Personal Finance – Page 13 – #retirement income

August 15, 2023

Don’t buy it if you don’t have the money

If you don’t have the money…

you don’t buy it!

Written by R. A. Stewart

Borrowing money to buy things is spending money you have not earned yet and there is a price to pay for that and it is called interest.

The worst type of borrowing is consumer debt. This is stuff you have bought with borrowed money. Consumer debt is purchasing things such as household appliances, motor vehicles, and the like. Going on holiday with borrowed money is consumer debt. It is also irresponsible.

As adults we must discipline ourselves to put off purchasing items which are pleasing to the eye but will leave us in debt if we break the budget in order to acquire whatever that may be.

I can say that I have never owned a credit card in my life. Who needs one?

If someone cannot make ends meet on their income without a credit card then they need to take a stocktake because the interest payable on credit will compound over a period of time. All that interest which has to be paid on top of the borrowed money is money which could have been put to better use.

What seems to be at the heart of a lot of people’s financial problems is their lifestyle. I mean if you are going to get involved in a relationship then you had better make sure your income level is sufficient enough to pay for it all and the same applies to having kids and it is no good blaming politicians for this child poverty stuff if your own choices got you in a financial mess.

So you are in a spot of bother, now what?

There are three options.

1 Increase your income; easier said than done if you have other commitments but no one knows your personal circumstances better than you so there may be a way to work around this.

2 Decrease your spending; it is time to find ways to cut back by reducing your wants and minimising the amount you spend on your needs.

3 Sell stuff that you no longer need. There are auction sites where you can sell your stuff. Make use of these.

There are some golden rules to follow when deciding whether to borrow for things like appliances and other items which may be consumer debt but are something which you need or will make your life considerably easier.

Ask yourself these questions:

1 Can you borrow the item?

This all depends on how often you are going to use it. If you need a mountain bike to get to work every day then you need to actually own one rather than borrow it but if it is a concrete mixer to do a one off job then borrowing is the way to go.

2 Can I purchase the item second hand?

You may not have the money to purchase something brand new but still can afford to buy it at a second hand store. This is a good option and you are still covered by the consumers guarantee act (In New Zealand)

3 Can I wait until I have saved the money for the item?

This option will definitely help you become a better money manager and also help develop the skill of prioritizing your spending.

4 Do I really need the item?

This all depends on your personal circumstances, tastes and preferences. It all boils down to whether you are prepared to sacrifice something now in order to save money.

Always keep in mind that saving something from your pay every week and keeping it in a rainy day account is a good habit to get into because it will enable you to pay cash for things which need fixing. It is also a good habit to invest some of your money for the long term such as in mutual funds. This is in addition to your government’s retirement scheme (Kiwisaver in New Zealand).

It is a bad habit to just spend everything in your pay packet every week so that by next week’s pay day you are broke.

www.robertastewart.com

Start investing on a shoestring

Sharesies makes it possible for anyone to get into buying and selling shares. It is an online share market platform where you have the option of purchasing shares in individual companies or in various funds (managed/mutual funds). You can even start with $5. This is a no brainer because it gives investors young and not so young the chance to improve their financial literacy. There is certainly no substitute for experience when it comes to learning and this is applicable to everything else, not just investing.

Join sharesies here: https://sharesies.nz/r/377DFM

Note: This article is of the opinion of the writer and may not be applicable to your personal circumstances. I may receive a small commission if you sign up for sharesies.

#share market #borrowing money #needsandwants #savemoney #howtosavemoney #deadmoney

August 14, 2023

Avoiding Dumb Debt at all costs

The quickest way to a financial mess is to borrow for stuff that loses it’s value. You not only pay more for such items but the item is worth less than when you acquired it because it is no longer new once you take possession of it and therefore you will receive less than what you paid for it. This is called “Dumb Debt.”

Avoiding Dumb Debt at all costs

Written by R. A. Stewart

Everyone has seen the television commercials with slogans such as “Buy now pay later,” and the like.

you do not need to save your money to buy that new car, a wide screen TV, that latest smartphone, or a holiday in a tropical island when you can have all these things now.

Instant gratification is a very expensive habit; one that will lead you to a life of financial challenges.

There have been misleading statements in some of the advertising; one I saw read, “Helping you to get ahead.”

That kind of slogan suggests that the finance company is doing borrowers a favour which is far from the truth.

Loan sharks and finance companies thrive on financial ignorance; a person with even a basic grounding in personal finance will avoid loan sharks as if they had tested positive for covid.

One should ascertain whether the item is a want or a need before signing on the dotted line.

Many people go into debt because they want to live a champagne lifestyle on a lemonade budget just to impress their friends. They are not happy with living modestly.

An expensive lifestyle is costly in the long run.

The parable of the prodigal son is a perfect example. Here was a young man who blew his inheritance on wasteful living and ended up living in poverty due to his lifestyle.

He not only blew his inheritance but was most likely living on credit.

It is borrowing that really kills off a person’s chances of financial success. That interest rate is dead money; it is the cost of borrowing.

Paying interest on stuff you have bought on credit adds to the cost of it and the value of a lot of stuff bought on credit is worth less as soon as you take possession of it.

“If you don’t have the money you don’t buy it,” is a simple philosophy to adopt.

What you think you cannot live without is something others have learned to live without.

It all comes down to the choices we make.

There are some circumstances when it may be wise to borrow such as when the value of the item you are purchasing is going to make it financially worth your while such as a student loan. This may or may not mean you will get a good paying job but you must be absolutely clear that it is what you want to do otherwise the course will be a total waste of money.

ABOUT THIS ARTICLE

Feel free to use this article as content for your website, blog, or ebook. Check out my other articles on www.robertastewart.com

Disclaimer: The information in this article may not be applicable to your personal circumstances therefore discretion is advised. I may receive a small commission if you make a purchase from any of the links you clink on.

August 7, 2023

6 Recession Proof Industries

6 Recession Proof Industries

Written by R.A.Stewart

When a recession occurs self confidence is reduced and spending is reduced. Some industries do well during recessions because whatever happens during the economy we all still have basic physical needs to meet.

Those industries rely on discretionary spending money are those that are most likely to be affected during a recession. In a period of belt tightening people will cut back on non necessities such as travel and the like.

A recession means job losses and while no industry is 100% recession proof there are some that will get through the recession better than others.

Here are some industries which are expected to do better than average during a recession.

Dairy Farming

Dairy products are basic grocery items and if you have the skills and the aptitude then you will be rewarded for your diligence. Retail outlets whose customers are farmers will buck the recession.

It is only the price of dairy products which will affect retailers. If farmers have the money to spend they will spend it.

Company to note: PGG Wrightsons

Healthcare

Health care will always be in demand, more so with an ageing population. If you are involved in this industry then you will always have opportunities for employment. The number of retirement villages is increasing in line with the increasing ageing population and this provides opportunities for investors with many of them being listed on the New Zealand stock exchange.

Company to note: Somerset

Consumer Basics

There are basic items which are always in demand irrespective of what the economy is doing. Basic food items, toothpaste, toilet paper, shampoo, shaving foam, laundry detergent, and the like are recession proof.

Company to note: Any company which deals in these products.

Pet Food & supplies

People will still spend money on anything related to pets during a recession because pets still need feeding. There is an increase in the number of cats and dogs handed to the SPCA during the cost of living crisis but there is still a lot of demand for pet supplies irrespective of what shape the economy is doing.

Utilities

There will always be a demand for utilities because it is a fixed expense in every household.

Companies to note: Genesis Energy, Mercury, Mighty River Power, and Contact Energy + others.

Alcoholic Beverages

There will always be a demand for alcoholic drinks and has been for the past 2000 years and beyond.

This list is by no means complete. There are dozens of industries which are recession proof; it is just a matter of choosing one which best suits your skill set if you are in the process of choosing your vocation or changing the one you already have. It is a good idea to add a few strings to your bow by working in different types of jobs or careers.

As far as the share market is concerned, it provides some insight into which companies are likely to survive the cost of living crisis better than others.

This article is of the writer’s experience and opinion and may not be applicable to your personal circumstances.

Disclaimer: I may receive a small commission if you sign up for sharesies or coinbase.

Www.robertastewart.com

#recessionproof #personalfinance #retirementsavings

August 4, 2023

The difference between assets and liabilities

ABOUT THIS ARTICLE

Knowing the difference between real assets and real liabilities and then setting your financial goals accordingly can be the difference between getting yourself financially sorted or the poorhouse. It underlines the value of financial literacy in helping achieve your goals.

The difference between assets and liabilities

Written by R. A. Stewart

An asset is something which pays you money while an asset is something that costs you money.

So let’s look at some examples.

Is property an asset or a liability?

Some people may say it is an asset because it is something you own, however, if you owe money on that property and are not getting a return on it then it is a liability because it is costing you money.

Is it an asset if you are receiving rent from that property?

Only if you are making a profit.

Some people would not agree saying, “The property is increasing in value over time.”

Lets not forget there are rates to pay plus maintenance costs and insurance to pay on that property so it could be costing you money in the long term but you will have to sit down and do your homework.

Other investment times are less complicated such as the sharemarket so lets look at other investment types which are assets.

Assets

Your retirement fund

Mutual Funds, also known as managed funds

Other investments

Business or farm

Learn to invest your money in items that can be quickly converted back to cash; some investments do not allow you to quickly turn the asset back into cash without jumping through several hoops.

Liabilities

Any item which has money owed on it and this is your form of transport, however there are circumstances where it may be an asset such as if the vehicle is used as a taxi, which therefore makes it an asset as it is producing an income. Such costs and the money owing on the vehicle can be tax deductible. The same applies to any vehicle used in a business.

Even though a vehicle used for work and business purposes may be classed as an asset, the money owed on that vehicle is a liability and will go into the accounts as such.

The reason why so many people are in such a poor financial state is that they borrow for stuff instead of saving for it and therefore pay more for that item in the form of interest payments.

A pet can be classed as a liability if it is costing you an arm and a leg to keep. Think of a dog for example; I read somewhere that it costs $20,000 to keep a dog during its lifetime. That is not just the food but vet bills and the like. A dog can be classed as a liability.

Do a stock take

Before you know where your money is going you need to do a stock take of all your spending. Your number one priority has to be the elimination of debt and plug up those leaks in your spending that is costing you money. In this way you will know where to make savings and redirect that money elsewhere.

Your task needs to be to reduce liabilities which means reducing debt then once you have savings use it to build your wealth. This involves setting goals which will increase your wealth and not send you to the poorhouse.

There are a number of share market platforms where you are able to drip feed money into the markets. Take advantage of these as they are a great way to build your financial literacy.

ABOUT THIS ARTICLE

Accumulating assets instead of liabilities will lead to a more prosperous future. It is vital for investors to know the difference between the two. In this article Robert Stewart explains this difference. Check out his blog at www.robertastewart.com

Start investing on a shoestring

Join sharesies here: https://sharesies.nz/r/377DFM

July 28, 2023

10 Practical Ways to Reduce Home Heating Costs and Save Money

10 Practical Ways to Reduce Home Heating Costs and Save Money

As the chill of winter approaches, homeowners often find themselves dreading the spike in their heating bills. However, with some thoughtful planning and simple adjustments, it is possible to keep your home cozy and warm without breaking the bank. By adopting energy-efficient practices, you can significantly reduce your home heating costs. Here are ten practical ways to achieve just that:

1. Seal Air Leaks: Start by identifying and sealing any drafts around doors, windows, and other openings. Use weather stripping and caulk to seal gaps and cracks, preventing warm air from escaping and cold air from entering your home. Proper insulation is a key component in maintaining a comfortable indoor temperature while saving on heating expenses.
2. Upgrade to Programmable Thermostats: Programmable thermostats allow you to set different temperatures for various times of the day. By lowering the temperature when you are away or sleeping, you can conserve energy without sacrificing comfort. Some advanced models can even learn your preferences and adjust settings accordingly.
3. Embrace Layered Clothing: Instead of cranking up the heat, opt for layered clothing and cozy blankets to stay warm. Dressing appropriately for the season indoors will enable you to keep the thermostat at a lower setting, ultimately saving on heating costs.
4. Utilize Curtains and Drapes: Open curtains during the day to let sunlight in, providing natural warmth to your home. Close them at night to retain the heat. For added insulation, consider using thermal curtains or drapes to reduce heat loss through windows.
5. Maintain Your Heating System: Regular maintenance of your heating system is crucial for its efficiency. Schedule annual inspections to clean filters, check ducts, and ensure that everything is functioning optimally. A well-maintained system will use less energy to heat your home effectively.
6. Use Space Heaters Wisely: If you spend most of your time in one area of your home, consider using a space heater instead of heating the whole house. Space heaters are more energy-efficient for targeted heating, but remember to turn them off when leaving the room.
7. Insulate Your Attic: A significant amount of heat can escape through the roof. Adding insulation to your attic can prevent this heat loss and reduce the strain on your heating system. It’s a one-time investment that can lead to long-term savings.
8. Consider Zone Heating: If your home has different temperature needs in various rooms, consider implementing zone heating. This involves using separate thermostats to control the temperature in specific areas, allowing you to reduce heat in unused rooms.
9. Strategic Furniture Placement: Be mindful of furniture placement in your home. Avoid blocking heating vents or radiators with large pieces of furniture, as this obstructs the flow of warm air and forces your heating system to work harder.
10. Upgrade to Energy-Efficient Windows and Doors: If you’re willing to make a larger investment, consider upgrading to energy-efficient windows and doors. These are designed to reduce heat transfer, keeping the warm air in and the cold air out, resulting in lower heating costs over time.

In conclusion, reducing home heating costs doesn’t have to be complicated or expensive. With a few practical adjustments and mindful practices, you can make your home more energy-efficient, ensuring both comfort and savings during the colder months. Taking steps to seal air leaks, upgrading to programmable thermostats, and embracing layered clothing are simple yet effective ways to minimize heating expenses. Additionally, maintaining your heating system, using curtains and drapes strategically, and utilizing space heaters wisely can further contribute to significant savings.

For more substantial long-term benefits, consider insulating your attic, adopting zone heating, and upgrading to energy-efficient windows and doors. By incorporating these tips into your daily routine and home improvement plans, you can enjoy a warm, cozy home while keeping your heating costs under control.

Power saving tip

If you have a freezer then make sure it is full or near full because a freezer with lots of space in it will use up more power. Filling up soft drink bottles with water and placing them into the empty space will save power.

www.robertastewart.com

July 24, 2023

Impersonating bank scam warning!

Impersonating bank scam warning!

A scam operating on the internet which involves impersonating well-known New Zealand financial adviser Frances Cook is contacting Ms Cook’s followers on social media. Those who comment on her content will receive a message from the scammer or scammers. Frances has 150,000 followers on twitter and the scammers will contact her followers with some offer. Frances will never message you with some offer or try to convince you to purchase cryptocurrency. With so many twitter profiles of Frances Cook it is hard to know who the real Frances Cook is.

It is the same old story of doing your due diligence.

Online banking scams the new norm

It is no secret that online banking scams are costing New Zealanders millions of dollars per annum and with technology such as artificial intelligence coming on the scene scammers have new ways of scamming people. It is important to put rules in place to prevent you from being a victim of a scam. Here is a list of rules to follow. You may have others that you could add to this list or may come up with others at a later date.

Don’t s

Don’t use a common password such as your pet’s name or the name of your home town.
Don’t sign in through a link in your email but instead type out the bank’s website address in the URL bar.
Don’t save your password to your device.
Don’t use the same email address your your banking as you do with a dating website.
Don’t click on any banking links in your email
Don’t link your debit card to your everyday account

about

Don’t have your wages go into your debit card
Don’t just leave thousands of dollars in your ordinary savings account but put it in a separate account or bank that is not linked to the internet.
Don’t click on any unfamiliar links in your email.
Don’t use the same password for different accounts

Do’s

Do be sceptical when you are offered an investment opportunity online.
Do keep your financial affairs private apart from your own bank.
Do ask for financial advice if you suspect something is not quite right.

4 Do change your passwords now and again.

Do ensure you have 2 factor authentication in place for extra security
Do invest your money in several places for extra protection.

About this article: The information in this article may not be applicable to your personal circumstances therefore discretion is advised.

www.robertastewart.com

July 16, 2023

Relationships can hinder your wealth plan

Relationships can hinder your wealth plan

Written by R. A. Stewart

“He who walks with wise men shall become wise but a companion of fools will be destroyed.”Proverbs 13:30

The person you form a relationship with can destroy your wealth creation plan and your future financial success if you CHOOSE the wrong person and I emphasise that word CHOICE because so many people during the Cost of Living Crisis blame the government for their financial situation and are completely oblivious to the fact that it is their own choices which put them there in the first place.

I mean let’s face it, only a responsible person will enter into a relationship when they are in a suitable financial position to do so and that is not the only issue.

If your chosen partner has a bad credit rating and you have a good credit rating then guess who is going to be persuaded to sign along the dotted line when your partner wants to borrow money for whatever reason?

Then there will be the difficulty in getting a mortgage if you both want to purchase a house and you have a good credit rating and he doesn’t. It has happened!

Another factor is your prospective partner’s attitude to money. Has he or she made any kind of financial plan for the future? A responsible person would!

At the very least they should belong to a superannuation scheme, in New Zealand it is called Kiwisaver.

Years ago I knew an old lady who was still working at an age when others would have retired. She was a waitress. She believed that men who have a lot of money are selfish and stingy.

Men are better off avoiding gold diggers such as her.

It all boils down to responsibility for your own finances. A responsible person will make provisions for their later years by joining their country’s retirement scheme. In New Zealand this is called Kiwisaver. It should be pointed out that your kiwisaver could become part of property matrimony in the case of a break-up but you don’t even have to be married for this to occur. In New Zealand, a relationship of three years whether you are married or not will mean that any asset acquired during the relationship is equally owned and that includes savings in kiwisaver but only contributions to kiwisaver during the term of the relationship.

If someone is irresponsible in the matter of finances then it is likely that they are irresponsible in other areas of their lives.

Having wisdom in the matter of relationships will make a big different to your long-term financial position. Lack of wisdom can send you to the poor house.

I will end this with something our teacher Mr. Hart said when we were at school, I was 13 when I was in his class.

During spelling lessons he used to tell us a story with one or two of the words that we were learning and on this particular occasion one of the words was wisdom. He told us this story:

One rainy day he was driving along McGowan Street which is the main street in the town where I attended primary school. (there was no intermediate school back then). Mr. Hart told us that he saw a man sheltering from the rain under the verandah of the shop and the man was reading the Friday Flash which is a horse racing paper. Mr. Hart then said, “If that man had wisdom he would save up his money to buy a raincoat for himself instead of spending it on the horse races.

Such is the value of wisdom.

About this article

You may share/print this article or even publish it on your blog/website/ebook.

Www.robertastewart.com

The information in this article is based on the writer’s experience and may not be applicable to your personal circumstances therefore discretion is advised.

July 11, 2023

Dumb Debt can destroy your financial future!