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Speaker 1: You're listening to the Saturday Morning with Jack team podcast

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Speaker 1: from News Talks, that'd be It's.

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Speaker 2: Called the can I invest Test, the questions you should

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Speaker 2: be asking yourself before any significant purchase that might get

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Speaker 2: you into more debt than you had anticipated. Ed McKnight

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Speaker 2: from Obi's Partners is here with the details this morning.

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Speaker 3: Hey, Ed, oh Jack, nice to talk to you.

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Speaker 2: Yeah, nice to be speaking with you. So when would

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Speaker 2: the can I invest test be appropriate to be used?

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Speaker 3: So we often use this with a lot of our clients.

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Speaker 3: So we're thinking about buying an investment property, and especially

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Speaker 3: today with the high interest rates that we've seen, the

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Speaker 3: rent for your investment property might not cover all of

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Speaker 3: your costs, and so you might have one hundred dollars

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Speaker 3: a week top up that you've got to make to

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Speaker 3: an investment property. So if we're ever dealing with a

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Speaker 3: client or a couple who's saying, look, i'm not sure

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Speaker 3: if we can afford that, we always say, well, before

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Speaker 3: you take on any debt, why don't you just try

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Speaker 3: for the next three months setting aside that one hundred,

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Speaker 3: one hundred and fifty dollars a week whatever it happens

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Speaker 3: to be, and automatically transfer that to a separate account

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Speaker 3: and just make sure you really can afford that. And

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Speaker 3: then if you can do that for three months and

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Speaker 3: you've seen the money pile up in your account, great,

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Speaker 3: You've proven to yourself that you really can invest. And

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Speaker 3: I think this applies not just with investment properties, but

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Speaker 3: with all types of investing. If I think about myself

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Speaker 3: when I recently bought my first time after buying investment properties,

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Speaker 3: so many years I was renting. And then when you

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Speaker 3: go buy a house, often you know, with all of

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Speaker 3: your costs, your rates, insurance, you're paying a big mortgage,

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Speaker 3: you end up paying more than you did in rent.

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Speaker 3: Now that's okay, But like most kiwis, you grab it

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Speaker 3: old blow, you turn it over, you've got the back

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Speaker 3: of it. You find a mortgage calculator and you do

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Speaker 3: some quick sums, and you look at your partner or

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Speaker 3: yourself in the mirror. If you're single, and you say,

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Speaker 3: could I afford that year? She'll be roight?

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Speaker 2: Yeah, I think all right, Yeah. I think it's such

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Speaker 2: a smart idea to actually not just wait three months,

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Speaker 2: but to really purposefully put that money aside into a

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Speaker 2: different account, because often people just say well, you know,

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Speaker 2: even if they're running a budget, that'll I spend this

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Speaker 2: monch this week and this much on that. But actually,

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Speaker 2: once you are like experiencing you know, less less money

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Speaker 2: for other things because you're putting that money in a

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Speaker 2: different account expendable income, then all of a sudden you

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Speaker 2: have a much better flavor for whether or not you

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Speaker 2: could wear the additional storms, you know, like, for example,

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Speaker 2: if you had an investment property and it didn't have

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Speaker 2: tenants for a few months, so something like that could

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Speaker 2: come up, it could cause a real shock otherwise.

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Speaker 3: And the other thing I have a place I find

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Speaker 3: it really useful is if you're thinking about I'm doing

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Speaker 3: a higher purchase, say you want to buy a new Count,

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Speaker 3: or you want to buy a new car and you've

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Speaker 3: got to take out a loan for it. It's really

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Speaker 3: easy to think about, Wow, my life's going to be

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Speaker 3: so good once I've bought that car. My life's going

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Speaker 3: to be so much better once I've got that Count.

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Speaker 3: But I often call those kinds of expenditure bubblegum debt

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Speaker 3: because just like bubblegum, you pop that in your mouth

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Speaker 3: and you're like, oh, it tastes lovely. Lovely and sweet.

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Speaker 3: I love this, But then the trouble with bubblegum is

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Speaker 3: that after you've tewed it for a while, it starts

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Speaker 3: to get really yuck and you don't like it anymore.

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Speaker 3: And what I often see with car debts or higher purchases.

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Speaker 3: It's great at the start, you love having that new

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Speaker 3: thing you wanted to buy. But with debt it's the bubblegum.

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Speaker 3: You can't spit out because you have to keep making

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Speaker 3: that payment again and again and again until you've paid

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Speaker 3: that off. And with the can I invest test, all

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Speaker 3: was saying is try seeing what life is like, because

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Speaker 3: you might find that actually we don't like having to

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Speaker 3: put aside one hundred bucks or ninety bucks a week

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Speaker 3: for that car payment. We can't really afford that. Well,

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Speaker 3: it's better to know before you take out that debt,

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Speaker 3: until waiting until after you've got it and you think, okay,

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Speaker 3: we bought that new car, but actually it's lost value

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Speaker 3: because we drove it off the lot and we don't

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Speaker 3: really like this car payment.

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Speaker 2: Yeah, one hundred percent, you're speak my language of their

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Speaker 2: things really good advice. In fact, my thing is unless

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Speaker 2: there are you know, extreme circumstances, and I realized I'm

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Speaker 2: probably speaking of privilege here. You never want to go

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Speaker 2: into debt for a car. That's my car, is no

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Speaker 2: an investment. Thank you so much. I appreciate your time.

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Speaker 2: Evening Night from Obi's Partners.

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Speaker 1: For more from Saturday Morning with Jack Tame, listen live

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