overseas, student loan, and other

[Pumice]

Value is pretty subjective isn’t it? Some people pay millions for dodgy bits of art.
I’m sure there’s some value in it. Even if it proves they’re ability to learn.

I’m an economist; so many people would say I’m the scourge of the earth.
I wouldn’t say they are wrong…..

[thishastowork]

Pumice at least Geology is useful even if there are at present few jobs in NZ but what use is a geography degree.

While there is no direct job with a geography degree in the same way that someone would study dentistry to become a dentist I dont know of anyone from my graduate year that has failed to find meaningful work after their degree. Myself I moved over to the UK and immediately found a good job for a town planning, development and regeneration firm. Having a geography degree here was the bare minimum requirement.

Others from my year are doing a variety of different jobs. One girl has moved to australia and is working in mining. Another is working for hamilton city council. And a good mate of mine is working in auckland for an environmental planning firm. Many decided to stay on and further their qualifications, going for masters in planning or completing research on their own interests.

Does this clear the mud?

[ENP]

Thishastowork...

I'm 22 been working for a year and have a $30k student loan. About $20k in savings. I don't plan on doing an OE for 2-3 years so am in a slightly different boat but I would suggest you pay it off as slow as possible.

I assume when you come back to live the interest on the loan goes back to 0% or does it stay at 6.6% when you are back living in the country?

Banks don't take into account student loans when you are applying for home loans if that is what you want to get into.

Also, if you save up and pay $50k off your student loan asap. Think of how long it would take you to save up again for another $50k if you had to start from scratch.

But if you simply want the weight of it off your shoulders and the debt is a burden, then by all means pay it off.

(Side note, did you go on an OE to the UK? Did you enjoy it and would you recommend the UK as a working OE?)

[thishastowork]

(Side note, did you go on an OE to the UK? Did you enjoy it and would you recommend the UK as a working OE?)[/QUOTE]

Im in france at the moment. But i started in the UK. I would recommend the UK as a start. For these reasons,
- Great place to start because it is an english speaking country so you dont get quite the culture shock.
- It is geographically close to the rest of europe (and the rest of the world) and with low cost airlines its easy to fly
- You will probably know someone whose couch you can sleep on when you arrive
- Its easy to get a job. Even easier for a new zealander
- Every kiwi (under the age of 30) is entitled too a two year visa, and if your grandparents (like mine) are born here you could probably get a 5 year visa

Although if you are in the UK for solely travel purposes i wouldnt recommend that you stay for any longer than a year. Because to be honest i think there are many better places to visit

[thishastowork]

I assume when you come back to live the interest on the loan goes back to 0% or does it stay at 6.6% when you are back living in the country?

It stays interest free for 6 months, then it backdates to when you left the country. It returns to interest free once you get back to new zealand

[lou]

Hi Thishastowork

I was in a similar situation to you a few years ago when the interest free loans were first made available. I went for the max and invested the excess. At the end of my studies I had around $12,000 in shares with the same mentality as you. Basicly it is a interest free margin loan.

After that I went and did a working holiday overseas with the plan that it was going to be zero cost to my savings. I was going to work to cover all my expenses plus I had a Job lined up in Canada before leaving. I would also like to add I am one of the most responsible people I can think of when it comes to money management and planning (also I am an accountant) so I thought I could do this.

However temptation got the better of me one way or another. When I got to Canada I need $4000 proof of funds so I had to sell some shares to have the funds available in a savings when I crossed the border. I did not purchase the share back as once I had done that I need to get a season pass, and snowboarding set up, and enough to cover me until my first paycheck.

This is not to bad only $4000 down.

A year later I had saved some money up from working in Canada and was going to do a central american tour. While on the tour I deceide to sell my portofilo [end of 2007 ] Partly because of what was happening in the market and partly because I needed an extra $1500 dollars to get home.

This is not to bad only $5500 down.

Once I got home I was thinking now I need to get a Job and start doing some saving.
On arrival I thought I better pay of my Credit card $500, and Buy a car $3500.

Only $9500 gone, $2500 left
By this point I was felling a bit gutted. I though I could job and start saving. My Job did not start for three months and I had to spend the rest to live on before my first paycheck.

While it is the best strategy on paper to not pay off your student loan it is not always the reality.

While I am not saying you are wrong in doing what you are doing there are potential downsides.

Hope you guys liked my anecdote.

[Year of the Tiger]

It's Sunday, a long weekend in Auckland and while I was reading the posts above, I see the ongoing "beating the Baby-boomers around the head" going on so have put some thoughts down.

Gen Y kids come out of University with their degrees and immediately head off overseas to delay or avoid paying their student loans. They whinge about Baby-boomers (B-b’s) being greedy, buying rental properties as investment vehicles for their retirement and basically stuffing up the future of NZ for them. Many B-b’s have now sold their properties and invested in “safe” finance companies, only to see the likes of Hotchin, Watson and many others, send their life savings into oblivion.

As a B-b myself, I’d like to offer a few things for our Gen-Y’s to think about:

Pros of being a Baby-boomer:
Free University education

Cons of being a Baby-boomer:
Not a lot of parents could afford to support their kids while they were getting this “free education” as the majority of families were one income only. Dad worked while Mum stayed home with the kids as there was no such thing as any sort of day-care. Usually society frowned upon “mothers working” and no such support existed to encourage mums out to work. (And funnily enough, there were very few jobs available for them anyway.) Usually it was the kids from more well-off families who went on to University at Auckland, Wellington, Christchurch or Dunedin. Even Massey was still known as Massey Agricultural College. Hostels were the norm for kids living away from home. Students living alone in flats were rare and mixed-flatting a serious no-no!!

You had to be lucky to have parents who could support you through your studies, as night and weekend jobs didn’t exist for most kids. No supermarkets, or bars and brasseries in those days. Drinking age was 21 so you couldn’t go into a pub and work the bar and shops closed at 8.30 Friday night and opened again at 9.00 Monday morning.

Instead of living in a “me-me” society, it would be great to think that the Gen Y’s were looking at the history of post-war New Zealand, understanding the role that B-b’s and Gen-X’s currently play in NZ, think about how the Gen-X’s will ultimately take over the position of the B-b’s as we retire and die, and how well they are placed to move into the gutsy role of keeping New Zealand a great place to live and raise kids. The country has moved from a manufacturing economy of the B-b’s through a service economy with the Gen X’s to the current technology economy with the Gen-Y’s.

Give the Gen-Y’s 20+ years. Many thousands of the current B-b’s will be dead from cancers, diabetes and other illnesses. (It’s happening already). The chance of many of us reaching the 90’s and 100’s is pretty unlikely and the Gen-X’s will start following closely behind us. Recreational drugs will shorten the lives of far more in decades to come than we are seeing now so there will be fewer to contribute to the Govt purse than we are seeing from the B-b’s at the moment.

As the Healthcare purse tightens, medicines will not keep us alive so don’t worry that we will be an increasing drain on society. We will be dead.

So, I guess I can finish with a final thought. Thank you to the Gen-Y’s who see fit to flit off overseas with their outstanding student loans that have been financed by the taxes of all of us B-b’s and Gen-X’s. If you choose to do what you say is legitimate, and avoid paying your loans for years to come, be prepared for the next couple of generations to feel aggrieved when they find there is NO student loans because the Govt purse is empty.

YOTT

[Pumice]

O.k. so I’m going to crunch some numbers for you and see what feedback I get.

My partner and I (Both graduates on averageish incomes) after Tax, Student loan, Kiwi saver/Retirement and charitable donations have in the hand about $6,150 per month ($73,800 p.a). We only have normal expenses like food, rent, savings etc as we don’t want any debt.

When we look at the numbers we can’t get it to work for us.
We have $100k +/- in cash and stocks. (Not including KS and other retirement funds)

We live in Wellington, where the average house is $450,000.
If we used the entire $100k as a deposit, that would leave a $350k mortgage.
Assume we drop an income to 1 to have children and we assuming we get no government assistance (?) we are left with about $37,800 to play with.
(also note that both our parents are too poor to have been able to help in any way)

$350k mortgage with an ave interest rate of 8% equals $28,000 (just in interest)
Add on principal, rates, insurance, normal bills, transport, cost of kids and we are well below the zero mark.

Live further away in a cheaper place? (Unlike the days of old) and you simply pay a fortune in transport ($2 a litre anyone), maintenance, parking etc.

Without making any assumptions about baby boomers.
HOW THE HELL DID YOU DO IT???

What are we doing wrong?

My parents bought an ave house in an average area on 1 ave income in their early twenties and had 4 kids soon after and claim it was a piece of cake. And my mother is a full time shopper!!!


P.S YOTT, my parents feel aggrieved that we couldnt have had free education like they did (just like your children no doubt). So are very understanding when we say we are heading to higher wage countries so we can pay back our student loans quicker. its just unfortunate we wont be here as tax payers either.
Really what you want is for all loan borrowers to have insurance against it so even if they die with it, it gets paid back.

[buns]

Any graduates leaving NZ should not feel bad about these possibilities to future generations. Are you saying grad leaving is going to force govt healthcare spending down and more intake of drugs? That’s ludicrous. If the govt woke up they have another $1.5b in there back pocket they are willing to waste on a fibre roll out no one wants/needs. Anyway govt spend is another story.

For NZ to get ahead we do need these high flyers in NZ, agreed. But NZ needs highly skilled employees, not graduates. I probably know of 20+ people who have gone and worked overseas, and all of them have or intend to come back once finished, or once accelerated there career/skills and have some good $$ behind them.

The problem occurs when these guys don’t come back, and in lots of cases there is good reason not to come back. Anyone wanting to work in business (a high growing rapid one like they have worked in overseas) will come back to work in a small capital restrained companies (baby boomers you pumping capital into houses), a workplace half full of old school twits who just want to get by with no win/compete attitude you find in Aust/US/UK. Then if you get ahead you will become regulated or forced to open up to competition. I look at the management team of a place like XRO – they did not learn there bold thinking from NZ.

Then you find the same sorts of actions from a personal sense, the tax system favours everyone not hard/innovative workers/companies, people who are lazy can carry on being lazy and live quite nicely. Any talk of rewarding the richer/smarter, forcing investment/savings will create an up roar.

Instead of your pessimistic view of NZ falling apart, I think we will see growth once a good portion of these people (20 something’s) come back from overseas. The govt needs to set a platform however, and I think they are slowly getting there.

[trackers]

O.k. so I’m going to crunch some numbers for you and see what feedback I get.

My partner and I (Both graduates on averageish incomes) after Tax, Student loan, Kiwi saver/Retirement and charitable donations have in the hand about $6,150 per month ($73,800 p.a). We only have normal expenses like food, rent, savings etc as we don’t want any debt.

When we look at the numbers we can’t get it to work for us.
We have $100k +/- in cash and stocks. (Not including KS and other retirement funds)

We live in Wellington, where the average house is $450,000.
If we used the entire $100k as a deposit, that would leave a $350k mortgage.
Assume we drop an income to 1 to have children and we assuming we get no government assistance (?) we are left with about $37,800 to play with.
(also note that both our parents are too poor to have been able to help in any way)

$350k mortgage with an ave interest rate of 8% equals $28,000 (just in interest)
Add on principal, rates, insurance, normal bills, transport, cost of kids and we are well below the zero mark.

Live further away in a cheaper place? (Unlike the days of old) and you simply pay a fortune in transport ($2 a litre anyone), maintenance, parking etc.

Without making any assumptions about baby boomers.
HOW THE HELL DID YOU DO IT???

What are we doing wrong?

My parents bought an ave house in an average area on 1 ave income in their early twenties and had 4 kids soon after and claim it was a piece of cake. And my mother is a full time shopper!!!


P.S YOTT, my parents feel aggrieved that we couldnt have had free education like they did (just like your children no doubt). So are very understanding when we say we are heading to higher wage countries so we can pay back our student loans quicker. its just unfortunate we wont be here as tax payers either.
Really what you want is for all loan borrowers to have insurance against it so even if they die with it, it gets paid back.

Assuming the average is about the same as the median (or near enough), 50% of homeowners out there are living in houses worth less than $450k. As first home owners should you not be looking at the cheapest houses possible?

I'm still in my twenties, own a house and my wife stays at home full-time with our baby and we manage fine - But we're in Chch in a $300k house