Welcome to the Money Maven's Financial Blog

Money Maven Blog by Sheryl Sutherland, Authorised Financial Adviser and Director of The Financial Strategies Group

Recommended Reading

Recommended Reading by Sheryl Sutherland: Girls Just Want to Have Fund$ - Every Women’s Guide to Financial Independence, Money, Money, Money Ain't it Funny - How to Wire your Brain for Wealth, and Smart Money - How to structure your New Zealand business or investments and pay less tax.

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The Financial Strategies Group

Most of us spend 40 years working to secure our financial future; the most important investment you can make is to purchase appropriate financial planning advice.

Contact us for a review of your investments and insurances.

Begin to experience the serenity that accompanies financial responsibility and integrity: email sheryl@strategies.co.nz, call 0800 64MONEY or visit our website http://www.strategies.co.nz

Thursday, 28 April 2011


A fascinating article in the Sunday Times recently highlighted readers on how to predict a divorce. It appears that credit card statements tell their own story.

So what are the alarm signals that suggest divorce might be in the offing? "There are many transactional signs," explains Professor Ben Fletcher, head of psychology at Hertfordshire University. "Spending on extra lunches or staying in hotels more frequently may indicate an affair. Perhaps the couple shared one weekly food shop and now buy separately. You'll see people preparing for a split by changing their wardrobe or taking on new financial responsibilities."

Welcome to the brave new world of super-crunching, in which large retailers, credit companies, governments and health providers store tens of billions of our financial transactions in huge data warehouses and send computer programmes scuttling through them like electronic spiders, looking for patterns that might mark individuals out as a health risk, debt risk or even terrorist risk.

It's a multibillion-dollar industry and, appropriately for a nation of net-curtain twitchers, the Brits are market leaders.

For example, the Canadian credit company Tire established that customers who went to sports bars were most likely to miss a payment, while buyers of carbon monoxide detectors and premium birdseed were a safer bet.

Each time you call your credit card firm, a computer rush-analyses every transaction you've made over the past 12 months and displays its assessment to the call centre operator answering the phone. And that's just the start.

Finance and Investments

The biggest investment we make, emotionally and financially is in marriage. Figures vary but almost half of marriages end in divorce. It therefore makes a lot of sense to sort out financial issues prior to marriage - it should in fact be a priority. Here are four areas that should be at the top of the discussion list.

How did your parents deal with money, how does that impact how you deal with it, and how might that impact a couple's relationship?

Because so many of our money behaviours are learned, couples should share their earliest money memories - whether their father hid money from their mother or how either parent fretted over the funds available.

While it's about the least romantic subject imaginable, your credit history holds a chunk of your permanent financial record.
Full disclosure on the credit front is useful for two reasons. It is a good starting point for a discussion about what you've learned (or still need to learn) about handling money.

Figuring out who will pay the bills each month may not seem to be an important conversation or assignment. But it gets tricky when both people want to take it on.

Here's another question that tends not to come up during courtship: Just how rich do we want to be one day?

There is no right or wrong answer, it's just about understanding, going into a marriage, what that would really mean.

More on these sorts of discussions can be found in my book "Girls Just Want to Have Fund$."

Who's Counting?

"I've done the calculation and your chances of winning the lottery are identical whether you play or not." Fran Lebowitz

Victoria University statistical consultant Dalice Sim crunched the numbers yesterday and revealed the odds of winning the big one where rather long. Per line, the chance of picking all six balls plus the Powerball is 0.000000026064, or one in 38,367,096.

With a $12 Powerball ticket, the odds shorten to a paltry one in 6,394,516.

Everyday Money

When you analyse a mortgage, there are three components which determine the true cost to you: the principal, the rate of the interest you pay and the total amount of interest paid. The principal is the initial amount you borrow, an amount obviously decided by the borrower in conjunction with the lender.

For a $230,000 mortgage, assuming an average interest rate of 7.5 per cent (based on the average interest rates of the past 10 years), the borrower will pay $348,950 over a 30-year term and $279,940 over a 25 year term.

Combine this with the principal amount and you have your total repayments: $509,940 for 25 years, or $578,950 for 30 years.

At the end of the day, you cannot influence the interest rate. At best you might be able to negotiate a discount. But a discount does not have a major impact, if you could secure a lifetime discount of 0.2 per cent (so average 7.3 per cent instead of 7.5 per cent), you will save $11,297 in interest.

What you can influence is the total amount of interest you are paying. Channelling your income through your loan to offset the interest cost, reducing your term, and making extra repayments will all have a substantial impact on the total interest you will pay.

Simply channelling your income can save 12 years' interest worth $147,194 on $230,000 borrowed on a 30-year term at 7.5 per cent interest. This translates to a real interest rate discount of 2.75 per cent, giving an effective real rate of 4.75 per cent.


Why is nothing in this world constant? Earthquakes, revolutions, and now the news that the lipstick effect isn't working any more. What? You mean you don't follow the lipstick index? Leonard Lauder will be horrified.

The idea of the lipstick index was conceived by Lauder, from that rather famous family, after the September 11 attacks in 2001. The theory is simple - in times of economic and political uncertainty, people don't spend up big on clothes and accessories, but still want to splurge on a little something for that feel-good factor.

Hence lipstick sales go through the roof while other retailers are hurting. This has been correlated from data during the Great Depression as well as early this century.

The problem is, in our current climate of financial and natural disasters, the lipstick slope seems to be stuck at the bottom, and is refusing to rise.

Musings and Amusings

It was not amusing to read of Saudi Arabia’s decision to ban voting for women – it’s outrageous.

It did however cause me to muse upon the flagrant disregard not just for women’s “rights” but the failure to see women as beings with intelligence, the ability to think, and to be at least equal to men.

I suppose that here in the West at least chauvinism is fairly covert and some effort is made to allow women to join the ranks of voters and workers. Still, women at the top as a matter of course seem to be a couple of decades away.