SAVING MONEY
The top 10 cash wasters
KAYNE WAHLSTROM is a young man with an old soul.
A recent battle with cancer, which resulted in major surgery and laid him up for a couple of months, has left him with a firm conviction that it is important to get ahead today.
Bitter experience has shown him that nobody knows what travails life will throw at you in the future.
In his early 30s, Wahlstrom is a founder shareholder in Manage My Money, an Auckland-based business he set up a year ago to help people prosper financially.
He’s become an evangelist for looking after every dollar, as over a lifetime it can make a big difference.
It’s what he calls the ‘‘multiplier effect’’ where small amounts of money allowed to be frittered away add up over the years.
For example, Wahlstrom says why waste even $10 a month on pointless bank fees.
‘‘If you are about to think to yourself, ‘Oh, well, it’s only $10 a month, so it is really not worth the effort,’ stop and multiply $10 by 12 months, and then multiply that by ten years,’’ he says. ‘‘Is it worth $1200 cash?’’
Then consider the needless interest that you would have paid over that decade as a result of not having used the money to reduce your mortgage.
‘‘People don’t realise what $20 or $30 or $40 a week off the average mortgage means in terms of how much money they could be saving off the interest, and in terms of years,’’ says Carey Brunel, a fellow owner of Manage My Money.
The Sorted.org.nz mortgage repayment calculator shows that $80 extra a month paid off a $100,000 mortgage would see it repaid three years’ earlier, saving over $17,500, assuming an average interest rate of 7 per cent.
Other than people really struggling by on low incomes, Wahlstrom and Brunel are convinced most families can find a ‘‘surplus’’ of 20 per cent in their income which could be dedicated to building savings and paying down their mortgage.
Getting debt free earlier in life, either to free up cash to build a retirement nest egg or to use to buy a rental property are common aims.
Wahlstrom says people aged under 30 tend to harbour hopes they can quickly get a mortgagefree home.
‘‘They talk about being debt free in 15 years. The older generation tend to think that being debt free in your 50s is more realistic,’’ he says.
But despite many professing that desire, few actually have a plan to make it happen.
That’s where businesses like Manage My Money come in, although the cost of that service varies.
There’s a budget price of $996 a year for people working towards getting out of problem debt or saving for a house deposit.
Most clients pay more though – $1650 for the first year, and then $10 a week ‘‘maintenance’’ after that. Wahlstrom and Brunel defend the cost by pointing to the savings people can make.
Commission is also sometimes earned, if insurance and mortgages are sourced for clients.
‘‘As an example, a client we helped save $65,000 in mortgage interest paid $1650 to work with us for a year and then $10 per week for our maintenance programme. We think that’s a pretty good return on investment,’’ Wahlstrom said.
Brunel says it’s about allocating. ‘‘The issue is to really understand what you are doing, and where the money is going.’’