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The illusion of wealth; Negotiating cheaper rent; Invest in what you know; Unnecessary spending; Last chance for your free $521

Posted in Personal Finance

By Amanda Morrall

My youngest loves to play the what-if game. It used to be choosing between two morbidly ways to die. The dialogue went something like this: "Mum, if you had a choice would you swim in a tank with sharks or jump off the Sky Tower into a bowl of jello.''

In case you're curious, I chose the jello dive from high heights. Watching Jaws at age 7 scarred me for life.

Given my wee boy's latest obsession with cars, the daily line of questioning goes something like this: "Mum, if you were given a Maserati Granturismo S - and you couldn't sell it - would you  keep it or give it away?"

The qualifier was a new addition to the line of questioning after my standard response to hypothetically winning x, y, z luxury brand race car was "I'd sell it for money."  

It took me some time to recognise that I'd become boring practical mum and not fun mim so as of yesterday I decided, damn the consequences of thrifty personal finance/yogi mum being seen driving around in a ridiculously fast, flash car. I will keep it. Even if it's just a kid's daydream. A pleasing answer to both my boys.

So the Maserati brings me to our first link today:"Why your Neighbour is Richer than you" from onecentatatime.com

This blog discusses the probable reasons for your neighbour being able to afford a nicer car than you. Some reasonable explanations offered but don't ever assume that nice car in the drive hasn't come without a steeper than purchase price cost owing to that horrible F word, financing. All is not what it appears.

 2) Negotiating cheaper rent

Frugal Confessions, a US blogger, offers some tips on how to bring down your rent. You may scoff, particularly if you live in Auckland, but don't knock it until you try it. It's worked for me, yes even in Auckland.

3) Invest in what you know

Taking the advice of three leading investors, Warren Buffett, Peter Lynch and Charlie Munger, an anonymous blogger from moneycone.com decides to see how he would have fared financially by using their collective distilled wisdom to invest in 2000 in stocks based on product familiarity. Guess what, it paid off. Luck or sound strategy? You decide.

Peter Lynch, manager of Fidelity's Magellan Fund : "Invest in what you know."

Charlie Munger, Buffett's business partner at Berkshire Hathaway, "Spend less than you make; always be saving something. Put it into a tax deferred account. Over time, it will begin to amount to something. This is such a no-brainer.

Warren Buffett, "Boring is beautiful.''

4) Unnecessary spending

A simple but important reminder here from thesimpledollar.com about taking concrete steps to change if you are unhappy, dissatisfied, or striving for greater heights in some part of your life, financial or otherwise. Don't fill the voids with shopping bags.

Remember Einstein's definition of insanity? Doing the same thing over and over again expecting different results. 

5) Last chance

A reminder this is the final day to top up your KiwiSaver account to qualify for the $521 in member tax credits. Salaried employees won't need to worry about this if they've made a minimum of $20 a week for the past 12 months. This is more a reminder to those self employed folks enrolled in KiwiSaver.

Easy enough to do through electronic banking as most providers make it easy for you to pay into your fund. 

For your A-Z personal finance guide here's how to order a copy of Amanda's book Money Matters: Get your Life and $ Sorted. The book is also available in ebook format as well via AmazonTake Five is published on Mondays, Wednesdays and Fridays. You can also follow Amanda on Twitter @amandamorrall; check out her previous Take Fives here.

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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Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

3 Comments

"Why your neighbour is richer

"Why your neighbour is richer than you"  There is another explanation, they're not. 
 
I knew a young couple with two young kids, living in a nice area, she had a BMW, he a nice company car, jet ski in the garage, big screen in the living room, you get the picture.  They projected success and wealth but it was all smoke and mirrors, house was rented, GE loan for the furniture and TV, car loans, jet ski loan, etc.  When the no interest loans kicked into 20% plus interest payments it all fell apart and they don't live next door anymore. 
 
This is a big part of financial strains in NZ, people have this perception that they need to appear as wealthy as possible.  Cars, clothes and phones are more important than investments and budgeting. 

Sad that so many people can

Sad that so many people can not resist the relentless advertising and peer pressure to buy perishable stuff they don't need.
You are brainwashed into thinking you are some kind of weirdo if you have money and don't fly overseas, or buy BMWs, smartphones etc; don't be too ashamed as the forces are hard to resist.

Freeloading Sky...not a

Freeloading Sky...not a surprise considering it's high cost...!
Wonder how long the decoder users will tolerate paying for the freeloaders using the net.?