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Five-fold Friday: Crash pads and other soft savings strategies; NAB's self-imposed credit reform; affordable housing?; WINZ crackdown, and "Enough bull"

Five-fold Friday: Crash pads and other soft savings strategies; NAB's self-imposed credit reform; affordable housing?; WINZ crackdown, and "Enough bull"

Crash pads and other soft savings strategies; NAB's self-imposed credit reform; affordable housing?; WINZ crackdown, and "Enough bull"

1) Saving & Spending

So, you've maximised your earning potential, sacrificed lattes, kissed Central Otago's finest Pinots goodbye and bought into the belief that cloth nappies will save the environment and money, and you're still facing demoralising rejections by EFTPOS at the check-out?

Financial defeatism is the plague of our times. Makes you wonder whether you might not be better off going on a blind and blissful spending spree, declaring bankruptcy when reality (or the debt collectors) catch up and then reincarnating yourself in the fashion of a finance company director.

Despite the obvious temptation, there is an alterative therapy for persistent bill shock. It's a new (or maybe just rebranded) model of consumerism called collaborative consumption . It encourages a deeper questioning of wants and needs and promotes homespun money saving strategies of the legal variety.

Rachel Botsman champions this model in her book 'What's Mine is Yours.' The theory is that by taking stock of and making better use of what we have; trading, sharing, loaning or selling stuff or skills that we have in our immediate possession, we'll be do our banks accounts and Mother Nature a big favour.

I'm sure there's some inherent risks converting my spare bedroom into a Crash Pad for strangers but when I view it in terms of a plane ride home to the land of maple syrup it has me thinking... Here's Botsman presenting the case for collaborative consumption on TED.

2) Credit & Debt

Kudos to NAB Australia for pre-empting legislative requirements on long-overdue reforms aimed at the credit card industry.

The Aussie bank announced on Friday  it was amending a little known policy that gave repayment priority to low-interest over high. NAB will now automatically channel money it receives for credit card repayment to that which carries the higher interest, "helping to reduce the overall interest cost to customers."

In boasting about the move (said to effect 1.5 million credit card users in Australia) NAB estimated that A$225 million a year could be saved in fees and interest if other banks and lenders across the country followed suit.

Curiously, the policy was not implemented by NAB's sister bank across Tasman, BNZ. It seems only fitting - not to mention fair -  that the same policy apply equally to financial institutes belonging to the same family. I reckon BNZ would put itself in good stead with New Zealand credit card customers if it followed NAB's example.

With all the negative sentiment shadowing the banking sector, those parties that initiate good practice, instead of having it foisted upon them by the courts, would be well placed to receive plaudits. I wonder which bank will be the first to step up in NZ?

3) Home & Real Estate

Some encouraging news for first time home buyers this week. As reported earlier this week, housing affordability is at its best level since March 2004.

A combination of last year's income tax cuts, the Reserve Banks' 0.5% cuts in the Official Cash Rate, and a softening in the property market are the main drivers.

New entrants to the property market appear to be going for it and banks aren't holding back. Mortgage approval rates are at the highest level in years. (Check out the historical mortgage approval rate here on

For what it's worth, the International Monetary Fund, estimates that New Zealand's property market is still overvalued by 15-20%. It's anyone's guess where the yo-yo market is headed but for first-time home buyers who also happen to be KiwiSavers, first-time home subsidies are worth exploring bearing in mind there are some strict criteria around qualifications (mainly to due with maximum income and maximum house price caps.)

See the IRD's website for details here.

4) Death &  Taxes

If I seem to be avoiding the grim subject of death, it's not deliberate. Just plenty of action on the tax side - of life. A biggie, that could have trustafarians on the horn to their accountants: changes to Working for Families Tax Credits. As part of a crackdown on high income earners milking the system, Inland Revenue is raising the bar. Effective April 1, recipients and new applicants with income in the following categories will be required to front up:

Inland Revenue informs that it will be conducting random audits to keep people honest. For other tax changes coming down the pipe, see Alex Tarrant's story from earlier this week.

5) Books and Film

Let it be known, I'm Canadian by birthright (not American you'll be happy to hear Wolly) which would account for the odd slip in North American spellings. On those grounds I'll hope for forgiveness for choosing a book that hails from the motherland. The title "Enough Bull:" won me over. Author David Trahair, an accountant, advocates a DIY approach to wealth accumulation, which will undoubtedly resonate with Kiwis.

Trahair suggests we forego stock markets, financial advisers and other machinations of capital markets that have emptied our pockets more than filled them. To be fair, do-it-yourself types have probably caused themselves just as much, if not more financial harm, than paid professionals, so the Kiyosaki-style assault on the financial sector has to be taken in stride.

However, Trahair raises some good points and gives readers a steer toward self managed funds, chiefly in the form of guaranteed investment certificates. These nifty little constructs are tax efficient beasts of short, medium to long term persuasion. Okay, so there a decided Canadian bias here but it's never a bad thing to learn about what's happening and available off shore. Happy to receive your recommendations on locally sourced finance books.

Here's a taster of "Enough Bull.''

We have just lived through a period of time that shifted the financial world on its axis. The old rules regarding personal finance are now
history, as in obsolete.
This happened in the last quarter, the autumn, of 2008. Let’s call it “The Fall of 2008.”

The Fall of 2008
During this period, decades-old financial institutions simply disappeared. World stock markets tanked. Entire investment portfolios were
devastated. Retirement dreams were wiped out. And it’s probably not going to get better soon.

What this series of events has done is show quite clearly the naked truth: traditional financial planning techniques don’t work. In fact, if
we had done the opposite of what the “experts” have told us to do to get ahead financially, we would be far better off today. Here are some
of the past theories and the new reality:

• Trust the stock market to make us wealthy? Never again.
• Pay our investment advisor a fee of more than 2% a year to try
to beat the market? I don’t think so.

• Risk our home trying to “make our mortgage tax deductible” by investing in mutual funds? Please, give me a break.

• Maximize our RRSP contributions religiously each and every year . . . and also save 10% of our income above that. You must
be kidding, right?

• Borrow to invest—“leverage” our way to riches? Forget it. Many have tried; you can now find most of them in the poorhouse.

• Skip a cup of coffee to get rich automatically? Yeah, right.

I am not opposed to capitalism. We need efficient stock markets so that entrepreneurial people can grow businesses that flourish—
businesses that create great products, deliver excellent services, hire good people, make profits and pay taxes.

The problem is that, obviously, markets have not been regulated satisfactorily. Businesses, especially financial ones in the United States,
have been allowed to run rampant in the quest for riches. Thousands of intelligent, well-educated people making six-figure salaries and multimillion
dollar bonuses spent years creating complex financial products that were sold to unsuspecting members of the public.

Ever heard of collateralized debt obligations? Mortgage-backed securities? Non-bank asset-backed commercial paper? What about
income trusts? Or even mutual funds? These complex instruments made many people rich. The people
that invented them. The people that re-packaged them. And the people that sold them.

Unfortunately, the vast majority of people that bought into them got screwed. There’s the homeowner with no job and no money who
was convinced to take out a mortgage on his home and ended up losing it. There’s the government, and you and me as the taxpayers,
forced to shell out billions of dollars to buy into financial houses-of-cards just to keep them afloat. And of course, there’s anyone who
holds investments in these worthless companies.

We welcome your comments below. If you are not already registered, please register to comment.

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.


"Effective April 1, recipients and new applicants with income in the following categories will be required to front up"


You mean it WASN'T the case until now?


Bunch of amateurs.....




"There have been changes to the types of income you must tell us about when applying for and receiving Working for Families Tax Credits.

For the year starting 1 April 2011, we need to know if you receive income from the following sources:  (see full list above)


The above income types will need to be included in the 'other income' box of the Working for Families Tax Credits application form (FS1) along with income from interest, dividends, rents, royalties, estates, trusts and Māori authorities.

If you are already receiving Working for Families Tax Credits, and you receive any of the above income types, you’ll need to tell us about them before 1 April 2011 so that we can make sure you receive your correct entitlement. You can do this by phoning us on 0800 227 773."



Sooooo much bureaucracy. Just scrap it and give the money back as a tax cut targeted at the lower-middle brackets.


Cut the Government - cut all taxes to a 10% flat tax for all - do away with all but basic "tempory" unemployment benifits and see how much better the place would run with people having more money in their pockets to live on.



Death to taxes - if unlimited growth is possible, why are you complaining about taxes?

And if you have the cranial capacity to realise that your holler represents 'limits', you'll realise that even having no Govt whatever, won't halt the de-wealthing process.

0 would  I think be way more fair.....



Which bit of Govn?

Health? so we pay double the cost to a private insurance compnay that may not cover us?

Education? be unable to afford to pay for private education for children?

No infrastructure like say sewage plant?

No jails? aka ACT, just shoot them? you know most are maori anyway so im sure shooting a few natives is just as Ok today as shooting them say 200 years ago was.

No thanks....

If you really object to the system/society we have, why stay? why not pick another country with a system you like and move?







Mutual funds.....those were all the rage.....just pay the interest on the mortgage and put the rest into a fund, 25 years from now cash it out and it makes more than enough to pay off the capital and leave you extra money!

The risk was of course it could pay out less....for some a lot less....

Fortunately I went simple mortgage.....with seperate pensions which are going to pay out a lot less than forecast, at 17 it seemed a good idea....these days its get rid of debt and do the investing myself.....everything else is obviously a scam run by amoral assh*les



Re Enough Bull

The financial engineering and bubble creation has wreaked havoc  but needs to be viewed in the bigger context.  Overnight 400,000 Brits protested about public service cuts. (This included some Anarchists taking advantage of the mass protest to inflict damage on shops and banks.)

I just read this in the comment section in the Telegraph in response to Daniel Hanan's  piece titled "March for the Alternative...What Alternative?"

Quote "The protesters are lamenting the disappearance of a world order that existed since the end of the WW2 and collapsed in the late years of the last decade. During that period western countries enjoyed rising incomes due to technological advances, low commodity prices and political stability at home. The money was spent on consumer goods, asset purchases and public sector growth.

Over the last two decades western nations have been unable to fund their lifestyle from income, instead borrowing vast sums for private and public consumption. At the same time many previously poor nations have learned how to compete in markets hitherto dominated by westerners, and started to beat them at their own game with a combination of modern management techniques, modern technology, low labour costs, hard work and entrepreneurship. This is causing commodity prices to rise.

I have no doubt that what we are seeing, here and in the rest of Europe, is the collapse of a society. The public will not accept a major fall in living standards, reduced public services and high unemployment. Increasingly they will take to the streets, and the ensuing anarchy will make matters worse since businesses do not invest in disorderly societies, nor do other nations lend them large sums of money. I predict a rerun of the extreme politics of the 1930's. It will not be exactly the same, it never is, but the theme will be repeated in some form - anarchy followed by a dictatorship."(unquote)

 We have to consider that this is coming to NZ too and accept our own part in this mess. Rampant consumerism and materialism with its accompanying loss of human values. 

I am hopeful that the coming breakdown might force us to find new ways and systems to organise ourselves as a human society.


Sadly, I think you're right PP. Stumbled across this article a few weeks ago from an old copy of Harper's Magazine (not Bazaarr). Check out the contribution from Bill McKibben on "Localize" as a potential fix. Maybe there's hope?