S1: Hello and welcome to It All Adds Up the podcast
S1: where we chat about money, how to get it, how
S1: to spend it, and how to invest it. I'm senior
S1: economics writer Jess Irvine, and you're listening to our summer series,
S1: where we're replaying some of our hottest hits to help
S1: you get in shipshape financial form for 2023. It all
S1: adds Up will resume normal programming in February with a
S1: brand new season full of money saving tips and insights.
S1: So until then, sit back, relax and enjoy. Hello and
S1: welcome to It All Adds Up the podcast where we
S1: chat about money, how to get it, how to spend it,
S1: and how to invest it, and seek to demystify the
S1: world of finance and investing. I'm senior economics writer Jess Irvine, and.
S2: I'm money editor Dom Powell. And for our first episode,
S2: we've decided we may as well just dive into perhaps
S2: the biggest topic in personal finance, the very vexed question
S2: of home ownership. We're going to take a look at
S2: how much it costs to buy a home in Australia
S2: these days and strategies to help you or a loved
S2: one get a foot in the door.
S1: We're also going to be sharing some of our own
S1: personal stories of getting into the housing market and things
S1: that we wish we knew before taking the plunge. And
S1: later in the episode, I'll be offering my budget tip
S1: of the week, which is going to be a regular
S1: feature to help you cope with the rising costs of living.
S2: But first, just a reminder that the information we're about
S2: to discuss is general in nature and does not take
S2: into account your personal financial situation, goals or objectives.
S1: Yep, good point. Now we don't know each other too
S1: well just yet. But I knew I was super impressed
S1: with you when I'd heard that you'd bought your first
S1: home at some tender age. I'm not even sure.
S2: I was 23.
S1: 23. And I think that's quite impressive. And I think
S1: that is quite anomalous in today's market. So I just
S1: wanted to ask you, you know, what was your experience
S1: of purchasing a home? How did you decide so early
S1: in life that you were going to even try?
S2: Well, look, my experience is quite unique. Definitely not the
S2: experience of of most people out there. The reason that I,
S2: I owned property at the tender age of 23 is
S2: because I got quite lucky with a little thing called cryptocurrency.
S1: You went to the moon?
S2: I did. I went to the moon. I was at
S2: the right place at the right time. I do not
S2: profess to be an investing genius. I just got curious
S2: in the world of crypto at the start of 2017,
S2: rode the market to a decent point, sold out and
S2: made a decent enough enough money that I could start
S2: actually thinking about home ownership. And before that it wasn't
S2: even on the cards. It wasn't even something that I
S2: was thinking I would do anytime soon. But after that,
S2: you know that that fateful year I was sort of
S2: in a position where I could start to think about
S2: actually buying a home. And then in about 2018, 2019,
S2: I started to look and bought a building, an apartment
S2: in in Melbourne in 2019.
S1: That's funny because that ended we ended up buying in
S1: the same year because I bought my first home in
S1: late 2019. So snap at the tender age of about 39.
S1: I think I was.
S2: Still a tender age.
S1: Did you turn up to a whole bunch of auctions
S1: and get knocked back? What was it like for you?
S2: Yeah, well, it was interesting. I am. So I should
S2: also add, because I don't want to be one of
S2: those man buys home at 23 from crypto savings like
S2: that is true. But I also had help from my parents,
S2: so there was a bit of both. Like I don't
S2: want I just want to make that very clear. I'm not,
S2: you know, some sort of 1 to 1 in, but
S2: I went to a lot of auctions. My first, the
S2: first one I bid at, I was quite demoralised to
S2: find out that the sort of price that I was
S2: hoping to to get the place that was just eclipsed very,
S2: very quickly. But in the end, I bought my home
S2: in a pretty weird way. I put it in an
S2: offer and then a number of other people put it
S2: on offer and we ended up having a boardroom auction.
S1: What's that?
S2: They sit you around in the boardroom of the of
S2: the Real estate agents office, and there was about three
S2: other people there for the people there. And you have
S2: an auction. But instead of being out in the street,
S2: you just sitting there at the put in the boardroom.
S2: It was bizarre. It was such a strange experience. But
S2: in the end I won that. So yeah, Then I
S2: bought my place at the end of end of 2019.
S1: Yeah. And I hope by sharing our stories of how,
S1: you know, we've got into home ownership, it's not I'm
S1: just incredibly aware of the privilege that I had in
S1: sort of having a good, decent income to accumulate my
S1: own savings. I didn't have any sort of cash from
S1: mum and dad, but I did have them go guarantor
S1: on my loan, which is something which we'll discuss later
S1: when we get to sort of some potential solutions if
S1: people are looking for ways to get in. I had
S1: my deposit ready to go for a couple of years actually,
S1: and I was just watching the market and I actually
S1: spent a lot of time on the sidelines just, you know,
S1: prices would go up. So I'd go, Oh, that's okay.
S1: I can live in an apartment. That's okay. Maybe, you know,
S1: I can just not have a balcony. And I kept
S1: trying to adjust down the, oh, I can buy further out.
S1: And then really just at the end, sort of had
S1: to go to the bank and say, what is the
S1: maximum amount you will lend to me? Like it's getting
S1: away from me. And then I did sort of end
S1: up looking for slightly more expensive properties. I paid about
S1: $870,000 for a two bedroom apartment. So in 2019, and
S1: I think the bank was going to lend me a
S1: million plus, but I sort of just decided that wasn't necessary.
S1: I did get up. We did an auction. So the
S1: week before I bought, I sort of turned up and
S1: I was have my maximum bid. They say you should
S1: write it on a piece of paper in your pocket.
S1: So I put my number and then during the auction,
S1: I proceeded to bid substantial proportion above one number as
S1: the do.
S2: Yeah, I think that's just the way it goes for
S2: any auction, right?
S1: Exactly. And the successful bidder was an investor. Basically the
S1: classic story of sort of just having way more money
S1: than I. So then I started looking about a suburb
S1: out from where I was originally and happy Days. So
S1: the point of sort of picking this is our first topic,
S1: I think in my mind is that really home ownership,
S1: you know, the decisions that you make about property will
S1: be one of the biggest factors that will influence your
S1: future financial capability and your wealth. It's just so, so key.
S2: Absolutely. Having a mortgage is sort of just makes you
S2: think about everything differently, I think, in terms of your
S2: personal finances. Like, you know, just when you have such
S2: a large asset in your life, I guess it just
S2: changes your perspective on everything. So I think you're right.
S2: It is it is a massive decision. And, you know,
S2: it does sort of make a very big impact on
S2: the way you think about money.
S1: And it's also probably the most expensive thing that you're
S1: going to have to pay for throughout your life is
S1: figuring out. Are you renting? Are you buying? And what's
S1: your strategy there? You know, when you retired, are you
S1: going to own a place outright or will still be renting?
S1: It's just so important. Now, look, preparing for this episode,
S1: you've you've been out there and you've been researching some
S1: pretty scary statistics just to give us the current state
S1: of play of where houses are at with home ownership.
S1: So do you want to run us through a few
S1: of the very scary stats? Yeah, it's not gross.
S2: It's not great. So something that did surprise me, which
S2: is the first statistic, which is that two thirds of
S2: Australians own their own home, which I thought might be
S2: a bit lower, and it used to be a bit higher.
S2: It used to be about 75%, but that's fallen over
S2: the last two decades to 66%. So, you know, it
S2: is coming down, more people are renting. But that sort
S2: of tells us that houses are expensive. We knew that
S2: this is not this is not surprising and have become
S2: much more and significantly more expensive over time. So in 2000,
S2: you could buy a house in Sydney and this is
S2: like a house, not a not an apartment for just
S2: under $300,000 and in Melbourne, just under $200,000. And that
S2: was at the turn of the millennium today. That's at
S2: about 1.6 million in Sydney and about 1.1 million in Melbourne.
S2: And the median across all capital cities is sitting pretty
S2: much exactly at $1 million to buy a house.
S1: A freestanding house, a.
S2: Freestanding house, obviously different for four units. But as most
S2: people think, you know, there's a sort of home ownership
S2: dream is owning a house typically. So that's that's sort
S2: of the reference. So that's a obviously, you know, an
S2: astounding rise in property values over I know obviously two
S2: decades is a long time, but that is a massive
S2: increase in the price of a property.
S1: Yeah. And way out of line with wages growth, you know,
S1: as a multiple of incomes. It's just it is to
S1: be stably got much much harder.
S2: Yeah nothing else you know few other things that have
S2: risen as much as you know as property prices have
S2: in the last 20 years. So what that sort of
S2: means for home owners who are trying to get into
S2: the market at the moment, is that to buy a house,
S2: you're looking at a deposit of at least $200,000. That's
S2: a lot of money. You know, that's it's an immense
S2: amount of money.
S1: To have the full 20% deposit, to have.
S2: The full 20%. Sorry, this should be clear.
S1: And is it that it's not hilarious? It's very painful
S1: that so we're saying that's how much she needed to
S1: buy a house in 20. In 2000 and now that's
S1: how much you need for a 20% deposit. It's just gobsmacking.
S2: Exactly. So what what could have bought you a full
S2: a full on house the whole hog back in back
S2: in 2000 now just gets you a measly 20% of it.
S2: So yeah, I think it's pretty clear to say that
S2: that the odds are stacked against young homeowners. A first
S2: home owners, young or not, it's a huge amount of
S2: money to save. And the stats are, you know, Australians
S2: save on average about $700 a month. So you're looking
S2: at maybe 8 to $10000 a year. So that's looking at,
S2: you know, for one person, 20 ish years of saving,
S2: if you're just saving straight off your own back to
S2: afford a home deposit, That's fascinating.
S1: What's the source of that?
S2: So that's from some savers savings surveys I found online
S2: from Finder. But I've checked a few other places and
S2: that's pretty accurate in terms of the ABS data as
S2: well as on sort of, you know, the amount that
S2: people save per year. Obviously, the older you are, you
S2: save more, the younger you are, you save less. But
S2: that's the average sort of thing. So obviously these these
S2: sort of figures change if you're saving for someone else
S2: like a you on a partner want to buy a.
S2: That sort of drops drastically, But you're still looking at
S2: a good number of years if you want to sort
S2: of go from zero to a house deposit. And I
S2: suppose this is where we can come in and look
S2: at what you can do to cut that period of
S2: time down or sort of circumvent it or whatever the
S2: possibility is.
S1: To help, because I think people would hear that. And
S1: I think a lot of people have just kind of
S1: given up and just gone. It's just not for me,
S1: you know, I'm going to have to look at a
S1: rent vesting sort of strategy where I'm investing somewhere else or.
S2: Just rent full stop and not even invest, Right. Yeah.
S2: You know, a lot of people can't afford to do
S2: investing on the side. So they're just sort of resigned
S2: themselves to renting for the rest of their lives.
S1: So yeah. And meanwhile, the rental market is getting tighter
S1: and people are getting squeezed there. Yeah, I mean, I
S1: sort of have done a lot of looking at that
S1: issue of renting versus, you know, buying and whether which
S1: one's appropriate. And I did use to be sort of
S1: I'll just be a rent. VESTER But I think I
S1: was just putting off city because I was doing the renting,
S1: but I wasn't doing the vesting, investing part of it.
S1: The common.
S2: Common scenario for many people in the in the renting
S2: bucket and.
S1: I think the sort of the having had a mortgage
S1: now and it's sort of it's enforced version of that
S1: that you know you it forces you to put aside,
S1: you know not only you're paying for the interest obviously
S1: on the loan that you've taken out, but the any
S1: principal you make is is a form of investment because
S1: you're increasing your ownership stake in an asset that you've purchased.
S1: And the ability I mean, there is nothing like property
S1: for banks to lend you money. So the ability to
S1: leverage and purchase an asset upfront of which you would
S1: enjoy any percentage gains in a tax free environment is
S1: pretty unparalleled. So when I've looked at renting versus, you know,
S1: buying a property to live in sort of comes back
S1: to that leverage thing of how much you'll be able
S1: to shackle yourself with one of these super sized mortgages,
S1: you know, which hurts on the interest front, but also
S1: gives you access to ownership of a large asset earlier
S1: in your life. So I am all about telling people
S1: that we've rigged the system such that property ownership is
S1: is structured in a way that if you can get
S1: on there, that hopefully will mean a good financial future
S1: for you, assuming you don't borrow too much. So whilst
S1: we acknowledge there are so many challenges out there, I really,
S1: really want to help people who are on the cusp
S1: or who might be close if they just did a
S1: few of these things. Yeah, we could maybe will help.
S1: Maybe we can help if we get there.
S2: The first thing I think is that we've we've spoken
S2: a lot, you know, just in this podcast so far
S2: about the 20% deposit and you don't need 20%. You
S2: can go in at less, you can come in at 10%
S2: or under, but you'll have to pay what's known as
S2: lender's mortgage insurance and have like, how much is that?
S2: Just like what? What is what's the sort of the
S2: average amount that you would expect to pay if you're
S2: paying lenders mortgage insurance?
S1: Yeah, I have in my mind sort of about $10,000
S1: being on a typical or a median sized home. It
S1: depends and it varies. But yeah, that's the insurance. You
S1: pay not to cover you in any capacity but to
S1: cover the bank. If you've borrowed on a lesser than 20% deposit,
S1: there's less equity that you have in the property. So,
S1: you know, the lender actually takes out this insurance to
S1: protect them. Yeah. And it can be a really high
S1: upfront cost. It is something you can build into your loans,
S1: so you just borrow that extra amount to cover it.
S1: And then there's also a government scheme which I think
S1: we'll get to. But yet number, you know, we've got
S1: a list of five solutions that we're going to offer
S1: to the people through number one, it doesn't seem like
S1: much of a solution, but to have less of less
S1: than 20% don't. If you're sitting there waiting to get
S1: your 20% deposit, for many people, the 23 years, that's
S1: just not you're not going to get there. And it
S1: just seems to be the way things are moving that
S1: the system is encouraging you and facilitating more people to
S1: get in earlier with smaller deposits, which is kind of
S1: scary when house prices are falling by 30 to absolutely 20%. Yeah.
S2: And you shack yourself up with a with a big
S2: mortgage and then, you know, interest rates go up and
S2: you can't repay it. Like there's a lot of it's
S2: not a it's not an elegant solution going in at
S2: less than 20% it is an option.
S1: But I think it is important for people to know
S1: that is what everybody else is doing. So, you know,
S1: absolutely you're sitting there waiting diligently to get your 20%.
S2: And like another option I'll second offering, which is doing
S2: similar to what Jess and I have done. And instead
S2: of looking to buy a house, looking to buy an apartment,
S2: so the median price for a per unit across all
S2: capital cities is about 600,000. In Melbourne, it's less than that.
S2: In Sydney, it's quite a bit higher. And you know,
S2: apartments are really nice. I love my apartment. I've got
S2: to have a great time.
S1: I love my apartment too. And I tell people, don't
S1: forget about. Ground floor apartments where you sort of all
S1: of us, apart from all the people living on top
S1: of you, it feels like you you know, you can
S1: have access to a bit of a garden as well. Yeah.
S1: I mean, as a solution, again, it's, you know, it's
S1: not what you dream of. You want the quarter acre
S1: block particularly. Got, you know, I've got a kid and
S1: I sort of it took me a lot of mental
S1: adjustment to go, That's just not going to happen. I'm
S1: not going to live in the sort of house that
S1: I lived in when I was a kid. And I
S1: think mentally adjusting to that can be hard because you
S1: feel like you want to provide that. But lots of
S1: great people, including us, are living in apartments. The only
S1: thing to watch out for that is strata fees. And
S1: I think people don't necessarily factor that in is which
S1: is a large ongoing cost.
S2: What are your strata fees each year in Sydney?
S1: I'm paying about a $9,000 a year in strata fees. Oh.
S2: 9000. I'm truly shocked.
S1: The building that's got a lift, it's got communal gardens.
S1: We've got a pool, which is actually lovely, but you know,
S1: you're paying the cost. And I have been meaning to
S1: do the sums. I don't know if you bought bought
S1: a freestanding house, whether you would be spending $9,000 a
S1: year on upkeep. What are your fees?
S2: 1400 a year.
S1: Oh, goodness.
S2: Yeah. So.
S1: Wow, maybe that's a Sydney, Melbourne thing because I'm.
S2: Guessing it might be. Also, I've only got 14 people
S2: in my block. Like, it's not a big it's not
S2: a big, big apartment. No lists. No lists. It's got
S2: actually communal gardens, it's got carports. It's like pretty low
S2: key on the maintenance front. So that's that's obviously the difference.
S2: But I'm not sure if that's, you know, seven and
S2: a half thousand dollars difference. That's a phenomenal amount of money.
S1: Yeah, I wish I had paid a little bit closer
S1: attention to that, actually, the ongoing cost, you know, because
S1: I'll own my apartment outright so there will be no mortgage,
S1: but when I'm retired, I'll still have this large ongoing cost. Yeah. Anyway,
S1: so just to take that into it, just take.
S2: That into account. What's our next tip?
S1: So solution three and this is what I wish I'd known,
S1: is that don't just sit there kind of thinking and wondering.
S1: You have to actually start going and talking to banks
S1: and to mortgage brokers pretty early on in the piece.
S1: And actually a large part of the education that I
S1: got about the process of getting a loan came from
S1: literally one day I walked into three different banks on
S1: the high street and just, you know, can I have
S1: a loan? And, you know, I'm a financial expert and
S1: it's just you have to go through that process because
S1: they then start to ask you all these questions like, okay, well,
S1: what's your income? What are your expenses? You know, and
S1: that's how they determine how much surplus cashflow you've got.
S1: And at the time, I was not the budgeting wizard
S1: that I am today. If you see.
S2: My famous, famous budgeting website.
S1: Instagram account, my money with Jess, I now keep a
S1: almost unhealthy level of tracking of my expenses. So now
S1: I know. But they will get you really thinking early
S1: on about focusing in on, you know, what's your income,
S1: what what are your expenses? Where could you trim back?
S1: You know, and I remember when I told one banker, oh, yes,
S1: I spend about, you know, what, three or $4,000 a
S1: year on hair treatments. And he sort of gave me
S1: the one I raised and went, Do you? Well, you
S1: don't now, you know, if you want your mortgage, you're
S1: not going to, you know, be able to you have
S1: to actually, you know, and I had to sort of
S1: live to a more modest lifestyle to afford my loan
S1: than I was previously. And know if you do go
S1: and have that conversation about your borrowing capacity, it can
S1: help you to sort of bring back to reality, you know,
S1: the some of the sacrifices that you probably will have
S1: to make.
S2: Though I think we should make it clear that we're
S2: not telling people to stop eating avocado toast.
S1: No.
S2: No, that's not part of that. You will never hear
S2: that on this podcast. We're never going to stop telling
S2: you to stop having your brunches. Yes, fine.
S1: Brunch is.
S2: Allowed to have.
S1: It, had a life. Maybe don't have that every day.
S2: Have it felt that if you were having an every day,
S2: I'd probably tell you to stop just from like a
S2: health point of view rather than like a finance point
S2: of view. I mean.
S1: Nutrition.
S2: Yeah. Would put them on nutritionists hat and say to
S2: stop eating the toast. Mix your diet up mate.
S1: Best healthy fats out of an avocado. We digress.
S2: We digress. Another sort of and this is this is
S2: the one that you sort of loathe to mention, but
S2: it is sort of the reality for so many people
S2: in Australia, which is the bank of mum and dad, right? Yeah,
S2: it exists. It's big. It offers a lot of very
S2: generous and low interest loans to a lot of people
S2: that a lot of people have to get money from
S2: their parents or they have to have their parents guaranteeing
S2: their loan. Like, you know, we've got two examples of
S2: either situation here, right? So it is sort of unfortunate
S2: that that is the scenario that we're in in Australia,
S2: where the generational wealth is such that that you have
S2: to rely on your parents to. I had the money
S2: for your house, and you then might have to do
S2: that for your own kids. But it is a reality
S2: for many people who are in the position that where
S2: their parents can do that. And you know that some
S2: it is a lot of ways to get into the
S2: property market.
S1: Yeah, it makes me really sad. We've designed such a
S1: terrible system that we've let house prices inflate away. And
S1: if you didn't carefully select your mother and father at birth.
S2: Which we all.
S1: Did to be someone who owns property and, you know,
S1: in urban areas. Yeah. The idea I hate giving this
S1: piece of advice and I was very loathe to get
S1: my own parents involved. I was like, No, I should
S1: be able to do this by myself. I want to
S1: be able to do this by myself. I was really
S1: worried about having mom and dad on the hook because
S1: they went guarantor by loan, but it is a conversation
S1: worth having. If your parents do own property, they've got
S1: substantial equity in their home. You know, they might not
S1: have the cash to actually stump up to help you
S1: with deposit. But there there are parental guarantees. And what
S1: was reassuring to me and it's just worth talk to
S1: a mortgage broker, talk to a banker about how to
S1: use these sort of guarantees. They weren't sort of on
S1: the on the line or on the hook, if, you know,
S1: if I didn't pay my loan, they were going to
S1: have to pay back my whole loan, but only for
S1: the missing amount that I had in my deposit versus
S1: having the 20% deposit. They went guarantor on that sort
S1: of smaller amount, which meant that I avoided paying lenders
S1: that lender's mortgage insurance that we spoke about.
S2: Okay, So you can sort of and organize it so
S2: it works in a different way.
S1: Yeah. So I think I mean, I could have borrowed
S1: with I think I had about a 15% deposit at
S1: the time and I could have done it and just
S1: paid lender's mortgage insurance. But it did, you know, having
S1: that guarantee meant that I avoided into that, that part
S1: of the cost. So it's not that I couldn't get
S1: it without the guarantee, but it did help me save
S1: save a little bit upfront. And then actually what happened
S1: is after in the year after I bought the the
S1: value of the property went up and then I was
S1: able to release them from the guarantee. Once your loan
S1: to value ratio is under the 80%, then you can
S1: release them. So that was a lovely moment to be
S1: had to right release I release you back into the wild,
S1: you know.
S2: Not they're not part of this.
S1: So yeah, I'm an independent lady all again, all over again.
S1: So there are the bank of Mum and Dad is
S1: not totally flush with cash. There are other ways that,
S1: that they can help. And you know, if you have
S1: access to that, it's a conversation worth having.
S2: Yeah. And also, again, you know, this is another sort
S2: of thing that a lot of people are very privileged
S2: to have, but a lot of people are not. So exactly.
S2: Obviously that piece of advice is not apply to everyone,
S2: but this piece of advice does apply to everyone, which
S2: is there are a number of first time buyer schemes
S2: out there. There was a I'm not sure if people
S2: remember the election. That was a bit of a that
S2: was a bit of a topic. So we have we
S2: have some sort of some some fresh home schemes that
S2: are available on the federal one. There's 35,000 places a year.
S2: They allow you to buy a place for as little
S2: as a 5% deposit and they'll sort of back you
S2: like the government will back you.
S1: Yeah, they essentially become the bank of mum and dad
S1: for you by going the guarantor. It is income tested. Yeah.
S1: For people to be aware of. But yeah, that's the
S1: first home deposit scheme which seems to be a new
S1: feature and a feature that's going to stay in the landscape.
S2: Absolutely. But obviously the caveat with that is that you
S2: have to apply. It's not for everyone and there's only
S2: 35,000 every year. So, you know, it's it's a bit
S2: of a limited scheme, but it is a good way
S2: to get yourself into the into the property market with
S2: a very small deposit. And then obviously on top of that,
S2: there's all the state based first home buyer schemes, which
S2: are pretty similar as far as I'm aware. Often it's
S2: a grant of about $10,000. They'll waive stamp duty up
S2: to a certain value of the property and then over
S2: that they'll reduce the stamp duty like I didn't pay
S2: any stamp duty on my place, which was, which was good.
S1: Because it was under the threshold.
S2: Yes. It was under 600,000. Yeah.
S1: And then the final one we wanted to mentioned was
S1: the first home super saver scheme, which I remember when
S1: that was invented back in the day. I'm showing my
S1: age now, but when Kevin Rudd got elected, you know,
S1: housing affordability was a big issue. How long a good
S1: Kevin I seven. So that's 15 is still a big issue.
S1: And this was their sort of offering which has since
S1: been expanded, that if you have a plan and if
S1: you're ahead of time, you know, a couple of years
S1: down the road before you want to purchase, you can
S1: make voluntary contributions to super up to a $15,000 a
S1: year and then capped at a sort of $50,000 total
S1: that you can put into super and take out again
S1: for release under the first Home Saver scheme. The advantage
S1: of that is that you pay lower tax on that money.
S1: So rather than be taxed at your marginal rate, you
S1: get to save in this lower tax environment of super
S1: and the that that can really you know, the amount
S1: of tax that you save adds to the deposit that
S1: you can then. A mess.
S2: Yeah. And if the market's having a good year, make
S2: it a little bit of money on your. On your deposit, too. Yeah.
S1: And you just hope it wasn't sort of the last
S1: year or. Yeah, you sort of want to be looking
S1: at us sort of a couple of years time horizon,
S1: I think. But if I have my time again, you know,
S1: and I got my act together a bit earlier, that's
S1: definitely something I would have looked at.
S2: That scheme made to I think about none of that.
S2: I would have put a bit more cash in. So
S2: something like that. Well, look, we hope that that sort
S2: of helps a little. Obviously, that doesn't erase the massive,
S2: overarching problem of housing affordability in Australia, which is something
S2: that no one appears to want to talk about or
S2: do much about. So moving on from that, Jess, we
S2: do have your budget tip of the week. Is it
S2: related to housing?
S1: It's not.
S2: Well, that's probably refreshing, to be honest.
S1: Unless you have home insurance. My budget tip of the
S1: week is to live your life to excess.
S2: Okay, great. You know what I said about avocado toast earlier?
S2: I'm just going to go grab some.
S1: Just go eat. No, this is to look at your
S1: excesses on your insurance policy. So everyone's tightening the belt.
S1: Starting to review, you know, household expenses. Something that I've
S1: done throughout my personal finances is to go through all
S1: my insurance. So car insurance, health insurance, home insurance, and
S1: a strategy that I have in place because I know
S1: that I do have an emergency savings fund. I've got
S1: my $36,000 that sits there, which I've calculated is roughly
S1: my six months of basic living expenses. So I know
S1: that if I do need to make a claim, if
S1: I agree to a higher excess, which means that I
S1: agree to pay a higher dollar amount out of pocket
S1: in the event that I need to claim that my
S1: premiums go down. So with private health insurance, they recently increased,
S1: you know, the excess that you're allowed to accept up
S1: to 750 for singles and 1500 for couples. And so
S1: I just go for the biggest excess possible. And I
S1: know that I've got the savings there to pay it
S1: if I need to pay it out of pocket in
S1: the event of a claim. But I have saved so
S1: much of my premiums on across all of my insurance
S1: is that it's probably already made up for whatever excess
S1: I would need to pay. And you could be unlucky, unfortunately.
S1: And you know, maybe you have a claim fall soon
S1: and you've, you know, agreed to the bigger excess and
S1: that's not going to work out for you. But it's
S1: definitely something you can tinker with because those are some
S1: very large parts of household budgets and insurances, particularly private health.
S2: Premiums, are one of those things that I think when
S2: I bought insurance for the first time, like I bought
S2: a car for the first time last year and I
S2: was like, I don't really understand this. I'm just going
S2: to set it at a number that feels about right.
S2: Like I didn't even I don't even think about it.
S2: So I should I'll I'll go back and review my
S2: excesses and be more excessive.
S1: Be more excessive.
S2: Well, I think that's probably all we have time for
S2: this week. But in future episodes, we would love to
S2: answer your questions, so please email them through to. It
S2: all adds up at nine. Accommodate a few or even
S2: send them as a voice memo so we can play
S2: them if a live. That's alright with you because we'd
S2: love to hear from you.
S1: This episode of It All Adds Up was produced by
S1: Chee Wong. Information discuss is generally nature and does not
S1: take into account your personal financial situation, goals or objectives.
S1: You should always do your own research or get professional
S1: advice before making any major financial decisions. If you like
S1: today's episode, hit follow in your podcast app. Leave us
S1: a review and recommend it to all your friends. You
S1: can submit your listener questions in text or audio format too.
S1: It all adds up at 9:00 for you. Thanks for listening.