About MoneySecrets: MoneySecrets offers a peek into the financial lives of our fellow Kiwis. The story below was written using pseudonyms to remain anonymous. When commenting, please remember that the writer has laid bare their financial life, which can be a scary thing to do. Please be kind, and enjoy!
INTRODUCTION
Kia ora! My name is Cat and these are my money secrets.
If the first things you knew about me is that I am 54 years old, a single parent with 2 kids, that I’ve been unemployed, restructured, and laid off numerous times and I drive an old bomb I don’t bother to lock, you might think this will be a sad money story. It isn’t.
Then maybe you’d hear I work 32 hours a week in one job and 25 in another and you’d feel sorry for me because of all the hours I work. Don’t. I love my jobs. One gives me security and a regular pay check that I mostly save every fortnight if I’m not doing something on the house or helping a charity or a person in need. The other job is a fun business I built up from an idea.
Running a little business has helped educate my kids about money, it got me mortgage free just after 50, and any day I don’t want my salary job I could walk away. That is a great feeling.
| Earning and spending summary | |
|---|---|
| Annual income | $158,000 |
| Less tax and payroll deductions | -$26,131 |
| Less annual spending | -$46,998 |
| Equals remaining income | $84,871 |
| Net worth summary | |
|---|---|
| Total assets | $1,549,000 |
| Less total debt | $0 |
| Equals net worth | $1,549,000 |
FINANCIAL GOALS
My big financial goal was to pay off my house, so I have always paid off more than I needed and saved lump sums to put against the mortgage. It was hard to split up with my husband and take on a LOT more debt and pretty much start again, but that is what I did at age 40 with 2 little children and no child support.
I enjoyed flatting when I was young and when I became a sole parent with a VERY BIG mortgage 14 years ago I got a boarder. If you are a social person this can be great company but it's also great from a financial perspective. I always keep under the tax threshold for boarder income.
I would have paid off my house earlier but it was falling down around my ears. So I made a plan to do the house up in logical affordable steps, not all at once and not by adding much more debt. I have had a 10k revolving credit facility for 12 years, mostly sitting at $0, that allowed me to get projects done and pay them off. I try to phase everything and started from the ground up. I did the boring structural things, not the fancy stuff. This year I’m adding a few more double glazed windows. Wow double glazing is fabulous.
I decided to get more education in my late 40s. Investing in my skills has given me more employability and more self confidence. As you get older, your skills can date. I still worked 30 hours a week while I got my Masters, it was tiring but I didn’t take on any more debt. I just didn’t watch any TV for a year! I still don’t watch much TV. I think being a full-time working Mum you learn to be awesome at time management.
Right now I have two boarders and one adult daughter at home. Everyone cooks and cleans and everyone is into not using plastic, composting, that sort of thing. I would say we are more like flatmates than a traditional boarding arrangement. I am always learning from the people I live with.
I can get potatoes and greens and apples and a surprising amount of produce like herbs from my backyard. Gardening is also a really fun and cheap hobby when you get into it. I have a goal to get a lot more productive fruit trees and get rid of the lawn so the whole backyard is edible.
I have three financial goals:
The first goal is about building my passive income generating assets. My business generates royalties from the products I make. I want to make more products.
The second goal is having enough savings to quit the day job. I just really don’t know how much this should be. Like I said, I can pay the bills without the day job right now but… it is giving me more retirement income and allows me to be generous to others and spoil myself. I would love to quit at 55 (in 9 months). If I quit, I will have more time to make products. I have over a year of post-tax income saved.
My third goal is to interest at least one of my children in my business. I would love it if they could find joy in the business and take it places, or just have the acumen to run it and supplement their income or spend more time with their kids. I’d love to hear ideas about how to do this from readers.
Assets
| Assets | |
|---|---|
| Cash | $5,000 |
| Term deposits | $90,000 |
| Kiwisaver | $140,000 |
| Real estate | $1,250,000 |
| Shares | $14,000 |
| Other | $50,000 |
| Total assets | $1,549,000 |
Being a little entrepreneurial has really helped me clear debt. Being at home with the internet I’ve been able to turn around jobs for people on the other side of the world while they sleep. At first I just wanted to get rid of mortgage debt but I’ve discovered I love having a business and I think I will stay running my business as long as I can. Maybe until I’m 99! The business is an asset as long as I keep the books and other records in good shape. I may sell it one day but I’d like it if one of my kids got involved.
I imagine I will keep working in my business beyond age 65 so I need to take care of my body. My body is my current worst debt issue. I owe it time and attention. I have built up assets at the expense of my physical fitness. I have a fitbit and try to do 10k steps a day every day. If I could go back and do one thing differently it would be not taking my fitness for granted. It is pretty hard work building it back up now. So I am investing in my body now more than I did in my 30s and 40s and I’m working a little less so I can fit more exercise in.
When my kids were young I worked full-time rather than part-time and I think this was a great decision for me. I have seen so many of my girlfriends’ careers stagnate because either they or their boss don’t take them seriously as a part time worker. I still did lots of stuff with my kids and when I needed to leave my partner I didn’t have to worry about how I would manage. I cut my hours back only when I had my business up and running well.
Cash: Whenver I get over 10k I usually invest in a term deposit, but I often put a little in shares too.
Term deposits: They are all in groups of 5k and 10k (maturing in different months). My goal is to build each one to 20k and have one maturing every month of the year.
Kiwisaver: Not actually kiwisaver, but rather a fund that came out before Kiwsaver arrived. I put about 4% of my income in and I remember the day I owed 60k on my mortgage and had 60k in this fund. I was neutral!! I've thought about adding lump sums but I'm enjoying having my own savings which have greater flexibility outside a retirement scheme.
Real estate: I have a big old 4 bedroom house that was a complete wreck when I bought it with my ex-husband. We'd put extra clothes on inside the house because it was warmer outside. Slowly doing up my house has made it warmer and dry. For many years I could not have sold it for more than I owed. I could now but I never want to leave.
Shares: At the time of writing, these are a little lower than usual because they took a dive with COVID-19. I have bought a few more shares while they were low. I love being able to support NZ businesses via shares, investing in ethical business, and I love dividends.
Vehicles: I drive a bomb nobody would steal. I also use public transport a lot. I share my car with the flatmates / baorders and we'd probbaly repalce with a car share if we had to.
Other: I have a small business, I don't intend to sell it so I've given it a low value here.
Debt
I don’t have any monetary debt. Just, as I say, I feel I owe my body regular fitness payments if I’m going to keep enjoying my life in good health.
I lend money to others quite often. I don't record this debt because I don't expect them to pay it back until they are on their feet and I usually then help them pay it forward by starting up a donation to women's refuge or similar. It feels good to help others.
I also feel like I have a bit of a debt to the environment. We don’t think about the environment when we do a budget. I’ve kept a monthly financial budget all my adult life so I can draw you graphs of my earning and my mortgage going down. But a few years ago I started collecting my plastic and estimating what my usage has been throughout my life. I decided I had a debt to pay back there. I’m trying to run a green household. I’d love your ideas about other things I could do on this front. I probably feel most guilty about the flying I did in recent years, now I know what kind of environmental damage that causes.
Income
| Income | |
|---|---|
| Salary | $90,000 |
| Interest income | $2,000 |
| Boarder income | $26,000 |
| Business income (distributions after-tax) | $40,000 |
| Total annual income | $158,000 |
| Annual after-tax income | $131,869 |
| Total weekly income | $3,038 |
| Weekly after-tax income | $2,536 |
I work 4 days a week for a company, often on-call.
I’ve lived through a few recessions and been unemployed and made redundant a few times. So having savings and security is something I massively value. I also want to be able to be there for my kids any time they need me.
The income from my side business is variable. In the table above I've estimated the annual after-tax amount that I draw from the business.
Expenses
| Expenses | |
|---|---|
| Housing | $2,000 |
| Groceries & supplies | $12,000 |
| Eating & drinking out | $2,000 |
| Entertainment | $350 |
| Transport | $4,120 |
| Utilities | $8,500 |
| Health | $400 |
| Shopping | $5,000 |
| Personal care | $480 |
| Travel | $400 |
| Insurance | $300 |
| Pets | $1,248 |
| Fees & charges | $200 |
| Gifts & donations | $10,000 |
| Total annual expenses | -$46,998 |
| Total weekly expenses | -$904 |
I have my expenses worked out in my budget and a regular amount goes into an account that pays them.
I have always done this and if we ever need to knuckle down we can look through and see what we really need, and what we could go without. I have it all colour coded like that - essentials and nice to haves.
I have a budget worked out for if I quit my main job, because it's nice to know I could survive without that job if necessary.
The pets expense is chickens. They repay me with eggs and keep pests down in the garden.
Remaining income
| Earning and spending summary | |
|---|---|
| Annual income | $158,000 |
| Less tax and payroll deductions | -$26,131 |
| Less annual spending | -$46,998 |
| Equals remaining income | $84,871 |
I have my retirement savings but I’m enjoying buying shares lately. It is so easy now because you can buy in small amounts. I’ve got my sister and my kids into it and we are all enjoying it so much. It is so much better than buying a lotto ticket.
I am gradually building a set of 12 term deposits so that I have one maturing each month. I have ten right now. I like the idea of eventually having a monthly bonus but right now I reinvest the interest.
I give to a lot of charities, I don’t want to sound braggy about it. I feel really privileged to be able to do that. One of favourites are the women's refuges. I just know how trapped so many women are, how hard it is to leave and how scary it is to start over that you stay and take abuse.
If I buy something for the house or myself now I like it to be a sustainable thing, a long term useful thing, a thing I actually need.
Inviting feedback from readers
What do you think about the idea of environmental debt? How would you repay it?
If you thought you were going to keep working into your 70s, would you work less now? Would you change your career?
How can I interest my kids in my business?
I've always had a small life insurance policy. Do I still need this? Maybe not!
