Saving for a Property

mecusherb on 28/11/2019 - 19:33
Last edited 28/11/2019 - 19:35

I am looking at 1 of 2 options to kick start my savings. My partner already has a lot but I need to get something happening to go close to matching before we invest.

I freelance, my wage ebs and flows from week to week.

Essentially at the end of this year I'll get $12,000 for a contract I completed. Initially I was going to put 10k of that straight into a savings account that I can't touch and add to it where I could which financially seems like the best option. However, my second option is to give all that to my partner for her to use to pay my portion of the rent over 12 months and during that time put away any money I make freelancing that isn't for bills.

I am leaning towards the second option so I don't have to stress about rent for a year and figure I can get to the 10k figure within 6 months anyway.

Thoughts? Other options?

***EDIT - We've just had our first child and are moving to a property where rent is 600 more PCM.

Poll Options expired

  • 18
    Deposit 10k
  • 5
    Cover rent and save from scratch
Financial

Comments

  • garetz on 28/11/2019 - 19:42

    Obviously cover your half of the rent, nothing is more important than contributing to bills, until bills are covered you cannot even think of saving for other things.

    • mecusherb on 28/11/2019 - 19:51

      Yeah, I mean I could probably cover it regardless but some months I might be scratching to get it happening. Basically I don't want to stress on that front and essentially put away in savings what I would have in rent. Some months less, some months more.

  • Ocker on 28/11/2019 - 19:43
    -1

    Seems like a very strange/temporary relationship to me. That aside maybe you should have waited before having the child?

    • mecusherb on 28/11/2019 - 19:50
      -1

      Seems like I've been with her for 10 years and she's 40. But I guess we could have had a baby at the age of 50…..

      • HighAndDry on 29/11/2019 - 09:23
        +1

        That's not really a good excuse. What did you do for 10 years?

  • crentist on 28/11/2019 - 19:56
    +1

    Both crap. A term deposit doesn't beat regular saving accounts and would lock you out of your money for a year and only give you $200 at the end.

    And what's she going to do with the money if you give it all to her? Pay a years rent upfront?

    Why do both your options for "saving money" involve handing the money you already have to someone else with nothing in return

    • mecusherb on 28/11/2019 - 20:00

      I never said anything about a term deposit. I said an account I can't touch, meaning I won't have access to it as an online option to withdraw.

      • crentist on 28/11/2019 - 20:59

        oh. So is that another investment with a better return or something? What will prevent you from accessing the money to withdraw? Or do you just mean you won't withdraw from it?

        Because if so then I don't see any difference between keeping the money in your account or hers in terms of savings benefit, or how it affects you paying rent while squirreling away for anything else you can.

        However, giving her all your money means that you will need to trust her not to spend it, and give you access to it if you need to dip into your own savings for some reason. Or maybe you have poor self control and would spend it all on crap?

        Either way this seems like more of a relationship question than financial. It's like you're asking if you should lock the money up in your own drawer or let your partner put it in hers. Why lock it up at all, and is it better if she manages household finances?

        • mecusherb on 28/11/2019 - 21:04

          Context she has 50k plus in savings and it will sit in that account. I'm not concerned at all about its security.

          I think to your point about spending it on shit is pertinent. I'll restrict my access, no bank card and no online access. I think I've answered my own question anyway, interest rates are so shit that dumping it all in won't garner a great return and I could alternatively live without the stress of paying rent whilst getting to the 10k amount during that time anyway.

          Unless you have a third option?

          • crentist on 29/11/2019 - 03:43

            @mecusherb: You mention elsewhere wanting to prepay an unavoidable expense.
            My third option would be to simply keep the money and pay from it as needed on an ongoing basis. Or if you don’t need a 1 year rent buffer, throw half of it in stocks and hope the market doesn’t tank. Either way it’s available if you need it in an emergency or something important. Especially if you might disagree on a purchase, or one of you is away and unable to access funds, or you break up and wanna run away to SE Asia and go on a drug fueled bender for as long as your visa allows.

            But I should also make clear that my earnings have been pretty steady, I’ve built up a buffer, I’m thrifty enough not to overspend a dangerous amount, and I feel antsy if my own mum suggests saving up a deposit together because of the responsibility and merging of finances that would involve.

            So my approach to financial management may not be suitable for you, or even anyone considering entering the property market

    • mecusherb on 28/11/2019 - 20:08

      ..

  • Halo375 on 28/11/2019 - 21:05
    +3

    Put your money into your account like an adult, setup a repeating rent payment to your partner and you’re good to go. Focus on ways to reduce what you spend, but keep your access to that money in case an emergency comes up and you need funds.

    • mecusherb on 28/11/2019 - 21:09

      Why not pre pay an unavoidable expense though?

      I guess I'm just a child…

      • elgrande on 28/11/2019 - 21:13

        What ever you do.. dont actually pay the rent in advance to the landlord.

        • mecusherb on 28/11/2019 - 21:14

          Oh yeah I know.

          • HighAndDry on 29/11/2019 - 09:25

            @mecusherb: In that case you're just transferring the burden of keeping track of paying your monthly rent to your partner.

        • donbot on 29/11/2019 - 11:20
          +1

          What if you can prepay a term of rent that you know you're going to pay anyway at a discount? Eg. Prepaying 6 months of rent at a 5% discount? Better than earning bank interest, provided you're going to stay there anyway. All the landlord can do is say no - worth a shot.

          I've done it before. Obviously the kicker is you need to be sure you're there for the duration.

      • Halo375 on 29/11/2019 - 19:59

        The point is to have access to those funds for emergencies, rather than paying for something 12 months in advance.

  • elgrande on 28/11/2019 - 21:12

    I'd put the $10k in with the deposit money.. and use your ebbing and flowing to pay the rent.

    Its much harder to save up the $10k from scratch.

  • SmiTTy on 28/11/2019 - 22:32
    +1

    I'd suggest you put together a plan for how to use your regular income (eg a portion for rent, portion for expenses, portion for savings etc)

    The lump sum is a bonus, you'll need to work out what to do but my suggestion is just transfer $x to your partnet regularly for rent (if that's the type of relationship u have) and put the rest away

    Another option is pool your savings together and invest it. (for example, in a vanguard etf or whatever you are comfortable with) but again, sounds like u need a plan

    I came across this article yesterday which may be an interesting read for u

    https://amp.abc.net.au/article/11564478

  • [Deactivated] on 29/11/2019 - 00:27

    I think OP is saying to keep the $10k and set it up as a dedicated buffer for expenses.

    I agree with OP. He needs to have that buffer and not consider that as something he can put towards a deposit.

  • brad1-8tsi on 29/11/2019 - 08:13

    Sometimes when I read posts like this I really want to sit down with the OP and look at their budget and spending habits, bills, etc and help them fine tune their savings strategy…

    • HighAndDry on 29/11/2019 - 09:26
      +3

      I feel that would just depress you further.

  • Gelato on 30/11/2019 - 00:10

    so if you are on option 1, does it mean you will struggle to pay bills for the coming 12 months?

    • Gelato on 30/11/2019 - 00:14

      just dont quite get the question.

      if you've spare $12k, then just save it. $1 today is not equivalent to $1 in 12 month's time, if you put it in the saving account

  • OZBMate8911 on 30/11/2019 - 09:24

    OP where are you actually on budgeting? Sounds like you need to do one up.

    If you need an easy kick start I would advise reading/listening to Barefoot Investor - I know I'm probably gonna get negged for suggesting it but it's just to start you off.

    I'd do what I do, which is what has been suggested to you above and use it as a buffer. For our household I've got uBank accounts set up. Our savings and the amount we put aside for bills each week are in the savings account. When a bill gets direct debited from the transaction account any necessary funds get moved over automatically, and it means you'll earn 2.1% in the meantime.

    EDIT - uBank doesn't support OSKO so even if you wanted to raid the savings it'd take 24 hours, assuming you shred the debit card.

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