Mary Holm: Bored at work, low debt, high skills? Time out could relight fire

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OPINION:

Q: I'm a single woman in her early 50s with no dependants. I work in middle management and have been with the same company for almost 20 years and worked in my field for 30-plus years.

My employer is a very good employer but I have been somewhat bored and unhappy in my role for a couple of years now. I have worked consistently since I was 17.

I have no debt except for a $120,000 mortgage on my home, which would sell for around $700,000 to $800,000. I have $60,000 in KiwiSaver and $20,000 in savings. Pre-Covid I travelled once or twice a year, but apart from that I'm quite a home body.

I need surgery which will be covered under private health insurance and means I will be off work for three to four months. My employer is happy for me to take the time off but most of it would be unpaid leave.

I have wanted to take a three to six-month sabbatical for some time now as I feel really jaded. I am considering selling my house, resigning from my job, renting for a while, recovering from surgery and then finding a new job and buying another house.

There are local and global shortages of skilled people in my field, and having been made redundant twice, I know I can always find work and make enough money to live on. Is this a mad idea?

A: No, it's a fantastic idea.

I've noticed a tendency for women who write to me — particularly single women older than 40ish — to be conservative in their investments and life choices. It's understandable, but it's a real pity.

True, you still have a mortgage and your savings aren't huge. But after a break you could come back with renewed zeal to reduce the debt and boost the savings. Your last paragraph was the clincher for me.

Many people in their fifties who have lost a job find it hard to get another. But that's not an issue for you.

The only thing that worries me a little is that you will be out of the housing market for a while. In recent years, that would have been costly. What about now?

The Reserve Bank said in its recent Monetary Policy Statement, "We expect house price inflation to moderate significantly over the coming quarters, consistent with the factors discussed above: low population growth, high levels of house building, higher interest rates, and tax policy changes.

"In our projection, house prices are assumed to begin to fall modestly from late 2022. A more significant fall in prices is possible, but at the same time, momentum in the market could prove more resilient than we expect."

The Reserve Bank has been wrong about house prices before — most recently 18 months ago, soon after

Covid struck, when it predicted a price drop of about 10 per cent, as did many economists. Then look what happened!

We could argue the fact that prices have soared since makes it all the more likely they will fall, or at least flatten. But who knows?

If this worries you, perhaps make all the other moves but don't sell your house until you're ready to buy elsewhere. Maybe rent it out in the meantime.

But maybe not. Let's look at the worst case scenario: sell now and end up later with a somewhat worse house, or living in a cheaper area — which doesn't necessarily mean a worse area for you. Meanwhile, you've done what you long to do.

And maybe the Reserve Bank's "more significant fall in prices" will happen, and you'll come out ahead!

As Austrian-American management consultant Peter Drucker said, "People who don't take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year."

Or you might prefer a quote from American actor Michael Landon Jr: "Whatever you want to do, do it now. There are only so many tomorrows."

Q: I just wanted to say, "Go you!!!" Reading last week's story from the solo mum thinking she should spend her hard-earned savings and therefore her future security on an expensive private education for her son, I was so pleased to see your feedback.

I don't have children, but have observed family and friends taking alternate paths on the education of their children. The outcomes? The children attending a public school have strived to achieve and in my view come through the process with great outcomes, having support from home around their education and encouragement to reach their goals.

I also fully agree the best thing we can all do is look first to secure a financial position that means we don't have to rely on others to support us in our later years!

A: I can't argue with anything you say. As I predicted, this topic has brought in more reader's responses than any letter in a long time. Read on.

Q: As an alternative to private schools the mother could look to the boarding establishments of some of the state boys' schools like Hamilton Boys' High or New Plymouth Boys' High. There she would only need to pay the boarding costs and have the benefit of the free education. There must be others around the country.

I passed School Cert at Inthesticks District High and did my further two years at a girls' high school with a boarding establishment, and did not break my parents bank account. Sometimes these schools also have nearby residents happy to take in pupils as boarders.

A: Boarding school does rather hinder parental involvement in education. But still, it seems to work well for some youngsters. It's a good idea to consider state boarding schools, perhaps just for the last two or three years of high school.

Other such schools for boys include Auckland Grammar and Christchurch Boys' High.

Q: In her circumstances, the single mum looking to spend money on a private school education might consider investigating what scholarship opportunities are available to support that option.

Alternatively, consider a state boarding school, as my parents did, taking account of the issues of using the local district high education system, where my local district high was lucky to get one successful University Entrance examination candidate in any year.

While I am not a fan of boarding schools for reasons other than the education outcomes (e.g. bullying), my educational experience boarding at a mixed boarding and day pupil state high school was excellent.

I bless my parents to this day for bearing that state boarding school cost, being a considerable part of my father's farm labourer's wage at that time.

A: Scholarships are probably a good idea, although a letter that I'll run next week — I've run out of space — shows what can sometimes go wrong with a private school scholarship.

And while you were happy with your experience as a boarder, your mention of bullying is important.

These days schools clamp down on it much more than in our day, but it must still happen sometimes. And for boarders there's no escape.

It's certainly something I would discuss with a school before sending my child to board there.

Q: The goal is superior tuition. Whether in the classroom or without, it is hard to beat one-on-one attention. A tutor or tutors might be a better and cheaper option than a private school. Having said that, many schools have great leaders, and that mysterious art can make all the difference too.

A: A good suggestion about tutors, as long as they are selected wisely. And I quite agree about school leaders. We've all seen schools dramatically deteriorate or improve as different principals have come and gone.

In that regard, the solo mum should keep an eye on her local high school, which she says currently "isn't a particularly good option." The above correspondent's mention of a local district high school with a poor academic record illustrates what can happen. But if a new principal should arrive, who knows?

Q: A reader wrote two weeks ago about how she sold her property and bought a half share of her mother's home, and then moved in to look after her mother.

Never say never when it comes to looking after an elderly parent, and keeping them out of residential care, especially when it comes to dementia.

Having looked after both of my parents with dementia, after just four years each needed 24/7 nursing care.

Good intentions of caring for parents, and other joint family financial arrangements (despite written legal agreements) can completely go pear-shaped when residential care subsidies and loans are assessed.

One concern for this reader is this exact scenario with her mother.

A: Gosh, you've had a challenging time. Good on you for supporting both your Mum and Dad.

You make a really good point. If the mother of our correspondent gets to the stage where she needs a higher level of care than her daughter can provide, she will presumably need to go into residential care.

And basically, the Government will pay for this care only if the person is deemed to be unable to afford it themselves. There are asset and income tests, which can be found on the Work and Income website at tinyurl.com/ResCareNZ.

The correspondent's mother could well have low enough assets and income. But the MSD also looks at how many assets a person has given away. And it seems the mother gave her house to her two daughters when she was diagnosed with Alzheimer's.

The MSD doesn't count a certain amount of gifting — up to $6500 a year ($6000 before July 2018) in the five years before applying for the subsidy, and up to $27,000 a year in earlier years. But if you give more, the Government can decline your application.

This is controversial, but I think it's understandable. It's to stop people from passing on their wealth so that they are "poor" enough to qualify for the Government to pay for their care.

It certainly doesn't feel as if this was a tactic adopted by this family. But they still might be caught by the rules, depending on the value of the house and when it was gifted.

It seems to me that if the correspondent's mother needs residential care, and she doesn't qualify for the government subsidy, her daughter may have to consider a reverse mortgage to fund that care.

Other readers might want to keep the residential care subsidy rules in mind when planning to make gifts.

Q: Last week you gave advice and information in response to a question about setting up KiwiSaver accounts for grandchildren. Your advice began with an assumption of giving "$1000 a year", and then followed with a series of calculations based on this amount.

However, in your P.S., this base amount was re-presented as "$1000 a month". Which was correct? It's quite a big difference.

A: Oops! Sorry everyone. The $1000 was annually. So the P.S. should have read:
P.S. If you can't afford $1000 a year, make it $100 a year. Then divide all the numbers above by 10. So the boy would have $3500 after 20 years, and $33,000 at retirement. That's still pretty nice.

- Mary Holm, ONZM, is a freelance journalist, a seminar presenter and a bestselling author on personal finance. She is a director of Financial Services Complaints Ltd (FSCL) and a former director of the Financial Markets Authority. Her opinions do not reflect the position of any organisation in which she holds office. Mary's 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 click here. Letters should not exceed 200 words. We won't publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.