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Oily Rag - Financial Fritters

Oily Rag - Financial Fritters

By Frank and Muriel Newman

Fair Go ran an interesting segment about a couple (Mike and Kirsten) who were having money worries, despite being a +$100k income household - the sort of household that some politicians call "rich". Trouble was, Mike and Kirsten were not rich, and like many, were working hard but not getting ahead. They had a $410k mortgage which at the current repayment rate was going to take 25 years to repay.

The good news is they made a commitment to get the problem sorted, and sought the advice of an expert (Hannah McQueen). The results were outstanding and remarkable.

The great thing we like about the advice they received, was that it was expressed in a way that was easy to understand.

According to Hannah most people fritter away about 15% to 20% of their income. We agree totally, which is why we think it’s so easy for people to transform their lives by being frugal (which our pre-decimal grandparents called being ‘penny wise and pound foolish’).

Apparently $50,000 a year was "going walkabout", frittered away on things that were not really necessary or needed - so a plan was put in place to spend less, and their mortgage was reorganised

Their objective was to save $13k in three months. They blitzed that by saving $26k! By putting those savings and some extra income that they were earning into the repayment of their mortgage, they cut the repayment terms from 25 years to six! Image that - being debt free 19 years earlier by taking control of your money!

There were spending $500 a week on food, but that was cut back to $200, by planning meals, and only buying what they needed (in other words, suppressing those impulse buying urges that the supermarkets are tempting shoppers with). Mike now takes a cut lunch to work, which saves him between $10 and $15 a day. And they increased their income through Mike increasing his overtime hours and Kirsten doing some work as a teacher’s aid.

Hannah made the point that a plan needs to be effortless, otherwise you won't stick at it. We also have a few other pointers.

There needs to be a compelling target or reason to save. What better reason than becoming mortgage-free and what better way to measure it than by knowing the month and year you are going to become debt free!

It needs to be a family effort. Having a common goal, like repaying the mortgage, is a team effort and everyone in the household should be part of the winning team - it brings families closer.

Kirsten says, it does not feel like they are living any differently - there are no huge sacrifices being made. People who live off the smell of an oily rag often say that. There is no sacrifice in being frugal, only benefits; when your money is under control, life is in control and that means a lot less worry, stress, and arguments at home.

Well done Fair Go. To see their segment online go to It's well worth a look. Fair Go asked viewers to send in their tips for saving - here's a tip. Go to!

As it happens the site is undergoing an oily rag reconstruction. Doing it off the smell of an oily rag means we are not spending money on experts - we are doing it ourselves and learning as we go! That means the site will be a bit wonky and forms a bit cranky so bear with us and send in your tips to us via email ( rather than the website until we get things in order.

Thank you for your questions and tips – please keep them coming! You can send in your ideas and join the Oily Rag mailing list, by emailing us at or by writing to us at Living Off the Smell of an Oily Rag, PO Box 984, Whangarei.

*Frank and Muriel Newman are the authors of Living Off the Smell of an Oily Rag in NZ. Readers can submit their oily rag tips by email at


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