Amanda's 30-day coffee challenge; Five financial lessons she wished she'd learned early in life; How to avoid the scars of sexually transmitted debt
Time for something a little different. I welcome your suggestions and feedback. Sorry no car washes or bikinis. amanda.morrall@interest.co.nz
1) Drink tea not coffee
If I had known when I was 21, when I had my first cup of coffee, just how expensive and addictive the habit would become, I never would have let the seductive, dark prince of Arabia pass my lips. Mind you, had I known what a drain my then boyfriend, who introduced me to the stuff, would turn out to be, I would have kept my distance from him as well.
Hindsight really is 20/20.
I don't want to know how much money I have spent over the years feeding my addiction. Needless to say it's a lot. I'm not alone. According to this article in the Independent the average bean-aholic will spend NZ$877 a year on coffee and the real snobs (that's me) around NZ$2,000.
I doubt I'll ever quit my coffee affair completely, but we're having a separation. I've put myself on a 30-day challenge. I know, "Madness" I've been told. Being reminded how expensive the habit is was a jolt to be sure, however I was more inspired to embark of this journey of madness by two co-workers who just finished the Ramadan challenge. Not once did I hear them complain. Not even when I accidently left chocolate in open view.
I'm a Buddhist but I'm hoping Allah will send me some strength to overcome my slavish worship of the bean. Coffee bet anyone? This will be tough in an office that thrives on coffee bets.
2) Sexually transmitted debt is scarring
I'm a romantic at heart, even though I disdain white weddings, Disney fairytales and saccharine Hollywood movies. But I learnt the hard way that love is no match for debt. Especially debt that lies concealed in white envelopes and arrives monthly. As much as partnership has its economic advantages, it can also be a drag if the debits and credits are not fairly balanced.
At a recent budgeting workshop I attended by CAP Money, a young couple asked the older (presumably wiser) participants in attendance whether separate or joint bank accounts were the way to go. Given this young betrothed couple still had stars in their eyes, I strongly suppressed an urge to shout out "separate.'' To be fair, it is a personal decision best determined by the couple.
My personal view is that separate finances are a good thing. I'm a realist. Even the best relationships are vulnerable to collapse. Even if they don't, I think it's good to have some financial independence from one's spouse. God forbid you have to go begging for a clothing allowance. And while one party may enjoy or excel at managing the family households, it pays for the other one to know a) what's going on and b) how to manage the show if the other is incapable of doing it for whatever reason.
The other hazard of joint finances is that if the relationship does go sideways, and one party happens to go nuts with the credit cards, you're both held accountable and liable for that debt.
Say "I do" to your love but "No thanks" to their debt, unless you want to own it.
3) Growing old is a fact of life, plan for it
When you're in your '20s, retirement seems like a galaxy far, far away. Planning for retirement seems all the more strange, foreign and unnecessary.
If I could wind back the clock, I would take a look through the Hubble telescope, then turn the lens back on myself and see that 40 years is but a blink of the eye. I'm not an extravagant spender but had I spent half as much of my disposable income as I did on my retirement savings as I did stuff, I'd be no where near as panic-stricken as I am about retirement.
When I heard a well-respected fund manager say the same thing recently (he was in his '50s) I eased up on the self-imposed guilt.
There's a lot of things you can't plan for in life -- and that's the beauty of it I suppose -- but growing old isn't one of them. Retire right by saving for it early on. And don't count on NZ Super to save you unless you're a Boomer.
4) Conquer your tax fear
I have come to interpret my two-sided hemispheric tax troubles as some form of karma. Not for trying to cheat the government but for putting my head in the sand over the years. Confession: I used to do anything to get out of doing my tax returns, usually fobbing the job off to my sister or mother both of whom have a natural affinity for that kind of stuff.
I reluctantly took over the job when I exhausted their goodwill and then found out it wasn't really so bad. Moving to New Zealand from Canada, I got lazy again because as a paid employee I didn't need to file an annual return as you are required to do in my home country. Where I ran into trouble was picking up extra jobs here and there, in a vain attempt to get ahead financially and getting sloppy with the tax side of things.
Okay, so it's an embarrassing admission for a personal finance editor. Apparently feelings of isolation have a lot to do with tax debt build-up. But get this: between 200,000 and 300,000 New Zealanders (mainly small business owners) are in the poo due to their own acts of negligence. If misery loves company we should throw a party in New Zealand.
5) Mother is always right
For years my mum harangued me about taking a greater interest in finance and business. Like most teens and 20-year-olds, I ignored her. I naively or perhaps optimistically assumed I'd get by on my good graces in life. "Yeah, right.''
I'll never lose my love for the fine arts but looking back I wished I studied finance instead of history as a minor in university. I also wished I'd spent more time pursuing the book aisles I tended to cruise past at the library. I'm making up for lost time now but making up lost money is much harder.
For the benefit of those wanting to get a jump on their finances, check out this recommended top five reading list from Investopedia. It includes Warren Buffett, Peter Lynch, Napoleon Hill, Robert Kiyosaki and Benjamin Graham.
A little learning in personal finance goes a long way.
Happy Birthday Mum!
47 Comments
And men NEVER buy clothes or cologne or other vanities huh? "Yeah right." I once set foot in the walk-in closet of a friend and she had a measly 1/10 share while dear hubby (DH's) share was crammed with a million white shirts wrapped in dry cleaning bags, shiny leather shoes and jackets. Of course, he was the bread-winner so didn't have to justify his vanity. Luckily his better half could wear a potoate sac and still look good. Sadly, money is used way too often as a control lever.
Find your financial soul mate and prosper I say.
I agree! My husband isn't that keen on shopping but definitely much keener than me, especially when it comes to tools and electronics.
As for separate accounts, I insisted on a joint account a few weeks after we met (not to take advantage of an unsuspecting man btw but because I was going to start earning a living earlier than him). 15 years and 5 babies later, it's working just fine for us. I guess it helps to both be responsible and share the same goals.
Yep, baby #5 is 12 days old and the oldest turned 7 yesterday :) We are one very lucky family (I put some photos here http://www.christelle-leru.com/SiteEn/latestnews/melody.html, off topic but she's so cute).
Thanks all. Scarfie, we are most definitely stopping there!! As for privacy, I have never done anything illegal (except maybe going over the 50kph limit once in a while, but not by much I promise) so I am not too bothered. And once your mugshot has ended up on a book cover, well, your "cover" is kinda blown... (that's another story altogether, let's not go there!!).
Well, we've planted about 400 trees so far since we moved last year.
As for the other, not every woman has 5. In fact, the average is 2.1 per woman in NZ, barely enough to ensure population replacement. Thank me for not contributing to the ageing population problem and making sure there will still be people to pay taxes when you're old ;)
Yes, they were all born in Christchurch so they are all Kiwis ... and with a proper Kiwi accent too I am told! They do also have automatic French citizenship but have NZ passports (we didn't bother with French ones). They quite rightly consider NZ to be their home country.
Both hubby and I asked for (and obtained) NZ citizenship 5 years ago, so we may never be "real" Kiwis but we feel quite patriotic about NZ still (and Sarkozy isn't about to entice us back).
Seperate bank accounts....I think thats a great idea based on experience but have both, so a joint account for the family / kids/ joint things and bills but syphon off "mad money" each month for each person.....that works well for us, Above all always talk, if that isnt happening the outcome doesnt look good IMHO.
NB. If one partner gets in debt I think the house is still at risk so the other ends up paying anyway?.....So in some ways having joint accounts means you can keep an eye on each other....no one's perfect after all.
regards
I stopped drinking coffee a few months back. I got some wicked headaches for the first two days and they gradually decreased over the next two weeks. Yep it took two weeks.
Drink lots of water and you will be fine.
I don't even miss the coffee now. Drinking lots of herbal teas now and starting to even like them:)
This article illustrates my point that the Generation X and Ys only have themselves to blame if they have no capital behind them. If you had saved every spare dollar you could have saved a deposit to buy a small unit in your twenties and would have been living in your own $450,000k house, mostly paid off by now. That is why the baby boomers have wealth. Most started being sensible with their money in their early twenties, had kids young and had time once the kids left to work to get more savings/ mortgage payments behind them.
The other thing GenX and Ys have done is delay having children and had less each so that is the reason the number of younger people is not there to support them into their old age. Another consequence of their lifestyle choices. Not quite sure why that is the BBs fault- I'm sure they would have loved grandchildren a little earlier, like before they were nearly 70!
There has been a change in the culture... a lot of Gen X's and Y's didn't get out of Uni until they were 22 or 23 even. Then they had student loans to deal with also. Plus house prices which used to be a multiple of 3x average wage rose to 5-6x average wage in the 90's.
So it has been much harder for Gen X's and Y's to get on the ladder. Combine that with also marrying later... saving for a deposit is easier when there are 2 of you.
Baby boomers had the benefit of cheaper housing (relative to wages), free education, and NZ was a wealthier nation (income per capita in real terms) in the 70's than today. One could argue that the BB's had an easy ride and then changed the rules when they got into power to make it harder on their kids....
Its all lifestyle driven. I am kind of in between- right at the end of the BB or beginning of X depending on who you believe.
I studied part time and worked fulltime so didn't end up with debts. I had to work 40 hrs, study 30 hours each week though so not easy. Exam fees went up hugely as I was studying but as I was working I could pay them without borrowing. I bought after prices started to go up so not at the cheapest.
Marrying later is still a lifestyle choice. There is nothing to stop them doing the same, they choose not to and it is a trade off. You can't have both. (Any babyboomers that started later and spent all their money through their 20s and earlly thirties are often not that well off either unless they had very well paid jobs.)
LOL...sir you jest...."Most started being sensible with their money in their early twenties"
I know few of my peers or slightly elders who were in any way more careful than I was and I wasnt very.....I was one of the few that took out my first pension at 17.....most did as the kids do today, spent it on booze, clothes, fast cars and chasing the opposite sex....the difference if anythign today is there are more toys/gadgets and they have to pay for their tertiary education....the latter is the most sobering by far.
Delay having children, with huge debt who can blaim them....less children, yes thank good because the population is already too large...women also have better education and take control of their fertility....and quite right to.
regards
Sir I'm not a sir actually. And are those elders really wealthy now? The ones that weren't careful are not unless they had a really well paid job.
Don't take on debt. Do your degee part time and work fulltime - the financial benefit is huge. No gap years. You will just have to work at something that is not your first choice for a while.
The population of well educated skilled people is not too large in my opinion. It is not large enough to carry the large numbers of unskilled people.
Agree....there was I think a big change about the end of the BBs.....many of the BBs I know has/have very nice company / Govn pensions thankyou.....I dont know of anyone my age (Generation jones) or younger who I'd say was that well off as BBs or will be that well off....
Agree
Agree
regards
LAJ, I think you are missing the word Fun somewhere.
All work and no play makes for a very dull life IMO.
Being a student and having a gap year or even 2 makes for some of the best experiences one can have in life. It's not always just about how much money you have.
Seperate bank accounts....?? In my parents' 65 years anniversary... dad told us that trust and understanding kept them together for all the years
Dad doesn't trust mum, and
Mum doesn't understand dad...
let's keep it that way, he said! And I might have to do the same in the relationship with my bank (manager)
I haven't roasted my own beans for a while Amanda, but if you are up this way I can tell you how to do it. Green beans are half the price per kilo, and with a french press the fresh ground coffee is awesome and affordable. I now use a drip maker that my dad picked up for $4 at a second hand shop.
I would love to get my hands on a vacuum press. The new ones are plastic rather glass, and besides I am too cheap to buy a new one:)
I never drink more than about 3 days in a row so I don't get addicted. Lol.
I'm no expert on the Property (Relationships) Act, but I thought that once you were married, in a civil union, or in a defacto relationship of 3 or more years, ALL the property owned by either couple was considered to be relationship property, and ALL the debts owed by each couple were considered to be relationship debts??? Am I right in this, does anybody know?
The only way to have separate property is to have either an opting out agreement, or a firm understanding that certain monies and assets owned by one or other of the partners was treated and regarded as separate property, and the other partner of the relationship or the relationship itself derived no benefit from those separate assets. It wasn’t just good enough to say it was separate you had to prove that it was kept separate from the relationship in the way it was treated. I thought the same applied to debts?
Just having a separate bank account that still gets used from time to time to benefit the relationship wouldn't stand up in Court should the relationship fail. It’s a nasty nasty vicious piece of law that Act, riddled with agendas.
I think you're right. I've heard of a case where the guy had a car worth $10k when they met, and $2 k 5 years later when they parted . The $8k drop in value was split and half was deducted off the woman's share as the value had been used up during the 5 years. She owned the house when they met and meanwhile her house had gone up $50k and he got half of that!!
99% sure you are right on assets, a trust or pre-nup might hide $ in the event of a split but Im not so sure on debt.....which is an interesting point.....Student loans for instance Im 99% sure are only that person's, so if a student dies before its paid off I dont think they can be recovered from the estate....but I could be wrong...info i can find suggests that,
"Inland Revenue has had to write off millions of the debt because of death and bankruptcy and accepts that some of the money will never be repaid." "Loans worth $10.7 million were written off in the year to last June because the borrowers had died."
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10684474
Ive heard of companies trying to claim the money back and pressurising the family to pay almsot at the funeral!....and while under stress that happens...
Its a nasty subject to my mind...
For some? all? debt? I think your name has to be on the debt agreement and a signiture, without that Im not sure it can be collected if the spose is dead. So if its finance on a car I assume the bank can take the car but cant claim on the house unless its listed on the docs. So any debt existing before you both bought a house (say) cant be at risk? fun stuff.....A joint CC could be ikky....
regards
David, I too would be interested in whether prior debts owed by one party comes to be 'owned' by both upon becoming a couple. If so, look out young people especially.
I too think the Relationship Property Act is an iniqitous piece of agenda-ridden legislation. Didn't it start out at several years more than a mere THREE before assets were evenly split upon the partnership dissolving? Hello, three years is nothing as one gets older..
And I heard somewhere recently that even having a friendship with a likely candidate, not even living together, merely being 'understood by others to be in-a-relationship/a couple as such' is enough after three years to start the process of being taken to the cleaners...
Real scary stuff which, as a widow makes me oh so wary of ANY new encounters with men,
Sad, I know, but that's the risky place this act puts people in. The house being in a trust (for a very good reason) would be safe from a predator, but my savings and personal assets wouldn't be. There must be lots of other singletons of all ages like me around, who can't risk a new relationship.
Social engineering?
Thats right if you have been together for three years..you are considered married.If you have been in a domestic relationship with anyone for that length of time beware...and that means anyone.On case quoted by CA. Was that of a farmhand who moved in with the boss..They were now in a Domestic relationship. When the boss wanted him to move out to make way for the new bride,he paid dearly.The only way out is by signing a Pre nuptual agreement,even that can be contested..This Domestic relationship act..is peculiar to New Zealand law.
My experience is that a joint account is the way to go, with ancillary personal accounts that are funded at a manageable level for personal treats and peccadillos.
It might be an idea to have the partner as a "passive" signatory on your own personal account (i.e. no operational access to the money) - that way, if one of you kicks the bucket, the other one can ransack the account to pay for the funeral (or grave-dancing lessons, depending on how well the relationship was going). Otherwise, I think the Bank has to freeze the assets until the estate is sorted out legally, which might take a while. If that scenario is a worry, it's worth having a chat with the bank before the grim reaper wields his scythe. Cheery stuff !
A new way for to lose weight!
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National Park Service Special Agent Chris Smith testified that Carlson told authorities that the boys were overweight and that he thought the hike would get them into shape."
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