"In the midst of COVID-19 headlines everywhere, we booked a cruise to the Islands with departure scheduled in February.
"The deposit was $3 for my whole family: the best $3 I've spent in years."
"It's given us a nice dream and a bit of mystery in our lives. I know that if the cruise is cancelled or delayed, there will likely be an incentive to rebook," says Anthony Appleton-Tattersall, specialist property accountant, AAT Accounting Services.
Money. It's the driving factor behind many life choices, but is it the be-all and end-all?
'Me and My Money' is a regular feature that investigates Kiwi attitudes towards money and what drives the choices they make. We also share their biggest learnings from COVID-19.
Newshub spoke to property accountant Anthony Appleton-Tattersall about buying rentals before a first home, buying a business and losing over $10,000 monthly and why putting a deposit on a cruise was the best $3 he's spent in years.
1. Are you a saver or a spender?
A saver. In childhood, any coins went in the piggy bank: even Easter eggs were squirreled.
Early in our careers, my partner and I saved her pay cheque and lived on mine. Each pay rise, we increased savings by half (after the first pay went on a big splurge). That helped get us in the property market. Less than a year after we married at ages 21 and 23, we had our first rental.
A few years' ago, we had a nasty experience where we bought a profitable, managed business that quickly went bad. We lost massive amounts of money. For a stretch, we were down over $10,000 per month, while also foregoing my employment income.
That adjusted my perspective on money a little.
Money is not to be wasted, but ultimately it's there to be spent...at some point.
2. What can people learn financially from COVID-19?
Your base living expenses are a lot lower than you think they are.
There's a spectrum between sitting watching your bank account increase and having to borrow money from a workmate the day before payday because you found too many 'bargains' over the weekend.
Find that happy medium. Enjoy life without worrying about how many days to the next pay.
3. What's the biggest financial lesson you've learned?
Money earns money. It's a simple concept, but incredibly powerful.
A small amount of passive income makes a difference. A large amount potentially changes your life.
In my university days, interest on my savings (circa 8 percent in 2007) was enough to buy a cheap lunch every day. A free lunch does exist! Of course, I chose to pack my own most days. But it was nice to have the option.
In 2014, I found a blog that showed saving and investing 45-50 percent of income enables retirement in less than 20 years. That introduced me to the F.I.R.E. (financial independence retire early) movement and provided a concrete goal for my savings.
4. Are you seeing more property investors entering the market (and will LVR restrictions affect them)?
The biggest group of new investors I'm seeing at the moment have owned a home for 10 plus years, built up their equity in the last boom, see another starting and want to make the most of it.
The loan-to-value ratio (LVR) rules will slow some investors down. But they'll affect smaller and younger investors more. The medium and big players have enough equity to operate in the lower LVR space, with total debt around 50-to-60 percent of their property values,
Most property investors buy based on the numbers and try not to overpay what a property is worth. My personal belief is that LVR rules will have little impact on the continued climb in prices.
5. What's your advice to first home buyers trying to get onto the property ladder?
That it's still possible! Our parents' generation could buy a property without too much trouble. But they often worked two or three jobs to pay their mortgage with interest rates above 20 percent.
For first home buyers today, the main hurdle is getting a deposit. Once you have the house, the mortgage can be cheaper than rent.
I recommend people don't give up. As soon as you give up, it becomes impossible. Save your money and work a second job if you can.
One option is to buy an investment property where you can afford and rent where you want to live. This can be tough with LVR restrictions on investors and Kiwisaver first home withdrawal rules, but I speak to people doing this at least once a month.
6. Give an example of a recent purchase that you consider was great value for money
In the midst of COVID-19 headlines everywhere, we booked a cruise to the Islands with departure scheduled in February.
The deposit was $3 for my whole family: the best $3 I've spent in years.
It's given us a nice dream and a bit of mystery in our lives. I know that if the cruise is cancelled or delayed, there will likely be an incentive to rebook. If a Pacific travel bubble opens up in time, we'll actually go on the cruise!
7. What was your last impulse or 'fritter' purchase and how did you feel about it afterwards?
In early September, (yes, that's quite a while ago, I don't fritter often) I bought some Playstation 4 games that I'm still looking forward to playing.
I've managed a few hours of Spyro, but I obviously overestimated my free time.
The purchase itself felt great. What doesn't feel so great is realising they've sat for months unused. This is why I don't fritter.
8. If you have spare cash to invest, what's your preferred form of investment?
As a specialist property accountant, I put money where I have the best understanding. We have residential rentals and recently bought into a commercial property syndicate.
The big advantage of property is that our banking environment is property-friendly. Without leverage, you can probably earn more with a widely spread share portfolio. But try getting a 70-to-80 percent loan to buy shares and you'll either be laughed at or offered an interest rate so high there's no point taking it.
In addition to property, I'm a big proponent of diversity. We have some money in a passive fund managed by Simplicity and a couple other non-property investments, with varying results.
9. Does having more money increase happiness?
Absolutely! But only to a certain point - and it's lower than you'd think.
A few years' ago, a US-based study identified that up to around $75,000 annual income was the sweet spot where more money directly increased happiness. Past that, the relationship markedly decreased. The New Zealand number would be similar.
Meeting your day-to-day needs and a few of your wants is a huge deal for happiness. But after a certain point, you end up accumulating 'stuff' that has to be stored, organised and managed.
There's a concept called the 'hedonic treadmill'. It basically says more stuff and more money makes you happy short-term. But long-term, you'll return to your usual stable happiness level.
When it gets to a point where people start worrying about being targeted for their wealth, it decreases happiness. A good problem to have, you might think, but still a problem nonetheless.
10. The best money advice you've received or given?
My parents taught me about the need to save for the future, and the power of compound interest.
If you don't spend your money right away and treat it right in the interim, it will reward you down the track.
Simple advice I give to others is: 'Spend less than you earn and you'll never need to worry whether you have enough in your bank account.'