We just received a $68,082.50 windfall!
31 Jul, 2022
Over the last 22 weeks, Jonny and I have been doing a bit of life admin that relates to the Christchurch earthquakes. Remember them? We have been working our way through a top-up of our original insurance claim. Recently, this claim paid us out $68,082.50.
It’s a significant sum of money which we were grateful to receive.
Today I just wanted to share with you why we came to receive this money and what we will do with it. These windfalls do not come around often (if ever), and it’s vital that we not waste this opportunity.
Why on earth did we receive this?
Back in 2010, we were living in an eastern suburb of Christchurch that was dramatically impacted by the earthquakes. Eventually, the land our home sat upon was “red zoned”, meaning that the government compulsorily acquired it. Once they took ownership (which we were happy about because it allowed us to move on), our home was bulldozed and our entire neighbourhood. If you wonder why I don’t see ‘bricks and mortar’ as a sure thing but instead as a risky and illiquid asset, this is why.
Thankfully we were fully insured with AMI, and after 2-3 years, Southern Response (who took things over) paid out. The total value of our home, which we owned freehold, was locked up during this time. It was an arduous, confusing and highly stressful process. But, eventually, our insurance claim was settled, and that money allowed us to move down to Alexandra and rebuild our house and lives.
I wouldn’t describe myself as a dramatic person, but that insurance process was an utter f**king nightmare!
After many false starts, in the end, years after it all began, we were finally offered an amount, and with all the energy now sapped out of us, we took it. We needed to move on. Unbeknown to us, some did not and could not. In court, they fought for fairer compensation, and almost ten years after it all began, they won their case, proving that they had received far lower insurance payouts than they were entitled to. What that court decision meant was that we fell into a large group of homeowners who, if they chose to, could have their settlement reviewed.
We owe our thanks to a tenacious few.
From what I gather, we owe our sincere thanks to Christchurch couple Brendan and Colleen Ross (Ross v Southern Response Earthquake Services Limited). You can learn more about their fight HERE. From what I understand, there are many more people who, like us, are eligible to have their claims reopened. You can find more information HERE.
We thought it was a scam! Jonny and I received a letter; I think it was in late 2021, offering us the opportunity to have our case reviewed. It immediately brought back the painful memories of the earthquakes and the battle of getting paid out. We actually thought it was a scam and threw the information away.
NO WAY did we want to open that can of worms again!
It was media coverage that we just happened to hear that made us think again, realising that this was legit. It appeared that if our case were reviewed, apart from having to pay a fee if you used a lawyer (which they would give you $2,000 towards the cost of), we could receive a cash payout if we had been underpaid.
We sought the opinion of a lawyer just to assure us we were not opening up a giant can of worms. We then filled out the appropriate paperwork and sent it away. Many conversations and emails later, in mid-July, we received the full and final payment of $68,082.50.
We were short-changed.
At the end of the day, this is money that should have been paid out to us all those years ago. Reviewing our claim picked up many inconsistencies, and they have now paid out on those, plus interest.
I am grateful to those tenacious Cantabrians who fought and won, meaning we have received this windfall.
Because there is such an extensive back story behind receiving this money, I can tell you that there is NO CHANCE ON EARTH that we will waste this opportunity we have been given. Nor do I want to disrespect the people who pushed this through the courts and made it possible.
The earthquakes and the subsequent insurance wrangle did change the course of our lives. Their impact really was massive. They are why we moved away from friends and whānau, left our jobs and settled in Alexandra.
Our financial management has improved during the last ten years.
I’ve put a lot of thought and energy into using our pūtea wisely over the last ten years. Month by month, I got better and better at putting habits and structures in place that help us head in the direction that we want to go. It means that for a long time now, I have been budgeting our money so we can buy the things we need now or save up for the things we need later. We are working on our plan to retire earlier than most.
So, receiving this $68,082.50 windfall will be used to complement and add to what we are already doing.
I structure our financial life based on a small card on my studio shelf:
Networth - We know it, and we track it.
Budget - We pay attention to both spending and earning.
Emergency Fund - If the earthquakes taught us anything, it’s that a large chunk of cash in the bank is an absolute lifesaver
KiwiSaver - We never miss a contribution to our funds, including our daughters
Debt Free - No more debt for us. Ever.
Invest - If we don’t need our money for short to medium-term things, we invest it.
Whenever money comes into our account, no matter the amount or the source, I see where it needs to go, based on this list above.
When that fat stack of cash arrived, this is what we did.
We had a family hui (meeting).
The three of us talked about what to do and asked ourselves if there was anything pressing that we desperately needed or wanted? Jonny wanted some new running shoes, but apart from that, because we have always budgeted and planned for our spending, there was nothing that we desperately wanted to go out and buy.
Which is quite remarkable.
I talk about ‘contentment’ a lot, this awareness that we have what we need. The point is that we just want a whole lot less these days. It means that our primary urge when money comes our way is not to go and ‘buy buy buy’. If there is something that we want, chances are we will have already saved up and bought it by now. I’ve absorbed the views of Mr. Money Mustache and Katie and Alan Donegan enough to know that being happy is the main pursuit, and buying more stuff no longer brings us increasing amounts of happiness.
Once we talked through a plan for this $68,082.50, we broke it down and allocated it:
We gave our daughter a pocket money ‘bonus’ for the week, gifting her the $82.50. “Do I have to invest half of this, Mum?” Ah, that would be yes.
We paid the lawyer's bill of $875.
We have many “Sinking Fund” bank accounts and took the opportunity to top some of them up:
Holiday Fund - $5,000
Emergency Fund - $1,000
Donation - $500
Health Fund - $200
Winter Heating Fund - $200
Jonny’s shoes - $200
And just like that, $8057.50 has been allocated!
We then moved $60,000 into a separate bank account to be invested along with our ‘normal’ investment for the month.
The remaining $25 was turned into a fancy bottle of red wine to celebrate with!
The biggest splurge amongst all that is the top-up to the Holiday Fund. We have a trip planned in January, half of which is already paid for, and we were on track to have the remainder saved up well before we left. Bulking that account up with $5,000, plus continuing the $100 weekly transfer into this account, means that throughout 2023 we will have plenty of money in our Holiday Account to take some trips away if we choose to.
Time to Invest
With all of our short and medium-term money goals sorted above, we have ‘no need’ to spend this $60,000 at this point. Therefore, we are entirely comfortable with investing all of this money long-term. We have been steadily adding to our two ETF funds over time, the Smartshares NZ Top 50 and Smartshares US 500, so it’s a pretty easy decision for us to make; we will split this money evenly between the two of them.
Although making a lump sum contribution to our KiwiSavers would have been an equally valid choice, we choose not to do this because we know we will need to access small portions of our investments before the age of 65. Although it did cross my mind to look at investing in a Total World Fund (because there is so much talk about that as an alternative to the US 500), I am sticking to our plan.
This windfall was unexpected, but because we have spent years putting simple and automated systems in place, it means that when this money or any money for that matter, came our way, I immediately knew where to put it.
Avoid the urge to squander
Yes, we could have gone out and bought a new car. Had we got this money 15 years ago, I’m pretty sure that is exactly what we would have done. But knowing what I now know, I see that as a hugely wasted opportunity when this significant amount of money will give our investments a real boost. More money invested earlier in life will provide us with bigger returns and income down the track.
I also think that it would be insulting for the people who fought in court so that we could benefit to see us squander this money.
Our consistent habit is to invest on the 20th of the month; the systems are all set up and need minimal effort on my part, making it easy to invest. There are no hurdles in the way.
It brings me back to the older gold miner I know who told me, “Ruth, everyone gets a few lucky chances in life, big pivotal points that if you handle them well will set you up”. Financial windfalls, expected or otherwise, are just those lucky breaks he was talking about, and I’ve chosen to handle them well.
This was an opportunity to future-proof, and I would be a fool to waste it.
Give your own money a plan
My advice to others who have money come their way is not to waste the opportunity and refer to my list above to work out what stage of the process you are currently in. And while you can mentally plan what to do with it, don’t spend or allocate a cent until you have it in your bank account.
Another thing too is; don’t be in a hurry. Often when people receive an inheritance or lump sum of money, they feel they must rush to decide because this money “needs to be put to work”. I don’t see it that way. Take your time and make the correct decision just once.
The excitement will wear off, but invested money will grow.
It’s exciting to see $68,082.50 show up in your bank account. But once the excitement wore off, Jonny and I went about our day. It’s satisfying to know that because we have a plan and a goal in mind that we are striving to achieve, this money gets us several steps closer to achieving it. That’s the most exciting part for me, knowing that what we are doing is working.
Please share this
If you know of people you think may be entitled to have their claim reviewed, PLEASE send this to them. Many people just like us moved away (some overseas) and then switched off the news, not wanting to dredge up those memories constantly. I have other friends who have received payouts, and they, in turn, have made others aware, so please, if you can, do the same. It is extremely rewarding to hear of others who were incorrectly paid out being fairly compensated at last. Also, if you have questions, Jonny and I are happy to help you; please just get in touch.
And a final note, make sure you have house insurance, for goodness sake!
