My Lockdown Diary
Mar 29, 2020
What a week. How are you? Honestly, HOW ARE YOU?
I hope you are doing well. Jonny, our daughter and I are doing Ok, all things considered.
Please look after yourself during this time and please reach out to me if you want to chat and I can help you work things through, I’m still here, as I’ve always been. We bottle up our money problems as a matter of course in New Zealand and at a time like this there are a lot of situations forming around money and if it helps you to write them down in an email to me, then as always I’m here to help you think things through. I tend to stay off social media at times like this but even I can’t help but notice that people who have never suffered a job loss before, now have. And that’s a big shock to the system.
So, what are you facing that I can support you with right now? LET ME KNOW
I’m not a Financial Advisor, never have been and never will be, but I can still help you with the basics and I wanted to start the conversation by getting some thoughts down about my own situation that I can share in the hope that I can HELP YOU with whatever your current situation is, either good or bad.
There is so much uncertainty out there so at times like this I focus on what I can control and I suggest that you do the same and just know that even though it’s a chaotic time, given time, things will settle down. I’m an optimist for sure!
Fortunately for us, both Jonny and I are already skilled at working online from home as he has worked from home for seven years now and we have all the equipment we need (if you need an incredible graphic designer right now, get in touch!). Our blog will continue as normal and as we settle into this month of isolation, I might even crack into this next podcast series that I keep promising. I have no intentions to bombard you with more than I normally do though, you have enough information coming at you already without me blathering on! Jonny’s design work is quiet but will recover and my part-time job is on hold for now. We have helped our daughter get fully set up to do her schooling from home, thankful that just two months ago we created her a purpose-built space in her room, never realising what it might be needed for!
For the teachers reading this across New Zealand, THANK YOU for what you are doing for all Kiwi kids at the moment!
We have created a calendar with daily fun things to do, so that should keep our spirits up. So far I’ve kicked both their butts on the spelling bee (and I didn’t even use Grammarly), I’ve made them do a family yoga session with me (they hated it), our daughter baked (delicious), today is a game of Task Master...
Our COVID-19 Lockdown Countdown calendar.
And we are helping our elderly neighbours with their shopping and just generally doing what we can, albeit from 2 metres away. I’m on a messenger chat with my colleagues and it’s good to see the ribbing we constantly give each other while at work can continue online! I’m yet to remind them that I blog about personal finance as they never wanted to hear about it while at work together and they probably don’t want to hear about it now...such a shame!
Can you believe this is happening? I still have to pinch myself regularly.
So, Ruth, WHAT'S THE MONEY SITUATION I hear you ask?
I thought I’d keep a diary for this week, so you can see what we are doing to prepare for the months ahead in this rapidly evolving situation. Take from it what you will and discard the rest.
First and foremost when it comes to money at a time like this, whether your job is secure or you have just lost it, the absolute key thing to keep in mind is to:
Always spend less than you earn
I’m really taking that to heart right now and I encourage you to do the same. Our ‘new’ income is basically $600 a week (we are both eligible for the $350 wage supplement which we then pay tax on) so I have reset my entire budget in PocketSmith based on this figure. I suggest you adjust to your new income, whatever that might be. Now is the time to be frugal, even if you know you have a few more pay cycles before you take a cut in income, reduce your expenditure immediately and please don’t bury your head in the sand and please do face your new circumstances head-on. If work continues as normal for you, the very fact none of us can go shopping means that you are saving money - so please put that money to good use, such as topping up an emergency fund, or debt repayment.
MONDAY 23rd:
NZX opened the day at 8409 (back on Feb 21st it was sitting at 12,000, a historic high).
This was actually Otago Anniversary Day, so a day off for us in the far South. I’d just come home from walking the dog when I spoke to my neighbour (from a distance of two metres) and they mentioned there was to be an announcement by Jacinda Ardern. So, I shot in to watch it.
Moment in history I’ll never forget. (TICK)
Level 3, moving to Level 4 lockdown by Wednesday 11.59pm.
Wow.
So, I ended up shooting down to work to help the owner’s as best I could prepare the business to close for four weeks and I could clearly see the massive impact this will have on them. Also, I was meant to be full time this week and was looking forward to that paycheque, but now it’s “no time” for the foreseeable future. Hence the rework of the budget!
That means that now both Jonny and myself are temporarily without work (more on that shortly).
Back home, I actually finally took a look at our KiwiSavers, because people kept asking me about it. And to be honest, it was not as bad as I thought it might be, it’s currently down 17%, about $25,000. I will make absolutely NO CHANGES to my KiwiSaver throughout this market crash, I’ll not stop my automatic payments into our funds while we still have good cash flow and I will certainly not change out of this Simplicity Growth fund. I was in the right fund one month ago and I’m in the right fund today. It’s got another 19 years before I need it, so I think that’s enough time to watch it recover, don’t you? My advice to you is that it’s too late to change your fund and if you do you will just lock in those losses.
To finish the day we had a family meeting, chaired by our 12 year old, holding a homemade microphone, to discuss what the next four weeks will look like for us and she finished up by saying how important it is that we talk about our worries with each other. So right! Keep talking to your own friends and family about the positive things you can do during this time and work together on solutions to problems you are facing.
TUESDAY 24th:
NZX opened the day at 9070.
I went into work again to finish up some jobs for the owners and it was nice to chat with them about how they can strategically prepare for a time like this and how they can stay afloat and reopen at the end of it. I would encourage you to ask your employer how YOU can help THEM and just try to walk a mile in their shoes for a moment. Importantly they filled out the government application to get some wage relief for the nine people that their business employs and they communicated to all staff how they would proceed. This gave certainty to myself and my colleagues that we would continue to receive a wage.
We do have other income coming in via this blog, but that’s a volatile income, so I’m not factoring that into my budget at all and instead will consider that a bonus that I’ll set aside.
I once again got out my financial microscope and looked at all of our March expenses using PocketSmith and just tweaked things a bit and planned ahead. I calculated that in January we spent $116 a day (excluding investments), and as at today, with the cuts we have made, we are spending $84 a day. That is a saving of $32 a day, or $960 over a 30 day month. Referring back to the slogan that is on loop in my head of “always live on less than you make” we are managing to do this, spending just $588 a week.
That is significant and really important because we need to cut costs right now to maintain cash flow. Unlike many Kiwi’s we have not gone and spent a fortune at the supermarket, blowing our budget for groceries for the month in a single week, but have just shopped normally, as should you. We have our cash cushion of our emergency fund available to us, but my intention is to NOT have to use it.
WEDNESDAY 25th:
NZX opened the day at 9109
This was a tricky decision to make, but I have started buying another fund through Sharesies. I already buy the NZ50 fund (FNZ) and the US500 fund (USF) directly with SmartShares and that investment happened on the 20th of the month as per usual. But each time people use my Sharesies link (thank you) they receive $10 and I receive $5 into my trading account. Normally I only buy the New Zealand Property Fund (NPF) with this and while I will continue my standard weekly investment into that fund, I really wanted to take advantage of this low share price for the FNZ, so I’m buying as much as I can of that at the moment. It’s a double up, to buy the same thing in two places, but I wanted to take advantage of the fact I can buy immediately instead of waiting for the once a month trade with SmartShares. Other than that, I want to stress that all of our investments continue on as normal and I’ve made absolutely zero changes!
Today Jonny was approved for his $350 a week, for 12 weeks, wage supplement, just a few days after applying for it and he received the total $4,200 into his bank account. This is an incredible thing the government has done and it is extremely useful and important to help us run our household and keep his workflow moving. So, what do we do with it?
BUDGET IT OUT OF COURSE!
I think the keyword for this month should not be “unprecedented” but should instead be “BUDGET”.
He of course has work expenses so will allocate money to cover those as they come due, like his provisional tax bill which he will just pay as normal because he has already budgeted it in. He will then set a regular payment of the next 12 weeks into our own bank account and this will represent his income. As he gets paid from work he is still doing (albeit a lesser amount) he will carefully budget that as well. Given that he works as a sole trader he has also looked at all of his incomings and outgoings and cut anything that he deems unnecessary.
Many of you reading this will still have a steady income, but will be working from home, but many of you may be like us, suddenly thrown a bit of a curveball, so hopefully seeing how we are dealing with it will help you plan things out as well. Basically I’m entirely focussed on essential needs only and there will be no other spending. This will create a surplus, because we do still have other small income coming in, but that will be put to one side for a rainy day.
THURSDAY 26th:
NZX opened the day at 9264.
First day of the nationwide Lockdown.
I thought I would quickly explain WHY I’m not ploughing into the stock market right now while all the shares are cheaper. It is because investing for me has never been an active ‘game’ to play. I’m not watching stocks and looking for a bargain, I’m not anticipating the bottom of the market and trying to jump in, in fact, I am barely even looking at our investments at all because from everything I have learned those types of investors fail over the long term. I have made monthly investments into our KiwiSaver funds since 2007 when it first started and into our funds for a number of years now meaning that I have invested as a matter of routine ALL the way up, while the share market was rising and rising to it’s February peak of 12,000, and I’ll buy monthly all the way down too. I don’t know where the bottom is and nor does anyone else. Apart from my more regular but small investments into Sharesies, NOTHING else has changed in the way we invest. It’s called dollar-cost averaging and it will all even out in the end folks. I’m not going to upset the apple cart smack bang in the middle of a crisis, so I’ll just stick to the plan: slow and steady wins the race. Buy and hold: forever! We don’t need the money that we have invested for at least 10 years. If we did, we should never have put it in the market in the first place.
So, if you are feeling jittery and suffering from FOMO, just chill out and stick to your investment plan. And for all those new investors out there who think you are smart, you probably are not, so don’t try to act like some investment genius at a time like this would be my advice.
The way we bank continues on as normal: money is transferred to my daughters dentist account (even though her appointment has been cancelled), to our car insurance sinking fund (even though we are not driving), even to our holiday fund (but let’s face it, we ain’t going on a holiday anytime soon so this money is now earmarked “emergency fund” but the optimist in me hopes that we can have a holiday again someday). Also, has anyone else noted the irony of fuel prices being so cheap right at the time when no one needs to drive?
FRIDAY 27th:
NZX opened the day at 9622.
This is how things were looking on Friday morning, before trading opened for the day. Source: Trading Economics
In fact these latest events have meant that the NZX Top 50 index has experienced its biggest single session fall since the market crash of 1987! But remarkably I am honestly completely unconcerned, which is testament to what I’ve learned about investing over the last number of years. How come I’m not crapping myself I hear you ask? Because although some sectors of our economy have been obliterated, others have surged. JL Collins points out that a stock can fall 100% to $0, but there is no upside to growth and some stocks will grow and grow far beyond 100%. There are companies that make up the NZ Top 50 fund that will fall off the index and others that will join in and give it enough time, we will recover. New Zealand has a lot of incredible companies that will work through this and maybe the future is going to look different, but it will recover. That’s why I don’t invest in individual companies and why I’m not worried.
Today I put my purse up on the shelf as I don’t really need it for the next month! #nospendmonth
SATURDAY 28th:
Our share market is closed on the weekend.
I finally sat down and updated my net worth spreadsheet this morning because it’s more or less the end of the month and I was looking for something to do. I look at the value of each investment (KiwiSaver, Funds, Gold etc) and also exactly what cash we have in each bank account (Everyday spending, emergency fund, holiday fund etc), I include our house and cars as well and I come up with a total that I then compare with the month prior and the same month the year before. We are down about $32,000 on February, but still $18,000 higher than March 2019. It’s an inexact science (who knows how much our house value has dropped?) but because I’ve been doing it this way for years now it gives me a pretty good idea.
All in all, not so bad, considering the situation.
SUNDAY 29th:
I’d be lying if I said it was not a hectic week. I still can’t believe that the majority of the country has been sent home. But because I have spent time during the week talking with Jonny and taking a sledgehammer to our spending, we now know our EXACT financial position and that gives us a sense of control and in a crisis, it’s really important that you control the things you can.
To wrap up:
We are now living on our new lower income.
We have halved our daughters pocket money and explained to her why (I see this as a good opportunity to teach).
The Lockdown Countdown calendar is a fun diversion for us all yet I would be lying if I said I was not concerned for myself, my family, my friends and my country.
My run streak continues Day#192 but now when I go out my usual running tracks are being shared by everyone else (I have NEVER seen so many people exercising in Alexandra, where do they all come from???) - I think that as a nation we are going to come out of this fitter, although I think we are going to wear our dogs out too!
One of the many funny images I have been sent during this time. Source: Unknown
I’m thankful that we have always thought that debt was a risk and we therefore have none and I’m buoyed by the woman from Invercargill who got in touch to say she paid off her mortgage this very week! CONGRATULATIONS!!! What perfect timing.
At a time like this, I think of the Warren Buffett quote of “when the tide goes out you can see who is skinny dipping” and I think that this current crisis is going to cause a lot of people pain over the coming months when they realise they have overextended themselves financially. But I also hope that for a lot of people a time like this is your wake up call, your Aha moment and that you make a lot of changes to your situation to protect yourself for when an event like this happens again, as it inevitably will in some shape or form.
To end, I’ll refer back to the top of this email: I hope you are doing OK? Please reach out to me if you think I can help you.
All the best everyone.
A heartfelt thank you to Jacinda Ardern for her clear leadership and to everyone who is working in an essential service and keeping the wheels of New Zealand rolling, albeit a bit slower than normal.
Keep busy. Keep BUDGETING. Be frugal. Be kind. Stay in your bubble. Stay HOME.
