We're living beyond our means...

[Boob Johnson]

Is the title of this (http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10523591) herald article. A fantastic read & extremely informative for those wishing (or needing) to be more prudent with their finances, especially in these changing times :blink:


Some fantastic advice & it's free :sunny:

[scumdog]

Fark!! I wish they would tell me something I DIDN'T know....

[Boob Johnson]

Fark!! I wish they would tell me somethign I DIDN'T know....
You're a quick reader :laugh:

[Mully]

Bit simplistic, I thought. Also disagree about telling that couple to sell the house and save. Once you are out of the property market, especially in Auckland, its hard work getting back in.

Mate of mine is selling up, and renting, but buying two rental units with the money he is paying on "his" mortgage. The units will be negatively geared and will reduce his personal tax, and if it all turns to shit, he can sell one and live in the other, and stays in the market.

[Number One]

Some good basic lessons in there. Do they actively teach this sort of stuff in schools yet? They didn't in my day :rolleyes:

http://www.kiwibiker.co.nz/forums/picture.php?albumid=253&pictureid=4875

[Mully]

Some good basic lessons in there. Do they actively teach this sort of stuff in schools yet?

That's a great idea. I think part of kids problems with money comes from plastic cards. They don't click that the money comes from an account

[justsomeguy]

Thanks for the article Boob.

Always wondered about the property thing. Even if I do find a buyer for one of my kidneys and get a deposit together, I need at least 300,000 for a decent hut (liar/lawyer fees, etc, etc all inclusive). At an interest rate of around 9% thats 27,000 for the 1st year in interest alone. Sure it gets a little less the next, but still it's years before it starts eating into the principal. Also I need to come with $4-500 a week to pay the mortgage which means if I want to have any kind of a personal life I may have to eat on alternate days.

Now paying cheap rent at $150/week - that's less than $8,000 a year, better than paying $27,000 a year or so isn't it? So isn't it better renting until one can save a 30%+ deposit or is it worth buying at all?

Hate maths and happy to be corrected with good advice.

[Mikkel]

Good article - I wonder how much common sense it'll take before people are willing to face the fact that they are living beyond their means and then stop blaming the rising petrol and food costs.

They had a spot on this subject on close on where that fella from Wellington who's quite good at economics (can't remember the name) pointed out that the salary index was going up faster than the food price index and that the reason that people felt a squeeze was the rising interest rates.

It sucks - but every party has to stop at some point... It's always up AND down!

I do think however, that if you're looking to buy a house in a couple of years there is going to be plenty of good deals on the market :yes:

[Winston001]

Now paying cheap rent at $150/week - that's less than $8,000 a year, better than paying $27,000 a year or so isn't it? So isn't it better renting until one can save a 30%+ deposit or is it worth buying at all?

Hate maths and happy to be corrected with good advice.

In a word, Yes. House prices are still way above the longterm average. Prices do go down. Its happened before and it will happen now. Harcourts already have a separate category for mortgagee sales and I've had a friend lose two houses through mortgagee sale. Both houses sold about $100,000 under market valuation.

Be patient and save.

[Papa Bear]

Hope this thread carrys on... might learn some tips on along the way :whistle:

[RantyDave]

I need at least 300,000 for a decent hut (liar/lawyer fees, etc, etc all inclusive). At an interest rate of around 9% thats 27,000 for the 1st year in interest alone.
Yes, yes it is. Frightening eh?

Nothing at all wrong with renting and saving up a pot of cash for when you actually want/need your own place.

Dave

[Mully]

It's interesting looking at overseas markets. In a lot of cities, its unusual to own your own property. Mainly cos it's cheaper and more convenient to rent. I think it's the NZ mentality that you have to own your own home. I know several people that don't own the house they live in.

You can, if you do it right, get a more consistent return from other investment year-in year-out. (of course, you want to stay away from finance companies at the moment....)

[Winston001]

It's interesting looking at overseas markets. In a lot of cities, its unusual to own your own property. Mainly cos it's cheaper and more convenient to rent. I think it's the NZ mentality that you have to own your own home. I know several people that don't own the house they live in.


Yes but somebody does own the house and they do very well out of it in the longterm. We also need to recognise that many cities and indeed nations are heavily populated whereas in NZ we are pretty sparse. Added to that is an ethos of very longterm renting - for a lifetime often. Plus there are particular laws and rent controls which make renting attractive.

Owning a house in NZ is realistic - except for the last 3 years. It will be again. Lots of land and only 4 million people. Compare that with England and Japan.

[Mully]

Yes but somebody does own the house and they do very well out of it in the longterm. We also need to recognise that many cities and indeed nations are heavily populated whereas in NZ we are pretty sparse. Added to that is an ethos of very longterm renting - for a lifetime often. Plus there are particular laws and rent controls which make renting attractive.

Dose anyone have the figures on long term per annum gain on property in NZ?? Just curious about whether or not the gains in owning rentals are actually there with the capital if you take all the market swings and the hassle of tenants (say you spend X hours per month sorting things out).


Owning a house in NZ is realistic - except for the last 3 years. It will be again. Lots of land and only 4 million people. Compare that with England and Japan.

Agreed, but we also need to factor in the cost of building here (RMA, etc) and the fact that our primary industry (farming) is land intensive which will restrict the availability of land (try buying a section in Waitakere and getting permission to clear it to build on for example)

[Max Headroom]

Dose anyone have the figures on long term per annum gain on property in NZ??

I recall reading a book written by a guy called Dolf de Ruis in the mid-90's about this. Dolf was a well-known property guru in the 90's who is in the USA now. In the book he quoted the example of a home in Christchurch that had been built in the early 1920's and was still there 70 years later. It hadn't been structurally altered or modified or subdivided, it had simply been repainted, maintained and renovated when required. Importantly it had changed hands every 5 - 10 years and never under mortgagee instruction, so it could be used as a fair example of price trends. The study found that the property had increased at an average rate of 10% per annum.

Now, that's not going to apply to any and every property in NZ. There are way too many variables, including the obvious such as location, presentation and vendor circumstances. And that's without considering the prevailing economic climate.

[slowpoke]

Bit simplistic, I thought. Also disagree about telling that couple to sell the house and save. Once you are out of the property market, especially in Auckland, its hard work getting back in.


Staying in the market is only important if values are rising. I think everything is pretty flat everywhere at the moment so if you are able to sell up and realise some cash gains from the growth over the last few years then you've taken the pressure off making ends meet and it allows you to invest the surplus somewhere it will continue to grow.


Thanks for the article Boob.

Always wondered about the property thing. Even if I do find a buyer for one of my kidneys and get a deposit together, I need at least 300,000 for a decent hut (liar/lawyer fees, etc, etc all inclusive). At an interest rate of around 9% thats 27,000 for the 1st year in interest alone. Sure it gets a little less the next, but still it's years before it starts eating into the principal. Also I need to come with $4-500 a week to pay the mortgage which means if I want to have any kind of a personal life I may have to eat on alternate days.

Now paying cheap rent at $150/week - that's less than $8,000 a year, better than paying $27,000 a year or so isn't it? So isn't it better renting until one can save a 30%+ deposit or is it worth buying at all?

Hate maths and happy to be corrected with good advice.

Yep, in the short term it's hard to justify buying....but over the long term I reckon you are better off as you are investing in an appreciating asset. If you are able to scrape up slightly more than the minimum payment then the difference comes directly off the principal and makes a big difference over the lifetime of the loan.

The best monetary solution is probably to rent and invest the difference between your rent and what would be a mortgage in the sharemarket (better long term growth than property). The problem is this takes a hell of a lot of discipline and you don't have the advantages of living in your own place and being able to do what you like to it or improve it. Don't forget wages go up over the years so the payments become easier whereas your rent will only go up.

Each to their own, it's not a competition after all.

[fire eyes]

ohh thankyou Boob! .. this article is definitely a reminder for me to tighten things up .. Ill admit it I get a lil wayward when it comes to money .. Iv realised that I do not monitor my money the way I need to in order to make it work for me, I put money away into a specific account but the rest well its a bit of a free for all .. and then I complain about petrol hikes? lol .. hmmmm .. wake up slap .. so thankx for posting this! tis timely :clap:

[Flatcap]

My wife and I bought a house in central Auckland 8 years ago and paid off the mortgage last year. We are often asked how we did it.

The answer is simple - we did without.

[Subike]

Is it so easy to forget those amoung us who have no chance what so ever to get above the bread line?
Here we see an article that talks about 100k incomes to households as if it is common as, like everyone gets that sort of money, or close to it!
FFS I work $13.50 an hour,
I survive on that comphy as, and ride a bike, prob one of the most exspensive hobbies I can have..concidering my income.But Im single.
I read here of the wealth of you rich bastards have...home owners...new bike owners..multi bike and car owners... friggin capatalists!
The arrogance of the ...go buy a house and pay it off in 10 years....
Hey the reality is, rentals are fast becoming the only way forward for low income workers.
Look at the motor camps, lots of low paid workers live there...let alone the people who live in older house busses, on minimum budjets.
I get aggro when I see people telling others how spend their money, what they should have, then laugh at what they have !!!!
This site is bad for it...judgement on a persons wealth....
Yet we do need to tighten the belt and budjet.
Stop buying all that bling for your bikes so that it is better, faster, shinnyier, newer than the other guy on the rides from last week.
Budjet? Whats wrong with sausages, spuds and peas for a month so you can afford the gass to go for a ride on a 30 year old bike ...thats one ride a month!
Go get a higher paid job???? Really???Where?
Get cheaper rentals.... really?? where??? you landlords are crushing us lower paid workers with your high rental fees....then moan when we cant afford $5 for the mower to mow the lawns.....
Hello...3rd world here we come!

Now, on 27K gross a year, single, 50 years old, what do you experts recomend!!!!

I like this place (KB) and I like the people in it, if anyone takes what I say personally, ( as some have in the past ) then deal with it, dont bleat to me.

[fire eyes]

I am not on a high income .. I have 3 kids to provide for .. but Im in the best position I have ever been in .. not everything is about money .. attitude has alot to do with it to ... :hug:

[smokeyging]

Is it so easy to forget those amoung us who have no chance what so ever to get above the bread line?
Here we see an article that talks about 100k incomes to households as if it is common as, like everyone gets that sort of money, or close to it!
FFS I work $13.50 an hour,
I survive on that comphy as, and ride a bike, prob one of the most exspensive hobbies I can have..concidering my income.But Im single.
I read here of the wealth of you rich bastards have...home owners...new bike owners..multi bike and car owners... friggin capatalists!
The arrogance of the ...go buy a house and pay it off in 10 years....
Hey the reality is, rentals are fast becoming the only way forward for low income workers.
Look at the motor camps, lots of low paid workers live there...let alone the people who live in older house busses, on minimum budjets.
I get aggro when I see people telling others how spend their money, what they should have, then laugh at what they have !!!!
This site is bad for it...judgement on a persons wealth....
Yet we do need to tighten the belt and budjet.
Stop buying all that bling for your bikes so that it is better, faster, shinnyier, newer than the other guy on the rides from last week.
Budjet? Whats wrong with sausages, spuds and peas for a month so you can afford the gass to go for a ride on a 30 year old bike ...thats one ride a month!
Go get a higher paid job???? Really???Where?
Get cheaper rentals.... really?? where??? you landlords are crushing us lower paid workers with your high rental fees....then moan when we cant afford $5 for the mower to mow the lawns.....
Hello...3rd world here we come!

Now, on 27K gross a year, single, 50 years old, what do you experts recomend!!!!

I like this place (KB) and I like the people in it, if anyone takes what I say personally, ( as some have in the past ) then deal with it, dont bleat to me.



with the age that you are, you should be better off, anyway, does'nt matter, they are a good bunch here and all you have to do is ask, helpful imformation is free here.

[Number One]

with the age that you are, you should be better off, anyway, does'nt matter, they are a good bunch here and all you have to do is ask, helpful imformation is free here.
:gob: that has to be one of the most patronizing and rude posts I've seen in a while on here. Good on you ya judgemental know it all

[Mikkel]

I recall reading a book written by a guy called Dolf de Ruis in the mid-90's about this. Dolf was a well-known property guru in the 90's who is in the USA now. In the book he quoted the example of a home in Christchurch that had been built in the early 1920's and was still there 70 years later. It hadn't been structurally altered or modified or subdivided, it had simply been repainted, maintained and renovated when required. Importantly it had changed hands every 5 - 10 years and never under mortgagee instruction, so it could be used as a fair example of price trends. The study found that the property had increased at an average rate of 10% per annum.

There's no doubt that investing in real estate is one of the most lucrative and secure investments you can make, provided:

1. The economy is growing, not receding.
2. You buy it with money that you actually have.

The problem that property inverstors are facing right now is the fact that interest rates are going up and they have borrowed money at variable rates using other properties as security. At least that's how I understand it.

If too many people speculate and try to get a slice of the cake the apparent value of real estate increases even faster - however, this increase is not a true representation of supply and demand and eventually the market will collapse/recede depending upon how large the artificial inflation of prices have been.

Give it a year or two and I think you'll be able to get some really good deal on houses around New Zealand - unfortunately for some people.

[Cruisin' Craig]

There's no doubt that investing in real estate is one of the most lucrative and secure investments you can make, provided:

1. The economy is growing, not receding.
2. You buy it with money that you actually have.



Agreed entirely.

But your second point hasn't always been the case has it. In fact, it's a pretty new concept to some of us. I personally have lost out in a big way by saving a large deposit before buying my home. For several years the amount I have been able to save each year hasn't even kept up with property price increases. The more I saved, the further away from owning a home I became!

Far better off are the people who jumped straight into the property market on 100% mortgage and capitalised on the rising prices. Even better off are those who mortgaged themselves up to the eyeballs to buy more than one home.

I'm 31 years old, but have always had the more old fashioned approach of saving and using money you actually own to buy the things you want. I would be FAR wealthier today if I had only learned to build up assets on borrowed money like so many of the rest of my generation have done.

Living within your means has not always been the smart way to live!

[Forest]

I recall reading a book written by a guy called Dolf de Ruis in the mid-90's about this. Dolf was a well-known property guru in the 90's who is in the USA now. In the book he quoted the example of a home in Christchurch that had been built in the early 1920's and was still there 70 years later. It hadn't been structurally altered or modified or subdivided, it had simply been repainted, maintained and renovated when required. Importantly it had changed hands every 5 - 10 years and never under mortgagee instruction, so it could be used as a fair example of price trends. The study found that the property had increased at an average rate of 10% per annum.

Now, that's not going to apply to any and every property in NZ. There are way too many variables, including the obvious such as location, presentation and vendor circumstances. And that's without considering the prevailing economic climate.

10% per year compounding over a long period of time is unrealistic.

Over a 70 year period this equates to an increase in value of 789 times the initial purchase price.

[Cruisin' Craig]

10% per year compounding over a long period of time is unrealistic.

Over a 70 year period this equates to an increase in value of 789 times the initial purchase price.

Not necessarily that unrealistic.

Average UK property price in 1937 = 540 pounds.
Average UK property price in 2008 = 221 580 pounds.

That's 410 times the initial value over a 70 year period.

http://www.communities.gov.uk/housing/housingresearch/housingstatistics/housingstatisticsby/housingmarket/livetables/

[Mikkel]

Agreed entirely.

But your second point hasn't always been the case has it. In fact, it's a pretty new concept to some of us. I personally have lost out in a big way by saving a large deposit before buying my home. For several years the amount I have been able to save each year hasn't even kept up with property price increases. The more I saved, the further away from owning a home I became!

Far better off are the people who jumped straight into the property market on 100% mortgage and capitalised on the rising prices. Even better off are those who mortgaged themselves up to the eyeballs to buy more than one home.

I'm 31 years old, but have always had the more old fashioned approach of saving and using money you actually own to buy the things you want. I would be FAR wealthier today if I had only learned to build up assets on borrowed money like so many of the rest of my generation have done.

Living within your means has not always been the smart way to live!

I hear what you are saying - but the reason that the market has worked in that way is because of speculation.
You can only inflate a balloon to a certain point before it burst...
So while some of these people have reaped from taking out large mortages - if they have continued to do so without consolidating their assets at some point along the line, they are most likely in a financial predicament of dimensions now. And I don't think we can expect the squeeze to stop just yet.

If you have kept on being as sensible with your finances I suspect you're not one of the people who are moaning about rising fuel and food prices :)

[justsomeguy]

The best monetary solution is probably to rent and invest the difference between your rent and what would be a mortgage in the sharemarket (better long term growth than property). The problem is this takes a hell of a lot of discipline

Good post.

What would be your advice on entering the sharemarket? To me (a layman) it seems something for people with lots or moneys or who are very intelligent. Since I'm not really one of them... what do normal folks do?

[Boob Johnson]

Bit simplistic, I thought. Also disagree about telling that couple to sell the house and save. Once you are out of the property market, especially in Auckland, its hard work getting back in.

Mate of mine is selling up, and renting, but buying two rental units with the money he is paying on "his" mortgage. The units will be negatively geared and will reduce his personal tax, and if it all turns to shit, he can sell one and live in the other, and stays in the market.
Yep it is simplistic but it can't be any other way as it is generic advice for the unknown masses.

Without knowing your mates full circumstances that is one good way to go about it. I've always told my clients there are 1000 ways to go about it you just have to settle on the way that suits you personally. Gearing property has been my area of focus in my previous professional life, it is a fantastic tool but needs to be fully understood first.



Do they actively teach this sort of stuff in schools yet? They didn't in my day :rolleyes:

lol great pic :2thumbsup

To the best of my knowledge, not even close to being taught in schools. The closest I remember at school (70's) was being taught how to open a till & ring up the cash lol, not exactly economics 101, even at high school economic studies had nothing to do with wise money management & or investment.

[Boob Johnson]

Thanks for the article Boob.

Now paying cheap rent at $150/week - that's less than $8,000 a year, better than paying $27,000 a year or so isn't it? So isn't it better renting until one can save a 30%+ deposit or is it worth buying at all?

Hate maths and happy to be corrected with good advice.
Your welcome :sunny:

As previously mentioned there are 1000 ways to go about it, its about identifying what will work for your circumstances & what you are personally comfortable with.

In a rising market saving up is often as helpful to baby making as putting your John Thomas in a vice. You won't be able to keep up, do whatever it takes to get on the property wheel (within reason). That doesn't mean you need to live in the house either. I have a mate who's first property he bought at 18yrs old, he is now mid 20's & still doesn't own his own home, he does however have 3 investment properties now. And part of the cost of owning them has been off set by his personal tax liability. You can't claim depreciation etc etc on your own home.

[pete376403]

Dose anyone have the figures on long term per annum gain on property in NZ?? Just curious about whether or not the gains in owning rentals are actually there with the capital if you take all the market swings and the hassle of tenants (say you spend X hours per month sorting things out).)

I've been in the same place all my life (apart from a few years renting) - I bought the house from my parents estate. It's a very ordinary 3 bdrm stucco on 1/4 acre in Upper Hutt
They paid 3000 pounds for it in 1952. I paid $16000 in 1982 (bought from my two brothers, so each of us had an $8k share). The current valuation for it is $300,000. I have no idea how 3000 pounds would relate to a 1950s electricians annual income. This what you're asking?

[Boob Johnson]

I do think however, that if you're looking to buy a house in a couple of years there is going to be plenty of good deals on the market :yes:
Oh hell yes, plenty already & a whole lot more to come.



It's interesting looking at overseas markets. In a lot of cities, its unusual to own your own property. Mainly cos it's cheaper and more convenient to rent. I think it's the NZ mentality that you have to own your own home. I know several people that don't own the house they live in.

You can, if you do it right, get a more consistent return from other investment year-in year-out. (of course, you want to stay away from finance companies at the moment....)
Absolutely, but like anything you need to do your home work......throughly!!!

The average everyday people like you are I understand property better than foreign markets etc.





Dose anyone have the figures on long term per annum gain on property in NZ?? Just curious about whether or not the gains in owning rentals are actually there with the capital if you take all the market swings and the hassle of tenants (say you spend X hours per month sorting things out).
The average is around 10% when stretched out over the long term. You should expect to see the average house double in value every 10 years.

Interesting to note, I read in Forbes a few years back that an estimated 90% of the worlds wealthiest people have gained the bulk of their assets in property. So be careful of any fund manager who outright "poo poos" property.

McDonalds: Are they in the fast food business? No. They are the biggest property owners in the world, they own almost every site, flippin burgers is for the tenant to make money on :shifty:

[Boob Johnson]

I recall reading a book written by a guy called Dolf de Ruis in the mid-90's about this. Dolf was a well-known property guru in the 90's who is in the USA now. In the book he quoted the example of a home in Christchurch that had been built in the early 1920's and was still there 70 years later. It hadn't been structurally altered or modified or subdivided, it had simply been repainted, maintained and renovated when required. Importantly it had changed hands every 5 - 10 years and never under mortgagee instruction, so it could be used as a fair example of price trends. The study found that the property had increased at an average rate of 10% per annum.

Now, that's not going to apply to any and every property in NZ. There are way too many variables, including the obvious such as location, presentation and vendor circumstances. And that's without considering the prevailing economic climate.
Dolf = :not:

What a legend that man is, if anyone wants to know exactly how he amassed a LARGE fortune, read his books. He was studying to be an engineer, him and a few buddies were broke ass students so they put their head (and finances) together & did a property deal that netted them a cool $30,000 which was about the same as his starting salary for his new profession. Dolf has never held a convention job in his life :clap:

[Winston001]

I personally have lost out in a big way by saving a large deposit before buying my home. For several years the amount I have been able to save each year hasn't even kept up with property price increases. The more I saved, the further away from owning a home I became!

Far better off are the people who jumped straight into the property market on 100% mortgage and capitalised on the rising prices. Even better off are those who mortgaged themselves up to the eyeballs to buy more than one home.



Good post and an echo of my own experience 20 years ago. I saved while my friends partied, enjoyed holidays, cars etc, they bought homes with minimum deposits......and passed me on the wealth ladder.

Why does that matter? Today I have children approaching university, retirement is looking a lot closer, and the capital gains I missed years ago don't exist to retire on. It will be ok, won't starve, but holidays on the Gold Coast which a lot of retired people are doing, won't be a choice.

So this is a good time to start looking for house bargains. Two reasons - sad market, and inflation. Inflation always translates into land values rising.

Finally, the longterm capital gain on land is about 10%. And never ever forget - LOCATION.

[Jez]

I was lucky enough to get into the property market in chch in 2003, paid $170k (absolute max of budget) for a modest 3 bdrm house in a good area of chch, sold it 08/2008 for $290k ... all i did to the house was put up a shade sail over the deck which the purchaser quickly ripped down ...

now own a house in Invercargill while im studying and living on a student allowance with my wife and 2 kids, money is tight, but the fishing is awesome! ...

If you really want to own your own home then Invercargill is one of the last bastions of affordability left ... and we dont get hit by the storms you north islanders get ;)

[Boob Johnson]

Staying in the market is only important if values are rising. I think everything is pretty flat everywhere at the moment so if you are able to sell up and realise some cash gains from the growth over the last few years then you've taken the pressure off making ends meet and it allows you to invest the surplus somewhere it will continue to grow.
Couldn't agree more :niceone:

However that tactic isn't always suited to everyone. Some property guru's say NEVER sell, hold ya properties till retirement. I think the most important thing is identifying a personalised road to success & sticking to it!



The best monetary solution is probably to rent and invest the difference between your rent and what would be a mortgage in the sharemarket (better long term growth than property). The problem is this takes a hell of a lot of discipline and you don't have the advantages of living in your own place and being able to do what you like to it or improve it. Don't forget wages go up over the years so the payments become easier whereas your rent will only go up.

Each to their own, it's not a competition after all.
Nice one SP, great advice but again not for every person. Some people are just not suited to the volatility of that the sharemarket can bring.



Don't forget wages go up over the years so the payments become easier whereas your rent will only go up.
Quoted for emphasis :niceone:

[Boob Johnson]

ohh thank you Boob! .. this article is definitely a reminder for me to tighten things up .. Ill admit it I get a lil wayward when it comes to money .. Iv realised that I do not monitor my money the way I need to in order to make it work for me, I put money away into a specific account but the rest well its a bit of a free for all .. and then I complain about petrol hikes? lol .. hmmmm .. wake up slap .. so thankx for posting this! tis timely :clap:
Your welcome sweet pea :sunny:


My wife and I bought a house in central Auckland 8 years ago and paid off the mortgage last year. We are often asked how we did it.

The answer is simple - we did without.
Damn straight!!! Me dear old ma paid off her house in a super quick time on a pathetically low wage. Even the bank manager used to shake his head, im sure he was convinced mum was a drug dealer lol. She just went without a lot of things, but now she can sit back & cruise, she has since traveled the world & life is pretty damned good for her, it came at a price, like anything worth while. But now she helps look after her grand kids on a daily basis. Ask her today if it was worth it?

[Subike]

so you guys all get into housing or property and either lease it out or rent it out whilst living yourself in a rental.
Tax advantages....ok.....
so who are the people you are going to rent it out to? Each other? Your family?
If we all have rentals to rent out
do we all live in each others rentals which we rent to each other
so that we all get that a tax advantage...
really?
This is a numbers game, true? well person one. owning three rentals, whislt living in one rental himself...um, is that three families that should be owning their own homes, and paying a mortage, not renting?
This thread was about budjeting to live in todays market...... how the fuck did it become an avisory into housing, rentals and mortages, investment in futures retirements and pot of gold when you retire?????
So we can all, well suposedly, buy a home....but thats not what is being discused at the beginning, or am I blind,
Where in the article linked to was the housing?
Its , How to survive in an economy that is costing us more to live in than the wages we earn?
So how is that done?
Go buy a house and get further into dept?
OR STOP BUYING ALL THOSE THINGS WE DONT NEED, LIKE AN EXTRA HOUSE!
opps
I better shut up now, Im only totally dept free person, so dont know jack about budjets, property, business, investments, or even the share market, (which at the moment, if you had loose cash would be the best time tio buy stocks)...but um no, propertys safer yeap, just aint got the expendabile cash to service the loans needed to get one. Bugger
:whistle:;):2thumbsup

[fire eyes]

so you guys all get into housing or property and either lease it out or rent it out whilst living yourself in a rental.
Tax advantages....ok.....
so who are the people you are going to rent it out to? Each other? Your family?
If we all have rentals to rent out
do we all live in each others rentals which we rent to each other
so that we all get that a tax advantage...
really?
This is a numbers game, true? well person one. owning three rentals, whislt living in one rental himself...um, is that three families that should be owning their own homes, and paying a mortage, not renting?
This thread was about budjeting to live in todays market...... how the fuck did it become an avisory into housing, rentals and mortages, investment in futures retirements and pot of gold when you retire?????
So we can all, well suposedly, buy a home....but thats not what is being discused at the beginning, or am I blind,
Where in the article linked to was the housing?
Its , How to survive in an economy that is costing us more to live in than the wages we earn?
So how is that done?
Go buy a house and get further into dept?
OR STOP BUYING ALL THOSE THINGS WE DONT NEED, LIKE AN EXTRA HOUSE!
opps
I better shut up now, Im only totally dept free person, so dont know jack about budjets, property, business, investments, or even the share market, (which at the moment, if you had loose cash would be the best time tio buy stocks)...but um no, propertys safer yeap, just aint got the expendabile cash to service the loans needed to get one. Bugger
:whistle:;):2thumbsup
:mellow: awwwwww .... would you like a huge & a cuppa tea????? I do not own a house. Actually I have no intention of owning a house I have no interest in the Property Market at all .. people have told me time and time again that renting is dead money .. that is one way of looking at it .. to me .. and only in my humble mind .. renting means I am not bound or obligated to anything long term .. I know I might get shot down for my opinion but so be it! I do not like to shoulder any more responsibility than is absolutely neccessary .. stability comes in so many forms ... it's nice to sometimes look outside the square of conditioning .. :shutup:

[fire eyes]

*hug + 10 characters

[RantyDave]

I survive on that comphy as, and ride a bike, prob one of the most exspensive hobbies I can have..
I used to live in Southampton, the UK one. Shithole in case you're wondering. A mate there used to live on a yacht in a poncy marina. He had a part time job helping out at some education institute and was as broke as fuck. He'd pick up odds and sodds - he had a particular speciality in scoring the job to drive cars onto the big carriers, would spend an evening driving 100 jaguars and getting paid for it.

He also got astoundingly good at blagging things. He would get left over antifouling from a boatyard somewhere, persuade a crane driver to lift his boat out for a few cans of beer and do his winter maintenance. He made this amazingly good stove out of left over bits of pipe too. His boat was never perfect, but always seaworthy and *always* ready to go.

He was a top bloke and it gained from me the respect for people who do shit on fuck all dollars. So, nice one :)

Dave

[RantyDave]

entering the sharemarket? To me (a layman) it seems something for people with lots or moneys or who are very intelligent. Since I'm not really one of them... what do normal folks do?
It's a reasonably safe very long term investment. If you chuck a shitload into it, once, and don't piss about for about (at least) twenty years you'll probably get a solid 8-10% return. If you jockey about buying shares here and there you'll be lucky to come out even (once the trading fees are accounted for).

What ordinary people do is put it into a unit trust. This basically means that a few hundred/thousand people get together and trust their savings to single (or team of) investment manager who is professional, expert at their job and enormously well paid. Or a 28 year old phallus snorting cocaine off the bonnet of his Ferrari. Only 3 out of 10 fund managers out perform the market - i.e the average performance you would get by just throwing a dart at a list of the top 500 companies - so draw whatever conclusions you want.

Don't enter into it now, anyway. The oil thing is going to kick in soon and I think we in the midst of another tech bubble. Not as big as the last one, but it's there.

Dave

[justsomeguy]

I think we in the midst of another tech bubble. Not as big as the last one, but it's there.

Dave

Care to elaborate Dave? I work on finding the IT chaps jobs. The market seems to be rather cautious at the moment. Most of the larger companies have hiring freezes on.

Any one able to give me some real life sample weekly/monthly mortgage payment numbers? E.g 300k, 25 years, 700/week (imaginary figures).

[RantyDave]

Care to elaborate Dave? I work on finding the IT chaps jobs. The market seems to be rather cautious at the moment.
Ah, that's different. By tech bubble I mean that tech company valuations are kinda high right now and a lot of it is built around hype rather than true value. Hiring freezes are caused by a worsening of general global conditions, fuel prices etc. etc. Big companies just have less money, basically.

Dave

[firefighter]

"Take the example of a couple in their early 30s, earning $155,000 between them. They owe $360,000 on a $370,000 house, and $40,000 on other debts. They are struggling to pay the mortgage, leaving little room for bills."

A couple earning $155000 between them struggling with a $360000 homeloan, a $40000 debt on top of that, and struggling to pay bills??? they must be absolutely rediculous with their money......shit i'd love to see them pay my mortgage on our joint salary, un-believeable, absolutely absurd, that pisses me off what they have to cut back on the caviar and opera? FFS! how rediculous, ok we aren't living great but wer'e young, paying a mortgage on A LOT less than that,and not struggling with bills..... how much is my business but believe me when I say I cannot understand how this couple made thier money in the first place with such bad money skills.

[jrandom]

Any one able to give me some real life sample weekly/monthly mortgage payment numbers?

Ask one of your IT job candidates to show you how to use Excel!

:laugh:


"Take the example of a couple in their early 30s, earning $155,000 between them. They owe $360,000 on a $370,000 house, and $40,000 on other debts. They are struggling to pay the mortgage, leaving little room for bills."

Let's say the man earns $100,000 and the woman earns $55,000.

The IRD's online PAYE calculator says that he gets $5,694 after tax each month and she gets $3,434. Total, $9,128.

A $360,000 mortgage at 9% interest over 10 years (they're trying to pay it off, not effectively just pay rent to the bank) as a P&I table loan costs $4,560 per month.

That other $40,000 of debt at, say, 16% over 5 years will be costing them $972/month.

So, after debt repayments, they have $3,596 per month to live off. Before they can start spending any of that on anything, they have to cover house, contents, vehicle, medical, life, disability and income insurance, rates and utilities (power, home phone, mobile phones, internet connection, Sky subscription).

Say another grand per month all up.

$2,500 per month left (or $576 per week, if you prefer) to cover everything else.

And then the bike needs new tyres, the car's radiator just sprung a leak, they have a funeral at the other end of the country to attend, and the roof on the house needs repair.

They're not left feeling wealthy by any means.

Of course, they could have more money in their pockets if they stretched their mortgage out to 30 years, but then they might as well rent.

I'm guessing your mortgage is over a term of 20 years or more?


I cannot understand how this couple made thier money in the first place with such bad money skills.

What an odd statement to make.

I, f'rinstance, have spent my entire working life talking the rest of the world into giving me money in return for writing computer programs.

What I do with that money has no effect on the worth of the programs I write, and therefore no effect on my ongoing income.

[geoffm]

I've been in the same place all my life (apart from a few years renting) - I bought the house from my parents estate. It's a very ordinary 3 bdrm stucco on 1/4 acre in Upper Hutt
They paid 3000 pounds for it in 1952. I paid $16000 in 1982 (bought from my two brothers, so each of us had an $8k share). The current valuation for it is $300,000. I have no idea how 3000 pounds would relate to a 1950s electricians annual income. This what you're asking?

Goto http://www.rbnz.govt.nz/statistics/0135595.html
3000 quid = $149,191.47
$16,000 in 1982 is $49,215.78

So it appears it dropped in real terms between 1952 and 1982, probably due to the huge inflation in the 70s and 80s (thanks Piggie), but you ahve dun good since then.
G

[peasea]

Bit simplistic, I thought. Also disagree about telling that couple to sell the house and save. Once you are out of the property market, especially in Auckland, its hard work getting back in.

.

In Auckland, who'd want to????????

[peasea]

I, f'rinstance, have spent my entire working life talking the rest of the world into giving me money.

Bravo.
I am terrible with money, never cared about it and rarely read bank statements etc, I just don't care. However, I am not on the dole and what I do with my money is my business and how I get it is my concern. If I get in the shit, that too is my concern. I have come close to being broke, saw it coming and did something about it. How people get into Mortgagee Sales is beyond me; you can't tell me they didn't see it coming.

I have some debt, I also have some assets and when I fall off my perch I won't leave my kids with bills, what else matters?

[peasea]

AND!
Don't forget the 'No Assets Procedure'

There's no 'accountability' these days.

Oh that's so faaarkin' ironic it hurts.

[scumdog]

I have some debt, I also have some assets and when I fall off my perch I won't leave my kids with bills, what else matters?

Sums up my attitude.

"Sustainable level of debt".

[peasea]

Sums up my attitude.

"Sustainable level of debt".

Yes, mine/ours is totally sustainable and it's about to go UP! FFS, spring is just around the corner, gotta make plans, freshen things up and clear the sinuses.

[scumdog]

Same here.

Two tyres for the bikes - plus regos..

HPC coating for the F100 headers.

New floor-mats and shit for the Thunderbird

Zorst for CBs Compact.

Priorities, people, priorities, with summer looming we've a shit-load of priorities.

[peasea]

Same here.

Two tyres for the bikes - plus regos..

HPC coating for the F100 headers.

New floor-mats and shit for the Thunderbird

Zorst for CBs Compact.

Priorities, people, priorities, with summer looming we've a shit-load of priorities.

We thought we'd up-grade, so we get on the blower...(so to speak....)
"Hi, Mister Bank, we'd like some cash"
"Sure, how much?"
"Erm, dunno, enough I guess...."

"How does 300+ grand sound?"


Ya fukn what?
No wonder people get in the shit.

[Winston001]

......I have come close to being broke, saw it coming and did something about it. How people get into Mortgagee Sales is beyond me; you can't tell me they didn't see it coming.



No simple answer but imagine a couple who buy a house on 100% financing for $300,000. Both working modest jobs. Life is tough but hey, they got a house.

Then she becomes pregnant, has to finish work. He gets made redundant with a small lump sum. No dole until he's been off work for a few weeks.

Or alternatively one of them gets sick - no ACC for that - and they are down to one income.

These things happen. Decent people drawn in to paying too much for a home because they feel desperate, and waiting just seemed to make the prices go higher.

[peasea]

No simple answer but imagine a couple who buy a house on 100% financing for $300,000. Both working modest jobs. Life is tough but hey, they got a house.

Then she becomes pregnant, has to finish work. He gets made redundant with a small lump sum. No dole until he's been off work for a few weeks.

Or alternatively one of them gets sick - no ACC for that - and they are down to one income.

These things happen. Decent people drawn in to paying too much for a home because they feel desperate, and waiting just seemed to make the prices go higher.

Now that is a sad scenario and I saw it happen years ago when Fletcher Challenge over-priced homes and financed employees into their schemes. I saw it coming but a mate didn't and he lost everything after getting sick. The house was over-valued, they foreclosed on a freakin' long-standing employee and it sucked.

Yes, these things do happen and don't get me wrong; I feel for those who get sucked into the vortex. For them there needs to be a social 'net' to fall into but when you get one started the bludgers deliberately fall (jump) into it. Just like the current scheme on TV.

I'm no good at sums but I pay my bills first, what's left is fun. Sometimes there's not a lot of fun and many people don't have that discipline, that's what's lacking in a lot of cases.

I get your point tho.

[scumdog]

No simple answer but imagine a couple who buy a house on 100% financing for $300,000. Both working modest jobs. Life is tough but hey, they got a house.

Then she becomes pregnant, has to finish work. He gets made redundant with a small lump sum. No dole until he's been off work for a few weeks.

Or alternatively one of them gets sick - no ACC for that - and they are down to one income.

These things happen. Decent people drawn in to paying too much for a home because they feel desperate, and waiting just seemed to make the prices go higher.

Hmm, if I had the money and foresight (instead of investing my $$ on hot-rods and motorbikes) a few years ago I too may have been 'burned' like that.

But after the Fortex fiasco and seeing bright, promising couples being decked by a double redundancy after being dumped by the insolvency of Fortex I got a tad more circumspect about these things.

[peasea]

Hmm, if I had the money and foresight (instead of investing my $$ on hot-rods and motorbikes) a few years ago I too may have been 'burned' like that.

But after the Fortex fiasco and seeing bright, promising couples being decked by a double redundancy after being dumped by the insolvency of Fortex I got a tad more circumspect about these things.

It is written in the book of Earnest:
Chap 1, V2;

"Should the glove of fiscal burdon smacketh one upon the cheek in the ugly fashion, then that cheek should be given smirk by way of increased but favourable debt. The joyous toys that are maketh possible by way of such debt should be enjoyed in maximus ad infinitum, for tempus fugit and therein corpus doth most verily knocketh."

[scumdog]

It is written in the book of Earnest:
Chap 1, V2;

"Should the glove of fiscal burdon smacketh one upon the cheek in the ugly fashion, then that cheek should be given smirk by way of increased but favourable debt. The joyous toys that are maketh possible by way of such debt should be enjoyed in maximus ad infinitum, for tempus fugit and therein corpus doth most verily knocketh."

Damn, if I could understand that lot I bet I would agree!!

[Boob Johnson]

Ask one of your IT job candidates to show you how to use Excel!

:laugh:



Let's say the man earns $100,000 and the woman earns $55,000.

The IRD's online PAYE calculator says that he gets $5,694 after tax each month and she gets $3,434. Total, $9,128.

A $360,000 mortgage at 9% interest over 10 years (they're trying to pay it off, not effectively just pay rent to the bank) as a P&I table loan costs $4,560 per month.

That other $40,000 of debt at, say, 16% over 5 years will be costing them $972/month.

So, after debt repayments, they have $3,596 per month to live off. Before they can start spending any of that on anything, they have to cover house, contents, vehicle, medical, life, disability and income insurance, rates and utilities (power, home phone, mobile phones, internet connection, Sky subscription).

Say another grand per month all up.

$2,500 per month left (or $576 per week, if you prefer) to cover everything else.

And then the bike needs new tyres, the car's radiator just sprung a leak, they have a funeral at the other end of the country to attend, and the roof on the house needs repair.

They're not left feeling wealthy by any means.

Of course, they could have more money in their pockets if they stretched their mortgage out to 30 years, but then they might as well rent.

I'm guessing your mortgage is over a term of 20 years or more?



What an odd statement to make.

I, f'rinstance, have spent my entire working life talking the rest of the world into giving me money in return for writing computer programs.

What I do with that money has no effect on the worth of the programs I write, and therefore no effect on my ongoing income.
A solid argument JR........as always. But what the good man is getting at is there is a HUGE amount of wastage goin on. It all comes down to priorities. There are SOOO many ways to save a few $$$ & when put together make a significant differnece. If you or anyone else can be bothered here (http://www.stuff.co.nz/4632911a13.html) is a shit hot article outlining just that!

Living beyond our means, springs to mind. We all seem to want/expect it all to happen in a nano second. In our granparents day they waited years before any luxuries arrived, some of us expect it ALL to fall into our laps in 30 seconds. Im not suggesting we should follow that example to the T (as in return to the 20's) but hell, live within your means. A fool & his money soon part, terribly cliche I know but who in their right mind could argue with that?









Bravo.
I am terrible with money, never cared about it and rarely read bank statements etc, I just don't care. However, I am not on the dole and what I do with my money is my business and how I get it is my concern. If I get in the shit, that too is my concern. I have come close to being broke, saw it coming and did something about it. How people get into Mortgagee Sales is beyond me; you can't tell me they didn't see it coming.

I have some debt, I also have some assets and when I fall off my perch I won't leave my kids with bills, what else matters?
Mediocrity is something I find hard to celebrate when it comes to this subject.

But in saying that there are somethings I don't as well as I could if I applied myself. I tend to (these days) prioritise what is important to me & what isn't. I don't love money, but I do like maximising what I have as every bit extra I have I can use it to enrich mine & my families lives & THAT is worth giving a shit about.

[Boob Johnson]

There's no doubt that investing in real estate is one of the most lucrative and secure investments you can make, provided:

1. The economy is growing, not receding.
2. You buy it with money that you actually have.


Not the case ma man. More than one way to skin the proverbial property cat.
If you are geared (particularly highly) then yes it requires you to be in a strong growth cycle if you have bought the conventional way but you can make money on property in any cycle. Dolf de Roos has heaps of sneaky lil tricks up his sleeves, pop down to Borders & take a look if you are interested to learn more.



No deposit, negative geared with positive cash flow is a thing of considerable sexyness :hug:

[Winston001]

If you are geared (particularly highly) then yes it requires you to be in a strong growth cycle if you have bought the conventional way but you can make money on property in any cycle. Dolf de Roos has heaps of sneaky lil tricks up his sleeves, pop down to Borders & take a look if you are interested to learn more.



No deposit, negative geared with positive cash flow is a thing of considerable sexyness :hug:

You weren't by chance, mebbe, perhaps......involved with Blue Chip?? :2guns:Cos that's the spiel they laid out to me one day in my office and it was mighty impressive. All the numbers ran the right way, very slick cutting edge accounting......loss attributing companies, pay yourself deductible management fees, depreciate the gib board linings, loss on your own home borrowings as well etc etc........very sexy........


.....until Dr Cullen changed the rules........ :blink:


Yes I know it can be done but personally I think you have to be young and single and not afraid of bankruptcy. Just my 2c.

[Boob Johnson]

You weren't by chance, mebbe, perhaps......involved with Blue Chip?? :2guns:Cos that's the spiel they laid out to me one day in my office and it was mighty impressive. All the numbers ran the right way, very slick cutting edge accounting......loss attributing companies, pay yourself deductible management fees, depreciate the gib board linings, loss on your own home borrowings as well etc etc........very sexy........


.....until Dr Cullen changed the rules........ :blink:


Yes I know it can be done but personally I think you have to be young and single and not afraid of bankruptcy. Just my 2c.
Ive been out of the industry for over 3 yrs now. Was involved in Australia back in the hay day & here also & am happy to say I never had a single thing to do with Blue Chip :oi-grr:


You don't need to be young n single at all, in fact its much harder unless the single person has a decent income. Obviously every investment won't suit everyone, its just property is something we can all relate too as we all live in one, bit like commodity trading ie sugar, coffee etc etc, easy to relate too.


Changed what rules? Gearing & depreciation are still available, LAQC companies are still available & extremely unlikely to ever change. The "grandfather" law is meant to protect governments law changes effecting those that have already started something, otherwise who would invest not knowing what the next government will do?? The other reason is the government cannot afford to provide all of the state housing. The property market would fall flat on its face if they messed with gearing as the average person wouldn't be able to afford to invest in property.



Buying a brand new state house & leasing it to the government can be a good investment for the sheepish or first timers, ive sold a handful of those. 10 + 5 year leases with guaranteed rent. The houses are solid as a rock, the bloody contract for the building is bigger than the sale agreement :lol:


In Auckland they have them all over the place, I sold a few in Botany Downs, bloody good area :niceone:

[firefighter]

A solid argument JR........as always. But what the good man is getting at is there is a HUGE amount of wastage goin on. It all comes down to priorities. There are SOOO many ways to save a few $$$ & when put together make a significant differnece.

pretty much yes, I just get peeved when people earning twice my income with the same sized mortgage go on about how hard it is, wer'e doing 'ok' and certainly not struggling with bills.......

[firefighter]

What an odd statement to make.

I, f'rinstance, have spent my entire working life talking the rest of the world into giving me money in return for writing computer programs.

What I do with that money has no effect on the worth of the programs I write, and therefore no effect on my ongoing income.

mmmmm, yes and no, I do realise that if you earn good money it doesn't necessarily mean that your good with it, BUT quite typically those who are smart with money or at least don't waste it/respect it tend to be higher earners.

[scumdog]

pretty much yes, I just get peeved when people earning twice my income with the same sized mortgage go on about how hard it is, wer'e doing 'ok' and certainly not struggling with bills.......

Sounds just like me.
Have you any idea of how much it costs to run a mortgage, feed about 18+ litres of Dearborn V8, two Harleys, overseas trips AND buy 12 year old single malt whisky?? - and assist a couple of improvident post-teen off-spring.

I bet you don't.

Some of DO struggle matey.

[jrandom]

quite typically those who are smart with money or at least don't waste it/respect it tend to be higher earners.

I dunno, aye. I have a feeling that those who've always been on a tight income learn the value of money better than those who've never had to worry about the pennies.

[alanzs]

It's interesting looking at overseas markets. In a lot of cities, its unusual to own your own property. Mainly cos it's cheaper and more convenient to rent. I think it's the NZ mentality that you have to own your own home. I know several people that don't own the house they live in.

You can, if you do it right, get a more consistent return from other investment year-in year-out. (of course, you want to stay away from finance companies at the moment....)

Very well said. Remember, who profits from the property market and the "myth" that owning a house is the best way to make long term money? Yes, over the long term, many times property is a great investment, but timing is everything. The housing market has always been cyclical, so again, timing is ever important. Great thread. :clap: