Hi Ozbargain,
Thank you to those that actually gave genuine advice - appreciate it.
I don't have the time to manage this thread anymore so I won't be reading/responding.
P.s Forgot to mention the 12% interest car loan on the lamborghini, will be able to save in no time once I sell it.
Problem solved.
We have family, friends and good jobs in Sydney. The market is slowing down too. If I was going to move out of Sydney I would move to Newcastle.
Do it sooner than that and save on the rent money!
Whatever you do
DO NOT COME TO PERTH!
Its a sh*thole with no future.
I been living here for 20+ years if it wasnt for my sick dad who cant move I would be gone long ago.
Wow, I've always wanted to visit though.
if it wasnt for my sick dad who cant move I would be gone long ago.
It's hard to find people like you who look after parents. Kudos to you!
Where do you live?
Each to their own. Don't get how you come to the conclusion it's a shithole.
I wouldn't recommend he come right now because in many industries the job market isn't great. However most people I know that have a choice want to live here over Sydney. In my industry, that's despite bigger salaries and more opportunities in Sydney.
Love Perth, the only place I could imagine raising my children. Don't listen to that sad sack.
I think @house2015 just means Perth has less opportunities with regard to the OP's comment.
I visited earlier in the year and absolutely enjoyed my time there - I rave about it but the general consensus is that it's currently nice if you're a tourist and not so much if you are after career development. Perth is great in it's own way - it depends on what you're after.
Living in Perth is so different to visiting. I lived there with my Family for several years and could not afford to buy a decent house in a decent area. So had to rent year after year and kept having to move on each year due to the owners believing that they could sell the house. Which they inevitably struggled to do, since prices have been dropping slowly since about 2014. Awful treatment as a tenant too.
Would be well-off had I bought houses in the 1990s.
Nice place to visit though.
I was on a professional mining salary, so should have been better off than most. Yes, there are heaps of houses cheaper than Sydney but the areas you have to live in are not the best - theft, drugs, violence and the people are not friendly, unless you are in the clique. Very transitory.
Was relieved to move back to Sydney where life was actually cheaper and the public schools were far better!
I understand you want to live in a more expensive area, but we had to start in a cheaper area, despite my wife's salary and mine being substantial at the time. We kept expenditure down, commuted long distance to work and have upgraded substantially, when we could afford it.
@Weshouldgetsushi: This is not the Perth I know. What suburb were you living in out of interest?
Cliquey I can imagine, but I'm struggling to figure why you were so far out. $450k should get you a decent size 2-bedder in pretty much any suburb you like in Perth (and the inner-city apartments are much roomier than Melbourne). Similarly $450/wk is going to serve you well anywhere in Perth. The situation would be different for a big family though…
@markathome: Getting way off topic.
Lived in a number of suburbs, could recite many details since we tried to buy a house many times. If I listed them, there would be discussions for/against. But had to be very careful to not "flush money down toilet" in an inflated market. The tactics of Real Estate Agents were "interesting" at that time.
Things are very different when you need to ensure children are looked after properly, all adds cost. The OP needs to be very careful in his/her planning of where to live and where to move to subsequently. Doctors income is certain, comes out of public pocket, partner's is not so certain, depending on industry. We are heading into a very strange style of recession.
Knowing Perth, you would remember that getting a rental house in Perth up to 2015 was extremely scarce and competitive, even junk houses and even in newer subdivisions such as Secret Harbour. So I took what I could find, there were queues down the street for many houses at inspections at that time, so had to keep going to higher priced houses. Very different now with the adjustment. Things changed and so did rental agency attitudes toward me!
At once stage, had 2 houses rented concurrently, since the lease ended (again), the house was apparently going to be sold and there was no flexibility and did not want children to move schools mid year. Need a high income to support this!
Perth will get expensive again if there is another boom. Lots of well paid jobs = high demand and high prices for everything. The reverse is also true.
House2015 is right on the money, although some here see the comment as negative. Perth can be an absolute grind to live in, unless you grew up there.
Many of my co workers owned multiple properties in not so nice suburbs and rented them out.
Didn't need CBD, since mining jobs not normally in St George's Terrace.
4 of us, so 2 x 1 unit doesnt work, besides my job required long hours with early starts and with calls during night, so needed a decent house where family was not being woken, to be fair to them.
Needed over 2 x the $450 you mention per week.
You need to get into mining mate.
It's just the the standard cycle in Perth. up/down. More down than up.
Move to the NT, get paid just to move there. Housing is at its lowest ever.
$50k first home owners grant
New Territorian Relocation Bonus (up to $7000)
Local Spending Benefit (up to $1250)
5 Year Retention Bonus (up to $7000)
https://nt.gov.au/news/2018/august-2018/welcome-to-the-terri….
https://www.facebook.com/TheNTNews/posts/territory-first-hom…
Whatever you do, please do not move to NT without a job in hand ! Darwin is a shit hole (along with its super humid weather most of the year) and there are very few jobs and even those go to mates. Even the locals are finding it hard. Same with Alice. Youth crime and crime in general is through the roof and there is nothing anyone who matters is doing.
Think , why is the broke NT government willing to pay you to move ?
You didn’t discover your boundless possible either?
Household earning about $220,000 pa.
take over 2 years to save for a deposit.
Isn't that just a sad note of current house prices :/
Yes! We are hoping it will drop a little more. We are planning to have a family in the next 3-5 years so we want to buy a house, not an apartment. We don't need anything flashy, just a modest 3 bedroom. We wouldn't want to move out west, we would rather move out of Sydney, so we are looking at a 1 -1.2 million dollar minimum purchase. Nothing against the west, just not convenient for family, work and our lifestyle goals.
Ah. You might want to adjust either those expectations or your savings rate.
30% of $220,000 is $66,000 x 2 years is $132,000. That might be 10% but banks are less and less willing to lend with LVRs of over 80%, especially for an owner-occupied property without rental income. I'd be aiming to have at least 15% of your desired house price, if not a full 20%. Don't forget about Stamp duty and other transaction costs either.
Yes, we have some savings already (50k) which was factored in. Trying to avoid LMI if possible. Really hoping our 1-1.2 turns out to be 0.8 - 0.9k once the housing market finds its floor.
@[Deactivated]: Do note you get preferred professional rates with most banks. So if you don't mind having a slightly higher initial interest rate you can get 90-100% of the home valuation in loan$.
@lethological: I've heard that you can also get no LMI loans with only a 10% deposit. Something we could be interested in. Do you know a good broker?
@[Deactivated]: My partner who is a broker says there are extremely limited exceptions to getting this but yes it is possible.
@[Deactivated]: If I read correctly you are a doctor which means you should be able to get a Medico package from the major banks to get 10% no LMI. I have also heard BoQ Specialist do some crazy LMI waiving for Doctors so maybe worth taking a look with them (brokers dont have access to them though)
Source - I'm a broker
@lethological: The thing to watch of course will be servicing a loan of that size with a low deposit. I think the OP has been updated but another comment refers to rental of $550 a week. Going from that to a million dollar loan will see a fair jump in money spent on accomodation. The repayments need to be comfortable and sustainable even with interest rate changes.
While the joint salary is solid, having children in the next few years will take a hit to the finances and be worth factoring in. If both parents want to continue in their line of work and won’t be taking extended time off, then it’s worth thinking today about what childcare etc will cost in a few years. If one parent does go in extended periods outside the workplace then you’ll cease to have 220k coming in.
Getting the loans one thing, living with it is another. Fortunately banks are being more vigilant now days but if planning to buy I’d be doing the numbers of what you know you’ll actually be able to afford to maintain more so than what total you can max the loan at, including factoring unplanned lifestyle changes. When the OP does see a broker they’ll likely ask for this anyway so may as well go in knowing what you’d be able to afford.
@Smigit: On top of Smigit's comment, the first thing I'd be doing is plugging an 7-8% interest rate into the repayment calculator and have an objective view as to whether that is acceptable for long term. Then I'd chuck in a 14% extreme to make sure you can weather that repayment for a year or so should the economy need to be reigned in again.
We built that buffer into our home loan by making a lot of additional repayments. We are now in advance by about $150k. So if I lose my job or interest rates spike we should be fine to service the loan for a number of years without too much worry.
You can raise a family in an apartment - dont rule it out!
buy my property at Kellyville!
It's not just the current house price, it is everyone's expectation to live close to work.
Where I'm renting currently in Perth is on the market for $500k. 3x2 villa. 5mins from work, which is 10mins from cbd, 5mins from a cafe strip, close to major highways and amenities.
Which suburb?
@spackbace: Fair enough. There's lots of affordable suburbs in Perth, but not all of them are ones you'd want to live in, even for the savings.
Slightly off tangent but buying a residential property is like parking money. You lose liquidity but you gain something you can sell for proportionately the same.
you sound like you live in my house
I actually think that's not too bad. Property prices should always been seen relative to incomes, and the fact that OP has a $220,000pa joint income and able to save for a property in just 2 years seems like a positive sign for affordability. This is a property - I saved up longer for my first car (barely - but you get the point); 2 years to save up for a home? Seems more than reasonable to me.
I don't know the maths logic behind Housing affordability to income ratio but last i read that 3 to 4 times is the affordable range.
And based on the average household income, Brisbane is close to 7 and Sydney is over 12 times.
Oh yeah Sydney is still hella unaffordable. I just don't think OP's situation is a good example. Median house prices are about 4-5x OP's joint, after-tax income. Which is reasonable. OP obviously has above-average income though.
@HighAndDry: 4-5x OP's joint after-tax income.
Still a long way to go until that's reasonable H&D ;) At least we've had a good start in Sydney and Melbourne now, here's hoping for another five years of the same!
We worked out that when my parents build in the 80s, housing affordability was about 4x my dad's income. Single income household. For that same sorta affordability (entry level build), you'd need an income around $100-125k. That wasn't the level dad was on at the time. Yes, interest rates were higher, but affordability was easier.
in the 80s
If I time-travelled back to the 80s, I'd mortgage my soul to buy up as much property as I could. Population growth (and so demand / supply for properties) have meant that property prices had to go up magnitudes more than inflation (which wages growth was already having trouble keeping up with).
Not actually sure what a good solution might be - the government to start up new cities along the East Coast? Because Australia has something like literally the highest rates of urbanisation in the world, with 90% of our population in 0.22% of the land area. We need more places where people want to live.
@HighAndDry: Hell I'd buy before the bubble here in '99, when a house in the 'burbs was $150-$250,000. Those same properties are $500+ now.
Unfortunately I was in year 9 at school lol not much I could do
@spackbace: Yeah. Just hope we're not looking back in another 20 years time saying the same thing - with the difference that we could've done something about it. (I worry that we will be though).
@HighAndDry: Comedians love to say that the millenials are basically waiting for their folks to die, or downsize, so they can buy a property.
It's sad but in many cases does ring true
@spackbace: I've never got that mentality - my money is my money. My parents' money is theirs.
I think that this is mainstream comedy reflects badly on millennials than on anyone (or anything) else - it's downright ghoulish and smacks of entitlement mentality. No one is entitled to own property, that's an absolute crock - if you can't afford it, too f'ing bad.
@spackbace: Yeah.. Perth saw exponential rises in house pricing as well. My parents bought their property for $200k (in the late 90's), it's valued at just under 1 million now.
@HighAndDry: Dude. All you have to do is travel to 2000 and buy Bitcoin.
Or you can play the 1B lotto in the USA.
Why invest in property????
@HighAndDry: Good solution? Your comment reminds me of the idea I saw to have high speed rail down the east coast and new cities filling the gaps.
@WhyAmICommenting: so much money and such long term investment that a sitting government would never go for it.
@abuch47: Yep, sad but true.
“Democracy is the worst form of government, except for all the others.”
@HighAndDry: I was just talking to somebody in Singapore about house prices. There apartments seemed multiples more expensive than Sydney.
Then he showed me some others that were 1/10th of the price. The only catch: you had to be a citizen to buy the cheap ones.
The government built mega housing all over the country - in the same suburbs as the fancy private apartments, so that citizens didn't have to compete with international buyers, unless they chose to.
Seems to work well for them.
I think the problem is that even with a household income of $220,000 (which is considered high), the OP is still looking for more income. On $220k p.a. you should be able to very comfortably afford a good property and nice lifestyle without needing to look for a side gig.
I think the problem is that OP works and is probably friends with others who earn around the same amount. What they see is all the friends and co-workers in really expensive houses and cars. They're definition of "good property" is probably at the extremes for their income bracket.
They probably need the side gig to keep up with the Joneses.
$220,000pa joint income - any kids? I feel like with that high income, your splits:
Income split into 50% expenses, 30% house savings, 10% holidays, 10% everyday spending.
can be adjusted. For example, $22,000 on holidays per year is extravagant when you're saving for a house. Likewise the 10% everyday spending on top of 50% expenses.
The general rule is that it's easier to spend less than to earn more. Especially when 'earning more' is sometimes deceptive because it incurs costs and expenses you might not realise (e.g.: more fuel, maintenance, risk of accidents for UberEATS).
Some common additional income streams: online piece-work (for sites like Airtasker, especially if you have specialised skills like coding, or graphic design). Photography or filmography if you're already into that and already have the equipment. Requires more experience and time to build up, but MC'ing events is a popular one in some circles.
And Airbnb if you have a spare room, or are away for weekends sometimes.
That was gross income. We both have HECS loans and combined with our tax rates our actual yearly pay is something like $142,000. 50% expenses ($71,000) 30% house ($42,000) and $14,000 for both overseas holidays and everyday spending. You're right still - might look into a New Zealand or Vietnam trip instead of the usual Europe, USA.
We don't really have any sellable skills for airtasker (Doctor and Operations Manager) MC'ing could be interesting. If only I had a more interesting personality.
Good suggestions.
Yeah - I'd definitely cut down on holidays if you're trying to save for a house. I have friends who basically didn't holiday or eat out for a year in order to push their budgets up to the kinds of properties they wanted to buy. Have to sacrifice somewhere, and holidays/eating out is short-term, the house you live in much longer.
Good advice. Thank you.
@[Deactivated]: I'm going to recommend getting as much overseas travel in before kids, but yeah, cheaper destinations.
@[Deactivated]: You should be saving around (approx) $77k per year.
I mean $470-$490 p/w for a 2 bdr unit*, leaves you almost $40k which is around approx $750-790 per week, depending on spend.
Your partner is a Doc so they can get 90%LVR loan no LMI. So within 2 years you roughly have enough for a deposit on a $1M property.
I could say work for 11 years and then retire but eh'.
You should buy a tesla in year 3, then you would be cool and I would like you much, much better.
Agree.. single here trying to save up for a house. No holiday for a year :(
Funny; just had my wife and daughter go to Thailand for six weeks while I stayed at home. I'm pretty sure I saved money by having her out of the country and on holiday :D If only I could get her to go for longer…
"might look into a New Zealand or Vietnam trip instead of the usual Europe, USA."
Ok, as much as I bemoan my parents for saying things like "Kids eat too much avocado toast at the cafes" or "In my day interest rates were almost 20%", and argue with them about the ratio of avg incomes to house value in their day, etc, etc…
A trip to Europe/USA should be a one in 5 to 10 years kind of trip, not some kind of annual shindig. Especially when trying to save for a house.
Ok just saw your response below - sorry for piling on about the holidays weakness.
@Seneki: Yes, I know, travelling without the kids was the mindset.
You'll be pleased to know that we didn't spend more than $7,000 on our last 3 trips to Europe (3-4 weeks).
We are Ozbargainers after all.
@[Deactivated]: The title of this thread should “how do I earn additional income? Saving for more holidays.”
@[Deactivated]: Have you done the math on how many Uber Eats you would have to deliver to earn $7000?
I think you already had the idea, but I would highly recommend holidays to SE Asia instead. I find them more fun and WAY cheaper
@Never Pay RRP: Many dont holiday for fun though. My holidays are hectic touring and walking so see as much culture/history as possible. Its not stressful because its your own pace and freetime. You have to want to do whatever you do in life at least somewhat so holiday destination is completely personal choice. I am of the opinion that Id like to see every inch of the earth.
@Never Pay RRP: Im in Spain right now I think if done right it can be cheaper than lots of Asia. Its hard to beat paying 1.50-2.50 euro for a bottle of wine (thats actually tastes good). Got some very nice and very cheap accommodation on airbnb too.
Doctor has lots of ways to earn side money that is 1k+/days work. Much more than you could earn with airtasker/uber stuff. It's called locum work. Just need to be generally registered for the entry stuff - PM me for more details.
my friends ex-husband is a doctor. he holds botox parties. easy money.
See post below.
Yea, the uber driving would be the other side. the one that gets to work 9-5.
@[Deactivated]: lol.. get the Dr to do the uber driving.
When people ask why is a Dr being a uber driver, get your partner to say - "I'm saving up for my 4th trip to Europe".
And people wonder why I hate people.
Have some nice holidays now while you are still young. By the time the adventures are all over.
The house prices would come down alot more than you spent on a holiday.
If your expenses are $71,000 a year I would seriously take a closer look at that.
Shop at ALDI for your groceries, stop eating out if you are doing it regularly, reconsider your subscription services etc. You need to make sacrifices if you want to save faster and I'd bet that saving more would be easier than a side gig. I've watched a couple of videos on Uber Eats on Youtube and it seems the drivers earn shit all, but maybe it's different for Australia (the videos are from the US).
Japan is great, always cheap flights on sale. And is real cheap to travel around.
I’m going to be the contrarian and say keep going to Europe and USA for holidays. Memories of those holidays will last a lifetime. The money doesn’t matter in the long run. Houses in Australia are a ripoff and being locked in a gilded cage of your own construction is no way to live. Enjoy your youth and travel.
$550 per week is $28,600 per year on rent. Your $220,000 income after tax and HELP debt would be $125,000. If living expenses are 50% that’s $62,500, take out the $28,600 rent and your still left with nearly $34,000 of “expenses” without a new car or some kind of debt the numbers just way to much. Especially when you’ve already budgeted $12,500 for holidays and $12,500 for “everday spending” which doesn’t even include groceries…
You can afford to cut this way more…
Any extra income would be taxed at nearly 50% or be cash work that would pay far less than your day job. Just drop the lifestyle for a while and you’ll have savings in no time. There’s millions of people living in Sydney with far less income that have much more difficulty than you.
The other part of the expenses comes down to insurance levels and exams. We have pet insurance, trauma insurance, health insurance, life insurance, medical indemnity insurance (the worst one) we factor in our rego/ctp costs. Costs for the dentist and some left over for fines and unexpected bills. To take the BPT exam was over $5000. We should have some money left over because we were cautious with the estimates.
Insurances should be tax deductible though right? I'm assuming that's how you got to $142k from my guess of $125k…
With an income like yours maybe cancel some insurances. Obviously not the work related ones but insurance should be thought of as a way to pool the exposure to catastrophic risks that you cannot absorb rather than a way to ensure nothing ever goes wrong.
If your cat/dog needed $10k of surgery tomorrow it's not going to have a catastrophic impact on you, just set back your saving goals a month or two, so scrap the insurance. If you or your partner lost their jobs would you still be able to pay rent and bills? If so cancel the income protection, sure it would suck if they did but it's only a lifestyle change not a life or death situation.
Saving involves sacrifice and when the government will take nearly 50% of anything extra you earn the best option is to trim expenses. The long term benefit of owning a house will far outweigh the short term costs. Maybe get yourself an Up account and review the spending report after a month and see where you money is going?
No, that was a combined salary not a single salary so there's tax free thresholds to consider. Thus the higher income.
It's true, I want to cancel some of them once we have some equity in our home.
We have ING accounts, no credit cards.
Good advice, I can see we still have some work to do to trim expenses.
@[Deactivated]: No credit cards. But why not? that would help you with the travel funds and not really hurt as long as you remain disciplined.
My plane tickets have come from planning far ahead and hopping black cards. all you need is 75k base each and you could clear more than enough points to carve a dent in your travel spending.
Worst case you just cancel them before going for the loans.
@lethological: I agree. We have the Coles card, 2 fly buys points per $. Haven't paid a cent for groceries in 6 months. Use it to pay bills, school fees, business expenses etc. The points stack up!
@lethological: Being financially uneducated, we tried to follow the barefoot investor method of living. Which encourages no debt including credit cards.
@[Deactivated]: I would go for a no annual fee points visa/master card that offers benefits like insurance etc and you get some points.
You'll find that getting money back from a debit card (if its stolen etc) or doing chargebacks for naughty merchants is very hard.
@[Deactivated]: You can have a credit card and no debt. My credit card has a zero balance every month, but every single thing is payed for with it. Get hundreds or thousands of dollars in points each year with zero downside.
@[Deactivated]: You're trying to keep expenses down. Don't start the credit card thing now - the temptation to spend "fake money" is very real.
If you really have to then have a low credit limit and just pay big things off the card straight after you buy them..
After 2 years, move to Brisbane or Adelaide or Perth and buy a house with cash.