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Budgets Archives - Mortgage Advisers - Mortgage Lab

If you have ever tried to tidy up your financial affairs, it can be overwhelming to try and do everything at once.  Like most big projects, the best way to achieve success is to break it down into bite sized chunks.  Our Small Steps blog series is all about tidying up your finances one step at a time.  This month on Small Steps – it’s time to update your details with your KiwiSaver provider

Why is it important to update my contact details with my KiwiSaver provider?

Once you have purchased your first home, KiwiSaver should largely be viewed as a “set-and-forget” investment.  It doesn’t really matter what you have invested until you are 64.9 years old.  Right?

Sort of.  Each year, there are 2 main things that you should check:

  1. your PIR tax (the rate that your investment gains are taxed at) is correct 
  2. that you are going to receive the maximum Member Tax Credit (check you have deposited at least $1,042 over the year).  

So while the total in your KiwiSaver isn’t important, you need to receive an annual statement to make sure these details are correct.

There is one more (slightly less pleasant) reason to update your address.  If you were to pass away, updated details make the handling of your estate significantly easier.

How do I update my address if I don’t know who my KiwiSaver provider is?

It’s estimated that 40% of Kiwis don’t know who their KiwiSaver provider is.  This is due to the auto-enrolment scheme that New Zealand has (in my opinion, rightly) in place.  The first time you move into a salaried position you are auto-enrolled with one of the default providers.   You may not even notice who your money is going to.

Then, as soon as move house or flat, your information is out of date.  Now you don’t know where your money is invested and you aren’t receiving statements.

If you are in this position, don’t worry.  As we saw above, a significant amount of other Kiwis are too.  You might take this moment to reassess which KiwiSaver provider you are with.  If you think there is a better option out there, you can change.  And when you change your KiwiSaver provider, you will give your new provider fresh details and you are sorted.

How do I update my address with my current provider?

If you know who your KiwiSaver provider is, it’s simply a case of calling your provider and updating your details.  You should be prepared with your account number and they may require that you prove where you live with a Utility Bill or Bank Statement.

Congratulations!  You’ve taken another small step towards being financially organised!

At least once a month, we try to bring you an unusual outside-the-box method to save money.  Recently we’ve introduced you to Pocketsmith.com and shown you how cleaning your heat pump can save you money on your heating.  We’ve even shown you a nifty app that hunts down the cheapest petrol which is getting more and more popular by the day.

This month we’re looking at a brilliant little clothes drying machine called the Spindel.

What is the Spindel?

Remember when you were a kid and you would part fill a bucket with water and swing it around.  The magic of centrifugal force keeps the water firmly in the bucket and not on you.

And this is what the Spindel does (amazingly well). It spins your wet clothes at 2,800 revolutions per minute, twice the speed of your washing machine. This draws out around 80% of the remaining water meaning less time in the dryer or on the clothes rack.

And less time in the dryer means cheaper electricity bills.  Because a spinning drum with holes in it is much cheaper to power than a giant heater.  1/100th cheaper according to the website.

The Spindel costs around $300 and is not available from those big box retailers (as far as I can see).  But if you order one on the website (we are not getting a commission from this, I promise), it will be delivered to your door promptly.  Installation involves taking it out of the box, removing a few plastic locks and plugging it in.

I’ve had mine running in the laundry for a few months now and have found it amazing.  We use a rack to dry our clothes and even in the darkest part of winter, the clothes dried quickly.  The amount of water that is removed is incredible.  Easily a cup or two of water is removed in the 3 minute cycle.

So what are the cons?  There are only 2 that I have found and they are very minor.  Occasionally the drum can be weighted unevenly and as you crank the turbine up to full velocity, the drum can begin to knock against the side.  It’s not a noise you’re likely to ignore but is easily fixed by stopping the machine and moving the clothes about.  The Spindel operating manual suggests folding your clothes before putting them in the machine but, honestly, who has time for that?  It’s easy enough to shuffle the clothes about to correct the weight distribution.

The second (and even more minor) complaint is that the machine doesn’t have a timer.  I know.  It’s a first-world problem when my clothes dryer doesn’t have a timer and I have to wait for 3 minutes.  I did say it was a minor complaint!

The Spindel Summary

In case you haven’t guessed, I very much like the Spindel.  There is no noticeable wear and (more importantly) tear on the clothing.  My power bill is reduced each month and clothes are out on the rack for a lot less time.

Hi Heat pumps are great.  They are efficient and quick to work.  In fact, Energywise says that a heat pump is the most energy efficient way of using electricity to heat your home.

However a lot of people are wasting money by either incorrect installation or poor maintenance.

Give your heat pump a winter once-over

Dirty heat pump filters block the air from going through and make the process less efficient

Ok, you’ve already got a heat pump installed.  When was the last time you looked at the filters?

The filters get rid of the majority of dust and pollen from the outside (most NZ heat pumps are single-split heat pumps; getting air from the outside).  This is obviously important but means that the filters can easily become clogged.  When this happens, the motors have to work harder to push the air through (or it simply doesn’t go through as much).

For most heat pumps, you should be able to easily access the filters.  If in doubt, google the exact make and model of your heat pump and add the term “pdf manual”.  This should find the manual which will walk you through the process of removing the filters.

heat pump

It shouldn’t take more than a couple of minutes to clean the filters. You can now see the carpet behind the filters meaning the air will flow through nicely.

From there, a quick vacuum is enough to get the majority of the dirt from the filters.  You’ll see the change immediately.  Replace the filters back and restart your heat pump.  You should notice a 2-3 degree increase in heat from when the filters were clogged.

Heat pump settings

Now that your filters are clean, it’s time to get the correct setting.  It’s generally agreed that a setting between 18 – 20 degrees is the best.  Any higher and your heater will be using too much energy to get the air that warm (particularly if it is very cold outside).

Focus the heat

Because the heat from a heat pump is so efficient and quick, there’s not much need to heat rooms that you aren’t in.  If you decide to move rooms, just open the door and the heat should flow through.  Heating a 30 or 40sqm room is much more efficient than heating a whole house!

Purchasing a heat pump

An under-powered heat pump will not heat the entire house which will just lead to disappointment.  We’re aware of a few companies offering special deals on heat pumps but they tend to be the lower powered units.  Seek out advice on the correct power requirements for your particular house.  As with all things, a little extra money can mean a significantly better experience.

Installation of heat pump

The best time to save yourself some money with a heat pump is at the installation.  Correct placement of a heat pump is key to getting the air distributed and circulating throughout your house.  A reasonable price for installation is around the $1,000 mark (can be $300 either way depending on difficulty) but is well worth the price you are paying.  The money you save for good installation over the lifetime of the appliance will more than cover the extra installation costs.

Summary

We realise that the outlay costs of a heat pump are high but the ongoing electricity savings are good for your wallet (and the environment).  Get the correct model for your house, get it positioned correctly and check the filters every 2-3 months in winter (less often in summer).

Purchasing your first home can be confusing.  The key to being ready to buy is to be organised.  Here are 3 things that first home buyers can do today to get ready to apply for a mortgage.

Order their Credit Report

Ordering your own credit report is free.  You can a nice and simple indication from Credit Simple or you can get the whole report (I recommend this) from Equifax. This second option can take a couple of weeks (my latest one turned up in 4 days though).  This will allow you to see exactly what the bank is going to see about your history.  If anything isn’t correct, now is the time to address that.

Tidy up your spending

Look through your last 3 months of bank statements.  Are you spending more than you earn or going beyond the limit of your bank account?  This is called going into “unarranged overdraft”.  To a bank, these 2 words send up a big red flag.  Once is usually ok, but more than that and getting a mortgage is going to be difficult.

You can limit how often this happens by setting up a spending account with automatic payments going out.  You’ll know exactly how much is going to be spent and how much is in the account.

Key point: don’t have an eftpos account attached to this expenses account.  You’ll end up over spending and going into overdraft again.

You can download a copy of The Mortgage Lab’s Excel Budgeting Spreadsheet here.

Get proof of your income

The bank is going to want to see your income and it won’t usually be enough to show them the money going into your bank account.  Banks like to see payslips because they show how your income is made up (ie; is it a base salary or commission).  The bank will usually want to see the most recent 3 payslips so if your HR department is a little relaxed in this area, get them working on it now.

If you are self-employed, you will need to have this year’s most recent Financial Statements (between October and March).  You can see our blog on when you need to update your Accounts.  Since Accountants are often busy, these can sometimes take a while to source so talk to your Accountant early.

Bonus Tip

If you’re ready to apply for a mortgage, it’s also time to look at your Life and Health insurance.  You’re going to be signing a contract for a large amount of money and need to make sure you can pay for it.  Find an insurance adviser who you like and feel is looking after your best interests.  We believe the best advisers only advise on insurance which is why we don’t offer it in our company.  They should be comparing several different products and choosing the one that suits you the most.

Summary

You can start getting ready to buy today by:

 

We all enjoy saving a bit of money, especially if you’re looking to buy your first home or if you’ve just got your first mortgage.

There are all sorts of convoluted ways to save money.  Some of them are easy (eg; ditch the expensive TV subscription and get yourself Netflix, Lightbox or Neon) and some of them are disproportionately hard (eg; setting up a grey water system to water your plants to save on Water Rates).

My initial budgeting suggestion for new “budgeters” is, pick the low-hanging fruit first.  And the easiest of all is to find what you’re paying too much for and find a place that sells it for less.  Groceries are a good example of this.  The price between supermarkets is astronomical for essentially the same product.  Petrol is another.

The Great Gaspy

This is where Gaspy comes in.  Whenever you open Gaspy, it will find you the cheapest fuel nearby.  And the range in prices is amazing!  For Diesel, my local price ranged from $0.99 – $1.17 per litre.  That’s an 18% difference.  Or to put it another way, if I normally spent $100 per week on fuel, I could save $936 per year by knowing the cheaper petrol stations around.

Now it’s not worth driving 30 minutes to save yourself $18 (or maybe it is!) but if you get in the habit of opening up the app when you’re below half a tank, then you are sure to pass a cheap spot sooner or later.

And as an added extra, the app summaries where the cheapest and most expensive areas are in NZ and it’s not where I would have expected!  You can find the link to the pdf here or you can generate the list yourself on the app.

If you haven’t tried Gaspy yet, give it a go and let us know how you find it.