What do people email me about?

Dec 15

Dec 15 What do people email me about?

Budgeting, Index Funds, KiwiSaver, Money Education, Personal Finance, SmartShares, SuperLife, Simplicity, ETF

Dec 15, 2019

Each week I get a lot of emails and it takes up a lot of time, but it’s an honour to answer each of them.

People just want someone to whom they can ask a money question but in their day to day lives it’s a complete lottery as to whether they can find the right person in their friend group to talk to, so they write to me instead. While I’m always at pains to point out that I’m not a financial advisor and that I’m just offering my thoughts based on the information they have given me, I do seem to be able to help. I think the key is that no topic is off-limits, I am happy to talk about personal finance all day long, and so much of being good with money is to me, just plain old common sense and when I remember back to a school report I once received it said: “Ruth has good common sense”. It also said, “Ruth is a chatterbox”.

So, I’ve got some of the skills necessary to help people think their ideas through. Oh, and I do have a Psychology degree, which I never thought would be of any use, but it actually is!

The most rewarding thing for me is being able to answer the questions people send me but also to dig a little deeper and ask a few questions myself. Personally, I always knew I had the potential to handle money well, but I just had no idea what I was doing, but when I crossed paths with some people who were good with money I listened to what they said and I discovered some good techniques and skills which have really helped shape my/our future. My only regret has been that I never had these conversations earlier in life, but fun fact...it’s everyone’s regret!

So, when people get in touch with me, they are fishing around for some information, they are not quite sure what they are going to do with it, but they know it will be helpful nonetheless. And often, once they find what they are looking for, they are transformed.

Transformed might be too strong a word, but in a lot of cases, it’s actually true.

So, I just wanted to share with you an edited version of an email exchange I’ve been having with someone over the last few months which will give you an insight into what kind of stuff comes up when I chat to people. For privacy reasons I’ve edited it down and changed the name, but I think you will get the gist of it, or to quote that fabulous movie, The Castle, “the vibe”.

The Conversation

* Ella and I started writing emails to each other in August 2019.

She got in touch because she was trying to decide how she could help her children as her oldest was nearing the end of school and would transition into tertiary education within the next year or two. Briefly, she told me that for all of 2016 she and her husband had been putting money into a SmartShares fund, with no idea what they were doing and no way of even checking their investment, they didn’t even know their login details to check their balance. Her question was along the lines of “are they even a legitimate company or are they going to disappear in a cloud of everyone’s money”?

So, we emailed back and forth about investing for children, teaching them good money management etc and also just how she could access her SmartShares so she could check the unknown balance of it. I also let her know how I save for my own daughter, how I teach her and I sent her through links to a variety of resources for her to check out.

This went back and forth a bit - she found that the $7,000 they had invested had now grown to $12,000 - and then, almost as an aside, she mentioned her own financial situation...

There was her husband’s student loan debt that was still being paid off (this couple are in their 40’s), a mortgage to pay (possibly all gone in about three years), their KiwiSaver schemes were ticking along slowly (but they were not overly happy with the fund), there was a term deposit but there were no other savings and they had a relatively tight weekly budget to cover the things they liked to do. Although she said they have a small house and a simple lifestyle, spending on family adventures kind of won out vs debt repayment and saving for the future.

This raised a red flag for me.

My reply email, after the usual pleasantries, said:

Hmmm, student debt and a mortgage change things Ella.
I have to tread carefully here and I mean absolutely no disrespect. But how can you set a great example for your children, if you’ve not ‘walked the talk’ yourselves? I know that student debt is interest-free, but it’s still debt. Once your mortgage is gone, how long will it then take to pay back that student debt? Or are you considering, like some of my old uni friends are, of NEVER being in a hurry to pay it back, just letting it be siphoned out of your salary for the rest of your working lives?
How about this instead?
Personally, and do remember, I’m not a financial advisor and these are just my opinions, I could not help others (my daughter) get ahead if I was not getting ahead myself. For my own daughter, we are only able to save and invest for her because we have our own financial house in order. I do understand the sentiment of enjoying a good life today, but ‘today’ can come at the expense of tomorrow. With that money in the mystery SmartShares fund, what about putting that straight on your mortgage? All of it. How many months or years would that take off your mortgage? And then get after the rest of that mortgage. As soon as that is gone then turn that money to your student loan and get rid of that as soon as possible. You could be COMPLETELY debt free in what, four years???
But what about your oldest daughter who is poised for study? Perhaps it’s a case of explaining to her your situation. And I think that her hearing that your student loans are still hanging around after (I’m guessing here) 15-20 years of completing study might be a real lesson to her. So, instead of saying “here is $15,000 for uni”, instead say, “Dad and I want to support you through your study and it’s really important to us that you do this debt-free or with minimal debt. So, we are offering you a free place to live while you study, free board, free food. We will also give you an allowance each week towards your university of $100 each week. This is to pay for university expenses, not for boozing. You may need this to buy textbooks, a new laptop, course costs etc. You can treat this money as income, to be saved up and used on a larger item, or to be used week by week. You will have it in a separate bank account, with a separate card, so you know that it’s only to be used for uni. Also, our expectation is that you work, perhaps a part-time job while you study and certainly full-time work in any holidays.”
Once your own mortgage and student debt are gone both you and your husband will receive a LARGE PAY RISE because you are no longer sending a chunk of your income to a bank or student loan each week. You can then cashflow your oldest daughter (this may mean making payments towards any debt she has accumulated) and you can certainly easily cash flow your younger child.
You sound like you have so much sorted (small house, simple lifestyle) and if you can just get this debt behind you then it’s going to be plain sailing from there. So, I hope this gives you something to think about, I can just see an amazing opportunity to work you and your husband closer to debt-free status, while still being able to support both of your children.
Does that make sense to you Ella?
Kind Regards,
Ruth

There was silence for a week. Gulp. Had I gone too far?

But then I heard back:

Kia ora Ruth,
Firstly, many thanks for your long email. I mean that - I am really truly grateful for the time you have taken to reply to me. I do like a bold conversation, and I really love that you have been willing to tell it like it is (I also love the fact that I have probably told you more about our finances than I have told anyone in all of my years!!).
Everything you have said makes a whole lot of sense. It does seem a bit odd to have this money in savings for our kids when we still have debt. I guess it was always earmarked for them and we didn't think too much more about it. And yes, you are spot on about the student loan - it hasn't been factored into the financial plan, for a range of reasons that possibly sound a lot like excuses. Debt-free in 4 years sounds awesome.
Your thoughts regarding financial support for our girls as they transition out of our care has been hugely helpful and has really turned around my thinking, clarified a few things and also given me a lot more to think about.
So, time now to have a careful conversation with my husband and hopefully he will be on the same page.
Thank you, Ruth.
Ella

More emails followed where I sent her links to interesting podcasts and blogs. She was on a hunt for information that she could use that related to her own situation and I’m always happy to help share resources I have found if they will help point people in the right direction.

And then as November rolled around I received an email that honestly just made me sit back and say “WOW, people are freaking amazing”!

Dear Ruth,
A big long email coming up but I figure you can handle it and like hearing this kind of thing!
It is mainly a BIG thank you, to you.
Reading your blog, and the emails we exchanged over a couple of months, has really helped to put me on a course of much greater clarity around where we are financially, and much greater confidence with this. When I first emailed you, my husband and I had some good habits in place and some vague ideas about 'the future'. I feel as if we have much more of a plan and are much better informed.
These are the things we have done since you and I emailed:
- Paid $20,000 off our mortgage, bringing the end date to October 2021. Yahoo!
- Creating a plan for student loan repayment.
- Both reviewed and switched KiwiSaver. It was a no brainer for my husband to switch from a languishing AMP fund with high fees (I have managed to hold off reminding him that I've suggested for years that he switches) to Simplicity, I decided to switch too because I really like what they stand for as well as low fees.
- Bought both Barefoot Investor books.
The Barefoot Investor: The Only Money Guide You'll Ever Need
The Barefoot Investor for Families: The Only Kids’ Money Guide You’ll Ever Need
- Sat down with eldest daughter and helped her to map out a plan she will have set up for her finances by the time she is 18 (Everyday spending account - short/medium term savings - emergency fund - Growth index fund - KiwiSaver) which surprisingly she is completely on board with and has started a concerted saving effort.
- This daughter has now picked up a part-time job and is having a trial right now at a local cafe! (CV put together based on the one in Barefoot for Families).
- Looking to open up a My Future Fund account for her with SuperLife, so she and we can put in money for long term savings.
- Currently reviewing life and income insurance.
- Restarted minimum regular payments into our SmartShares FNZ.
- Opened SmartShares US 500 and set up minimum regular payments.
- Doing a huge amount of reading and obsessively becoming a personal finance geek. Following the Barefoot Investor and Kiwi Mustachian Facebook pages instead of trawling through TradeMe.
- Have read your whole blog and am working my way through the podcasts :) I loved the one about your story!
- Scrapped the idea of buying a rental when the mortgage is paid off.
- Feeling much less like the poor cousins and much more empowered by the choices we have made. Realising too that those who have big, nice houses and overseas holidays may actually be in a lot of debt!
I know that these are not huge and spectacular things that we have done, but I feel that these small changes are creating a good trajectory.
So, where to now? My main goal is to reach a point where I don't worry about having enough money or how we would cope if something happened such as redundancy, and to feel fully confident that we would financially survive and thrive no matter what life throws at us. I don't know what that looks like in a $ amount, but it is definitely being debt-free and growing our savings.
I feel I know a lot more about what we need to do to get ourselves there.
I've also started initiating conversations with people about money, dropping in things about KiwiSaver, insurance etc - it has been really fascinating to see how people respond! It must be amazing for you to read and hear from all the followers of your blog.
So - thank you, your work is amazing and much appreciated.
Enjoy this beautiful weekend,
Ella

WOW right?

Why have I shared all of this?

Because I want YOU to know that if you have any doubt, any question, any inkling that something is not sitting quite right with you that it’s OK to find that person that you can talk to about it. In this case, Ella found me. We have never met (although I hope to one day), we have never spoken but I could provide some insights that I have and she could go away and process them. And I’m asking for nothing in return. All I did was give her the tools to go and speak with her own family really so they could explore what is important to them as a whanau.

I have to be extremely cautious when I write to people. The Financial Markets Authority (FMA) does not take kindly to unqualified people dishing out potentially dodgy financial advice and I’m always aware of that. BUT so much of good money management is just plain old common sense and apparently if you refer back to my school report, I actually have that. I just give people the opportunity to talk about money, something that is generally frowned upon in society. Unfortunately.

To receive that last email from her and to know that she now felt she was working towards a plan with her entire family is something I really treasure and when you read my blog you often don’t get to see or get a feel for the community I’ve created. On a daily basis, I have a lot of conversations, whether they be by email, by phone or over a coffee and I’m forever having someone such as Ella touch my life. Or I touch theirs, just at that moment in time when they need it.

To end, I just want to encourage you to seek out information and start a conversation that will move you in a positive direction or, if you have information that you know others could benefit from, reach out and share it. The worst that will happen is that they say no, but the best that will happen is that you might be the trigger that transforms someone else’s life and take it from me, helping other people, with no thought of gain for yourself, is one of the most satisfying feelings you will ever get.

To quote Will Smith: “If you’re not making someone else’s life better, then you’re wasting your time. Your life will become better by making other lives better”.

People ask me “Ruth, how do you manage to think of something to write each and every week”? Well, if you could see my inbox, you would quickly see just why I remain so motivated to keep producing my blog. Thank you to everyone that I’ve corresponded with who have trusted me enough to share, often for the very first time, their financial life. I’ll continue to always reply as quickly as I can and with as much honesty and useful information as I can!