Woo hoo! I had enough money left over from September spending to fill out my first $1.6K House Down Payment Fund to completion.
I worked out in a previous post that I'll probably need a $800K house/apartment, and a 20% down payment is $160K. I have previously saved up $50K (about 31%), so I have $110K to go! Every $1600 more that I save gets me 1% closer to my $160K goal, and $1600 is a doable amount.
I've now completed 32.25% of my House Down Payment goal. Hurrah!
After finding out I'm going to be losing my stipend during the final ~6 months of my PhD, I took another look at my budget.
***New budget for my most cash-strapped months after I lose my stipend***:
Income (2 paycheck months): $1,970
Rent (5 rent check months): $1,125
Internet/Electricity: $100
Groceries: $500
Cell phone: $20
Medical: $25
Savings: $50
Charity: $60
Misc: $75
Eating Out: $50
This scenario (I have to pay rent 5 times but get paid twice in one month) is worst-case, and should only happen 3x in 2024. It happens in May but I get paid 3x that month, so it isn't as dire a situation.
I also receive $65 per week from renting out the car park space associated with my apartment, and the renter is super reliable and has been around for a while, but I cannot count on that remaining the case forever. Months where:
will make the above budget much more doable - that "extra $$" will go to misc, medical, and eating out spending for sure. There's just no wiggle room or ability to absorb expenses in this budget - I won't be able to save above my minimum $50/mo.
I have no idea what else I could do to cut expenses in the above budget. Rent does not get any cheaper than what I'm paying, so moving is not an option that will cut expenses - with the car park rent I get, it comes down to $160 per week. You can't even share a room for that cheap in Auckland CBD - it's that much just to share a bed or a room with another person here! Groceries are coming out to be $100 a week at a minimum. With household items I need to buy like toilet paper and cleaning supplies, it's $500/mo. Utilities are shared with two other people, and I've got the cheapest fibre internet plan I can find that bundles with electricity (I just did a review of my utilities a few months ago). For electricity, I signed up for free power from 9 pm - 12 am and I do most of my bathing, dishwashing, cooking, and laundry in that time period. My cell phone plan is $17/mo for 1.5 GB of data that rolls over if I don't use it all each month (if I downgraded to their $9/mo plan, I wouldn't be able to use the data that I have rolled over). That plan has unlimited texts and 200 rollover minutes. For Medical, I have to pay $25 every time I get my prescription renewed.
Charity, savings, misc, and eating out are really the only places I can cut easily, and the amounts I have listed are pretty minimal for all of them.
Mind you, if I had chosen a single person to share my flat with, I'd have even less $$ for non-rent expenses!! Yikes.
So, I will survive, it'll just be a bit stressful and I'll have to be ever more careful.
As I wrote in previous posts, I need to park a large chunk of my liquid savings and monthly leftover savings ("overages") dedicated to long-term goals somewhere while I make some decisions about where to invest it.
I also set up two new funds for my overages: a $1.6K House Down payment fund and a $4K Dividend Fund.
With inflation as high as it is, it feels wrong to keep my money in savings, but I'm not legally allowed to invest it in index funds from NZ like I'd normally choose to do. Converting it into USD and then investing it in my Vanguard taxable brokerage account is also an option, but I think I'm going to end up in NZ for retirement. I would not want to convert the money right now due to the horrible conversion fee, plus all the fees I'd have to pay, twice - once from NZD to USD, then back from USD to NZD.
(That's something I actually need to investigate - how much would I actually end up paying in fees if I converted once or twice? It looks like right now I'd lose $1K converting $90K NZD twice.)
The money has been parked in a high yield savings account called a NoticeSaver that requires me to give a 60 day notice when I want to pull the money out. I ordered the money out two months ago, so $50K has just hit my regular savings account.
Immediately, I opened a new term deposit account and started my first CD ladder.
I don't know how long current interest rates will remain high. Right now the highest I could get was a 6.25% p.a. one-year term deposit (what they call CDs here in NZ). So, I've now placed $10K in a one year term deposit, to pay out on maturity. I'll earn $625 NZD from that $10K over the next year.
On 4 Oct, the NZ Reserve Bank will review the official cash rate and decide if interest rates are increasing or decreasing. The next one is on 29 Nov 2023, then 28 Feb 2024. Some folks are forecasting interest rates to go even higher later this year, so I'll keep an eye on it, but it won't affect my strategy TOO much. Maybe I'll put a little more $$ if the interest rates climb to 7%, though. That would be ideal. I feel like 7% is
pretty close to the returns you can reasonably expect from the stock
market, but a term deposit is extremely safe in comparison. Crossed fingers!
Every month I'll add $5-15K to another term deposit. I eventually want to get to a point where I'll have a CD maturing every month next year, starting in October 2024. By then hopefully I will have decided a strategy for that money that will allow me to invest it properly, with some thought behind my decisions.
