• Tony Alexander

How to handle a high cost of living and qualify for a mortgage

Coins in a jar

By Tony Alexander

Independent Economist and Speaker

Handling a high cost of living

Last week I sent out a survey link to my 25,000 subscribers inviting people to give their thoughts on how families can handle the newly escalating cost of living in New Zealand.

Over 450 people sent in their thoughts and what I have done is select a good number of the responses which capture the vast majority of what people wrote.

Many people sent in a list of suggestions, and I have picked single suggestions from many lists and reprinted them below.

My summary of the thoughts which people have offered is this. In terms of cutting back on expenses, the most popular suggestion was to stop buying café coffees alongside reducing eating out and entertaining at home. Growing one’s own vegetables was frequently suggested alongside reviewing all one’s expenses and subscription services, electricity, and insurance in particular.

• Sell unwanted items on Trademe

• Ask your employer for a decent wage increase or shift jobs.

• Make a budget and stick to it, and don’t deviate from your supermarket shopping list. However, bulk buying groceries ahead of time if on special.

• Make your own lunch and do weekly baking for kids’ lunches.

• Reconsider buying another pet.

• Switch to cheaper holidays.

• Calculate expected annual expenses and set up an automatic payment to an account ready to pay them.

• Cancel credit cards and avoid buy now pay later schemes.

• Go vegetarian.

• Take in a boarder or flatmate.

• Put bank account money to better use in alternative investments.

• Adopt a less cluttered lifestyle not focussed on acquisitions.

Respondents’ suggestions

• Stop buying cups of tea or coffee. It's almost as bad as being an alcoholic.

• Talk to your employer about working from home instead of spending money on transportation costs.

• Take advantage of community recycling centres where you can find some high-quality products at bargain prices.

• Rather than the posh cafe for coffee and panini, how about the lovely family bakery for a $3.50 sandwich? Saves huge money and you still get the convenience of eating out.

• How about making soups and freezing them to use up a chicken carcass rather than throwing it out?

• Assess your fixed costs and look at whether there are other providers that do it cheaper. In particular, mobile plans, internet, power, and insurance. You might even benefit from considering moving to a cheaper area, particularly if you're now able to work from home more.

• Check if there are any ongoing subscriptions that you could live without.

• Restructure/refinance your debts - if you're really squeezed, putting everything into one loan over a longer period can help.

• Sell car & use a bike and public transport more/ try and increase your rates for any contract consultancy work.

• Get a veg garden going.

• Eating less meat, buying from PaknSave, cutting takeaways and subscription services, keeping track of budget more tightly, selling unwanted possessions on TradeMe, getting part-time work on the side.

• Something we implemented several years ago was to have a “cheap week”, where we basically commit to spending a quarter of our regular amount on groceries. We found there was actually a lot of wastage and overages within our regular shop, plus if you dig around the pantry and freezer, there were meals upon meals of food stashed away. It takes a lot of forward planning for the week’s meals, and some very boring old fashion stodge for dinner, but the excitement of spending $100 rather the $400 is huge.

• Less eating out and takeaways and buying more used products where we would buy new - e.g., coffee maker on Trademe.

• Go shopping 1x/wk instead of several, fewer days a week using car, potluck dinners & make your own coffees.

• Just purchased a hybrid vehicle to reduce petrol costs. In the next 12 months will seriously consider moving to Australia.

• Meal planning to only buy needed items and avoid food waste and overindulgence and get groceries once a week to reduce the opportunity to buy more unneeded food. For women, use a reusable menstrual cup instead of pads and tampons. Use handkerchiefs instead of paper tissues and cloths instead of paper towels. Collecting laundry to only wash full loads. Sell unneeded items that have not been used in the last year.

Cut down on takeaways/cooking books for economical family meals / reduce to 1 car &


Buy Assets (Property and Shares) and cut nonessential spending. Try and get some interest-only debt and use inflation to improve your equity position. Fix loans for 2-3 years. Look at equity partnerships to assist others to do the same thing. A time to improve leverage for those that own assets and ensure wage reviews are more than annual.

• Make a cut lunch at home for work. All my staff spend over $8.00 - $10.00 on lunch

every day at canteens etc. I take my lunch and it costs me under $1.0, for 4 sandwiches.

• Shopping smarter. Predominantly purchase items on special; forward purchasing at the supermarket, which saves money. However, requires being an organised forward thinker and also having surplus cash to stock up the freezer.

• We've switched to an electric car, and we have switched to an EV electric plan and incidentally put a timer on our hot water cylinder too. The savings from doing this are $65 per month in electricity and simply not buying any petrol at all which is huge. The fact our power bill has gone down not up with a new provider (Meridian EV plan) essentially gives the car a negative running cost!

• If you are paying more than 3% into KiwiSaver, you could temporarily reduce the contribution amount (but make sure to increase it again as soon as you are able). Alternatively, take a savings suspension for 12 months if things are really tough (but try to contribute something in order to get the government contribution at least).

• Have a clear out! Sell things you no longer need or use regularly. Trademe, Facebook Market place or a garage sale are all good ways to make a bit of extra money to top up your emergency fund.

• Make comparisons. Compare insurance providers, compare meal plan kits, compare grocery stores; shop around and save where you can. Whilst we may have brand loyalty when it costs us, it will add up quickly.

• Buy a decent size freezer. Buy frozen veg, no waste just use what you need and return to freezer. Chase the specials on poultry which can be ridiculously cheap, pun unintended.

• If a beer drinker, become a home brewer; so simple to make good beer at a fraction of the price of commercial stuff.

• Be light on the gas pedal.

• Baking/cooking at home to bring to the beach instead of buying there.

I try and do baking once a week to put into the freezer for school lunches.

• Reduce or cut out those coffees, maybe by buying a Nespresso or similar, which work out to less than a dollar per coffee. Avoid the takeaways - roast a chicken yourself and save the leftovers for salad or sandwiches the next day. Buy canned chickpeas and find a good recipe for chickpea salad - cheap, filling and healthy!

• Household Costs: Review your regular bills such as electricity, gas, broadband and mobile network provider (flipping providers can provide healthy credits), opt out of subscription services (Netflix, Sky, Spark Sports, wine club and gym memberships, the daily couple of coffees) that charge monthly for a la carte one off or treat yourself to a movie night/buy services on special, don't buy new cars (depreciation on trade up), learn to cook at home (cheaper than dining out and especially hosting dinner parties), consider making your own espresso coffee at home (acknowledge the social aspect but $10 for two coffees a day is $2,400 a year not counting holidays), grow veges at home (exercise/tastes better and you don't discretionary spend as opposed to wandering through a mall) - set aside a regular account for luxuries and don't overspend it, reconsider getting pets for the kids or choice of pet (feeding, vet bills for a dog are much more than a goldfish let alone the exercise)

• Resist impulse buys on clothing - look at the idea of capsule wardrobes built around a small selection of quality garments that you can coordinate (men and women).

• Above all don't worry about FOMO/keeping up with Jones next door - I had neighbours with new European cars, a boat, lots of overseas holidays but loaded themselves with debt and it all went pear-shaped when they lost jobs whilst I paid down a mortgage and drove around in an old Ford.

• I've always been a fan of growing my own when I can. Gets me outside, fresh air, a bit of exercise, satisfaction once you grow something .... and it normally tastes better too.

• Quit smoking and buy a jar of instant coffee.

• Wash in cold water only to help reduce power costs. Repair damaged clothing. Join a library.

Quite often suppliers will lower their prices by you simply calling and asking "Hey, can

you do better?"

• Instead of doing things on the weekend that cost money we enjoyed free places like being out in nature, going to galleries or museums etc.

• If you rely on Uber Eats, go to night school and learn to cook, you can make some fantastic meals for under $10.

• Buy used items not new i.e., second-hand clothing, cars, trade me & marketplace, you can get part tins of paint & used curtains. etc explore your options. Don't buy named brands unless you really know they are worth it, take in a boarder. Consider cheaper holidays, much can be enjoyed for less cost.

• Bulk buy non-perishable food, directly from the producer if possible or from bulk resellers. Get a chest freezer and buy meat on special then freeze it. Upfront cost, but big savings.

• Shop around for phone, internet and electricity providers as you may be able to secure a better rate/price.

• Taking a prewritten grocery list to the supermarket and not deviating from your list! Don’t be fooled by the displayed products, check pricing on the category shelf. Stay away from buy now pay later!

• Buy a 10 or 20 kg bag of rice one week, a sack of potatoes, sausage meat, eggs, a cabbage. Onions if you can afford them. This is enough to live on for evening meals. Porridge and possibly milk powder for breakfast. Vegemite and bread for lunch, butter if you can afford it. Some shops will let you collect newspapers that haven't been sold. Cut into squares, put a hole through one corner, tie with string and hang on the toilet roll holder. It needs a good crushing and rubbing before use and ideally not flushed. If water rates apply use a bowl in the sink and use the water to water the veggies you are growing. Use Sunlight soap for everything = dishes, laundry, bathing, hair. Need to shake it in a tin with holes for dishes, melt grated in hot water for laundry. Shout yourself a cheap hair conditioner. Turn off the hot water system power in the morning and on at bedtime. Share a mobile network. Walk to work if only 8 km or less. Yes, this is how I was brought up. For my birthday I wished for an orange and wouldn't dare wish for steak, but definitely, shop-bought sausages.

• Buy clothing online, it's lots cheaper, do not buy a new car every two years, buy a second hand one and look after it. Alcohol is expensive, cut down the consumption, same with cigarettes.

• Cook meals at home.... eating out is expensive. Walk more: drive less. Ride a bike. Get a side hustle or part-time job. But the best advice is to want less...embrace minimalism and don't be a slave to advertising gimmicks. Most stuff you buy, you simply do not need. It's just clutter.

• Turn off extravagant appliances - spas, spare fridges etc to reduce electricity costs.

NEVER shop when you are hungry!

• BP has a weekly special that increases the saving made per litre of petrol from 4 cents to 10 cents up to 50 litres. Using the card on the right day just saved you $5.00 which, on a $100 fill-up, is 5%. Do that 26 times a year and you just saved $130.

• In past times when money has been an issue for me personally, I did a monthly supermarket shop for essentials. Only eat fresh meat and vegetables as always. Allowed me one treat a week, whether coffee out or cake of chocolate. Treated at least one if not two days a week as carless days. Planned walks from where I was living doing at least 10-20km walk on the carless days. Found myself a casual or part-time job on top of my full-time work. • Limited shower times, making sure all lights turned off and electrical appliances turned off at wall not just on appliances itself including TV's etc, turned heated towel rails off completely, hung towels outside, dried washing under the carport and in the garage. Cold wash for washing clothes and only when the washing machine was full. In winter lived in one room put on extra layers of clothing including long johns, thermal underwear.

• Do your own chores instead of outsourcing them - lawns, hedges, cleaning etc.

• Reduce household costs as much as possible. Live cheaply. Budget. Instead of using a heater, wrap up in warm clothes and watch tv covered in a blanket. Use electricity during off-peak times. Turn off lights or heating when you leave a room. Limit warm showers to 3 minutes. Instead of taking your car to the shops or work, try cycling or walking. Instead of getting takeaways or eating out, cook up your own big pot of rice or spaghetti. Take a lunchbox to school or work. Grow your own vegetables. Go vegetarian, it's much cheaper and better for the planet. Reduce unnecessary subscriptions. Use cash instead of a credit card. Take your own coffee to work. Set a strict personal spending budget of $50 per week - when it runs out, stop spending until next week. Sell your car, buy a bicycle. Move out of your expensive rental and into a friend's cheap converted garage (I did this for 2 years!) Get a flatmate - rent out extra rooms in your home.

• Make sure that you use all loyalty discounts available, whether that is the AA/Countdown card for fuel discounts or other supermarket/petrol discounts. I put everything possible on my credit card (unless there is a charge for doing so) and then use the points e.g., Warehouse credit card then use the points to buy kids Christmas presents. Always pay the credit card off each month. Have Flybuys/Airpoints etc. Replace branded goods with home brand especially flour/milk etc. Plan meals around what is on special that week.

• Use Click and Collect grocery shopping – it’s easier to stick to a budget/list and to ensure you get everything you need for the week and don’t have to go back. Much easier to take snacks out of the online shopping cart than when you’re seeing the bill at the cash register in-store.

• Delete sweets/biscuits/cakes/ takeaways from the diet.

• Supermarkets discount some perishable items after a certain time, usually sometime from 3 pm onwards. A vacuum sealer is a good way to make food last longer.

• Cut spending on eating out. This was an easy win for my family, we now do Friday night 'Fakeaways'. I have also stopped buying coffee when I'm in the office and bring my own plunger coffee for my morning fix.

• Wait for the movies to come online - cheaper to watch as a group at home.

• Leave the cities & relocate to the regions where rent/ house prices are in check with incomes. Food production hot spots in the regions are best where produce can be purchased directly from farmers. Middlemen apply considerable markups so opportunities for savings are plentiful when going direct.

• Download and use the Gaspy app, we save about $20 per fill, admittedly that's for a full tank of 98 in the Porsche!

• Review all utility payments, use Powerswitch etc. to find the best deal for your

needs. Suppliers understand it takes effort to change and that’s an apathy tax.

• If frugality is hard because of your social milieu, you can either change your friends or tell them that you are doing it for the planet. Then go and buy your clothes from op shops.

• Live like a student.

• Never pay for car parks- allow time to walk a bit further to free parking instead.

• Do supermarket shopping only at the end of the day when you can shop the specials.

Reverse the way the supermarket wants you to walk around, so expensive fruit and veg

come last not first.

• Supermarket rule - own brands and lowest shelves are cheapest.

• A doctors visit or haircut in a poor suburb costs half that in a wealthy suburb.

• Hi from London, UK. We have the same scenario here. Use meal delivery service - Hello Fresh or Gousto are my two faves here. They really save you money. Since using either of them, I have cut my visits to the supermarket drastically. Definitely save money on food with these meal planners.

• Put your excesses up on your insurance and save the difference.

• Drink tap water.

• Get rid of the landline.

• Shop 2nd hand first - you will be surprised what some people throw out/sell-off for next to nothing. But be critical - make sure it looks almost new and/or you can repair it easily. Got me a 75% woollen coat in an op shop for a fiver and it's lasted me 20 years. Only needed a dry-clean and I always get compliments on it.

• Get veggies from greengrocers not supermarkets; a difference between varieties of apples for $5.50 vs $1.99.

• In the country we have the opportunity to purchase a beast that is killed and dressed, if you have 2-3 others share in the cost this will certainly save you money on your meat bill in the long run. Ask your neighbour for the fruit that falls from their trees and goes to waste

• Don’t spend money on things that will be used for a short time - instead spend it on an occasional experience for the whole family. Young children don’t need a lot of plastic toys. They will be just as happy with homemade play dough, or outside with mud pies in the garden. Shop at 2nd hand stores. If you don’t know how to sew, go to sewing classes. Cheap, basic sewing machines can be easily bought now for less than $100. Older kids can learn to make their own clothes. They can sew designer labels on them from old clothes. Don’t buy lots of different household cleaners - Baking Soda and white vinegar are cheap cleaners. I use Handy Andy and Jif for nearly all cleaning. A little Handy Andy in a bucket does the hard floors (or use a spray bottle with the mix in it and a mop). Jif cleans the shower perfectly. Windows are easily cleaned with a small amount of Handy Andy in warm water, then wiped down with a clean cloth. Shop the outside aisles of the supermarket - this removes lo temptation to buy pre-prepared foods and junk food!

• In my experience it is always best to make sure to take money out of one’s wages or salary first for savings, tax, rent or mortgage payments etc. It is amazing how far the balance can be stretched if required.

• In the 1980s with high inflation, I channelled every spare cent I had into paying the mortgage and rented out a room to cover costs.

• Reduce/eliminate food waste.

• Eliminate the people who are financially incompatible with you.

• If you have a problem paying the bills, seek credit counselling as soon as possible.

• Write down what you intend to buy. Wait a week or a month (for expensive things), to decide if you still need to buy. This reduces impulse purchases, especially if you involve like-minded family or friends in this strategy.

• The Internet is full of recipes for using left-overs in healthy meals, also for recipes that use some meat but not a lot e.g., stir-fry meals. Buy some re-sealable containers for left-overs (money well-spent!). Re-use plastic bags (wash and dry - not those used for raw meat).

• Reward children, not with bought treats but with your time - and have a list of satisfactory liked alternatives - read a series of books to them - depending on age level and interest but even 6-7-year-olds enjoy the Narnia series - reading an extra chapter can be a highly regarded 'treat'! Even a slightly later bedtime can be a well-liked 'treat'. Go to the Library, to a Museum, to a park, to a playground, take a ball or maybe a kite with you, go for a walk, play some requested music, sing with them, play a game, help children find alternatives. Ask children what they'd like as 'rewards' or 'treats' for good behaviour, doing as told, etc - the criteria being that it does not cost money and time allocation is appropriate.

To read or access

• For clients in a difficult position with debt - I recommend Dave Ramsay's book 'The total money makeover' - you can get this as an audiobook for free if you have not signed up to Audible before.

• Learn to budget

• Budget carefully; Track spending (we use Pocketsmith).

• Read the Barefoot Investor by Scott Pape. While Australian, it has some really good principles to help shape your financial situation for the better, including getting that side hustle going.

• Have a look at Ker-ching. That is my App for these exact times. AppStore or Playstore.

• As a business owner, we are getting the team at to deliver their business courses on budgeting and financial literacy. I don't know if many businesses are aware of Sorted's mini-courses for staff. But this year will be all about budgeting for many of our staff, and how to handle refixing their mortgages.

Extra Income

• Keep an ambient level of attention focused on the job market so that you are in tune with the opportunities to increase your income.

• Swap jobs with friends or neighbours e.g., 3 hours cleaning for 3 hours gardening or babysitting

• Get a 2nd job (I took in ironing after work - cash in hand paid well)

• Employees must put pressure on their employers and managers for higher wages and be prepared to move on if they do not get what they want. Lots of staff moving around will encourage employers to pay more as they will not have an option.

Have a genuine conversation with your employer, in advance of any formal pay reviews,

to outline expectations for wage growth in light of this.

• For those on fixed incomes with money in the bank at <1.50%, invest in higher-yielding

shares and funds. I get asked for an opinion (as I am not an advisor) a couple of times a month. Those that do have an improved standard of living while those that don't keep moaning.

• Important to benchmark your current remuneration with similar roles. Compare your performance and productivity to that of your peer group and negotiate accordingly. Always be positive and have an objective plan to present to your employer, which should work.

• Join your union.

• Rent your home out during holidays for extra income.

• Take in a boarder to help with rent or mortgage payments.

• Be loyal to yourself, not your employer. The best way to secure a pay rise over inflation is to look for new job opportunities. With low inflation, some industries are seeing staff head-hunted with 15 - 20% salary packages dangled in front of them.

• Employers don't really want to lose their good staff. If you feel valued and confident and aren't on a collective agreement, ask for an increase. If you don't ask, you'll never know the answer. Most people do this badly. Say you want an increase - list your strengths and don't explain because it's the cost of living. Focus on what you bring to your employer. They are more likely to consider it if your reasons are based on what you bring THEM. After you've explained why you are the bee’s knees and you've asked for your increase, be quiet and let them do the talking. I've worked in HR for countless years and the amount of time people talk themselves out of an increase is astounding. Oh, and don't forget to check how much you get in the hand after tax. If the increase has the potential to knock you into the next tax bracket, the amount you ask for might need to change. You can check the amount you get in the hand after tax on the IRD website.

• Downsize to free up cash to invest for LT income.

• Putting more of my earnings into securities e.g., ETFs and less into my savings account.


• Cut your cloth before you get into trouble. Went vegetarian when the kids were young and money was tight. Do things that later on in life people will comment to you that you are lucky.

• Financial management by having bank accounts that income is paid into and held in to meet ongoing loan payments, bills, insurance etc..... save some funds in another account.... what is left is available for discretionary spending in the spending account.

• Structuring bank accounts to easily see what funds you have available to spend. Total up the bills you have for the year (insurance, rates, mortgage, power estimate, phone etc) and each payday have an AP go to a bills bank account those bills are paid from and ideally an amount to a savings bank account too. Then each week a set amount is paid over to the bills account to cover these costs/AP's that are set to come out from this bank account. Then what is left in the bank account is available to be spent. No funds in that account then you can't afford that night out or new clothing. A simple way of budgeting that only needs updating once or twice a year.

• Consider moving from credit cards to debit cards.

• We found that we were spending a little amount, a lot! And the only way we discovered that was printing out our statements and going through line by line adding up the totals. Small changes like a prepped lunch and 50% fewer takeaway coffees meant we saved a lot quickly.

• I maintain a Google spreadsheet where I record my monthly summary of expenses, credit card/Q/Gem payments, electricity usage, etc. Also, monthly expenses are categorised into different areas such as groceries, vehicle, house, baby, entertainment, medicine, etc so I know exactly where my money goes. Also, this helps me to have a good view of our household spending and where the areas that we should or can cut costs.

• Prioritise your spending. Write down your expenses ranked from most important (probably food, mortgage, any savings etc...) to least. Then draw a line where your budget allows and stop spending on those things below it.

• List expenses highest to lowest, start with highest, brainstorm each one with team/family. How can we remove this expense, or halve it? Should manage to save 10-15%.

• I use an excel spreadsheet to record income and deduct monthly accounts. I reconcile it to the bank account daily entering my daily expenses as per the bank record. It shows a running balance for the month that connects to the next month’s new page, so any entry affects the running balances up to 8 weeks ahead. This way I can see what my monthly surplus will be and when my bank account will be stressed with outgoings enabling me to work around the issues before they arrive. I would be stuck without this and would hate to return to a stressful hit and miss situation.

• The setup is simple ... just collect all your last month's accounts and arrange them in due date order. Enter them onto the spreadsheet with Income across the top by calendar date Day1-31 and expenses down the left-hand side as a budget fig and enter the amount across the page on the date the payment is due. Sub total income on a daily basis and the same with the expenses and deduct the expenses from the income showing the result on a new line below the expenses totals. This new line represents your end of day bank balance.

• The top left corner should begin with last months final balance and the bottom right should represent this month’s final total which transfers to the new months top left and cycle repeats. By entering a regular savings figure and transferring it out as a cost

to a separate account each month works well and provides a buffer for those unexpected costs. This method prevents an account from being forgotten and also shows up any unusual changes in monthly costs which can be queried.

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