What would you do with this debt/income?
- Thread starter Esel
- Start date
No thanks Kathryn, i appreciate all the advice. like most people we don't talk about money to anyone except each other so it's good to get some perspective. We've picked up some bad habits this year.
I will have a look at our bank account later today and add it all up.
Yep ok. I think the stage I'm at now is picturing what we could achieve with the money instead so we have an incentive to change our behaviour. Because im having the time of my life haemorrhaging money and we've got a mortgage on our forever home. It looks like we could maintain this comfortable standard of living for a while. So I'm trying to work out what we could be doing instead.
I agree with advice in regards to analysing money in money out, budgets etc but if the root issues arent addressed history can often repeat itself.
Without getting to flowery our money habits and attitudes go way back to childhood. I attended a seminar in 2001 by a man called Paul Counsel who talked about the psychology of money. I remember he used an analogy in regards to reseting the internal thermometer from say 50k a year to 200k to 1mill and so on. The premise is that we all have a setting on what we think we are worth on a sub concious level. If its 50k per year and you earn 170k then you will dispose of the surplus income to get back to your comfort setting. Think people who have won lotto then loose it all soon after often ending up worse off.
Tinkering with our internal mechanisms in regards to money (and life in general) would be the first port of call imo.
Books, SSF and attending seminars keeping your wits about so you dont fall for the enivitable sales pitch, as well as pondering on what you have learned will eventually reap dividends. Its a life long journey and Im in no way arrived as Ive made some good decisions in the past as well as some not so good ones. Be fore warned it can take years or even decades for your knew found knowledge to be realised, well it has in my case.
You have arrived at the best place. Realisation that change is required.
Start planting seeds now and watch your garden grow
and if done wisely your childrens children will enjoy the fruits of what you have planted.
Without getting to flowery our money habits and attitudes go way back to childhood. I attended a seminar in 2001 by a man called Paul Counsel who talked about the psychology of money. I remember he used an analogy in regards to reseting the internal thermometer from say 50k a year to 200k to 1mill and so on. The premise is that we all have a setting on what we think we are worth on a sub concious level. If its 50k per year and you earn 170k then you will dispose of the surplus income to get back to your comfort setting. Think people who have won lotto then loose it all soon after often ending up worse off.
Tinkering with our internal mechanisms in regards to money (and life in general) would be the first port of call imo.
Books, SSF and attending seminars keeping your wits about so you dont fall for the enivitable sales pitch, as well as pondering on what you have learned will eventually reap dividends. Its a life long journey and Im in no way arrived as Ive made some good decisions in the past as well as some not so good ones. Be fore warned it can take years or even decades for your knew found knowledge to be realised, well it has in my case.
You have arrived at the best place. Realisation that change is required.
Start planting seeds now and watch your garden grow
and if done wisely your childrens children will enjoy the fruits of what you have planted.
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Try flipping that figure around then you'll be getting somewhere!
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I've re read everyone's comments and they are really interesting (i just dont hear anyone talking like this normally) so thanks for the input, it's much appreciated.
Kathryn - Ok, so a back of an envelope calculation says we spend about 7500 a month on mortgage, food, transport, insurance, childcare, utilities, foxtel, Telstra etc... Leaving about 3500 a month which we have spent on everything else.
FMS - a lot of that really rings true.
Kesse - you are hilarious.
Bayview- I would love to see the budget of a family of 5.
Nemo30 - thanks for explaining that calculation.
Ive had a good chat with my partner about our spending. He agrees that we have had a huge year. However, he thinks I'm nuts to suggest that we could live on his wage only and have enough left over to fund an IP so we are going to take the advice and concentrate on our mortgage for now and i'll see if I can prove him wrong by saving!
Kathryn - Ok, so a back of an envelope calculation says we spend about 7500 a month on mortgage, food, transport, insurance, childcare, utilities, foxtel, Telstra etc... Leaving about 3500 a month which we have spent on everything else.
FMS - a lot of that really rings true.
Kesse - you are hilarious.
Bayview- I would love to see the budget of a family of 5.
Nemo30 - thanks for explaining that calculation.
Ive had a good chat with my partner about our spending. He agrees that we have had a huge year. However, he thinks I'm nuts to suggest that we could live on his wage only and have enough left over to fund an IP so we are going to take the advice and concentrate on our mortgage for now and i'll see if I can prove him wrong by saving!
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Good luck!
I think that's a solid plan. Take a year to study property investment, set a budget, stick to,it, and save.
I think that's a solid plan. Take a year to study property investment, set a budget, stick to,it, and save.
I've easily spent that this break, probably even more, and I'm single!
But I'm saving too so no biggie.
Esel, what you said in your earlier post "So we should just keep saving? Thats what my nana said. i was hoping for more exciting advice than that". Listen to your nana, if you can't save a good portion of your income you may easily get into trouble with an IP and be forced to sell, which you definately don't want. Get into the habit of saving now, and in only a few years after you have done the hard yards and bought your IP or 2 or 3 THEN you can splash your spare cash around. Delayed gratification is the key and investing isn't meant to be exciting. If you want exciting go down to the casino and put it all on black. Or trade forex
So......you basically have around $3500 for entertainment? Or close to a grand a week to just blow? I'm Gobsmacked!
There is definitely a lot of fat that can be trimmed, and a few of us here could really get stuck into it for you, but I don't think you'd be ready for that just yet.
Take the first step. Put your income away AND DON'T SPEND IT! Not on holidays, cars, furniture, or anything else. Just pretend it doesn't exist. Put it into the offset on your mortgage if you are disciplined enough to not touch it. If not, then put it in an account that makes it hard for you to withdraw it, maybe the mortgage.
Haha, yeah, the money thing. Nobody talks about it. That's what's good about this place. WE DO!
I think your husband is nuts
Your problem will be that he is not overly committed to the investment idea because he views it as an impact on his lifestyle
Once people have this mentality it's a hard shell to crack
My mrs and I have two IPs,only small value stuff in reality but better for investments , total val 600. Out of pockets about 6 k a year all up. Our combined income is 80k
You've got a lot of work to do to get him on the same page
I will clarify that my wife earns about $600 per week from her part-time job.
We are Aldi, and Dandenong Market shoppers. IGA as a last resort.
We buy almost nothing for ourselves these days; only the kids.
We almost never go out for restaurants etc.
Our fuel bill is about $300 per month (wife has a 20 min commute and we own an AWD Kluger which she uses for 99% of the time - could have bought something less thirsty, I guess). My portion would be about $20.
I take left overs and tuna sandwiches to work for lunch. Never buy it. We only buy the Bodem coffee in bulk. Non-smokers and not retail therapy tragics.
Our biggest expenses are our electricity, and waste of time insurances for the various facets of life, and interest on various debts.
Our holidays are now non-existent (had a 4 day camping trip at my brother's house on Cup w'end - very cheap). But, we are in a nice house and have a pooland a spa, and our location is a holiday destination, so we don't feel the need for exotic hols much at the moment.
When you are broke, (we are "asset rich, cash poor" currently) it's pretty easy to stop spending...
Try and think like a broke person and you'll be fine.
That was my first thought too!
If the husband thinks living on his wage alone would be difficult...
after paying the mortgage, maybe bank his cheque, and live off yours instead.
That's how you really get ahead
Gee, I'm a comedian and I don't even know it!
While I made that comment partly with tongue in cheek I think you can do a lot better than saving a measly $200 a week.
You'll need to prioritise and figure out what's more important - building yourself financially or spending every cent to enjoy life to the max now.
My husband was never any good with money. From the outset of our relationship I told him that I want to buy old house and do them up but I didn't want to do it while he was spending every single cent of his pay with unsecured debt to boot. I brought up the topic occasionally over the coming years and then one day he had this light bulb moment and saw there was sense in what I was saying.
I didn't want to jump in right away because it's easy enough to say you'll do something as opposed to actually doing it so I gave him 6 month to show that he was dedicated and really wanted it and much to my surprise for the first time in his life he started to save. He was pretty chuffed with that. He still wasn't too keen on the short term short term sacrifice thing so we had a 'carrot' - be disciplined for 3 years and he can buy the boat he always wanted.
We then bought and renovated 3 houses in the space of 18 months and while he hated the reno part he loved the financial benefits once renos were done.
I guess what I'm getting at is it's really difficult to change a mindset but it helps if you start seeing the benefits of doing so and even better if there's bribes involved!
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Well You have done it (saving ) once, given you paid off and sold another house, and there are a plethora of threads on halving your living expenses .... (hint ...there is one active at the moment.) So no saving advice from me.
I think you need to grasp two concepts.
1. An active consumer lifestyle lived with blind ignorance and no checks and balances leads to poverty.
This is what you are doing now.
Yes, yes, you have a million dollar house, but its heavily indebted and one lifechanging event you will lose it forever. YOur consumerism is out of control if you have no idea where the money went.
get your life, work and trauma insurance sorted, one car crash and the the remaining spouse will have to sell it, including the fancy furniture, and enjoy life on the breadline. You can cancel it when you can afford a major catastrophe instead of it wiping you out as you have no financial backup plan currently.
You say you want an investment that reduce your taxable income and doesnt impact on your disposable income?
Then why load up on non deductable debt?.
you need to start reading up on debt recycling, how to turn nondeductable to deductable debt.
Start putting money into an offset account. that is the best return you will get at the moment in your situation (ie deep in debt with no financial savvy). when you have developed a stash and some financial discipline, then use this as a basis of your future investment journeys.
Go and read mrmoneymustashe.com
he is hilarious and does a really good job of financial philosophy.
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2. Investing isnt exciting. It should be boring.
It should be a methodical accumulation of assets with appropriate risk strategies in place. The more the better.
Use the tax man to help you.
If you want to turbo kick start it, rent an equivalent house, and put the mortgage on IO. Suddenly you have tax deductions galore, the same kind of house and you have freed up cash to get your emergency fund together/pay it off.
Thats what I did. the taxman and the tenants helped me kill the mortgage
If you Luuuurve your house then offset cash until you can start investing it.
Too much emotion leads to poor outcomes and poor judgement. The market doesn't care if you are excited or not but punishes mistakes.
go and find a compounding interest calculator online and see the difference small amounts make over time.
The number at the end is exciting but the process needs to be methodical, calculated and goal driven.
By all means see a financial advisor. the best one is the search button on this forum. Its free.
good luck.
Xactly
Likewise.
I am saving for retirement / freedom from work / financial independence forever.
No TV / 12 year old corolla / single mattress.
My water bill for the past six months came to $28.
I don't particularly enjoy travelling either. Only business related trips.
Shop at Woolworths looking for specials.
However, my main indulgence is eating out for dinner / chai lattes in the morning - spend up to $150-200 per week on this. No lunch or breakfast though.
Well, I love shopping at aldi and eating tuna so that adjustment shouldn't be too hard.
I've gone back at looked at our account using the Anz money manager so I can see where it's all gone. I'm not telling though because it would make your eyes water and i can't face the virtual scolding.
I've also played around with the mortgage calculators and worked out we could have it all paid off in 10 years if we banked the bonus and my wage. I had no idea, so that was encouraging. I've also run that past my partner and received quite a luke warm response. Which is odd because he's honestly been really really tight for most of his life. Maybe he's just confused by me suggesting we save money.
Xactly - that's a really interesting idea. I had a search for properties near us and didn't see anything suitable. Plus weve just done a renovation to get this place how we want it, which my partner refers to as 'the worst year of his life' so it would be nearly impossible to get him to leave now we are in. However, I will stash that idea away as it might work for us in a few years if we had to move.
I'm off to google some of those suggestions now.
Thanks everyone.
I've gone back at looked at our account using the Anz money manager so I can see where it's all gone. I'm not telling though because it would make your eyes water and i can't face the virtual scolding.
I've also played around with the mortgage calculators and worked out we could have it all paid off in 10 years if we banked the bonus and my wage. I had no idea, so that was encouraging. I've also run that past my partner and received quite a luke warm response. Which is odd because he's honestly been really really tight for most of his life. Maybe he's just confused by me suggesting we save money.
Xactly - that's a really interesting idea. I had a search for properties near us and didn't see anything suitable. Plus weve just done a renovation to get this place how we want it, which my partner refers to as 'the worst year of his life' so it would be nearly impossible to get him to leave now we are in. However, I will stash that idea away as it might work for us in a few years if we had to move.
I'm off to google some of those suggestions now.
Thanks everyone.
+1.....Esel $1k pw for 2 1/2 people is ridiculous.
You don't have to go without much to be in front.
Good luck.
Cheers Spades.
C'mon China live it up a bit. I'd be a bit more optimistic and at least invest in a double mattress. Futon's are cheap.
