Control Spending and Eliminate High Interest Debt

2. Control spending and eliminate high interest debt

When you first start earning money, or get a big promotion, it is exciting to be able to spend money that you didn’t have before. And part of Moneyworks philosophy is that you should always celebrate.  But it is important to know when to stop celebrating and get back on track to achieving your goals.

Controlling spending doesn’t mean never spending.  But it means being aware of how much you are spending and on what.  Of course you should have luxuries and even the odd vice or two, but if you really do want to have control over your finances, you should set rules for yourself about how much you can spend on those vices and luxuries.

One of the best ways of controlling your spending (and a number of our clients do this), is to have different ‘jam jars’ – well actually, bank accounts for different reasons.  Now that there are bank accounts with no monthly fees available – this is a very achievable solution. 

Put aside a certain amount each pay for travel, or for a particular goal.  If you have to ‘raid’ that account, it means that you don’t have the balance of spending quite right yet, or if it really is an emergency, try and replace the money as soon as possible.

Eliminating high interest debt should be the first step when you are developing your financial plan.  You should not owe any money on your credit cards past the due date.  The high interest rates that are charged can keep you in a cycle of having no money, if you don’t repay the balance in full each month.

Borrowing money on high purchase to buy a vehicle or TV is also a trap. The best way to buy new things is to save up until you can afford to purchase the item.  But if that is not possible, look around for interest free cards and finance. 

Make sure that you read the fine print, once the interest free period ends, you could end up paying very high interest rates, so make sure that you repay the loan before the interest free period ends.

Should New Zealand Superannuation continue to exist as it is?

Moneyworks was established in 1997, which was the same year that the referendum on compulsory superannuation was held as a result of Winston Peters negotiations to form a Government.  ThisRead more

Should adult children be able to challenge their parents wills?

You will have seen the headlines in the media about families at war over their parent’s wills.  The arguments of the Green familyRead more

The Dow Jones turns 125 years old

If you have been investing for some time - even it has just been in KiwiSaver, you will know that markets go up and down in value depending on market events, but over time they do increase.  This isRead more

Cyber Security issues and protections are getting far more important

As your financial adviser, we work with you to reach your goals, in particularly to get you to and through retirement - ethically (for those who want ethical investments).  But a big risk to yourRead more

Abuse of people knows no limits

We all know the stories of people being abused within closed doors, and New Zealand has the Family Violence Act (was Domestic Violence Act) to recognise the harm that abuse incurs. Email and socialRead more

Do you know what is in your insurance policy?

Fair Go and the media regularly cover situations where insurance companies don't  pay out on a claim.  Having been an intermediary between insurers and the insured party for 25 years, we have seenRead more

Some interesting things that we have read or listened to recently

This post is a little different, as it doesn't have a commentary on these articles, but they are interesting articles that might be worth a quick look at: How to dismantle the Absurd ProfitabilityRead more

Ethical Investing Update

As we have signalled, we are working on a big project this year to become internationally certified as Ethical Investment Advisers, and to be able to provide our clients with certainty over whatRead more

No more cheques - technology has taken over

You may be aware that I am quite a fan of technology and adapt technological advances (in the belief that it will make my life easier, but we all know that technology brings its own challenges - itRead more

Stuffing up NZ Super - make sure you get it right

This blog post comes from an excellent article written by Rob Stock that highlights how easy it is to muck up your New Zealand Super entitlements.  Here is a link to the article. Some important poiRead more

Investment Markets - updated graph

From time to time fund managers put together a wallchart for their advisers to hang in our offices for clients to see what has happened in investment markets over time. We feel that it is moreRead more

Is your PIE tax rate too high - going forward you can get a refund

A subtle change to PIE tax rules was delivered behind the scenes, which benefits investors.  If you get your PIE tax rate wrong and overpay your PIE tax, you will get a tax refund going forward.Read more
 

This product has been added to your cart

CHECKOUT