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Vitriolic financial advice; The case for Gisborne; Saving for a deposit on a first home; Fake boobs refunded on credit; Dumb luck or skill in the share market

Vitriolic financial advice; The case for Gisborne; Saving for a deposit on a first home; Fake boobs refunded on credit; Dumb luck or skill in the share market

By Amanda Morrall (email)

1) Ramit's world

Because I try to stay current with what's hot and happening in personal finance, I subscribe to several blogs. One of them is "I will teach you to be rich" guy Ramit Sethi, a big name in personal finance in the U.S. I read Ramit's blogs for entertainment as much as I do the financial advice.

He's pretty darn acerbic. In his latest twitter post, Ramit slams other Personal Finance bloggers for their lame, obvious or bad advice. Here is a sample to whet your appetite.

1. “She suggests peppering your teen with daily finance texts…”

Let’s start off with this post from ING Direct.

This …financial educator…”thinks parents should use this to their advantage and harness the teens’ texting obsession to help them learn about money. [She] suggests peppering your teen with daily finance texts, because guess what? They’ll actually read them.  Some of her suggestions for clueless parents include little gems like:

  • “Just deposited ur allowance to ur checking account. JW how much money u want to deposit in ur savings account?”
  • “TTYL about wat ur going to do with ur bday money from gma and gpa. LTS. 2nite at dinner?”

Ramit’s comment: I am going to supply my future children with a gun and ask them to summarily kill me if I ever do this.

And on another blogger's comments about the latte factor and savings you could make sacrificing take-away caffeine.

Ramit’s comment: Oh my god. Do we think there’s one American who hasn’t been guilted into thinking their small $3 purchase is a horrific Satan-spawned communist idea? It’s easier to believe that people “just don’t realize the harm they are doing” than to actually dig beneath the surface. Just like fat people don’t know they’re fat, right? This canard is why personal-finance “experts” continue giving horrible advice.

Ugh. I am going to decide if I want to continue writing this blog or simply move to a deserted island, never to see the face of technology or another “expert” again. See you guys later.

Amanda's comment: Please remind me not to invite this guy to my book launch. Soft scripted texts may not be all that effective with a dozy hormonal teen, but I'm willing to wager there is a way of manipulating this technology in a way that might actually be an effective educational tool. And a word of advice for you Ramit: until you become a parent yourself, bad idea to give other parents advice, unless you are a parenting expert which I doubt you are, given your self professed hatred of pets. 

2) The case for Gisborne

First a confession. I actually haven't been to Gisborne. I just like to muse about it as I have heard nice things about this joint and the idea of buying a NZ$200,000 three bedroom home in a surfing paradise, rather than a draughty NZ$400,000 home in Auckland that has newspaper for insulation seems appealing.

Check out our latest home loan affordability report here for district profiles in term of your purchasing power.

Here's the skinny on Gisborne in our Roost Home Loan Affordability report for single first home buyers in Gisborne

 It now takes 34.5% of one median income of a person in the 25-29 age group to pay the mortgage on the lower-quartile priced house in January, down from December’s 34.9%. 

This index was 37.4% a year ago and 64.5% four years ago. This affordability index reached its highest point of 79.9% in July 2007. 

Essentially a single median income for a first-home buyer is not high enough to buy a lower-quartile priced house, even with a deposit around 10% of the house’s value. However, a couple/family with more than one income may find the lower-quartile house price is affordable. (It's 16.8% for a two income first home buyer household

3) How much, how long?

Wondering how long it will take to save for a deposit on a first time home if you're saving out of your wages?

Check out our latest, greatest home deposit calculator here:

4) Credit card coup

I never thought I'd see the day when I'd be writing something positive about credit cards but after reading this article from the Guardian's Money section on Lloyds TSB refunding a woman £3,700 for faulty breast implants, I'm duly impressed.

I don't approve of her actions (that is buying silicon boobs and worst yet putting them on credit) however it's says something good about Lloyds that she'd be reimbursed for them on the grounds she was sold faulty goods. A good reminder to read the fine print of both your credit card policy and the Consumer's Act.

5) Luck or skill

I had a good laugh yesterday when I noticed that one of my KiwiSaver video's on you-tube got the thumbs down.  What I found so amusing was that I hadn't even posted the story on our website yet.  I'm not sure what the person disliked about the video however I did take on board a comment later posted on the article rubbishing us for not talking about what the funds are invested in.

We didn't have time to go into that in the Q&A which was related to two specific questions however that information can be obtained from your provider. You can also get to their disclosure and investment statements from our website as well if you look up your fund in the "Find your Fund" section and then click on the related links. We also show a break down of the asset allocation for each fund so you can see what proportion of the fund is invested in cash, bonds and equities. 

On the question of performance, I thought the disgruntled commentator might enjoy this article from Forbes Money on whether a fund's returns are owing more to luck than skill. The article's headline speaks for itself: "Why Smart People Fail to Beat the Market."

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

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My teen son walked 20 mins to save $2.50 bus fare. Then made sure he caught an off-peak train, rather than pay $4 for a peak fare.
He allows himself a $7 pizza on Tuesdays (apparently Dominos do cheap pizzas on Tuesdays) and packs a lunch other days.
He's off to Europe next month.

Smart kid, off to cracking start in his financial life:)

good on him....I allow pizza once a month.....

Whatever made you use the word "Joint" in a piece about Gisborne?

I dunno, too much Sopranos I guess. Plus, writer's rage at losing my original story after two hours this morning. Cheers

I like the home loan deposit calculator - I'm on track to hit my target within two years.
Now just waiting for BH's housing crash to take advantage!

Blimey 6.6 years to save 50 odd  K   geez talk about depressing! and then you want to blow it all on an overpriced piece of property and a small piece at that!
The way to save for a home deposit if that is really what you want is to go off shore, somewhere with high wages and low cost of living,  and work for a year or two  and you will  find that sort of money quite easy to come by in that time frame. Or as an alternative work 5-6,7  yrs off shore and buy the whole damn house when you come back to NZ.

1. The latte story is not about guilt, it's about how one can save money if one needs to. I've had this conversation many times with budget clients trying to "reframe" their expenditure. Cutting out expenses like visits to the cafe is a simple way of saving money. Bring a thermos and packed lunch to work :-)
For some people the cafe visit provides more than just the over priced coffee and if that is part of their daily self-care or enjoyment, why not? 

Been working in Gisborne recently.  Nice place to live - if you have a good job/income.  However, nice houses near the beach can still be 500-700k, e.g. Wainui....

I've lived in Gisborne for 5 years after moving from Auckland.  A truly great place to live if you have a job.  Lots of entrepreneurs here trying to make a living and live in a great place.  I recommend visiting.