blog a long time ago that doing the old Harvey Norman 2 years interest free ONE item at a time, and making sure you pay it off within the 2 year period, is not a bad way to go if for some reason you need/want to buy an item before saving for it (like when you've just moved into a flat/house and don't have enough left to buy the new fridge you so desparately need).

Like paying your credit card off in full every month, you get an interest-free loan from the credit company, at the expense of those who aren't so disciplined.

If you add in the freebies you get from the points on the card, you can actually be in credit at the end of each year for the priviledge of having a free line of credit. Which is nice.

 

I do exactly that for

I do exactly that for something big and expensive like a new fridge if I have to but yes only one thing.
They do charge a $50 per year admin fee though so take a 24 or 36 months interest free credit period and not say 30months if its offered as you still pay 3 x $50 up front on the 30 months, just like 36 months, ditto 18months, take 12months.  Also obviously on a $500 item the $50 surcharge means it makes little sense, +2k yes, OK.
regards

I used to think that buying

I used to think that buying an iten on Harvey Norman or anyone elses "interest free" terms was a good idea.  The problem is that they charge booking and insurance fees and what initially looked like a "free interest" period is not so attractive any more.  The bank offered me a plantinum card the other day, for "a small annual fee".  I told them I don't need a platinum visa card to prove anything to either myself or anyone else and I'd be happy to hold on to my current visa which has no annual costs associated with it.

There is a one off start fee,

There is a one off start fee, but that isnt re-charged on the subsquent items, then yes an annual fee which you have to watch.  I decline insurance fee's you must be dodgy.
:P
regards
 

Remember in the old days when

Remember in the old days when you purchased a new car it didn't come with a radio or air conditioning they were all extras at a price.
Now all cars have them and they are no longer considered to be extras  but included in the price.
Nothing is free.

I remember when a new car had

I remember when a new car had split rims and leaked oil everywhere, when you had no 'windows' and night driving was safer with the old lady walking along in front with a lit candle in a jar...you young blokes had it easy.

Yeah not so in Australia NG.

Yeah not so in Australia NG. Maybe it's to get around the luxury car tax, but when you buy a luxury car here you get basically the body (in primer pretty much) and an engine. You then pay extra for:-

seats, wheels, the 'sports' pack' the 'sound' pack, the paint colour (if it's anything other than white or black), the interior finish, the stearing wheel, transmission, satnav, etc etc

The classic is seeing new models like the BMW one series at the airport. There is a big sign saying 'from $50,000!' and you think OMG that's cheap, and then when you look closer at the details for the actually car on display it says in very small writing - 'price of vehicle as shown is $85,000'.

As people say, nothing is free.