Midweek musings

I know a girl from the States, an international student over here, with a bunch of different student loans (most of them private). She was featured in an article in our student mag saying that her repayments on all of them, once she graduates, could be around $500 PER WEEK! That’s a full-time wage right there!

Stories like that make me so grateful to have been given a scholarship. My school was one of many with links to AUT, with two specific scholarships designated just for us. I earned one of them…and can’t actually remember who got the other one. Shame on me!

I’ve actually been meaning to write a thankyou note to the scholarships office; I finally did that a couple of months ago. I’m not sure if anyone would have even read it, but it was something I felt I should do because I’m going to graduate debt free, which is something not many can say.

Granted, my savings are pretty dismal. All up I have less than $4k – I’m owed close to a grand by ex-heinous-flatmate which I’ll never see, and a few hundred by T. But I’m going to be putting 4% into Kiwisaver, and I’m aiming to save 20% of my income. If T was working full time, this would be a lot higher, but c’est la vie.

Just by the by, (tentatively), he’s set his sights on an apprenticeship in automotive fabrication. Next step: creating a knockout CV and approaching potential employers. Any tips on how best to approach a busy workshop – phone, in person, etc, chime in! I’m thinking it would be best to call up, find out who makes the hiring decisions, and try to speak to them on the phone, followed by sending in a CV or a face to face meeting.

November spending

Seeing as ASB has this handy tracking tool, I’m going to start making regular use of it!

Here’s what November looked like. Debt repayments are higher than usual, as T put an extra $100 towards his car loan, plus an unexpected $20 tax refund that showed up in his account.

We’re still spending a bit on eating out – definitely need to make sure we’re buying enough on our grocery shops so we don’t run out by the weekend and waste money on takeaways.

Entertainment includes both of our new cellphones and our monthly topup, and we paid our quarterly contents insurance bill.

I saved about $250, but excluded it from the graph because it was part of another transaction – otherwise it would’ve shown up as over $1000 saved! That’s the only drawback – each transfer can only be classified to one category, even if you bought, say, gas and food in one swipe. (That’s what weekly roundups are for, though I’m not sure how much longer I’ll be doing those…).

December will probably look a little out of kilter, what with the silly season and all, but we’re doing gift hampers for our families – baskets have been bought, and we’re planning to bake a lot of stuff – and just need to shop for T’s brother/nieces, and his mother, who’s getting an antique trinket box.

LINK LOVE

Carnivals I participated in this week: Carnival of Money Stories – My Financial Dreams’ Edition and The Carnival of Personal Finance #233!

Here’s to NOT eating cat food when I’m 65

Exciting (if dorky) news – I finally joined Kiwisaver!

I haven’t had my first deductions yet so I don’t know how much exactly it will be, but given that I’m contributing 4% and should make $1320 in an average fortnight, I should be putting in $52.80 per paycheck. After tax this would be $1056, leaving me $1003 take home.

So in 6 months I should have… $2788, excluding fees, gains and taxes.

Of this, less than half would have come from my contributions, thanks to the generous initial incentives.

$792 – me
$396 – employer
$1000 – government kickstart
$600 – tax credits

Even if my fulltime hours don’t last beyond the next few months, at least I’ll have contributed a decent amount in that time!

(I would do the math for a year’s worth, but I really, really don’t want to jinx it).

After a lot of tossing back and forth, I decided to go with Huljich in their growth investment fund.

Seeing as Kiwisaver is only a couple of years old, none of the funds have much of a track record. But Huljich has performed well, in all of their schemes. I based this off information on fundsource.co.nz and this Morningstar survey.

I also switched T over to Huljich, moving him from one of the six default government schemes (AMP). Huljich’s high fees worry me a bit, given he’s not actively contributing, but even if returns don’t continue as they have been at least he still got a free thousand dollars in there.

KIWISAVER 101

There’s a wealth of Kiwisaver info out there, so I’ve just done a quick roundup here. A quick Google search should tell you anything more you need to know, or Sense to Dollars has done a nice series on joining up and picking a provider.

Kiwisaver is made up of:

1. your contributions
2. your employer contributions
3. the government kickstart
4. the government tax credit

You can contribute 2%, 4% or 8%. Your KiwiSaver contributions are calculated on your before-tax pay, but deducted from your after-tax pay. (Yeah…still scratching my head a bit on that one).

You also still pay tax on the full amount that you earn. Let’s say you earn $500 a week. You contribute 4% ($20), but will be taxed on the full $500.

(I definitely recommend the Sorted calculator for playing around with contribution levels and future projections!)

Your company will make contributions of 2%, and the government will stump up a tax-free $1000 three months after you join, plus up to $1,042.86 a year in what they like to call member tax credits. This is untaxed and will be claimed on your behalf by your fund provider in July each year. If you join KiwiSaver part-way through a membership year (1 July to 30 June), you get a tax credit for the portion of the year that you’ve been a member.

GETTING YOUR HANDS ON IT

Withdrawals are tax free. You’re eligible to withdraw funds at age 65. Alternatively, you can withdraw your funds if you are:

- buying your first house (you can take out your contributions and your company contributions, but not any the government contributions. you could also get a subsidy of up to $5000)

- suffering significant financial hardship (you can take out your contributions and your company contributions, but not the government contributions)

- seriously ill or disabled (you can withdraw all of the funds in your account)

- moving overseas permanently (you can withdraw your contributions, your company contributions and the government $1000 kickstart, but not the government tax credits)

SIGNING UP

To sign up, ask your employer for a KiwiSaver employee information pack (KS3) and fill it out. Your details go off to the IRD and you’ll be temporarily allocated to your employer’s chosen scheme, if they have one, or one of the six default KiwiSaver schemes. The IRD will hold your contributions and your employer contributions, and pay interest on them. Within 3 months of your first contribution you get the option to choose your own scheme (this is about the time you get the $1000 kickstart) and will then be enrolled with them.

OR, you can join directly through your provider of choice, which is what I did. Again, the IRD will hold your contributions for three months with interest, throw in the kickstart after 3 months, and then hand it over to the provider.

You’ll be automatically enrolled if you start a new job. You can opt out if you do so between 2-8 weeks. This is the ONLY time you can opt out of the scheme.

If you’re self-employed or not working, you can sign up and make payments directly to your provider. Some have minimum contribution requirements, so do your research if you’re going down this path.

MAKING A COMMITMENT

Once you’re in, you’re in life, basically. You can apply for a contributions holiday to the IRD of three months or more. Your employer will stop contributing as well, although you can continue to make voluntary ones.

There’s no limit to the number of times you can take a contributions holiday and you can renew it at any time. Generally, you do have to wait a year from the time you first join to apply for a holiday, unless you get into dire financial straits.

Phew! There’s quite a bit to wrap your head around at first, but it’s really not too complicated. I’m going with the set it and forget it route. Given that not only you and your employer contribute, but the government does too, it’s a pretty sweet deal.

What are you worth?

I came across a really interesting post on the TradeMe message boards not long ago on the subject of pay raises. This person was a qualified tradesperson on $20/hr, and had just had a request for a raise rejected. Not having had a pay rise for years, he was worse off in real terms because of inflation. His company also contracted him out on close to $90/hr – sounds about right, that’s what T’s employer used to do.

It turned into a pretty heated debate, with commenters telling him he was grossly underpaid and no qualified professional should be on a rate less than $50, and others railing against greedy employers failing to keep workers up with the cost of living.

$50 an HOUR!!! My god, that is a LOT of moolah. That’s $2000 pretax a week or $104,000 a year. I’m right in the average range for an entry-level journalism grad ($30-35,000), and even if I one day work up to a more senior role in subbing or editing I don’t imagine I’d be breaking the six-figure mark. It’s not a particularly lucrative field – maybe I should transition into PR one day? – but to be honest, I have trouble believing my work would ever be worth $50 per hour.

I do, however, believe everyone is entitled to at least a raise to keep up with inflation. In my entire life (marked by a series of short, casual and part time jobs to date) I received ONE payrise, at the worst waitressing stint I ever did. It was a 50c increase. I was overjoyed.

Hard work deserves recognition and raises should be based on merit. But we shouldn’t have to work doubly hard to gain a big enough raise every year just to keep up with the ever-increasing cost of living.

Now that I’m a newly graduated, FT employee – may the situation continue, touch wood – I should have performance reviews and all that jazz along with everyone else. Wages and salaries were frozen last year, but with things looking up, perhaps they’ll see fit to melt the ice a little bit.

Because otherwise, I’ll have been here 2.5 years, albeit parttime, without one. If I was on the collective contract I would have had two small raises by now. A lot of people at my workplace are represented by the union, but when I moved from evening to daytime hours after a year I switched to an individual agreement as the rate was higher. (For all those who do weekends and shifts, though, the union has a great thing going on with several different allowances and extra payments. It’s all a tad complicated – but at least they get compensation for their odd hours. I think Sundays garner double the pay!)

What about you – what do you consider a “professional” rate for your industry? Do you think employees deserve cost-of-living raises?

Spending roundup – Nov 22

I worked on Saturday afternoon, so my weekend consisted of Thursday off and Sunday. We had lunch at Mercury Plaza and drove over to Mission Bay, where we were going to hire out a tandem bike and go for a ride, but decided not to because the weather was pretty crappy. On Sunday, we hit DressSmart and bought T a new wallet and me some new underwear, then he cooked up a huge roast and we had a group for friends over for dinner.

$110 groceries, plus an anticipated $20 for lunches
$47.60 eating out
$83 for a full tank of gas (HAS to last us two weeks!)
$28 for T’s wallet
$6.50 for clothing

The iconic fountain

T doing a backflip on the beach

Rangitoto looks so close, yet so far…

Bike hire

Spending roundup – Nov 18

$146 groceries (yep, a super pricey week. T bought a lot of lunch foods; I’m trying to get him to eat better, and eat more. He doesn’t eat breakfast and often skips lunch too. Is it any surprise he often has an upset stomach?)$146 groceries (yep, a super pricey week. T bought a lot of lunch foods; I’m trying to get him to eat better, and eat more. He doesn’t eat breakfast and often skips lunch too. Is it any surprise he often has an upset stomach?)
$29 gas
$20 brake fluid
$30 to top his cell phone up (I earned a free topup through YourVoice this quarter, doing surveys)
$18 on eating out
$7 for eye drops
$10 on a three-piece roasting/baking dish set
$16 for two wicker baskets (we’ll be making up hampers for Christmas presents for our families)

Also spent: $37 on pizza and drinks at Carpark, and $39 on a taxi to work on Sunday, both to be reimbursed.

What my degree cost me

It’s going to cost me $75 to graduate *splutter* what with all the graduation regalia I have to hire. I could just NOT do the ceremony…but I’m a ceremonial type. I like events. I like pomp and circumstance (well, within reason). I attended all school awards and prizegivings, went to our 2006 high school leaver’s dinner (paying something like $65 to sit at a table and eat dinner with my friends, ignoring the majority of the rest of our year whom I hated), did my best to be in every class photo and saved all my yearbooks. It’s our chance to be recognised for our work over the past three years and I’m going to be there, dammit!

But I’ve been pretty lucky in terms of education costs. I had a scholarship which covered almost all my tuition over the three years – looking back in my records, I paid (out of pocket) just $1358. That’s $644 this year, $212 in 2008 and $182 for 2007.

I got away with buying very few books – and got most of those secondhand. I’d say I spent under $150 on textbooks.

Stationery I got a lot of from work for free – pens, reporter’s notebooks and the like. Let’s say I bought two folders and two pads of refill a year – that’s $36. I also had to buy a bunch of extra arty gear – special pens, paper etc for my advertising paper last year, which cost about $40. For photography, I used the old SLR I had from high school, but film and paper together probably cost me $250. I also bought a digital voice recorder this year, which to be honest, I’ve hardly used. Most of my interviews were done over the phone, and I never got around to getting a pluggy thing to connect it up…I could totally have got away without buying it. That cost me $120.

Finally, bus fares. I would have had to bus into town for work anyway, but I’ll include it all. At 13 weeks a semester and two semesters a year, $27 a week (rounded) comes to $2106 over three years.

So a rough total puts me at $2029 in directly related costs, plus $2106 in travel. That’s $4135, or roughly the cost of a year’s tuition alone. Can’t really complain.

(My post on the cost of eating out is in this week’s Carnival of Personal Finance, hosted by M is for Money!)

Photo / Quimbero

Money talks

They always say that you should never disclose how much you currently get paid to a potential new employer. Whoever names their number first in an interview loses the upper hand. And it also shows your lack of experience at negotiation. (I also thought this was an interesting comment from career consultant Kim Wendleton: “If the job is too low-level, don’t ask about the money, upgrade the job!”)

I’ve been asked how much I make, twice. Both were for relatively low-paying, basic jobs. The first time I was absolutely stunned, and didn’t even consider lying. I was too shocked to be anything but honest, and ended up on a relatively low wage.

The second time, I was also pretty taken aback, but perhaps a part of me was expecting it, as it was a new role and no doubt they had no reference as to what it was worth. I was pleasantly surprised at the offer they came back with, and got about what I thought the position was worth.

Have you ever been in a situation like that?

Going paperless

I can safely say that the majority of the mail I get consists of bank statements. I chuck them on my desk and at the end of the month, file them away. (I’m getting better, I promise: I used to do it even less frequently! But in an effort to simplify and declutter, I’ve reorganised my desk and filing system).

But I’ve been thinking: Should I stop my paper statements? I do all my banking online and don’t actually read the physical copies, because I’ve already seen it all. I keep them more for my records and in case I ever need to check something out – I’ve been told my bank only stores electronic statements for 12 to 18 months.

What do you think? Do you still receive statements in the mail? And what if you need to confirm a transaction from, say, two years ago?

Eating in vs eating out

Debt Hater and Fabulously Broke recently blogged about the costs of cooking at home versus eating out every meal. Honestly, I think eating out every day would be bliss – but it’s a luxury FB says gets old, fast, and sometimes you just want a simple basic meal instead of heavy, restaurant fare. Something I can totally understand.

We spend around $120 a week on groceries for the two of us. Sometimes it’s more, especially when we get lots of fruit and veg. (This also usually includes bits and bobs like cleaning products and toilet paper). I have to admit, we’re usually out of food by the Saturday and eat breakfast and lunch out. But the $120, by and large, covers most of all our basic meals.

If we were to eat out three times a day, it would cost us $294. That’s cutting it really low, too – I’m talking a pie or roll from the bakery for breakfast, and an average food court/fast food meal for lunch and dinner. It would probably also be enough for sushi, a salad or something similar at that price.

Breakfasts – 14 x $3  ($42)
Lunches – 14 x $9 ($126)
Dinners – 14 x $9 ($126)

Ouch! Dinners alone would be the equivalent of our weekly shop. I’ve thought about this topic a lot, but never actually sat down to crunch the numbers. Looks like it’s definitely worth it for us to cook and eat at home.

(Just as a side thought: why are all the quintessentially NZ foods so greasy and fatty? Fish and chips, pies, sausage rolls…)

Photo / midorisyu