Advice on Saving

LStarryStarry on 19/02/2018 - 23:41

Hi we are couples in our early 30s with no saving whatsoever. We been travelling around the world for the past 10 years or so (we worked and lived in UK, US, Ireland and Canada) been involved in a horrible financial decisions before. and now we're back in Australia and planning to buy a house and start a family. so some of ozbargainers wisdom required and how do we built a good credit rating?

about us
1.32 and 33 years old
2.Civil and Mechanical engineer (4 months in the job)
3.we both have a car on salary sacrifice (mitsubishi triton and Toyota Hilux) (fuel rego insurance included)
4.debt $0
5.credit card $0
6.combine income of $7000 a month after tax and $1500 salary sacrifice taken out
7.$350 a week rent and $200 utility bills a fortnight

so now … where do we start ? how do we maximize our saving ? our goal is to save $50000 by the end of the year.

thank you for your time to read the post!

Financial

Comments

  • [Deactivated] on 19/02/2018 - 23:42
    -3

    Zencash it.

    [Deactivated] on 19/02/2018 - 23:42 (Collapsed - Offtopic. Show)
  • doweyy on 19/02/2018 - 23:45
    +10

    Your goal needs to be a lot more reasonable, after all your expenses so far you're only left with $42,600 after a year from now..

    I'd say $30k is a reasonable goal, you need to pay for food and everything obviously, but getting 30k would be easy I reckon. Just live frugally, don't go out too much, don't unneccessarily spend. Force yourself to send a certain amount each pay to an account which you can't touch (maybe parents etc).

    • [Deactivated] on 19/02/2018 - 23:47
      -5

      Stop tring to replace Mathnerd. Reported.

      [Deactivated] on 19/02/2018 - 23:47 (Collapsed - Offtopic. Show)
    • StarryStarry on 19/02/2018 - 23:54

      ok Thanks … considering beimg super frugal and every 3 months stash 10K put it in term deposit

      maybe do overtime

  • Randxyz123 on 19/02/2018 - 23:50
    +4

    I use a app called daily budget.

    I enter my expenses and how much I want to save of my salary and it calulates my daily allowance.

    You can have fixed and non fixed expenses.

    Works really well for me. Helps me see how much I can spend.

    • StarryStarry on 19/02/2018 - 23:54

      downloading it now cheers !

  • kingsville on 19/02/2018 - 23:59
    +1

    get the barefoot investor book!

  • [Deactivated] on 19/02/2018 - 23:59
    +2

    all in bitcoin or on black

    [Deactivated] on 19/02/2018 - 23:59 (Collapsed - Offtopic. Show)
    • [Deactivated] on 20/02/2018 - 00:04
      +2

      top advice.

      • [Deactivated] on 20/02/2018 - 00:18
        +3

        im here to serve

        • Diji1 on 20/02/2018 - 02:05
          +1

          Dogecoin will win!

  • Azrael169 on 20/02/2018 - 00:01
    +3

    so 7000 a month, say 10 months left for the year = 70k
    You wanna save 50k, 70-50k = 20k to spend for entire year
    350 a week rent, 10 months at 4 weeks per month (i know this is understating but its quick math) = 14k
    200 for utilities per fortnight, estimate 40 weeks (or 20 utility payments) = 4k
    70k earning - 50k saving - 14k rent, minus 4k utility leaves a grand total of 2k for 10 months food, recreation and luxury purchases… good times ahead for you guys!

    Saving - If your risk adverse just find a high interest account and keep pumping as much money as you can into it every pay cycle. You wont earn much interest but anything is better than nothing. If you are willing to risk it some low risk ETF shares may have a better return but eh…

    You either need to lower the amount you wanna save or earn more

    Earn More
    Can you do extra hours at work? Overtime available? Drive Uber? Part time job on the side?

    Reduce expenses
    Share accomodation? rent out a room? Move somewhere cheaper? Stop buying things out (coffee, water etc). Stop eating out. Cook bulk/boring cheap meals. Cut down on your internet/phone expenses. Downtrade your cars to free up cash…

    • StarryStarry on 20/02/2018 - 00:14

      cheers for the advice … looking at the UBER option

      I will volunteer for overtime as well … we think 50K + 20K government FHOG will be enuff to purchase $350K unit or townhouse for a start

      • Azrael169 on 20/02/2018 - 01:14

        If you can move in with family for the year you free up 14k instantly. Plus you may save some on your utilities as well. I know its not a attractive option, but if you speak to your family and explain why you wanna do it they may be willing to help. Had a few friends go down this pathway

    • [Deactivated] on 20/02/2018 - 00:49
      +4

      quick maffs
      https://www.youtube.com/watch?v=X09oxyIeGuY

  • Almost Banned on 20/02/2018 - 00:18
    +5

    Try living off one income and saving ALL of the other income in a separate 'high' interest account.
    That's how we saving our home deposit.

    • owli on 20/02/2018 - 01:30
      +2

      Yeah, get used to living on just the breadwinners income, because one of you should probably stay at home when you start having kids.

      • try2bhelpful on 20/02/2018 - 10:24

        +1 on that. We don't have kids but when we bought our first house we lived on one income and the other one went straight into the house payments. We had an offset account with drawback and the wage was just deposited in there. We never saw it so we didn't have a choice. We didn't travel overseas until out thirties, this was pre mobile phones, and we only went out for special occassions; it sucks but if you want the house you need to hunker down. Repeated the experiment for the second one as well.

  • dcep on 20/02/2018 - 00:27
    +3

    don't rush into things else it will be another horrible financial decision

    biologically you're time limited , so continue renting, grow 1 kid and go from there.

  • [Deactivated] on 20/02/2018 - 00:34
    +6

    3.we both have a car on salary sacrifice (mitsubishi triton and Toyota Hilux)

    Did you need such expensive cars?
    Fair enough if you need these vehicles for your work.

    • altomic on 20/02/2018 - 00:52
      +4

      this. do you need them for work?

      make your own lunches for work.

      don't buy coffees. I've stopped buying a coffee everyday I'm in the office (3 days x $5 -large soy latte =$15 a week. 47 weeks a year = $700!!!

      what phone plans do you have? how much do you need? I just have a vaya 1gb + unlimited talk + text $9 a month. my phone is a 2 year old lenovo k3 note.

      hurry up and save for a deposit and then buy a place. if you don't need the cars for work then get rid of them and use the salary sacrifice component for your mortgage.

      • dcep on 20/02/2018 - 01:14
        +1

        how much is your home internet ?

    • StarryStarry on 20/02/2018 - 07:59

      work I need 4wd and ute to carry materials and to visit work sites… some work sites still on dirt road. my partner tho … he could've just pick a Jazz or i20 that'll do him.

      • xeion on 20/02/2018 - 09:26
        +1

        I would consider selling one of the utes and getting a small cheap to run second hand car.

        That would also kick start your saving depending on year model.

    • JIMB0 on 20/02/2018 - 08:14
      +1

      Got to impress the neighbours somehow.

  • Colombian on 20/02/2018 - 03:33

    $200 in utilities a fortnight? Too high in my opinion.

    • [Deactivated] on 20/02/2018 - 03:53
      +1

      Electricity, gas, water use plus I assume internet and mobiles. I nearly pay that a week but have a family of 4 and pay council rates.

    • [Deactivated] on 20/02/2018 - 03:56

      Dupe

    • StarryStarry on 20/02/2018 - 07:44

      $70 electricity
      $50 gas
      $35 internet
      $10 netflix
      $5 spotify
      $20 water bills

      all direct debited fornightly except for netflix and spotify comes monthly all rpund up to the closest 10s

      at rental property so no solar and no tank water :(

      phone from work

      • fossilfuel on 20/02/2018 - 07:55
        +2

        If you have good internet, cut Netflix and get kodi with the exodus plugin. Works best with a TV box but also works on a desktop or laptop. Spotify you can do without too. Get a proximity sensor app, open lyric versions of songs on YouTube and pop the phone in your pocket. Alternatively, listen to free podcasts online.

        The savings add up in the end.

      • Colombian on 20/02/2018 - 09:15

        $70 Electricity is my monthly bill.
        $50 gas is also my monthly bill.
        $35 Internet > $60 monthly for me.

        I don't have netflix nor spotify.

        $20 water bills > I only pay water supply which is about $23 monthly.

        Couple living in a unit.

  • garetz on 20/02/2018 - 07:52
    +1

    Its simple mathematics called budgeting, get a spreadsheet, look at your expenses for the last 3 months, then trim the fat, based on the figures you presented, i would say your goals of 50k are close to impossible unless you move back with your parents and remove rent.

    You really should be aiming at about 40% savings of your total earnings pa. Luckily you are in a very good financial position, instead of trying to save on expenses, maybe you should be trying to maximise your income earning potential instead.

    • StarryStarry on 20/02/2018 - 07:55

      living with parents is not an option sorry my parent passed away and his parents one in UK and one lives in interstate

      we need to get some overtime going … thats how I see it. or drive UBER :)

  • [Deactivated] on 20/02/2018 - 08:03

    live with mummy and daddy

  • Quantumcat on 20/02/2018 - 09:29

    Get rid of one of your cars and that person can get a lift with the other, or take a bus or walk or ride a bike or get a motor scooter or motorcycle (cheaper to run, can be cheap to buy)

  • Mokr on 20/02/2018 - 10:33

    Do you have any family members or friends who could loan you 10K-20K?

    Any assets you can sell now?

    As others have said getting 30K is easy, but that 20K gap will be hard.

  • Seraphin7 on 20/02/2018 - 10:57
    +3

    Based on your present income, saving $50k in the next year is a mathematical impossibility. Without taking risks that shouldn't be contemplated over a one year horizon considering your apparent goal (i.e. to basically have $50k in savings), any return on your money will be negligible.

    For this scenario, I'm assuming you simply are going to put money in the bank. With returns of even 3% (before tax) hard to get. On an after tax basis, if your savings earned you $400 over the next year you'd probably be doing well.

    So you'll actually need to save the whole $50k. This is $4,200 a month for 12 months, or $5,000 a month for 10 months if you want to get there "by the end of the year".

    Even if you abandon the salary sacrifice you've got a starting point of $7,000 a month. Unless you are prepared to live very frugally (and/or are prepared to be a total leech), I would suggest that even the "move in with the parents" option isn't going to get you there. While it is entirely possible to do, living on $2,000 a month is not easy when you're not used to it and you don't "have to". It's just too easy for money to leak, and in the nicest possible way, I would suggest you've been used to a "nice" lifestyle over the last 10 years where you haven't worried about money too much.

    I would suggest you need to look at both increased income and decreased spending. The question you need to ask is how much of a lifestyle hit are you prepared to take?

    A big lifestyle hit could get your monthly spend down to $2-3k, but is this actually achievable? If so, you need to find another $1k a month in income. This is likely to be ~$1.5k pre-tax that is probably doable.

    A more moderate lifestyle hit could get your monthly spend down to something like $4k, but then you'll need to find another $2k a month in income. Considering tax, that might mean as much as $3-3.5k pre-tax. Is this viable?

    The big thing here is to be realistic on what is achievable. If you go "gung ho" and say we'll save $5k a month by cutting everything to the bone and then six weeks in find $2k sitting in the bank you'll likely abandon the whole thing. If you have a realistic plan, you'll find it is more achievable in every sense.

    • [Deactivated] on 20/02/2018 - 11:09

      Is that you Scott Pape?

      • Seraphin7 on 20/02/2018 - 11:16

        Who's Scott Pape?

        • [Deactivated] on 20/02/2018 - 11:20

          Some dude I know who can't even afford shoes.

        • Seraphin7 on 20/02/2018 - 12:25

          @TightBottom: Is that the barefoot bloke? There's some good stuff, but some dangerous stuff in that book. A lot of over-simplifications that I've seen create false confidence resulting in either genuine loss or opportunity loss.

        • Colombian on 20/02/2018 - 15:59

          @Seraphin7: Can you tell me about the dangerous stuff? I'm not an expert in finances and I'm reading his book at the moment.

        • Seraphin7 on 20/02/2018 - 16:48

          @Colombian: It's been a long time since I've looked at the book so I can't remember specifics, but my recollection was a lot of the examples used glossed over important details that can cause difficulty if you don't actually understand what you're getting into.

          My view has probably also been clouded by too many people using it as an "instruction manual" and just following it blindly rather than as simply a source of educational information that should be combined with other sources before taking a course of action.

          Things like budgeting, etc. are low risk. There's very little that can go wrong with this. It's when you start making decisions that may have implications for years (decades) to come that you need to make sure your decision (whatever it may be) considers all reasonable scenarios and is not driven by a formulaic, one size fits all approach.

  • AlienC on 20/02/2018 - 11:09
    +1

    What are your impulse buys or big expenditures. Work on them first figure out what you need or don't need. For example tv, pc, air conditioner, heater etc.

    You can trim the fat and reduce usage or bills and stuff and maybe enjoy a more simpler life.

    One I can think of that everybody has is better mobile plans and home phone and home broadband plans. You can save some there if you don't already by shopping.

    If you own a house get solar asap. Best return on investment you can do or have if you own or are trying to own a house aka non renter.

    If you want you can do some safe and steady investments both stock and crypto. Just pick reliable risers and not unpredictable wild cards. My favourite pick is nvidia stock on the nasdaq.

    • dcep on 20/02/2018 - 11:30

      there is only so much you can trim off NBN pricing ..

      unless you go buzztelco

  • [Deactivated] on 20/02/2018 - 11:20

    How could you have not saved anything at all in the past 10 years?

    • dcep on 20/02/2018 - 11:26
      +1

      "travelling around the world for the past 10 years or so (we worked and lived in UK, US, Ireland and Canada) been involved in a horrible financial decisions before"

  • Trying2SaveABuck on 20/02/2018 - 11:21
    +1

    10 years of travelling sounds like a real adventure good on you guys for doing it you would of left in year early 20s which it a big step at that age.

    In regards to your financial position now, i think maybe talk to a professional adviser on your best course of auction and realistic goals because 50k in 12 months is probably not possible at just a quick glance.

    If it was me i'd be working 6-7 days a week you have basically had 10 years of holidays if you aren't doing at least 45-60 hours a weeks then i dont think you are working hard enough. - not being judgmental just telling you that is what i and my partner would do for at least a good 2-3 years - or until you get into your own home and have a years worth of mortgage repayments in your offset.

  • Realsteel on 20/02/2018 - 11:41
    +1

    As others have suggested, don't rush into buying a place. Focus on your savings, set realistic targets and measure how you are tracking. There will always be things that come out of the woodworks which you may not have budgeted for.

    Hopefully with more experience, your income will grow and that will enable you to save more if you continue to be diligent. Having a larger savings would make the purchase (when it happens) a lot easier.

    I am speaking from experience as I was there once and did not have enough savings and really wanted to buy a place. Good luck with everything.

  • BobLim on 20/02/2018 - 23:30
    +1

    Airtasker could be good for earning a bit more. Lots of work on there for someone with a ute and some tools who can chop wood, landscape or remove debris etc

  • youngchinaman on 18/04/2018 - 16:53

    Start small with your savings plan. Find a good product with a decent return and reinvest all interest back with a regular savings plan. Watch the magic of compounding work and you'll be surprised at what you can do. PM if you like more thoughts etc.

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