Design freelancer with startup in Auckland

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

I’m Asher, 29. I work part time in a design role in Auckland, and part time on my startup.

I grew up in what would be considered a big family these days. As a kid, I remember a real contrast of things about money and wealth. Some of the things around me were super basic. Other things made me feel like we were quite lucky.

My parents were never into flashy stuff. We did have a nice pool and big house (to fit us all in) yet my mum almost never bought a bottle of wine for herself over $10. Dad opted to buy his company car and proceeded to use it, no upgrades, for almost 20 years. He kept it in pristine condition.

They didn’t get into anything particularly expensive other than finding ways to give us kids lots of great experiences. For example I was taken out of school for two months to travel one year. It was so important to my parents to show us kids the world. This definitely had an impact on me. I’ve always tried to avoid getting too caught up in having stuff instead of enjoying experiences, people, and learning.

As I got older I noticed a close relative was getting involved with property investment. This made me see the value of compound interest as I saw them go from one to six properties in 7 years. I joined him in one property investment but my heart wasn’t really in it. I was much more interested in starting businesses, and felt drawn to investing in myself instead.

Ironically I’ve since seen him do the same since - co-founding a startup company in the tech space. Watching technology compound has been much more interesting to me than watching money compound. That said, there’s no denying the value of financial freedom. It’s a huge part of having mental stability, and allows one to push the limits of what they are working on. Having to worry about money and giving someone else your precious time is something I think super important to go through, and then leave behind as fast as possible.

The best content I’ve ever come across about wealth is from Naval Ravikant in a tweet storm that was adapted into a 3hr YouTube video. He said wealth is all about freedom. Money is the IOU for the time and knowledge you’ve shared. Money earnt is a proxy for how big the problem is you’ve solved for someone. Money is useful, but it’s not the goal. The goal is freedom to work on what you love. I dig that.

FINANCIAL GOALS

Money, today:

My savings are depleted from buying a flat in central Auckland recently. Right now I’m working on having enough financial freedom to work completely on my startup.

My partner and I live together so money is frequently a grey zone. Who paid what? We don’t know. It’s a bit of a mentality of whoever feels like they can pull out their wallet first. Sometimes one pays a big bill to fix the car, sometimes the other is paying for a long weekend away. You got me dinner? I’ll get the beers.

We’ve recently started talking about bigger financial goals to work on together which will be an exciting new chapter. The start? A joint bank account.

The future:

I have an extremely colourful imagination which always has me dreaming up the near impossible (a curse and a blessing). I have dreamt up some pretty extravagant things in life I want to achieve, so in this sense the future looks expensive. Who knows...

Assets

One thing that I’ve seen to be important in my family is having a backup plan or at least financial options.

I’m almost 30 with a lot of energy going into my startup, so I thought I should try to squeeze out an investment into some property while I could handle it. Plus my KiwiSaver looked as useless as cash in the bank. I wanted to put it to work. The bank qualified me for only $400k or so. I found pretty much nothing I could happily commit to in AKL. It was a bit of a blow to be honest.

Luckily for me my youngest sibling was looking too. I can’t remember who suggested it but we decided to team up. We came across a (tiny!) two bedroom flat that was $614k with $590 rent appraisal. The rent was able to cover the mortgage so we decided it was a good idea.

To make the flat purchase we each needed $30,700 for half the 10% deposit. My kiwisaver had $18k, plus I had $4,700 in the bank. I was still $8k short which I had to borrow off another family member. I was lucky to have that option up my sleeve for sure.

We’re now living in the small two bedroom flat and couldn’t be more stoked. The already epic sunlight-filled and private flat now has some newly added character thanks to my design skills, 9 free plants, and a $2k furniture/decor budget.

Buying the flat basically reduced my cash savings to zero. I've just finished paying back the sibling who lent me 8k to fund my half of the deposit, and am building up some savings again. Woop! Cash flow positive!!

• Kiwisaver: All but $1,000 used to buy the flat recently, so just slowly building this back up (growth fund with Kiwi Wealth).

• Vehicle: Honda station wagon (gotta love some good ol' car camping).

Debt

I feel like any debit without a growth asset is stupid. My parents were big on not buying what you can’t afford because it’s a slippery slope.

• Credit card: I spend on a credit card, then promptly pay it off. It might get to a few hundred in the red but it's always sitting back at zero pretty quick.

• Student loan: Industrial Design Degree from Vic uni, 3 years in total. Pretty low balance - I got a job so I didn't go too far backwards in living costs.

Income

I currently earn around $68,000 in a part time job (I have the flexibility to scale this up or down to some extent). I also work on my startup, but don't draw a salary from my startup yet. I also earn a little from freelance design work.

I’m a big fan of reducing pay and hours to work on your own stuff. Since I left uni I’ve probably only spent 2.5 years working full time for someone else.

I’m not anxious about income, I’m well off enough, it’s just not a big deal. I’m excited for the day I can pay myself from my own startup.

Expenses

When it comes to spending I keep a tight budget when no one is looking, and completely let go when it involves a group.

My default frugal nature might have gotten a bit carried away when I was younger (spending everything on my business). But my partner has shown me the importance of letting my hair down and living a bit more in the present.

The most ridiculous I’ve been about holding back a purchase was when I used to “vacuum” our flat by crawling around on the floor picking up dust particles with an audiobook playing in the background.

The most unnecessary thing I bought was $420 on three pairs of “work” shoes in one go from the US. Something went wrong and the transaction reversed. I took it as a sign and never re-did the purchase. I’ve since decided that buying a snowboard to replace the one I bought when I was 16 is a better treat.

• Housing: The cost to live close to town with a few little comforts in our wee two bedroom flat. This is my half of the rent including rates, maintenance, etc. I think this is quite a lot for one person. It used to be closer to $10k but this increased when we bought the flat.

• Groceries and supplies: Our flat shop for groceries which keeps our food costs down quite well.

• Eating and drinking out: I try to keep this low as hell, knowing it's so easy to spiral.

• Entertainment: Avid Audible books fan. Also a huge fan of paying subscriptions to avoid ads, e.g. Youtube Premium (hopefully the amount I pay to avoid ads helps reduce unnecessary spending too). I spent about $1,000 on festivals and gigs etc this summer including related costs. Hard to put a price on music!

• Transport: I try to use public transport once a week to help offset my carbon footprint, though I still spend around $75 on car fuel a week or more if heading out of town (which is pretty regularly).

• Utilities: This is quite a big expense really, but I'm a bit of a tech geek so internet/mobile costs are fairly big. Other utilities stock standard I suppose.

• Sports and hobbies: Frisbee golf, climbing, basketball.

• Health: Just a bit of dental and eye care mostly.

• Kids: Two little nieces who might get a treat or two :)

• Personal care: Makeup I guess.

• Travel: In the Beforetimes (pre-covid) I was usually overseas once a year, love a good airbnb, love escaping the city, and get to the South Island a number of times a year. Almost makes any attempts to reduce my carbon footprint a joke, which I'm well aware of.

• Insurance: I have a basic Southern Cross health insurance plan.

• Gifts and donations: Man, I should totally give more!

• Other: Random subscriptions and small costs for my previous (still operating) startup e.g. website, zoom, etc. Average cost over the last 5 years.

Remaining income

I’ve found it tactical to have a to-do list which is focussed on treats/expenses. Right now it says:

March:

• Savings $1,000.

• Credit card $85.

• New prescription glasses $99 ($250 from insurance).

• Suede hat $69.

Later:

• Lego set (alpaca rescue): $85.

• Paragliding: $5,000.

• Snowboard: $1,500.

• Cuba in 2022: $7,500.

• Tesla Model Y in 2024: $120k.

• Deposit?

There’s a little figuring out to do for the big stuff. But I’ve stopped spending money on little things that don’t actually matter because they don’t make the list for this month.

Inviting feedback from readers

I’m human so I’m sure lots of my thinking on money comes across contradictory. If there’s something you want to point out, please be my guest! I love advice, I love hearing what works for others, I love being questioned.