Amanda's Take Five for Monday

Personal Finance

The cost of dying; Better off in Oz?; Sneaky side businesses; 8 ways inflation is zapping your wealth; The art of full screen living

10th Sep 12, 8:05am by Amanda Morrall

1) The cost of dying

When my beloved late grandfather died, he instructed that he be cremated in a cardboard box. It wasn't so much the cost (although he was a Scotsman and thus thrifty by nature) but rather the material itself. You see he was a talented woodworker and conservationist and was horrified at the prospect of burning up a beautiful tree.

One of my most cherished belongings is a cribbage board my tree-loving grandfather made out of the mahogany spiral staircase that was salvaged from my great grandparent's home in Ontario, Canada. It unfolds in the shape of a triangle (he was a former sailor too) and comes with a leather case, which he also made himself from recycled materials.

I was reminded of my dear grandfather after watching this TV3 piece on the cost of dying and how to minimise funeral costs. As you might imagine, coffins are one of the biggest expenses, right up there with the real estate required to bury them. For these reason "Grumps" was cremated. Sometimes I wish I had a place to visit him, but he remains deeply embedded in my heart. RIP Grumps.

2) Mortgage vs saving

In case you missed it, we had a lively web interactive session Friday with our soon to be departed managing editor Bernard Hickey. Don't worry, Bernard isn't dying just reincarnating himself. Anyway, it was a wide ranging conversation but the focal point of it was mortgage repayment versus savings. I think you'll know where he stands on that one.

For the benefit of our good readers living in Australia I thought I would include this link today from the Age. It discusses the importance of early saving to capitalise on the compounding interest advantage. However, I was also interested to read a contrarian view in the article suggesting that in some cases, actually it makes better sense to direct your excess income into savings rather than the mortgage. That's due to the tax structuring and concessional contribution caps of superannuation schemes abroad which favour the long-term saver. Worth a read regardless of where you live because you just never know where you'll end up.

3) Your sneaky side business

In the web interactive with Bernard, I offered my own two cents worth of advice for avoiding poverty in old age. In a nutshell, I suggested that in addition to scrimping and saving and paying off debt, those aspiring to get ahead should look at ways to grow their income, through self investment. Someone construed from this that I was suggesting you exploit one of the many government benefits on offer to further your financial cause. For the record, this isn't what I was getting at. What I meant was that those looking to build up their nesteggs ought to look for opportunities to capitalise on their own talents, skills and networks to make money. The possibilities are infinite, you just have to get creative.

So, do the bonds of full-time employment constrain you from pursuing a sideline, and if so, what are your obligations in this regard? KNSFinancial.com explores.

4) Inflation and savings

Two of the biggest threats to savings? Tax and inflation. The following, from gobankingrates.com looks at 8 ways inflation is zapping your wealth.

5) Full screen living

At work, we have a few twin screeners. That is they have two computer monitors with which they interface all day long; three actually if you include the smaller screen on their mobile phones. On one hand, this makes for greater efficiencies (I'm told) and yet it has also the effect of turning us into scatter brains. It may not look as cool but focusing on one full screen at a time may in fact be more productive if it has the effect of making you more focussed on particular job and giving it up 100% instead of 1/10.

For your contemplation today, here's an item from Zen Habits on "Full Screen Living."

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

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.

26 Comments

by MortgageBelt | 10th Sep 12, 8:21am 1347222101

Repay Mortg vs Savings: Well, if you wait until all your debt is gone before saving/investing you may never get there. Another way is to 'set & forget' your mortgage and start saving anyway via KS or TDs or whatever. Also, if you rapid repay your mortgage chances are that you can/will claw it back for something - if it's locked down in KS or TD or shares then it's harder to fritter away ie it's ringfenced.

The same philosophy is used on the'debt snowball' - attack the small debts first regardless of the interest rate. Get some wins which motivate you to carry on repaying the next debt & so on. As behaviour is not perfectly logical.

2 Screens: Just moved to 2 physical screens @ work & it's far more productive. Can read an email while updating bits of a Word document etc - don't have to print so much... Don't know why I didn't go for 2 screens a long time ago. Now waiting for the pay increase.

by Gummy Bear Hero | 10th Sep 12, 8:57am 1347224221

I was very surprised when you mentioned " self investment " , that someone else didn't use that as an excuse to whitter on about " peak oil " or " AGW "..........

.......as for the departure of head gloomsteriser Hickey , I reckon a cardboard box should do the trick ........ not for cremation ! ..... as a going away gift , summit to put his pens & doo-dads in ( you're not the only one with Scottish ancestry , Amanda ! )...........

Bernard's been telling us to be frugal , now's the time to demonstrate how we took on board his message , and give the big guy an austere farewell ......I'm sure he'll be well pleased to see that we really were listening .......

by Uninterested | 10th Sep 12, 9:19am 1347225580

On Old Grumps: What happened to the old fellas ashes?

The most obvious thing to do with ashes is to sprinkle them somewhere natural and nice. eg At sea at a certain spot. In a park etc. In my view there is no point keeping them in an urn on the mantlepiece.

by Gummy Bear Hero | 10th Sep 12, 9:32am 1347226340

..... that's good quality potash you're wasting there , jimmy ........ sprinkle 'em on the marrows or the tomatoes ...... give yon garden a wee boost ....

And let the dearly departed " Rest In Peas " , as they say

by Amanda Morrall | 10th Sep 12, 10:42am 1347230544

Actually he was quite a happy fellow grumps. The only time he barked was at my gran who never stopped talking. The story of his ashes (which have yet to be sprinkled) is a rather sad one. He had requested a river release.

by StanGoodvibes | 10th Sep 12, 6:50pm 1347259809

The Whanganui River is rather fetching at this time of year....

by StanGoodvibes | 10th Sep 12, 10:05am 1347228359

#1 I had an amusing argument with my parents a while back when they discovered that at the time I didn't have a will and were horrified that my estate might go to the government. I patiently explained that I wouldn't care because I would be dead. They tried to counter-argue along the lines of 'don't you want to feel like you left your money to something/someone useful?', to which I counter-argued that I wouldn't care because I would be dead.

I neither care what happens to my stuff after I'm dead, what happens to my body after I am dead, or who bears the cost of disposing of me after I am dead because I'll be dead. So minimising funeral costs or minimising the environment cost of my departure is something I never think about, because when it happens, I'll be dead.

Boy, when you're dead, they really fix you up. I hope to hell when I do die somebody has sense enough to just dump me in the river or something. Anything except sticking me in a goddam cemetery. People coming and putting a bunch of flowers on your stomach on Sunday, and all that crap. Who wants flowers when you're dead? Nobody. ~J.D. Salinger, The Catcher in the Rye, 1945

To himself everyone is immortal; he may know that he is going to die, but he can never know that he is dead. ~Samuel Butler

If you spend all your time worrying about dying, living isn't going to be much fun. ~Roseanne Barr

by StanGoodvibes | 10th Sep 12, 11:21am 1347232915

Correct. I have no children. I hate them :-)

It's very liberating; they say our children don't inherit our planet, we borrow it from them. But I don't have any kids so am borrowing it from complete strangers, which means I can live a scorched earth lifestyle without caring what happens to them after I'm gone.

Actually I'm being a bit facetious - the above quote actually came from a Dilbert cartoon. There is some truth in it though, in that myself and 7 billion other people are trashing the planet faster than it can fix itself. The wealth you leave your kids may not be enough to give them the life you hope for, because by the time they grow up you'll be looking at 9-10 billion people and a radically altered environment.

That's one of the reasons I'm so blase' about my death - I expect most of the rest of the human race won't be far behind me

by ngakonui gold | 10th Sep 12, 11:59am 1347235194

two things i find with no kids people is that time means nothing and the word COMPROMISE

doesn't exist in their world.

by steven | 10th Sep 12, 11:31am 1347233505

2nd and 3rd, yes.

regards

by StanGoodvibes | 10th Sep 12, 12:29pm 1347236959

Sorry Ivan, let me clarify - I have a couple of neices I quite like, and am happy to spend time with. I was referring more to the constant annoyance of having to endure other peoples children, most often when I am trying to have a relaxing coffee or enjoy something outside.

I'm not normally a grumpy person, and accept that there are evolutionary reasons why parents basically become retarded when they have young children and tend to forget that there are still other people in the world, let alone that those other people are totally indifferent to their children. It's part and parcel of living in a city. Doesn't mean I have to like them though.

And I've never wanted any of my own, for a variety of reasons. Which is fine, because it's not like the planet needs any more humans right now. So on the contrary, the world is full of wonderful things to see and do, especially if you have the time and money that not having kids affords you, so you don't know what you are missing.

Also, I was a very annoying child LOL

by StanGoodvibes | 10th Sep 12, 10:08am 1347228515

#5 I need two screens at work - one for actual work and one for writing comments to website...

by steven | 10th Sep 12, 10:31am 1347229915

Best thing ever 2 screens (well except 3).

regards

by StanGoodvibes | 10th Sep 12, 10:14am 1347228865

#2 Inflation is everything when it comes to paying down debt or saving - inflation eats your savings, but that $400,000 mortgage that seemed so scary back in the 90's when you were earning 50k isn't so bad in 2012 when you are earning $150k.

With the western world in debt to the tune of approx $28 trillion, a lot of that debt is going to have to be inflated away, so that Kiwisaver account that's going to be worth $300k in 2050 will probably buy you a small family car...

by steven | 10th Sep 12, 11:10am 1347232235

You assume inflation.

I think the forthcoming event will be bigger, worse and deflationary.

Kiwisaver is based on profit of a something, the underlying assets will deflate tremendiously.....50% to 90% aka the 1930s Great Depression.

By 2050 there will be no fossil fuels at the price the likes of you and I can afford......it will be a push bike but my kids/grandkids will be riding....I will be long gone.

regards

by StanGoodvibes | 10th Sep 12, 1:59pm 1347242366

Well it's a tricky one to pick - on the one hand the Great Recession is having a deflationary effect, but on the other you've got Bernanke and Draghi about to fire up the printers and launch another giant inflationary cycle. The net result is hard to pick.

The only good thing about inflation is that interest rates typically rise with it, so your savings increase along with inflation (fingers crossed).

by steven | 10th Sep 12, 2:23pm 1347243827

Ok, but where is the core or real inflation from the last printing sessions? The inflationistas have promised us substantial inflation for 4 years (so buy gold!, buy gold!!!, its so shiny so buy gold!!!)....and it hasnt happened yet.

So I dont know at present, if they (Fed and Congress) could or had the balls to print many many Trillions then OK, they dont and US congress wont let them I think....and if Romney gets in he will replace Bernanke who is the last defence against deflation....Even if they did print I dont think it would fix the underlying lack of energy....

That leaves deflation, its just a Q of when IMHO.

Two good things about deflation is that interest rates typically" are low but your savings increase in value...and its a tax free gain.

regards

by StanGoodvibes | 10th Sep 12, 4:06pm 1347249972

Yes I see the gold bears are pushing for gold as a hedge against inflation, but as you say, it could just as easily be the big deflation. Antipodean properties are still way overvalued IMHO, but yet it seems people are still pushing the boat out on mortgage loans to buy them. Maybe we'll get the property crash we deserve, maybe low growth and low interest will keep the market ticking slowly (with the odd spike) for the next 10 years or so. Hard to predict.

I'm back to paying off a mortgage and have no intention of selling any time soon, so ideally I'd like to see the Great Recession drag on NZ until the OCR follows Europe and the US down to like 0.5%, because the big four would have to drop rates and I could do with a few years of a 2-3% mortgage rate. I'm not banking on it though.

by steven | 10th Sep 12, 5:05pm 1347253535

What worries me is the law of un-intended consquences. For instance we borrow at a possibly cheaper rate because of the carry trade. So foreign banks borrow at 0.25% and lend to us at 4~5%....If the OCR drops to 0.25% then maybe ppl who actually have to put their own money up wont....

regards

by StanGoodvibes | 10th Sep 12, 6:10pm 1347257408

Well yes but you appear to be labouring under the assumption I care about how it affects other people, Steven. It's all about me.

:-)

by steven | 10th Sep 12, 6:39pm 1347259193

I wasnt discusing you at all.

anyway, you are not alone.

regards

by speckles | 10th Sep 12, 1:09pm 1347239368

Nice idea however for most... incomes never now keep up with real inflation so good luck with that.

by StanGoodvibes | 10th Sep 12, 3:59pm 1347249559

well it's relative speckles, my income has far surpassed inflation in the last few years, admittedly largely through moving to Australia (and some upskilling). There are opportunities everywhere if you are prepared to have a crack at it...

by speckles | 10th Sep 12, 10:02pm 1347271364

Its all relative, to do relatively well you have to do better than most. I have more money in the last four years of so called recession than than in the previous boom and I timed both right..

However this is not the case for most so in general it does not apply.

In aussie, given you have asset appreciation as well, the PFP assoc. stats. tell me you had to make a average pay rise of 12-15% pa to get ahead. You have to be extra special to make that consistently, year in year out, in an established job on their eastern seaboard.

by Ralph | 10th Sep 12, 1:08pm 1347239301

Well I did ask Mr Hickey about that idea to which he pointed out delfation can last a very long time, as evidenced in the Japanese experiment of the last 25 years. Also the variable of interest rates is of interest.

by steven | 10th Sep 12, 2:16pm 1347243364

Japan had a huge retirement fund to ponce off, that is now actually ending as those ppl in retirement try and draw down on their savings. So the japanese govn will have to go offshore for funds or offer a reasonable rate of return....ie 5% plus....hence why its had 3 decades of slow deflation that is I think about to end. Japan also I think had a huge property bubble....they were lucky enough to slowly deflate out of it...

regards