What I Learned From my Parents Has Shaped my Life

What you can learn from your parents will help you throughout your life

When you grow up, you learn a lot from your parents.  There are things that they directly teach you, like tying your shoelaces. And there are things that you don’t even know they are teaching you. That’s what I think happened with finances. I was never directly taught by my parents about finance, but I now know that I learned so much from them just …

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Passive Income Report: April 2018

Passive Income report for NZ personal finance blog Passive Income NZ

There is no point in having a goal if you don’t measure whether or not you have achieved it. My current goal is to replace my income with passive income. I have decided to split my goal into smaller more manageable goals. The first small goal is to achieve a passive income of $25 per week. Once I have achieved this I will push for …

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4 Steps to Early Retirement Through Passive Income

the 4 steps to early retirement through passive income

The thought of early retirement for many people is an un-achievable construct. But if you are a millennial you have time on your side. See, early retirement isn’t hard in a certain sense. It isn’t like learning quantum mechanics, and trust me quantum mechanics is hard. I did several quantum mechanic papers at university, and I am still don’t fully grasp all the concepts. Early …

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Spending Report: April 2018

Monthly spending and investment report showing you how my portfolio is going and how it can help you on your journey to financial freedom

April has been a fast month for me. It seemed like it was over in a blink. April is always packed with birthdays, as nearly all my family was born in April. Along with daylight saving, and a few cold days, April has hinted that winter is coming for us in NZ.

This is the second spending report that I have posted. I post these in the hope that I actually use my spending data to improve the next months spending. The aim is to direct as much extra money as I can to invest in passive income streams for the future. Ultimately, allowing me to retire years earlier than the socially accepted retirement age of 65.

So here is April’s spending.

Again, our mortgage payments have been around 50%. This month we will have to negotiate with the bank to get a new fixed rate. Already I have asked around and currently, the Bank of New Zealand is offering 4.2% fixed for 2 years with a bonus retainer of $3000. I’m going to take that offer to my current bank to see if they can match it. I don’t want to change banks, but if the offers are better at the competition, we will have to change.

The Good

In March I opened a new account with InvestNow and deposited some money to buy some passive funds. It took me a while to decide what funds to buy, but I managed to read all the documentation and bought some funds in April. I have added another $400 to this account.

Groceries were down on March

We slashed $200 off our grocery bill was down for the month of March!

The Bad

Miscellaneous consumption

My spending has gone up for the month of April. This is because I bought a 3D printer, both for work prototyping and for making items for around the home. I have made several items for the garage. And printing items has been quite relaxing for me. I spend a chunk of that spending on consumables and upgrades for that printer.

Eating out has crept up

Since April is a month of birthdays, it is not unexpected that the dining out bill has more than tripled to $330. It is expensive, but sometimes you have to do it to strengthen your social network.

And the Ugly

Car expenses

Car expenses have gone down to in absolute terms, but in percentages, it is still up at around 12%. And I haven’t even travelling much recently. It is quite a large expense for just driving back and forth from work on my luxury sofa.

Overall, we had a loss this month of $330.89. We need to sort that out!

Goals for 2018

So I have decided to start some goals for the remainder of 2018. I am still formulating some other goals, but at this stage, I am going to aim to increase my investing this year. Over the month of April, I will look into some other goals. I am thinking about setting a monthly expenses goal but need to analyze past data to see what is actually achievable.  I don’t believe it is worthwhile setting an unachievable goal.

Increase investments by $12,000

My goal for 2018 is to increase my investments by $12,000. Since I started in March, that is around $1200 per month. In April I invested $1500, and this month I managed to invest $400. So I am currently 15% towards my goal.


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Information presented on the Website is intended for informational and entertainment purposes only and is not meant to be taken as financial advice. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through. Please note that I only recommend products and services that I have personally used.

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Why I Chose to Sell my House Privately

Selling your house privately and save thousands

The real estate agent told me they gave me a good deal—a commission rate of “only”  3.95%. Oh, and then they mentioned I would have to pay for a photographer for professional photos. Ok, I thought, why is that not included in the commission. They said if I wanted to list on Trademe, I would have to pay for the listing fee on top. Still …

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Do you know where you stand?

Do you know where you stand compared to others in New Zealand

Sometimes, to motivate you to improve your life, you need to compare yourself to others. This gives you some perspective. Gives you something to aim for… I want to be as rich as Bill Gates, and I want to be as good of an investor as Warren Buffet.

Fat chance.

Dreaming about what you would do if you were Warren Buffett, Bill Gates, etc., isn’t going to help you. In Fact, it is probably not very healthy to do so. But where you can get some perspective and motivation is to look to your peers. Ok. That may also be hard as many people don’t like divulging their personal incomes and financial situation, sometimes not even to their partners.

Which by the way, would solve a lot of issues. It would probably solve the gender pay gap. If everyone knew exactly what everyone else at a job was earning, then it would be obvious who is being paid fairly, and who is eating all the free lunch.

Anyway, the best way to compare where you stand is to look at statistical data. Here in NZ, the average household income is $107,000 per year.

Let’s go back to school for a bit. The average, or in school the mean, is the sum of all the items divided by the number of items.  When you think about this, it is not a good measure to compare to. Say you take the average income of several people. Let’s say Gareth earns 1 million, your neighbour Steve earns 70k, and Sally down the road earns 100k. You earn 44k. The average of the four of you is $303,500, but nobody earns anything like that.

So the average is not a good measure. That is why income statistics are normally given in medians. From the above example, the median is $85,000. That is much closer to what the group earns.

The median income in NZ is $48,000 per year. And the median household income for 2017 is $85,000.

So where do you sit?

If the typical Kiwi household earns $85,000, then I figure if we earn more than this we should be saving and investing all the excess. Given that the majority of Kiwi households get by on $85k. But do we do this?

Our household income is slightly north of the median at $130,000, so there should be at least $45k invested and saved. 

What are my numbers?

Last year was before I really started to take growing my passive income seriously. But we still managed to save and invest $75k. Albeit, the majority of the saved money when to pay the mortgage. Leaving us a $55k in expenses, which in my opinion is still too much. For 2018 I hope to change this and really ramp up the savings.

What I am really ranting on about is that sometimes you can measure up where you are against the masses. It can give you a good feeling, or it can make you work harder. Either way, you need to know that the masses are not trying to save and grow a passive income. So you need to act differently to them.


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Use This Link to get 1 month Free on any new car insurance policy

Information presented on the Website is intended for informational and entertainment purposes only and is not meant to be taken as financial advice. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through. Please note that I only recommend products and services that I have personally used.

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You Can Save Thousands by Selling Your Home Privately

Passive Income NZ

A few years ago, I finished my on the job training and decided that I should find another job at a different company. After all, if you stay at the job you trained at, it will take longer for you to shake off the title of the trainee. It is far easier to move somewhere else so that you can reinvent yourself as fully qualified. But that’s another story for another day.

Since I had to move to a new city for my new job, I had to sell the house I had bought four years earlier. There was no way that I would have enough money to buy another house in the new city and keep a house in the old city I was moving out off. Never mind that if I were to keep the other one and rent it out, it would be a 5-hour drive between the two houses. Not exactly easy to rent a house out when you live 5 hours away, except if you want to pay someone else a hefty return on your investment.

I did what anyone else would do. I talked to numerous real estate agents. Listened to their pitches as to why I should list with them. That they had more buyers than the competitors and were waiting for quality houses to come onto the market if you have ever had to deal with real estate agents you will know what I am talking about.

Commission Rate of 4%

At the time, most of the agents were willing to sell my house at a commission rate of 4%.  Now if you’re like me, that 4% commission seems a bit funny.

It should sound funny because in what other industry do people provide a service for a percentage of the sale price. Sure I know they do this on auction sites like TradeMe etc. I don’t understand the difference between selling a $200k house and a $400k house? They are both houses. Both requiring advertising, both requiring open days.

The difference is $8000. So if I was the owner of the $200k house, let’s suppose that this house is in the lower end of the market.  I would be concerned that the agent would be doing less work to try to sell it. After all, they are being paid half the amount when compared to selling a $400k house.

Here is another reason why I think the % commission system is strange. Say what you want to sell your house for $400k. An offer of $380k comes in a week into the marketing campaign. The real estate agent persuade you that this is a great offer, and you should take it.

Now, why are they doing that? Persuading you to sell your house at $380k, when you know it is worth $400k. And besides, it has only been a week.

I will tell you why. Selling at $380k will bring in a commission of $15,200 for one week’s work. Now say it take 4 weeks to find a buyer who wants to pay the $400k. Now the real estate agent brings in a commission of $16,000 but had to spend an extra 3 weeks of work to get you the buyer, only receiving extra $800 for their efforts. Considering the weekly amount drops from $15,200 to $4,000, you can see exactly why the agent would want to pressure you into selling at $380k.

The agent sees a difference in the commission of $800, but you see a difference of $19,200. This fact alone should make you question your agent’s agenda. Especially when they keep saying that you should always take the first offer, as it is usually the best offer. And another thing. How do agents know this? Can they see into multidimensional timelines to determine that the first offer is the best?

Real estate online?

The second thing I don’t understand about real estate agents is the fact that it is one of the only industry that hasn’t seem to move online. Why is that? Physical stores are closing left right and centre due to the increase in spending online. Second-hand car dealerships are closing everywhere since you can just go on TradeMe to by a car. Heck, you can practically buy anything online if you know where to look for it. Everything is becoming peer-to-peer, from taxis with the likes of Uber, to accommodation with Airbnb, and even loans with the likes of Harmoney.

Selling houses privately

So why has real-estate not moved on from a commission-based system to a more online peer-to-peer system? And why on earth does it cost that much to sell a house? Thousands of dollars a week? Considering the average price of a house in NZ $670K, and the average time to sell currently is 46 days, a real estate agent working a 40 hour week will be earning around $102 per hour. For only listing one house! If the agent has 10 houses, that is $1020 per hour! What other job do you earn that kind of money?

Ok, let’s be reasonable, I have heard that half the money goes to the brand that they are associated with for expenses like advertising and admin overheads. Still, that agent selling 10 houses is earning around $500 per hour if they worked a full 40 hour week. That is absolutely insane! That puts real estate agents amongst professionals such as an anesthesiologist, commercial pilots, and even more than our prime minister!

After thinking about all this, I decided I would give selling privately a go.

* note: the example I gave above about how much a real estate agent earns are all rough ballpark figures using averages. The actual amount of money they earn probably varies widely, but still, the hourly rate at which it costs to sell your home, your biggest investment, is staggeringly high for what is actually involved.


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Information presented on the Website is intended for informational and entertainment purposes only and is not meant to be taken as financial advice. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through. Please note that I only recommend products and services that I have personally used.

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The Most Important Thing You Will Ever Learn: Part Two

the most important concept you will ever learn

Now earlier, I wrote a post about the most important thing that you will ever learn. If you didn’t read it, I would recommend that you go back and read it. It will make this post make more sense. To really hit home the power of exponential growth let’s look at a simple example.  Think of a game of chess. The game of chess was …

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March 2018 Spending Report

Monthly spending and investment report showing you how my portfolio is going and how it can help you on your journey to financial freedom

My First Spending post! Yah!

I have been tracking my spending for a long time know, but I have never really analysed the data and made any goals to try and improve. Hopefully, these posts will allow me to do that.

So here is March’s spending.

The one thing that is good about the above graph is that nearly 50% of our expenses are the mortgage. Once we have paid that off, we can really ramp up investing and growing our passive income stream. The bad side is that the mortgage won’t be paid off for several years now. And it is time to start re-negotiating the rate.

The Pros

Investing was up

In March I opened a new account with InvestNow and deposited some money to buy some passive funds. This is because my previous managed funds with Rabobank were being migrated there anyway, as Rabobank has moved out of the fund business.

Groceries were down

Our grocery bill was down for the month of March!

Miscellaneous consumption

Miscellaneous consumption, or consumerism as I like to call it, was down for the month of March. That is great. I consciously  

The Cons

Car expenses

Car expenses always surprise me as to how large they are! A whopping 13% of my total expenses. I would be totally owned if Mr Money Mustache has a look into my expenses. Next month my car expenses should go down. There was a lot of driving going on in March and I had to do some yearly maintenance and replace a few failing parts.  

Bank fees

Bank fees are up. I don’t even know what they were until I realized that I had automatically categorized a few speeding tickets into bank fees. I don’t have a category for speeding tickets. It’s not a common occurrence for me to get them, so I will leave them there. There was a lot of driving in March. That could also explain why owning my sofa on wheels had a total expense of 13%.

Goals

The goal for April is to bring car spending down and to put that excess into investing.  In April we will also have to negotiate with the bank for a good rate. And if the rate they offer us isn’t what we expect we will go to another bank to see if they want our custom.  I use the mortgage rate page on Interest.co.nz to get a quick overview of what the current rates are. They have all the banks on there with the exception of ANZ. I think their data feed for ANZ is broken. Overall we are aiming for a low 4% for a 2 year fixed. Let’s hope we can get it

Overall, we were positive for the month!


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Subscribe to Passive Income NZ — get ahead with the latest post emails directly to your inbox. As a bonus, I'll send you a FREE Personal Finance Resource Kit, so you can start your Journey to Finanical Freedom.


Visit my Resources Page to find out how you can get 50% off Pocketsmith!


Use This Link to get 1 month Free on any new car insurance policy

Information presented on the Website is intended for informational and entertainment purposes only and is not meant to be taken as financial advice. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through. Please note that I only recommend products and services that I have personally used.

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Budgeting Made Easy

Budgeting made easy with online software made for NZ

Anyone who wants to pursue early retirement or grow their passive income through saving and investing tracking your spending is a must. This way, once you’ve set your realistic budget ( I always see people set unrealistic budgets, unrealistic budgets have no real value as you will always fail), you can track where in your budget you are overspending. Giving you a better focus on …

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