Speaker 1: Cura and welcome to this episode of Shared Lunch where
Speaker 1: we focus on Money Month, which is run by Sorted
Speaker 1: New Zealand. The theme this year is to pause and
Speaker 1: quite literally get your money sorted. So we thought we'd
Speaker 1: discussed something familiar to many, and that's you've managed to
Speaker 1: get on the property ladder. But now what How do
Speaker 1: you stop yourself from going backwards or standing still and
Speaker 1: grow your wealth for the future. I'm Helen Madison and
Speaker 1: to help us with this conundrum, I'm joined by financial
Speaker 1: strategist and coach, the founder of enable Me, Hannah McQueen.
Speaker 1: Hi Hannah, lovely to have you in the studio. Thanks
Speaker 1: for joining us.
Speaker 2: Thank you, Hannah.
Speaker 1: That's harder than ever to buy a house, it seems
Speaker 1: at the moment. And I think you recognize this that
Speaker 1: times have actually changed when you decided to, I think,
Speaker 1: republish or update your book, kill your mortgage, and sort
Speaker 1: your retirement. So let's start with what's different today than
Speaker 1: perhaps a couple of decades ago.
Speaker 2: Ultimately a couple of decades ago, provided you weren't bad
Speaker 2: with money, you were going to be okay in the end.
Speaker 2: So the conditions were favorable enough that you could almost
Speaker 2: drift towards financial success and being able to retire comfortably.
Speaker 2: As long as you lived within your means, as long
Speaker 2: as you delayed your gratification, you were going to be okay.
Speaker 2: And that was largely because the house prices to income
Speaker 2: prices were a lot closer than what they are today.
Speaker 2: So in my granddad's day, let's say he bought a house,
Speaker 2: and let's say he earned fifty thousand dollars. The house
Speaker 2: cost one hundred thousand dollars hypothetically, So what that meant
Speaker 2: is that it was a lot easier to save a
Speaker 2: deposit because he didn't have to save as much of
Speaker 2: his income to come up with a deposit, which meant
Speaker 2: he could get onto the housing ladder very early. He
Speaker 2: was able to have a very moderate mortgage. He could
Speaker 2: become mortgage free within ten years, provided he wasn't bad
Speaker 2: just being average. And then because he was mortgage free
Speaker 2: in ten years, he then had thirty five years to
Speaker 2: save for his retirement. So that was his condition. So
Speaker 2: then you go to my parents' day, where instead of
Speaker 2: it being a one to two ratio, it's a one
Speaker 2: to four, or to my day where it's a one
Speaker 2: to six ratio. So house prices are now six times
Speaker 2: the average income of someone, and practically that means that
Speaker 2: you need to save a lot, which means you need
Speaker 2: to get the deposit, which means it takes you longer
Speaker 2: to save. Your mortgage is fatter, which takes longer to
Speaker 2: pay off. And if you're lucky and you're good with money,
Speaker 2: you may be mortgage free by retirement. But that assumes
Speaker 2: that you will not upgrade your home, or help your
Speaker 2: kids onto the property ladder, or do anything kind of
Speaker 2: moderately exciting that under those conditions you might be okay.
Speaker 2: But less than forty percent of kiwis are on track
Speaker 2: to do that, And so I guess ultimately that big
Speaker 2: ratio has changed, which sort of has made it very
Speaker 2: difficult in other areas. But in addition to that, compared
Speaker 2: to my granddad's day, we've now got consumer debt, so
Speaker 2: short term death Like credit cards weren't even a thing
Speaker 2: back then. You couldn't even use a credit card, so
Speaker 2: now we can. Now we can buy things, pay for
Speaker 2: them later, we can buy things. We've just got so
Speaker 2: much choice. Not only were there no credit cards back then,
Speaker 2: but there are no cafes, so all these things that
Speaker 2: we enjoy and want to be able to enjoy, and
Speaker 2: maybe should rightly be able to enjoy. It's making it
Speaker 2: easier to spend when the conditions are worse, so at
Speaker 2: the very time, because normally, when things are harder, you
Speaker 2: come at that by saying, Okay, well, I'm going to
Speaker 2: be better. But if we look at these generations that
Speaker 2: I'm surrounded with, conditions are harder, but at the same
Speaker 2: time we are worse, and that's something that needs to
Speaker 2: quite seriously be addressed. Otherwise we're going to have people
Speaker 2: who either don't believe they'll get onto the property ladder,
Speaker 2: which is really concerning for young people, or aren't going
Speaker 2: to be able to retire safely, which has a lot
Speaker 2: of impact in other areas as well.
Speaker 1: So, while Leboon's situation is different, is it fair to
Speaker 1: say that given that environment what you've just explained, people
Speaker 1: are probably feeling a bit stark. There's a bit of
Speaker 1: fog around what they should be doing financially to be
Speaker 1: smarter and to get ahead. Yeah.
Speaker 2: Well, I think people think that I'm not bad with money,
Speaker 2: therefore there can't be any obvious areas I can improve.
Speaker 2: Therefore there's no point sort of going through that process
Speaker 2: of refinement. That seems to be the gist, And I
Speaker 2: think it's because they don't immediately see where their inefficiencies are,
Speaker 2: because a lot of them are more technical inefficiencies structure
Speaker 2: all to do with how they structure their mortgage and
Speaker 2: their key we savers, their insurances, their tax how their
Speaker 2: money flows like that. Actually those are specialist areas, so
Speaker 2: most people don't even know what they need to know
Speaker 2: to do it better. So they just think, well, it
Speaker 2: feels about right, therefore it will be. And then the
Speaker 2: other half is most people don't know how to save successfully.
Speaker 2: They don't know what their target should be for savings,
Speaker 2: and so then all that we do is we think, okay, well,
Speaker 2: for success, I just need to earn more money. If
Speaker 2: I just earn more money, I'm going to be okay.
Speaker 2: But what happens is as you earn more money that
Speaker 2: all that happens is that you get this lifestyle creep.
Speaker 2: You just spend a little bit more, and you feel
Speaker 2: okay about that because you're earning more money, but it
Speaker 2: translates to this really dangerous outcome of you're working hard
Speaker 2: and you're going nowhere, or you're not going getting ahead
Speaker 2: at the rate that you should indicative of your income,
Speaker 2: because I think we do you accept that the poor
Speaker 2: will always be poor and the rich will always be rich.
Speaker 2: But it is the strength of that middle class who
Speaker 2: kind of don't identify as being super rich but earn
Speaker 2: pretty good income when they are not getting ahead. That
Speaker 2: is a problem that really needs to be addressed.
Speaker 1: So if you're in that situation and you are feeling
Speaker 1: quite struck and you're not really sure what to do,
Speaker 1: what can what's the starting point?
Speaker 2: Yeah, well, it's almost like you've got to hop on
Speaker 2: the scales, right, which is horrific. I heard a locker
Speaker 2: from a weight loss perspective that the worst part of
Speaker 2: any journey when you're going to get on those scales.
Speaker 2: But we've got to take stock of where you're at.
Speaker 2: We need to understand what you're aiming for. And most
Speaker 2: people don't even know how to set financial goals. They
Speaker 2: don't even know what they should be aiming for. So
Speaker 2: again they default to, well, I just won't be bad,
Speaker 2: but we need to understand we you are, what you're
Speaker 2: trying to aim for, what you're actually progressing at. It's
Speaker 2: like there's no point having a goal unless you're tracking
Speaker 2: to it or understand your trajectory, and then we need
Speaker 2: to work out and can we do it better? And
Speaker 2: for most of my clients we can normally improve their
Speaker 2: savings rate by three hundred percent, like it's insane, And
Speaker 2: these people are financially literate people. They earn good income,
Speaker 2: they're managing budgets in their day job. But on a
Speaker 2: personal basis, we often need a plan and structure and
Speaker 2: some accountability if we're going to stick to it.
Speaker 1: Are there also things that you can do that more
Speaker 1: short terms, say like having an emergency fund, and then
Speaker 1: there's the longer term things thinking perhaps about your contributions
Speaker 1: to QBSABER for example.
Speaker 2: Yes you can, but those are the sort of more
Speaker 2: tactical things, right like that that's not going to move
Speaker 2: the boat out any faster, And yes, I want you
Speaker 2: to be in the right key. We save a fund,
Speaker 2: contributing the right amount with the right provider, of course
Speaker 2: I want that. That's sort of an inefficiency for most
Speaker 2: of us, But that a nice is still not going
Speaker 2: to get your mortgage paid off faster, and nor is
Speaker 2: it going to position you so you can help your
Speaker 2: kids onto the property ladder or whatever your goal is
Speaker 2: for you, And I think that's where people get sometimes
Speaker 2: fixated on the things that won't actually change the dial,
Speaker 2: and because the things that change the dial right, those
Speaker 2: are harder to unlock because it's often linked to behavioral change,
Speaker 2: and that can be tricky for some people, especially when
Speaker 2: you overlay relationships. But I think the first back to
Speaker 2: kind of what are the things that you can do
Speaker 2: as part of taking stock of where you're at, you
Speaker 2: have to understand who you are and how you work
Speaker 2: with money, because that will determine what strategy is going
Speaker 2: to be effective for you. Because if you are a saver,
Speaker 2: someone who naturally enjoys saving, which I can't even I
Speaker 2: can't relate to that at all because I'm a shopper,
Speaker 2: but they naturally enjoy doing that, how we would set
Speaker 2: a strategy for that person is very different to how
Speaker 2: we engage a natural spender. And neither of them are
Speaker 2: good nor bad. Like please don't attribute emotion to money,
Speaker 2: but depending on what you are, there is a different
Speaker 2: way that we need to combat or play to that
Speaker 2: strength if it is a strength. And I think that's
Speaker 2: where some people come unstuck. They're not self aware with
Speaker 2: their own money tendencies, that their money beliefs that they
Speaker 2: tell themselves. All these things have more of an impact
Speaker 2: around what you're likely to achieve rather than your income level.
Speaker 1: But also, I suppose often you buy a house, it's
Speaker 1: a pretty large asset. With someone else, you might have
Speaker 1: quite different money behaviors, and that probably is something you'd
Speaker 1: probably have to navigate. I mean, you must see couples
Speaker 1: in the situation all the time.
Speaker 2: Yes, sometimes I think I'm more of a relationship counselor
Speaker 2: and a financial advisor. Yes, I think you've got the
Speaker 2: coupling right, Like, if you're a spender married to a spender,
Speaker 2: you're looking good, you're having a good time, you're probably
Speaker 2: going nowhere, but boy, you fun. And then you've got
Speaker 2: the saver married to the saver, which are just sort
Speaker 2: of tight, which is helpful, I guess. And then you've
Speaker 2: got that combo where you could be a spender and
Speaker 2: a savor and that can be quite fraught. And I
Speaker 2: think when you first get together, it's probably cute and
Speaker 2: interesting and you're curious as to how they work with
Speaker 2: money and all of those things. But after a few
Speaker 2: years it's quite tiresome for everyone. Because the spender feels
Speaker 2: bad about spending and the saver is not making any
Speaker 2: progress and you don't understand why the other person is
Speaker 2: how they are, and it creates friction. Not necessarily arguments
Speaker 2: the friction could be dealt with by not talking about it,
Speaker 2: Like friction doesn't have to be explosive. But that friction,
Speaker 2: if we go back to the science of propulsion, that friction,
Speaker 2: that disconnect slows down your ability to get ahead. And
Speaker 2: I do think it's well many my clients, half my
Speaker 2: clients are that opposite attracts financially, and so we've got
Speaker 2: to learn, well, how can we navigate that when you
Speaker 2: both have you've had different upbringings around money. You see
Speaker 2: money differently, you spend differently, you're motivated by different things.
Speaker 2: How do we navigate that successfully so that you still
Speaker 2: like each other and obviously you still like me. So
Speaker 2: those are things that we take care to do. And
Speaker 2: I think it helps that I'm independent and qualified to
Speaker 2: comment on these things because there's a lot of emotion
Speaker 2: that comes to these meetings. There's frustration, there's hurt, sometimes
Speaker 2: there's guilt, and you have to be able to work
Speaker 2: through that in a really constructive way, which is interesting
Speaker 2: because one of the most common pieces of feedback I
Speaker 2: get from clients is I wish i'd found you ten
Speaker 2: years ago. I'm sleeping better, and I can't believe you
Speaker 2: got away with saying that to my spouse, right, Like,
Speaker 2: sometimes you've got to just hear it from the right
Speaker 2: person for it to be taken on board. So if
Speaker 2: I'm wanting to get fit, my husband's fit and I
Speaker 2: could take advice from him, perhaps I'm just I'm not
Speaker 2: interested in receiving helpful suggestions. And so even if he
Speaker 2: would say something that my personal trainer would say to
Speaker 2: me the exact same thing and without emotion, like, it
Speaker 2: wouldn't be like a jab, it would be really constructive
Speaker 2: and kind. I'm just not inclined to engage with his feedback,
Speaker 2: but I will my personal trainer, And I think back
Speaker 2: to that self awareness kind of taking the pulse of
Speaker 2: where you're at financially, understanding yourself who you need to
Speaker 2: hear the information from so you actually take it on
Speaker 2: board is very helpful.
Speaker 1: I'm in that spender saver relationship marriage if you like,
Speaker 1: and I totally concur with what you're saying. I could
Speaker 1: talk about it all day, but we won't. One thing
Speaker 1: I did wanted to talk about, though, was how much
Speaker 1: of a difference does it make with restructuring or structuring
Speaker 1: your mortgage. I mean, quite often New Zealand is I
Speaker 1: think most commonly fixed for two years and pretty much
Speaker 1: leave it and everything's being paid off at the same time.
Speaker 1: What do you say to that, Well.
Speaker 2: Structuring your mortgage is important, and you're trying to balance
Speaker 2: a few things. So you want certainty I guess for
Speaker 2: a period of time, and the fixed interest rate gives
Speaker 2: you that certainty. But you also want the ability to
Speaker 2: pay off the debt without being penalized because you do
Speaker 2: need to pay it off faster, and you want the
Speaker 2: flexibility of being able to reaccess that money as well.
Speaker 2: So you're trying to balance those things. Before you can
Speaker 2: work out how to structure it. We have to first
Speaker 2: maximize your cash surplus. So if you don't, if you're
Speaker 2: not saving at the moment, that suggests you don't have
Speaker 2: a cash surplus, and most people will, you'll sort of
Speaker 2: be able to identify whether you think you're sinking, floating,
Speaker 2: or flying somewhere along there around that spectrum. So we
Speaker 2: need to first determine is there money left over that
Speaker 2: we could put towards paying the mortgage off faster. If
Speaker 2: the answer is yes, great, that makes you better than most.
Speaker 2: The next question is how do I maximize that? And
Speaker 2: once I've maximized it, then I'll work out how I
Speaker 2: need to structure the mortgage. If your situation, though, is
Speaker 2: that you don't have much money left over, you're kind
Speaker 2: of living paycheck to paycheck most likely, well paycheck to paycheck,
Speaker 2: but there isn't much growing out the side, perhaps beyond
Speaker 2: your Kiwi saver, Well, then we've got to take a
Speaker 2: different approach because we have to try and stabilize your position.
Speaker 2: If you're already flying saving a lot, again, we still
Speaker 2: want to maximize it, but we're trying to fly you
Speaker 2: to your destination faster. So depending on where you're at,
Speaker 2: we want to first kind of squeeze out all the
Speaker 2: inefficiencies and try and get you. So we've got a
Speaker 2: plan to lift your savings rate to twenty percent of
Speaker 2: your income, and not everyone can get there. For some
Speaker 2: of my clients, it has taken us more than a
Speaker 2: year to get to that level, and it's a combination
Speaker 2: of costs coming down and also working on strategies to
Speaker 2: lift income so that we do have that money left over.
Speaker 2: But that's the first thing that we're trying to do,
Speaker 2: and then we work out how to structure the mortgage. Now, typically,
Speaker 2: if I was to put numbers around this, if you're surplus,
Speaker 2: the money leftover could be increased to fifty thousand dollars
Speaker 2: a year. I'm just plucking a number. Then I would
Speaker 2: link that into how I structure your mortgage. I would
Speaker 2: have a revolving credit facility that you don't have f
Speaker 2: poss access to, so it's not a transactional account, but
Speaker 2: it would be fifty thousand dollars overdrawn, and the objective
Speaker 2: is going to be to pay that off over the
Speaker 2: course of the year. Again, you don't have f poss
Speaker 2: access to that, but that becomes I guess, the propulsion
Speaker 2: to try and grow wealth when we move to the
Speaker 2: next stage. But I've got to get you mortgage free
Speaker 2: first well, as part of the know how quickly I
Speaker 2: can get you mortgage free before I overlay the wealth strategy.
Speaker 1: But there's a balancing act, though, isn't it. Because we
Speaker 1: often get the question should I be paying off my
Speaker 1: mortgage or should I be contributing to key wesaver, And
Speaker 1: obviously you should be contributing to key we Saver, But
Speaker 1: then it's how much and what's my emphasis?
Speaker 2: Yeah, So, as a general rule, you contribute to key
Speaker 2: we saver if you're not in financial hardship, and you
Speaker 2: contribute up to the level that your employer matches. If
Speaker 2: you're self employed, there isn't that much of an incentive
Speaker 2: to contribute beyond what the government will unlock the attacks
Speaker 2: credit for you. But let's say it's three percent. So
Speaker 2: if you had money outside of that, then the question is, well,
Speaker 2: what do I do with it? Well, yes, you could
Speaker 2: put it into key we Saver, and I guess that's
Speaker 2: a form of compulsory saving. But that is assuming that
Speaker 2: you haven't purchased your first home, I guess, And you
Speaker 2: don't need that money for retirement. I guess it protects it,
Speaker 2: it locks it in a vault for you. But for
Speaker 2: most of us, cerdainly the clients that I'm working with,
Speaker 2: I can put that money to work a lot faster
Speaker 2: and a lot harder than if it was left and
Speaker 2: a kiwisaver fund. So contributing up to the level your
Speaker 2: employer matches absolutely could put that into kiwisaver. It's the
Speaker 2: extra contribution that I'm I'm wary of because if I
Speaker 2: can put that money towards paying your mortgage off faster,
Speaker 2: not only are we creating flexibility and financial resilience now
Speaker 2: that you can benefit, but we're creating equity and your
Speaker 2: property as well that we could recycle as a deposit
Speaker 2: for an investment property. And so then you've got kind
Speaker 2: of three layers working hard for you. You've got your
Speaker 2: greater cash surplus, which increases your resilience, which means you
Speaker 2: can weather storms more comfortably. We've got your mortgage coming down,
Speaker 2: which is saving you interest costs, getting you mortgage free faster,
Speaker 2: and also creating equity in your home. And then we're
Speaker 2: tapping into that equity as a deposit for an investment property.
Speaker 2: Those three things will outperform any qv saver investment kind
Speaker 2: of any day of the week, any extra key WE
Speaker 2: Saver investment on what your employer matches.
Speaker 1: But the beauty of compound interest, obviously you need to
Speaker 1: be contributing something though, so that you can take advantage
Speaker 1: of time.
Speaker 2: Yes, but yes, but I do think that the benefit
Speaker 2: of kiwisaver isn't really the compound interest, and it isn't
Speaker 2: really time. It's the fact that your employer is contributing,
Speaker 2: so you're getting one hundred percent return. That is the
Speaker 2: beautiful thing. The actual fund that you're investing in after
Speaker 2: inflation in some of those things might actually give quite
Speaker 2: a poor return, but getting access to that employer money
Speaker 2: is the golden ticket for kiwisaver. So yes, having it
Speaker 2: locked up so you can't touch it is also helpful
Speaker 2: because you don't inadvertently fritter it away. But it's more
Speaker 2: that it's just locked up for a long period of
Speaker 2: time rather than the based performance of the fund, which
Speaker 2: is where I guess that compounding concept comes in.
Speaker 1: What about trying to be smart with your money? And
Speaker 1: I mean there's the options, the shares, the savings accounts,
Speaker 1: better deals on your insurance, things like that. I mean,
Speaker 1: all of them probably have a part to play. But
Speaker 1: if you weren't just focused on your mortgage and you
Speaker 1: had other investments and you're quite diversified, what do you
Speaker 1: think then what could people be doing well?
Speaker 2: I think it comes back to kind of the principles
Speaker 2: of wealth creation, where you want your money to work
Speaker 2: as hard as it can for the kind of balance
Speaker 2: of risk or volatility. So if we look at a mortgage,
Speaker 2: let's say the average mortgage rate, the three year mortgage
Speaker 2: rate at the moment is six point three five percent.
Speaker 2: So if you've got an extra dollar, you've got the
Speaker 2: question do I pay off my mortgage to save myself
Speaker 2: six point three five percent on what I've paid off?
Speaker 2: Or do I put that dollar into something else, whether
Speaker 2: it's managed fund, shares, property, crypto, whatever we want to
Speaker 2: call it. So I guess the question then is, well,
Speaker 2: what is the return on these other investments, what is
Speaker 2: the certainty of that return, and what is the impact
Speaker 2: of inflation as well? Because we've got a balance these things,
Speaker 2: and can I reaccess that money easily? When you're looking
Speaker 2: at a guaranteed return of six point three five percent
Speaker 2: guaranteed after tax saving, then that would be the equivalent
Speaker 2: of a guaranteed maybe ten per I can't do the
Speaker 2: math in my head, but let's say a ten percent
Speaker 2: return before tax, before fees and all of those things,
Speaker 2: which most investments, whilst they might perform at that rate
Speaker 2: over a long term, some might very few of them
Speaker 2: perform at that rate on a guaranteed level. And so
Speaker 2: then you say, well, I need if I'm trying to
Speaker 2: get my money to work as hard as it can
Speaker 2: for as much certainty, which while you've got a mortgage,
Speaker 2: you need to be thinking more about the certainty of
Speaker 2: outcomes rather than the hopeful outcomes. We're not ready to
Speaker 2: diversify yet, because you've got this mountain of debt that
Speaker 2: we need to get under control, and we do want
Speaker 2: to get that under control before we even kind of
Speaker 2: think about diversifying. And I think that's why some people
Speaker 2: lean to more property based assets whilst they have a mortgage,
Speaker 2: because they can reuse the equity they've got in their
Speaker 2: home or on the property that they're paying off and
Speaker 2: still grow wealth. Now, once we mortgage free, it's game
Speaker 2: on for diversifying to your other assets. But we really
Speaker 2: want to ensure we get certainty of return kind of
Speaker 2: no matter what. And while interest rates remain high, it
Speaker 2: makes more sense in most instances to pay off that
Speaker 2: mortgage over investing in other types of assets because it
Speaker 2: just won't work as hard. But when interest rates drop,
Speaker 2: and we're kind of on the precipice of rates starting
Speaker 2: to drop, we're going to move. I guess the equilibrium
Speaker 2: of that point is going to change. So you'll recall
Speaker 2: in COVID when interest rates went down to two percent,
Speaker 2: why would you pay off a mortgage under those conditions
Speaker 2: when you could get a lot more investing in other
Speaker 2: types of assets. So the first question we ask is
Speaker 2: what is the interest rate that you're paying and can
Speaker 2: I get a guaranteed return somewhere else? And if the
Speaker 2: answer is no, well then you should be paying off
Speaker 2: your mortgage.
Speaker 1: What are some of the biggest mistakes? Then you see
Speaker 1: that people make. Is it what we spoke about at
Speaker 1: the beginning, that they kind of think they're doing the
Speaker 1: right thing and they're flaying along, saving a bit, spending
Speaker 1: this structuring their mortgage in a way that they think
Speaker 1: might work. Is it all a bit up to chance
Speaker 1: or what do you see?
Speaker 2: I think a lot of Kiwis are sleep walking towards
Speaker 2: their retirement and there's sort of this hope that it'll
Speaker 2: be okay. And they were brought up by parents or
Speaker 2: grandparents where it was okay, so you could see why
Speaker 2: they would make that conclusion. But for most of us
Speaker 2: that isn't going to be the case. And so then
Speaker 2: you say, well, what is it not being okay? Actually mean,
Speaker 2: because no one's dying as a result of not having
Speaker 2: their retirement, but the impact of not having enough saved
Speaker 2: for your retirement and key we save normally accounts for
Speaker 2: around forty percent of what you are likely to need
Speaker 2: for retirement. So it's helpful, but it's not the silver bullet.
Speaker 2: It's better than no bullet, but it's not the silver bullet.
Speaker 2: I've got to work out what to do with the rest.
Speaker 2: So if you haven't been able to amass the rest
Speaker 2: of the money that you needed, then it just is
Speaker 2: going to mean, Well, you're going to need to downsize
Speaker 2: your home earlier, you might need to work longer, You're
Speaker 2: unlikely to have the retirement you want, or be able
Speaker 2: to help the kids as you expected. I don't think
Speaker 2: any of those things are literally the end of the world,
Speaker 2: but it is disappointing, I think for many of us
Speaker 2: when we know that we have earned good income, so
Speaker 2: why is that our financial reality? But being prepared to
Speaker 2: confront that, especially when you have a partner who often
Speaker 2: is disengaged from finances. There's always one who's disengaged in
Speaker 2: the relationship. What I find is that when you hit
Speaker 2: around fifty age fifty for at least one of you,
Speaker 2: you are very conscious of the fact, well, I've got
Speaker 2: fifteen summers of income here that I need to maximize.
Speaker 2: And for many of us, knowing that we are going
Speaker 2: to maximize, it still isn't going to be enough. So
Speaker 2: that's the brutal reality. The next question is what do
Speaker 2: we do about it? And there is always something that
Speaker 2: can be done, hands down.
Speaker 1: The other thing, too, I suppose, is if you get
Speaker 1: a plan in place, if you do what you've just described,
Speaker 1: you probably have to review it reasonably often too, though.
Speaker 2: Yes, I think well with my clients, I review it
Speaker 2: every three months because in my experience, you need milestones
Speaker 2: that need to be celebrated. Absolutely, But you get this
Speaker 2: little bit of creep that comes in, and even if
Speaker 2: you only have a one degree kind of shift in
Speaker 2: how you spend over the next fifteen years, that is
Speaker 2: the difference between did we save enough or not? And
Speaker 2: that's I'm conscious of that. People come to me for
Speaker 2: that accountability, and I'm tracking savings targets, spending targets. I
Speaker 2: want you to have a good life, so I'm not
Speaker 2: trying to prevent you spending. But once we've got the
Speaker 2: number that you have allocated to whatever you need to spend,
Speaker 2: then let's commit to it. And most importantly, I'm then
Speaker 2: tracking your mortgage coming down faster, the pace that we're
Speaker 2: getting building equity, and how quickly we're growing wealth in
Speaker 2: addition to paying off your mortgage. Well I did, I
Speaker 2: ran a half marathon on the weekend. Oh haggulation. Well
Speaker 2: that wasn't the reveal. But what was weird about this
Speaker 2: reveal is I wanted to do a particular time and
Speaker 2: I accidentally deleted my app on my watch in the
Speaker 2: shoot before you start. Oh is this crazy? So I
Speaker 2: was trying to work out how I was pacing. And
Speaker 2: the weird thing about this course is they didn't give
Speaker 2: you any milestones along the way, So they didn't give
Speaker 2: you you've run two k's or five, five k's or
Speaker 2: whatever the case is. You only were told where you're
Speaker 2: at at the halfway mark. And so I was trying
Speaker 2: to I was just trying to get my bearings. I'm like, oh,
Speaker 2: this doesn't feel particularly good. And I could see a
Speaker 2: pacer up in front and they had their number how
Speaker 2: long they were going to take to run, and I thought, oh,
Speaker 2: they're running slower than what I was aiming for, but
Speaker 2: I can't even pass them because I'm like, this is terrible.
Speaker 2: And so what turned out is I ended up passing
Speaker 2: the pacer on this hill and I said, well, can
Speaker 2: you tell me how far we've gone? And because my
Speaker 2: watch was saying six k's and they're like, we've actually
Speaker 2: gone nine k's. So then that completely changed things. And
Speaker 2: then I'm like, at what pace are you doing? And
Speaker 2: they're like, oh, we're not actually running at the pace
Speaker 2: that we said. We're running faster than our pace. And
Speaker 2: I'm thinking, you've got one job literally to stick to
Speaker 2: your pace. Why are you off? But how that relates
Speaker 2: to finances, as for many of us, we feel like
Speaker 2: we're sort of we're caught in something and we're trying
Speaker 2: to get to the other end, and it is so
Speaker 2: hard to get to the other end where you don't
Speaker 2: know where you are relative to where you need to be,
Speaker 2: where you don't know the pace at which you're moving
Speaker 2: forward to work out if you need to improve or
Speaker 2: slow down, because it all comes home to roost at
Speaker 2: some point. And I just thought that's how many people
Speaker 2: must feel financially or with any big goal that they
Speaker 2: just don't even know. So when you don't know, you
Speaker 2: don't get to celebrate. When you don't know, you don't
Speaker 2: know how to adjust, And for most of us it's
Speaker 2: just small refinements made quickly that will be the difference
Speaker 2: between whether we keep that cadence going or whether we
Speaker 2: actually kind of burn out prematurely. And so it's hard,
Speaker 2: but I really believe structure, milestones, celebrations, support and quick
Speaker 2: adjustments are the key often to keeping your mindset strong,
Speaker 2: because I need your mindset in order to get through the.
Speaker 1: Curveballs well said, looking at it being sordid month and
Speaker 1: people actually perhaps taking the time now to do that,
Speaker 1: I suppose the idea is that they not just look
Speaker 1: at it, but actually take some action and then make
Speaker 1: that action stick.
Speaker 2: Yes, And that's the hard part. And I think if
Speaker 2: we can create that structure of accountability first telling you
Speaker 2: what's possible and then showing you how to hit it,
Speaker 2: I think that shifts a lot of people. But being
Speaker 2: there when it gets hard, because anyone is good on
Speaker 2: a good day, but very few people are good on
Speaker 2: a bad day, And when it comes to finances, we
Speaker 2: tend to have more bad than good. At least that's
Speaker 2: how we rationalize our lack of progress.
Speaker 1: Thanks for joining us today, Hannah. We could have talked
Speaker 1: for hours. It's great to have you. Thank you very
Speaker 1: much for having me, and thanks everyone for tuning in.
Speaker 1: We're giving away two copies of Hannah's book, Kill Your
Speaker 1: Mortgage and Sort Your Retirement. You can find these details
Speaker 1: in the episode description. Great to have you watching and
Speaker 1: listening today to Sheared Lunch Until next time, Kakitiano.
Speaker 2: Investing involves risk you might lose the money you start with.
Speaker 1: We recommend talking to a licensed financial advisor. We also
Speaker 1: recommend reading product disclosure documents before deciding to invest.