Thoughts on Dave Ramsay’s Baby Steps in an NZ context?

[goldie81]

@robbentley I disagree with saving for kids university fees. But that is partially because I have seen the "paid for" kids dick around a lot!

I also disagree with the person who thinks you don't need an emergency fund. Having dealt with MSD once when we were really struggling I want a savings buffer before I have to rely on them

I like the Barefoot Investor accounts set up. We also now put aside 15% into our pension by putting 6% to kiwisaver (plus 3% employer contribution) and 6% into a private pension.

 

[jamesmason10]

@goldie81 My parents made us get student loans and then once we graduated they ended up giving us money towards them. Meant I didn't borrow more than the essentials, because I was expecting to have to pay it all off!

 

[goldie81]

@jamesmason10 Fair call and my parents always expected us to pay them board if we were working and living at home but then gave us the money back when we moved out as our "starter kit".

 

[hanna123]

@robbentley I wouldn’t worry about a college fund per se. But putting aside some money for your kids to access as adults is a bomber idea if you can afford it. I’m putting away $20/child at the moment. Not much but having $20-odd k when they are in their 20s won’t hurt, and it only costs me my beer money.

 

[gopi007bond]

@robbentley I don't like the debt snowball. I pay my highest interest debt first, followed by second, third etc.

The wiki on here is better for kiwis. https://www.reddit.com/r/PersonalFinanceNZ/wiki/stepbystep/

 

[shaulhatarsi]

@robbentley It works fine but emergency fund needs to be 5k not 1k

 

[barbarossa]

@shaulhatarsi I think they do it so people feel like they have achieved something? In a interview someone asked Dave if $1000 was enough now with the cost if living? He said "$1000 was never enough" even then, but it put people in a place where they thought they had started to achieve financial goles.

 

[shaulhatarsi]

@barbarossa Well that makes sense. You could set it as smaller goals to get a sense of achievement. My issue with it being 1k was almost all of my sudden emergencies cost well beyond 5k so I adjusted the amount to reflect inflation and also nz prices in general

 

[barbarossa]

@shaulhatarsi Yeah I don't think I could relax with just $1000 for a sudden emergency? Emergencies as they are tend to be much more than 1k especially here? I did the same and saved more. That's now part of overall emergency fund.

 

[shaulhatarsi]

@barbarossa Yea, im down to 2700 emergency savings and I feel mega nervous lol. I get your point about sense of achievement though. It keeps you motivated to keep going. So setting 1k goals and doing a little treat to celebrate every time you hit another 1k into the savings is a good idea.

 

[friendlyagnostic]

@robbentley I think steps 1 to 4 make sense. There's some things that could be tweaked like a bigger starter emergency fund, and we don't have the same retirement fund benefits they do so, while investing 15% is a good idea, I wouldn't put all that into kiwisaver. Steps 5 and 6 are the two I don't agree with. I don't think saving for college is as necessary here as it is in the US, and I don't think it's a good idea to put off investing until the house is paid off since our house prices are around the million dollar mark. For me, I think step 5 is to save a house deposit, and 6 is paying off the house early while still investing.

 

[birdofprey]

@robbentley Goal is to retire in Asia with pensions and kiwisaver. Live by the beach. Have small surfing business. I think $100/week is what I need.
Pension and Kiwisaver should be sufficient. Ill buy a property before retirement, $100K max I would say.

 

[strayan123]

@robbentley Just wondering about the house situation....he says pay off all debts and save up and buy a house cash....wouldn't the house prices have gone waaay up in that time in NZ...maybe America has slower house price rise? I really don't get it, in what scenario would the number makes sense?

 

[nommie]

@strayan123 Dave doesn’t say to buy your home with cash. His advice is 15 year fixed-rate mortgage that’s not more than 25% of your take home pay. For properties beyond your primary residence he does say to save up cash to purchase them.