Here are a few tips to help you ring in the new decade with as little debt as possible.

1. Reconsider whom you need to shop for

At different points in our lives, it makes sense to shop for certain people and not for others. For example, when our nieces and nephews are young, gifts are appropriate but when they’re adults, maybe a heartfelt card is enough.

Go through your list and decide whom you really need to shop for and who can make do with a heartfelt holiday wish.

2. Set yourself a limit – and stick to it

Now that you know who you need to shop for, set yourself a budget based on what you can reasonably afford. Set aside one “money bucket” for gifts, remembering to factor in the cost of wrapping paper, tape, greeting cards and the like.

Consider a separate money bucket for food, drinks and entertainment. This includes eating out, coffees, treats, parties, costumes and movie outings.

Once you have your budget, stick to it. The whole point is to spend only what you can afford to spend.

3. Consider what people actually need

It’s often the case that people don’t really need, or even want, new expensive gadgets in their lives. If you consider what each person really needs, you may uncover creative and inexpensive ways to fill their holidays with cheer.

Maybe you can surprise your nostalgic mother by transforming all your old childhood photos into a digital scrapbook, or give your achy partner a massage based on a technique you learned from YouTube.

4. Shop online

If you do end up with a few physical goods on your to-buy list, consider buying them online. Not only can you often find better deals, but you’re also less likely to incur unexpected or hidden expenses like petrol, parking, eating out, that special gift to yourself and all those pumpkin gingerbread lattes.

But online shops want your dough just as much as brick and mortar shops do, so make sure you don’t get sucked into all the online sales and marketing gimmicks. Make sure you shop around for the best deals and buy only what’s on your list.

5. Do a Secret Santa

Secret Santas aren’t just for the office and the school yard; they’re great for families too. So if you really want to save money this holiday season, and help others do the same, consider a great big Secret Santa.

Ask everyone to write down their name on a slip of paper, along with two or three items they need (or they can simply write “surprise me!”) and throw those into a hat. This way, everyone can save a little money and no one is left with a useless gift they’ll just toss later.

6. Go potluck

There’s nothing wrong with wanting to entertain guests at your home over Christmas or New Year’s. However, there’s no reason to splurge on all the food yourself. If you decide to throw a party, go ahead and cook a couple of your specialty dishes, but ask all your guests to bring something too.

7. Spend New Years in

You don’t need us to tell you how expensive it can be to pay for food, drinks and cover charges just to attend a fancy New Year’s party. Why not hang some mistletoe at home and have your party there?

You won’t have to put up with obnoxious strangers and you won’t have to stand on milk crates to see the fireworks on your big screen and most importantly food and drinks will be a fraction of the price.

Eat, save and be merry!

With some foresight and a little self-control, you can get through these holidays without burying yourself into a pile of debt you’d otherwise spend the next year digging yourself out of.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

The post 7 ways to save money this holiday season appeared first on Credit Simple NZ.

If you’ve never had a budget, or if you’ve tried and given up on one before, it can be easy to get overwhelmed. Visions of complicated spreadsheets and living on nothing but 2 minute noodles make the idea seem at best, snore-inducing and at worst, overly restrictive. But the truth is it takes very little effort to get a basic system – ‘money buckets’ – in place. This is great news, as it can mean the difference between major savings and none at all.

If you’re hesitant to set up a budget, or even if you have one now that’s only kind of working for you, here’s a solution that may just work: separating you money into ‘buckets’.

What is a money ‘bucket’?
The concept of ‘money buckets’ has been doing the rounds of the personal finance blogs and media for a while now, and it’s a simple one: instead of a complicated line-by-line budget that accounts for every cent, you simply split your income into large ‘buckets’, setting up a separate account – and automatic transfers – for each. That way, you automate your saving and spending so it becomes easy to save: it’s that simple.

Step 1: Track how you’re spending now
For a week, or better yet, a month, track your spending. You could log this manually in an app or sync one with your bank account, but actually, many banks in Australia and New Zealand have this function built in to their online banking already, categorising all your transactions for you. However you choose to do it, you’ll soon see trends emerging, and you’re ready to move onto the next step.

Step 2: Choose your categories and decide how much goes in each
Once you have all your info, it’s time to come up with a few broad categories that reflect a realistic picture of how you want to spend and save. For example, you could have categories like rent or mortgage and bills, emergency savings, groceries, eating out, fun money, travel savings and debt. Less is definitely more – fewer categories makes for a simple budget that’s easy to stick to, making it easier to save. Once you’ve set your buckets, decide what percentage of your income needs to go into each. Assuming you’re not spending more than you’re earning, this needn’t be vastly different from how you’re spending now.

Step 3: Open an account for each bucket
With a different account for each type of spending and saving, you’ll know exactly how much you have in each bucket. Many financial institutions offer an option for multiple accounts linked together, and you can even give them customised names so you can see, at a glance, how much you have in each of your ‘buckets’.

Step 4: Set up your automatic transfers
As with many things in life, set and forget is the surest path to success. Make sure you set up direct debits for each of your buckets so your money is moving where you need it without you needing to think about it. Many companies will let you split your salary this way, or you could have all your income go into one account to begin with, with regular transfers set up to move money between accounts automatically.

Step 5: Regular check-ins
Whether monthly or quarterly, it’s a good idea to check your buckets regularly to make sure they’re where they need to be. That way, if you find one overflowing while another is almost empty, you’ll know it’s time to tweak your transfers to better match your spending and saving goals.

So what are you waiting for? It’s time to let your savings take care of themselves. Get started on your money buckets to see how automating your finances can help you save towards your dreams.

The post This could be the secret to better budgeting appeared first on Credit Simple NZ.

As the long weekend kicks off, it can be all too easy to fill your time with fun and frivolous spending. But before you know it, Monday night rolls around and your bank balance is looking more than a little depleted.

Luckily, it doesn’t take much to reset your default setting from ‘spend’ to ‘save’ for a few days, and the savings can be pretty significant. Read on for our tips to boost your savings in just a few days.

Skip 1 thing
You probably have a pretty good idea of which is your biggest discretionary spend. But what would happen if you skipped it, just for this weekend? It’s easier than you think.

For example, for many of us, a big money suck can be eating out. With 4 days off, you could find yourself eating out a couple of times a day and think nothing of it. With even your local cafe or Thai restaurant setting you back at least $20 a head. If you’re a couple or a family, you could save hundreds of dollars.

Only use cash
Studies show that when we use cash rather than cards, we feel the loss of money more. This is because cash is a physical, tangible thing you have to give away to pay, while credit and other payment methods feel hypothetical or even non-existent.

Switching to cash not only makes it easier for you to mentally track your spending, but if you take out a set amount at the beginning of the long weekend, it makes it much easier to stick to a budget.

Take the zero-spend challenge
This one’s a game changer. For a single day (or even the whole weekend if you feel like an epic savings challenge), don’t spend a single cent and see what happens.

As an added bonus, you’ll find that (as long as you have a well-stocked fridge and ready access to a car or public transport) that the possibility for free activities are almost limitless. Make your own coffee, go for a run, fire up netflix, have some friends round or chill in your local library. It can be a really fun experiment.

Apply the ‘clean slate’ principle
If you spent Friday-Sunday on a bit of a spree, that’s actually ok – studies show that at the beginning of a week, month or any time that feels like a ‘fresh start’ is the perfect time for habit change.

With that in mind, Monday or Tuesday may be the perfect time to set up a new budget or set and ambitious savings goal, especially after a few days of spendthrift-madness.

So go on, take the challenge – enjoy a low-spend long weekend. It could save you heaps!

The post How to enjoy a low-spend long weekend appeared first on Credit Simple NZ.

New Zealand’s collective credit card debt was nearing $7.2 billion in June this year. Your contribution to this growing national burden may be miniscule, but it probably doesn’t feel that way when your credit card bill thuds ominously onto the welcome mat.

So, how can you avoid credit card debt in New Zealand? Many people believe using your credit card is always a bad idea. However, if you’re savvy and organised, paying on plastic doesn’t have to be the road to financial ruin.

Here are the best ways to use your credit card:

1. Pay off your card in full every month …

Any list detailing the best ways to use your credit card will tell you to clear all your charges every month. We’d love to throw a curve ball here and deliver a unique spin on this tip, but we can’t – it’s really that simple; you must try and clear your arrears before the interest starts kicking in. Anyone who always stick to this rule is already most of the way to perfect credit card use.

2. … Or at least avoid paying the minimums

 If you simply can’t afford to pay off your card in full every month, try to at least pay more than the minimum charge. Depending on the size of your debt, the minimum could be even less than the monthly interest, so you could be making regular payments and still falling further behind financially.

3. Understand your interest rates

The average interest rate on credit cards is 17.8 per cent per annum, according to the Reserve Bank of New Zealand. But what does this mean? Put simply, you’d pay 17.8 per cent interest each year on any credit card borrowing. If your balance is $1,000, you’d theoretically pay $178 over 12 months.

4. Don’t take cash out with your credit card

Notice how we said ‘theoretically’ before? That’s because interest rates are rarely that simple, and you get charged differently depending on how you use your credit card. One thing is for certain though – taking cash out of an ATM with your card is a bad idea. We looked at one bank’s low rate Mastercard, which is 13.45 per cent for card purchases, but the cash advance rate is 22.95 per cent.

5. Be smart with rewards schemes

 Rewards schemes may lure you in with luxury goods, cash-back offers and frequent flyer points, but are they worth it? The interest rates and annual fees are usually higher for rewards-based credit cards, so you’ll need to be receiving enough goodies to offset the charges. Unfortunately, research suggests that you may struggle to find a worthwhile scheme if you only charge up to $5,000 a year on your card, although they can benefit big spenders.

6. Compare different cards

Now that you know some of the best ways to use credit cards (and avoid debt) in New Zealand, you’re armed with the necessary knowledge to compare different offers and select one suited to your spending habits. Read the T&Cs for any mention of hidden fees, surcharges and interest rate hikes to prevent any unwelcome surprises.

7. Don’t over-rely on your credit card

Our tips may have you feeling like a credit card champ, but you should still try to only use your card in a crisis. Think of your card as a financial safety net rather than a pot of free cash. Debts may spiral out of control if you’re not careful, and missed payments can have long-term ramifications for your credit rating.

We understand that budgeting can be hard; our research shows 30 per cent of people live pay cheque to pay cheque. So why not sign up to Credit Simple and take a giant leap forward with your money management?

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Don’t believe you have to have a credit card. Paying interest sucks. It sucks the lifeblood out of your finances. That’s because unless you clear your entire bill within the interest free days, you pay interest.

That interest means you’re paying as much as 22.95% more than your mates at the mainstream banks for the same things, which has a detrimental effect on your finances over time.

Other (cheaper) ways to pay

Thankfully there are way more credit-free ways to pay than ever before that are far better for your bank balance. Here are some of the options:

Debit card. One of the arguments for needing a credit card is the ability to shop online. All banks now offer either Mastercard or Visa debit cards. They look like credit cards and can be used anywhere that displays the Mastercard or Visa logo, but you can only spend your own money, not credit.

EFTPOS. We all know how EFTPOS works. Now you can pay online with just an EFTPOS card through some banks at a number of etailers such as MightyApe, BurgerFuel and Smith & Caughey’s department store by choosing “Online EFTPOS” as your payment method at the checkout. A text is sent to your online banking and you approve the payment. The first banks to offer this were ASB and The Cooperative Bank. find out where you can pay with online EFTPOS visit Paymark’s website here.

POLi and account2account. Both POLi and account2account are payment methods that take the money direct from your bank account. Your payment is approved immediately. You can use POLi and account2account to pay online for goods at The Warehouse, Bunnings Warehouse, Xero, NZ Transport Agency, Air New Zealand and others. Despite the fact that this payment method is widely used overseas and offered here by trusted companies, New Zealand’s banks say that it’s not secure and users are breaching their terms and conditions if they pay this way. In the UK regulators forced banks to make customers’ data available to them, meaning they can use this type of payment system without fear.

Ping it. In the old days we did bank to bank transfer or paid cash for Trade Me purchases. Then Trade Me brought in Pay Now, which required a credit or debit card. Now they’ve added Ping. This allows you go pay with credit, debit, or straight from your bank account. The advantage of this is you only need an EFTPOS card to do it. The disadvantage is you are setting up a direct debit agreement with Trade Me and not all members are comfortable with that.

Pay later. Trade Me and other retailers are starting to offer buy now pay later schemes. You buy now, receive the item, and make interest-free payments over several weeks. Laybuy.com, PartPay and Trade Me’s Afterpay all offer this. The problem is if you miss a payment the charges can prove more expensive than interest. Non-payment can also put a black mark on your credit record.

Pre-paid travel cards. Pre-paid currency cards such as Loaded for Travel, OneSmart and Cash Passport work like debit cards when you’re travelling overseas. The catch is that you pay fees and commissions that make this an expensive way to spend.

PayPal. This online payment method that you can load up and spend with isn’t used all that often in New Zealand. If you’re buying from eBay and overseas stores you might find having a PayPal account useful.

Bitcoin. You can pay for a growing number of real life purchases using your Bitcoin wallet. I do own a very small amount of Bitcoin and look forward to the day when I can spend it and bypass my bank’s fees.

Cash. What’s that you say? Sometimes ditching the plastic and spending cash is the most sensible option. Take it out at the beginning of the week, split the money between envelopes for different purposes such as shopping and entertainment and once each envelope is empty just stop spending.

There are other forms of payment coming on. For example Apple Pay has made it to New Zealand in a limited way and Alipay is on its way. However payments from both are connected to your debit or credit card so aren’t in effect changing the way you spend.

Of course credit cards do have uses when you have an emergency. But everyday things such as buying groceries or school uniforms aren’t emergencies. They need planning for.

The post Using a credit card for everything? There are other ways to pay appeared first on Credit Simple NZ.

“Call me loyal”, Dave Dobbyn once sang, and “I’ll say you’re loyal too”. (He also once sang “drink yourself more bliss,” which makes less sense, but we’ll set that aside for the moment.)

Loyalty programmes are everywhere these days, and they’ve come a long way from Satan’s original “Eat one apple and get a free eternity of shame and feeling weird about nudity unless you’re Paul Henry” offer.

From airlines and groceries to credit cards and even the humble cup of coffee, loyalty programmes that offer free products, points or even cash can look like a good deal. But are they really worth the effort? Short answer: meh. Long answer? Read on.

What’s in it for them?

For your local coffee shop, a loyalty card is just a loyalty card. Offering every 5^th or 10^th cup free means you’re more likely to visit them than the place across the road. (You’re also more likely to visit more often… but more of that below.) For bigger outfits like airlines, supermarkets and petrol stations, the real attraction is information about your purchase habits. This is like gold for big retailers and can help them with everything from deciding what to stock in store (Vaughn seems to like coffee and Coke… let’s order in some coffee-flavoured Coke*!) to sending you direct offers if they have your address or email (hey Vaughn, here’s 10% off Coke when you buy some coffee!).

What’s in it for you?

One to two percent, more or less. Obviously, a one-in-ten coffee card works out to a 10% bonus (IF you always use it AND you redeem the free one) but across the board, most loyalty schemes work out to about a 2% reward for your loyalty. (Schemes offering airline points often deliver higher rewards, but they can usually only be exchanged for flights.)

Sure, that’s better than nothing. But it can be a gotcha with credit card schemes, especially if the merchant tacks on a credit card fee of up to 5%… suddenly you’re going backwards. Same goes with annual card fees. Credit card reward schemes are really only a good idea if they have no fee (pretty rare for reward-bearing cards) or if you spend so much each month that the fee is just a blip compared to the rewards you’re getting.

For more information about credit card rewards, check out this 2016 league table by research company Canstar (here).

Fly Buys and supermarket cards

Shop, swipe your card and receive free money… what’s the catch? You are. Cards that track your spending across a lot of products reward you because of the customer information that gives the retailer or the company running the card scheme. Many cards like this will also sell access to their audiences to product brands to deliver them special offers… which can sometimes be a good deal for the customer. So the only downside (which you might care about a wee bit more in this post Cambridge Analytica age) is that you’re letting companies know a lot about your family’s shopping behaviour.

Getting smart with fuel rewards

Remember the ads with the taxi driver asking us whether we wanted to spend or accumulate? If they left you confused, you’re not alone. Most AA Smartfuel users we know take the simple route and simply use their discount on the spot. Insiders tell us, though, that the really smart thing to do is fill your tank with the minimum qualifying spend for accumulating rewards ($40) for a month, then spend the accumulated discount on a full tank (discount applies to a maximum of 50 litres)… if you can be bothered making the extra visits to the service station (more on how to milk AA Smartfuel here).

Bottom line: it’s a bonus

Unless you’ve got the energy to spend your life optimising your shopping habits and changing cards and airlines based on their reward rates (see the movie Up in the Air for where this can lead) it’s probably best to treat reward schemes and loyalty cards as a bonus – and certainly not one worth spending more at retail or putting up with a higher card fee for.

*God help me, but it’s a thing.

The post Does loyalty pay? Here’s how to get the most out of loyalty programmes appeared first on Credit Simple NZ.

We know your new girlfriend or boyfriend wants to go out every Friday. Even two drinks each, some snacks and an Uber ride home could set you back $50. It’s dead easy to blow $100 if you throw food in as well. What’s more, dating can send your credit score south. Fast.

Let’s say you spend $150 a week going out, $300 a couple of times a year on a weekend away, $200 on his/her birthday, and flowers or chocolates on Valentine’s Day. You’re up to around $8,500. And who has that to spend year in year out?

If you keep this up your savings will be knocked for six if nothing else. But it could lead you into a downward debt spiral. Debt is a real turnoff to plenty of potential mates. Trust me, I’ve been there.

Got unrealistic expectations? Dial them back

Serious socialising might also set your date up with unrealistic expectations about how much money you have and are willing to spend. What if she wants jewellery, or he wants to go Dutch on lots of expensive weekends away at $200 a night love hole hotels?

As unromantic as it sounds, the difference between needs and wants matters even when you’re dating. There is good news, however.

Cheap but romantic dates

You can be romantic without spending much. If you’re clever, the apple of your eye won’t even realise what you’re up to. Tee hee.

• Cupid tip 1: Take up walking. Going for a walk down the beach, a walk in the bush or a walk through an interesting part of town is very romantic.
• Cupid tip 2: Learn to cook. Find a recipe that you know you can pull off easily. It doesn’t have to be haute cuisine. Google ‘simple romantic recipes’ and choose something easy. If you really need three courses, choose cold dishes for the starter and desert and prepare them the day before. If you can’t cook then buy nice bread and salad and a few simple sausages.
• Cupid tip 2: Cook up a storm on a public barbecue. You’ll find them at many beaches around the city.
• Cupid tip 4: Pack a picnic. Almost any food becomes romantic when there is a picnic blanket and park, river or beach involved. Buy a pre-cooked chicken or French bread and fillings from the supermarket. Cold champagne for two is oh so romantic.
• Cupid tip 4: Go bike riding. Meet up with your own bicycles. Or many of the major cities in New Zealand now have public bike stations, such as Waterfront Bikes in Auckland, and nextbike in Christchurch. Many cities now have electric bike hire as well.
• Cupid tip 5: Watch a movie together. But whatever you do, find out the other person’s tastes. If you like fantasy and she only watches period dramas you could make a mistake. Homemade popcorn is very romantic indeed.
• Cupid tip 6: Go to church together. Honestly!  If you both believe in compatible religions then it’s a nice thing to do.

The great thing about cheap dates is they set the bar low financially, but high in terms of what a creative, romantic person you are.

Happy dating!

The post Has Cupid’s arrow struck? Don’t date your way into debt! appeared first on Credit Simple NZ.