Millionaire #122

What is your net worth? $1,700,000

At what age did you become a net worth millionaire? 40

What region of New Zealand do you live in? Auckland

How did you accumulate your net worth, what are you invested in? By far the largest part of our equity is in property. We bought our home for $490,000 in 2004 and it is currently valued at $1,150,000. We prioritised paying off the mortgage and made the final payments on it this year (2021). We did buy another smaller rental property in Auckland in 2013 for $490,000 with a current value of $740,000, and about $420,000 outstanding mortgage. We are not prioritising paying off that debt, but just funding the repayments through rental income. We intend to sell the rental when our current renters leave but are in no rush so there’s no definite timeline on that.

I joined KiwiSaver at inception and currently have a balance of about $115,000 with Generate, my husband joined a few years later and currently has a balance of about $95,000 with Simplicity. I contribute the standard 3%, while he contributes 4%.

We also invest in a managed growth fund by ANZ, contributing $2,500/fortnight. The current balance is about $85,000.

We keep $10,000 as an emergency fund, and have another $20,000 unassigned at the moment, we’re planning on investing that in a balanced fund with Simplicity, and continue to invest any excess cash there for future spend. We realise that a balanced fund is pretty volatile for money that we may want to use in the next 5 years, but there is nothing we are planning for that couldn’t wait. eg. potentially remodelling our home, buying a Tesla rather than a cheap second hand, buying business class tickets for the first time if we ever get out of lockdown.

We have never carried a balance on our credit cards, the most expensive car we’ve ever had is a 2011 Toyota Corolla that we bought for $19,000 in 2013 and still feels “new” to us. I drive a 2007 Suzuki Swift. Having replaced a 1997 Suzuki Cultus and a 2005 Toyota Starlet.

What was your highest average household WEEKLY income after tax? About $4,000 currently

What is your career? I.T. (Programming)

Do you have children? YES

Do you have a tertiary qualification? YES

Did you inherit any of your money? NO

What's the approximate value of your house? $1,150,000

Are you debt free now? NO

If NO, how much debt do you have and what is it for? We have an outstanding mortgage of about $420,000 on our rental property.

Are you in KiwiSaver? YES

Were you taught about money? YES

If YES, how were you taught? I think for the most part we were both taught by example. We grew up in lower to middle-income households and our parents had to be exceptionally smart with their money. We never wanted for anything, but even though it wasn’t a “done” thing to share your finances with your kids back then we were still aware of the trade-offs and sacrifices that needed to be made to give us the opportunities we had.

For a couple of the early years, we had to “save” half of our pocket money which would be returned to us for the summer holidays to do with as we pleased. I found that frustrating, as the money was just kept in a piggy bank so in my mind there was not much benefit in “saving” it.

When I met my husband (a couple of years before we started dating) he recommended a personal finance course to me and another friend. Something he also attended a couple of years before. It was only months in of me getting my first full-time job, so the timing couldn’t have been better.

What is the most enjoyable thing you do with money? We spend a lot of money (comparatively) on food. Eating out, meal kits and takeaways. We also like to travel and before COVID used to go to Rarotonga most years for a spring break.

Do you use your money or your time to help others? YES

If YES, can you please elaborate. We donate to various charities, totalling about 13% of our after-tax income. Charities include KidsCan, Variety, Plunket, Red Cross, St Johns, Wikimedia and Tim Bray theatre company.

What is your greatest financial win? I think paying off our mortgage as soon as possible. Not having those monthly payments frees up A LOT of cash.

What is your worst financial mistake? I think our worst financial mistake may yet come to bite us. We bought our home without a CCC. We were naive and didn’t realise the potential implications. I also think we rushed into buying a home a bit. We bought it with only a 5% deposit, and didn’t realise how much longer-term difference saving up a larger deposit may have (back then saving for a deposit wasn’t as hard as it is now). However, house prices were also rising steadily in 2004, so who’s to say what would have been the better decision.

I also think we bought a larger house than we needed.

We have had 18 years of very comfortable living in our house, CCC or not, so in the end I think we were still very lucky.

What advice do you have for others? I don’t want to fall in the trap of thinking what we did was particularly special. We were both incredibly lucky, getting through Uni without accumulating student debt and working in a field that pays well and generally has a lot of demand for skills.

In the end the only advice I have is to stay away from consumer debt, and not to try to keep up with the Joneses.

What is the point of having a net worth above $1,000,000. What does it mean to you? It gives us a lot of options and peace of mind. We know that one of us could stop working if needed. Or if we keep at it likely we could both retire in 10 years if we wanted. We’d be 55 and 60 then. Alternatively, if something bad should happen and we both lost our jobs, we’d still be ok for several years while the economy recovered.

We can also help other people out when needed, with no negative impact on our financial well-being.

Finish these sentences:

If you want to build wealth do this… Spend less than you earn, and invest some of what is leftover

If you want to build wealth avoid doing this… Taking on consumer debt.

Millionaire #123

Millionaire #121