Planning Financial Independence for a Single Woman

[artdecolover]

Geelong or Ballarat? My unique situation.

Hi Everyone,

I have been browsing these threads for a while but not yet commented, and now I would like to share (with your experience) my own unique situation. Your thoughts would be appreciated! Warning: it's lengthy...thankyou for your patience, but I do not have many financial figures around to ask these questions.

My History:
I am a 28 Year Old woman who works as a graphic designer. I have struggled earning a great wage, working in an industry where having a creative job is considered the reward in itself. And it is! I love my job, but for the future anticipate no riches, say 45-55k wage standard.

I've made a great relationship with a client and am now earning 80k. I hope to work with him at least 2 years. As such, I have moved closer to work (Melbourne's West), have a petrol card and am now in a position to save a more significant amount of money. This is new for me after having struggled in share houses on shitty wages with many people in the gorgeous, creative but EXPENSIVE Melbourne Inner Suburbs. It's worn me down a little, but the city inspires me.

Financial Status:
I have $10k in savings, $2k left to pay off my cheap $7k Hyundai Getz.
I have started a savings account with Rams that doesn't allow me to touch my money. I directly put in $500 a week into this account - so, $2000 a month saving. I put $100 a week onto the car loan. The interest until I pay off this loan will only incurr about $150 so that doesn't bother me as the payments are more manageable this way.
I anticipate I can save $30,000 by next November and have $60,000 by November 2014.

My Objective:
I want to feel a little more stable. I want to be financially independent. I want to not be so intimidated of my earning a single income basic wage for my future. I want to plan ahead.

Plans Considered:
GEELONG
- I'm originally from Geelong and have some family and a couple of friends there. I always loved Geelong West area and have been excited by the new creative developments in the town.

Invest - Perhaps I could invest and get a 2 bedroom unit- a buy and hold investment- a walk to the station that I could use as an investment property and get a foothold into GW? If ever not leased, it has easy access to the train station and potential for me to live in it if I ever wanted.

Desire - My true desire is to have a 2/3 Bedroom Terrace/Cottage in the above area.

BALLARAT
- I spent a year studying in Ballarat and fell in love with the architecture there, especially the 'CBD' living, the arts campus in the city (only could have a good effect on the city!!). the history and the ease of movement.

Invest- It is so cheap here it reminds me of the prices I once saw in Geelong for a terrace. I would be tempted to invest Inner CBD close to the station, and tempted to buy a terrace as it is achievable here. I think a Terrace has more upkeep and may not be such a good investment.

Desire- Perhaps one day when I want to raise a family or am sick of the city expense and congestion this could be a creative lifestyle, not far from Daylesford or Geelong. A 3 Bedroom Terrace to renovate could be a great project.


OK, So these are my initial thoughts.
So my first goal is to save up $30k, $60k by the following year.
I hate debt and that is why I am attracted to these areas.
I feel like I have been priced out of the Melbourne region as a single, lower/middle income woman.
Most creative work is in Melbourne but my career has freelance opportunities.
I could also invest and live in the suburbs I prefer in Melbourne.

As you can see, I have a lot on my mind, but genuinely appreciate your input on these sorts of plans!

Geelong, or Ballarat? Why?
And perhaps your thoughts on my 'unique' situation.

Thankyou very much,
Kristy

 

[Aaron_C]

Are you working 'for' the client as in a job, or are you still running your own business?

 

[artdecolover]

Hi Aaron,
I am employed full time contract and feel I will be needed long term in the business.

Thanks

 

[Mr. Fabulous]

Hi Kristy, firstly your situation is not 'unique'. There are many people out there in a similar situation (both men and women) who are doing what you would like to do.

Aside from Aaron's question - the car loan - are you paying interest on it? If so, it may be worthwhile considering paying it out, out of your savings. The interest rate you are paying is likely higher than you are getting on your savings, so in effect, you are actually going backwards. Just be sure that it doesn't have an early payment penalty, if so pay off all but a small amount and make the repayments on that.

Have you thought about freelancing full time? Being single makes this a lot easier. My brother is a graphic designer who works full time and also does a lot of freelancing on the side and makes a lot more from the freelancing. The only thing is, that the income is lumpy. But it might be worth considering as an option.

Personally, I would rather invest in Geelong than Ballarat. I also grew up in Geelong and believe that there are more opportunities for CG there than Ballarat. But I also don't know what your long term investment goals are.

As far as getting yourself set up for the future, I would strongly advise discussing this with an accountant, to ensure you get it right from the start. I strongly recommend you speak to James at House of Wealth, he's the best in the biz. He can be contacted via their website at www.houseofwealth.com.au. I would also speak to a good broker. There are plenty to choose from here, Aaron_C happens to be one of them. Take it from someone who knows - it is important to get your finance structure right from the beginning.

 

[Peter_Tersteeg]

As a basic summary:
* Currently self employed earning $80k but general earning potential is around $45k.
* Savings of $10k and adding $2k per month.
* Anticipates having $60k available for investment in 2 years.
* Anticipates being debt free by the end of 2012.
* Current locations under consideration are priced at $350k - $450k

Essentially you've got about 1-2 years before you've saved enough deposit to be able to do anything. Some things you can spend that time doing:

1. Educate yourself more - read the forums and other sources of information.

2. Understand what you can achieve - you need to understand what's possible with your resources. With a reliable income of $45k it may not be prudent to be buying into a $400k price point. It might be a good idea to speak with a mortgage broker to go through some finance scenarios.

3. Develop a strategy - your investment and desired objectives appear to be based on an emotive basis, you should also back this up with actual figures and strategy to achieve the longer term goals. An art deco house might appeal to you, but what financial position will it put you in and will that get you where you ultimately want to be?

4. Research the areas you're looking at to determine if they'll fit your strategy. Research elsewhere to see if other locations to see if they work better. I grew up in Ballarat and I've spent a lot of time in Geelong. Both cities have some great opportunities but I suspect buying right in the CBD of both areas might not work for some strategies.

5. Consolidate your employment. A single source of income in a small business is a significant risk and your investment strategy is likely to be heavily reliant on that income.

If you can spend some time doing these things whilst you work towards putting a deposit together, when you're ready you'll be in a good position to make the best investment decisions you can.

 

[artdecolover]

Thanks for your reply.
I would say I am interested in $200-$280k region, and quite happy to invest in older unit or villa also. I'm open to suggestions.

Thanks again

 

[dubsey]

Hey there,

My observations of Ballarat having lived here for work past year.

- BPC factor is immense (BPC = Bogans per capita)
- Only a few cafes that i would say have decent coffee / food (In case you are a coffee snob)
- Take away food is a complete rip off & not that good either.
- If you like your junk food then you will love it.
- Lots of teenage mums & dads.
- Subtance abuse is common & in your face at the super market, bus & on the streets.
- Lake is nice.
- The weather is very cold if not freezing in winter.
- Daylesford is a short 20 mins drive which is great.
- Its a great town if you are a student.

 

[Munchkin]

I grew up in Geelong and now live close to Ballarat and for myself to live, I would choose Ballarat. couldn't say from am investment perspective though.

I definitely don't agree with everything dubsey has said. Most of those things were worse in the town I just moved from.

 

[CHAOS]

Hey there,

My observations of Ballarat having lived here for work past year.

- BPC factor is immense (BPC = Bogans per capita)
- Only a few cafes that i would say have decent coffee / food (In case you are a coffee snob)
- Take away food is a complete rip off & not that good either.
- If you like your junk food then you will love it.
- Lots of teenage mums & dads.
- Subtance abuse is common & in your face at the super market, bus & on the streets.
- Lake is nice.
- The weather is very cold if not freezing in winter.
- Daylesford is a short 20 mins drive which is great.
- Its a great town if you are a student.

You could always live in Daylesford and commute? You would pay more for food in their trendy cafe's, more in rent and more $ to get to work. Daylesford probably has bogan's too but they would probably be called artsy or cultured.

 

[our obsession]

Welcome Artdecolover to somersoft..

I will link this into the Regional Victorian Investing thread.

From the 'Guide to Property Values' (Victorian Valuer General office statistics) from 2001 to 2012 decade:

The change in property value growth, (expressed as percentage) for the decade, houses first:

Ballarat Central:--9.3%

Ballarat East: --9.4%

Ballarat North: --8.3%

Units

Ballarat/C:--8.3%

Ballarat/E:--8.8%

Ballarat/N: --11.7%

----------------------------------------------------------------------------------

Geelong (Houses): --8.6%

Geelong West: --10.1%

Geelong Units

Geelong: --6.6%

Geelong West: --9.3%

------------------------------------------------------------------------------------

Toss in Bendigo for fun, Houses

9.1%

Units

9.6%

Thoughts on Regional Victoria for Investing..

*******************************************************

 

[artdecolover]

Our obsession
Wow! Thanks for those stats, it's interesting to see how they have performed in relation to each other.

In regards to Ballarat being full of bogans and miscreant activity,
Well, I'm no stranger to that. Having lived in Fitzroy, Carlton, Preston, Richmond
It seems that I'm not only priced out of many of those areas but surrounded by the same kinds of behaviour

I do have a few questions, though:

1 - while I'm saving, are there strategies I should be thinking of?
2 - when I do hit $60k saved, what would YOU do with it - it being a relatively small amount, max $250k loan...
3 - is it a better idea to look regional - eg am I correct in feeling priced out of a good melbourne buy?

Thanks so much everyone!
I have lots to learn...

 

[Peter_Tersteeg]

1 - while I'm saving, are there strategies I should be thinking of?
2 - when I do hit $60k saved, what would YOU do with it - it being a relatively small amount, max $250k loan...
3 - is it a better idea to look regional - eg am I correct in feeling priced out of a good melbourne buy?

Whilst you're saving over 2 years, you should educate yourself more. That way you'll have a better understanding of what strategies are more likely to suit you. It's very hard to say what sort of strategy is for you, but some to consider might be:
* Heavily positive geared (harder to achieve than most people believe)
* Negative gearing with a view to growth (will limit your opportunities due to your limited resources atm).
* Incorporating renovation, subdivision or some other improvement strategy into one of the above. Even development is within your resources.
* There's lots more possibilities, hence you need to spend lots more time educating yourself.

$60k would be sufficient funds for a purchase price of about $400k. In this scenario the loan would be about $360k.

You probably are priced out of Melbourne unless you're willing to look at the outer suburbs (many of which I believe do offer good value).