KEY POINTS:
Q: I was interested in your article last week in regard to giving meaningful Christmas presents.
While it is commendable to encourage people to buy a goat or a chicken for the unseen poor overseas there is a charity much closer to home that brings a bit of Christmas cheer into homes around New Zealand.
I am referring to the Salvation Army "Adopt a Family" scheme, whereby participants purchase gifts for a specific local family who are struggling to provide gifts for their children at Christmas.
The purchaser is provided with the first name, sex and age of the recipients and there is no contact between giver and receiver, as the Salvation Army wishes to avoid any embarrassment on behalf of the recipient.
Many baby boomers who have grown children may like to consider this as a method of returning something to the local community, and it is great fun to go out to purchase toys for a 4-year-old girl or a 12-year-old boy that you have never met.
My husband and I have been doing this for several years and as well as providing gifts for the named children, we like to put together a food hamper in which we can include all sorts of treats that the family would likely not enjoy over the year.
We make all the parcels look as bright and beautiful as possible and we usually provide more than just one gift each.
Although we get no direct contact from the family we do hear from the Salvation Army how well the gifts are received.
We have been told in the past that sometimes these gifts are the only ones the children get.
Although this may not be as long term as providing a hand-operated tractor to a farmer in the Sudan, it is bringing a little happiness into a local family who often feel somewhat isolated during the Christmas period.
When dropping off the presents at the local Salvation Centre there is a definite sense of doing something worthwhile when our boxes are added to the pile waiting for distribution.
Further information can be obtained by contacting Raewyn Heke on (09) 261 1074 or email raewyn_heke@nzf.salvationarmy.org
A: Charles Dickens - or someone else, depending on the website - once wrote, "Charity begins at home". I don't necessarily agree when it's applied to helping out a stranger in New Zealand as opposed to a stranger overseas, whose needs are probably greater.
Still, the Adopt a Family programme sounds great.
Perhaps we should all take part in it, as well as giving goats or chickens to overseas people - more on this below.
In the literature you sent me, the Salvation Army notes that it's a good idea to give gifts with a focus on the future or in bringing families together. "Family games, educational items or even disposable cameras are some good examples of gifts that achieve these goals."
Raewyn Heke tells me the recipient families are chosen from people "working within the Salvation Army programmes that offer assistance - for example, life skills, budgeting, employment and addictions - that will enable them to improve their current and future situation for themselves and their families".
Last year, gifts went to more than 500 families - or 2800 parents and children - all around New Zealand. Some donor families have dropped off the list this year, because of hard times, and Heke welcomes new participants.
What if she gets too many donors? "We'll always find families," she says.
Q: Great article last week on meaningful Christmas presents. We have been talking about this for some time and our extended family has been discussing limiting our presents to each other to $6.
Your article strikes a chord with our ideals, but no contacts or websites included? Any suggestions?
A: I don't know what got into me last week. I had the list below all ready to add to the column, but it didn't happen. Is it too early to blame it on the pre-Christmas rush?
For those who missed last week's column, you can buy a gift for a person in need, on behalf of your friend or relative, who receives an acknowledgment that they have given anything from a book or seeds to a tractor or a clean-water system. The charities that offer this include:
* ChildFund New Zealand: 0800 223 111 or www.childfund.org.nz
* Fred Hollows Foundation: 0800 227 229 or www.hollows.org.nz
* Leprosy Mission: 0800 862 873 or www.leprosymission.org.nz
* Oxfam: 0800 600 700 or www.oxfamunwrapped.org.nz
* Save the Children: 0800 167 168 or www.wishlist.org.nz
* TEAR Fund: 0800 800 777 or www.giftsforlife.co.nz
* Unicef: 0800 243 575 or www.unicef.org.nz
* World Vision: 0800 245 000 or www.giftsofhope.org.nz
Q: I am a single mum who runs a part-time business from home. I also receive some assistance from WINZ. I am currently contributing $20 a week to KiwiSaver.
Because money is a bit tight at the moment I have been considering working part-time as well to bring in maybe an extra $100 per week.
Now that National is in government if I go ahead with this does that mean my government contribution would go from $20 per week to just $2? Surely this can't be right?!
A: It is right - unless the new government changes its policy before it becomes law. In its pre-election statements, National said it would limit the KiwiSaver tax credit for employees to 2 per cent of their pay, which in your case would be $2 a week.
But I have high hopes that will change. In a recent statement about KiwiSaver, John Key said, "In terms of the impact on those with low incomes, the National Government gave an assurance this week that it would have a look at it. We understand the issue."
Meantime, you will benefit from another change proposed by National. Currently if a beneficiary earns more than $80 a week, their benefit is reduced. National says it will increase that to $100 a week - the first change in the cut-off point since 1996 and a jolly good idea.
Q: Re your recent comments about KiwiSaver under National: Your recommendation not to bother with mortgage diversion is correct if one earns under $104,000.
But there is one thing that I think that you did not stress enough to your readers - that the 2 per cent saving from the reduced KiwiSaver contributions could be used to increase the mortgage payments, and therefore the same effect would apply as diversion.
A: Good point. And in light of several emails I've had about how difficult it can be to set up mortgage diversion, National's proposals will make the whole thing so much simpler.
First, though, I need to correct you. I wasn't that sweeping about the $104,000 cut-off.
Certainly employees earning more than that should consider mortgage diversion under National's changes - contributing 2 per cent of pay and then diverting half of that to their mortgage. For people earning less than that, mortgage diversion is less rewarding.
Still, people earning more than, say, $70,000 might find it worthwhile, especially if they are younger and/or are investing in a lower-risk KiwiSaver fund.
Your point, though, applies to every employee - no matter what their income level. Instead of putting the current 4 per cent into KiwiSaver and then diverting half of it towards mortgage payments, they will be able to put 2 per cent into KiwiSaver and another 2 per cent - or any other amount they choose - into their mortgage. No need to fill out forms with your provider and mortgage lender; just do it.
The question is, I suppose, whether people actually will do it, or whether they will just settle for 2 per cent into KiwiSaver and leave it at that. Still, that will be much better than nothing.
All those who aren't in KiwiSaver now because 4 per cent of their pay feels like too much, but who might manage 2 per cent from next April on, will certainly be better off in the long run.
Another consideration: What if the Government makes the changes hinted at above, and permits employees to boost their annual tax credit up to the $1043 maximum by contributing more than 2 per cent of their pay?
People will then have to weigh up putting that extra money into KiwiSaver versus putting it into mortgage repayment.
Broadly, older KiwiSavers and those in higher-risk funds will be better off putting the extra into KiwiSaver, while younger and more conservative investors will be better off concentrating on their mortgage. I'll go into that in more detail once the changes have been finalised.
Readers on KiwiSaver
The following are some of the winning entries in the Herald's Money Column giveaway of my book, KiwiSaver Max: How to get the best out of it.
To enter, readers had to say in 50 or fewer words what they think of KiwiSaver.
Being in my mid-20s, I asked around before deciding to opt out. Although KiwiSaver is a noble cause, no young person likes to be reminded that one day, they too will be "old". Won't I have more fun with that $50 a week now, than I ever will at 60?
Katherine Williams, Auckland City
Mary's comment: Many 60-year-olds, having more fun now than when young, would challenge that. What's more, if you save $50 a week in KiwiSaver, by the time you add government and perhaps employer contributions, you will have far more than that per week in retirement, even after adjusting for inflation. More to the point for the young, though, if you don't yet own a home, KiwiSaver is clearly the best place to save for one.
Save! is the catchword of the day
But little incentive has come our way
Now KiwiSaver is dangled before us
The long-term benefits are simply enormous.
It's a scheme that only fools will ignore
Invest a little now and at 65 there'll be very much more.
Jocelyn Coburn, Kawerau
Mary Holm is a seminar presenter and author. Her website is www.maryholm.com. Her advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it.
Send questions to mary@maryholm.com or Money Column, Business Herald, PO Box 32, Auckland.
Letters should not exceed 200 words. We won't publish your name.
Please provide a (preferably daytime) phone number. Sorry, but Mary cannot answer all questions, correspond directly with readers, or give financial advice.
