HELP! Can we be homeowners?

[pully]

i agree. there is not enough info, but on the case as presented, things do not add up at all.

earning $100000 with minimal expenses, so far disclosed would suggest the poster could make an effort to save?

how were all savings lost in the GFC crisis? where were they invested?

super and shares declined, but basic savings were not effected very much in general.

not enough info.

 

[wobbycarly]

Rob, I didnt think that was much of an income; especially considering Im the only one contributing to the household debt ;-)

After outgoings like Rent ($1630 pcm), food, daycare fees , insurance and running a car theres not much left at the end of the day.

Mistype, or more to the story?

i agree. there is not enough info, but on the case as presented, things do not add up at all.

earning $100000 with minimal expenses, so far disclosed would suggest the poster could make an effort to save?

how were all savings lost in the GFC crisis? where were they invested?

super and shares declined, but basic savings were not effected very much in general.

not enough info.

Not attempting to judge. There are enough inconsistencies, or lack of detail, that there is no way we can do so.

The short answer to the original question is, IMO, "Yes but", with the "but" being that corny old "if you keep doing what you've always been doing, you'll keep getting what you've always been getting."

From the amount of detail that's been provided (and as Player mentioned, there is no obligation for Gillchase to declare anything more) it is impossible for any 3rd party to provide anything concrete, only the ideas that have already been presented.

Gillchase, there was another thread recently talking about budgets - from my limited reading of your position, you might get some value from it. http://www.somersoft.com/forums/showthread.php?t=62992

To compare, I am in my mid-30's and on a wage less than $70k. Wife earns <$12k. 2 primary aged children. We are in the process of paying off our own home (7 years in) and have 4 IPs. There were times when it got realllly tight, especially after than 2nd child came along, but we sacrificed some things to make it through those times. (We only had 2 IPs until 2 years ago)

Now that the IPs are almost neutral and 7 years on a home loan makes a difference, it's a little easier, but there are still things we need to do without today, to insure our future.

 

[schweedy]

I have to agree with most here. In your current mental position, you wont get a place anytime soon. Not saying you wont get there, just it will take longer unless your willing to change things in the meantime.

You wont be able to buy something with nothing, but you will be able to buy something with something, so now its time to work on that.
I always tell my friends to save like the next bust is around the corner, as if they never start saving, they will never get there.

Ok, wife has just had bubs, so off work for 12-18 months, so why are there daycare fees??? If its for when she returns to work, can placements be suspended or can she come off and go back on the waiting list???

Ok, wife doesn't make an income from working, but could she generate a little extra from something part time (ebay, partyplan, family daycare worker), there are lots of options she could have to generate that extra that will still allow her to be at home with the kids and help get you ahead. (Let her keep the money SHE makes to use for the kids, thus allowing you to save more of your income).

If you still dont think you will get there because of 'household debt' you need to look at THAT first. Pay it down as much as possible, then turn that money into the start of your deposit. You never know, banks might be a bit more friendlier before then.

How close to Clarinda do you need to be, and for what reasons??? Are cheaper areas like springvale/noble park be a better option or are they too far?? Just looking on re, there are even a few house with shop fronts, which may be another option????

 

[Peter Parker]

Rob, I didnt think that was much of an income; especially considering Im the only one contributing to the household debt ;-)

After outgoings like Rent ($1630 pcm), food, daycare fees , insurance and running a car theres not much left at the end of the day.

A 3br townhouse in Ormond is very nice, and there are significant hassles of moving, but if you were to relocate to something like http://www.domain.com.au/Property/For-Rent/Apartment/VIC/Seaford/?adid=6632607 http://www.domain.com.au/Property/For-Rent/Apartment/VIC/Frankston/?adid=6582524 or http://www.domain.com.au/Property/For-Rent/Apartment/VIC/Chelsea/?adid=6613027 that's approx $100 - 150 pw rent saving right there (these are all 3br places though beware of moving expenses and higher transport costs).

Downsizing our rental (to save money) is not an option right now as we really need the 3 bedrooms as a minimum.

Really really need or merely want?

Forget advertising and mainstream social opinion about what people 'need'.

The fact is that basic human needs are simple - walls and roof that don't leak, basic food, basic clothes and (for most people) social interaction to stop one going batty. Education and health improve quality and quantity of life.

Anything beyond are just wants, which are within your influence to change or reprioritise. If the aim of buying a home is important, you will take action to control costs and sacrifice lesser wants to achieve the higher aim.

 

[skater]

You need a reality check, you are living in a good suburb and can't save anything on $100k a year so that suggests you are trying to keep up with the Jones's which is fine if that's what you want but long term you are headed for the poorhouse and a miserable pension.

How do couples with 3 kids a mortgage and an income of $50k survive? Not sure but many do it.

Like many have mentioned, your income is quite good. If you can't save a huge chunk of that each week, you are really not trying. Here are a few tips.

I don't know Melbourne that well, so can't really comment on the area, but I am sure that if you looked around, you would find an area perhaps a little further out, that will have cheaper rental accommodation.

Daycare, do you need it if your wife is on maternity leave?

Car(s), I am guessing that you have expensive loans on vehicles. Is it possible to downgrade, paying cash. This is an area of possible great savings.

Groceries, Each week I am gobsmacked by the amount of "stuff" people put into their shopping basket. Someone I know told me they throw away a lot each week (they can't be alone). Only purchase what you need. Cut down on maybe the "name" brands. Buy some cheaper cuts of meat and make the expensive ones "treats". Buy in bulk where possible. Make your own "snack packs" by buying full size packets and placing small portions into zip lock bags. Soft drinks are expensive and not very good for you, teach the kids to drink water instead.

Do you smoke? If so, quitting will save a lot of money and you will benefit with better health.

Alcohol: This is expensive. Is there a way to cut down? Maybe buy a bottle to enjoy at home with the wife instead of a couple of drinks at the pub.

Eating out: This is a big one for some families and something where drastic savings can be made if it is something that is done on a regular basis. If you eat out once a week, then drop back to once a month. Or special occasions only.

Lunches/morning teas/latte's: Another one that can save a significant amount. Take your lunch to work. Don't buy the latte. If this has been a habit for a long time, it can be a huge sacrifice, but it is well and truely worth it. Maybe give yourself a treat once a week or better yet, once a fortnight.

Clothing: Wear what you have. Don't buy anthing that is not needed. Can you buy cheaper brands when you do need something? Are you buying kids clothing from Myer, when Kmart will do? Does your wife really need that new pair of shoes.

Cut up the credit card, or put it in the freezer. Anything to make sure it is out of sight, out of mind. You don't need it.

All of the above are some simple tips to help reduce your spending. They are all easily done without any huge changes to lifestyle. Many of the forum members (if not currently doing so) have done this and much, much more to get them to where they are today.

Now, the final step. Add up the savings. There should be several hundred $$ each week. Set up a direct debit into another account (one it is inconvenient to get money out of) AND DEPOSIT THIS AMOUNT each pay period, whether that be weekly, fortnightly or monthly. Pretend you have had a reduction in salary. DO NOT TOUCH IT! This is your deposit for your first home.

If you take the amount of savings out before you even see the rest of the money it is much easier than trying to find it after you have spent everything. Start today! As you reduce your expenditure, then increase the savings amount.

While doing this, keep coming back to the forum and get educated. In a years time, you should be well and truely on the way to your home.

Good luck.

 

[wylie]

I just read this, and agree with a lot of what has been said. $100K is a considerably higher than "average" salary, higher than hubby has ever earned.

The bits that others have gleaned, also made me wonder..... daycare costs being one. I know it is possible your wife uses daycare to give her some "me" time. You are cheaper than day care .

Second thing that struck me was the "need" for three bedrooms. If it means a considerable saving, then could you not "make do" with two bedrooms while saving for your own place (or an IP)?

Money slips through our fingers so easily, and until you really watch what is being spent, many people have no idea "where it all went".

Good luck with it. I think we have all "been there, done that" and understand where you are. The hard part is changing some (possibly) bad spending habits but once you see that deposit growing, the incentive to keep going should follow.

 

[Above Average]

Is there a reason why you need to live in that particular suburb? If not.....move further out for a cheaper rental while you save the deposit. Also, give up the daycare. If there is a medical reason that your wife needs the break then utilise family, friends or yourself on weekends to give her a break.

Don't eat out. We have a take-out meal only once per month. ie something like Chinese take away $33- to feed 5 of us plus left overs for lunch for one or two of us the next day.

Try to make days out as cheap as possible. eg. a trip to the childrens garden at the botanic gardens with a picnic rug & picnic lunch.

Buy a deep freezer & buy up on meat & bread in bulk & freeze. Freeze left overs from any meal for yourself or as pet food. I have saved a fortune in dog food by freezing left over meat, veg & gravy for our dog. He loves it! I find that if i have easy meals in the freezer for us then there is no need for that last decision take-away meal due to tiredness/availability. I bought my deep freezer on special & it has well & tuly paid for itself.

Buy a bread maker. Have soup & home made bread for dinner once a week over winter. This is such a cheap meal & I always have left overs which I freeze to take to work for lunch.

Walk whenever possible to save petrol costs. Use the library instead of purchasing books. Turn off lights in rooms that are not being used. Have a night where you cook from what is in your cupboard ie. don't buy something new to cook.

Do you pay for any outsourcing? ie. cleaner, ironing, home maintenance? If so, re-gain ownership yourself & save those dollars.

At the end of the day, it will be up to you. I have put some of the above measures in place & until this year we have earned considerably less than you & are paying off our own PPOR and 2 IP's with 3 young children. At the end of the day it comes down to your choice.

Good luck & please let us know how it is coming along.

Above Average

 

[bluestorm]

So we find ourselves in our mid 30’s with one good income (the other on maternity leave) and no savings.
No deposit, but reasonably good income
Not a lot of spare $$ each month to spend each month
After outgoings like Rent ($1630 pcm), food, daycare fees , insurance and running a car?

Mid 30's without any savings. Before you start worrying about property, it sounds like you need to learn to manage your money. $100K is quite a lot of money.
What day care fees? Isn't your wife at home. So there is some cost you can already cut. Like all the comments have said, people manage to do well, on far less than you earn.

 

[weg]

People have given you some great advise.

I think your prospects for saving a deposit are excellent if you change your mindset. It all depends on how much you want your own house.

One thing not mentioned is that since the child is already in daycare for some of the time, your wife can get a job in those hours?

It's still a break from being housebound and she gets to socialise with other adults. You could then give her a few hours off on a weekend or in the evening if she wants to do other things.

And I would definately move to a smaller place as you shouldn't need a 3 bed place; one that's perhaps only a few suburbs away will often be cheaper. Prices can vary significantly from suburb to suburb.

Keep in mind too that if you don't do something now while the baby is young and doesn't cost you much, it will be much harder to save later on, especially if you decide to have more.

 

[Peter Parker]

shape the child's memory and minimise disruption

Keep in mind too that if you don't do something now while the baby is young and doesn't cost you much, it will be much harder to save later on, especially if you decide to have more.

Another consideration as the child gets older is the dislocation caused by moving away from established friends and changing schools.

Proximity to (the obligatory 'good') schools becomes a key criteria later whereas you've got much more location freedom with a baby or toddler.

Also important is that your location at the time shapes the child's earliest memories of life.

For the child's eventual financial success it is probably best that early memories (up to say age 6 or 7) be in a loving but very modest home (say a tiny 2br flat in Noble Park).

This instills children with a view that high living standards cannot be taken for granted, opens their mind to the possibility they can live for much less and also the lifestyles of people less fortunate (the latter also helps develop tolerance).

It also increases their chance of future success - by example and experience as you'll be showing the link between saving and achieving goals by having a house move to a better place, as they'll be old enough to remember both homes. This should allow them to avoid your problem - ie reaching your 30s on a high income with no savings - and improve their ability to save for their home.

Living in said Noble Park tenement would save around $200pw, which if carried over 5 years, is $50k. Many other economies possible (as per others' suggestions) with a $100k income might allow a further $50 - 100k of saving, ie a substantial deposit.

 

[VYBerlinaV8]

Let's think of some things you can do right now to start moving in the right direction:

1) Have a good look at your spending. I think you may need to either do a budget, or rebudget, making sure you put a good amount into savings on pay day each month. There's already some good tips on this thread about reducing costs (coffees, eating out, expensive groceries, alcohol, lunches, etc).
2) What are you and the wife driving? I know it can be really hard to downgrade the cars you love, but have a think. Ideally, have only 1 car, if you need a second, make it a cheapie.
3) Do you go on holidays? Holidays can get expensive, and although you have fun, you have nothing asset-wise to show for it when you return. Expensive holidays need to go until you have your home, and can afford to travel without borrowing.
4) Use term deposits to save, or a high interest account that pays interest monthly.
5) Set some goals about how much you will have saved and by when.

I realise that I don't know your circumstances, and that you may have other expenses you haven't told us about. If you have consumer debt, you need to get that under control, and stop accruing more.

I, like you, earn a good income, and there's two things I have learned:
1) It's really, really, REALLY hard sometimes to stick to the plan when your colleagues and friends seem to have great things, and do great stuff.
2) The sense of freedom when you realise you don't have to have that stuff, and you don't care if others know that, is phenomenal. Don't fall into the higher earner's trap of thinking that a simple life is boring or unfulfilling - it's a lie.

Best of luck, let us know how you go!

 

[bluestorm]

We’re currently renting a 3 bedroom townhouse in Ormond (Melbourne)

Just looked at the Melbourne map. Why do you NEED! this house, and so close to the city. It seems you really need a hard look and determine what your priorities are. Living the high life (and keeping up with the Jones) now and being poor later, or making some sacrifices now, and being financially independent later.
$100K, gives you about $5.5K after tax. You should easily manage at least $2K/mth in savings on that income.

Spiderman also makes some excellent points "For the child's eventual financial success it is probably best that early memories (up to say age 6 or 7) be in a loving but very modest home". When we came to Australia in 1982, the first 2 years we lived in caravan parks, then public housing in Blue Mountains. But, now my parents and all 3 kids are better off than you are on your high salary. Suck it up, and make some sacrifices.

 

[Paul Do]

I’m now at a point where I realise that by not owning a home or at least an investment property we are leaving ourselves exposed in later years such as retirement when we will then have no choice but to continue renting.

What's wrong with continued renting? In Europe, the majority of people rent.

The question you're really asking is how to build sufficient assets for retirement. To which I'd reply: don't close off other options. Given the relative valuations between the stock market and the real estate market, consider making regular investments into a stock index fund (that is, you are investing in the whole market, and not a particular share(s)). Also, consider doing it through your super due to its tax effective environment.