Latest / Making Cents / Overtime, Property Prices, AI Shopping and $608 Billion in Debt: Your Money News Roundup

Transcript

Overtime, Property Prices, AI Shopping and $608 Billion in Debt: Your Money News Roundup · Making Cents

• 0:02
  Hey, team, it's Frances.
• 0:04
  Look, there's been an awful lot happening in the money world recently, including revelations about how much we're all working, whether we're getting paid for it, what's going on with the property market, and even whether AI is about to
• 0:16
  upend the online shopping world.
• 0:18
  And I talked about all of this with the lovely Jim Moore on RNZ Sunday mornings.
• 0:24
  So we had a lovely chat.
• 0:26
  His team said I could share that again here for you.
• 0:28
  Enjoy.
• 0:34
  Our first guest this morning, Francis Cook, best selling author of youf Money, you, Future, and host of the Making Sense podcast, which won Best Business podcast at the New Zealand Radio and Podcast Awards this year.
• 0:48
  Francis, good morning.
• 0:49
  The line from the old song, taking care of business and working Overtime.
• 0:53
  You have new stats on the way we're doing both of these things in New Zealand at the moment?
• 0:58
  Yeah, some research that came out from the global fintech revolute and they used YouGov to make sure that the numbers are all good.
• 1:06
  Nearly 6 in 10 of us New Zealanders, 59% of us say we're working overtime.
• 1:12
  But of those of us that do, 30% of us getting nothing extra for it.
• 1:19
  And the problem here is that is exactly what we are not wanting.
• 1:22
  44% of us say we would take a pay cut in exchange for one extra day off per week.
• 1:27
  The younger we are, the more likely we are to want to make that trade.
• 1:30
  65% of the 18 to 24 year olds would take that deal.
• 1:34
  Only 29% of those aged 55 and over.
• 1:39
  And yeah, the real problem is we are actually then spending all of our free time trying to manage our money instead.
• 1:47
  So 32% of us say that budgeting and staying within budget eats up more of our free time than anything else, really.
• 1:56
  So, yeah, a whole bunch of stats that throw you away and all of them fairly depressing.
• 2:00
  Sorry about that.
• 2:02
  So, yeah, just to repeat what you've said in case people were a bit incredulous like I was.
• 2:06
  So people stop work and then use a lot of their time trying to make ends meet because they are not earning enough money from work work even though they're working overtime.
• 2:15
  Yeah, exactly.
• 2:16
  And I think what this is really showing us, it's the pointy end of a cost of living crisis that has now been dragging on for a long time.
• 2:24
  You know, when it's been going for several years, people run out of the reserves and they also run out of the sort of mental fortitude to keep going through it.
• 2:34
  So it ends up soaking up more time.
• 2:35
  Partly because you're dragging your feet through it, you don't really want to do it.
• 2:40
  And nowadays as well, a really soft job market.
• 2:45
  So I think particularly when we see these younger people saying that they would love a day off and they would absolutely give up some pay to do it.
• 2:55
  To me, I feel like that's quite an indicator on the state of our job market where we do see a lot of the younger generations struggling to find meaningful work.
• 3:05
  A lot of those entry level, first one or two steps on the career ladder, those sorts of jobs are quite hard to find now.
• 3:15
  So it's not that surprising to me that maybe the older generation who have landed in those more meaningful jobs, the jobs where you've got a bit more autonomy, where you're working on the higher skilled stuff, that they probably
• 3:27
  don't feel as much of a need to take time off work because even though it might be hard work, it can be more meaningful.
• 3:33
  Whereas I think the younger generation is just feeling locked out in general.
• 3:36
  And if that's how you're feeling, why wouldn't you say, yeah, I'd love some more time off for my actual life because I don't really care that much about my career.
• 3:43
  So what can you do about this if you're working overtime and you don't want to.
• 3:48
  Yeah, and I think it's a tough one.
• 3:49
  And when we're in this soft job market, as I've already pointed out, you don't have that much leverage.
• 3:55
  I do think it's one of those situations where maybe having an honest conversation with your boss, I want to give you my best self.
• 4:05
  How can we make sure I am doing that?
• 4:08
  And then in terms of the managing the money, taking up so much of our free time, you see things like the old fitness influencers saying, if you're trying to eat healthy, have the same couple of lunches on high
• 4:21
  rotation so you don't have to think about it, you know, you're hitting your needs and you move on and you've still got breakfast and dinner to have a bit more interest in your life.
• 4:29
  And I think it's a similar sort of thing with your money.
• 4:31
  If you build habits where you sit down one time and maybe really put in an intensive effort at the beginning and say, right, what's coming in, what's going out?
• 4:40
  What are things that I can do with my money?
• 4:43
  What are things that I can't?
• 4:44
  And what's the general sort of system here?
• 4:46
  And then you try to build in lifestyle habits to support that, so then you're not doing it all the time, you're not thinking about it all the time.
• 4:55
  You don't want to be checking in on your bank account every single day, weekly or monthly check in, sort it out once, keep those habits going, then it's less of a time suck.
• 5:06
  So that honest conversation with the boss and of course if you're not regarded as a really essential employee, you're very nervous about having that conversation.
• 5:15
  So that's not a bad idea though you start positively by saying, gee, I'm a good employee and I'd really like to do more or not more, but I'm a good employee and I'd really like to be of more
• 5:27
  help, but I've got this standing in my way that changes the mindset maybe of the.
• 5:32
  Both 100% and every time you're heading into a negotiation, whatever type of negotiation it is, don't approach it from your perspective even though obviously you're probably thinking and quite rightfully so, I'm exhausted.
• 5:48
  This is ridiculous.
• 5:49
  They're asking far too much of me.
• 5:51
  How can I possibly sustain this?
• 5:53
  All of those are true and valid and put that in the group chat.
• 5:56
  Say it to your friends that evening over a couple of beers, totally fine.
• 6:01
  But don't approach that with your boss because you're arguing from your own point of view and we're all just self centered little humans.
• 6:07
  Think about your boss's point of view.
• 6:09
  And so what you're saying is I'm a team player, I want to be giving you my best.
• 6:13
  I want to make sure that we are endless for the long haul together.
• 6:17
  How can we make sure that I'm spending my energy in a way that is sustainable and helps this business and when you're approaching it with that sort of energy, they're far more likely to be sympathetic and to work
• 6:30
  in with you.
• 6:30
  Very good.
• 6:31
  Shame you can never tell the complete truth in life, isn't it?
• 6:34
  But that seems like good advice.
• 6:36
  Very good advice.
• 6:38
  Francis Cook Real Estate in New Zealand how's it doing?
• 6:41
  Yeah, we just got some new data out from Realestate Co NZ and really big milestone in there where they saw the average asking price for Auckland has dipped under a million dollars for the first time in six years.
• 6:56
  So since 2020 obviously we saw that huge boom post Covid and then coming back down slowly, slowly, slowly the market's been really sort of flat and tailing off and I think hitting this milestone now is a really big
• 7:11
  psychological marker for where we are with our property market.
• 7:15
  We're seeing parts of the south island actually ripping away and really quite going up.
• 7:24
  And it's usually to do with the agricultural sectors.
• 7:28
  You know, the one bright spot in the north island story as well is the Waikato.
• 7:33
  Whereas any places where it's more white collar jobs, the cities, they're not doing great.
• 7:40
  So this is a really fascinating indicator on our two speed economy.
• 7:45
  Yes.
• 7:45
  And okay, the metros are suffering and inflation is set, isn't it, to re accelerate.
• 7:52
  So that will keep house prices down for a while, if not a long while.
• 7:57
  Yeah, yeah, oh absolutely.
• 7:59
  We're seeing the Iran conflict still just going and going and going.
• 8:05
  And we've seen fuel prices hit record highs again this week.
• 8:10
  And the problem with when fuel prices go up is it impacts everything else because that's the transport that we use for moving around all the other bits of the economy.
• 8:18
  Even for people just getting to work, inflation is probably going to keep going up and so we might see interest rates go up because that's the biggest lever they've got to hammer it.
• 8:27
  If you don't enjoy interest rates going up, it can get so much worse than that with the cost of living accelerates even further.
• 8:34
  Unfortunately, I would say that when we're looking at inflation likely to go up, interest rates likely to go up.
• 8:43
  Do keep taking your time, my lovely.
• 8:45
  First home buyers, hunt out those bargains.
• 8:49
  It's a really good time.
• 8:50
  There's lots of stock on the market, you have lots of choice.
• 8:55
  Do have a hunt around.
• 8:56
  Do keep looking for those bargains because you want to be bearing in mind that if interest rates do go up, then your mortgage could become more expensive.
• 9:05
  So going right to the edge of what you can get lending on, probably not the plan.
• 9:10
  Okay.
• 9:11
  You know, people have been saying they're cautiously optimistic for a while now without being able to factor in outside events prior to the election.
• 9:20
  Of course, there's pressure on politicians to explain how they'll fund their promises.
• 9:25
  I was reading about France and how the student riots have exposed that country's debt problem.
• 9:30
  It can't afford to maintain its schools properly, from all accounts, and that's one reason the school pupils are rebelling.
• 9:38
  That whole concept of la belle vie and the generous retirement packages and everything else they've got going may be a thing of the past.
• 9:46
  And the UK's also carrying massive debt, as is the US, which doesn't seem to care as much.
• 9:52
  And I know we're in a much better position than other economies are, Francis, but what is happening in the rest of the world that may actually affect.
• 10:00
  Us when I look at sort of our big risks.
• 10:04
  Our main international sort of financial relations are with China, Australia, the us, even Korea.
• 10:13
  So we are still exposed to problems in Europe, but not too badly.
• 10:19
  So it's one where I look at it as there's clouds on the horizon.
• 10:22
  Let's keep an eye on the weather forecast.
• 10:24
  Francis Cook, one more thing to talk about with you.
• 10:28
  And it could be, in the end, a big thing.
• 10:31
  Who knows?
• 10:32
  If big tech gets its way, Francis, we won't be doing much of our own shopping anymore.
• 10:38
  Yeah, it's interesting, isn't it?
• 10:40
  We've seen, I mean, the rise and rise of the various social media companies trying to get in on online shopping.
• 10:50
  I mean, even TikTok shop has been huge.
• 10:56
  Facebook marketplace elbowing out places like Trade Me.
• 11:00
  And now we've got Meta saying Muse is going to just go out and automatically buy things for you.
• 11:09
  This agentic AI which will just do it.
• 11:13
  I look at it and I'm sort of like, do people even want this?
• 11:16
  Don't people kind of enjoy going shopping?
• 11:18
  Isn't that a whole hobby?
• 11:20
  Not if they're working overtime, Francis, and not getting much money for it.
• 11:24
  That's the thing, isn't it?
• 11:25
  So Meta would handle your shopping for you.
• 11:28
  Gee, he's got a Meta vision, hasn't he?
• 11:30
  Mark Zuckerberg, Muse would come between you and merchants and retailers, and not everyone's happy with this because then them studying you and your habits and having command of that information would become less important because you'd have an agent
• 11:48
  doing the work for you 100%.
• 11:50
  And we've already seen with the rise of these LLMs, the models like ChatGPT or Claude that people use now more than Google, that you see whole industries like marketers trying to change how they do things.
• 12:06
  They're not trying to rank number one on Google anymore.
• 12:09
  They're now trying to have an online presence that gets picked up by these AI models.
• 12:15
  So if this agentic AI that goes shopping for you did become a reality, I can only imagine how that would entirely change the online shopping world and how people would try to adapt that as fast as they can.
• 12:31
  And I'm a little bit in two minds about it, right?
• 12:33
  Because if it did turn out that it helped people price compare more or take more active control of their financial lives, well, then I would love that.
• 12:43
  You know, you and I have talked plenty about shopping around being annoying, but a really, actually powerful thing you can do.
• 12:52
  The idea of the free market actually asks a lot of us.
• 12:56
  It asks for us to Be doing research and to be price comparing and to be a really active and educated consumer.
• 13:04
  And just like the revolut research at the beginning of our chat, you know, who has the time these days?
• 13:10
  It's really quite tricky.
• 13:11
  So, okay, if we had this AI agent go out and sort that stuff out for us automatically, I could love that.
• 13:19
  It's interesting though, just quoting from the market screener online coverage of this.
• 13:25
  If switching banks, insurers, hotels or subscriptions becomes as simple as saying, find me something cheaper and switch me over to your AI agent from the comfort of your couch, many companies that have prospered on consumer passivity will be
• 13:41
  in danger.
• 13:42
  And actually we have resented them holding so much information on our lives, haven't we?
• 13:48
  And that whole operating system would be threatened if this actually comes to pass.
• 13:55
  100%.
• 13:55
  I mean, even something as basic as power prices.
• 13:59
  There have been reports on New Zealand's power industry that kind of blamed consumers a little bit, which I'm reluctant to do, but saying that we're some of the stickiest customers in the world, by which they mean we don't
• 14:14
  tend to shop around, we don't tend to look.
• 14:15
  Once we find something we like, we tend to stick with it for years and not check if someone is cheaper.
• 14:21
  So if there was something that would empower people to do that more easily in these very busy lives we all have now, I love it.
• 14:29
  What I worry about is the tech company playbook where they start out with this amazing really cheap, really high service model and they're often losing money hand over fist just trying to establish market dominance.
• 14:42
  And once they get you in, then they bring down how much they'll give you, they bring down the levels of service and they ramp up the prices, which is colloquially known as inshittification.
• 14:57
  And so they, you know, this is a standard tech playbook where they try to cut out any competitors by being the cheapest, being the best, and then once they have that market dominance, to no longer be the cheapest
• 15:09
  or the best.
• 15:10
  So it could work if it was a model that had a good amount of competition.
• 15:16
  If it's really only meta doing it.
• 15:19
  Oh, I'm worried.
• 15:20
  Yeah, well, it's huge money is going into making it work.
• 15:23
  That's the thing.
• 15:24
  And I wonder, I mean, there are many aspects of online life we wouldn't have chosen if we were asked, we wouldn't have said, I'd like you to know as much as possible about me, please.
• 15:34
  So are we going to have a choice in this?
• 15:36
  I mean, if meta creates Muse and the other big players create their own versions to ostensibly bet on your behalf and take all these decisions away from you, you poor little overworked thing.
• 15:49
  It may actually become a fait accompli.
• 15:51
  It's interesting, isn't it?
• 15:52
  Because, I mean, Meta, the whole reason they're called Meta instead of Facebook anymore, they used to be called Facebook.
• 15:58
  And then they said, we're going into the Metaverse and everyone's going to live their lives online and we're all going to have these online meetings and we're going to have these avatars and the whole company's called Meta now
• 16:09
  because the Metaverse is the future and they poured billions into it.
• 16:14
  I mean, kudos to Zuckerberg when he believed in an idea, he really clearly believes in it to the tune of several billion dollars.
• 16:20
  But unfortunately, the whole thing massive fl.
• 16:23
  And so I do sometimes wonder when we get these, these tech bros who are like, I've got this amazing idea.
• 16:28
  This is going to be great.
• 16:30
  And I'm sort of like, does the average person want this?
• 16:33
  Or does.
• 16:35
  Does a tech bro want this?
• 16:36
  And not understand that?
• 16:37
  The average person is actually a little concerned about how much time they spend online, a little concerned about losing out to their real life and the little details of life that make life worth living.
• 16:48
  Like doing your own groceries.
• 16:51
  Do we get to vote?
• 16:52
  We don't get to vote on this.
• 16:53
  That's the thing.
• 16:54
  So true.
• 16:56
  No, but you're right.
• 16:57
  I can understand the rebellion and maybe it won't come to pass, but it's being reported pretty seriously.
• 17:03
  Anyway, how much shopping just finally can we afford to do in New Zealand?
• 17:06
  How much private debt is there in New Zealand now?
• 17:09
  It's fairly staggering figure.
• 17:10
  Yeah.
• 17:11
  From the Reserve Bank.
• 17:11
  Yeah, yeah.
• 17:12
  So we've got for New Zealand, it's 608 billion.
• 17:19
  So that's about 117,000 for every single New Zealander.
• 17:24
  And of course, it will not be such an average.
• 17:26
  There'll be some people who'll be far more in debt than that.
• 17:29
  What I find fascinating that, though, 400 billion of that is on housing.
• 17:34
  So that's two thirds of that debt is going towards our housing market.
• 17:40
  Consumer debt is an absolute fraction of it.
• 17:42
  14 billion.
• 17:43
  Even business debt, where they sometimes go pretty hard, 140 billion, doll.
• 17:49
  And that would be the productive side that would be ideally being used as investment into our economy to help us make more money.
• 17:57
  But no, instead, 2/3 of it all going into housing.
• 18:00
  So if that takes years to clear that debt, given a flat housing market.
• 18:04
  What's the knock on effect for the rest of the economy?
• 18:07
  Well, exactly.
• 18:08
  You can see why the official cash rate is such a powerful lever to pull, right?
• 18:12
  Because it really hurts people with mortgages.
• 18:14
  It.
• 18:15
  I think this is where we have such a strong conversation about our banking sector and if we are maybe too conservative because I've talked to a lot of people in the financial sector who are very concerned that banking
• 18:28
  is almost incentivized with some of the rules.
• 18:31
  We have to have a lot of lending going to housing, which is people need a place to live.
• 18:37
  But it's not a productive part of the economy.
• 18:39
  It doesn't employ people.
• 18:40
  It's not creating new innovations which we can go and sell to other people and make money from.
• 18:46
  And then you've got this fraction of it that is business debt.
• 18:49
  And banks are often more cautious about lending to people with a startup idea or a business idea.
• 18:55
  So it really there's an argument that this shows exactly where our economy is being stifled.
• 19:00
  Interesting times.
• 19:02
  May we not live in them, but we are.
• 19:05
  Francis, thank you.
• 19:06
  Always a pleasure to catch up with you and thanks for your advice.
• 19:08
  Lovely to chat, Jim.
• 19:10
  This podcast can only give you you general information about how things work in most situations.
• 19:15
  It's not individual financial advice.
• 19:18
  If you're after that, a financial advisor is always the best bet.