75. If it’s not simple, you shouldn’t be doing it.

PODCAST TRANSCRIPT: Episode 75 - Nov 2, 2022

This week, staying with the under-30 group for a short while longer, I caught up with a couple in their mid 20’s, who got to choose their own aliases, and they chose Richard and Jane. They have been listening to my podcast for some time and had thought about sharing their financial story and finally went out on a limb and contacted me. Their express aim in putting themselves out there is to comfort the other twenty-somethings that their financial situation is in their own hands and they, to a large degree, get to write their own story. 

In 2019, they purchased a home in a major New Zealand city when they were just 22 years of age and are now setting about paying it off. Buying a home so young is unusual, but having the goal from the beginning to pay it off as fast as possible is even more unusual. My first question to them was, “how did you get so smart?”

Richard and Jane grew up in regional New Zealand, and for privacy reasons, I won’t go into specifics here. Jane moved over from the UK with her family when she was ten years old. They actually met at high school and have been a couple since the age of 15, and now that they are both 25, almost 26, they have really gone on their financial journey together. While most teens are working out how money works for themselves, from a young age, they have kind of been working things out together, or in the earlier days, at least with the other in mind.

When they emailed me, Richard had given me a bullet-point breakdown of their situation. He had headings of:

Personal details

Home

General financial information

Investments

And he even listed their hobbies.

The question that immediately popped into my mind was ‘how did this young couple get so darn smart so young?’ I was poised to hear about an upbringing filled with talk about money over the dinner table each night. 

Actually, not so.

His parents, who are now in their 50s, and who he loves with all his heart, are not the best when it comes to money, and the lessons they tried to instil in him were more about how to put things on tick and they did try to lead by example because they are very comfortable living with consumer debt. His parents still have a mortgage and are still buying new cars using car loans, but each to their own, he said. 

I asked if they ever talked about money now that he is an adult. Money is a touchy and sometimes shameful subject, he said, and possibly like most parents, they would feel awkward asking their child for advice. Which is a shame because he would like to share what he has learned over the years. 

In a small way, when he was little, they did encourage him to save, but there was never really a purpose or direction to his saving. He feels that he has always leaned towards being a saver, and when he was younger, he would save hard for an item. Then spend all of his money on it and begin again. Rinse and repeat.

I concluded long ago that this is effectively teaching our tamariki to live paycheque to paycheque, and he 100% agreed with this. When he was about 11 years old, he desperately wanted a PlayStation 3, and he started saving for it. It took him a year to save the $600 he needed, and as soon as he hit his number, he went and spent the lot.

This was the pattern he was encouraged to use. If you want something, you save up for it, then spend all your money; you might have a new consumer item, but you are effectively back at square one with no money again.

Since that time, he has always believed that if you don’t have the money to pay cash, you can’t afford it. And the big learning for him and the big difference between him and his family is that he no longer spends all his money; some is always held back to grow and compound over time. 

As he was coming to adulthood from a teen, he said there were clashes around money, where he was called greedy, which rang a bell in my own head.

So, my next question was a bit left field when I asked Richard if he was good at playing Monopoly as a kid. Absolutely YES, he likes the trading of resources between people, yet no one ever wanted to play as he would always win. That was similar to me; I used to love playing Monopoly with my four siblings, would often win and was often called a greedy money-loving capitalist. Which I’m not. Ah, good family times!

He has one younger sister, and he said as far as their money personalities go, they are stark opposites. While he has forged his own path and taken on advice that is contrary to his parents, she still has confidence in what they have to say. And for him, because he loves her to pieces, it is hard to watch her struggle to manage her money. 

He keeps offering support and encouragement so she can avoid racking up even more debt, but she is not yet ready to hear it, which I know is always frustrating to witness, but I encouraged him to stick with it and to lead by example in his own financial life as she continues to try to find her own way. People need to come to it in their own time.

So, although his money mindset is very different from his parents and sister, he does have grandparents who he is comfortable discussing money with. Although not investors, and not risk takers, they are certainly savers, and I think it is really important for people to learn from an older generation. Because without taking on huge risk and debt, they are financially successful, showing that being slow and steady with your pūtea, or money, certainly does win the race over time.

In regards to Jane’s upbringing, her parents are pretty good with money and frugal by nature and taught her lessons through their actions. There were never any big sit-down talks. It was simple things like you eat the leftovers in the fridge instead of going out to buy more food. They had a financial boost when they moved to Aotearoa in the mid-2000s and changed their money from pounds to New Zealand dollars. On the advice of friends, they used it to buy property, some of which they have recently sold, and they have been lucky in that they did get to release the capital gains from the increase in property prices.

But they do give advice that neither Richard nor Jane agree with, and that is to only take on an interest-only mortgage because, in regards to property they believe that “everything goes up in time”. While, yes, maybe that is true for certain periods of time, it is not always the case, and you really rely on the hope that you hold the property during a period where things are going up in value then you sell it and release those capital gains, but it doesn’t always work out that way.

So, after hearing that neither of them was raised with a silver spoon in their mouth, I was even more curious about how they got so smart. 

They became a couple when they were just 15, and with him being a natural saver and her parents pushing the concepts of frugality and saving, they just combined those talents when they wanted to save up for a product or, as they got a bit older, a holiday.

In their final years of school they each got jobs, she at a retail store and he at a supermarket. They made very little money, barely enough to get by. And as school was nearing its end, Richard got caught up in the uni buzz and the thought of going off to do the whole uni thing, leaving their small town, and heading off to the big smoke, staying in a hall of residence in the first year and getting drunk often. He said to a large extent, FOMO took hold, and he really got hooked on it, but at the same time, he was tallying up the costs of studying and living, and it didn’t sit well with him. 

In regards to the cost of the halls of residence, he recalls thinking, ‘how can people afford this’? At that time, he thought the price was $370 a week, which is a lot of money to find. He finds it strange that it is a given that you go out and get into debt as an 18-year-old. He believes that it sets up a psyche that debt is ok. And while educational debt might be ok if you have a plan for your career, that laid-back attitude toward debt easily moves you into consumer debt, which is the worst kind of debt in his opinion. 

Floating around was also the rhetoric that if you don’t go to uni, you are a bit of a loser, so as a good student from his school, he really felt compelled to go.

But the problem was, all he ever really wanted to do was policing. Going to uni was really just to tie him over until he could apply.

For Jane, she was never even interested in tertiary education, plus her family were telling her it was a waste of money, so she was headed into the New Zealand military because she could get paid to train on the job, and it was what her family really thought she should do. 

But for her, she wanted to join a particular enforcement agency in New Zealand that was not the police but was still critical to New Zealand security.

So, here were two young people about to head off in different directions from each other to careers neither of them actually wanted.  

Thank goodness they both changed their minds. 

When he pulled the plug on going to university, she pulled the plug on joining the military. That bold move changed the course of their lives.

They became those, quote, ‘losers’, who stayed put in their hometown and were very grateful that her parents let them live in one of their flats with cheap rent. Which was lucky because at the beginning, they were earning minimum wage, and he was only working 12 hours a week at the supermarket. She was on a casual contract with the retailer she worked for, but work hours were far from guaranteed. 

Initially, they barely had any money, making about $20,000 a year, which is peanuts. He said the money was so tight that when they boiled the kettle to make a cup of tea, they then poured the leftover water into a thermos to use later, so they didn’t have to use any more power.  

But each of them managed to get full-time work with their employers, and slowly things began to turn around for them, and they settled into full-time work for the next 2 - 3 years, never giving up on their career ambitions during that time. Collectively they made about $70,000 a year before tax, but they still felt they had no money because they were constantly setting money aside, saving up for things and taking holidays, which reduced their usable income.

They had separate finances, and he said neither had any idea how to invest; they both only knew to put money in the bank.

Each of them tried to progress their career applications but, in hindsight, were probably held off due to their youth, but he said the time delay was probably a good thing, and the period that they lived together was really good in terms of learning how to live away from your parents, with your partner and away from home. Plus, living in the inlaw's house gave them a little housing security as well.

During this time, they had a good time, they saved up and paid cash for both ‘things’ and experiences but what he called, ‘the money stuff’ only started when they went on a trip to Auckland when they were about 18. They were passing through on their way to jump on a - paid in cash - cruise to the Cook Islands and Richard’s cousin took him for a ride through an affluent part of Auckland in his friend's Porsche.

He said that there was something about that new car smell, the all leather interior and the fact it had a badge on the front that said Porsche that lit a fire in him.

He thought, “how can I be this wealthy”?

It kind of got him started on thinking, “how can we accumulate wealth”?

He googled ’how to get rich through property development’ because all he knew was that in New Zealand, people get wealthy through buying and selling property. 

And he changed his money habits overnight.

From there, the floodgates opened. He really got into reading books, particularly anything to do with property. And the more he got into it, the more Jane got left behind. 

She was rightly thinking, “what the hell is wrong with you”. Last week we were happy to spend money on food and friends; this week, you are telling me we have to save 65% of our income”.

It was a rocky period and one where he needed to bring her up to speed.

This is pretty common. One spouse reads, listens and learns a tonne of new information and either tells the other that righto, from now on, everything changes or, in an attempt to bring them around to their way of thinking, tries to impart their newfound financial knowledge, but it never comes off as cleanly as it would if they had have read the books themselves.

So, how did he bring her on board with his way of thinking?

Well, turns out Richard is a bit of a slow learner when it comes to relationships.

It got to the point where he was so consumed by learning about property investing that he droned on and on about what he had learned, and all it did was really piss her off. When he has his mind set on something, he goes at it 100%. But for her, it was a bit too much, or a lot too much.

Before this overnight change in her partner, they had been talking about overseas trips and living an exciting life, but once he got on his bandwagon to buy a house, this was in direct contradiction to what their plans had been. To her, she was thinking, “there goes my O.E., there goes all the fun we had planned.

So, he had to slow down, hold back and learn to see things from her perspective, and he said that as time went on and things started to fall into place, she came on board. It was a long and steady process, made up of many conversations. 

Because their money was their own at that stage, he showed his intentions with his actions and using stock investing as a tool; she saw that he was building wealth, she saw a future house deposit beginning to grow, and she could see it was now working. He was not all talk after all.

Honestly, hats off to these two. Talk about how to nail communication in a relationship. You have to see the other person’s point of view, you can’t force your plans upon them, and you have to create a shared vision for the two of you. You have to explain things in a way they want to hear, and it is not enough to say, “don’t worry about it; I understand it; you don’t have to”. All that does is insert uncertainty, and therefore risk, into the mind of the spouse. 

They ended up moving to a large New Zealand city when Jane got a job in her chosen career in 2017. His application to join the NZ Police was still ongoing, so he followed her there. They moved from a nice flat to a room in a mouldy shoe box, paying $300 for the privilege. 

But Jane was able to settle into her new career, starting at the very bottom so she could build her skills from the foundation up, and he found supermarket work again. His job basically sucked, with a dreadful boss and colleagues you couldn’t have a laugh with, but as for Richard and Jane, they were on their way.

After a year, her job was ticking along well, and in 2019, he finally started his Police training. 

Now, let's jump back to those share market investments of his.

And what, I hear you ask, happened to his assault on the residential property market?

When he first started learning about growing wealth, it was all about property, and he drank the cool aide; that was all he wanted to do, buy bricks and mortar. The gurus he followed would all say that the share market was for losers because, in most cases, you can’t leverage (or take on debt) to buy stocks. It was all about borrowing as much as you could to buy property and then sitting back and watching the value soar.

But when you are late teens, on a minimum income, and no bank wants to lend you money because you have nothing to secure it against, you are a little stuck. So he couldn’t ‘do’ property, but he knew he had to do something. 

He had been reading a lot of finance-based content, and when he left his supermarket job to move to the city, he had a lot of leave saved up, which was paid out to him in cash. He had decided that he was going to invest all of this money in the share market.

Much like explaining how you place a bet at the races, in 2017, he said he:

Put $2,500 on ASB Securities. 

He put $10,000 on Hallensteins.

From that date, his plan was to save up $2,500 chunks of money and “drop it on a stock”. It took him between 4 - 6 months to save that amount.

And how exactly would he decide what to drop it into, and how successful was he?

For some reason, he said he was anti index funds. I would take a guess that those gurus of his said something along the lines of “if you want average returns, just be average and invest in index funds”.

In response to that I’d encourage you to google Warren Buffett’s $1 million bet. This is where he invested in the S&P 500 index fund, and a hedge fund manager tried to pick stocks. Buffet easily won.

Unaware of this, Richard thought he was smarter than average and would grow his wealth by buying individual stocks and companies.

And his reasoning was sound given that he, and most of us, are encouraged during our upbringing to be above average, and when we learn about investing, it tends to be about picking winning companies. So why settle for ‘the average’ when investing? 

He thinks that around 2017, he might have also heard Warren Buffett saying, “if you shop at the company, buy the stock”. Well, he shopped at Hallensteins, and I didn’t ask, but I suspect he might have banked with ASB, so that is why he chose those two.

For the record, Warren Buffett, who has made a phenomenal amount of money by buying individual stocks, is also famous for saying that when he dies, he advises his wife to put all her money into index funds.  

Richard went on to also buy shares in AirNZ, The Warehouse, Westpac Bank and Trustpower. All in all, he thinks he invested about $15,000 over a two-year period, and when he sold out at 21 years of age, he came out with $25,000; his favourite clothing brand turned out to be his best pick. He thought that was pretty incredible, and it gave him confidence in what he was doing - even though he thinks that, in hindsight, he was very fortunate to have come out on top in such a short period of time and by buying individual companies. But, risk aside, this investing did allow them to create the basis of their house deposit.

During this time, Jane was watching from the sidelines; she was not involved, but she was looking on and watching with interest as the value of his portfolio went up.

She was also an investor herself but using a different route, her KiwiSaver.

Both of them have utilised KiwiSaver since their very first jobs: him doing a paper run and her working in a retirement home. 

So, although Richard was investing, it was no longer his or her money. When they moved to the city together, they made the decision to combine their finances for the simple reason that it just made sense from a savings perspective, given they were both saving towards the same goal of buying a home. So, why not just put all their money together and earn interest together? They had already been together so long; they simply thought, why not.

Combining money with your spouse has been made into a pretty big deal for many couples, unnecessarily so in my view, and I wondered what their advice would be for others.

Richard said that full transparency about money in a relationship is crucial. Once you combine your money, everything works together and runs like a well-oiled machine, and it makes decision-making easier. He also said, “it’s you two against the world”. And I liked that.

If there is not 100% transparency and you are a couple that is inclined to fudge the reality of your actual spending, more or less hiding transactions, there are some issues that need to be ironed out in a relationship, he believes. Combining money with your spouse brings you closer, which he sees only as a good thing. And if it doesn’t bring you closer, you should probably go and see a relationship counsellor as there are issues that may need to be addressed.

So, now that it was two against the world, which in this case was the rising New Zealand housing market, how did they get their house deposit together?

By now, they were both in full-time work and were diligently setting money aside. Having enough to buy a home snuck up on them when they realised they would have enough money for a 10% deposit.

Collectively they had saved about $30,000 in their KiwiSaver accounts.

They had $25,000 from selling their share investments.

They had also saved up just over $10,000 in cash.

The government gave each of them $5,000 as a first-home buyers grant.

All of this added up to a $75,000 deposit.

I asked if they had any financial help from either set of parents. They did try to turn over any rock looking for money to add to their house deposit, and they did approach family, but their request fell on deaf ears. He said that they asked purely to tick that box, it was not out of desperation, and they didn’t hold out much hope, but it was worth a shot.

The answer was a resounding no to both gifting them money and acting as a guarantor. 

They visited their bank in late 2019, and even at that time, house prices were considered to be at an ‘all-time high’. They didn’t let it put them off, and they forged ahead, and the bank approved their lending up to $600,000. 

Very quickly, they went house hunting at the $600,000 end of the market, but the agent threw in a cheaper option to take a look at. On just day three of what they thought would be a long and arduous house hunt - this was based on the experiences of hearing how hard it was for others they knew to find a house - they found one. The one. After a bit of counter offering, they bought their first home, a three-bedroom property, for $485,000. They held a little of their money back, paid $58,000 in cash, and took on a mortgage of $427,000.

The reason I thought they were particularly interesting to speak with was that very early in the piece, they made the decision to try to pay off their mortgage as fast as they could. Given that they were so young, just 22, and so unfamiliar with that amount of borrowing, they signed up to a 20-year mortgage - that felt quick to them. Their concept of early payoff has since changed. Their deposit was on the lower side, so they had to pay a slightly higher interest rate, but they fixed the entire mortgage at just over 4%. 

Once the paperwork was dry and the payments set, he was in a bit of limbo. They leaned towards smashing out their mortgage while they were young, on good incomes, with no dependents, but the thing was, their parents were saying that “debt is cheap, don’t rush to pay it off, you should take out an interest-only mortgage”. So they were a little torn. 

Richard said that logic was telling him that if interest rates are so low, surely NOW is the time to pay it off. Don’t sit around waiting for interest rates to rise (as they are currently doing); by attacking cheap debt, you pay less interest and more principal. His thought was, “debt is cheap so pay it off”. 

The Police offer a lot of discounts and deals to their staff, and one of them is a free consultation with a financial advisor. So, they took the opportunity and went and sought an independent opinion.

Jane and Richard shared all of their financial information. And after a thorough look, the advice given was to forget share investing for now - except for paying into retirement funds and KiwiSaver - and pay off your mortgage as fast as possible. 

Having drained their KiwiSaver, they both restarted them, with Jane paying in 3%, leaving her with more take-home pay to put towards the mortgage. For Richard, he once again restarted his KiwiSaver, where he voluntarily contributed the minimum by setting up an automated bank transfer of about $42 a fortnight to be eligible for the government contribution of $521 each year. He also signed up for the Police Super scheme.

He has to contribute 7.5% of his net pay, and he told me that the government contributes after-tax about 10.5%. So, that is roughly 17.5% going towards his retirement, plus with her contributions of 3% employer and 3% employee, that takes their combined retirement inputs up to about 23.5%.

Now, I might have my numbers just slightly out on this, but the gist is that these two are both saving a decent amount for retirement by investing AND paying off debt. I hear a lot of people who forget that investing in your KiwiSaver or company superannuation fund is considered investing.

So, when the financial advisor told them that share investing could wait, they did that because they could see they were already investing a portion of their take-home pay into retirement accounts. And once they get the mortgage gone, they can then look to invest in things outside of their retirement accounts. If they were to do any share market investing, it would be a tiny amount and purely from an educational point of view, to prepare them when one day they will have that mortgage payment spare to invest. But at this stage, his mindset is if he has any extra, it goes on the mortgage.

Today, they have a combined amount of about $27,000 in their KiwiSavers, plus his super fund is just under $40,000. 

Today their mortgage balance is sitting at $355,000, meaning they have paid off $72,000 in roughly 2+ years.

And what do they consider to be their biggest financial triumph?

As a couple, it definitely the fact that they saved up a deposit on a small income and managed to purchase a house at the age of 22. And that they did it in a city that, like many cities in NZ, is experiencing somewhat of a housing crisis. It is a massive achievement but proof that with a bit of a plan and a bit of time, you can achieve your financial goals. He said that while he hears of many just whinging and moaning about housing, yet personally doing nothing to further their own cause, he is rightfully proud they bought a home. 

So, I wondered, now those gurus he read about at the age of 18 will be delighted that this 25-year-old couple has some equity in their own home. Surely now is the time to leverage themselves up to their ears and buy more homes? As is the Kiwi way. 

Not so. Richard and Jane’s thought process is that a home is your foundation, one that you don’t put at risk. Once you get it paid off, then they will perhaps look at other opportunities, but until that day arrives, no investment will put their own home at risk. 

I really like the methodical approach this couple has. They realise they are young; they realise they have time, and there is no need to do everything at once when doing so has the potential to put everything at risk. Good on them for sticking to their own rules and values.

They live a relatively wholesome life, getting out in their garden and enjoying the outdoors in the region they live. They like their respective sports and Jane also enjoys picking up bargains and re-selling them for profit; they enjoy the campervan they paid cash for, and are very content, which is the key, I think.

One other thing missing from their story too is that they bought a home and seem to have just set about living in it; there was no talk of drawing down on the mortgage to replace the roof, which tells me that either they didn’t need to do any repairs, or they cash flowed any repairs they have made. 

So, given that their mortgage is on a fixed rate, how do they structure their money and also, what do they earn a year? Their incomes are both variable, dependent on hours of work etc., but they each average about $70,000 per year, so a combined household income of about $140,000 per year pre-tax. They did their time at their minimum-wage jobs and then learned on the job, upping their income as they went. I’m sure there is room for growth over time too.

Although they have been good with money, up until recently, they didn’t really understand where everything was going in any great detail. And he thought to himself that they both work their butts off every day for money, so why don’t they have more respect for where that hard earn money is actually going. They tried using spreadsheets to track their income and spending, but it was really hard going, so three months ago, they took the plunge and signed up to the Dunedin-based budgeting software app called PocketSmith.

He said that since getting his head around how to use the software, the savings they get have been, in his words, “mental”. He loves how he can look at a complete picture of their spending and earnings and easily work out that ‘we are spending too much here’ or there. Since using it, they have been able to cut out expenses, such as subscriptions that they were paying for but not using. He said that they now have so much more disposable income, and once a week or so, they sit down together and bring their attention to things they need to adjust.

The software itself can be hard to learn; it is a process, he said, and he is still very much learning, but once you get the hang of it, it's pretty intuitive. And having the ability to see their categories of expenses nicely and cleanly in a graph is extremely useful. 

I’m always encouraging people to budget in whatever way that works for them, and Richard said something that backs up my belief that you need to understand where your money is coming from and going. When we spoke in October of 2022, inflation was high, meaning goods and services cost more, and mortgage rates were climbing. But he said that instead of kind of guessing where this extra money might come from to pay their bills, they could clearly see where they could free up cash. Just having that ability gives you a sense of control in a situation where so much is out of your control.

If Richard could return to his 15-year-old self and start again, I wondered what he would do, whether it be the same or something different.

He said he would keep his finances simple, as they do now. He would save money, and he would also invest a certain percentage, and he would fight tooth and nail to get a house ASAP. Using hindsight, they would have definitely saved a lot more money for their home had they realized the impact it would have had today; they would owe less had they done so. He would still invest in the share market, just a little on the side, as more of a financial education because he can now see that those investments he started at the age of 18 could have gone either way. He was fortunate to grow his money, not lose it.

In regards to their day-to-day banking, they bank with two banks; one is for their daily banking, including their mortgage and the other, is used for savings. They have accounts where they are saving up for various things like home improvements, vehicle maintenance, holidays, and a computer he is building. Any money left over gets spent on debt reduction.

They pay $1,800 a fortnight towards their mortgage, which remains as one lump sum on a fixed term with a current interest rate of 2.75%. It is up for renewal this December, and they know they will need to adjust to a higher interest rate, and thanks to now budgeting and tracking their numbers, they now know they can absorb the approximately $150 extra they will have to pay a fortnight to keep on track with their debt payoff period. They expect to be mortgage free in eight and a half years. An option that they will have available to them is, as they near the end of their mortgage, he is allowed to pull some money out of his work pension scheme, and this is something that they may consider closer to the time, depending on their situation at that time. 

I predict they will become debt free faster than they realize.

I’ve nothing to base my prediction upon, just the fact that when people sit up and pay attention to where their money goes, they tend to reach their goals faster because they stick to their plan and look for reasonable options and opportunities, but they also tend to make more money.

Up until recently, they have kept an emergency fund of $15,000 as cash in the bank. In its own account and not part of a redraw facility on their mortgage. Just cash. But more recently, they have increased this to $25,000.

You know that question I ask “if you were given $10,000, what would you do with it” well, Janes's parents recently sold a property and gifted them that amount. Jane and Richard had been saving up to go to the UK in the next year or two, so, as this is a relatively recent gift, they are still working out where exactly they will put it, so they have just popped this money in with their emergency fund at the highest interest rate they can find and will use that towards a future trip.

The beauty of their uncomplicated financial life is that their money and attention are not being pulled in different directions with things like student debt, credit card debt, rental property debt, investing, KiwiSaver and so on. So, they know this money is earmarked for a future trip, and when they get around to it, they will just put it in a bank account for that purpose; they won’t be trying to offset it anywhere.

I often notice people with mortgage debt offsetting savings against debt in an effort to save money on interest. Although I can see the theory, they do often end up making their finances overly complicated. Not so with these two. Cash is cash. Debt is debt. 

So, one of my first questions was, “how did you two get so smart”. Richard did go on to explain that he has not always done everything perfectly. For the record, no one has.

His financial misstep was that he never used to feel that they needed insurance on their cars. And he learned the hard way why you should. 

He didn’t have car insurance because he was holding onto his money a little too tightly, feeling that it was a ‘waste’ to pay for something you might never use.

They got into an altercation with another vehicle which ended up costing them about $8,000. He said he was screaming into pillows over that one. That’s a right financial mess to get themselves in, but the saving grace was that they had $10,000 cash sitting in their emergency fund bank account ready and able to fight this financial fire. It was just cash sitting in a high-interest account. So, although it sucked to hand most of it over, at least they put out their own financial fire, and for that, they should be exceptionally proud of themselves. 

I do understand that money is tight for many, so if you feel you can’t afford to insure your car, at least take out a minimal insurance policy that will pay for the repairs on someone else's car if you hit them. He was fortunate that they didn’t crash into a more expensive car. They have insurance now; that’s one way to learn, he said. They also carry house and contents insurance. Plus, a Police perk was that if they took on some health insurance, they got a discounted fixed rate on their ANZ mortgage. Thinking back to the recent episode I did with Ayana; her advice is to always look for any perks that come with your job. Jane’s job doesn’t offer too much, but they take advantage of his perks as best they can.

I asked Richard what the most extravagant thing he has purchased for himself in the last 90 days was. He is not one to spend money on himself much, but he loves video games and is building himself a new computer. The one he built previously has lasted him seven years, and more recently, he spent $800 on a CPU. There is still more to buy, and he has a budget of $4,000 to do it.

Another relationship win is that although he is about to spend $4,000, no one is keeping score. Jane, he said, spends more regularly than him, but they are smaller amounts. He rarely spends but spends big when he does. But they never have those “because you spent that, I get to spend this” conversations. No one is keeping score. Instead, they track their household spending and ensure that it's in line with each of their values. That makes for a very happy home.

And what might two 25-year-old fully employed homeowners drive, I wondered? An $8,000 Toyota with 50,000kms on the clock and a $12,000 camper van. They call it their ‘compromise van’, bought because they couldn’t take an overseas holiday but still wanted to travel. He also uses an e-bike for commuting to work.

Given he scrimped on having car insurance, I wondered if he had any other financial hacks to share - ones that wouldn’t leave them $8000 out of pocket, that is.

He charges his bike at work and showers at work. Given they used to save their boiling water into a thermos, using their employer's hot water instead of paying electricity to heat their own would come naturally to them, I’m sure. 

His bike commute is a 20km round trip on really bikeable roads and trails, and over the course of a ten-day roster, he anticipates he saves driving about 120kms. I’m not sure what it cost to buy his e-bike, but with high fuel prices, that is a good fuel saving and better for the planet too.

Because they both work full time and there is shift work involved, they use the food subscription service Hello Fresh. They used to shop and cook but found they were bad at creating a shopping list, bought too much and chucked a lot out. Which is ironic, considering he used to work in a supermarket. Now, it costs them about $260 a week to buy a box that provides five evening meals and in the grand scheme of things; they are comfortable with that because they know that they can come home and quickly prepare healthy and fresh food. 

He uses a gym at his workplace, and Jane has found an affordable gym that she pays a subscription to. They pay for a couple of TV subscriptions, dine out once a week and all in all, they don’t feel like they are struggling; in fact, they feel they have an abundant life. 

I wondered if they now had a handle on their annual expenses, but he said he is still currently building up their transaction history in PocketSmith. He said that the numbers won’t lie, and he can’t wait to find out over the course of 12 months what they actually earn and spend in detail.

Such fun!

Where has he been gathering his financial information more recently, and what resources would he point you and me in the direction of, I wondered? 

They have been loosely following FIRE but are not set on that as an imminent goal. He has multiple influences and takes a little from each. At the moment, he is following Dave Ramsey on YouTube, and this has helped him come to the realisation that if your financial plan is not simple, then you should not be doing it. He likes clear-cut, simple advice, and Dave Ramsey gives common sense advice in spades.

He likes the simple straight forward, clear information given by The Barefoot Investor and Mary Holm, plus he likes both my blog and podcast because he wants to hear about and from normal people doing straightforward things with their money.

In their relationship, they are a financial team, and each is the other's sounding board. He tends to take charge because he is more interested, but they get excited talking about paying the mortgage off and planning their future. In terms of finding people around him to talk about money with, his workmates know he has a money head on his shoulders. Still, no one is up to talking about it and really, when it comes to talking about money, it’s just him and Jane, which is why he likes hearing this podcast so much; it’s just normal people across Aotearoa and how they think about money.

I’m happy to oblige.

First up, obviously, I want to say a huge thank you to Richard for sharing his and Jane’s journey with money. 

He gave me great confidence that despite all the negativity around unaffordable homes, of course, owning your own home can still be achieved if you set that as your goal and set about saving up for it. 

Just the other day, I ended up deep in conversation with a random member of the public (as I often do because I’m chatty like that), a father who has kids of Richard and Jane’s age, and he was stating it as fact that his kids would never be able to buy a home of their own. I took great delight in calling B.S. on his sweeping statement by sharing the story of Richard and Jane. And at the same time, I dearly hoped that his kids were able to look beyond the restrictive attitude of their father, who was telling them that buying a home just couldn’t be done.

Remember when we were young, and our parents told us we could be anything and do anything we wanted? They should keep telling their adult kids the same. I’d encourage kids not to give up on their dreams and parents to provide positive support to those who want to achieve something, in this case, a home. 

By coming on my podcast today, they just really wanted to give confidence to those leaving school that you don’t have to go to uni or into tertiary study to be successful. And if you do go, you better be damn sure that you complete your course and that it is what you want because heading down that path sets your life on a certain direction and may come with the pressure of debt. 

They encourage you to be analytical with the info you receive, particularly when hearing the opinions of family and friends like the Dad I just mentioned. Seek information widely and trust the experts when you find them. Much like they did when they sat down with that financial advisor. Richard and Jane are now experts at buying a home, and I’d far rather share the example of a couple who have actually done it than hear the vague views of someone who says they can’t.

And above all else, Richard would say to you, as long as you get off the sidelines and make a start, your goals, whatever they might be, your goals are achievable. And stepping towards them will increase your confidence in your own decision-making over time. 

For now, they are both happy in their respective careers and their choices. But in time, they would like to try living somewhere else one day. But for now, their jobs and the incomes they bring in hold them where they are. But, as he said, they are young, and they can do the hard mahi at this stage of their lives. But their simple financial plan of having structure around their money, paying into retirement funds, paying cash for things they want and going hammer and tongs at smashing out debt will mean that with every month that rolls by, they get to choose what path their lives take. That path will be less and less dictated by money.

I see repeatedly that when you own everything you have, money becomes a bit of a non-issue, and you get to decide what you want to do with your life beyond what you have to do for money. That’s a pretty cool position to find yourselves in, and I’m delighted for this young couple that they have worked this out so early in life. I wish them both well.