Q&As

  • Situation not so bad for mother-to-be going onto a benefit
  • 2 readers misunderstood last week’s house price graph
  • Meaningful Christmas presents

QI have a complicated situation that has blindsided me. I am 28 years old and have recently split from my husband for unexpectedly sad reasons after being together for ten years. Four days later, I found out we were pregnant.

Here’s where my situation gets impossible. Currently I am working as a teacher and making about $71,000 a year. We sold our house and my share was $80,000. I am due the middle of January so won’t be going back to work in the new year.

I have gone to WINZ and my situation is as follows:

  • I will be receiving $300 in child support a week from my ex. This is more than he legally needs to provide.
  • I qualify for the highest-level family tax credit at about $92 a week.
  • Depending on my accommodation costs — I could potentially get $75 a week plus a temporary assistance grant.

I need to move cities to be close to my parents. WINZ have told me if I leave my $80,000 in the bank, I qualify for no benefits. But if I put the $80,000 in a house, it no longer counts as a cash asset and I can qualify for all the above benefits.

I will not be working as I can take two years maternity leave from my job. Several financial advisers have said banks will not lend to me under these conditions and as a beneficiary.

What do I do? I don’t want to waste my life savings and only shot at getting back into the property market. I am overwhelmed.

AI don’t blame you. But your situation — while a bit complex — is not as bad as you think.

It seems you’ve been given some incorrect information. “Sole Parent Support is not asset tested, however it is income tested,” says a spokesperson for the Ministry of Social Development.

“If the client was to leave her $80,000 in the bank, the interest incurred from these savings of $80,000 would be regarded as income and could have some effect on her Sole Parent Support — depending on the amount of interest earned.”

More on that in a minute. But first let’s just note that having the $80,000 as a cash asset in the bank — as opposed to in property — will, however affect your ability to get extra help. “A single person must have less than $8,100 in cash assets in order to be eligible for the Accommodation Supplement,” says the spokesperson.

Perhaps that’s where the confusion arose.

Okay, so what’s the deal with the interest you would earn on the $80,000?

A Google search on “Sole Parent Support” will give you more info, including this: “You can get up to $5,200 a year (before tax) in additional money (for example from working) before your benefit payment is affected, and $20 more a week if you have childcare costs.”

Would the $300 a week you’re getting in child support from your ex be included in the $5200, I asked?

Yes, says the spokesperson. “When somebody is getting regular child support payments directly from the paying parent instead of through Inland Revenue, this is called a private arrangement and the payments are counted as income for benefit purposes.

[Further info from MSD added later: “Please be aware that any private arrangement you have is in addition to the amount that’s payable to Inland Revenue — Child Support”.]

“We need to know about the full amount because, while the first $100 may not affect the rate of the main benefit that a person receives, it might affect their entitlement to extra help payments like Accommodation Supplement, Disability Allowance or Temporary Additional Support.

At $300 a week plus interest on your $80,000, your additional money is well above $5200 a year. Where does that leave you?

“If a person receives more than $100 per week, the extra money affects their benefit as follows:

  • Income between $100 and $200 reduces their benefit by 30 cents for each dollar of income received.
  • Income over $200 per week reduces the benefit by 70 cents for each dollar of income.”

That’s not great news. But note that you’re losing way less than $1 in benefit for every $1 gained from elsewhere, so you’re still better off getting that money.

Still, you might wonder if you should perhaps give the $80,000 to your parents — in the expectation that when you rejoin the work force they will give it back to you, plus interest.

“If the client was to give the $80,000 to her parents, Work and Income would need to consider this as something known as deprivation of income,” says the spokesperson.

“Deprivation means someone has changed their financial arrangements to put themselves at a financial disadvantage, which has led to them qualifying for assistance or assistance at a higher rate.”

This could lead to your benefit being declined, reduced or cancelled. Forget that idea. I suggest you just park the money in bank term deposits and use it later to buy a home.

The spokesperson adds, “We strongly recommend this person contacts Work and Income so we can talk through all the details of her case.

Everyone’s circumstances are different and there are a number of factors that affect a person’s benefit entitlements.” She suggests you email [email protected] or contact your local Work and Income office.

If anyone else is unsure or unhappy with information you’ve been given on benefits, I suggest you look at www.workandincome.govt.nz. There’s a lot of clearly laid out info there.

P.S. There’s a clarification on this Q&A in the following week’s column. Do a search on the word “clarification”.

QI presume the house graph with your column last week covers the national market.

If it does not it is highly inaccurate, as I do not know anyone in Auckland who has only had a 13 per cent increase in house valuations since 2000, which the graph implies!

Most Auckland house valuations have gone up at least 200 to 300 per cent in the last 17 years, though they have of course reduced over the last year.

AYes, the graph showed New Zealand house prices. And your last sentence is correct. Auckland house prices have increased by 293 per cent from January 2000 to June 30 this year, says CoreLogic.

But prices for all of New Zealand are not all that far behind, at 244 per cent over the same period. So the graph would be quite similar for just Auckland house prices.

I think what’s confusing you is that the graph doesn’t show house prices themselves, but how much they have changed from year to year. Specifically:

  • When the line goes up, prices are growing at an increasing rate. For example, if they grow 10 per cent in one year and 14 per cent the next year, the line rises.
  • When the line goes down, prices are growing but at a decreasing rate — perhaps 10 per cent one year and then 6 per cent the next year.
  • When the line drops below zero per cent change, prices are falling. At first, when the line goes downwards, prices are falling at a “worsening” rate each year — perhaps a 3 per cent drop followed by a 6 per cent drop. But when the line turns back up towards zero, price falls are getting smaller — perhaps moving back to a 3 per cent drop.

Given that the line spends the vast majority of its time above zero, house prices are usually growing. But note that prices fell no fewer than five times in recent years. The biggest fall was in the global financial crisis. In the 15 months from December 2007, Auckland prices dropped 11 per cent, and New Zealand prices dropped 10 per cent.

QEnjoy reading your column and normally accept (not necessarily agree) with your thoughts. I have actually started into shares recently to diversify.

Now re this house price graph, you are an intelligent person so I don’t even need to point out the ridiculous argument you make with a couple of dips below zero.

Like it or not houses go up. As in your share advice, invest for the long term. Yes houses in Auckland have fallen 3 per cent, but that is misleading when they have come off a 46 per cent gain.

AIt seems that you, too, misunderstood last week’s message. The reader had been told house prices never go down, and I thought it was important to point out that they sometimes do.

For many people a fall in house values for a while doesn’t really matter. But for those forced to sell in a downturn — perhaps because they’re moving to another town or country, or they’re renting out the house and can no longer meet the mortgage payments or other expenses — it can matter a lot.

MEANINGFUL CHRISTMAS GIFTS

Many charities offer Christmas gift programmes. You buy items for people in need that are given on behalf of your family or friends. For example, you might donate money for school equipment in developing countries. You receive an acknowledgement to give to your relative or friend to show what they have “donated” to the children.

It makes a great Christmas gift — more meaningful than buying stuff for one another that is often not wanted.

Each year, this column runs a list of charities that take part in these programmes. I’ve asked each one to describe their programme in 20 words or less:

Caritas Aotearoa New Zealand: 0800 22 10 22 or www.caritasgifts.org.nz. “Caritas Gifts of hope, life, peace and learning enable our life-changing work around the world and in Aotearoa New Zealand.”

ChildFund New Zealand: 0800 223 111 or childfund.org.nz/gifts-that-grow. “From chickens to coats to computers, give the gifts that grow children’s lives this Christmas.”

Christian World Service: 0800 74 73 72 or www.gift.org.nz. “Give Hope: Clean water for Ugandan HIV/AIDS orphans, school for Haitian children or emergency rations after a disaster. Multiply good.”

Leprosy Mission New Zealand: 0800 862 873 or www.reallygoodgifts.org.nz. “Bring God’s love to lives affected by leprosy through Really Good Gifts, including protective sandals from $10.”

MEND — Mobility Equipment for Needs of the Disabled: 021 060 9631 or www.mend.org.nz. “Give young people in poor countries life-changing gifts — corrective surgery, prostheses, mobility aids, physiotherapy or hearing aids … for just $65!”

Oxfam New Zealand: 0800 600 700 or oxfamunwrapped.org.nz. “The best gifts can’t be wrapped! Choose a unique present this year from Oxfam Unwrapped, and help end poverty.”

Salvation Army: 04 802 6269 ext 24846 or www.salvationarmy.org.nz/justgifts. “Give a gift that just keeps giving as it tackles poverty and injustice around the world. Thanks for your support.”

Save the Children New Zealand: 0800 167 168 or gifts.savethechildren.org.nz//the-good-gift. “By giving The Good Gift, you will directly transform a child’s life and make a world of difference.”

Tearfund: 0800 800 777 or www.giftforlife.co.nz. “This Christmas, donate a life-changing gift to a loved one with Gift for Life. Giving a little means a lot.”

The Fred Hollows Foundation NZ: 0800 227 229 or https://www.hollows.org.nz/gift-of-sight. “Give the gift of sight — give a loved one a gift card to help restore sight for $25.”

World Vision: 0800 24 5000 or www.worldvision.org.nz/smiles. “Choose a life-changing Smiles gift this Christmas and help children and families in real need.”

Mary Holm is a freelance journalist, a director of Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. From 2011 to 2019 she was a founding director of the Financial Markets Authority. Her opinions are personal, and 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 [email protected] 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.