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It is common knowledge to save in times of plenty for rainy days and survive hard times, what role plays home ownership and how to utilize what people already own?



How to survive Hard Times by

Saving in Times of Plenty for rainy Days

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Stock in times of plenty for days in need


It is common knowledge if you stock in times of plenty, you will have a better chance to survive hard times. That is for many people a reason to strive for financial security by paying for a “nest egg”. In NZ is the “nest egg” associated with home ownership,  Kiwis are more likely to borrow for housing more than other nations. That has worked for many because of good capital gains in the past, but during the financial crisis mortgage sales (foreclosures sales) painted a different picture of home ownership. Since affordability has been  the centre of housing politics.


Commonly a house is rated as an investment and mortgage re-payments are seen as savings toward future ownership. In contrast in European countries, and especially in the eastern European countries like Czechoslovakia or Russia, people are reluctant to take out home loans as a mortgaged home is not truly owned.  People prefer to rent until they can afford to buy. Interestingly in Switzerland and also Germany people save regular amounts towards home ownership (“Bauspar-Vertrag” is a typical saving product).


But at the end of the day, it does not matter how you reach you financial goals—paying for a mortgage or making an adequate down payment with compound interests, you must have the discipline to save (in times of plenty) for rainy days. As soon as you feel financial pressure, your focus changes and it is much harder to make good decisions.




Treat life as gift, make decisions as investment


Life is constantly changing and you have to adapt for surviving. For instance nobody has a job for life, home ownership and capital gain are not guaranteed and good health counts more than millions of Dollars.


If you treat decisions as an investment and  spend each Dollar wisely towards rainy days that results in a financial resilience most people don’t have. Let me assume you toss a coin between a new car and solar hot water heating—then you set priorities between “nice to have” and “essential to have”. Sure a new car is fun, but getting hot-water with lower energy costs is essential and would outperform a new car, right? The sun offers tax free income and cost savings.


Owning a home and paying off a mortgage is more expensive than renting at the beginning, but it follows the same principles by cumulating something in time of plenty (when being young and energetic) and offers comfort being mortgage-free (when retired and in need).



Control over returns or value for money


When giving your savings to a fund manager, do you think you get the best return possible? Paying your housing costs to a landlord, do you expect more value for money than being a homeowner? Saying here, if you strive for best results, you have to take control.


I met people who monitored the interest rates and waited for buying a home until the  interest rates were below their rent payments. At this point buying was more affordable but the demand was higher than the supply on housing. Needless to say competing with more buyers in the market does not produce better deals.


Ownership gives you control. So combine experienced homeowners repairs and maintenance with improvements. That saves money in two different directions; e.g. calling the builder once by combining different jobs and  saving due to implemented improvements (for instance reduced energy consumption).  Do you see the advantage homeowners have over renters?




Using a home to its potential is not rocket science


People often forget about the small stuff that adds up and becomes costly like a dripping hot-water tap, two times 150 Watt security light not switch off, water damage because of a blocked or leaking gutter, or buying herbs and vegetables instead of producing something in the garden. I talk about people who complain about money but waste their own resources.


Be flexible – prove yourself.



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Klauster Blogs lead to a real person, an experienced renter for more than 25 years in Europe, South Africa, Australia, New Zealand and became a landlord/investor  before founding Klauster Properties Ltd in 2006.


The passion of making experiences available and helping people to avoid pitfalls has been rewarding by forming lasting relationships.


Our philosophy to treat life, partnerships and hobbies as an investment has helped people in our circle. Life is a dream with a deadline, happiness comes from making the right choices by having realistic expectations.


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