Are you feeling left behind?

Personal Finance

Elizabeth Kerr could not contain her inner green-eyed monster this summer holidays

21st Jan 16, 10:53am by Elizabeth Kerr

By Elizabeth Kerr

Is it just me, or did everyone else upgrade their lives this summer?

I swear it feels like everyone I know has bought something expensive, larger, more awesome and are just generally having the time of their lives, while we plod along holding on the theme for “no major changes” for 2016.

Just in my little corner of the universe I can count six new cars, three holiday homes, five adult-only overseas trips, two new bedroom suites, two total home makeovers, and a selection of top of the line BBQ’s and new outside dining areas just to mention a few things.

Adding to all that, I feel like I’m the only person who isn’t out burning $100 notes at fancy cocktails bars on sunny afternoons, posting perfectly posed pictures in designer harem pants on Facebook for everyone to see. (If you’ve seen my tribe at a McCafe you’ll understand why, but that’s not the point… everyone else seems to be doing it.)

I mention this because even though I write about the benefits of building a money machine, there are no secret super powers that I have access to which make me immune to feeling jealous at other people’s shiny new things just like everyone else does. Sometimes I can feel left out too. Sometimes I feel like I want something I can boast about now as well and I fear that without that something then there will be no connection between us anymore.

Funnily enough early retirement and savings goals usually don’t foster much of a conversation.

Them: “How is your money machine coming along”?

Me: “Good, saving is the only constant.”

Them: “Yes you’re right. Hey, talking about saving, guess what I got on sale last week… it was three for 80 bucks… bargain!!!”

See what I mean? Not exactly a topic that keeps people hanging off my every word. Sometimes I have to force myself to celebrate their purchases just as any good friends do. It is of course not about me.

And that is the point - what other people spend their money on is not about me or you at all. It’s their money and their lifestyle design and even though you may be convinced that they are pissing money down the drain it is not for you to say.

Here are a few things I think I/we need to remember in order to overcome feeling a little jealous and achieve a money machine while keeping our relationships.

Not everyone is on the money machine journey. Although I argue that it should be, it’s not for everyone. If you are finding your own feelings about money is getting in the way of enjoying your pals, then you might just be a crap friend. It is not your job to enlighten them about how the money machine works and remind them every time they hand over their eftpos card. It is your job to lead by example with your own spending decisions and answer any questions they may have.
Remember “Hedonic Adaption”. This refers to the fact that science has proven that when we lust after something, and then purchase it… our baseline happiness will return to how we were feeling before the purchase was made. There aren't any goods or services out there that you can buy which will raise your level of happiness for the long term.
Don’t say anything bad about their purchases. Your job as their friend is to be supportive, let them shine and bask in their moment. Sure, you know hedonic adaption will kick in and in a few weeks they’ll stop parking that car in the garage and the seats will be covered in raisins and sticky fingers just like their old one was… but that’s not the point here. It would be cruel to take away that moment from them. Smile, nod, ask about the features, congratulate them and just swallow it down.
Ask yourself if you are jealous because you really want it for yourself, or if the impact on your money machine and extra years of working required to pay for it are worth it? Remember patience attains all that it strives for. If you are consistent you will get there in your own time.
Remember that there is a very high chance that no one believes you can actually achieve an early retirement in today’s market, on your salary without winning lotto. A remodelled kitchen or larger TV will never feel as good as the freedom that comes from having your own money machine and the endless choice this gives you. Not to mention the pleasure of proving others wrong.
It is YOUR life. Yours alone and no one can dictate to you how you should spend your money other than you. I know that the suggestion that you too should take an all expenses charged to your credit card holiday because you deserve it comes from a good place…. but your money is to reflect YOUR choices.
Go back to the drawing board and look at your money machine goals one more time. What will you do differently? (if anything), check you’ve got the numbers right, brainstorm some ways to get their quicker, talk to someone who is on the journey, email me at Elizabeth.kerr@interest.co.nz, do whatever you need to in order to paint the vision as brightly and attractively as possible to drown out the temptation to spend unnecessarily.

So as we near the end of the summer holidays, I for one am glad to be getting back into the swing of things again. The summer BBQ bragging was getting just a teeny tiny bit too much to take and there’s nothing like some post holiday back-to-work depression to remind me why we are on this journey in the first place.

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158 Comments

by dictator | 21st Jan 16, 11:23am 1453328586

8. The car purchases are financed.
9. They will be eating dog roll when they retire with 30 years still left on their mortgage. I hear frying the dog roll helps.

by Elizabeth_Kerr | 21st Jan 16, 11:28am 1453328883

Oh bless... thanks for that....

Note to readers: if you're feeling all green-eyed message dictator he has all the soothing words *wink*

by dictator | 21st Jan 16, 12:30pm 1453332602

One of my hobbies is helping people online who have got themselves in one heck of a financial disaster. I'm pretty sure I've seen it all but people make a lot of bad decisions. Although the younger we are it's easier to treat retirement as some distant event to be ignored. One thing I wish is that kiwisaver existed when I first started working as I would be substantially better off right now. It's too bad that most people will be carrying debts by the time they retire, and their retirement savings will just be a bail out leaving them little or nothing to live on.

by steven | 21st Jan 16, 10:32pm 1453368755

tomato sauce....fixes just about anythings taste.

by grum | 22nd Jan 16, 11:18am 1453414708

Good observations. I found that once I got my life back, I stopped wanting most of the things I thought I wanted. Instead of jealousy at people's new shinies, the over-riding emotion I now feel is pity (for them). Of course you have to keep that to yourself.
Innit funny how people say "You lucky b**** how the hell are you retired at your age?" but then within 20 seconds of you starting to explain how simple it is and that they could be too, their eyes glaze over and they are looking around for someone to bray at about their new toy or trip. I just think, well your consumerism is helping my money machine work better, thanks.
Hold your course Elizabeth, it is all worth it.

by lac | 21st Jan 16, 12:37pm 1453333022

Couldn't have said it better myself:) "he over-riding emotion I now feel is pity (for them)"

by lac | 21st Jan 16, 11:50am 1453330241

Story of my life......
I just stick to my plan that's all, I have realized some time ago that I cannot educate everyone about the "money machine" I now wait for them to ask me about some tips etc.
I just congratulate them, usually go home and do a quick analysis/calculation of what their purchase would have accumulated "me" in the next 25 years.....AND I FEEL SOOOO MUCH BETTER AFTER THAT, I sleep like a baby:)

by xelnaga | 21st Jan 16, 3:15pm 1453342532

The only money machine that seems to work is Auckland housing.

by tito | 21st Jan 16, 4:00pm 1453345230

Agreed. Although, we don't know how long we have on this planet, so its important to get the balance right between having a little fun with your hard earn't money and investing/saving. Life is too short not to have the odd holiday, enjoy a BBQ with friends and treat yourself every now and again. I recently splurged $2k on a BBQ I enjoy cooking on a BBQ and I love slow cooking meat on the rotisserie whilst having friends around. Did I suffer Hedonic Adaption with my BBQ purchase - no I did not. Life is to short not enjoy pulled pork :)

by Elizabeth_Kerr | 22nd Jan 16, 8:31am 1453404673

BBQ's as part of a considered and well funded lifestyle design get my tick too.

:) Enjoy the pulled pork. My favorite is the beer can chicken ...

by skudiv | 24th Jan 16, 10:05am 1453583147

Enjoy your gas cooked food, I prefer the sizzle of some manuka embers. Smokey BBQ flavour, just like God intended.

by skudiv | 21st Jan 16, 5:57pm 1453352253

I did contemplate getting a J.O.B this year, just so I could buy some more shiny stuff, but though nah, fark it! The jealousy wouldn't outweigh the tedium of slaving my life away. I'd much rather be enjoying the school holidays on the beach with the family.
Other people I know, don't need a money machine, they just live on next to nothing, get all the income supports they are entitled to, and just cruise.

by Alter Ego | 21st Jan 16, 6:38pm 1453354733

Cruising is easy, but capitalizing is not allowed and why swear in public, anyway.

I joined the dots.

Wash yer mouth out Skudiv...work is a a 4 letter word in NZ. But a j.o.b implies commitment.

But then we should all be committed.

Invest is the new way to suck-cess.

By the time we are all finished there will be no jobs left....slavery is the next step.

Debt slavery, I do believe it is called.

by skudiv | 21st Jan 16, 7:47pm 1453358857

Succintly said, as always :)
Why pay off your debts?

by Alter Ego | 21st Jan 16, 8:29pm 1453361343

Being in the top percentage in my class, I cannot think why? at all. I just do.

School's still out..have fun.

by 703 | 21st Jan 16, 5:57pm 1453352263

Hi Elizabeth.

So which category do these people you know fall under?

1. Aspirationals - Are hyperconsumers with big incomes, but little wealth. Their spending patterns mimic the millionaires.
2. The millionaires - They have generated wealth and even if they are hyper-consumers, their spend has negligible impact their wealth.

Contrary to popular believe, based on USA research data, the truly rich people on average spend less on cars and other expensive items compared to the aspirationals. However, only a small percentage (5%) of the truly rich spend big on luxury items and they usually work in the showbiz industry.

by keywest | 21st Jan 16, 6:47pm 1453355224

I'd suggest many of these people are better than most at managing their money machines. They are probably smarter than the average population in creating wealth in their lives. I speak from experience.

by Elizabeth_Kerr | 22nd Jan 16, 8:33am 1453404789

That is a really interesting line of thought. That you have to be smart to create wealth - the inverse is that you would have to be dumb to be poor. I am bravely writing about this next.... watch this space.

by sadr001 | 22nd Jan 16, 3:39pm 1453430353

Exactly, Intellect has a strong correlation to wealth.
As I mentioned in response to another comment below:

Even if you own your own place the smart people will still rent the house they live in. Think about it, If you get $500 a week renting out your place and pay $500 a week to rent a place, are you at neutral?

The answer is no. You are making money. (Assuming the house cost you $1,000,000 and you have a $750,000 loan @ 4.5% interest and a tax rate of 30% you'd be making roughly $10,000 per year).

This is because you'd be able to claim back the tax on the interest component of your mortgage for a property that is rented out. The main thing that distinguishes the smart from the poor is the ability to do math. With that "extra" $10,000 per year you can have your fancy gadgets/luxuries whilst still saving more than the poor guy who bought a house and then decided to live in it :)

by rastus1 | 22nd Jan 16, 6:28pm 1453440480

...or you get together with family/mates. You buy 'your' house, they buy 'their' house and 'rent' off each other. Each claim all the outgoings. Tax deductible personal living.

by keywest | 22nd Jan 16, 8:08pm 1453446524

Your right and one of the flaws in the New Zealand tax system as makes no sense, I do believe owner occupiers in overseas countries can claim interest and expenses?

by sharetrader | 23rd Jan 16, 10:18am 1453497503

yes its a distortion in our tax system, by renting out you can claim deductions, there are structures to achieve this the only thing is they can not be linked to whomever is living in the house for IRD

by sadr001 | 22nd Jan 16, 11:47pm 1453459647

Exactly! You used to be able to do this solo by having your trust rent to you but the IRD took a dim view of that some time ago :(. The main complication with friends buying and swapping is the keeping up with the Jones (each other) factor, any upgrades you make will technically be to your mate's property :) . Hence the straight up rent to / from strangers idea.

by rastus1 | 23rd Jan 16, 11:45pm 1453545908

Dim view = IRD bluff. Not specific law prevents it...

by badmonkey | 23rd Jan 16, 8:09pm 1453532997

The $250K equity is worth up to $25K p.a. invested in the right portfolio. Even if you value it at the same low 4.5%, that's $11.25K p.a. opportunity cost. So $10K p.a. actually becomes a -$1250 loss. Oops.

by skudiv | 24th Jan 16, 10:01am 1453582884

I would have said BURN! instead of oops, but it's a nice way to highlight the reliance on capital gains to garner a profit.

by KH | 21st Jan 16, 6:51pm 1453355515

i quite like the goodies. And I worked out early that the way to have more of them was to work an Elizabeth type money machine. It worked well, and I have goodies as and when I choose, don't have to work too hard, and have a lot of security. In contrast I see my peers who went for consumption hard and early in their lives are the ones who struggle now, only having the occasional goodie, much fewer than me, and their future is likely to have no goodies at all.
But OK for them, it was their decision.

by Elizabeth_Kerr | 22nd Jan 16, 8:33am 1453404818

Precisely. Good job KH.

by SVP | 21st Jan 16, 9:39pm 1453365577

Aside from your great column, I am also a fan of www.mrmoneymustache.com which I read regularly. One passage he wrote that sticks in my mind whenever I get green-eyed is;
"My personal favorite statistic [in reference to "Millionaire Next Door"] was the one that over 66% of people driving $70,000 luxury cars in this country [US] are actually non-millionaires. Millionaires typically spend $29,000 or less on their cars, representing less than 2% of their net worth. If you’re not a millionaire yet, your spending should be the appropriate ratio lower, probably translating into a $5,000 car or less!
So when I bike down the street on my 3-year-old $299 commuter bike, wearing ripped jeans and a plaid construction shirt, and someone passes me in a brand new BMW 7-series, I actually get to feel pity for that person and their very-likely poor financial situation. That is true joy."
Appreciating the things that you have, and not envying what others have meant that we can now live on way less that our passive income and save 100% of my working income (which gives the passive income a pay rise each year). Strangely, now that we can afford all the showy stuff I no longer desire it. Saying this, we have a long way go to reach the heady heights of frugality that you and MMM have achieved! The ultimate joy belongs to you.

by Alter Ego | 22nd Jan 16, 7:14am 1453400084

http://www.marketwatch.com/story/almost-half-of-ipo-filings-include-an-…

Buy a Ferrari, or buy the Ferrari IPO. Glitz is not all...it seems.

by Elizabeth_Kerr | 22nd Jan 16, 8:40am 1453405205

This is my favourite part of that quote: "Strangely, now that we can afford all the showy stuff I no longer desire it.".

On the one hand I love how we are all so quick to judge the impact of other peoples purchases on their savings but the truth is we don't really know how their money machines stacks up in the background and its none of our business.

Most importantly, criticizing other peoples spending goes against what i believe to be the essence of a good relationship so I was very deliberate in not writing about the benefits of thinking that way. Yes it works in the short term but has the risk of turning you into a penny-pinching loner.

Much better I feel to just focus on making your own vision for your money machine as bright and colorful and amazing as possible so it pulls you towards achieving it and keeps all your friends on side as well.

by grum | 22nd Jan 16, 11:13am 1453414393

Elizabeth, Not wanting to appear defensive, but to clarify. The ones I feel sorry for generally either a) I know can't really afford it and are living a lifestyle beyond their means in an attempt to be seen to be doing well, or b) are showing me their new stuff while simultaneously professing envy of my early retirement achievement. Neither situation is the basis for a good friendship, because the respect isn't there. The first lot are insecure poseurs, the second are mindless consumer addicts.

On the other hand I have several friends comfortably into the wealthy category whose company I am completely relaxed in while helping them enjoy their bach and boat. We both know I could have that too if I wanted to, and respect each other's choices. Furthermore, so as not to be seen as a penny pincher, when I hire a bach for a week I invite them to come and visit, or I bring along a contribution to the boat running cost. I do however still feel a bit of pity for the planet when I think of the environmental cost of creating and operating all that stuff.

by Elizabeth_Kerr | 22nd Jan 16, 1:38pm 1453423128

Well said.

by mandalay | 21st Jan 16, 10:16pm 1453367797

Well I'm stuffed. Clearly I am not as clever as yous all (yeah I know what I wrote.) i work bloody hard, have two jobs, but no bling or flash or fancy stuff, but just the basics cost shed loads and every brass bloody cent is accounted for. I feel absolute no envy for the people who have the flash car and the best goodies, all I want to do is provide for my little tribe and while the likes of yous all ( yeah I know what I wrote again) say you'll impart your wealth knowledge, you actually don't... All you can suggest is I go back in time and buy an Auckland house for two hundred thousand in 1990... Then I'd be rich... And because I didn't, I clearly must be stupid and therefore beyond help...
But if you can offer me some real advice, other than time travel, I'd really and honestly appreciate it....

by steven | 21st Jan 16, 10:29pm 1453368559

Have no debt, keep your health, get good at growing your own food.

by mandalay | 25th Jan 16, 10:10am 1453669835

Thanks Steven. I have no debt to speak of. Though when you don't own a home it's pointless growing veggies, when your landlord sells or increases rent to the stupid factor and one has to move on...

by Elizabeth_Kerr | 22nd Jan 16, 8:40am 1453405250

Email me.

by mandalay | 25th Jan 16, 10:11am 1453669889

Will do this afternoon thanks very much Elizabeth.

by mandalay | 25th Jan 16, 6:42pm 1453700520

Am wondering if I misunderstood your comment, Elizabeth? Thought you were about to impart some excellent wisdom :) alas you don't have your email on interest.co.nz
Cheers, mandalay

by keywest | 22nd Jan 16, 11:50am 1453416615

I'd say don't worry about it and keep renting, is a he'll of a lot cheaper than owning your own place...

by sadr001 | 22nd Jan 16, 3:34pm 1453430092

Even if you own your own place the smart people will still rent the house they live in. Think about it, If you get $500 a week renting out your place and pay $500 a week to rent a place, are you at neutral?

The answer is no. You are making money. (Assuming the house cost you $1,000,000 and you have a $750,000 loan @ 4.5% interest and a tax rate of 30% you'd be making roughly $10,000 per year).

This is because you'd be able to claim back the tax on the interest component of your mortgage for a property that is rented out. The main thing that distinguishes the smart from the poor is the ability to do math. With that "extra" $10,000 per year you can have your fancy gadgets/luxuries whilst still saving more than the poor guy who bought a house and then decided to live in it :)

by keywest | 23rd Jan 16, 1:31am 1453465908

As I live overseas by default I have always been renting hence my NZ properties are only now positively geared. Makes no sense to live in a house you own from a cost perspective.

by badmonkey | 23rd Jan 16, 8:19pm 1453533574

Nope, you're making a loss of at least $1K. Failing to account for opportunity cost - typical mistake of the Auckland property bubble blowers. See my comment above to your quoted quote.

by ptamanz | 24th Jan 16, 12:12pm 1453590735

If you can't afford an house you could buy a cheap rental for $200k or in a medium size town or city in the provinces and rent it out. Have it managed by a local property manager and hold on to it for the long term. Rent will cover the mortgage.
You won't have huge capital gain like Auckland but it
will get paid off eventually. Slow and steady.

by mandalay | 25th Jan 16, 11:15am 1453673703

Thanks mate. Deposit stupidly tied up in KiwiSaver...

by lac | 25th Jan 16, 8:12am 1453662734

Do you have any debt? Clear that first and any payments you were making towards debt, invest in anything that generates passive income....
Read "rich dad poor dad" by Robert Kyosaki for a start. (take some of the things he says with a grain on salt but he gets you understanding the right concepts)
I am 31 with 3 properties and purchased my first while in university and working in a restaurant. So no silver spoon here. But financial education is important and the best are the ones that gained it via experience:)

by mandalay | 25th Jan 16, 10:17am 1453670273

Thanks Iac. No debt. I've read Rich Dad... Clearly the advice there is buy property... I don't have the nouse to be an entrepreneur. I think you'll find that you cannot even get a one bedroom flat in a working middle class neighbourhood for under half a million. Even with low interest rates that's a hefty weekly payment, even after the 100k deposit. Things have changed in Auckland in the last ten years since you were at Uni.

by lac | 25th Jan 16, 11:46am 1453675607

I agree completely, but when I bought my first property it wasn't easy back then either. Working for $9.50 an hour was tough but I saved and made it happen. Dont get me wrong, today the property market is ridiculous but maybe property is not for you right now so maybe another form of business will suit, just don't give up because you cant get into Auckland property. My portfolio is made up of Property, Stocks, ETFs, Cash, Kiwisaver (managed funds), metals. I try and set aside 2 hours a day just reading financial books, articles, websites, forums etc. The thing is, people just give up on property because they cant get into it in Auckland and then do nothing else......

by mandalay | 25th Jan 16, 6:44pm 1453700643

Thanks Iac. Wise words.

by mandalay | 21st Jan 16, 10:15pm 1453367700

by bigblue | 21st Jan 16, 11:05pm 1453370702

Elizabeth - in the two weeks leading up to the 18th of December over 14,000 mortgage approvals were granted. Using the house as a cash register is back in vogue - that's how they are paying for the beach houses, new cars and trips etc. Along with no interest, no payments for 6 months and people swapping credit card debt for a new credit card interest free for a year. So if you wanna keep up with the Joneses credit is how they do it - but do you want to get into that trap? Ask them straight up how did you finance that new car?

by Elizabeth_Kerr | 22nd Jan 16, 8:44am 1453405448

I did that once about 13 years ago. They were mortified that I would ask. We no longer talk. The truth is that it was none of my business. Lesson learned.

But you are correct - house equity is the new credit card thanks to revolving (revolting) credit facilities.

by Zoltuger | 22nd Jan 16, 8:55am 1453406154

A colleague of mine has been shopping for a new car for months. Finally made her choice, financed through an increase in her home loan.

I've thought about my car and how it's 11 years old and a bit small - but then I realise it's absurd to spend tens of thousands of dollars on a depreciating asset that sits idle for 23 hours a day.

by 703 | 22nd Jan 16, 10:34am 1453412045

What is often not discussed in financial books/debates are the safety aspects of premium cars made in the last 7 years. Yes a 15+ year old car will get you from A to B fine, but given the accident prone roads in NZ and the number of impatient/bad drivers out there, spending $20K more on a car is cheap insurance policy against reducing the risk of loosing a limb or your life in a serious accident. Which will impact your ability to generate future income not to mention reduced quality of life.

Safest cars are the heavier ones (1700KG+ Kerb), with 5 star safety ratings. This is proven in crash statistics collected all over the world. So for the safety of you and your family, do not cheap out on small cars (even those with 5 star ratings), as they do much worse in a collision against heavier cars when all things are equal.

by rastus1 | 22nd Jan 16, 10:43am 1453412631

..i guess using the same logic you should go buy an AK47?

by 703 | 22nd Jan 16, 2:03pm 1453424595

The funny thing in this world is that there are full of factual (often free) information, those who act on it and use it to their advantage often comes out on top.

How much do you think the tax payer pays for a month worth of treatment/rehabilitation due to injuries at the hospital? And also the lost of productivity? A lot more than $20K. Depending on the nature, $100K is not uncommon. There is a reason why the government now have ACC bands for your Rego cost.

by steven | 22nd Jan 16, 3:46pm 1453430784

but the potential costs are to different cost centres. You pay the 20k but someone else pays the 100k.

by skudiv | 23rd Jan 16, 7:56am 1453489009

Are injuries at the hospital that common?

by kiwichas | 22nd Jan 16, 1:15pm 1453421753

Agree to a point, I have a larger 2 year old car for open road/high speed work, but around town a medium size older one is probably OK, as collisions are at much lower speed .Unfortunately older cars don't have side airbags and getting T-boned at an intersection, especially in a small car would hurt(especially the head).My wife wants to keep her 21year old car, but I think it's worth 30k to stop her head getting worse....

by 703 | 22nd Jan 16, 1:48pm 1453423706

Yes most of the advancement have been made on side impact and rear impact (such as headrest/seat geometry and active headrests). Not too much have changed in frontal, apart from structural changes for offset impacts, multi-stage airbags, and more pedestrian friendly bonnet designs (some goes as far as popping the whole bonnet off).

by badmonkey | 23rd Jan 16, 8:24pm 1453533895

That's a false dichotomy isn't it! You don't need to spend $30K to maximize safety. (Unless you're also insisting on a premium luxury vehicle). $15K buys a beautiful used car with maxed safety stats. Research independent crash testing e.g. NCAP and ignore NZ govt recommendations as hopelessly inconsistent. Look to Europeans and be aware that NZ new cars are often de-spec'ed for the crappy market here.

by steven | 22nd Jan 16, 3:44pm 1453430696

Do you have any actual data/articles? What you are claiming is that comparing like accidents with like accidents shows a significant degree of less injury, Id be fascinated to read such pieces. Also there may be cheaper ways to achieve the same thing, ie wear a crash helmet for instance. Accident prone? I've not had an accident I can recall in 20 odd years of driving here, now sure there are stupid ppl about. Do you have any statistics v other countries, say the UK?

by 703 | 22nd Jan 16, 5:00pm 1453435204

IIHS has been collecting stats on this going back decades.

http://www.iihs.org/iihs/topics/t/vehicle-size-and-weight/qanda

Click on "Fatality Facts" and look at driver deaths per registered million vehicles. You can filter by the year of vehicle.

by skudiv | 23rd Jan 16, 8:02am 1453489347

CHeapest ways to reduce accidents, stay on your side of the road, don't speed, drive to the conditions, make allowances for other peoples stupidity and irrationality. Common sense, you can easily get through life without ever having an accident. Even if you are not at fault, it's still often possible to avoid accidents if you are driving defensively.
If a more expensive car costs an extra 20k to purchase, an extra 50% on maintainence, and consumes 20% more fuel per year, then the net loss far outwieghs the benefits, and for most the money could be better spent.

by kiwimm | 22nd Jan 16, 3:46pm 1453430801

You get a bigger reduction in accident risk from reducing the number of miles driven than by upgrading the vehicle

by steven | 22nd Jan 16, 3:48pm 1453430922

That is my understanding also. Also Id wonder on time of day avoidance like commuting hours and kids school hours if observations are anything to go by, all of which I do.

by kiwimm | 22nd Jan 16, 4:08pm 1453432134

Depends what you want to avoid. Arguably, you want to limit accidents which cause physical harm to you over material damage. School run is local low-speed roads. Serious accidents are caused at higher speeds.

by Alter Ego | 23rd Jan 16, 10:48am 1453499321

Oil is on the rise....again

So are the Markets..Again....the Green light has been given, Christmas is over, now you will pay the price... again.

Back to work and the speculators need your dough.

I speculate that Speculation with debt has to be paid back...again...and again.

http://finviz.com/futures.ashx

My advice is simple, to all you folks with gas guzzlers, around the World, do not fill the tank, just enough to get where you want to that day.

That way, it will all tank again as they will want to sell more and cannot store it elsewhere, but Your Gas Guzzeler's tank...and you can breathe a sigh of relief, that you bought that gas guzzler in the first place....a self full-filling legacy, no doubt at present.

Prices will soon drop......giving you a sense of temporary satisfaction, until the next time.

And the next time you want to sell your gas guzzler...thing on.

( Unless a speculator, making his borrowed dough...into real bread for the almighty dollar).

by Alter Ego | 25th Jan 16, 10:21am 1453670485

https://nz.finance.yahoo.com/news/gas-prices-plunge-14-cents-194537653…

And that is per gallon...not per litre. Even allowing for the sinking exchange rate, what a rippoff.

We are being stiffed in NZ, so that will not keep the economy wheels rolling along.

by lac | 25th Jan 16, 11:40am 1453675241

I Agree, but the next time your friend buys a new car, just ask him what the safety rating on it is.... bet he will Google it on his iphone in front of u. It is great it people buy cars because of safety but that is usually not the reason they buy new cars. I drive a 18 year old Euro, but it's built solid with all the options when it comes to safety. The Mrs new-ish car, 2008 Japper rates lower in safety.
I agree and disagree with you at the same time, if safety for u and the family are the reason for a new car, excellent, get a 4x4 and be safe but 90% of the time, the new car is really for something else.....

by rastus1 | 22nd Jan 16, 10:41am 1453412465

I always spend less than $10k, hold for maybe 5 yrs, maybe loose a $1k or so per year. Sometimes Ill buy one for a specific purpose (eg holiday) and flick it off after, often making a few dollars and always get money back. Many seem to buy a car based on their occasioanal purpose (eg holiday) as opposed to the main use, being work and back....Unless you need the flash car for business or have cash to burn, new cars are a pretty dumb idea.

Thinking about trying one of these sharing APPS when i need a specific purpsoe vehilce..eg

https://yourdrive.co.nz/

by steven | 22nd Jan 16, 3:51pm 1453431117

Interesting idea, thanks.

by sadr001 | 22nd Jan 16, 3:20pm 1453429206

You'll also find that new cars can consume thousands less in fuel/energy costs than your 11 year old one every year. On top of which new cars have lower ACC levies and are less likely to have expensive mechanical faults.

by steven | 22nd Jan 16, 3:36pm 1453430198

"thousands less" this depends on mileage. A newer car would save me maybe $200 a year over my 19year old one, (assuming 8000kms a year) but to get it via a bank loan over 5 years is at least 5% /annum if I did it on the mortgage, the cost of which would far outweighing the petrol saved.

Newer cars are less likely to go wrong sure but if they do you are in for bigger bill.

by sadr001 | 22nd Jan 16, 4:16pm 1453432576

Lets do the math for you and use a behemoth sized new car (2015 Mitsubishi Outlander PHEV XLS 2.0L). We shall assume 10L / 100km for a 19 year old car ( including any decrease in efficiency due to age ) and fuel at $1.80/L.

8,000 KM/year * $1.80/L = $1,440/year

8,000 KM/year / 365 days = approx 21km/day
21km = 4 KWh
4KWh * $0.18/KWh = $0.72/day
$0.72 * 365 = $262.8/year

Based on 8,000km/year your car costs roughly $1,200 per year more to run than a new four wheel drive SUV. The average person aparently does closer to 16,000km per year which would bring the annual savings to roughly $2,400. Just imagine what happens if/when fuel prices go back up to $2.20/L

by Belle | 22nd Jan 16, 4:33pm 1453433617

As much as I agree with you re new car over old, I think you will find it quite disappointing the savings in fuel. 2004 hilux....not much worse than 2013 hilux. I like all the airbags tho. And it climbs hills a lot faster.

by sadr001 | 22nd Jan 16, 4:39pm 1453433960

But how about if you switch your helix for cars designed completely with modern tech? Try the fuel economy of 2016 tesla model X (762 bhp, climbs hills quite quickly) vs the 2014 Hilux. The model X might even have more cargo capacity.

by Belle | 22nd Jan 16, 5:06pm 1453435564

So I googled the Tesla. Ah yep I guess I could fit half a dozen calves in the back seat if they were all good friends. It might not like pulling 2 tonne of colostrum though. It seems the 8.3l/100km is more like 11 given a canopy and a rural rd. Hopefully the new cars do better than the utes.

by Henry_Tull | 22nd Jan 16, 5:13pm 1453435991

They are very wide cars.

by sadr001 | 22nd Jan 16, 5:20pm 1453436413

Towing capacity of the tesla model x is 5,000 pounds. Put the calves in a trailer? http://www.hybridcars.com/tesla-model-x-towing-capacity-cut-to-3500-pou…
Did you perhaps look at the tesla model s?

by Belle | 22nd Jan 16, 5:32pm 1453437163

Do you think it would do a hillstart on the metal rd with a 2.5 tonne inclg trailer plus colostrum?Cant put calves in with the colostrum. They dont swim well at that age.

by sadr001 | 22nd Jan 16, 5:56pm 1453438567

Unlike the old combustion engines electric engines provide instant torque and have no gears :) That means fully loaded hill starts aren't an issue. They might have a ute version soon.

by Belle | 22nd Jan 16, 6:11pm 1453439500

Sold.

by steven | 22nd Jan 16, 6:38pm 1453441100

Actually you need to compare apples with apples and TCO, total cost of ownership.

I have a better estimate of my fuel consumption, 1 tank full per month = $80. x12 so = ($1000 roughly)

Even if we said a 2016 car was 20% better that add up to a saving of $200 per year over an equiv new car. new car = $25000 and 5% over 5 years to pay it back. So $3200 interest over 5 years. $1000 in saved fuel. There are other costs as well like I suspect my insurance would go up steeply.

EV SUV, you also assume its 100% charged which I suspect isnt a far point, as it can only do that for 38kms I think from reading the spec? but lets go with that as its not too far off for me. Electrical cost more like 25cents / kwh. $1 a day in power = $365. Net saving in fuel looks more like $700 a year.

Cost of the SUV? $62000NZ?

$8132 in interest over 5 years to save $5000 in petrol. I would also be paying back over $1000 a month which I simply could not do financially. Insurance would I assume also be significantly higher, lets look online, $53 a month, so $250 in extra insurance per year. After 5 years also a set of tyres, $380 for my car, closer to $1000 for the SUV?

So really the TCO starts to stack badly against a new car.

by sadr001 | 23rd Jan 16, 12:06am 1453460809

Negotiate hard and buy in a group with mates. I recently bought the XLS version for circa $50,000, if you can buy it under a GST registered business then you can take another 15% off that. You'd also need to factor in the amount recovered by selling the existing car.

Can't really do a like for like comparison as for all I know your car may resemble a Nissan Leaf more than a Mitsubishi Outlander. I assumed the car to be fully electric every day because your average daily commute is less than 55% of advertised all electric range and you can charge the car from any household power point. You probably need to switch power companies if you are paying $0.25/kWh (try flick or P2P power if you can get them). If you live in a metropolitan area you can charge your car for free at hundreds of places ( plugshare.com ) including several spots in New Market and 2 at Sylvia park mall (ev only spots with free charging). Using $0 /kWh however wouldn't be fair.

by badmonkey | 23rd Jan 16, 8:40pm 1453534819

Can you sum up your argument please. It's too hot and I can't follow it.

It seems to be that you are saying an electric SUV would make more financial sense than a gas burner, presumably of comparable year/miles. I suggest the capital cost of the latter sinks the case. Your comments.

by badmonkey | 23rd Jan 16, 8:30pm 1453534218

What on earth are you talking about? Use comparable units. You started off with 10 L / 100 km, okay. Are you then imagining an electric SUV?

by Sluggy | 22nd Jan 16, 10:19am 1453411177

I import / wholesale products in the swimming pool industry. This industry has never been busier. More pools going in than ever before, especially Auckland. Average cost probably 60 - 70 k when all is said and done.
Global Warming ? Nah.
Paper gains being used in earnest I believe.
For the record. I dont have a pool - to expensive.

by grum | 21st Jan 16, 11:31pm 1453372269

In reply to mandalay: I managed to live in Auckland for 10 years and avoid buying a house. So I wont throw that one at you. D'oh to me I suppose, but at least I did something mostly sensible with the money not spent on interest (started learning how to invest). Other decisions that made a material difference - move away from Auckland to somewhere with a more sensible cost of living, agressively pursue all opportunities to increase my earning power (retraining, job hopping, getting out of comfort zone), and (although I guess this needs the time machine) limit the size of my tribe to a very small number.

by Elizabeth_Kerr | 22nd Jan 16, 8:45am 1453405522

Precisely!! re "aggressively pursue all opportunities to increase my earning power (retraining, job hopping, getting out of comfort zone)".

If you can't trim your expenses any further it's not a spending problem it's an income problem.

by mandalay | 25th Jan 16, 11:12am 1453673550

Good advice. However both jobs require I remain in Auckland. There really is no use for what I do in the regions... And my skills are specific and not easily transferable.
Darnit, even to me it looks like I'm making excuses... But I'm not... Specific and hard earned skills, paying well, but not enough for Auckland when median house prices are over 800k and rents over 500 a week... Two kids in junior school... No more on the way, unless by devine miracle :) am always aggressively pursuing other opportunities, hence the baring my like on a public forum... Got a job for me in Whangamata? ;)

by xelnaga | 22nd Jan 16, 2:45am 1453383929

Ha, just checked on my stocks and shares "money machine". Looks like after three years of putting in money its running negative after the latest round stock market troubles.

by Elizabeth_Kerr | 22nd Jan 16, 8:46am 1453405599

Stocks and Shares are a long term investment. Right now the world is "on sale" so get them whilst they're cheap.

(Readers: remember I'm not qualified just opinionated....see a QFA before making any changes)

by notaneconomist | 22nd Jan 16, 9:20am 1453407628

Elizabeth....I.m equally opinionated and also not a Financial Advisor.....and I really dispute the advice in that first sentence above. This long-term investment strategy stuff is nothing more than buy hope and pray.......and we all no "hope doth butter no parsnip".......

Long term planning should be about being in a certain position at a certain time and hitting the target......all investments should be returning a profit from the get-go........and the profits taken off the table while they are there.....I suggest your long term investment approach in stocks and shares is needlessly exposing hard earned capital to all sorts of issues including wipe-out of capital.

by KH | 22nd Jan 16, 10:19am 1453411191

I agree and disagree notaneconomist. Shares are risky and unpredictable certainly. Targets. Meh. Given the variables over the long term you are almost never going to hit them. Sometimes given the variables you might wildly exceed them.
But if day by day you have an expenditure less than income you are on the right track. Every bit of surplus is an investment, even it is only reducing your mortgage.

by Elizabeth_Kerr | 22nd Jan 16, 1:41pm 1453423306

Long term as in 10+ years instead of 3-4.

by SmoKey | 22nd Jan 16, 2:35pm 1453426536

Stocks and shares require almost daily tracking and managing. One should not be dogmatic about the long term view. One should have a good exit strategy, limit the greed and hope and exit when appropriate for the person's circumstances. Skimming off the profit regularly is a good idea. And remember, like gambling, invest only what you can afford to lose. Review, review, review. A bit tough for the individual with other diversions, needs for their time, but can't help it.
That is why long term strategies like Kiwisaver, may work well for some, not for others, depending on the timing etc. There is no exit strategy in Kiwisaver. Just hope and praying.

by notaneconomist | 22nd Jan 16, 3:13pm 1453428831

My thinking exactly SmoKey.......stocks and shares can be very hard work!!

by kiwimm | 22nd Jan 16, 3:29pm 1453429756

Some things you should know about share investing (100s of research papers via google if interested):
- over time, stock picking (this includes managed funds) will underperform the market. .
- the more you trade, the less you make
- market timing leads to underperformance
- diversification maintains returns and reduces risk (the only free lunch in investing)
- historically, no-one has made a loss from holding the market over any 20 year period on record
- most market movement in the short-term is noise

Lessons from this are:
- buy and hold the whole market via a tracker
- buy into the most diverse tracker you can
- keep costs to a minimum
- only review rarely to ensure you are still following your strategy (at most quarterly)
- never sell until you physically need the money

by Elizabeth_Kerr | 22nd Jan 16, 7:27pm 1453444059

Thank you KiwiMM..... just what i wanted to say. Yes picking your own stocks/shares is bloody hard work and to actually get the information you need to make an informed decision can cost money/time.

Index trackers are the way to go. See this column here: http://www.interest.co.nz/personal-finance/75016/final-her-two-part-ser…

by speckles | 23rd Jan 16, 8:52am 1453492361

The data sets are such that the history is short in financial economics research, also given it is a social science, coupled with given changes in the economy and financial markets... makes many of theses papers academic relics...

by kiwimm | 25th Jan 16, 9:29am 1453667345

There is now 150 years worth of data which gives a good insight into financial markets and how they work. That period encompasses a great depression, many recessions, 2 world wars, changing political stances, oil crises, currency failures, debt defaults, tech bubbles, housing bubbles and many other events.

Unless you believe in a fundamental game changer that will stop capitalism functioning then this is your best long-term guide.

by badmonkey | 23rd Jan 16, 8:47pm 1453535238

"Elizabeth....I.m equally opinionated and also not a Financial Advisor.....and I really dispute the advice in that first sentence above. This long-term investment strategy stuff is nothing more than buy hope and pray.......and we all no "hope doth butter no parsnip"......."

Long term stock markets have returned 7-10% p.a., in both NZ and overseas markets. E.g. the average annual return for the US S&P 500 since its inception in 1928 through 2014 is approximately 10%, inflation adjusted CAGR about 7%.

Trading might successfully add alpha, or it might fail and retard growth. Either get skilled or find a good fund manager. Either way those figures are your "buy hope and pray" baseline - and they're not too bad.

by Alter Ego | 22nd Jan 16, 9:55am 1453409721

http://www.marketwatch.com/story/look-out-stocks-might-fall-a-lot-furth…

Cheap is comparative ??. I am not qualified to advise...but read that above.

by steven | 22nd Jan 16, 9:57am 1453409843

With insane P/Es and another global recession looming buying shares strikes me as a potty idea frankly. PS I have already sold all of my shares.

by Neven911 | 22nd Jan 16, 10:36am 1453412172

Its called "catching a falling knife"

by sharetrader | 22nd Jan 16, 8:37pm 1453448264

agree have sold down most, but if 2008, 2009 happens again I will be in boots and all. sometimes the fear makes good companies cheap.
as warren buffet says“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”

by Finance Gal | 5th Feb 16, 10:57am 1454623031

No offence Steven, but you always think the world is about to collapse....

by kiwichas | 22nd Jan 16, 1:06pm 1453421160

Get a different fund manager, you should still be 30% or more up over the last 3 years

by kiwimm | 22nd Jan 16, 4:13pm 1453432405

or ditch the fund manager completely and perform better in the long-term by buying a tracker

by speckles | 23rd Jan 16, 9:35pm 1453538156

clearly the end of a cycle/bull run

by notaneconomist | 22nd Jan 16, 9:04am 1453406655

The word "leverage" deserves a mention when discussing a money machine.

by kiwimm | 22nd Jan 16, 4:14pm 1453432469

As does the word "risk", particularly in relation to "volatility" and "reward"

by Elizabeth_Kerr | 22nd Jan 16, 7:31pm 1453444285

Agreed..... but it is a hard one to discuss. Leverage to buy a property - people get that. Leverage to buy shares/stocks.... people get that to some degree too but are less comfortable with it. If you have paid off your home in a growth market, or have a really low LVR in a growth market then sure, you could leverage into riskier environments. Is this what you were referring to?

by Weka | 22nd Jan 16, 9:37am 1453408671

I used to save absolutely every cent and get a huge kick out of it (saving for retirement and seeing the $ increase), but it is nice to treat yourself once in a while to make you feel that you are getting something tangible out of it. When I say treat I don't mean the big ticket items (I'd go into cardiac arrest buying anything like a house, a new car, etc.) But just something small (for me) it could be a new plant for the garden or a dinner out with the kids or if I really can't afford anything just get out and explore new places, see new things (locally) with friends and family - it's not all about money. It was a bit of an sobering moment when friends who have the new car, boat and holidays have recently said to me that the bank has expired that line of credit and now they have to pay some of it back. My car is 15 years old (no one would steal it), it's cheap to run, insure, service and very reliable. Basically if anything still works then who cares (except someone who is incredibly shallow and not worth bothering with). To spend my money it has be an essential requirement, not a fleeting want :-)

by Roger Witherspoon | 22nd Jan 16, 12:47pm 1453420035

Ah, yes, the purpose of buying things you can't afford with money you don't have is to impress the impressionable into thinking you are cleverer than they. No wonder the bankers rule the world.

Harmoney has been an eye opener to me. If you can't beat them...

by Elizabeth_Kerr | 22nd Jan 16, 1:43pm 1453423405

hahahahaha yes P2P lending does have its upsides if you're on the right side of that arrangement.

by Just a farmer | 22nd Jan 16, 12:53pm 1453420390

I know what you mean Weka, I have only really been concentrating on saving for a few years but it is an incredible feeling to look at things that I once thought I could never afford, and realise that I could easily buy it with cash if I wanted to.

by Weka | 22nd Jan 16, 1:36pm 1453422972

I completely agree Farmer :-) the lovely looking BMW SUV that my friends purchased for 20K (via the bank), then had to spend $3,700 repairing (serious mechanical fault) several months later seems a complete waste to me. I also comfort myself with thinking what I could buy if I wanted to, it's really satisfying!

by Andrewj | 22nd Jan 16, 1:39pm 1453423172

you will destroy the consumer society if you carry on like this. It will be Armageddon out there.

by 703 | 23rd Jan 16, 1:38pm 1453509516

Buying a bmw that is outside of the manufacturer warranty is a risky undertaking! third party warranties don't cover most things that can go wrong with a modern car.

by Andrewj | 22nd Jan 16, 9:58am 1453409890

I have university age children and those loans are scary things. How do you save with that around you neck? So I end up paying but I have just told my daughter if she cannot come back to me with a plan on how how her degree is going to create wealth, forget it.
http://www.studentloan.org.nz/blog

by grum | 22nd Jan 16, 10:26am 1453411616

Yesss! I have a degree obtained in the days of "free" tertiary education, because that was what you did then, but now my question to my offspring re education choices is "show me the business case". If my daughter wants to be a plumber or whatever I'll be quite comfortable with that (although brain surgeon would be OK too). I am quite skeptical of the education institutions, I think they are now just another business, very much interested in their own success. Caveat emptor.

by O.Farr-Kinnell | 22nd Jan 16, 12:58pm 1453420693

Yep. Education institutions are creaming it thanks to the government being their "cash-cow". Did I read that there is a course in "clowning"? Well good luck with that, There is already a well established highly paid troupe in Wellington.

by Elizabeth_Kerr | 22nd Jan 16, 1:49pm 1453423784

I agree entirely regarding having a business case for a degree.

by MikeM | 24th Jan 16, 9:13am 1453579984

The irony with tertiary education is that some of the cheapest degrees have some of the highest earning potential such as economics, finance, engineering, mathematics etc. While some such as dentistry, vet science and med degrees are either extremely expensive or require up to 10 years of training with eventual earning potential not equating with the education effort and expense. That's my opinion anyway.

by steven | 24th Jan 16, 10:34am 1453584864

I will disagree, on some degrees ie not engineering (I am a B.Eng.) though it depends on the discipline. Medical degree, well that gets you to say a GP earning on average $127k per annum, way more than an engineer. Dentists I think can earn very good money, however the $120k? (plus then the interest while paying that off!!!!!!) to get your degree is frighteningly high IMHO.

by Ngrrk | 22nd Jan 16, 2:52pm 1453427540

I have recently finished paying off a $40,000 student loan at 38 years old which had been a huge burden for me. For that reason if I had kids I would want them to show me a 'business case'; however, I think its a tragedy because the whole country gains when its young people are educated and not just as accounts or IT consultants but also as artists and historians.

by Andrewj | 22nd Jan 16, 3:49pm 1453430954

730,000 student loans in NZ, 14.6 billion $ , while 3.1 billion is owed by people overseas.

I'm with you we need to encourage the arts,not a privileged university system.

by ngakonui gold | 22nd Jan 16, 11:22am 1453414935

In the very small group of people that i classify as friends there appears to be school of thought that now they have a nest egg called KIWI SAVER,waiting for them when they turn 65 ,they can now blow the money that they had previously put away.

by Weka | 22nd Jan 16, 12:29pm 1453418971

I know someone who earns $125,000 per annum and spends every single cent, every single month with a couple of personal loans thrown in to boot. No Kiwisaver - no nothing and they do not own a property - terrifying prospect to someone like myself. They are ten years off retirement age... University educated so their earning power is good but they have no idea about personal finances whatsoever!

by Elizabeth_Kerr | 22nd Jan 16, 1:48pm 1453423737

I had a conversation about this very thing last week. 3% of ones income is not going to provide for them anywhere what they might be used to earning before retirement. But I guess the powers that be are happy for people to have a little rather than nothing. This is my favorite retirement calculator based which clearly shows that even at saving 10% it will still take you 54 years which takes someone into the mid 70s at least.

https://networthify.com/calculator/earlyretirement?income=50000&initial…

by Weka | 22nd Jan 16, 2:06pm 1453424772

You try and help them but they don't want to know - it will be far too late when they are "living their retirement" with nothing. It scares me to death to see someone in this position and they 'do nothing' while they still can to help themselves...

by tito | 22nd Jan 16, 2:07pm 1453424863

Great calculator - I assume you don't include your personal home equity in 'portfolio value'?

by tito | 22nd Jan 16, 2:24pm 1453425876

by rastus1 | 22nd Jan 16, 3:20pm 1453429206

...this is all well and good but lets get realistic for a moment. Plant yourself into the minds of todays youth, their worry is not how much cash they will have in 54 years......its more about the havoc unwinding as we slowly melt down and the planet implodes........... most have no idea how bad things are and how quickly they are goona get worse.

Time for a beer...a cold one..

by kiwimm | 22nd Jan 16, 4:25pm 1453433153

The only factor that determines how long until you retire is your savings rate. If you can save a larger percentage then you can live on a smaller percentage which reduces the amount you need to save. If you don't believe me, try it in the calculator above e.g. any amount earned but 50% saved leads to retirement in 16.6 years.

by sadr001 | 22nd Jan 16, 4:34pm 1453433664

Is the calculator inflation adjusted? What kind of ROI does it assume that you get?

by MortgageBelt | 22nd Jan 16, 4:36pm 1453433786

According to the calculator: I can retire at 111 years of age!

by Elizabeth_Kerr | 22nd Jan 16, 7:36pm 1453444561

Click on 'Calculator Assumptions". It's quite high level but does give the slap in the face effect some people need.

To another response above - no there is no home equity assumed - this is a savings calculator assuming its in cash and invested.

by speckles | 23rd Jan 16, 3:42pm 1453516958

the assumption your current expenses equal retirement income required makes this of limited use to most.

by speckles | 23rd Jan 16, 3:42pm 1453516958

the assumption your current expenses equal retirement income required makes this of limited use to most.

by Belle | 22nd Jan 16, 3:30pm 1453429800

There are quite a few braggers out there who say ...Ive got 30k in kiwisaver now ....like its a lotto win or something. Yes it is good but hell is it going to grow large enough to keep you in retiirement....I want to ask ....ok what else you got.....but darent. Not that I have a hoard of gold stashed away. But then I am not bragging. Being somewhat negative on the um fortunes of the globe I also consider kiwisaver has the possibility of being a fizzer.
Back to the car thing. I am with the guys that vote newish biggish and safeish. Better to reduce the risk of being pink slime considering the roads we drive on and the drivers we go to battle against. My business has to cover the cost however high that is. Which kinda means I have to be out there driving more. Vicious circle.
Good topic Elizabeth. Yes we seem to be revisiting 2004 to 2007. New baches new cars new farms new houses overseas trips. For me a new kitchen. How much is just living and enjoying life, or just plain overspending. Who knows ...until hard times hit. Which look as if they could be just around the corner. But do we really go to our deathbeds inspired cos we have an excess in the bank. Hard one. Thankfully we are all different and have different answers, different lives.

by KH | 22nd Jan 16, 9:47pm 1453452440

Don't be too down on Kiwisaver Belle. It might only be 30K but then Kiwisaver has only been going 8 or 9 years. Think how it might be for folk once it's got 40 years of track.
The problem with Kiwisaver is that the Nats have crippled it and already wasted the crucial first years for many people. I don't understand why Bill English is sitting on his hands and letting so many people take a contributions break, or why he has not stuck to the programme of stepping up the contribution rate.
I do agree Bellle that those relying entirely on Kiwisaver are not bright. But at least it will lift many of those dopes off subsistence level incomes in retirement.

by Belle | 22nd Jan 16, 4:36pm 1453433773

If they dont blow it at the first chance. And I wouldnt put it past govt to make that 70 or 70 plus. Which is why I wouldnt touch it.

by kiwimm | 22nd Jan 16, 5:16pm 1453436184

Around the world, you see state benefits being moved back in age and private pensions being available earlier. So expect the NZ Super age to go up over time but access to KiwiSaver to get earlier (probably from 55)

by billsay | 22nd Jan 16, 5:30pm 1453437027

There's no single model - every country is different. The USA is raising it's social security benefit date very slowly to 67, but you can choose a lower benefit starting at 62 even then. And can choose to delay starting year and get an additional 8% a year. (This is the single area in life where Peter Dunne might have a sensible approach.)

What continues to be ignored is the start of super in NZ for people still with jobs, sometimes on large amounts - particularly with public servants not required to give up their jobs at any age. There would be a very easy to implement income tax approach to earned income in addition to super. No need for complicated asset or means testing.... superannuation is currently taxed at source and can be added to other earned income with an extra tax if you are doing both, say above $50,000 earned income. Just raising the age for everyone ignores other issues such as people on various other benefits who would remain on those benefits longer.

No one should have a high paid salary, and collect the full super.

by kiwimm | 22nd Jan 16, 5:57pm 1453438641

In the US as you say the state benefit is increasing but you can access your 401k at 55 and your RothIRA at 59.5 years. In the UK, state pension age increasing but private pension full withdrawal available at 55

by Laminar | 22nd Jan 16, 7:01pm 1453442496

Hero post!

by kiwimm | 22nd Jan 16, 7:11pm 1453443073

Mate, we need to talk about your drinking

by Bully Hayes | 23rd Jan 16, 4:09pm 1453518581

my wife and i have a rule - if you cant pay cash you cant afford it.

only ever take a loan to buy a house or business.

we would like a new car. i would like a boat. but our corolla - purchased new 8 years ago with cash (vanilla on wheels - but does the job fantastically) will have to last a little longer until there s money in the bank to replace it. ill continue to dream about boats - prolly another 5 years until we can afford that. in the mean time we ll continue to smash the mortgage - we have a goal to get that cleared before i turn 40

by badmonkey | 23rd Jan 16, 8:59pm 1453535988

Sorry. No offence. But why on earth and in hell would you *ever* buy a *new* car - especially a godforsaken Toyota?

Was the capital cost really worth it to have a 2007 Corolla?

by steven | 23rd Jan 16, 9:33pm 1453537980

Pretty reliable and economic cars.

by Bully Hayes | 23rd Jan 16, 11:51pm 1453546291

no doubt many of their models arent exciting - but our experience has been good, and many other owners find the same - for this reason they hold their value well - after 8 years ownership i could confidently say its still retaining in excess of 1/3 of the original purchase price.

that combined with an initial 5 year warranty, 5 years free servicing + WOF, and an average fuel consumption of 5.5l/100km has made it a very easy car to live with.

we are still waiting for something to break - so far has only been regular servicable items and a single set of replacement tyres. still on the original battery.

cheap when all things are considered

by speckles | 23rd Jan 16, 5:10pm 1453522242

In one business I'm involved in we have 2800 clients and through those entities we see around 12,000 personal incomes profiles consistently over a twenty year profile.

Over the past twenty years the vast majority of people are the working poor in that they a have limited gross income and naturally limited disposable income.

This includes the majority of the self employed. If they are financially disciplined they just get by while those who do not... have consumer debt.

Variability income over a working life has always been an issue and more so today.

Successful, self employed often do not have more than five years continuous high returns, unless they develop a business with a sound business model and leveraging off systems and people. A great majority of these have been established for 25-30 years plus years in the market place. Only a small amount come through today with scale. Financial discipline has to be over a working life, the number of people who are frugal for twenty years and then blow it is remarkably high. The other extreme is people who cannot spend and lived more limited lives because of it.

Even the professions only legal and medical have had high consistent income over their working life. The number of people in corporate life that get the whole package that is materially going to make a difference to their life is very small.

Yes you need to make the most of what you earn but in addition you need balance, the number of people that have limited their outlook and personal development to save but cut short by health is tragic.

Remember life is for living. Something can happen tomorrow which can change everything.

Personally envy is an emotion that I cannot relate to, I always focus on what I have to appreciate in life, I can seen those that have made wealth through property could generate envy as it has often been based on luck,timing and really in NZ has been a recent development, (for a substantial amount of property owners that is..not thinking old money in this) i.e especially in the last ten years. around 2002 onwards.

by KH | 24th Jan 16, 2:40pm 1453599609

Yes Speckles. We are a low income country and we allow the large corporates the strangehold position on the core activities. Cash flows out of the country in a torrent. Ownership is held elsewhere. Most NZ businesses and individuals are left with crumbs. We have had a political failure.
But as an individual - what do you do about it ? The Micawber Principle is about the only thing you can do.
If you have a poverty income, and especially if thats not going to change, you have to achieve a surplus on a weekly basis. Even one dollar. It will make a difference to your future - possibly the only thing that will.
If you have a good income (doctor say) recognise it's low by some standards what you have to do is just the same.
Remember the exponential curve works in all directions. Including downwards.

by Bully Hayes | 24th Jan 16, 10:40am 1453585201

have a chat with a divorce lawyer - like the one that is a family friend of ours - he does quite a few of the 'wealthy' ones where there are often high value assets to argue over.

its quite obvious from conversations with him that there is rarely any money left after the house in ponsonby is sold, the european cars go back to giltraps, the boat is sold at a massive discount, the beach house is finally moved one and mortgages re-paid - very very little cash is left over in most cases.

by steven | 24th Jan 16, 2:16pm 1453598197

and the 2 sets of lawyers are paid.