Hi, Newbie poster!

Hi All

I'm a first timer here and are looking for a direction to take in an effort to purchase my first property. I'm 22 years of age and theres just so much information to take in I'm frankly overwelmed.

I earn $80k pa, of which $1260 is spent in rent pm, with $1090pm in car. I'm currently putting away $900 per month towards a high intrest term deposit account.

I have recently started saving for a deposit but are intrested in seeking advice on whats the best way to save, or maximise savings to make getting that deposit much easier.

I'm unsure as to whether I purchase off the plan, or a older property.
The property would be owner occupied.

Is there any sources of information on buying off the plan, maximising savings or similar?

any advice for a first timer is much appreicated, thanks!
 
Welcome to the forum Kris !

Originally posted by Kris K
I earn $80k pa

Good start !

Originally posted by Kris K
of which $1260 is spent in rent pm

mmm... okay. You're in Sydney, so I don't think you're going to improve much there.

Originally posted by Kris K
with $1090pm in car

Ouch !

My first house cost me less than that !!

$1090 per month will allow you to service a P&I loan at 6% of $181,000 !!!

I'm not criticising here - you have to make your own decisions, and a good car may be very important to you. But you did ask for advice on maximising savings... and I would suggest ditching the car would be a great place to start.

Originally posted by Kris K
I'm currently putting away $900 per month towards a high intrest term deposit account.

I have recently started saving for a deposit but are intrested in seeking advice on whats the best way to save, or maximise savings to make getting that deposit much easier.

Sounds like you're doing great. First thing to check is that you really are getting the best rate for your money. Check out accounts like ING Direct's Savings Maximiser - electronic bank account that pays high interest with money at call. Better rates than most term deposits these days !! (but shopping around will probably still find you better rates if you don't mind your money being locked up for a while).

When you're first starting, there's not much more you can do other than just save cash as quickly as you can. Once you get enough for that first deposit (don't forget costs !!), and you buy a property, the second property is easier to save for if you get good capital gains and can draw on equity.

The best thing you can do is to take a long hard look at where you want to be, and where you currently are. Are there things in your life now that you can do without for a while until you are in a much better financial situation ? Do you have personal debts which are not tax deductible and are eating into your cashflow ? Do you have a budget that you stick to so that you maximise your savings ?

Just some suggestions ! All the best !!
 
Hi

Thankyou :)

Yes, the Audi is a real money eater, but I dont drink, smoke or go out very often and its my only real hobby, I guess I do need to enjoy my youth to some extent but from a more responsible and future oriented view, the Audi is a very deep pit!

My work may be doing a leasing agreement where by the repayments will be deducted from my salary before tax, saving me $300 per month including insurance, if this falls through I may sell it and put that $1000 odd into my savings account and drive a bomb

My savings account is with St George @ 4.75% calcuated daily (same as ING). I am trying to maximise my savings and keep expenditure to a min, although its very hard !

Most advice seems to be similar, save my tail off and ditch the Audi.. I may even consider moving apartments to split the rent ($100 per week down from $290 per week, saving $760 per month)

The first is the hardest it seems!

Thanks for your advice Sim and kind welcome to the board..What a gold mine it is..!
 
hiya Kris!

Welcome to the forum!

I have to say, I concur with Sim. If you don't need the car for work, or family, I would say that now is the best time in your life to save, and be frugal. Later, when the IP's are paying for it, let THEM buy you the Audi!!!

If the Audi is really important to you, however, as Sim said, it's your decision, and you really have to do what's important to you.

I nearly had to sell my car last year, but got bailed out by my mum and dad at the last minute, did a deal with them where I pay them less interest than GMAC was charging, and much more than their bank was paying, so all are happy. But, I remember how close I got to losing my car, and it gives me shivers. (Remember, I require my car for work, and have kids... it's only a commodore...)

Good luck with your decision, use the forum for information, and don't hesitate to ask questions...

hope to hear more from you!

asy :D
 
Thanks asy, pending outcomes with work I may or may not keep it.

One things for sure, I need a car! Perhaps not this one but..
 
Eeek,

I wasn't suggesting you go CARLESS!!! (Aghast at the thought...)

even a new commodore would almost halve your payments, though...

and it was just a thought... you need to work within your comfort level!

also, Audi... nice choice of car... :)

asy :D
 
lol!

Save Save! I might use some skills after hours to try and get some $ on the side, Property certainly is getting no cheaper!
 
Hehe... maybe you could hire yourself out as a limosine service occasionally ? Make some money from the Audi and make it a tax deductible expense ??

Just a thought !!

PS. I also like the choice of car. I'm guessing for that price it's an A4 (my old boss had an A4 Turbo - but not quattro, and his repayments were about the same). Just think, when you are extremely wealthy from your investments, you can afford a souped-up A4 for day to day stuff, an A6 for the wife, an A8 for family outings on Sunday, and a TT for Friday nights :D
 
Asy and Sim have addressed the money side of things.

While you are getting this part of the equation in order you will also need to attend to the other, equally, important details and that is your knowledge base.

Learn by reading as much as you can, retrace this board so that you can determine you preferred property investment option, ask questions, read recommended books, ask more questions, attend some free/cheap seminars and ask still more questions.

These will enable you to determine how you want to invest in property and will increase the likelihood of success when the time is right.

f.f
 
G'day all,

I love reading posts like this - people helping people - and some good stuff coming thru.

Kris, I gotta go with Sim, Asy, and f.f - as an alternative thought, can you "get rid of your Audi, yet keep your Audi" ????

What I mean is this - is it THIS CAR that you want, or would you be happy with (say) a 10 year old Audi (or 7, or 5 - I don't know them - is your current one near new?)

Almost certainly, your savings will accelerate if you are happy enough to "make do" with a cheaper vehicle. So, why not an older Audi? At 1/4 of the price? And we all need to start out by saving - DON'T get disheartened, tough it out, and set a goal for your savings - then head for it.

And, yeah, keep reading, learning - your savings regimen will take some time to come up with a "sufficient" deposit, so use that time to educate yourself (via this forum, reading books, seminars, etc) so that you're ready for your first IP purchase.

And don't discount using shares to "grow" your money while you wait. The stockmarket has taken a beating (AND it may not be over yet) but there are some good stocks that are becoming very cheap. Some of your learning could be in this arena while you save your deposit for your first IP.

Anyway, fantastic to hear of one so young thinking smart. And do let us know how you're going..... We're always happy to help people who are wanting to help themselves.

Are you going to be at Philip Foote restaurant? (Sun 13th - see Meeting Point). If you are, see you there.

Regards,
 
Hi Kris K,

Nice to have you on board and congrats on putting down a goal or two for the future.

A couple of years back we were in the same situation with you, however our passion was motorbikes, and although they seem less expensive than cars, I assure you they are not! We ditched the two bikes we had because of our common goal to start buying property, and once we did, we were able to free up over $100 a week to save towards the house.

Our rationale was, five years down the track, where do we want to be? Own a vehicle that is paid off, and worth only a small percentage of what we paid, and still renting.. or be paying off a house, and have some equity to borrow against?

Just some food for thought..

MT
 
Having only just got my Audi (02 Audi S3) I'm really inclined to enjoy it at least for 6months

Maybe I can think outside the square and try and earn some money on the side using skills I have. These are options Ill try before I get rid of my Yellow baby! :)

Stocks is one area I'd like to learn more on, but it seems a rather risky business.

Philips Foote? Great pub :) I've been there a few times and had a steak out the back, I may see you there

THanks for the ideas people, time for some hard thinking!

Regards
Kris
 
Kris, if you do come to Phillips Foote, do please bring the S3 so we can drool over it (good motiviation for becoming wealthy !) :D
 
Hiya Kris

Well I must say that I agree with all of the other forumites with regards to maximising your savings potential and living frugally etc as I believe that this will reward you many fold 'down the track'.

Having said this though I also hear what you are saying about your Audi as they are an absolute screamer of a car as my wife has one also. Whilst my situation is obviously different to you I do admit that if we (wife and I) had had the exposure to this terrific forum 15 years ago then we could have enhanced our financial position immensley today. Anyone

There are a lot of very knowledgeable and experienced people on this forum who can only try to share their knowlegde and experience with you. It is up to you whether or not you choose to have the 'flash' or the 'cash' as I imagine that many others on this forum have learnt from first hand experience that the 'cash' is definitely best when considering the long term benefits.

Pedro
 
Saving is fine but.........

Hello All,

I also love reading the forum and especially like when I get to actually post something usefull :)

I agree with everyone else. The car definately has to go as you can save a heap of $$$ without it. However letting go of such a nice car will be tough

As for the mechanics of saving. This is a phase I am going through at the moment. The best way to start is to make a budget, which it sounds like you have done. However what I personally find hard is keeping track of wether or not I have stuck to it.

I use a program that runs on my Palm organiser called budget master. You use it to keep track of how much you have spent on a particular category of expense i.e. entertainment, petrol, rent etc..etc... It's really simple and easy and only takes minimal discipline to use. The good thing about it is that it lets you know how you are going day to day in terms of your monthly budget. So if you have a blow-out early in the month, you can then plan to stay at home and eat peanut butter sandwiches in order to meet your goal for that month. The only problem is that you need to carry your Palm everywhere which is a bit geeky, but hey.........geek is chic. Check it out at http://www.budgetprogram.com/. I should also so that I am in no way affiliated with the makers of said software, I just use it and like it.

I'd also recommend using a credit card as much as possible. That way your salary can sit in your high interest bank account for the longest period possible. Plus you get points that you can use to reward yourself with, instead of spending your own money.

I too have started looking toward the share-market as a way of accelerating my savings.......but I haven't taken the leap yet. I'm still learning.

Best of luck with your investment goals and good luck on the savings front!!
 
Hi Kris,

One thing that is very hard to do is have hindsight before you experience something, so the best we can all do for you is tell you what we went through, what we think about those choices now and pass them on to you to make you own decisions.

For me I was 24, I was on a very good income and my current car was poorly selected, I had enough of repairs and decided to buy new instead. So I paid about $30k all up for Nissan Pulsar SSS.

3 yrs later I swapped jobs, got cashed out and decided to payout my car debt.

2 yrs after that I got another bonus and decided to buy my first IP (after reading many books to learn the lingo) for $167k

The 8yr old car bought for $30k (+ interest) is now insured for $8k and the 5yr old $167k house is now worth $250k+

Me like many others you'll hear will say, I wish I had started sooner.

And investing is not just about making money, its about options and the freedom to choose. Some people are stuck in jobs where the demand for that skill has shrunk, and they have to stay there to pay the bills.

Capital gain from investments allow you to acquire more, and the cashflow from these gives you a safety net against the necessities of living.

Here's a thought, something to think about...

On one hand is the nice car - has the cost of cars risen dramatically over the years? Let's say for this example they haven't then is there lost of opportunity of leasing a car for $1000/mo now or in 5 years?

On the other hand there is a property - will the cost of property change over time. Will a house today that you have buy for say $2500/mo provide you the same opportunity in 5 yrs (for the same per month?).

Though not accurate, you could research the sales prices of Audi's for the last 5 yrs and the cost of units where you are living now for the previous 5 years and compare the two.

I think the message most people are going to try and give to you is that TIME is the secret here.

Assume your current $900 with a possible $1000 extra rounding up to $2000/mo. $2000 x 12 x 5 = $120,000, but at the same time you will develop skills and knowledge so you'll build up resources as you go along.

The other secret is momentum, as you develop skills you develop confidence, and that will create its own momentum and will generate its own rewards.

FYI - I'm 34 now, a have a few properties, and am working on some business ideas, but the momentum is there now and snowballing.

One last thought - start listening to people, I don't mean us, but the people you know and will meet, listen to them talk, listen to their dreams and what they want to do. Consider if you'd be happy to walk the same path they do, or if you hear something interesting, find out what path they are taking. This does tend to reveal knowledge too. If someone seems to be doing well, but doesn't have a regular job, think or ask why that can be?, it may pay to learn how they do it.

Anyway, that's enough from me.
Michael G
 
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