When the going gets tough, don't borrow; Breaking the mold around household finances; Dollar cost averaging; extreme early retirement; women saving more

By Amanda Morrall

1) When the going gets tough, don't borrow - I think my boss fancies me. A complete idiot. For example, witness the virtual telling off I got yesterday about me getting a dog:

Amanda, Amanda, Amanda, sigh....

Time for a lecture that makes me look like a grumpy grinch with a heart of lead. ;)

Firstly. Life is long, particularly if you have a mortgage.

I get really grumpy with the youth of today who say life is short. It's long. We'll live to 100. Spending money now instead of repaying debt just extends the life of the debt and creates an enormous opportunity cost of interest that doesn't have to be paid.

I know you're in a great position in not having a mortgage.

But...

For anyone who does have one.

I've worked out that not spending NZ$1,000 a year on a dog and instead using it to repay that amount extra on a NZ$200,000 mortgage would save NZ$27,548 and allow you to repay the mortgage three years and two months early.

Is a dog worth NZ$27,548?

Do I look Grinchy enough?

Mebbe it's because I still have a mortgage. Grrrr

Enjoy the dog...  ;)

Mother's guilt is something else. Working mother's guilt is particularly potent. If we're not beating ourselves up over the lack of time we spend with our kids, we're invariably berating ourselves for falling short of the '50s ideal of the crafty, creative, home cooking mummy making fresh muffins for after-school play dates.

Quite often that's because we're either thinking about work or doing it on the side when we're meant to be fully present and engaged at the playdough station.

I've had to let go of that albatross. I take heart from the endless comments I've had recently about how polite and well behaved my sons are that I'm not a total screw up in the mother department.

Working is a reality many have had to accept. Most working moms I know enjoy what they do, they just struggle with the rigid frameworks for work and also social expectations.

This blog from freefrombroke.com describes the new reality facing many families who are having to break the mold to make their finances work for them.

I'm sure it'll resonate with a more than a few dual income families.

3) Dollar cost averaging

Conventional investment theory holds that it's time in the market that counts most, not your efforts to time the market. Recent experience challenges that notion, with many Baby Boomers still trying to recoup loses from the market meltdown brought on by the global financial crisis.

One investment strategy that presents itself as a solution to this conundrum is dollar cost averaging. That's where you buy into the market on a regular basis, just chipping away for the long-haul. KiwiSaver works this way.

Here's moolanomy.com explaining why dollar cost averaging works well in a volatile market.

4) Early retirement extreme

Barring very extreme measures (which I'm not prepared to take or lie outside of my current realm of reality) I will not be retired by 50.  I admire the chutzpah and dedication of those who have kissed goodbye to working life before their hair has grayed.

A kind reader, who I suspect is on this path, offered up this link yesterday for the benefit of those who might be thinking of going this route. The blog lives up to its handle and contains some extreme advice. I'd be consulting with a nutritionist about the long-term impact of living off a diet of rice and lentils. This guy has a $70-$100 a month grocery bill. Wow! 

5) Anything you can do we can do better

Some might mistake me for a raging feminist. I'm not. If my story selection is any way gender imbalanced it's probably because I'm short of female company at the office. Maybe Mazzy will even the score.

I was encouraged and interested to spot this article in the Guardian which reports that womens' saving rates for retirement have reached a seven-year high. According to a survey, women in the U.K. are proportionally out-saving men for retirement, if only slightly 12.9% to 12.6% of income. Men are still saving more on the whole because of inequity in gender pay. 

We'll get there. Tables are turning, however slow.

For more Take Fives by Amanda Morrall click here