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Is there an end game ?

I’ve been scratching my head lately, If the housing market is on fire, Why are high end luxury vehicle sales down 13% against their 3 year averages.

Our newsfeeds have been blasted with headlines on New Zealand’s housing market

“Competition fierce in NZ’s hot housing market, Hot New Zealand property market sees mad scramble for real estate, or Housing market continues to hit record highs”

Hordes of would be home owners are falling over themselves to buy, buy and buy.

When I digest all of this, the following word comes to mind:

spruik:

to make or give a speech, especially extensively or elaborately; spiel; orate.

oxford dictionary

Is this housing market surge the new reality, or is this just real estate agents hyperbole ?

Let’s not forget that a large contributor towards media advertising comes from the real estate industry.

In light of record high house prices across the country, a government who has failed to improve legislation that would increase housing supply, and record low mortgage rates, there doesn’t seem to be an end in sight.

For first home buyers are driven by FOMO, the fear of missing out. FHB’s are taking out home loans at rate of $1.3 billion-a-month representing 25% of the housing market.

Investors are also increasingly active in the housing market, just slightly ahead of first home buyers with a 26% market share.

With a market on fire, the Reserve bank of New Zealand has announced it will pour a large can of petrol on the fire, in the form of $100 billion of quantitive easing to ‘stimulate the economy’.

Wait a moment……

How can we have a red hot housing market and the need to stimulate our economy at the same time ? Let’s look at some numbers shall we.

  • COVID19 wreaked havoc on the global economy, including here in NZ, the value of our economy (GDP) shrunk by 12%.
  • We are now officially in a recession.
  • Those who do not have a job, but are available to work and are actively seeking one rose 12%
  • Average weekly earnings (including overtime) fell 2.8%
  • We have a country, along with its citizens that are earning less, with a large chunk of people looking for work.
  • And the scariest statistic of them all is that New Zealanders are borrowing even more, the value of housing loans are at $208 billion, up 6% on 2019, in increase of $26 billion from 2018.

Folks can’t all be thinking things are great if high-end car sales are down 13% against 3 year averages. (MIA, 2020) The one anomaly I spotted was that Ferrari sales were still strong, lets face it, owing a Ferrari is a status symbol that say’s to others, I’ve made it.

I would bet that those mum & pop property investors turned property tycoons are the ones buying up those Ferraris, when the more astute investors (Bentley owners) are holding off to see where this all ends.

Those normally upgrading their existing Audi, Mercedes and BMW’s are also possibly holding off, remaining cautious. You would think that if more people felt wealthier, and are optimistic about the economy, they would be buying more high-end cars.

I often wonder if the masses are literally enslaving themselves in debt to ride the wave of capital gains, in the hope the party never ends.

In fact, I often hear from people who believe that property in New Zealand will never go down.

This might just be the case, but one thing that is certain is that peoples incomes, and their ability to buy property will decrease as the cost of borrowing increases, investors will pass on these costs to renters, and with nobody left who can afford to buy theses homes, with immigration brought to a halt due to COVID19, what happens to house prices then ?

What is certain, is the higher your debt burden, the more likely you will be shackled and restricted in your decision making when needing to respond to any economic shocks.

Did you know there are FREE Debt Counselling options available all over New Zealand ?

It’s free to know that help is just a phone call away, and Ive put together a quick guide get you the help you need.

If it’s free, why do I charge ?

Peoples financial situations vary, I understand that some people visiting Nuke your debt may not have the financial means to pay for advice.

I’m also a firm believer in the evidence that shows when you pay for something using your own money, you are psychological more invested.

I also challenge my clients to commit to a process.

If you are concerned your situation is approaching critical, and you are in need of some direction, book an appointment with me today. A small investment in time getting good advice, can end up saving you $1000’s after time.

If you feel you’re at a stage where your situation is beyond critical, please reach out to one of the organisations I’ve listed below.

Here are some options for you today.

MoneyTalks is a free helpline for people experiencing financial hardship or unmanageable debt. Contact MoneyTalks on 0800 345 123. MoneyTalks provide support over the phone or by email or online.

I highly recommended CAP, they works with local churches to release New Zealanders from debt & poverty. They provide practical support, and all services are FREE, friendly and focused on the best way to help you, whether you’re struggling with debt, unemployment, a life-controlling habit or living on a low income. Call their Freephone number on 0508 227 111 or visit them online.

The Citizens Advice Bureau also offers budgeting and debt management counselling in some locations, however the services offered vary from branch to branch, but usually cover Debt Crisis Help, One-on-One Budgeting and ​Ongoing Budgeting Assistance.

Debt problems will spiral beyond control if left unresolved, It’s important to take responsibility for your situation now and to reach out for help.

Either taking advice from a free service above, or working with Richard from Nuke Your Debt one-on-one Is the best decision you can make right now.

5 MONEY SAVING TIPS you can do right now.

Saving cash is not easy when you have had bad habits engrained into you for as long as you can remember.

All is not lost, here are 5 simple tips you can apply to help you change those behaviors while stockpiling cash fast.

1 – Meal Plan

You can believe it, what we spend on food each week is often the difference of being under or over budget.

A proven method often neglected is the art of ‘meal planning’….I’m not talking about counting macros, but cents.

Planning 3 key meals each day, over a week will ensure you are buying the essentials on your weekly shop.

This helps you to build up an understanding of your family’s food spend, while fine tuning your eye for a deal.

Not only that, but it will reign in the amount of cash you spend on takeaways and brought lunches.

2- Buy Used

What’s the best deal you’ve ever got buying used ?

If you need something, always look at finding the item used first.

You can save a signifiant amount of cash with purchasing lightly used items.

In todays highly connected world, put out a social media post “Anyone got a XXX for sale?”

You’ll be surprised by what’s out there and the deals to be had.

Facebook Marketplace, trade-me, garage sales, op-shops, are all great places to seek out that next item.

The fun part is seeing what the item would have costed you buying new, the difference is the cash you now have left in your pocket, and not someone else’s.

3- Cancel Netflix

Talk about controversial, no way !

Yes way, with the tonnes of information and entertainment online, do you really even need paid subscriptions ?

Easier said than done I know, however it’s really about prioritising what you spend your money on, and how committed you are to savings goals.

The trouble with paid subscriptions is that they accumulate, It seems easy and cheap at the time, especially with the attractive free trial offers, but after a while, having added up multiple subscriptions you soon find you are paying more than what you originally intended.

Let’s take a look at what your likely to spend :

Netflix $22 per month.
Neon / Light box $14 per month.
Apple TV $9 per month
Disney+ $10 per month
Spark Sport $24 per month
Spotify $15 per month

It’s not uncommon for people to be subscribed to all of the above services, in some cases spending up to $94 per month, or $1128 a year.

The question you perhaps want to ask is how badly do I really need to watch this mini series ?

My wife is always trying to get me to watch a series, I tell her I’ll watch a movie, but not a series. Buzz kill perhaps, but the real reason is I don’t trust myself to not get hooked, next thing I know i’ll be locked into the couch watching endless shows on netflix dependant on it as my only source of fulfilling entertainment.

Half the time i’m scrolling through my mobile phone, distracted by something else, not even watching the show, tell me you don’t do this yourself ?

I’m not trying to ‘show shame’ you, but maybe ask yourself if you really need all of those monthly subscription services when a book, board-game, or spending time with someone is a lot more fulfilling.

4- Pay cash for cars.

A car is one of the largest purchases you will make after a home, and many people make the mistake of buying a car they think they can afford, rather than buying affordable.

Cars are funny in the way they often become extensions of our own personalities. You’ve probably heard the jokes “hairdresser mobile” or “that guy must be compensating given the size of his ute.”

At the end of the day, who really cares what you drive ?

So long as it gets you from A to B safely and cheap as possible, you’re winning.

The reality is cars quickly depreciate in value. When taking out a loan to buy a car, you are more than likely running the risk of spending more than what you intended to once you’ve added up the finances costs over time.

It’s extremely common for people to extend against their mortgage to buy a car. We often justify the idea that your home loan interest rate is lower than any car loan out there.

But what really ends up happening is when we add the cost of that car to a housing loan, that original chunk of debt is then amalgamated when you refinance your home, we don’t actually pay it off within the intended time frame, it ends up costing us a lot more in interest overall than compared to paying off a car loan within one or two years.

So, pay cash when buying a car !

An important process takes place when paying cash for a car, it forces us to assess what is really important in our lives.

Yes, you are probably unlikely to get a nicer car paying cash rather than financing one, however the amount of cash you potentially save can be applied to paying off debt, or saving for your children’s education or your retirement.

If you are looking for a car, get the safest, cheapest to run, most affordable car that will meet your needs, and pay cash for it.

5- Regift

Have you ever received the same gift back from there person you originally gave it to ?

My own mother is notorious for this sort of thing, she’ll be giving out gifts when you soon recognise it’s the same blender you once got her for xmas.

You have to admit, as controversial as this is, it’s certainly a money saver.

When you consider how many family & friends birthday parties, anniversaries, xmas, baby showers, kids parties that you might attend in a year, the cost in gift giving can quickly add up.

Now I’ll admit, you can’t exactly confiscate your child’s gift only to regift it later in the year, there is a skill in being undetected. That’s where the box stashed in the hallway cupboard comes in handy. Decide what you want and stash the rest for later.

Don’t feel too bad, It’s more common than you think.

I’m quite impressed how my mother in law has a stash of gift readily available, if my wife has forgotten to get someone something, she’ll usually have something stashed away. However I suspect this is partially because she’s a shop-aholic and is redeeming her credit card reward points.

The trick is to avoid using your own money wherever possible.

Giving away your gift cards, or re-gifting all helps to keep the cost down.

By adopting some changes in your spending habits, looking for ways to improve each day, little by little, before you realise it you will be on the way to building up cash reserves.

Try this 5 money saving habits now.

Big ticket items, and store cards.

What might seem like an easy way to get your hands on a big ticket item, can turn into a nightmare if you’re not careful.

I spend some time taking a closer look at store cards, their features and are if there are any benefits to using them.

If you’ve found yourself in a little hot water with store cards, I can help up get out of trouble, get started by booking an appointment with me.

Is a Home loan repayment deferral the right option for you ?

With the fallout from COVID19 ravaging economies all over the world including here in New Zealand, banks have been quick to offer their customers debt relief by way of mortgage deferrals, also called home loan repayment deferrals.

Home loan repayment deferrals are put in place by your bank for those facing short-term hardship as a result of COVID-19, those who have lost income can essentially apply to their bank for a mortage deferral of up to 6 months.

People need to beware that the interest will continue to accrue on their home loan during a deferral, this will increase the amount owed, potentially prolonging the repayment period of your housing loan.

A deferral can be tempting in the short term, but this needs to be weighed up against your long term finacial goals.

It’s worth asking your bank what the added cost will be to your home loan in deferring for 6 months.

There are other options before going down this track for example.

  1. Reduce your spending habits.
  2. Liquidate unused assets such as a car, the boat or the bach to pay off debt, and reduce your overall exposure.
  3. Take advantage of lower interest rates, test the market, switch banks if you have to.

The issue we all face is the uncertainty, we don’t know the exact impact on our economy of continued lockdowns.

This scenario could well be drawn out causing further unemployment, thus making it harder for you to recover lost income.

The single most important thing is to build equity in your home loan by paying off debt hard and fast, while not over extending yourself.

When the rainy day comes, you’ve built in enough of a buffer to buy time while you make some tough decisions.

If you’ve found yourself in this position, and not sure if taking on a loan deferral is the right thing for you, get in contact with me now, I will help you to understand the cost, and get you on a plan to survive hardship you may be facing.

Combating bad debt in a pandemic.

Like many, Richard lost his employment due to the impacts of the COVID-19 pandemic on the NZ economy. 

With a young family, including a newborn, he can understand the financial pressures people now find themselves under.

Richard has always been passionate about helping others get out from underneath the constraints of personal debt, and now It’s just as important as ever to discuss money matters during the challenges of a pandemic and beyond. Putting together a robust plan to ensure you’re in the best possible financial position for the future is key. 

The fear of meeting face-to-face can often make this difficult, despite lockdown being lifted in NZ.

COVID-19 has provided many challenges to industries and has affected the incomes of many people. The future remains uncertain as we deal with the fallout from adapting to changes brought about by the pandemic, including rising unemployment.

“Not knowing where your next dollar is coming from is beyond stressful. It’s important to not let the fear set in, but focus on what you can control and the changes you can make to put yourself in a better position.” Says Richard. 

Richard wanted to find a way to reach people while in lockdown, while adapting his business to a new way in which people will seek financial advice in the future.

As a registered financial advisor, and head coach of his debt coaching business ‘Nuke Your Debt’, Richard knew adapting to this new environment meant pivoting more towards leveraging technology and video conferencing, whilst finding new ways to increase digital interactions and exposure with existing and potential clients.

“Sometimes, when you know you need help, it’s not often practical to simply pop into an office to speak with an advisor, especially those conscious of, or at risk of getting sick. I’m excited to be able to offer people the ability to discuss their finances from the comfort of home in their pyjama’s, in the car, or even waiting for the bus.” Richard says. 

By applying his experience in banking and finance, Richard knew he could make the greatest impact by helping people manage their finances during uncertain times.  

“Unemployment will be a problem for years to come, as household income is impacted, people will have to begin prioritising their spending. What might feel like a hard decision to make now, when making sacrifices with your spending, may just turn out to be a blessing in disguise”. Says Richard. 

It will be a tough time for many, however Richard is keen to help those who may find themselves in tough situations.

Richard believes free budgeting services offered by community groups are often a good place to start, unfortunately the advice can be limited. 

He aims to help people help themselves with household spending, establishing tailored and realistic financial goals, as they pass through life’s milestones.

Having a realistic budget and a clear understanding of where your money goes is critical, it’s also important to have a plan to pay down personal debt, knowing how to go about it is an issue faced by many, however Richard enjoys helping people navigate this challenge.

This is just one example of how a small business owner has had to find an effective strategy to adapt ways of working, in order for business to thrive and survive. 

Changes like these allow important and useful services to continue, to be available for their customers for now and the foreseeable future. It’s important for everyone to look internally to determine what changes can be implemented in order to protect and future-proof their businesses, livelihoods and personal financial positions during these unprecedented times. 

What to do when you loose your job.

COVID19 has caused a massive amount of economic carnage abroad, we would be naive to think this couldn’t be the case down under.

If you’ve unfortunately been a casualty and have lost a job or faced reduced hours, then there are some practical things you can do right now to minimise the damage.

With less money coming in, the simple fact of the matter is you will need to curb your spending.

As depressing as this may sound, you should see this as a positive. When we are faced with the need to reduce our spending, it forces us to look at what we value the most in our lives.

If you have not done a budget, or you have one, but haven’t paid much attention, now is the time.

5 important areas you need to consider are the following:

Money In – Income, wages, salary, what money is coming in, is there any part-time work you can do, is there working for families or spouse’s income you can rely on, what about Work and Income support ?

Money Out – What do you spend money on each week, fortnight or month? If tend to get paid on a specific pay cycle, try breaking your spending down to match your pay, followed by what that might look like over a week. For example, if you get paid fortnightly, multiply this over a year, then break it down to each week.

Surplus – This is the sweet spot you have left over after paying your bills. Surplus is what we use to save, or pay down debt. If you find you are constantly in the red each week with nothing left over, then we need to address your spending, you simply can not spend more than you earn. If you’re not sure, book an appointment with me and I’ll help you through this.

Debt – It’s super important to come to terms with what you owe. Perhaps you’ve got a slightly higher credit card balance than you would prefer, maybe you brought a car on finance recently.

Add up the total so you know what to pay back.

What you can sell – Take a look around the house, you’ll be surprised by how much you may be able to get for items you no longer use. Old sports equipment is a perfect place to start, use the proceeds to paying down debt or setup cash reserves for a rainy day.

There will be some tough calls to make, and you may need to sell things you would have loved to have kept, you may also have cut back on a few items as part of your weekly spend. Don’t despair, this as an opportunity to get rid of what you don’t need, and to focus on what’s most important to you.

Think about that skills & talents you have, everyone has something, how could you make an extra buck or two selling a skill, product or service ? You’ll have some extra time while exploring other income opportunities, so get your hustle on.

If you are needing help with a budget, or perhaps you need some coaching to get you started. Book a time with me today.