How do I teach my child about money in a cashless society?

This one’s for you Ado.

Last time I gave you guys my 2 cents on why I think children should be taught the value of money. My goal today is to present some tools and strategies from across the net to help you do this in a cashless society.

I’m not going to pretend like I know everything about children or money. Heck, I don’t even have children yet. Yet? I’m also not a millionaire yet. Yet.

So what value do I bring? I bring my beliefs and, hopefully, some experience.

I believe financial literacy is just as important as English literacy, I believe people should feel comfortable talking about money and I believe parents, yes the parents, have an obligation to teach their children about basic life skills such as the difference between a debit card and a credit card.

BOOM cashless society segue!

Did you know that Kiwis made 140 million electronic transactions in Feb-2019? This equates to about $6.9 billion in one month alone and it continues to grow! Insanity.

With fewer people transacting in physical cash how do we show, let alone explain, what money is to our little ones? If you’re anything like a human being you learn through your 5 senses. Kids are the same, they learn to pick up the phone by watching you do it, they learn what a hug is when they feel your warm embrace, and they learn not to stick a 2 pronged metal object into a wall socket when they get blown half-way across the room with their hair on fire #truestory #thisisme.

Right, so this post is about HOW to teach your kids about money in a cashless society; let’s get back to it.

I scoured the net to find some insight on the subject and came across this which gives some awesome tips. I’ve taken the liberty of summarising key points, adding a bit of my experience and notes along the way.

Start Early, Make it Visual, Take an Active Role

In general, “The New Age Parents” suggests to start talking about money early, i.e. toddler age. Before you ask what financially irresponsible parents would give their toddler a BNZ Platinum Plus Credit Card (best cash back rewards btw), back up and read on. They suggest setting up physical piggy banks or savings jars which you encourage your child to drop coins in to. The goal here is to imprint the act and not about teaching them the glories of saving – that comes later my young Padawan. Keeping physical jars keeps things visual for them (thinking back to the 5 senses) and your active participation and interest in these jars illustrates its importance to the toddler at an early age.

Gamify

This is the part where I share my learnings as a teacher. You read that correctly. I was once a teacher. I taught Elementary School English in South Korea and it was one of the hardest things I’ve ever done. Imagine this, a foreigner approaches you in the street to ask for directions, their English is spotty at best and you’re in a rush. You decide not to leave this poor man to wonder aimlessly so you try your best to help without using any words. You point and swivel, using your hands like a bendable SAT NAV, make grunts and gesture landmarks. They finally get the message only to get lost once again. Now imagine this foreigner is a child with no desire of listening to you, you’re in their country and in a class full of little rascals that can’t understand any of your instructions.

What was I to do? Luckily us Native English teachers had a secret weapon. Games. We created Power Point games like the classic “Bomb Game” in which children got points by answering questions relating to English. Some of these questions had points underneath, some had bombs. It drove the kids bananas watching other teams reveal a bomb card because it meant they lost all their points. They loved it and so did we because the kids were learning through doing.

I’m not suggesting using Power Point games to grill your children about money. What I’m suggesting is to leverage money gamification to your advantage. Check out this cool Kiwi article about Gamifying Finances. It talks a lot about what I just described above and introduces you to Banqer a finance education platform that teaches grade schoolers about the value of money. It’s sponsored by Kiwibank (man these guys do some cool stuff).

The Fictitious Household Economy Experiment

Warning, I’m about to get all Asian Dad up in here, right now, so strap in.

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I wrote a bit about starting financial education off early in a cashless society and about keeping things visual, taking an active role in educating and about using gamification to help children develop good money habits. Now I want to share with you an idea that I had whilst thinking about this topic.

I want to see whether constructing a fictitious household economy could prepare my spawn for real life. It’s going to be a bit of an experiment really so, if I’m still writing blogs in the future I may give you, my dear readers, a bit of an update on how that’s going.

What is a fictitious household economy? In my mind, it’s an economy based solely on the household the child lives in. Chores done will be paid, living expenses, and “luxury goods” will be charged for and savings will earn interest from the bank of mom and dad. Obviously we’re not talking market rates here but the skill I want my child learn is cash management and a basic understanding of how the economy works. This would be a cash system (keeping things visual) at first but could move into cashless at a later point in time.

Thinking something like this to start out with:

Chore Income $1.00 per chore
Tax Rate 33%
Living Expenses $1.00 per week
Luxuries TBP
Savings Interest Rate 30% p.a.

Obviously theres alot of planning I still need to do but… what do you guys think? Am I going overboard? Have I become a crazy asian “pseudo-dad”? Will Robin ever do away with Batman and form his own crime fighting series? Find out next time!

If you enjoyed reading this please give a like and leave a comment on THIS SITE instead of the social media platform, please. Thanks for reading!

Disclaimer: This post is for entertainment purposes only. It contains only general information about childhood and financial matters. It is not advice and should not be treated as such. I am not an expert in children psychology nor an expert in early childhood education.

Do your children know about money?

I mean of course they know about money. They know how to take it from mom (I’m Canadian) and dad, go to the supermarket and buy stuff right? Isn’t that all there is to it? To a child it might be, but should they know more? Could children grasp what so many adults struggle with every day of their lives?

I’m talking about simple things like where money comes from, not the bank of mom and dad. Stuff like debt, the economy or … if we were to stretch their minds a bit more… perhaps even saving for the future? You’re probably thinking, man this guy is a crock of shinto that’s basic stuff! Well let me tell you, it’s not. In a study conducted by the ANZ, they found that for “Financial Wellbeing” (a measure that considers ability to meet financial commitment, financial comfort, resilience to unexpected events) NZ scored a glorious 59%. That’s a fail as my asian dragon mom used to tell me. “If it isn’t an A it isn’t worth showing.” Thanks mom. Let me further illustrate my point from a child’s perspective.

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The Leather Wallet

I want to share with you a story out of my childhood. When I was a kid many eons ago I used to take money from my parents leather wallet in the kitchen because if they didn’t keep it safe its their fault not mine – I was also a little rascal but that’s a peripheral point. Anyways, I was pretty ninja about it and my parents kept losing money and I kept buying ice cream cones (because Asians love ice cream – its true) without them knowing or so it seemed for months! One day I saw my mother crying in the kitchen and I asked her what was the matter. She replied “Son, I thought we had enough money, I really did! We were saving money in this leather wallet over here to bring your sick Mama (grandmother in Cantonese) over to Canada so she could receive treatment.” My heart sank. I burst into tears and confessed to everything. I vowed to sell lemonade (I was 6 and had a lot of lemons) by the side of the road until there was enough money to bring Mama over to Canada. So true to my word I went out in the scorching Canadian heat for weeks and months until I paid back all the money I took. When I was finished my mother came up to me and asked me if I enjoyed making back that money. I told her it was the hardest thing I’ve ever done. She smiled and said welcome to the rest of your life. This wallet wasnt for your sick grandma she’s actually pretty healthy and at the casino every day playing Mahjong. This wallet was for your college fund which we have been saving for you and was waiting for you put the money back before we deposited into a savings fund for you.

The story illustrates a good point about children. Until you show them how hard money is to earn and save they will never know the true value of money and how to harness its power to achieve the freedom they want in life. I am, of course, referring to savings and investments; making money work harder for you and being responsible with debt.

Educating your child has a strong impact on your childs financial success. We see it in the ANZ study as well, where people whose parents did not provide them with advice on money matters when they were growing up had lower levels of financial wellbeing on average (55) than those whose parents did provide such advice (62).

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Value Based Decisions

Knowing this, it is more important than ever to engage children in conversations about money early on. Start with the basics and practice what you preach. A good example is when you are out with your child involve them in money decisions i.e. when deliberating between getting fries with that or just sticking with that 50,000 calorie McD burger. Begin with asking your child what else you could do with this money or if its better in savings. That’ll start to get children into the motion of stopping that impulse buy and use a bit of that frontal cortex when thinking about purchases. Next you could start entrusting them with buying decisions and offer alternatives to buying something now for something in the future. For example, “Adam, you’re old enough to make your own buying decisions so here’s $20 dollars for lunch but keep in mind that you are saving for that game console  – do you want to put some of that money aside for that? How much would you want to put away?” And let them decide. This not only empowers your child to think for themselves but it gets them thinking about money as a fixed resource and introduces an element of savings.

There are more tips and tricks up and I’m sure there are a lot more out there that others could share! So please take the time to do so.

I’m looking for opportunities to help young people break the stigma around talking and learning about money. I firmly believe it’s a leading factor to why many today struggle with debt. It’s a silent killer. I’ll be committing to writing more content around this issue (in addition to other money related issues) soon and am currently brainstorming ideas on how best to educate young people and adults alike on financial matters! Watch this space!

Let me know if your thoughts or ideas on how we can destroy the money stigma together! I’m based in NZ so let me know if there are any kiwi readers as well ;).

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Why I decided to lose weight and the Ectoendomorph body type

So, I have a body type that’s quite unique… it’s called a Ectoendomorph. Is that even a word?

If you recall from phy-ed, “experts” like to classify bodies into 3 types, Ecto, Endos and Meso morphs.

Ectomorphs are the skinny lanky tall creatures that can’t seem to gain a pound of fat but also have an equally hard time gaining any muscle.

Endomorphs seem to be the exact opposite. They are usually short and stalky has quite an inclination to gain fat as well as muscle but have a hard time getting cut. They resemble a pear with fat accumulation arounds the hips, stomach, lower back and thighs.

Mesomorphs are human unicorns and are the sexiest beasts around. Able to shed fat and gain muscle quite easily, these people tend to resemble the images of Greek gods.

According to Dr. Google these are the only body types. Unfortunately, the world isn’t quite that simple, Google. Enter the Ectoendomorph.

I am what you call a hybrid of two body types. I have a hard time gaining muscle anywhere but thanks to my hideous genetics I accumulate and have a hard time getting rid of belly and lower back fat. I also have a higher propensity to accumulate visceral fat and the many medical complications that come with that.

I’m lucky that I keep reasonably fit… or so I thought. I’ve been struggling with a pain in my lower abdomen. It feels like a sharp pain pushing against my intestines. Not a fun feeling. I was going to the gym 4 times a week doing Olympic lifting so I thought I was covered. Granted I wasn’t watching what I ate.

Month on month my stomach and visceral fat kept getting larger (damn you Indian curries!) and the pain kept getting worse. GPs said it would pass but it never did (don’t get me started on how useless GPs are) … I took matters in my own hands.

I started tracking my calories using my fitness pal and set obtainable goals. I was competing at the 85 kg weight class during my competitions but I knew that wasn’t my natural weight so I made the choice to go down in weight class, 77kg … to my coaches dismay.

My Fitness Pal …. Check

Weight Goal… Check

Strategy to get there…. Where do I start?

Less is more

Calories in – Calories out = Weight Loss or Gain – It’s as simple as that. You don’t need to go Paleo or go to a naturopath and eat moss off a log to get shredded – All those fancy diets and fads are just convoluted ways to achieve the same thing, a calorie deficit.

I assumed I had a higher than average muscle composition from my prolonged “hypertrophy” training (I’ve been trying to only gain muscle by whatever means necessary all my life). Not the most effective approach but it did give me a good benchmark.

My fitness pal uses an algorithm to calculate an average resting metabolic rate so keep that in mind when you try and hit your calorie targets. For me, I knew I didn’t want to lose weight too fast and that I had higher muscle mass than the average Joe which required a higher calorie maintenance (or resting metabolic rate) than what fitness pal suggested so I set my goal to “maintain current weight” and I knew I would start to lose weight… and I did 4 kgs so far and the pain in my side is finally gone!

Macros

Carbs, Protein, Fats – It all boils down to how your body reacts to these three. From the many sources I’ve read, the optimal splits between these three depends on the person. Mesomorphs tend to get away with eating pretty much anything (if they hit their protein requirements). Ectos and Endos are the ones that need to be a bit more strategic. I noticed that my body reacted poorly to a low carb high fat diet so I turned to a high protein balanced approach. Hitting my calorie deficit I set my macro split goal to 20/50/20 carb, protein, fat split. It was the worst decision of my life.

The Big Mistake

My life of chicken breast and canned tuna grinded my diet to a halt in about 2 weeks. My stomach couldn’t process the amount of protein I was consuming and I became quite ill. Turns out by reducing other macros I was also depleting my already diminishing digestive enzyme supply my body had in stock. Without a way to digest the protein my body started building up stockpiles in my small intestine. Carbs and fats would pass through no problem but if anything resembled protein entered my system my body would immediately reject it. I’m still recovering, although now armed with some digestive enzyme supplements to assist in the protein backlog. I’ve been reintroducing protein slowly. The enzymes seem to be working… for now.

I’m switching my diet back to how it was originally 30/40/30 which was working great before. Some people can do a 20/50/20 carb, protein, fat split – I wasn’t one of them. It took a lot of mistakes like this one to realise what works for my body. I’m not suggesting going as far as I did but do play around with your diet and pay attention to what it reacts positively to. It will make your experience a lot nicer.

So what’s a good split for you? If you are cutting properly and only doing low rep strength training to do just enough to preserve your muscle, then to compliment that you will need to consume about 2x your bodyweight in kgs in protein. Go to my fitness pal and get your % for protein to allow for at least that much protein and you can play around with the carb/fat split and adjust it to what works best for your body and activity level. For example, I was 85kgs so my protein requirement was 170g of protein. Anything more than that is excessive and unnecessary.

I’m going to end the blog here for now and I’ll keep you guys updated on how I do with my diet. I hope to get bloody shredded by the time my wedding rolls around. Watch this space!

Have you guys had fitness goals you’ve been trying to obtain? Let’s compare notes!

Getting married. T-minus 3months.

Man, it’s been a while hasn’t it…

Sorry for the big hiatus ladies and gentlemen. I’ve been busy planning my wedding… Scratch that, I’ve been busy watching my fiance plan our wedding. Yes, I probably should be helping out a bit more but since my sense of style is something of an enigma I have been graciously dismissed from pretty much every decision (really hope she doesn’t read my blog haha). Let’s stick to my strengths… Or strength, counting money!!! It’s time to frugal all over this wedding.

It’s 3 months out and we have all the big things under wraps and deposits paid for. Venue, up and coming indie photographer, cake, wedding dress, guest list, flowers and some of the decorations. We’ve even started to put a rough timeline together to see if we’ve missed anything. We did, obviously. Weddings can be confusing at best. If you’re unsure of how to begin planning your wedding give this a go:

Top 3 things to hammer out now

1) Your partner’s involvement – like most things one person will care about this more than the other. If you’re reading this, I’m guessing that’s you. Agree on the big things together but make sure to understand that they may not want to know every single detail. Conversely they might want to be part of everything. Just make sure to have the conversation. This will save you countless hours of trying to figure out where their heads at and why they aren’t responding as you would expect.

2) Build an affordable budget – I’ll get into this in more detail in a later blog but this is super important. This is like building the foundation of your house. Get this wrong early on or not do this at all and you’re in for a world of pain… Still not convinced? Let me put this another way. You’re about to spend the rest of your life together, share in your debt, savings, assets, your lives and the children you create together(if you’re into that). Do you really want to start all that in debt? I certainly did not. Do the frugal sensible thing, make a budget and stick to it.

3) Wedding size – this will draw out the sandbox you will play in. If the budget is the foundation then the wedding size are your four walls. Understand, with your partner, how big you want to make this wedding, the bigger you make it the more of a logistical nightmare it becomes and the more expensive and more exposed your budget gets. Nicole and I decided on a small wedding of 36 people and we found a venue that could only hold that many people so if people asked why they weren’t invited ( yes people do that) we would blame it on the venue instead of having that awkward conversation about “not making the cut”.

It’s easy to get lost in everything but if you hammer out these 3 things first I guarantee it will make things down the road a lot clearer. Nicole and I have been engaged for over a year now and we agreed early on that we would spend a around  20-30k on the wedding for 36 lucky guests and that my involvement would be the groomsmen, the budget, transportation, my wedding band and the guestbook, we agreed that Nicole had veto power over what I choose to do. We also calculated how long it would take for us to save up 20-30k which is why we chose to get married a year and a half later. We knew we didn’t want to start this amazing journey together by borrowing money or by relying on our parents. We’ve almost reached our savings goal! More on that later…

Here are a couple of shots of our engagement photos. This came with the wedding photography package. I love a good deal. Photos by Rachel Soh.

Stay tuned for more exciting frugal accountant wedding talk! You only get married once! Or so we hope. If you’re getting married, thinking about proposing or just doing some early planning because you think he might propose because you saw him checking out those rings that one time you both walked out of the mall 2 weeks ago and all your friends have been telling you that it’s a sign and that you should get a head start on planning your perfect dream wedding and by “friends” you really mean the voices in your head that sometimes tell you to do silly things, then tell me about your experiences.

How far are you along? Are you hitting any road blocks? Dr. Frugal is here to help.

Is Property Investment Suicide: Part 2

“Time is the friend of the wonderful company, the enemy of the mediocre.

– Warren Buffet

I recently had a conversation with a friend about their investment property. It was the usual exchange up until we started talking about capital gains.

“Jim just used his $200k property gain to buy himself a new boat!” I heard him exclaim. The guy had several properties – and several mortgages.

I was in two minds, I couldn’t deny that $200k was a huge gain but I also could shake that something smelled fishy. I crossed my legs.

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I started wondering “Hold on. Was it actually a gain? How long and how much money did he spend on the house before he sold it?” Why does this even matter? Money is money right? Let me illustrate why knowing how much money you actually gained is important.

The Property Guru

Lets look more closely at Jim.

Jim is an equity property investor and has 4 properties; A1, B3, C4, D5. For the purposes of this example we will focus on the sale of D5.

Here are the facts and calculations that I did in the background:

  • Jim has just sold D5 for $650,000 which is was worth $450,000 5 yrs ago and has a mortgage at 6% fixed.
  • Jim has tenants helping him pay his mortgage
  • Based on the above, the current value of Jim’s mortgage at the end of Y5 was $460,060 (Interest + Principal Contributions + remaining mortgage balance at Y5)
  • Commissions and other cost to sell were $25,000 (Based on B&T and this article)
  • Let’s assume renovations were required (because you generally won’t get something for nothing. Yes even for property) at a cost of $132,000 (60 sqm at $2200 based on Westpac)

I’ll save you the arithmetic, the gain after interest and fees is $32,940.

So what happened to this $200k gain? Most likely a product of the law of least effort (its easier to deduct $650k from $450k then do the arithmetic above or to keep track of several properties and their respective mortgages). If Jim did buy a boat for 200k it would have been at the detriment of his other investments.

Womp Womp, bad investment decision. 

But is Jim’s situation typical? In a “hot market” you may get away with a quick sell at a marginally higher price, which is what you’re hearing about in the news (as rampant speculators quickly start bidding up prices) however, in most cases you will need to do some sort of improvements/maintenance; especially if you have tenants.

More time passes = more improvements/ maintenance work = higher cash outlay required before sale. For property, time is a double edge sword.

The Property Market

Let’s compare alternative investment vehicles with the average returns of the property market in Auckland as per Barfoot and Thompson.

Why? Because you want to.

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2012 2013 2014 2015 2016 2017
Jan $470,000 $526,888 $580,000 $700,000 $760,000 $846,500
Feb $464,000 $525,750 $620,000 $685,000 $738,000 $820,000
Mar $500,000 $575,000 $652,000 $711,000 $798,000 $900,000
Apr $491,250 $566,000 $619,550 $753,500 $820,000
May $504,000 $570,000 $645,000 $750,000 $809,500
Jun $528,900 $590,000 $626,500 $786,000 $839,500
Jul $518,500 $585,000 $645,000 $757,000 $840,000
Aug $505,500 $561,500 $630,000 $755,000 $850,000
Sep $525,000 $599,000 $635,000 $790,000 $850,000
Oct $545,000 $590,000 $655,000 $780,000 $865,000
Nov $560,000 $621,400 $691,500 $795,000 $850,000
Dec $550,500 $629,000 $720,000 $800,000 $840,000
Yearly Average $513,554 $578,295 $643,296 $755,208 $821,667 $855,500
% change 13% 11% 17% 9% 4%

As you can see housing growth rate has decreased since its 2014 peak. Let’s assume the 5 year average is a good indicator 11%. As you’ve learned above this 11% is gross, meaning, that any interest effects, commissions, renovations, legal fees and other fees (like tax on capital gains) haven’t been taken out of this figure.

I’m going assume that none of these costs exist for our comparison because I’m too lazy to mock up example figures and I want to give property the benefit of doubt. Please note that the costs I am ignoring are VERY substantial and should ALWAYS be taken into account when making investment decisions unless you want to end up like Jim.

So let’s look for investment alternatives in a place where all kiwis should be familiar, the Kiwisaver.

The following funds currently outperform the property 5 year average:

  1. The OneAnswer Australasian Share Fund; 13.68%
  2. The OneAnswer Australasian Property Fund; 15.76%
  3. Milford Active Growth Fund; 13.84%
  4. Milford Wholesale Fund; 13.68%
  5. My personal P2P lending account; 18.39%

These are gross figures to make them comparable. If we were to take just last years property growth figure (4%) and compare that against the Kiwi Saver results we can see that almost every single Kiwi Saver fund (irrespective of risk preference) outperformed last years property growth.

Obviously future gains are not indicative of past results but it does show that there are other (easier) options out there that give you the same if not better results.

If property growth continues to slow is it wise to continue to hold your property or put more money into other investment options? Only you can make that call.

The Take Aways:

  1. Don’t believe the media hype about property. As you can see from the March results the average cases are nothing special and with a declining growth rate it will be interesting to see if the hype continues.
  2. Get the full picture – Make sure you understand how much money your investments are making less the costs.
  3. Property is not always the best choice or the easiest to manage.
  4. Make your money work for you not the other way around.

That’s it for now. If you have any questions about anything let me know in the comments below.

Is Property Investment Suicide? Part 1

We’ve all seen the affects real estate has had on our respective economy. With Western economies becoming increasingly reliant on real estate, its becoming all too true that the only thing left of value in this western world is the land that we own.

I recently revisited the idea of buying into real estate after rebutting and denying the effects real estate has had on our economy and its dominance in our everyday lives. In New Zealand especially it seems to be the only topic of discussion:

“Why are we so willing to give up our land?”

“Sell the milk not the cow!”

“Foreigners are stealing our land and our jobs”

“Housing prices and rent are on the rise AGAIN”

“McDonalds needs to bring back the McRibb” – ok that’s one of mine but still relevant… to my stomach.

Many people I’ve spoken to have had some kind of interaction with real estate from the millennial trying to buy their first house or a property guru making their 7th property investment. The number of interactions involving real estate is mind boggling. But you aren’t here to hear me rant about people. You’re here because you want to know what my title is all about.

What I am hoping to communicate to all of you is that property is a GREAT investment … for a small % of you. For the rest of you there are probably better investment opportunities that you should probably consider.

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What?

Some house keeping. I had to make some assumptions in my analysis for the below. I assumed that the mortgage rate and any alternative investments are the same, 6% per year and that everything is compounded yearly. I assumed rent was $470 per week (pretty high but its what I pay) and that the value of the property was $600k with a 20% down ($120k) – probably the price of the property I’m renting based on my recent searches on TradeMe.

Let’s get into it. There are a couple of types of people to consider:

The Home Maker

These are individuals that don’t see property as an investment vehicle but as the next stage in life. These individuals typically buy to live, only own one property and take out that 30 year mortgage to also allow them to enjoy life while also being able to pay for their home.

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At the end of 30 years they’ve just paid $1.034M for your $600k home.

There’s no point doing a what if analysis for these people because they aren’t in it to invest they value the security of having a home if things turn for the worst and there’s nothing wrong with that.

The Property Newb

firsttimehome

Young professionals that hear something on the news or have went to a couple of seminars about property investing. Fresh to the game they have a vague idea of mortgages, interest capital gains and investing but nothing too in depth or any practical experience. They’ve rationalised that they want to invest and property seems simple enough. Buy, maybe rent or sell at a good time. Property newbs don’t have enough capital to own several properties so they typically put all their eggs into one property and might have also asked for parent consignment on the mortgage. They opt for a 30 year mortgage, perhaps even an interest only mortgage so they can maintain their quality of life while owning a piece of the action.

Scenario 1: The interest only mortgage payers

You’ve paid 20% down ($120k) and are only paying the interest portion. You are building 0 equity and lets assume you rent your property out ($470/week) to help with the interest payments. Your goal is to sell at a gain. Your mission, unbeknownst to you, will be to sell at a large enough gain to make all that interest back plus a little bit extra to say that you came out on top. Let’s take things one at a time – how much do I need to sell my property for to breakeven with my interest payments?

This is what you want:

Required gain on sale = ∑ of all interest payments

Let’s say you hold it for 2 years and then sell:

Your property needs to sell for $608,720. Easy!

No one to rent your interest only property?

Your property needs to sell for $657,600. Again, doable.

Here’s a graph of how much you need to sell your property for the longer you hold the property for no rental income.

Property 1

Obviously the longer you hold your property for the higher your property price will need to be to make up for all that money you shelled out in interest. Keep in mind that you still haven’t made any money just broke even.

Scenario 2: Fixed rate mortgages

Same numbers but you’ve opted to gain some ground on the bank and increase your share of the house. You will need to contribute more; the principal portion.

Let’s begin with the ability to rent your house to cover part of your mortgage payments and a sale at the end of 2 years.

Your property needs to sell for $608,012 if you have rental income and $669,180 if you don’t.

Property 2

Again, you haven’t made any money just broke even with your investment. The difference between interest only and fixed rate is the compounding principal payments you’ve been paying.

I’ve just painted a pretty rosy picture in favour of buying into this property debacle but as with all epic novels the Hero of the story is about to run into some trouble. Stay tuned for the next blog to find out what happens when we want to actually make money off our investment and when we pit property against other investment options available. I’ll also cover off our third type of investor the “Property Guru”.

What do you think about investing in property? Is it for everyone? Is it worth the hassle? Any good/bad stories? Let me know in the comments. Also, if you have any questions about the calculations or about other investment options available in NZ let me know. I’m always happy to help.

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Experience NZ: Waiheke’s Stonyridge Winery

Last blog I went on to explain, in general, what there was to do on Waiheke aside from going to the winery but lets not kid around, wines are the main attraction. The tour we went on was Taste of Waiheke which was a REALLY amazing tour (and very expensive – but definitely worth it). We got a dedicated driver who was super awesome at her job and catered to our ever need and explained everything about the island (including the local gossip).

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The first stop was Stonyridge Winery where we were greeted promptly on decent from the bus with a glass of a cold white. Stonyridge isn’t known for its white wine so I’ll leave the name out.

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As usual the décor was fantastic and the views, stunning.

One of the girls (she was from Canada!) walked us through their olive trees which they initially grew for aesthetics and to give it a Mediterranean feel but over time started pressing their own olive oil to compliment their wines.

She then walked us over to the vines which were “caged” off to protect the berries from birds. Neglecting to net off their vines or even doing it too late could result in their entire harvest being picked off in a matter of weeks.

You will also notice that each row has a rose plant planted at the front. She explained that roses are very sensitive to disease and if the rose plant begins to show signs of deterioration they will have time to make the necessary precautions to protect their vines. Very smart stuff!

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Its not a wine tour if you don’t take the cliché wine on a barrel picture.

They let us try the red next, I believe it was the Larose which is their mid tier wine. It was a Bordeaux style red wine – Cab Sav dominant. It was quite a bold wine but very smooth. A glass of this will set you back 16 dollars, their most expensive vintage the Luna Negra goes for 18 a glass.

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This is where they served us our light lunch as well. I was too hungry to take any pictures so you’ll need to just accept that it was really delicious and move on.

We got to walk around the vineyard on our own. It was really quite amazing and facing a Stonyridge (go figure).

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That was it for this vineyard. It was beautiful as all of them are on the island. It was the start of our trip and we were excited to go on to the next stop which was an olive garden surprisingly. More on that next week!

What is the most beautiful winery you’ve been to? How does this stack up?

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Experience NZ: Waiheke Vineyard Edition

Ok, your visual cue for the day: An Island of award winning vineyards.

Vineyards, Waiheke Island, Hauraki Gulf, near Auckland, New Zealand

Nicole and I recently went on a pretty amazing wine tour courtesy of Lucy Lu and Taz Yin. Shout Out. With that said we had already been on other wine tours and private adventures on Waiheke so I decided to make this into a series giving each vineyard the respect it deserved. We’ll get into those soon but first, a little about Waiheke.

Proximity

Locals have touted about being able to get that “Island Feel” with just a hop on and off a ferry. The ferry ride itself is only 40 minutes and will put you under about $36 return. The differences between the city and the island are vast.

So where is Waiheke exactly?

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Density

There are around 30 wineries scattered across the island ranging from your small quaint vineyards to your high distributing luxurious ones. Each have their own style and personalities. Luckily the tour Nicole and I went on took us to the smaller wineries which we haven’t been to.

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If vineyards don’t float your boat there are various nature walks, beaches, restaurants and bird watching opportunities to tickle everybody’s fancy.

Getting there and around

Like I said above, you can take a 40 min ferry ride over. Currently, only Fullers operates ferries to and from Waiheke. If you’re after Devonport, Fullers takes you there as well. If you are a tourist, make sure you buy your tickets ahead of time (at least hour before if possible) and make sure you line up at least 30-40 min before during high season or you’ll end up taking the later ferry.

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Be prepared like these two happy individuals.

If you have an AT Hop card you don’t need to buy a ticket just line up for the ferry and tag on with one of the machines. The attendant scanning tickets will show you where.

If you’re looking to drive around town you should book a car in advance. There are only a handful of venders so book early. We used this company before. They do require a credit card to put down a deposit on the car in case you wreck it. There are also scooter options and bicycles.

There is also public transportation available on the Island which take the AT Hop card. If you don’t have one of these cards they do take cash, bring spare change. Another option is doing the off and on buses but they aren’t worth it. They come just as frequently as the public busses and are so much pricier – they are good if you plan on hopping on and off quite a few times. I’ll leave you guys to do the math.

I’ll end things here to add to the anticipation of my upcoming entries. What I will leave you with are 3 things you need to do on Waiheke.

  1. Visit at least all the wineries
  2. Go on a hike around the coast and around the rolling hills at the “bottom end” of Waiheke
  3. Try Waiheke Oysters – You can try these at the Oyster Inn (Where we’re getting married!) or visit the actual Oyster Farm

Up next Stonyridge Winery!

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Experience NZ: Pararaha Valley Tramp

Shout out to the Mauger Family for taking me on this epic tramp.

Imagine you’re back in time before the time of British settlers. You’re an indigenous person maneuvering past trees, foliage and marsh; following the stream in hopes it will lead you to your next adventure. You traverse the dangerous foothills and fallen logs, jump down mighty waterfalls and swing off of enormous ancient trees. As you venture deeper into the woods you notice mighty towers of stone flank you, fallen trees and logs laid across your path as if to mock your ability to pass.

You, of course, have come this far; you press on. The number and size of fallen trees seem to grow the higher and deeper you go. The stone walls seem to laugh at your futility as the sun beats down on your shoulders. You feel heavy but hopeful. You reach the top. As you look across you see a clearing… not of land but of water. Great meters of open water barred by stone ledges that you must climb. It seems endless…

Yea, the hike was just like that. Badass right? This tramp literally had every obstacle that nature could have thrown at us. Marsh, rivers, rocks, trees, climbing, enormous pools of water. It was insanity but oh so cool and all jam packed into one entire day of excitement.

Anna’s going to kill me for sharing this but as always here is a map of where we went:

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Piha is the region with the best hikes and tramps. It is also most likely the most scenic place in Auckland. In the summer time this place is packed with Aucklanders and tourists. But not everyone knows about Pararaha Valley. Lucky for us.

The hike was different than what I was expecting. Instead of hiking up a mountain or across land we started by descending into the marsh… but not before I captured the views

The signage was a bit confusing but we found our way to a little hut (it wasnt a hut) where we were meant to wait for Anna’s dad – he was our guide but he had to wait for another member. Needless to say no one knew where they were going. The views were stunning though.

When Anna’s dad showed up that’s when the fun really began. First thing he did was take us into the stream. We had to jump to either carefully jump across slippery rocks or just walk through the stream like a boss. I chose to be a boss.

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The beginning wasn’t too bad I just thought we were going to jump a couple of rocks maybe climb a few stone walls and swim across a pool of water. It was like that except so much more fun.img_3067

When we went it was quite cloudy and a little cold which made it quite difficult to swim through the great pools of water. But I can only imagine how glorious the pools of water would have been if it was really sunny. Here are some pictures of Anna and the gang sliding down the rock water slide.

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Unfortunately, I cant find the pic of me sliding down but if there was a picture you would have seen me slide a little to the left of where everyone else landed at the bottom and into a hole. It was like a child slipping through the middle of a toilet seat.

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Heres a video of gav “almost” falling into that same hole. Quality is a bit crappy. Apologies.

In addition to water slides the tramp also provided us cliff diving which all but Anna, her dad and his friend were too afraid to do. Heres the video (again very short and low quality – sorry)

As we progressed further through the pools of water we came across the abyss. A huge pool of water that you actually had to swim across and then trying to pull yourself out on the other side leveraging off a slippery rock ledge. Heres a picture of the gang waving by the smaller friendlier pool and a picture of us swimming across the abyss.

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Pretty epic eh? There was a larger waterfall that came afterwards that I couldn’t get a picture of but was pretty tall. There was also a ledge and a piece of climbing rope left on that tree that reached out across the other larger pool of water. It could have been 20m high. Clearly some maniacs used this to swing themselves into the pool of water. I didnt chance it. Cause I’m a chicken shit.

Heres a picture of us coming through the canyon and the fallen logs that had got stuck after the valley was drained.

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Something out of a novel. Huckleberry Fin got nothing on this.

Well there you have it folks. Pararaha Valley was probably the most action packed hike I’ve had in a while. The most epic part was when Anna’s dad had to rock climb over the largest pool of water then up a water fall. We found an easier way up on a narrow ridge above and watched as he got stuck. He had no footing to progress further and he positioned himself too far from the lower one to go back. Luckily he found a small rock on the side which he leveraged to rock himself back on the right path. It was pretty lucky. Shame I didnt get a picture of it. I also couldn’t capture when he dived INTO a waterfall. That man is a legend. Anna, if you’re reading this; when I grow up I want to be …your dad? Yeah, as I typed that it seemed wrong but I also laughed so I’m not editing that out. #writersbenefit

We spent nearly 8 hours in the valley. None of us were prepared to stay that long. I only brought a couple of cookies and there were some bananas that other people brought but needless to say we were all starving. I hit McDs shortly after. What did I order? Fillet O Fish and a 1/2 pounder of some fancy burger. Oh, and COMBO. #obesity

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Have you been anywhere cool? Seen a place that “had it all”? Interested to hear your thoughts. Comments below. I swear ill be nice.

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