Australia Cost of Living $200k + Not enough

[Johndoe]

I'll bet a penny to a pinch of salt they trade their cars in once the loan is paid and get 2 more new ones. My current Prado is a used 99 model that I paid 14K for 12 yrs ago and it's still going great. Those outgoings bear no relation to the average punter's and this couple remind me of:

 

 

[Jon the Hat]

Lets be honest, when you need a G&T with lemon, you would pay $20 for a lemon.

[Guest The Pom Queen]

The thing is @Johndoe if they were really struggling they could probably get away with one car, even if they needed two they could get old bangers or even one nice car and one old one, but to blow so much on two posh cars is beyond me. 

[Guest The Pom Queen]

On 08/10/2018 at 10:12, can1983 said:

I have to say I did the same exercise for our family of 4 last week. We spend $7100 a month which is just over our income before we factor in the rental income in the uk.

Yes their lifestyle is extreme and they are spending $12,000 a month which is a bit eyewattering for someone who doesn't own a home.

But the principle applies I think, $112k income (our family income) which is about national average is not enough to live in Australia. We live in Hobart which is one of the cheapest places to live and its fair to say I feel to live a comfortable life around $150k family income is required.

There are plenty who live on less than $112k in fact I bet the majority of Australian households earn less than that. There are plenty of people who manage with their Centrelink money or their state pension.

I think these days the more you earn the more you feel you need. 

‘This Guy is a financial advisor yet he can’t see how he can reduce his overheads dramatically? I think it’s a case of he doesn’t want to see.

[can1983]

8 hours ago, The Pom Queen said:

There are plenty who live on less than $112k in fact I bet the majority of Australian households earn less than that. There are plenty of people who manage with their Centrelink money or their state pension.

I think these days the more you earn the more you feel you need. 

‘This Guy is a financial advisor yet he can’t see how he can reduce his overheads dramatically? I think it’s a case of he doesn’t want to see.

Most Australians own their home outright that they brought in the 1970's or 1980's for $25k-$50k of course they can survive on $60-$70k a year.

I'm talking about those buying now.

My wife's parents have had a mortgage for 2 years of their whole lives, my parents for 6 years total. We had one for 8 years which we paid off and are about to take on another one which will probably take 8-10 years to pay off. At that point we will have a lovely family home but 16-18 years of mortgage compared with 2 or 6 for the generation previously. - AND I think we have done well for our generation it has a massive impact...

Without housing costs you can live on half what we earn of course

[Marisawright]

2 hours ago, can1983 said:

Most Australians own their home outright that they brought in the 1970's or 1980's for $25k-$50k of course they can survive on $60-$70k a year.

But consider what they were earning in the 1970s.  That was a lot of money.   The average salary in those days was around $7,000 a year.

They paid off their mortgage not because it was so low, but because they did without. Nothing was more important than paying off the mortgage.  They would have bought an old banger, second-hand furniture, no holidays.  Take-aways and eating out were almost unheard of, and everyone bought a lot less stuff. Very few people had credit cards.

When I first got married, we bought a unit.  We had my father-in-law's old car, which was in such a bad state it failed its next roadworthy.  The TV was so old you could hardly see the picture for snow.  But we would never have dreamed of getting a loan to buy a decent car or a new TV, because everyone just knew that a mortgage was something you had to get rid of ASAP.

Nowadays, people accept that a mortgage is for the long-term and they want to enjoy life in the meantime.  That's fine, just don't think the earlier generation had it easy by comparison.  

[Guest]

It's not enough because they took out a $100,000 personal loan !! How utterly stupid .. wonder what the article author was thinking when they wrote this story. They didn't need to buy such expensive cars was my first thought. $1000 a month in entertainment, do they really need to spend this every month! Why not choose a few things or month about. If they dropped some of of this they could save so so much per year.

It's not exactly the bleeding hearts section.

[Guest]

15 hours ago, The Pom Queen said:

There are plenty who live on less than $112k

We do, happily and with treats here and there, plus a car loan (granted it's much much smaller than the 'couple' in the article). We don't get assistance from the government we just live within our means.

[Skani]

15 hours ago, The Pom Queen said:

There are plenty who live on less than $112k in fact I bet the majority of Australian households earn less than that.

Yes,  at the 2016 census the median household income was $74,000 - so half of Australian households earn less than that. 

[Guest The Pom Queen]

7 hours ago, can1983 said:

Most Australians own their home outright that they brought in the 1970's or 1980's for $25k-$50k of course they can survive on $60-$70k a year.

I'm talking about those buying now.

My wife's parents have had a mortgage for 2 years of their whole lives, my parents for 6 years total. We had one for 8 years which we paid off and are about to take on another one which will probably take 8-10 years to pay off. At that point we will have a lovely family home but 16-18 years of mortgage compared with 2 or 6 for the generation previously. - AND I think we have done well for our generation it has a massive impact...

Without housing costs you can live on half what we earn of course

To be honest I don’t think MOST Australians do own their own home. 

If you managed to pay off your mortgage in 8 years then you have done very well so I wouldn’t say you have struggled would you?

Obviously if you can pay your mortgage off a lot earlier than the 15 - 25 years you are earning more than your living costs so you can afford to pay off your mortgage early. I can’t see us paying off our mortgage early unless we win the lottery. However, I do love my dogs and if I hadn’t spent money importing them etc I could have probably paid that off my mortgage.

As I said people on Centrelink etc manage so it can be possible, it’s just we all choose to live beyond our means.

[Skani]

7 hours ago, can1983 said:

At that point we will have a lovely family home but 16-18 years of mortgage compared with 2 or 6 for the generation previously.

2 or 6 years total for a mortgage would be very atypical.  We - and all our baby boomer friends - have been paying off mortgages until our late 50s.  That's 20+ years of mortgage for most of us.  

[Skani]

5 hours ago, Marisawright said:

Very few people had credit cards.

 

And it was very difficult to obtain a loan for anything - especially if you were a woman in Australia when you had to have a man act as guarantor (not matter how financially irresponsible he may have been.  )    Easy credit has made such a difference to spending habits and people's sense of entitlement to "must haves".    So glad I grew up when one had to save before buying anything - or learn to make do without.  

[rammygirl]

Lay-bys now replaced by afterpay. The concept of saving for something appears to have disappeared. 

[starlight7]

I used to like the lay-by system.  Especially at Christmas because it was a good way to hide all the kids' presents and you could go and collect them just before Christmas . How come they stopped doing it?

[SPRINTER]

Wow, I must get out and spend more, we live very well on half of the required income mentioned, I would have a real job to spend that sort of money.

[Guest The Pom Queen]

6 hours ago, starlight7 said:

I used to like the lay-by system.  Especially at Christmas because it was a good way to hide all the kids' presents and you could go and collect them just before Christmas . How come they stopped doing it?

I didn’t know lay-bys had stopped either. As like you, it was a way to hide the kids presents until Christmas Eve.

[Guest The Pom Queen]

6 hours ago, rammygirl said:

Lay-bys now replaced by afterpay. The concept of saving for something appears to have disappeared. 

After pay reminds me of the old Catalogue your parents use to have in the UK where it was the size of a phone book and you could pay it back at so much a week. I wonder if it’s still going.

 

[Jon the Hat]

12 minutes ago, The Pom Queen said:

After pay reminds me of the old Catalogue your parents use to have in the UK where it was the size of a phone book and you could pay it back at so much a week. I wonder if it’s still going.

 

Littlewoods wasn't it originally?  Plenty of others came after it and are mostly gone now.  Next online is the current way of doing it on account.  Very easy to rack up a few grand.

[Guest The Pom Queen]

57 minutes ago, Jon the Hat said:

Littlewoods wasn't it originally?  Plenty of others came after it and are mostly gone now.  Next online is the current way of doing it on account.  Very easy to rack up a few grand.

That was it, and I just remembered the other I think, was it John Moores? 

Is afterpay in the UK?

[Guest The Pom Queen]

Another story today on a couple managing on $62,000 a year. I think these are very helpful especially for people looking at making the move

 

[can1983]

Over the weekend this has clearly become a inter generational debate...

I think baby boomers had it the easiest of any generation that has ever lived, baby boomers disagree. the debate will never end..... Its not that I don't respect the generation interest rates were eye watering for you in the 1970s and 1980s plus the strikes limited power/lights per day and my parents used to sit on the floor when they first brought their house until they could afford second hand furniture initially BUT they also had a second home which earned 20k a year for 10 years in the 90/00's- more than my mums salary!! so she gave up work (retired) at 45

The fact remains the house I took 8 years to pay for used to be occupied by dock workers and then by workers in the local factory but for me I had to become a chartered engineer to afford it. The 50-60 years old chartered engineers I worked with live in 5 bed detached houses and have done since they were in their 30's...

That's how I measure how hard it is, look at where somebody who does the same job today as you did at their age lives - make the comparison and tell me there isn't a problem. Find even one example of someone who has 'knuckled down' not eating avocado toast for brunch and afforded that 5 bedder at 30 like so many boomers did.

[ramot]

35 minutes ago, can1983 said:

Over the weekend this has clearly become a inter generational debate...

I think baby boomers had it the easiest of any generation that has ever lived, baby boomers disagree. the debate will never end..... Its not that I don't respect the generation interest rates were eye watering for you in the 1970s and 1980s plus the strikes limited power/lights per day and my parents used to sit on the floor when they first brought their house until they could afford second hand furniture initially BUT they also had a second home which earned 20k a year for 10 years in the 90/00's- more than my mums salary!! so she gave up work (retired) at 45

The fact remains the house I took 8 years to pay for used to be occupied by dock workers and then by workers in the local factory but for me I had to become a chartered engineer to afford it. The 50-60 years old chartered engineers I worked with live in 5 bed detached houses and have done since they were in their 30's...

That's how I measure how hard it is, look at where somebody who does the same job today as you did at their age lives - make the comparison and tell me there isn't a problem. Find even one example of someone who has 'knuckled down' not eating avocado toast for brunch and afforded that 5 bedder at 30 like so many boomers did.

Wish we could have afforded a 5 bedder at age 30! As a baby boomer, (not sure how many of us there are on Poms?)  my reality of actually being in that situation is that none of our friends could afford to do that.

We lived a far more frugal life then, ‘I might get my violin out’ did the washing by hand and went to The launderette once a week, remember the excitement of saving up and finally having a washing machine. Saved and bought our first house, mid 1970’s,  8 years after marrying, but went without the things that people consider necessities of life these days. 

I completely agree that the cost of housing is out of reach for many these days, but my husband was earning a reasonable wage, RAF pilot,  and we could never have afforded to buy in London for example, completely out of our reach, but could buy in a small village. Price and affordability of housing Obviously is dependent on area.

However two of ours in now their 40’s managed to buy houses in their 30’s, run 2 cars and now have all the bells and whistles that we couldn’t have afforded at the same age.

 

[rammygirl]

One of the differences is that more people remain in education much longer now. They don’t start earning a proper wage until there 20s and have debts from studying so have little chance of saving for a deposit.  Housing costs are higher in real terms.  Yes we paid a mortgage at 14% but our first house (a small two bed terrace in Stockport) was a smaller multiple of our wages.

My eldest only started a proper job at 27 after degree, Masters and PhD. Yes he is earning pretty well for a first post but buying in Canberra is out of his reach at the moment and rentals are high too.  He really should be beyond shared rentals by now but it seems his generation aren’t. I was married and pregnant by then, even though I too went to uni.

[Marisawright]

6 hours ago, can1983 said:

The fact remains the house I took 8 years to pay for used to be occupied by dock workers and then by workers in the local factory but for me I had to become a chartered engineer to afford it. The 50-60 years old chartered engineers I worked with live in 5 bed detached houses and have done since they were in their 30's...

The house you live in used to be a slum, that's why dock workers were able to live in it.  When baby boomers were kids, the inner city was where poor people lived - everyone saved furiously to go out and live in the expensive, leafy suburbs.  Then the inner city became fashionable and gradually rose in price to overtake the burbs.

It's true some middle-class baby boomers have benefited in Australia from the ridiculous explosion in house prices,, but it's pretty insulting to say all older people had it easy. 

I think younger generations just aren't capable of imagining what life was like because they take so many luxuries for granted. It would be interesting to go through your monthly budget and delete all the stuff we didn't have when we were in our twenties:

• Delete all take-away coffees and food, and all café/restaurant meals:  you may have one cheap pub meal and a few beers per week;
• Delete all massages, physiotherapy, alternative health treatments, beauty treatments, life coaching etc;
• Delete all gadgets (including the tumble dryer, dishwasher and microwave ).  You can have a basic TV and a washing machine;
• Delete all clothing and shoe purchases, unless bought to replace something that had actually worn out;
• Delete all gym memberships, workout gear etc except shorts, T-shirts and Volleys.
• Delete the new car and buy an old banger.
• If you have kids, delete all extra-curricular activities except one. Delete all coaching.

Look at how much that saves you in a year.  Then multiply that by eight to reflect the years between 22 and 30, and don't forget to add on the interest you would have earned by putting that in the bank or sharemarket.  And remember that in the meantime, you would have bought a horrible old slum of a 2-bedroom unit and spent all your spare time doing it up yourself, even if you had no DIY skills. 

Now do you see how they afforded the nice house (with a huge mortgage of course) in their thirties?

 

Edited October 15, 2018 by Marisawright

[rammygirl]

DIY wasn’t a hobby it was a necessity. I learned how to wallpaper, paint, tile,do basic plumbing etc. because we couldn’t afford to pay for someone else to do it.