July 14, 2024 • 40 mins
Financial Advisor Hannah McQueen joins Tyler Adams on The Weekend Collective to discuss how you can pay off your mortgage faster, even when you don't have much left at the end of the week.
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from News Talks AB.
You can see the.
Speaker 2 (00:17):
Welcome back into the Weekend Collective and it is time
for the Smart Money Hour. And in studio is Hannah McQueen.
She is a financial advisor, the founder of Enable Me,
and author of Killing Your Mortgage and Sort Your Retirements.
Hannah is with me now to help you sort out
your finances. Get a Hannah, nice to see you.
Speaker 3 (00:34):
Hello.
Speaker 2 (00:35):
What book number is this?
Speaker 4 (00:36):
Man?
Speaker 2 (00:37):
You're busy, aren't you? Is this number?
Speaker 5 (00:38):
Four?
Speaker 1 (00:39):
Oh?
Speaker 2 (00:39):
Yeah, I think it is actually fantastic. Congratulations by the way,
thank you.
Speaker 3 (00:43):
Yes, it seems to be doing well and resonating with people,
which is the main thing, right, Yeah, hope when they
feel there is none.
Speaker 2 (00:50):
Yes, I mean particularly now, right in the economic climate
that we find ourselves in. She's certainly tough out there.
Speaker 6 (00:55):
Now.
Speaker 2 (00:56):
If you've got a question for Hannah, now is your
opportunity our eight hundred and eighty ten eighty is the
number to call, or nine two ninety two is the
text number. And just on the the idea of killing
someone's mortgage or your own mortgage when the economic climate
is the way that it is and there's a lot
of people that have assessed their budgets and tried to
cut out as much fat as possible, Are there other
(01:17):
strategies they can look at to try and find a
little bit of extra dollars at the end of each week.
Speaker 3 (01:24):
In short, yes, I think that for a lot of people,
their inefficiencies are to do with things that aren't necessarily
connected with their discretionary spending. So it might be how
they've structured their mortgage, or their key we savor, or
their insurances, or how their tax is structured, or those
things might be where there is some inefficiency. So if
we can find that first before we overlay improvements in
(01:48):
your own behaviors around money, Normally there is room to
be better, but I think when can I guess when
it gets harder, that does mean that you do need
to be better, and I think go one of the
days where you could drift towards a comfortable retirement. It
just actually isn't plausible now and probably won't be plausible
(02:09):
in my generation or even for my kids.
Speaker 1 (02:11):
Right.
Speaker 3 (02:11):
So, a lot of the financial advice that we've heard
over the years normally is positioned to the times when
they are good, and often on a good day anyone
can be good. We want to know that on a
bad day, you're still going to be okay. And that
takes some crafting, and it takes some deliberate actions and
it's no longer the result of sleepwalking towards it.
Speaker 2 (02:35):
When we look at some of those big things like
how you structure your mortgage or the insurances that you
have as a family, that is really the area for
a lot of us, right that you kind of need
professional help with because a lot of it is complicated.
You might not know if you're getting the best deal,
particularly when it comes to insurances. Is that where a
broker or a professional and or a financial advisor really
(02:58):
comes to the forward to say, here's what we think
you can cut out or here's where you can save
an extra couple of dollars take that stress away from people.
Speaker 3 (03:06):
Yeah, I think that for a lot of these things,
they are more complicated than we realize. Unfortunately, a lot
of financial advisors in Australasia give advice on the products
they are allowed to sell, and for some people they
actually need to understand what's available in the market first
before they work out what is the right product for
(03:29):
their particular situation and so there's almost this well they're
serdainly a conflict, but a bias towards whatever that advice
is representing. Say, if I'm trying to determine which bank
is the right bank for my clients, I mean, people
know I don't really like any bank, but there can
be commercial reasons why one bank is better. And it's
(03:50):
often got nothing to do with interest rates. It's got
a lot to do with how they allow you to
structure your mortgage and probably whether they're going to allow
you to access the equity in your home. So on
one particular day, I might make an application or through
not me personally, but the mortgage team we work with,
where we say, okay, we'll go to market and let's
(04:11):
see how much lending we can access for this particular
client and their situation. And there could be the difference
between one bank might not even look at them through
to other banks that are prepared to take them on
as a customer. But there could be a variable amount
of maybe one hundred thousand dollars in potential lending that
they could get going one way versus another. And most
(04:32):
people don't know the trade offs before they make their decision.
And I think there is something to be said about
going through that process of canvassing the market, understanding what
your strategy is to determine what's going to be the
best product for you rather than just choosing a product.
Speaker 2 (04:48):
And it can be pretty overwhelming for a lot of people,
can't it. I mean, when you look at at the
idea of structuring your mortgage to make sure that you're
saving the right amount of money. And indeed I mentioned
insurances there. These are things and I'm speaking for myself personally,
at the end of a working day and everything else
that's going on in life, the last thing I really
want to do is try and sit down and work
out if I'm getting the best deal of my insurances.
(05:09):
You know, I kind of want someone there I can
trust to say, no, you're not getting the best deal.
Let's rearrange things and try and do things a bit
better so you're saving money and still being looked after
on the insurance side of things and the mortgage side
of things.
Speaker 3 (05:22):
Yeah, I think that at the end of the day,
most of us are tired, which is why we don't
get round to those things that are important to us.
So many of us are financially literate, but that doesn't
seem to translate to us making much financial progress, despite
being literate, despite maybe even managing money in your day job.
So I think that one of the reasons why we
(05:44):
never get around to it is financial success does take
time and deliberation and analysis and understanding competing objectives, and
most of us just don't have that time or expertise
even if you had the time. And that's where I
think bringing in experts who are impartial can be very helpful.
Speaker 2 (06:06):
Yeah. Great, the text questions are coming through. If you've
got a question for Hannah, now is your opportunity to
get in, And I'd get in early because it's always
very popular. Oh, eight hundred and eighty ten eighty is
the number to call if you've got a question about
finances or money or your mortgage. Hannah is the person
you want to have a chat to. And the text
number is nine two nine two. Texts are ass and
they haven't given their name Hannah. It says hi, Hannah.
(06:28):
I look after the finance between me and my partner.
We've been trying really hard to put a bit of
extra asite because our savings has fast been dwindling. The
problem I'm facing now is my partner is very good
for a couple of weeks, and then is adamant on
wanting to go out or spend discretionary money we don't have.
(06:50):
And I find myself very tired of having to have
this argument again and again. Any advice for having honest
conversations about finance with my partner.
Speaker 3 (07:00):
Yeah, I've got a little bit of advice there, because
often I feel like I'm more of a marriage council
and a financial advisor. I think that if your values
aren't aligned, or your beliefs are different, then it's going
to be really hard to align you. So values are
around your goals, what are we actually trying to achieve?
(07:21):
What is the priority? And then the beliefs are do
they actually believe it as possible for them to lean
into it or do they actually think it's not possible.
And some people who spend when they should be saving,
it's not because they can't save, it's because they don't
actually think that saving is going to be enough to
solve the problem. And on one hand, I'm like, well,
(07:42):
calling it early. If that is the truth, go and
enjoy the money. But maybe there's a problem kind of
underneath that that we need to work through. So I'd
be wanting to know what was some of the upbringing
that your partner had, so I can understand what messages
or talk self talk are giving themselves around money. But
perhaps we start with, well, if you keep doing what
(08:02):
you're doing, are you in fact going to achieve the goal?
Speaker 2 (08:05):
It's the goal?
Speaker 3 (08:05):
Your goal? Is it a shared goal? Are they wanting
it to be their goal or do they own that goal?
And could we do it faster or smarter? Because if
we can get to your goals faster, people do lean
in for longer if they understand that the sacrifice is
going to be worth it. But if you don't think
the sacrifice was ever going to be enough, why would
you keep going? Yeah, it did sound like my dieting strategy.
Speaker 2 (08:27):
Is I'm with you there, but just on that, I mean,
is it and it's a great answer, but keeping it
at the forefront because it sounds like this text gets
their partner on side for a soonain amount of time
and they can clearly understand why the need is to
stop going out to have dinner, but then reverts back
to oh, why not we can treat ourselves, you know,
(08:48):
let's spend a couple hundred bucks doing something nice? Is
it having some sort of you know, visual stimulus there
to have it always at the forefront and say, I
know things feel like they're good now, but we've got
to stay on track. We've got a goal here that
we need to get to. Can that help just to
the other partner on side to say, oh, that's right, yeah,
we're working towards this.
Speaker 3 (09:08):
Well, yes, you can have visualization. Normally accountability is helpful,
but I think if we when you're designing a plan,
you want them to be able. For my clients, I
want them to enjoy the life that's important to them.
So if actually he needs to go out, that's part
of his makeup, it's what he enjoys, it's his reward, well,
(09:31):
then that should actually be factored into the plant. If
your plan requires asterity measures, it's not going to last
for long, especially if the goal isn't going to be
achieved in the first few weeks. And my experience is
that people can go hard for a couple of months
tops it's like a detox. If you want it to
be renewed or to be extended beyond that period of time,
(09:53):
it has to be worth their while. Make it worth
my while. And I'm a shopper by default, which means
I can save, but I just don't get excited by
so so if you want me to put effort into
managing my money, make it worth my while, and that's
what my clients expect as well.
Speaker 2 (10:12):
That's great Again, if you had a question for Hannah,
I had one hundred and eighty ten eighty is the
number to call. Let's go to the phones. Nigel. How
are you?
Speaker 6 (10:20):
Yeah?
Speaker 1 (10:20):
Good?
Speaker 6 (10:20):
Thank you to yourself.
Speaker 2 (10:21):
Yeah good. Hannah is standing by.
Speaker 6 (10:24):
I'm wonderful. Hey, listen, I've just increased, or not increased.
I've just renewed my mortgage and probably unfortunately now I've
taken that out for two years. But anyway, I've got
a little bit more money than what I thought I
was going to have. And how do I restructure that mortgage? Now?
Do I put that extra few dollars a week aside
(10:47):
and invest it for the year and then payoff lump sums?
Or am I best to put it into the mortgage
payments or repayments on a weekly basis.
Speaker 3 (10:57):
Okay, So there's a couple of questions there. The first
is for people who have just fixed their mortgage for
a medium term. When the indications now that rates are
coming down, what do you do? Or you could break
your mortgage. And I don't actually think there would be
any break costs for you if you now wanted to
break and pause for a few months or fix perhaps
for six months. So certainly don't rule out that as
(11:18):
an option or think, oh my gosh, I'm kind of
locked in as interest rates are about to go down.
So break costs only apply if the interest rates have
dropped between when you fixed and when you are breaking.
And we haven't seen much movement in the last couple
of weeks, despite the indications being that they are going
to drop in the coming months, So that's I guess,
(11:39):
a little win for you. The next one is if
you've got extra money, what do you do with it?
Do you increase your repayments? Do you make a lump
sum payment? My recommendation is we never increase our repayments.
We try and keep that at the minimum. If you
tallied up the amount of extra funds you're going to
have over the course of the year, let's say it's
ten thousand dollars or maybe twenty thousand dollars, I would
(12:02):
be looking to break off a portion of the mortgage
to that size of extra or surplus funds, say twenty
thousand dollars, and put that onto a revolving credit facility
that you're not going to have. If poss access too,
you will deposit those additional funds into that new facility
and they will pay off that mortgage and save you
the interest cost on that. And if that is happening
(12:23):
consistently over the course of the year, the effective interest
rate is actually half the floating rate, So you're not
going to be penalized I guess with higher costs if
you are paying that balance down. But the most important
thing there is that you can reaccess those funds, and
that is very important. Flexibility gives you the resilience if
you get a curveball, but it also gives you the
(12:43):
opportunity to take advantage of things should you need to.
Speaker 6 (12:48):
And what's it called a revolving.
Speaker 3 (12:50):
Credit revolving credit facility?
Speaker 6 (12:52):
Yes, okay? Is that worth the mortgage company or is
that with the bank?
Speaker 3 (12:58):
That's think that's with the bank. So which bank are
you with?
Speaker 6 (13:01):
Oh?
Speaker 2 (13:02):
Kee we bank, Kee we bank?
Speaker 3 (13:03):
Yeah, So I do think they call there's a revolver
credit facility. They all have slightly different names or branding
of that facility, but with Kibibank, I believe it's a
revolving credit.
Speaker 6 (13:13):
Okay, cool, Well, I might look into that tomorrow.
Speaker 2 (13:16):
Nice one, Nidra, thank you very much for calling up.
One hundred and eighteen eighty is the number. If you
want to have a check to Hannah as well, quick
text and then we'll get back to the phone calls high, Hannah,
I am struggling hugely to pay my mortgage. Is it
a bad idea to sell buy a tiny home on
lease land? I am in my mid fifties.
Speaker 3 (13:34):
So it's not a bad idea to sell if you
are buying something in the same market, Lowering your overall
fixed repayments can be helpful. Putting a tiny home isn't
an issue, but putting it on a lease land is.
So we'd be if you are wanting to downsize, and
if downsizing means a tiny home on some kind of property,
(13:56):
that's okay, But you really need to own the land
and that property. Otherwise you're exposing yourself to exposing yourself
to higher rep payments or ground rent as you go,
which can erode your capital. As time passes and that's
going to be closer to your retirement.
Speaker 2 (14:14):
Yeah. Great again. If you've got a question for Hannah, Oh,
one hundred and eighty ten eighty is the number you
need to call. Got to take a quick break. It's
twenty one past five Back in a month and you
are listening to Smart Man Our Money and we're joined
by Hannah McQueen, financial advisor and the founder of enable Me.
Thank you very much for to Thank you very much
for your time again, Hannah.
Speaker 3 (14:33):
Thank you for having me right.
Speaker 2 (14:35):
A couple of text questions and we'll get back to
the phone calls. Hi, Hannah, I transferred two thousand dollars
into my key we Saver last week. I'm sixty two.
Have I done the right thing here? From Wayne?
Speaker 3 (14:48):
Well, Wayne, it's not something that I would advocate to do.
So the idea with key we Save it it's a
great way of saving and obviously it gets matched by
your employer and a contribution from the government, and that
makes it incredible. And you really want to take advantage
of those extra kind of bonus payments of sorts. But
(15:12):
when you contribute above the threshold needed to unlock those benefits,
that's where you're doing good work in the sense that
you're putting more to your KEI saver, but it is
getting locked in and you can't access that to your
sixty five. Now that might be if you're a compulsive spender,
that might be a good thing because you're just not
going to be able to get access to it. But
(15:34):
for many of the people that I work with, we
could redirect that money to work harder for you before
you're sixty five, rather than having it locked into a kiwisaver.
So it's better than doing nothing, absolutely, but there could
have been other ways to maximize how hard it works
for you.
Speaker 2 (15:51):
Just on qisaver, would you recommend if someone is saying
their thirties and I've currently got the three percent, would
you encourage them to look at upping that percentage that
they put into keisaver at that stage of their life.
Never never, at least.
Speaker 3 (16:06):
The employer is contributing more. Some employers you might say,
if you put in six, will put in six. But
if the employer isn't doing that, my preference would be
to redirect those funds somewhere else. And I think some
of the justification for putting more into your key wesab
when you're younger. Is well, I'll be able to get
access to that for my first home. And that is true.
(16:29):
You can get access to it based on today's rules.
But in some instances, your first property might not be
your first home. It could be an investment property and
we can't touch it for that. So again it's about
just being strategic and thinking further down the line than
what might be the case. Now, there often isn't an
obvious negative consequence for some of these things, but there
(16:54):
can be some unintended consequences that you can rue the
day of a little bit later.
Speaker 2 (16:59):
Yeah, it gives you that flexibility if you keep it
out of key we save. It gives you that flexibility
to utilize them if the right investment pops up.
Speaker 3 (17:06):
That's right. The risk for some people though, and you'll
know yourself if this is you, as they might inadvertently
spend that money. Hell, if that was the case, then
it was better off being in Kili Sabor.
Speaker 2 (17:16):
Yeah, very good. Oh one hundred and eighty teen eighty
is the number to call, Irene. How are you hi, Irene?
Speaker 1 (17:24):
Oh? Yes, hi, Hello, Sorry, that's right, Jenna asked Hannah.
I have a question So if I have a fear
and I like to put it to purchase some shares
to interest in chears, which one is more I mean
more than special putting it through a finance manager or
invested in independent brokerage platform like shares is myself. That's
(17:49):
my first and my second question parts from putting it
an investment like in scheers or bonds or being off mortgage.
So I have like a little amount of money, like
just tex hundreds per per month, is there any other
smart option to invest the money? Thank you?
Speaker 2 (18:06):
Now, a little bit hard to hear, Iren because your
phone was playing up a little bit, But did you
get the gist there? I think she's she was talking
about a brokerage versus the likes of Sherries if she
as Chezes.
Speaker 3 (18:16):
Yeah, yeah, Look, Irene, it comes down to how much
we've got to play with. I think that if you've
got more than maybe ten or twenty thousand dollars, you
really need to start to think about having an investment plan,
whereas with Cheza's you're sort of you're picking and choosing
what you want, which if the money you've got invested
is small, no one really cares, and that's fine. It
(18:38):
can be fun and it can be engaging, but if
you're actually trying to deliberately grow wealth, we need to
be more considered and we need to understand your appetite
for risk, but also what level of risk you need
to expose yourself to in order to achieve your goals.
And once we know that, then we could narrow down
the investments that could be suitable for you. And they
(19:00):
may be share market based investments or managed funds, or
it might be that you just need a consistent return
and so investing in more financial products could be more
suitable for you. It's a little hard to say, but
I think that if the money you've got invested in
shares is of a minor nature, then have fun with it.
(19:21):
But if it is to serve or to solve a
particular problem, you would benefit from having some objective advice
that covers the entire the breadth of options you have
when it comes to growing wealth.
Speaker 1 (19:34):
Right right, right, I see, And that's where I think
your advice am I right through your company.
Speaker 3 (19:43):
Yes, you you could speak to us about that, but
you could go to more like a share broker. It
doesn't have to be me, but someone who's got access
to a number of investments, and if you want to
consider investments outside of just the share market, then you
would need to talk to different advisors that specialize in
the different types of investments, or if you want some
(20:05):
one who's across all of those things. And yes, that's
when you talk to someone like me.
Speaker 1 (20:09):
Thank you, thank you, yes, thank you.
Speaker 2 (20:11):
Thank you very much, Irene. Thanks for calling up just
on the chass aspect, and no doubt that it's been
hugely beneficial for a lot of kiwis. But did you
or have you found that that those who are not
familiar with how the share market operates or what is
the best share to invest into, when they go into
the likes of Chezys, it's a bit of let's put
our money into this particular index, funnel this particular share
(20:34):
without really knowing what they're doing, and end up perhaps
not having the best strategy.
Speaker 3 (20:40):
Yeah, I think that's by and large what most people do.
They don't actually have a strategy. They choose a firm
based on the brand or something that does not influence
the performance of that particular business. Yeah, it's not our
it's not our area of expertise. And I'm across these
(21:01):
things but I would speak directly to my share advisor
on those because that market's changing all the time. And
to think that I would have a clue, crazy.
Speaker 2 (21:12):
Well, I used a third person phrasing there, but I
was really talking about myself, Honner. Is that that's exactly
what happened to me when I use Cheesy's And it
was a great platform, but it was a bit of
trial and era. And that's the wrong thing to do
with your own money, right, is trial and era. I
should have spoken to a professional.
Speaker 3 (21:27):
Well, it comes down to what stage you're at in
your wealth journey. If you've got a lot of wealth,
fill your boots. I have fun like work out how
much you can afford to lose and go in or
all in red or whatever you want it to be.
But for most of us, we don't have money to lose.
We actually need all our money to work as hard
as possible to have a shot at achieving our financial goals.
(21:49):
And I think we've just got to come back to
kind of some of the core principles of getting ahead financially,
which is we've got to first maximize your surplus, which
can be hard to do that. It's about psychology more
than it is about literacy. So we've got to understand that.
And then when it comes to wealth creation, that is
that is deliberate, and that is calculated, and it is clinical,
(22:10):
and we need to be able to apply that rigor
to your own situation.
Speaker 2 (22:15):
Yeah, great, Grant, How are you.
Speaker 1 (22:19):
Good?
Speaker 2 (22:20):
I you're on with Hannah?
Speaker 7 (22:22):
God I Hannah? Here you going?
Speaker 5 (22:23):
Hey, I'm grand here Hey, just a couple of questions.
I've got twenty six hours and owing them a mortgage. Well,
and I was on target to be finished that July
next year, but change a job, circumstances, so it's sort
of changed the weather, so it's going to be the
end of next year. Now do I continue to pay
(22:46):
what I'm doing, or like clear the mortgage on a
year's time, or do I knock my payments back to
a minimum so if I want to draw down that mortgage,
I can buy a new car or something like that.
Speaker 3 (23:03):
Yeah, I think a little. But similar to the earlier
caller with Nigel, I think where you should look to
pay the minimum on your mortgage, which sounds counterintuitive, but
the money that therefore is left over because it's not
going and fixed mortgage repayments set that up as a
revolving credit or if I look at your situation ground,
(23:23):
if you're on track to have that twenty six thousand
paid off by the end of next year, that suggests
you're going to be paying off maybe around twenty thousand
dollars in the next twelve months. So perhaps we would
take off twenty thousand dollars of your mortgage and put
that onto a revolving credit facility that you're not allowed
f poss access to, and then you can put all
your money into that facility and be able to reaccess
(23:46):
that as you need because with you being close to
being mortgage free, and this may be an unfair assumption,
but I'm assuming you are older to be in that position,
and so the bank's willingness to help you to give
you more lending is going to get less and less
as we get closer to retirement. So I think we've
(24:06):
got to be again more considered with how we structure
the mortgages to give you the best of both worlds,
that flexibility so you can buy the car if you
want in the future, not the knowledge that you are
making progress, but that you are protecting your flank at
the same time, so that you can reaccess funds if required.
Speaker 7 (24:26):
Yeah, because you mentioned about kiw Savor, Well that was
my grand plan, get them alwage paid off and put
more money into the kei we save. But I heard
you say before that's not a smart idea.
Speaker 3 (24:36):
Well for many, it's not a smart idea. So for
the average kei we, Kii Saver will make up maybe
forty percent of what you're going to need to live
off in retirement, even with a mortgage free home. So
we've got to work out where's the rest coming from.
And most people don't have a plan to find the
(24:59):
rest of the money they need, and so then they
almost guarantee they are not going to have it by
putting it all into Kiwi Saber. Whereas if we can
keep some of that money out, we can start to
put it to work to try and close out the
gap that Kiwi Saber won't itself be able to close.
Speaker 7 (25:15):
Okay, So the revolving credit is what you're talking about.
Speaker 3 (25:18):
Yet, Yes, but the key here is that you can't
have f poss access to it because if you have
bad money behaviors, that's just like it's dynamite.
Speaker 7 (25:30):
I'm very disciplined.
Speaker 3 (25:32):
Yeah, fantastic and don't use a credit The banks will
encourage you to use a credit card and all that nonsense.
You just stay away from all of that and you
keep your eye on that prize of we're going to
be Morgod free December twenty twenty five. But you're giving
yourself the flexibility to be able to maneuver if your
situation changes.
Speaker 6 (25:48):
Yeah.
Speaker 7 (25:49):
No, your most helpful. Thank you very much, Thank.
Speaker 2 (25:51):
You, Grant. Thanks for bringing up a question here from
Mike any sears high Hannah, I believe the safest option
at the moment is a bank term deposit with such
high interest rates currently. Am I on the right track here?
Speaker 3 (26:03):
Yeah? Kind of. I think one of the things that
this isn't financial advice, but for many of my clients
that need to access their savings at some point, I
probably prefer to go along the lines of a Squirrel
on call account. So this is squirrel mortgages. Their interest
rate is around five point two five percent, so it's
on a par with a term deposit, but you can
(26:24):
access the money the next day or the next week
without being penalized, So that can give you kind of
that consistent return which is really helpful, but also the
flexibility that you need that term deposits don't always afford
you if the timing doesn't quite work. But yes, Mike,
I think that with the bank rates or with some
of these other options performing at such a high rate,
(26:47):
why would you expose yourself to something else that has
volatility compared to certainty.
Speaker 2 (26:52):
Yeah, just on the back of Grant's call, if someone
was to get a lump sum, whether it's inheritance or
some sort of windfall, and they're in a situation similar
to Grant, that you're at the end of the mortgage,
is it always a good idea to just pay off
the mortgage in its entirety? Or is sometimes you need
to have a reassessment and think, maybe that's not the
(27:14):
best strategy.
Speaker 3 (27:15):
For most of the people I work with, that isn't
the best strategy. We want to have a parallel strategy,
So yes, we want that mortgage gone, but at the
same time, we want to get the equity working harder,
and we don't have the luxury of waiting until we
are mortgage free before we get the money working harder.
So for many of us, we have to apply both logics.
(27:38):
So perhaps use your equity. If we were going to
be buying an investment property. We can do that while
we focus on paying off the home mortgage. That might
be an example. So grant situation is sort of slightly different.
That he is very close to paying off the home mortgage,
so you could say, well, could we just wait. But
what I think the risk for Grant might be is
that the bank's willingness to lend him money to grow
(27:59):
his wealth is going to start reducing. So on one hand,
one of the factors was really favorable, but the other,
the one, that thing called time and age, not so much.
So we've just got to balance those things.
Speaker 1 (28:10):
Yeah.
Speaker 2 (28:10):
Great. Just a question on the revolving credit accounts this
text are as high Hanner. We had a revolving credit
account in the past, and it didn't work because we
tapped into it too much during tough times. Is there
a way to lock down that account completely, not just
credit card access, but to lock it down to make
it very hard to transfer money out.
Speaker 3 (28:31):
Yes, you could force it so you could take it
off your internet banking. You could take any access from
your cards. I've had some clients that they only let
me see the balance of that account because they don't
trust themselves. But we've got to just understand what your
money personality is and if that actually becomes more of
(28:54):
a risk to you, then we've got to try and
skin the cats in a different way. But flexibility is
probably the most single most important asset you can build
for your household, financial flexibilit and that is a deliberate
way of doing it.
Speaker 5 (29:09):
Great.
Speaker 2 (29:09):
If you've got a question for Hannah, eight hundred eighty
ten eighty is the number to call. We'll get to
more of your phone calls very shortly. It is twenty
one to six. Good evening to you. It is the
Smart Money Hour, and we're joined by Hannah McQueen, financial
advisor and founder of Enabled Me. If you've got a
question for Hannah, now's your opportunity. O. Eight hundred eighty
ten eighty is the number to call. She is a
(29:29):
wealth of knowledge on everything financial. If you've got some
questions about your own finances or how to handle your money,
she is the person you need to speak to. Let's
go back to the phones dominic. How are you good?
Speaker 6 (29:41):
Thanks to yourself very well.
Speaker 2 (29:42):
Hannah is standing by.
Speaker 7 (29:44):
Hi Hannah, Hi are you hi? I just got a
quick question.
Speaker 4 (29:49):
I'm twenty four going on twenty five, and I've got
a that a three hundred and eighty thousand dollars mortgage
I've got I've pretty much drained all of my chess
and keep yous over a couple of years.
Speaker 6 (30:02):
Ago when i went in for the house.
Speaker 4 (30:06):
So I'm currently putting back about ten percent into my
key resaver and that's around twenty grand at the moment.
Speaker 6 (30:13):
And then I.
Speaker 4 (30:14):
Also in my savings once I've taken all my bills
and got about a month and a half work of
savings just to cover all the extra bills and my
repayments after that, and my actual other savings account, I've
got about twenty grand saved up on that. Is it
better for me to put that in something like a
term deposit or when one of my because I've slipped
(30:35):
my mortgage to three years, which I've refixed one last
year so till them come off next year to be refixed,
and then one of them comes off in October this year.
Is it better for me to do something like lump
some that twenty grand onto one of those mortgage repayments
or am I better to put it in like a
urn deposit or just increase my week my fortnightly repayments.
Speaker 6 (30:57):
What would be the best option for that?
Speaker 3 (31:00):
So normally there's a couple of sub questions I guess
that have been asked there. The first one is, if
you had money, do you put it in a term deposit,
do you put it in your key, we save it?
Do you put it against your mortgage? Normally, the mortgage
interest rate is higher than the interest rate on a
term deposit, so your money's going to work harder for
you paying off debt and saving new interest than what
(31:21):
you would get if you put it in a term deposit. Similarly,
it's a consistent interest saving so managed funds if they
So let's give you an example. Let's say your interest
rate is what is the interest rate of the mortgages
that are coming off next year. We'll use actuals, So the.
Speaker 4 (31:36):
Ones that are coming off, so the one that's coming
off the end of this year is five point three
to nine, and then the ones that are coming off
next year of five point nine and six point eighty five.
Speaker 3 (31:45):
Okay, great, So the one that's coming off at five
point three nine, if we had at this twenty thousand dollars,
do we pop it against that mortgage or do we
put it into a term deposit. If we put the
money into a term deposit, let's say we even had
the same interest rate, you're going to pay tax on
the interest you earn on that term deposit, whereas the
money you save, the interest you save on your mortgage payments,
(32:05):
you're not going to pay tax on. So already it's
going to be twenty to thirty percent better off paying
off your mortgage versus than putting it in a term deposit.
So I'd be advocating for you to put it against
the mortgage. But the benefit of the term deposit that
the mortgage doesn't give you if you do make a
lump sum payment or increase your repayments. The term deposit
gives you that rainy day fund, right like, if something
goes wrong, you've got it there and it feels good.
(32:27):
So the way that you would create that outcome for
yourself would be breaking off or when that five point
three nine mortgage comes off, split what you've got available
to you, so at least twenty thousand dollars into a
revolving credit that you don't have access to, and if
you've got extra surplus each year, you can put pop
that into there as well. I'd be reducing your key
we Saver contributions to the minimum level that your employer
(32:50):
matches and be channeling everything against that particular mortgage. But
well done on having a mortgage at twenty four. It's awesome.
Speaker 4 (32:56):
Yeah, absolutely wonderful things for that guys.
Speaker 2 (32:59):
All right, thanks Dominic. Mark Hannah is standing by to
hear your question.
Speaker 1 (33:05):
Thank you.
Speaker 2 (33:06):
You go for it.
Speaker 8 (33:08):
Yeah, Hi, And look, just a question, just a bit
curious what I can do. I've got mortgage free luckily,
and probably I don't know, including key we Saver, say
four to five hundred thousand. I don't know whether to
buy another property or just keep the money that I
(33:29):
have invested in banks. I just don't know what to do.
Speaker 3 (33:33):
Yeah, So there's two quick Well done, Mark, that's really great.
So the next question is is the four hundred thousand
dollars you look five hundred you've got in key We
say we're going to be enough to fund your retirement.
And the answer to that maybe yes, that could be good,
or it may be no. It might be that we
need a little bit more. For most of my clients,
they need a mortgage free home and kind of eight
(33:55):
hundred thousand to one million dollars sitting in funds. Obviously,
it comes down to the lifestyle that they want to
be able to live in retirement. But let's first answer
that question, because that will determine what the problem is
we're trying to solve. If it is that we don't
actually have enough or not expected to have enough based
on your current QI SAB contributions to fund your lifestyle,
then the problem we've got to solve is how do
(34:16):
we grow wealth in addition to doing what you're doing.
If it is that you are on track to have enough,
the objective isn't to grow wealth, it's the objective is
to diversify your investment so that on a bad day,
you're still going to be okay. And that's where I
would need to do some analysis. But if you'd had
a back of a fag packet mark or back up
an envelope, we would be saying, what is your lifestyle
(34:39):
cost each year? Is it eighty grand, is it seventy grand?
But whatever that number is, times that by twenty five,
and that's how much you will want to have available
to you in your retirement. Then we take off the
key we savor that you have to deduct that from
the number, and we take off five hundred thousand dollars
(34:59):
because that's how much the pension is going to pay
you for those twenty five years. And if we have
a gap leftover, that is what we need to grow.
That's the wealth we need to grow. And then if
you don't have a gap, but you want to, you're
possibly a little more cynical me where I'd be like,
even if I have enough money, they're probably going to
introduce the capital gains tax, or they're going to means
test a pension or put it up or whatever these things.
(35:21):
And that's why you would also grow wealth so that
you could neutralize potential negative curve balls.
Speaker 8 (35:26):
Okay, makes sense, Yeah, okay, no, thank you again.
Speaker 2 (35:30):
Nice one. Mark, Yeah, congratulations, Thank you very much. Right,
we'll take a quick break and then we've got time
for another couple of calls. It is eleven minutes to six,
beg very shortly here on the weekend Collective, Good evening.
Tyler Adam's filling in for Tim Beveridge, and you are
listening to Smart Money, and in the Auckland studio is
Hanna McQueen, financial advisor and founder of Enable Me. Now
(35:53):
this is a bit of a curly question, but I
like it. Hannah come via text, says Hi, Hannah, I
have forty thousand dollars in bitcoin, sixty thousand dollars in
key we saver, plus eighty five thousand dollars in cash
in savings, and I am fifty three years old with
no mortgage. I earn a modest wage and have two
teen kids as a solo parent. My house needs about
(36:15):
one hundred thousand dollars worth of work. Should I use
all my cash, get a mortgage and split the costs?
Speaker 3 (36:26):
There's so much more I want to ask that person.
So when they say they need modest work done on
their house, do they have to have it done now?
Is it going to degrade the house? Are they wanted
to sell it? Is it healthy home?
Speaker 7 (36:37):
Like?
Speaker 3 (36:38):
What are we talking for that one hundred thousand, Because
in a perfect world you would say we'll defer the
spend until you've saved enough money up. I probably feel
a little bit nervous that so much of your wealth
is well, we've got eighty five thousand in cash in savings,
So I like that. That's great. I'm assuming we're mortgage free.
(37:00):
We can't get access to the key we saver normally,
even if you are in genuine hardship, it is so
hard to get access to it's a bit of a joke.
The bitcoin is as volatile as anything. No one knows
on any given day what it's going to do.
Speaker 2 (37:14):
It's a heak of a lot of money. And at
current see forty thousand dollars.
Speaker 3 (37:18):
Yeah, yeah, but I don't know if she put in
forty thousand dollars right, or she might have put in
ten thousand dollars and today it's worth four times the amount,
but tomorrow it'll be worth nothing. You know, it just
goes up and down, and so the unpredictability of that
type of investment is really tricky when, as you say,
you're living on a modest wage, and so how you
stretch your money. You just don't have much to come
and go on on a bad day. So back to
(37:42):
the hundred thousand dollars, I would try. If you have
a modest wage, introducing mortgage payments is going to be hard,
but I would be thinking if you've got savings, that
suggests that you do have money left over that you
could be putting towards savings. So I don't know enough
to answer it accurately. But if the house needs the work,
(38:03):
or if it's not healthy or safe, then get it done.
And if it means you've got to get a mortgage
to get it done, that's fine. But let's get a
plan to get rid of it.
Speaker 2 (38:13):
Yeah, fantastic. That is all the time. We've got Hannah McQueen,
financial advisor and founder of enable me. A couple of
techs coming through. How people can get a hold of
you and enable me Hannah, just.
Speaker 3 (38:22):
Pop to enable dot me. You can request a consultation
with one of my team of amazing financial advisors. Normally
four hundred dollars for that first session. It's discounted I
think to one fifty for news talk listeners.
Speaker 2 (38:34):
Brilliant. And your new book, Kill your Mortgage and Sort
your retirement. Where can people find a copy of that book?
Speaker 3 (38:40):
Any great New Zealand bookstore or I think maybe even online?
So how here you go? Maybe even kindle who knew?
Speaker 2 (38:47):
How good? Too easy? Thank you very much, lovely to
see you again and we'll chat again soon.
Speaker 3 (38:50):
Thank you.
Speaker 2 (38:51):
That is Hannah McQueen, financial advisor and founder of enable me.
And that is me for today and for the weekend.
Collector for the time being. Tim Beveridge will be back
with you next weekend. Thank you very much for having
me and being so kind of enjoyed it. We will
catch again soon. Thank you to my producer Tyra. Have
a great rest of your Sunday evening. We'll chat again soon.
(39:11):
See you Ladder. For more from the Weekend Collective, listen
(40:01):
live to News Talk said Be weekends from three pm.
Speaker 7 (40:05):
Follow the podcast on iHeartRadio.
You're listening to the Weekend Collective podcast from News Talks AB.
You can see the.
Speaker 2 (00:17):
Welcome back into the Weekend Collective and it is time
for the Smart Money Hour. And in studio is Hannah McQueen.
She is a financial advisor, the founder of Enable Me,
and author of Killing Your Mortgage and Sort Your Retirements.
Hannah is with me now to help you sort out
your finances. Get a Hannah, nice to see you.
Speaker 3 (00:34):
Hello.
Speaker 2 (00:35):
What book number is this?
Speaker 4 (00:36):
Man?
Speaker 2 (00:37):
You're busy, aren't you? Is this number?
Speaker 5 (00:38):
Four?
Speaker 1 (00:39):
Oh?
Speaker 2 (00:39):
Yeah, I think it is actually fantastic. Congratulations by the way,
thank you.
Speaker 3 (00:43):
Yes, it seems to be doing well and resonating with people,
which is the main thing, right, Yeah, hope when they
feel there is none.
Speaker 2 (00:50):
Yes, I mean particularly now, right in the economic climate
that we find ourselves in. She's certainly tough out there.
Speaker 6 (00:55):
Now.
Speaker 2 (00:56):
If you've got a question for Hannah, now is your
opportunity our eight hundred and eighty ten eighty is the
number to call, or nine two ninety two is the
text number. And just on the the idea of killing
someone's mortgage or your own mortgage when the economic climate
is the way that it is and there's a lot
of people that have assessed their budgets and tried to
cut out as much fat as possible, Are there other
(01:17):
strategies they can look at to try and find a
little bit of extra dollars at the end of each week.
Speaker 3 (01:24):
In short, yes, I think that for a lot of people,
their inefficiencies are to do with things that aren't necessarily
connected with their discretionary spending. So it might be how
they've structured their mortgage, or their key we savor, or
their insurances, or how their tax is structured, or those
things might be where there is some inefficiency. So if
we can find that first before we overlay improvements in
(01:48):
your own behaviors around money, Normally there is room to
be better, but I think when can I guess when
it gets harder, that does mean that you do need
to be better, and I think go one of the
days where you could drift towards a comfortable retirement. It
just actually isn't plausible now and probably won't be plausible
(02:09):
in my generation or even for my kids.
Speaker 1 (02:11):
Right.
Speaker 3 (02:11):
So, a lot of the financial advice that we've heard
over the years normally is positioned to the times when
they are good, and often on a good day anyone
can be good. We want to know that on a
bad day, you're still going to be okay. And that
takes some crafting, and it takes some deliberate actions and
it's no longer the result of sleepwalking towards it.
Speaker 2 (02:35):
When we look at some of those big things like
how you structure your mortgage or the insurances that you
have as a family, that is really the area for
a lot of us, right that you kind of need
professional help with because a lot of it is complicated.
You might not know if you're getting the best deal,
particularly when it comes to insurances. Is that where a
broker or a professional and or a financial advisor really
(02:58):
comes to the forward to say, here's what we think
you can cut out or here's where you can save
an extra couple of dollars take that stress away from people.
Speaker 3 (03:06):
Yeah, I think that for a lot of these things,
they are more complicated than we realize. Unfortunately, a lot
of financial advisors in Australasia give advice on the products
they are allowed to sell, and for some people they
actually need to understand what's available in the market first
before they work out what is the right product for
(03:29):
their particular situation and so there's almost this well they're
serdainly a conflict, but a bias towards whatever that advice
is representing. Say, if I'm trying to determine which bank
is the right bank for my clients, I mean, people
know I don't really like any bank, but there can
be commercial reasons why one bank is better. And it's
(03:50):
often got nothing to do with interest rates. It's got
a lot to do with how they allow you to
structure your mortgage and probably whether they're going to allow
you to access the equity in your home. So on
one particular day, I might make an application or through
not me personally, but the mortgage team we work with,
where we say, okay, we'll go to market and let's
(04:11):
see how much lending we can access for this particular
client and their situation. And there could be the difference
between one bank might not even look at them through
to other banks that are prepared to take them on
as a customer. But there could be a variable amount
of maybe one hundred thousand dollars in potential lending that
they could get going one way versus another. And most
(04:32):
people don't know the trade offs before they make their decision.
And I think there is something to be said about
going through that process of canvassing the market, understanding what
your strategy is to determine what's going to be the
best product for you rather than just choosing a product.
Speaker 2 (04:48):
And it can be pretty overwhelming for a lot of people,
can't it. I mean, when you look at at the
idea of structuring your mortgage to make sure that you're
saving the right amount of money. And indeed I mentioned
insurances there. These are things and I'm speaking for myself personally,
at the end of a working day and everything else
that's going on in life, the last thing I really
want to do is try and sit down and work
out if I'm getting the best deal of my insurances.
(05:09):
You know, I kind of want someone there I can
trust to say, no, you're not getting the best deal.
Let's rearrange things and try and do things a bit
better so you're saving money and still being looked after
on the insurance side of things and the mortgage side
of things.
Speaker 3 (05:22):
Yeah, I think that at the end of the day,
most of us are tired, which is why we don't
get round to those things that are important to us.
So many of us are financially literate, but that doesn't
seem to translate to us making much financial progress, despite
being literate, despite maybe even managing money in your day job.
So I think that one of the reasons why we
(05:44):
never get around to it is financial success does take
time and deliberation and analysis and understanding competing objectives, and
most of us just don't have that time or expertise
even if you had the time. And that's where I
think bringing in experts who are impartial can be very helpful.
Speaker 2 (06:06):
Yeah. Great, the text questions are coming through. If you've
got a question for Hannah, now is your opportunity to
get in, And I'd get in early because it's always
very popular. Oh, eight hundred and eighty ten eighty is
the number to call if you've got a question about
finances or money or your mortgage. Hannah is the person
you want to have a chat to. And the text
number is nine two nine two. Texts are ass and
they haven't given their name Hannah. It says hi, Hannah.
(06:28):
I look after the finance between me and my partner.
We've been trying really hard to put a bit of
extra asite because our savings has fast been dwindling. The
problem I'm facing now is my partner is very good
for a couple of weeks, and then is adamant on
wanting to go out or spend discretionary money we don't have.
(06:50):
And I find myself very tired of having to have
this argument again and again. Any advice for having honest
conversations about finance with my partner.
Speaker 3 (07:00):
Yeah, I've got a little bit of advice there, because
often I feel like I'm more of a marriage council
and a financial advisor. I think that if your values
aren't aligned, or your beliefs are different, then it's going
to be really hard to align you. So values are
around your goals, what are we actually trying to achieve?
(07:21):
What is the priority? And then the beliefs are do
they actually believe it as possible for them to lean
into it or do they actually think it's not possible.
And some people who spend when they should be saving,
it's not because they can't save, it's because they don't
actually think that saving is going to be enough to
solve the problem. And on one hand, I'm like, well,
(07:42):
calling it early. If that is the truth, go and
enjoy the money. But maybe there's a problem kind of
underneath that that we need to work through. So I'd
be wanting to know what was some of the upbringing
that your partner had, so I can understand what messages
or talk self talk are giving themselves around money. But
perhaps we start with, well, if you keep doing what
(08:02):
you're doing, are you in fact going to achieve the goal?
Speaker 2 (08:05):
It's the goal?
Speaker 3 (08:05):
Your goal? Is it a shared goal? Are they wanting
it to be their goal or do they own that goal?
And could we do it faster or smarter? Because if
we can get to your goals faster, people do lean
in for longer if they understand that the sacrifice is
going to be worth it. But if you don't think
the sacrifice was ever going to be enough, why would
you keep going? Yeah, it did sound like my dieting strategy.
Speaker 2 (08:27):
Is I'm with you there, but just on that, I mean,
is it and it's a great answer, but keeping it
at the forefront because it sounds like this text gets
their partner on side for a soonain amount of time
and they can clearly understand why the need is to
stop going out to have dinner, but then reverts back
to oh, why not we can treat ourselves, you know,
(08:48):
let's spend a couple hundred bucks doing something nice? Is
it having some sort of you know, visual stimulus there
to have it always at the forefront and say, I
know things feel like they're good now, but we've got
to stay on track. We've got a goal here that
we need to get to. Can that help just to
the other partner on side to say, oh, that's right, yeah,
we're working towards this.
Speaker 3 (09:08):
Well, yes, you can have visualization. Normally accountability is helpful,
but I think if we when you're designing a plan,
you want them to be able. For my clients, I
want them to enjoy the life that's important to them.
So if actually he needs to go out, that's part
of his makeup, it's what he enjoys, it's his reward, well,
(09:31):
then that should actually be factored into the plant. If
your plan requires asterity measures, it's not going to last
for long, especially if the goal isn't going to be
achieved in the first few weeks. And my experience is
that people can go hard for a couple of months
tops it's like a detox. If you want it to
be renewed or to be extended beyond that period of time,
(09:53):
it has to be worth their while. Make it worth
my while. And I'm a shopper by default, which means
I can save, but I just don't get excited by
so so if you want me to put effort into
managing my money, make it worth my while, and that's
what my clients expect as well.
Speaker 2 (10:12):
That's great Again, if you had a question for Hannah,
I had one hundred and eighty ten eighty is the
number to call. Let's go to the phones. Nigel. How
are you?
Speaker 6 (10:20):
Yeah?
Speaker 1 (10:20):
Good?
Speaker 6 (10:20):
Thank you to yourself.
Speaker 2 (10:21):
Yeah good. Hannah is standing by.
Speaker 6 (10:24):
I'm wonderful. Hey, listen, I've just increased, or not increased.
I've just renewed my mortgage and probably unfortunately now I've
taken that out for two years. But anyway, I've got
a little bit more money than what I thought I
was going to have. And how do I restructure that mortgage? Now?
Do I put that extra few dollars a week aside
(10:47):
and invest it for the year and then payoff lump sums?
Or am I best to put it into the mortgage
payments or repayments on a weekly basis.
Speaker 3 (10:57):
Okay, So there's a couple of questions there. The first
is for people who have just fixed their mortgage for
a medium term. When the indications now that rates are
coming down, what do you do? Or you could break
your mortgage. And I don't actually think there would be
any break costs for you if you now wanted to
break and pause for a few months or fix perhaps
for six months. So certainly don't rule out that as
(11:18):
an option or think, oh my gosh, I'm kind of
locked in as interest rates are about to go down.
So break costs only apply if the interest rates have
dropped between when you fixed and when you are breaking.
And we haven't seen much movement in the last couple
of weeks, despite the indications being that they are going
to drop in the coming months, So that's I guess,
(11:39):
a little win for you. The next one is if
you've got extra money, what do you do with it?
Do you increase your repayments? Do you make a lump
sum payment? My recommendation is we never increase our repayments.
We try and keep that at the minimum. If you
tallied up the amount of extra funds you're going to
have over the course of the year, let's say it's
ten thousand dollars or maybe twenty thousand dollars, I would
(12:02):
be looking to break off a portion of the mortgage
to that size of extra or surplus funds, say twenty
thousand dollars, and put that onto a revolving credit facility
that you're not going to have. If poss access too,
you will deposit those additional funds into that new facility
and they will pay off that mortgage and save you
the interest cost on that. And if that is happening
(12:23):
consistently over the course of the year, the effective interest
rate is actually half the floating rate, So you're not
going to be penalized I guess with higher costs if
you are paying that balance down. But the most important
thing there is that you can reaccess those funds, and
that is very important. Flexibility gives you the resilience if
you get a curveball, but it also gives you the
(12:43):
opportunity to take advantage of things should you need to.
Speaker 6 (12:48):
And what's it called a revolving.
Speaker 3 (12:50):
Credit revolving credit facility?
Speaker 6 (12:52):
Yes, okay? Is that worth the mortgage company or is
that with the bank?
Speaker 3 (12:58):
That's think that's with the bank. So which bank are
you with?
Speaker 6 (13:01):
Oh?
Speaker 2 (13:02):
Kee we bank, Kee we bank?
Speaker 3 (13:03):
Yeah, So I do think they call there's a revolver
credit facility. They all have slightly different names or branding
of that facility, but with Kibibank, I believe it's a
revolving credit.
Speaker 6 (13:13):
Okay, cool, Well, I might look into that tomorrow.
Speaker 2 (13:16):
Nice one, Nidra, thank you very much for calling up.
One hundred and eighteen eighty is the number. If you
want to have a check to Hannah as well, quick
text and then we'll get back to the phone calls high, Hannah,
I am struggling hugely to pay my mortgage. Is it
a bad idea to sell buy a tiny home on
lease land? I am in my mid fifties.
Speaker 3 (13:34):
So it's not a bad idea to sell if you
are buying something in the same market, Lowering your overall
fixed repayments can be helpful. Putting a tiny home isn't
an issue, but putting it on a lease land is.
So we'd be if you are wanting to downsize, and
if downsizing means a tiny home on some kind of property,
(13:56):
that's okay, But you really need to own the land
and that property. Otherwise you're exposing yourself to exposing yourself
to higher rep payments or ground rent as you go,
which can erode your capital. As time passes and that's
going to be closer to your retirement.
Speaker 2 (14:14):
Yeah. Great again. If you've got a question for Hannah, Oh,
one hundred and eighty ten eighty is the number you
need to call. Got to take a quick break. It's
twenty one past five Back in a month and you
are listening to Smart Man Our Money and we're joined
by Hannah McQueen, financial advisor and the founder of enable Me.
Thank you very much for to Thank you very much
for your time again, Hannah.
Speaker 3 (14:33):
Thank you for having me right.
Speaker 2 (14:35):
A couple of text questions and we'll get back to
the phone calls. Hi, Hannah, I transferred two thousand dollars
into my key we Saver last week. I'm sixty two.
Have I done the right thing here? From Wayne?
Speaker 3 (14:48):
Well, Wayne, it's not something that I would advocate to do.
So the idea with key we Save it it's a
great way of saving and obviously it gets matched by
your employer and a contribution from the government, and that
makes it incredible. And you really want to take advantage
of those extra kind of bonus payments of sorts. But
(15:12):
when you contribute above the threshold needed to unlock those benefits,
that's where you're doing good work in the sense that
you're putting more to your KEI saver, but it is
getting locked in and you can't access that to your
sixty five. Now that might be if you're a compulsive spender,
that might be a good thing because you're just not
going to be able to get access to it. But
(15:34):
for many of the people that I work with, we
could redirect that money to work harder for you before
you're sixty five, rather than having it locked into a kiwisaver.
So it's better than doing nothing, absolutely, but there could
have been other ways to maximize how hard it works
for you.
Speaker 2 (15:51):
Just on qisaver, would you recommend if someone is saying
their thirties and I've currently got the three percent, would
you encourage them to look at upping that percentage that
they put into keisaver at that stage of their life.
Never never, at least.
Speaker 3 (16:06):
The employer is contributing more. Some employers you might say,
if you put in six, will put in six. But
if the employer isn't doing that, my preference would be
to redirect those funds somewhere else. And I think some
of the justification for putting more into your key wesab
when you're younger. Is well, I'll be able to get
access to that for my first home. And that is true.
(16:29):
You can get access to it based on today's rules.
But in some instances, your first property might not be
your first home. It could be an investment property and
we can't touch it for that. So again it's about
just being strategic and thinking further down the line than
what might be the case. Now, there often isn't an
obvious negative consequence for some of these things, but there
(16:54):
can be some unintended consequences that you can rue the
day of a little bit later.
Speaker 2 (16:59):
Yeah, it gives you that flexibility if you keep it
out of key we save. It gives you that flexibility
to utilize them if the right investment pops up.
Speaker 3 (17:06):
That's right. The risk for some people though, and you'll
know yourself if this is you, as they might inadvertently
spend that money. Hell, if that was the case, then
it was better off being in Kili Sabor.
Speaker 2 (17:16):
Yeah, very good. Oh one hundred and eighty teen eighty
is the number to call, Irene. How are you hi, Irene?
Speaker 1 (17:24):
Oh? Yes, hi, Hello, Sorry, that's right, Jenna asked Hannah.
I have a question So if I have a fear
and I like to put it to purchase some shares
to interest in chears, which one is more I mean
more than special putting it through a finance manager or
invested in independent brokerage platform like shares is myself. That's
(17:49):
my first and my second question parts from putting it
an investment like in scheers or bonds or being off mortgage.
So I have like a little amount of money, like
just tex hundreds per per month, is there any other
smart option to invest the money? Thank you?
Speaker 2 (18:06):
Now, a little bit hard to hear, Iren because your
phone was playing up a little bit, But did you
get the gist there? I think she's she was talking
about a brokerage versus the likes of Sherries if she
as Chezes.
Speaker 3 (18:16):
Yeah, yeah, Look, Irene, it comes down to how much
we've got to play with. I think that if you've
got more than maybe ten or twenty thousand dollars, you
really need to start to think about having an investment plan,
whereas with Cheza's you're sort of you're picking and choosing
what you want, which if the money you've got invested
is small, no one really cares, and that's fine. It
(18:38):
can be fun and it can be engaging, but if
you're actually trying to deliberately grow wealth, we need to
be more considered and we need to understand your appetite
for risk, but also what level of risk you need
to expose yourself to in order to achieve your goals.
And once we know that, then we could narrow down
the investments that could be suitable for you. And they
(19:00):
may be share market based investments or managed funds, or
it might be that you just need a consistent return
and so investing in more financial products could be more
suitable for you. It's a little hard to say, but
I think that if the money you've got invested in
shares is of a minor nature, then have fun with it.
(19:21):
But if it is to serve or to solve a
particular problem, you would benefit from having some objective advice
that covers the entire the breadth of options you have
when it comes to growing wealth.
Speaker 1 (19:34):
Right right, right, I see, And that's where I think
your advice am I right through your company.
Speaker 3 (19:43):
Yes, you you could speak to us about that, but
you could go to more like a share broker. It
doesn't have to be me, but someone who's got access
to a number of investments, and if you want to
consider investments outside of just the share market, then you
would need to talk to different advisors that specialize in
the different types of investments, or if you want some
(20:05):
one who's across all of those things. And yes, that's
when you talk to someone like me.
Speaker 1 (20:09):
Thank you, thank you, yes, thank you.
Speaker 2 (20:11):
Thank you very much, Irene. Thanks for calling up just
on the chass aspect, and no doubt that it's been
hugely beneficial for a lot of kiwis. But did you
or have you found that that those who are not
familiar with how the share market operates or what is
the best share to invest into, when they go into
the likes of Chezys, it's a bit of let's put
our money into this particular index, funnel this particular share
(20:34):
without really knowing what they're doing, and end up perhaps
not having the best strategy.
Speaker 3 (20:40):
Yeah, I think that's by and large what most people do.
They don't actually have a strategy. They choose a firm
based on the brand or something that does not influence
the performance of that particular business. Yeah, it's not our
it's not our area of expertise. And I'm across these
(21:01):
things but I would speak directly to my share advisor
on those because that market's changing all the time. And
to think that I would have a clue, crazy.
Speaker 2 (21:12):
Well, I used a third person phrasing there, but I
was really talking about myself, Honner. Is that that's exactly
what happened to me when I use Cheesy's And it
was a great platform, but it was a bit of
trial and era. And that's the wrong thing to do
with your own money, right, is trial and era. I
should have spoken to a professional.
Speaker 3 (21:27):
Well, it comes down to what stage you're at in
your wealth journey. If you've got a lot of wealth,
fill your boots. I have fun like work out how
much you can afford to lose and go in or
all in red or whatever you want it to be.
But for most of us, we don't have money to lose.
We actually need all our money to work as hard
as possible to have a shot at achieving our financial goals.
(21:49):
And I think we've just got to come back to
kind of some of the core principles of getting ahead financially,
which is we've got to first maximize your surplus, which
can be hard to do that. It's about psychology more
than it is about literacy. So we've got to understand that.
And then when it comes to wealth creation, that is
that is deliberate, and that is calculated, and it is clinical,
(22:10):
and we need to be able to apply that rigor
to your own situation.
Speaker 2 (22:15):
Yeah, great, Grant, How are you.
Speaker 1 (22:19):
Good?
Speaker 2 (22:20):
I you're on with Hannah?
Speaker 7 (22:22):
God I Hannah? Here you going?
Speaker 5 (22:23):
Hey, I'm grand here Hey, just a couple of questions.
I've got twenty six hours and owing them a mortgage. Well,
and I was on target to be finished that July
next year, but change a job, circumstances, so it's sort
of changed the weather, so it's going to be the
end of next year. Now do I continue to pay
(22:46):
what I'm doing, or like clear the mortgage on a
year's time, or do I knock my payments back to
a minimum so if I want to draw down that mortgage,
I can buy a new car or something like that.
Speaker 3 (23:03):
Yeah, I think a little. But similar to the earlier
caller with Nigel, I think where you should look to
pay the minimum on your mortgage, which sounds counterintuitive, but
the money that therefore is left over because it's not
going and fixed mortgage repayments set that up as a
revolving credit or if I look at your situation ground,
(23:23):
if you're on track to have that twenty six thousand
paid off by the end of next year, that suggests
you're going to be paying off maybe around twenty thousand
dollars in the next twelve months. So perhaps we would
take off twenty thousand dollars of your mortgage and put
that onto a revolving credit facility that you're not allowed
f poss access to, and then you can put all
your money into that facility and be able to reaccess
(23:46):
that as you need because with you being close to
being mortgage free, and this may be an unfair assumption,
but I'm assuming you are older to be in that position,
and so the bank's willingness to help you to give
you more lending is going to get less and less
as we get closer to retirement. So I think we've
(24:06):
got to be again more considered with how we structure
the mortgages to give you the best of both worlds,
that flexibility so you can buy the car if you
want in the future, not the knowledge that you are
making progress, but that you are protecting your flank at
the same time, so that you can reaccess funds if required.
Speaker 7 (24:26):
Yeah, because you mentioned about kiw Savor, Well that was
my grand plan, get them alwage paid off and put
more money into the kei we save. But I heard
you say before that's not a smart idea.
Speaker 3 (24:36):
Well for many, it's not a smart idea. So for
the average kei we, Kii Saver will make up maybe
forty percent of what you're going to need to live
off in retirement, even with a mortgage free home. So
we've got to work out where's the rest coming from.
And most people don't have a plan to find the
(24:59):
rest of the money they need, and so then they
almost guarantee they are not going to have it by
putting it all into Kiwi Saber. Whereas if we can
keep some of that money out, we can start to
put it to work to try and close out the
gap that Kiwi Saber won't itself be able to close.
Speaker 7 (25:15):
Okay, So the revolving credit is what you're talking about.
Speaker 3 (25:18):
Yet, Yes, but the key here is that you can't
have f poss access to it because if you have
bad money behaviors, that's just like it's dynamite.
Speaker 7 (25:30):
I'm very disciplined.
Speaker 3 (25:32):
Yeah, fantastic and don't use a credit The banks will
encourage you to use a credit card and all that nonsense.
You just stay away from all of that and you
keep your eye on that prize of we're going to
be Morgod free December twenty twenty five. But you're giving
yourself the flexibility to be able to maneuver if your
situation changes.
Speaker 6 (25:48):
Yeah.
Speaker 7 (25:49):
No, your most helpful. Thank you very much, Thank.
Speaker 2 (25:51):
You, Grant. Thanks for bringing up a question here from
Mike any sears high Hannah, I believe the safest option
at the moment is a bank term deposit with such
high interest rates currently. Am I on the right track here?
Speaker 3 (26:03):
Yeah? Kind of. I think one of the things that
this isn't financial advice, but for many of my clients
that need to access their savings at some point, I
probably prefer to go along the lines of a Squirrel
on call account. So this is squirrel mortgages. Their interest
rate is around five point two five percent, so it's
on a par with a term deposit, but you can
(26:24):
access the money the next day or the next week
without being penalized, So that can give you kind of
that consistent return which is really helpful, but also the
flexibility that you need that term deposits don't always afford
you if the timing doesn't quite work. But yes, Mike,
I think that with the bank rates or with some
of these other options performing at such a high rate,
(26:47):
why would you expose yourself to something else that has
volatility compared to certainty.
Speaker 2 (26:52):
Yeah, just on the back of Grant's call, if someone
was to get a lump sum, whether it's inheritance or
some sort of windfall, and they're in a situation similar
to Grant, that you're at the end of the mortgage,
is it always a good idea to just pay off
the mortgage in its entirety? Or is sometimes you need
to have a reassessment and think, maybe that's not the
(27:14):
best strategy.
Speaker 3 (27:15):
For most of the people I work with, that isn't
the best strategy. We want to have a parallel strategy,
So yes, we want that mortgage gone, but at the
same time, we want to get the equity working harder,
and we don't have the luxury of waiting until we
are mortgage free before we get the money working harder.
So for many of us, we have to apply both logics.
(27:38):
So perhaps use your equity. If we were going to
be buying an investment property. We can do that while
we focus on paying off the home mortgage. That might
be an example. So grant situation is sort of slightly different.
That he is very close to paying off the home mortgage,
so you could say, well, could we just wait. But
what I think the risk for Grant might be is
that the bank's willingness to lend him money to grow
(27:59):
his wealth is going to start reducing. So on one hand,
one of the factors was really favorable, but the other,
the one, that thing called time and age, not so much.
So we've just got to balance those things.
Speaker 1 (28:10):
Yeah.
Speaker 2 (28:10):
Great. Just a question on the revolving credit accounts this
text are as high Hanner. We had a revolving credit
account in the past, and it didn't work because we
tapped into it too much during tough times. Is there
a way to lock down that account completely, not just
credit card access, but to lock it down to make
it very hard to transfer money out.
Speaker 3 (28:31):
Yes, you could force it so you could take it
off your internet banking. You could take any access from
your cards. I've had some clients that they only let
me see the balance of that account because they don't
trust themselves. But we've got to just understand what your
money personality is and if that actually becomes more of
(28:54):
a risk to you, then we've got to try and
skin the cats in a different way. But flexibility is
probably the most single most important asset you can build
for your household, financial flexibilit and that is a deliberate
way of doing it.
Speaker 5 (29:09):
Great.
Speaker 2 (29:09):
If you've got a question for Hannah, eight hundred eighty
ten eighty is the number to call. We'll get to
more of your phone calls very shortly. It is twenty
one to six. Good evening to you. It is the
Smart Money Hour, and we're joined by Hannah McQueen, financial
advisor and founder of Enabled Me. If you've got a
question for Hannah, now's your opportunity. O. Eight hundred eighty
ten eighty is the number to call. She is a
(29:29):
wealth of knowledge on everything financial. If you've got some
questions about your own finances or how to handle your money,
she is the person you need to speak to. Let's
go back to the phones dominic. How are you good?
Speaker 6 (29:41):
Thanks to yourself very well.
Speaker 2 (29:42):
Hannah is standing by.
Speaker 7 (29:44):
Hi Hannah, Hi are you hi? I just got a
quick question.
Speaker 4 (29:49):
I'm twenty four going on twenty five, and I've got
a that a three hundred and eighty thousand dollars mortgage
I've got I've pretty much drained all of my chess
and keep yous over a couple of years.
Speaker 6 (30:02):
Ago when i went in for the house.
Speaker 4 (30:06):
So I'm currently putting back about ten percent into my
key resaver and that's around twenty grand at the moment.
Speaker 6 (30:13):
And then I.
Speaker 4 (30:14):
Also in my savings once I've taken all my bills
and got about a month and a half work of
savings just to cover all the extra bills and my
repayments after that, and my actual other savings account, I've
got about twenty grand saved up on that. Is it
better for me to put that in something like a
term deposit or when one of my because I've slipped
(30:35):
my mortgage to three years, which I've refixed one last
year so till them come off next year to be refixed,
and then one of them comes off in October this year.
Is it better for me to do something like lump
some that twenty grand onto one of those mortgage repayments
or am I better to put it in like a
urn deposit or just increase my week my fortnightly repayments.
Speaker 6 (30:57):
What would be the best option for that?
Speaker 3 (31:00):
So normally there's a couple of sub questions I guess
that have been asked there. The first one is, if
you had money, do you put it in a term deposit,
do you put it in your key, we save it?
Do you put it against your mortgage? Normally, the mortgage
interest rate is higher than the interest rate on a
term deposit, so your money's going to work harder for
you paying off debt and saving new interest than what
(31:21):
you would get if you put it in a term deposit. Similarly,
it's a consistent interest saving so managed funds if they
So let's give you an example. Let's say your interest
rate is what is the interest rate of the mortgages
that are coming off next year. We'll use actuals, So the.
Speaker 4 (31:36):
Ones that are coming off, so the one that's coming
off the end of this year is five point three
to nine, and then the ones that are coming off
next year of five point nine and six point eighty five.
Speaker 3 (31:45):
Okay, great, So the one that's coming off at five
point three nine, if we had at this twenty thousand dollars,
do we pop it against that mortgage or do we
put it into a term deposit. If we put the
money into a term deposit, let's say we even had
the same interest rate, you're going to pay tax on
the interest you earn on that term deposit, whereas the
money you save, the interest you save on your mortgage payments,
(32:05):
you're not going to pay tax on. So already it's
going to be twenty to thirty percent better off paying
off your mortgage versus than putting it in a term deposit.
So I'd be advocating for you to put it against
the mortgage. But the benefit of the term deposit that
the mortgage doesn't give you if you do make a
lump sum payment or increase your repayments. The term deposit
gives you that rainy day fund, right like, if something
goes wrong, you've got it there and it feels good.
(32:27):
So the way that you would create that outcome for
yourself would be breaking off or when that five point
three nine mortgage comes off, split what you've got available
to you, so at least twenty thousand dollars into a
revolving credit that you don't have access to, and if
you've got extra surplus each year, you can put pop
that into there as well. I'd be reducing your key
we Saver contributions to the minimum level that your employer
(32:50):
matches and be channeling everything against that particular mortgage. But
well done on having a mortgage at twenty four. It's awesome.
Speaker 4 (32:56):
Yeah, absolutely wonderful things for that guys.
Speaker 2 (32:59):
All right, thanks Dominic. Mark Hannah is standing by to
hear your question.
Speaker 1 (33:05):
Thank you.
Speaker 2 (33:06):
You go for it.
Speaker 8 (33:08):
Yeah, Hi, And look, just a question, just a bit
curious what I can do. I've got mortgage free luckily,
and probably I don't know, including key we Saver, say
four to five hundred thousand. I don't know whether to
buy another property or just keep the money that I
(33:29):
have invested in banks. I just don't know what to do.
Speaker 3 (33:33):
Yeah, So there's two quick Well done, Mark, that's really great.
So the next question is is the four hundred thousand
dollars you look five hundred you've got in key We
say we're going to be enough to fund your retirement.
And the answer to that maybe yes, that could be good,
or it may be no. It might be that we
need a little bit more. For most of my clients,
they need a mortgage free home and kind of eight
(33:55):
hundred thousand to one million dollars sitting in funds. Obviously,
it comes down to the lifestyle that they want to
be able to live in retirement. But let's first answer
that question, because that will determine what the problem is
we're trying to solve. If it is that we don't
actually have enough or not expected to have enough based
on your current QI SAB contributions to fund your lifestyle,
then the problem we've got to solve is how do
(34:16):
we grow wealth in addition to doing what you're doing.
If it is that you are on track to have enough,
the objective isn't to grow wealth, it's the objective is
to diversify your investment so that on a bad day,
you're still going to be okay. And that's where I
would need to do some analysis. But if you'd had
a back of a fag packet mark or back up
an envelope, we would be saying, what is your lifestyle
(34:39):
cost each year? Is it eighty grand, is it seventy grand?
But whatever that number is, times that by twenty five,
and that's how much you will want to have available
to you in your retirement. Then we take off the
key we savor that you have to deduct that from
the number, and we take off five hundred thousand dollars
(34:59):
because that's how much the pension is going to pay
you for those twenty five years. And if we have
a gap leftover, that is what we need to grow.
That's the wealth we need to grow. And then if
you don't have a gap, but you want to, you're
possibly a little more cynical me where I'd be like,
even if I have enough money, they're probably going to
introduce the capital gains tax, or they're going to means
test a pension or put it up or whatever these things.
(35:21):
And that's why you would also grow wealth so that
you could neutralize potential negative curve balls.
Speaker 8 (35:26):
Okay, makes sense, Yeah, okay, no, thank you again.
Speaker 2 (35:30):
Nice one. Mark, Yeah, congratulations, Thank you very much. Right,
we'll take a quick break and then we've got time
for another couple of calls. It is eleven minutes to six,
beg very shortly here on the weekend Collective, Good evening.
Tyler Adam's filling in for Tim Beveridge, and you are
listening to Smart Money, and in the Auckland studio is
Hanna McQueen, financial advisor and founder of Enable Me. Now
(35:53):
this is a bit of a curly question, but I
like it. Hannah come via text, says Hi, Hannah, I
have forty thousand dollars in bitcoin, sixty thousand dollars in
key we saver, plus eighty five thousand dollars in cash
in savings, and I am fifty three years old with
no mortgage. I earn a modest wage and have two
teen kids as a solo parent. My house needs about
(36:15):
one hundred thousand dollars worth of work. Should I use
all my cash, get a mortgage and split the costs?
Speaker 3 (36:26):
There's so much more I want to ask that person.
So when they say they need modest work done on
their house, do they have to have it done now?
Is it going to degrade the house? Are they wanted
to sell it? Is it healthy home?
Speaker 7 (36:37):
Like?
Speaker 3 (36:38):
What are we talking for that one hundred thousand, Because
in a perfect world you would say we'll defer the
spend until you've saved enough money up. I probably feel
a little bit nervous that so much of your wealth
is well, we've got eighty five thousand in cash in savings,
So I like that. That's great. I'm assuming we're mortgage free.
(37:00):
We can't get access to the key we saver normally,
even if you are in genuine hardship, it is so
hard to get access to it's a bit of a joke.
The bitcoin is as volatile as anything. No one knows
on any given day what it's going to do.
Speaker 2 (37:14):
It's a heak of a lot of money. And at
current see forty thousand dollars.
Speaker 3 (37:18):
Yeah, yeah, but I don't know if she put in
forty thousand dollars right, or she might have put in
ten thousand dollars and today it's worth four times the amount,
but tomorrow it'll be worth nothing. You know, it just
goes up and down, and so the unpredictability of that
type of investment is really tricky when, as you say,
you're living on a modest wage, and so how you
stretch your money. You just don't have much to come
and go on on a bad day. So back to
(37:42):
the hundred thousand dollars, I would try. If you have
a modest wage, introducing mortgage payments is going to be hard,
but I would be thinking if you've got savings, that
suggests that you do have money left over that you
could be putting towards savings. So I don't know enough
to answer it accurately. But if the house needs the work,
(38:03):
or if it's not healthy or safe, then get it done.
And if it means you've got to get a mortgage
to get it done, that's fine. But let's get a
plan to get rid of it.
Speaker 2 (38:13):
Yeah, fantastic. That is all the time. We've got Hannah McQueen,
financial advisor and founder of enable me. A couple of
techs coming through. How people can get a hold of
you and enable me Hannah, just.
Speaker 3 (38:22):
Pop to enable dot me. You can request a consultation
with one of my team of amazing financial advisors. Normally
four hundred dollars for that first session. It's discounted I
think to one fifty for news talk listeners.
Speaker 2 (38:34):
Brilliant. And your new book, Kill your Mortgage and Sort
your retirement. Where can people find a copy of that book?
Speaker 3 (38:40):
Any great New Zealand bookstore or I think maybe even online?
So how here you go? Maybe even kindle who knew?
Speaker 2 (38:47):
How good? Too easy? Thank you very much, lovely to
see you again and we'll chat again soon.
Speaker 3 (38:50):
Thank you.
Speaker 2 (38:51):
That is Hannah McQueen, financial advisor and founder of enable me.
And that is me for today and for the weekend.
Collector for the time being. Tim Beveridge will be back
with you next weekend. Thank you very much for having
me and being so kind of enjoyed it. We will
catch again soon. Thank you to my producer Tyra. Have
a great rest of your Sunday evening. We'll chat again soon.
(39:11):
See you Ladder. For more from the Weekend Collective, listen
(40:01):
live to News Talk said Be weekends from three pm.
Speaker 7 (40:05):
Follow the podcast on iHeartRadio.
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