Five scary beasts to beware of in personal finance and how to get them under control

By Amanda Morrall

As a kid Halloween was one of my favourite occasions. It wasn't just the pillowcase full of sweets either. If we were lucky enough for the snow to have held off, walking up and down the streets dressed in costumes with the crisp fall leaves crunching under our feet, bare tree branches casting ghostly shadows in the street and giant carved pumpkins greeting us at doorsteps was pure magic. I appreciate Halloween is regarded as a crass North American import so thought I'd look at five frightening things related to personal finance instead.

1) Fees

Before I started taking an interest in personal finance, things like fees didn't concern me too much. I had a somewhat cynical view that if you had to employ the services of any party in the financial services sector you were going to get creamed in fees no matter what and that the differences would be marginal, so why bother reading the fine print. I remain jaundiced about this today however given the close attention we pay to the subject, I have discovered just how big, and dramatic in some cases, the fees can be and why it pays to understand just how much you are paying, particularly when it comes to fees that keep ticking over, like KiwiSaver for example.

Find out what you are paying, square that with performance, and compare it to others similar funds.

When you look up your fund on our data base, you will find a break down of asset allocation and also fees. If you want to see how that compares to others in the same category of fund, click fund type in the top box and you'll get a list of equivalents where you see their fees as well.

Fees outside of KiwiSaver also count, so never gloss over this matter. Here's a link to our fee calculator which shows just how scary high fees are over the long run.

2) Debt

In a past life I used to be somewhat indifferent to debt as well. I disliked it but accepted it as a normal part of modern life. Today I am more mindful about the fact we have a choice about taking on debt.

Here's some resources to help you manage your debt.

Interest.co.nz's mortgage calculator

Sorted.org.nz's debt calculator

Janine Stark's cure for debt and depression.

3) High interest rates

High interest rates are great -  if you're a saver with money in term deposits. If you're a borrower, they're killer. Regardless of which side of the equation you stand on, make sure you're getting the most bang for your buck.

Borrowing - compare here.

Saving - compare here.

4) Credit cards

I don't much like credit cards either although I do appreciate that there is an upside if they are well managed. In most peoples' hands, they're an excuse to spend what they don't have. The scariest part is what you end up paying for impulse purchases that are paid off over time by drip feeding your debt. To find out the shocking cost of paying the minimum off each month, run your numbers through this baby.

5) Unfulfilled dreams

The most frightening thing by far in my opinion, or maybe it's just the saddest, is folks who languish in jobs that don't fulfil them or help them to realise their full potential. Here's a great article from Lifehack.org about finding your passion and building a business around it.

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