Diana Clement: Confusopoly, laddering and a few twists

Even if cars are the love of your life, bangernomics should prevail. Photo / Getty

You'd think that writing about money was simply repeating the same concepts over and over again. Every year I come across new ideas, new concepts, new products and sometimes someone phrases an idea in a new way that makes it sink in.

I've noted down many of those learnings that came my way in 2015. They include everything from the concept of Confusopoly to effective ways to counter the "I wants" in children and teens.

One example is that the implications of the rule that to qualify for New Zealand Superannuation you must live and work here for five years between the ages of 50 and 65 sank in. It means there will be an awful lot of Kiwis in Australia who will on retirement discover that they don't qualify for the pension there or NZ Super here.

We journalists love labels. This year thanks to Dilbert, I came across the word "Confusopoly" when trying to describe mobile phone plans. The game of Confusopoly was played over a period of months by peer-to-peer lender Harmoney, with both investors and me, as we tried to get to the bottom of its double dipping commission model.

That particular puzzle reminded me that reading every word of the fine print doesn't guarantee understanding.

On the subject of labels I gained a new view this year of Bangernomics, the economics of keeping old cars running, which I have wholeheartedly endorsed all my life. An interviewee, however, made the point to me that if cars are the love of your life, then it's okay to spend money on them providing it's within the budget.

Another concept that gained a label this year is laddering. Laddering involves splitting your term deposit maturity rates to take advantage of the highest interest rates, but always have a portion of the money about to mature.

I had the pleasure of being MC at a Financial Services Council conference this year. The Ministry of Social Development speaker Lynda Smardon pointed out that if you fall ill and your partner is earning $30,712 or more you're not entitled to a single cent of benefit.

On the subject of insurances, reader "Arthur" commented rather cynically that we no longer need life insurance because a Givealittle campaign will sort the finances if something goes wrong.

Tim Grafton, chief executive of the Insurance Council made a very valid point about the huge number of Kiwis whose homes are underinsured. Underinsuring means you'll get a smaller or not so nice house as a replacement, not no house at all, Grafton pointed out.

The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.

I finally put into words the concept that Kiwis consider the credit available to them not as debt, but as part of their overall finances. Zero is no longer zero, says Otago University academic Lisa McNeill. Having zero money means negative $2,000 or whatever their limit was.

A related concept is that Kiwis have come to view their houses as piggy banks that can be dipped into whenever the credit card needs clearing or a new kitchen/bathroom/extension is required. They view their capital as "spare equity" and the remortgage wipes from their minds that they're living beyond our means.

Leaked Barfoot & Thompson data about non-resident foreign house buyers in Auckland was an eye opener, despite sectors of society with a vested interest doing their best to discredit it. . It showed that whilst ethnic Chinese make up 9 per cent of the population, 39.5 per cent of Auckland houses sold from February to April this year were bought by buyers with Chinese surnames. Not all would be non-resident buyers. But that's a huge disconnect in the figures.

Sometimes it's an old concept articulated in a new way, which makes the reality sinks in. Construction Cost Consultants' Gary Caulfield made the point in an article I wrote for Property Quarterly that New Zealand's Building Code isn't a standard for builders and developers strive to, it's the lowest common denominator. New houses that just meet the standard are actually pretty substandard by OECD levels.

Parenting Place's John Cowan came up with a good counter to the "I want I want" disease in children. Offer to buy the shirt or the phone, not the label.

He means: provide enough money to buy a shirt from The Warehouse or a Huawei phone, and the child saves the rest if they want to buy an Amazon shirt or iPhone.

The best financial quote I heard this year is actually several hundred years old. But thanks to EY's Aaron Quintal for citing Louis XIV's finance minister Jean-Baptiste Colbert who declared that "the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing." Nothing changes.

Reader "ecopath" from St Heliers made me think about how people plan to use their KiwiSaver. Naïve me has always assumed that it would eked out over their twilight years. "You forgot to mention that many people have already mortgaged their KiwiSaver account, because there is no way they have their debts paid off by the time they retire," s/he said.

The Reserve Bank of New Zealand told me: We're the Australian parent to attempt to transfer assets out of the New Zealand entity to strengthen the Australian entity on non-commercial terms, then this would result in regulatory action from the Reserve Bank.

Andrew Bruce, president of APIA pointed out in an interview that $1m borrowed now on a property costs the same to service as $500,000 did in 2009. "It's scary having a mortgage that much bigger. It's half price, but it's not going to stay half price forever," Bruce said.

One of the most interesting products I came across this year is the Retirement Income Group's annuity style product that allows retirees to receive a fixed income for life from their KiwiSaver pot. By coincidence that product launched last week and details can be found at Litetimeincome.co.nz. Another product that came of age is eWill.co.nz which unlike previous online Will-writing packages is backed by a company that actually understands and checks for the mistakes that DIY Will writers can make.

I learned an awful lot about hard sell methods after insurer Youi deducted $592 from my credit card account.
The experience made me dig deeper. When I sat down and read the Youi policies I realised that the company isn't selling equivalent cheaper insurance, as it appears to me based on their claims on TV. It's selling different cover. This is a great reminder to READ YOUR POLICY.

Various articles about older people revealed the good and the bad. It had never occurred to me that children might be forcing older people to take out reverse mortgages for them and hand over the money.

There were as always a number of epiphanies to be had. One came thanks to American personal finance writer Thomas C Corley who put the figure of no more than 15 per cent of net income that we should spend at the supermarket. He argued that many products we drop into our trolleys should be classed under our entertainment budget.

I still worry whether Australian banks could take a haircut of NZ savings if things turned to custard there. The Reserve Bank of New Zealand told me that "were the Australian parent to attempt to transfer assets out of the New Zealand entity to strengthen the Australian entity on non-commercial terms, then this would result in regulatory action from the Reserve Bank." What that said to me was that the Aussies could still try.

I'm afraid I ended the year shaking my head in despair at why so many financial services companies such as Youi and Harmoney view investors/customers as cash cows to be milked.

Their methods may be legal, although all have faced investigations from the authorities, but they're certainly not morally acceptable.