February 15, 2023 • 20 mins
Jess and Dom offer Jewels, a first home buyer and guinea pig owner, who is living at home to save up for her first place, some saving strategies to help her realise her dream of owning a three bedder in Ballarat in three to five years.
It All Adds Up is the podcast where we make money easy to understand so that listeners can begin building their financial wealth. You can submit questions to italladdsup@nine.com.au for Jess and Dom to answer each week.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
S1 (00:07):
Hello and welcome to It All Adds Up the podcast
where we chat about money, how to get it, how
to spend it, and how to invest it. I'm senior
economics writer Jess Irvine.
S2 (00:17):
And I'm money at it, dumb pal. And this week
we're kicking off the first part of our new budgeting
series where we're looking at your finances and telling you
how you could be saving some extra dollars.
S1 (00:26):
Thanks to everyone who has already sent us an email at.
It all adds up at nine.com.au dot EU showing us
your budgets and asking your questions. And it's lovely to
see the range of people who are getting in contact.
So I hope that by listening to this series there'll
be something in this for everyone, no matter what your
(00:47):
set up is.
S2 (00:48):
Yes. And if you missed last week's episode, that was
my sort of grilling, budget grilling. So if you want
to listen to someone who really doesn't know what they're doing,
you can go back and see that that you.
S1 (00:59):
Are not too bad.
S2 (01:00):
It was alright in the end, I think. But our
first cab off the rank this week is Jules. She's
a university student and part time early childhood educator living
in Melton, Victoria. And just to set the scene, let's
hear a little word from Jules.
S3 (01:15):
Hi, Jess and Don. This is Jules from Melton. No,
I actually dream of Ballarat. I'm a full time university
student and part time early childhood educator, and I'm currently
saving for my first home. I'm saving at least $410
a month, and I'm hoping to have enough for a
deposit or a 2 to 3 bedroom unit or a
(01:36):
house in Ballarat. My favourite place within the next 3
to 5 years and while I'm saving, I've moved back
in with Mum and Dad. But I was wondering if
you had any extra tips or strategies that I could
use to be saving a bit more or to help
me reach my goal faster. As I said, I dream
(01:57):
of Ballarat and I want to make that dream a reality.
So I'd love to hear what you think.
S1 (02:05):
I love it. I've been through Ballarat on a holiday.
I think it's a beautiful little town and I love
the jewels that she has settled upon wanting to buy
in a regional part of Australia because it's definitely going
to be a little bit more affordable compared to to
say Melbourne. So I think straight off the bat I
think she's doing really well with having a very clear
(02:26):
goal in mind of where she wants to live and
it not being the most expensive place that there is,
although of course it's it's just such a big challenge
these days to save up for a first home and just,
you know, kudos to Jules for putting the flag in
the sand and saying this is, you know what I want. And,
you know, so many people are so disconcerted about how
(02:48):
unaffordable things are to not even try. So I would
love for us to support Jules to be able to
achieve that ambition. And I think, you know, over the
long term, hopefully with enough modest expectations, it's something that
is that can be achievable for people.
S2 (03:02):
Absolutely. And I think this is sort of a great
sort of case study, I suppose, in in showing the
sort of things that that people do to save for
the houses, like, you know, living with their parents, that
sort of thing. Choosing a regional area like these are
the ways that that this sort of goal of this
sort of seemingly unachievable goal of home ownership is is
quite it can become quite achievable. So should we get
(03:24):
into it?
S1 (03:25):
Yeah. Look, you were crunching some numbers. I immediately just
jumped on domain dot com and I was looking at
three lovely beautiful 2 to 3 bedroom homes in Ballarat
and I want to move there now myself. And I
was sort of looking at, you know, of course the
quality of the property can vary, but maybe we're looking
at sort of a 500 ish thousand dollar purchase price
(03:45):
currently for something in that range. And Dom, you were
crunching some numbers on what sort of deposit you might
need or how long that might take.
S2 (03:53):
Yeah, So to do a 22% deposit for something, obviously 20%
for over 500,000 is 100,000. So that is if you
do that 20% mark, obviously you can get a home
loan with, with less than, than 20% of a deposit,
but you will be paying lender's mortgage insurance which makes
your repayments a bit more. But you're looking at about
that $100,000 mark. So with the current rate that you're saving, Jules,
(04:18):
it's looking like it's going to take quite a while too,
to save up to that mark, obviously. But as Jules
has mentioned to us, she's currently on a part time
salary and expects to be working full time in a
year or two. So that will sort of drastically increase
the amount that that she's saving. So yeah, and there's
there's a lot of things to think about here, I suppose,
like you're not necessarily needing that 20%, 20% deposit and
(04:41):
perhaps going a little bit a little lower or doing
a sort of a first home buyers scheme. That's also
something you can look at as well. I mean, my
sort of initial thoughts when I saw this is that
considering that Jules says that she wants to buy a
house in 3 to 5 years, that's a decent timeframe
away in terms of that money that that she's saving
this $410 a month that she said that she saves.
(05:03):
Maybe there's something that she could be doing with that
that's not just putting it into a bank account. Like,
you know, you could be putting that into a term
deposit or something like an ETF or some sort of,
you know, other investment like that which would see your
money appreciate in a sort of a more significant way
than than just to sort of leave it in the bank.
S1 (05:21):
Yeah. Although I mean, I was looking at some online
savings accounts because this is like also a radical thing
for for younger generations, if I can include myself in that,
is that you can actually put money in the bank
and earn interest. You know, look, I just Google canstar
or finder and best savings accounts, 4% is about the
(05:42):
interest rate that you can expect to get on your
savings at the moment. And to get that, sometimes you
usually have to be making, you know, regular contributions and
sometimes you have to be contributing $2,000 a month, which
is going to be ambitious. But there's even like one
with St George where you just you're popping in $50
per month. If you're over 21, you can earn a
(06:03):
bonus total interest rate of 4%, you know, with, with
I don't think any fees associated. So you know, I
think people if you are sort of looking at that
five year horizon, maybe you can be looking at shares
and you can ride out some of those fluctuations in
values because if you've been trying to save for your
first home in shares for the last year, you might
(06:24):
be very disappointed because share returns have been very modest,
if not negative. So, you know, I'm actually all about
putting money in the bank. Don't you know, it's guaranteed
if you have under $250,000, you know, you won't lose
your money and and you get the interest rates that
are on offer and rates are still going up. So
(06:45):
and there's a lot of pressure on banks to be
passing that on even from here. So maybe four, four
and a half, will we see a 5%, you know,
savings rate? Hopefully we will. But as you say, term
deposits too, could be a good option, although you tend
to need to have a big whack to sort of
pop in up. For that.
S2 (07:06):
Something else I was thinking about is this that at
the first home super saver scheme, which the government has,
where you can put additional sort of contributions into your
super and then take them out as sort of like
a tax free sort of savings for a house and
use that that sort of additional money that you put
in as a deposit and you get all obviously all
the gains of all the, you know, hopefully gains that
(07:28):
you would have gotten on your on your super. But
you were mentioning just that that might not be so
applicable because that some sort of not so much of
a tax break when you got a lower income.
S1 (07:36):
Yeah, well, contributions to super are taxed at $0.15 in
the dollar. So if you are on a lower income
and you maybe most of your income is, you know,
zero tax, you pay zero tax up to your first
$18,000 of income and then you get popped on the
19th century marginal rate. So, you know, it's a saving
(07:58):
$0.15 in the dollar versus $0.19. But what I think,
you know, when Jules is in that full time position
and her annual income is going up, and I think
she said she is going to or interested in being
a kindergarten teacher. I'm not sure what the salaries are
actually for that at the moment. But if you're getting
to the point where you're over the threshold for the 32.5%
(08:21):
tax rate, then you're popping your money straight into your
super and paying $0.15 in the dollar rather than taking
it home and having the tax man take 32.5 cents
in the dollar can be a great way to turbocharge
your savings, and yet you're allowed to pop money into
your super account and withdraw it later on. As long
as you've checked with your super fund that they will
(08:42):
let you do this and actually release the funds to you.
You can save up to $50,000 in total split across
a number of years and withdraw that to use as
your first home deposit. So possibly something worth checking out
there or having a Google first home super saver scheme.
So we've probably covered off on some ways or places
(09:05):
to put Jules's savings once she has diligently accumulated them.
And it does look like she is regularly saving, which
is fantastic. She did provide us with some of her figures,
so she's on a roughly a monthly income take home
of of 1950. So as we said, she's studying and
so this is a part time income and that's sort
(09:27):
of the the base amount that she expects to get
from her regular part time job as an early childhood educator.
And big shout out to the early childhood educators out there.
It's amazing. Absolutely. It's often you should be paid double
what you're paid, but thank you for the wonderful work.
So of that she's tallied up that she's got monthly bills,
(09:49):
probably of about 821 per month. And so she's got
that savings she wants to make. And it does look
like she is in a bit of a surplus after that.
But let's have a look at some of her major costs,
because I was wondering if we could save you money.
One of the best ways to save money is to
reduce your expenditures. We did identify that there's a big
monthly direct debit for a phone, her phone plan and
(10:12):
the the handset, which is $174 per month, that's already
sort of locked in for the next 23 months. But
can you talk us through is it is it a
good idea to buy the handset and sort of be
paying that off monthly or, you know, what's the best
way for people to save on a phone plan if
they haven't already locked in?
S2 (10:31):
Yeah, it's a bit tough once you've already sort of
committed to it. But yeah, I mean, I've always been
a big believer in the buy a phone outright and
go on a prepaid plan. Obviously, buying a phone outright
is a significant outlay and this is why these plans exist,
because it means you don't have to pay anything upfront,
but you end up paying, you know, the full market
(10:51):
value of the phone and then some of the sort
of 12 to 24 months that you've got onto these plans.
So I mean, hundred $74 a month for your phone
and handset is is quite a lot of money. But
so this is where it's always a good idea to
look at sort of second hand phones unlocked, phones, all
that sort of stuff. Like that's how you sort of
save a bit of money on these on these big
direct debits every month because you get prepaid plans like
(11:14):
30 bucks, like 30 bucks a month. That's that's cheap chips.
So this is definitely sort of an area, I think that,
you know, Jill's if you had your time again, maybe
that's something that you could could look at. But obviously
that's locked in now. So this there's not a great deal.
I also want to talk about the $60 of guinea
pig expenditure a month, because Jill's very kindly also send
(11:34):
us in some lovely photos of her pet guinea pigs,
which I wish we could show you on the pod,
but obviously we can't. But it's imagine some very cute
guinea pigs.
S1 (11:42):
Two beautiful girls called Billie and Zita, and they're very
cute guinea pigs. And I didn't know how much guinea
pigs cost to feed, but apparently they eat a lot
of hay socials and spending about $30 per month on hay.
And then they get pellets and also fresh fruit, fruit
and vegetables as well, which is adding up to $60
per month, 60.
S2 (12:02):
Bucks a month. Not that bad. You know, other pets
cost a lot more. So, look, 60 I think there's
no issue there with the guinea pig expenditure. I just
wanted to point it out because it was.
S1 (12:11):
Just.
S2 (12:11):
Unusual.
S1 (12:12):
It's so cute. And she's also paying $390 a month aboard.
So that's a payment to her parents to sort of
cover some of the costs. And so I think that
is a great you know, not everyone can live at
home completely rent free with the with the parents. So
wonderful that she's contributing. And that's, you know, building discipline
(12:32):
as well of sort of paying for those housing costs,
which will be much higher. Yeah. If she's successful in
getting into home ownership, I also see there's there's $12
for Google, a slash YouTube monthly direct debit. So that's
the kind of thing you could maybe look at is
axing that kind of thing unless, you know, you know,
everyone needs a streaming service or two. So, you know,
(12:56):
if it's only the $12, that's pretty good. And $30
for the gym per month, which which sounds like a
good investment to me.
S2 (13:03):
That sounds super cheap. I wish I could pay $30
for the gym each month. Yeah. Yeah.
S1 (13:08):
So there's not you know, there's not it doesn't appear
to be a lot of frivolous spending going on. And
just to say that she tracks her spending using my worksheet.
So that's that's amazing to hear. And just having that visibility,
she's going to be seeing it. Any of the unexpected
expenses that come up. And I just in general, I
was going to caution jewels and just everyone, you know,
(13:30):
unexpected things come up in life. And there's a very
ambitious savings goal here to get the deposit within the
3 to 5 year time frame. And I just, you know,
urge everyone to just just be aware that life happens.
And sometimes there is the big expense that's going to
come you know, maybe there's no mention of a car.
You know, if you moving to Ballarat, you might you're
(13:51):
going to probably need a car as well. So there's
all sorts of expenses that come up. But I just
love the commitment that we're seeing to sort of have
start doing the savings. But just being aware that, you know,
life does throw things at you. And one of the
things Jules is doing is trying to build up an
emergency fund, which I think is a fantastic goal, which
(14:12):
can just help you cover some of those unforeseen expenses.
S2 (14:15):
And there's also the $50 a month going in each
fortnight to its label, as is Future Jules. But it's Rize,
which is the micro investment app, I believe. So it's
good to see that. You know, Jules is also sort of,
you know, she is doing a bit of investing on
the side, which is, I think, a wise thing to
do if you can afford it. But, you know, that
is also money that that you could just put straight
(14:36):
into savings. So that's sort of a decision to make
as well. Like you could be putting another hundred bucks
a month directly into a house saving. So it's sort
of a toss up to think if you're going to
get a better return for that hundred dollars every month
through micro investing or if you're going to get it
through just putting the cash in the bank.
S1 (14:53):
And I would just say to check the monthly fees
that apply to some of those micro investing apps and
just make sure, you know, add up how much that's
going to be over the year. Depends how much you're
putting in there as to whether those fees are worth it.
So that's just something to to watch out and check for.
S2 (15:11):
I mean, all in all, it's great that Jules is
tracking your spending in this way. I also think it's
great that she has the opportunity to stay at home
and live with their parents. You know, not everyone can
do that. And it's a great way to save, obviously.
And it's a way that so many people say for
for that first time deposit. So it's also really good
to think about other ways to get into the housing
market without having to sort of go for that really
(15:33):
onerous 20% deposit. Even in a place like Ballarat where
you can get lovely houses for, you know, way cheaper
than you get them in Melbourne, you're still looking at
a fairly sizable deposit. So I mean just what sort
of screams out there and like is there anyone that
you can sort of go to to help sort of
talk about this sort of stuff with?
S1 (15:48):
Yeah, Look, I mean, I think for Jules, the priority
now is heads down, bums up, get through, study, get
into your full time job that's going to really turbocharge
what you're going to be able to save when you know,
she is hopefully working in that full time job and
earning that full time income. I would just encourage you
to go to speak to a mortgage broker as soon
(16:09):
as you feel like you're really serious about wanting to
to say, you know, not you don't wait till you've
got your whole deposit, You go and have a chat.
Mortgage brokers don't charge you anything upfront, you know, if
you then do get a loan through them, there can
be commissions that they receive in the background. But you know,
mostly they're very open to to helping you, to talking
to you, and they can talk you through that. There
(16:31):
are various strategies that can enable you to purchase if
you don't even have that 20% deposit. The Government has
the first home deposit scheme where you only need 5%
of the purchase price and there's a limited number of
spots available each year under that scheme. But that can
be something that you get. The you only put down
(16:53):
the 5% the Government sort of agrees to essentially go
guarantor so you don't have to pay the lender's mortgage insurance,
which can be a large cost. And yet many lenders
are actually quite willing to write home loans to people
who don't have the 20% deposit anymore. So if that's
what's in people's heads to think, I have to wait
(17:15):
until I get that. It's not necessarily true. I think
once Jules has the regular income coming in and she's
got this demonstrated history of of saving regularly, that's going
to be more than enough to sort of think that's
the time to go and talk to a mortgage broker about,
you know, how realistic is this? How long do I
need to save for? And I think, you know, mortgage brokers,
(17:36):
you know, can can give you a really good steer
on what where you might need to. And they even
look at your expenses and ask you and sort of say, well, look,
that does look high compared to other applicants that I've
got and ways to save. So I think, yeah, heads down,
bumps up with the savings now for Jules and I
think she's doing a great job have having a budget
(17:57):
on paper and and really it's just writing down She's
estimated her income and expenses and she's tracking a spending
that's going to evolve over time. She's going to get
a better view of a budget and it's going to
change when you start working the full time. And, you know,
it's and it changes again when you're a homeowner because
there's lots of other costs of home ownership to consider.
And it's really cute. She's the 3 to 5 year
(18:18):
time frame that she's mentioned is because she would love
to move into the dream home in Ballarat while she
still has her current guinea pigs. And I'm devastated to
learn that guinea pigs don't actually live for much longer
than eight years, 5 to 8 years, and they're already
two years old. So you know that that is the pressure.
That's the dream. As to why I would like to
get into the dream Ballarat Palace. She described in an
(18:39):
email to us and lived there with the guinea pig.
So I think that's a wonderful dream board to have.
Life might get a little bit more messy and be
a little bit more challenging, but I think with the
commitment to making regular savings and finding a good, you know,
if it is the online savings account or if it's,
you know, another method of saving, just starting to build that. Supplied.
(19:01):
That's a fantastic base for building the financial future going forward.
S2 (19:07):
Yeah, absolutely. And look, I think big thanks to Jules
for submitting her expenses and letting us have a look
and and calling into the podcast, so to speak. We
love how we look at it. We love we love
giving you our thoughts and we'll be doing it again
next week with with someone new and some some new scenarios.
So hope you enjoyed hearing all about Jewel and Billy
(19:29):
and Zetta and thanks very much for listening.
S1 (19:32):
Thanks everyone for listening. And yes, do keep the voice
memos coming. If you just record it on your iPhone
and email it to us that it all adds up
at nine dot com today, you and we are listening
to those and very much enjoying hearing of our own stories.
See you next week. This episode of It All Adds
(19:52):
Up was produced by Chee Wong. The information discussed is
general in nature and does not take into account your
personal financial situation, goals or objectives. You should always do
your own research or get professional advice before making any
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(20:14):
to all your friends. You can submit your listener questions
in text or audio format at it all adds up
at nine dot com you.
Hello and welcome to It All Adds Up the podcast
where we chat about money, how to get it, how
to spend it, and how to invest it. I'm senior
economics writer Jess Irvine.
S2 (00:17):
And I'm money at it, dumb pal. And this week
we're kicking off the first part of our new budgeting
series where we're looking at your finances and telling you
how you could be saving some extra dollars.
S1 (00:26):
Thanks to everyone who has already sent us an email at.
It all adds up at nine.com.au dot EU showing us
your budgets and asking your questions. And it's lovely to
see the range of people who are getting in contact.
So I hope that by listening to this series there'll
be something in this for everyone, no matter what your
(00:47):
set up is.
S2 (00:48):
Yes. And if you missed last week's episode, that was
my sort of grilling, budget grilling. So if you want
to listen to someone who really doesn't know what they're doing,
you can go back and see that that you.
S1 (00:59):
Are not too bad.
S2 (01:00):
It was alright in the end, I think. But our
first cab off the rank this week is Jules. She's
a university student and part time early childhood educator living
in Melton, Victoria. And just to set the scene, let's
hear a little word from Jules.
S3 (01:15):
Hi, Jess and Don. This is Jules from Melton. No,
I actually dream of Ballarat. I'm a full time university
student and part time early childhood educator, and I'm currently
saving for my first home. I'm saving at least $410
a month, and I'm hoping to have enough for a
deposit or a 2 to 3 bedroom unit or a
(01:36):
house in Ballarat. My favourite place within the next 3
to 5 years and while I'm saving, I've moved back
in with Mum and Dad. But I was wondering if
you had any extra tips or strategies that I could
use to be saving a bit more or to help
me reach my goal faster. As I said, I dream
(01:57):
of Ballarat and I want to make that dream a reality.
So I'd love to hear what you think.
S1 (02:05):
I love it. I've been through Ballarat on a holiday.
I think it's a beautiful little town and I love
the jewels that she has settled upon wanting to buy
in a regional part of Australia because it's definitely going
to be a little bit more affordable compared to to
say Melbourne. So I think straight off the bat I
think she's doing really well with having a very clear
(02:26):
goal in mind of where she wants to live and
it not being the most expensive place that there is,
although of course it's it's just such a big challenge
these days to save up for a first home and just,
you know, kudos to Jules for putting the flag in
the sand and saying this is, you know what I want. And,
you know, so many people are so disconcerted about how
(02:48):
unaffordable things are to not even try. So I would
love for us to support Jules to be able to
achieve that ambition. And I think, you know, over the
long term, hopefully with enough modest expectations, it's something that
is that can be achievable for people.
S2 (03:02):
Absolutely. And I think this is sort of a great
sort of case study, I suppose, in in showing the
sort of things that that people do to save for
the houses, like, you know, living with their parents, that
sort of thing. Choosing a regional area like these are
the ways that that this sort of goal of this
sort of seemingly unachievable goal of home ownership is is
quite it can become quite achievable. So should we get
(03:24):
into it?
S1 (03:25):
Yeah. Look, you were crunching some numbers. I immediately just
jumped on domain dot com and I was looking at
three lovely beautiful 2 to 3 bedroom homes in Ballarat
and I want to move there now myself. And I
was sort of looking at, you know, of course the
quality of the property can vary, but maybe we're looking
at sort of a 500 ish thousand dollar purchase price
(03:45):
currently for something in that range. And Dom, you were
crunching some numbers on what sort of deposit you might
need or how long that might take.
S2 (03:53):
Yeah, So to do a 22% deposit for something, obviously 20%
for over 500,000 is 100,000. So that is if you
do that 20% mark, obviously you can get a home
loan with, with less than, than 20% of a deposit,
but you will be paying lender's mortgage insurance which makes
your repayments a bit more. But you're looking at about
that $100,000 mark. So with the current rate that you're saving, Jules,
(04:18):
it's looking like it's going to take quite a while too,
to save up to that mark, obviously. But as Jules
has mentioned to us, she's currently on a part time
salary and expects to be working full time in a
year or two. So that will sort of drastically increase
the amount that that she's saving. So yeah, and there's
there's a lot of things to think about here, I suppose,
like you're not necessarily needing that 20%, 20% deposit and
(04:41):
perhaps going a little bit a little lower or doing
a sort of a first home buyers scheme. That's also
something you can look at as well. I mean, my
sort of initial thoughts when I saw this is that
considering that Jules says that she wants to buy a
house in 3 to 5 years, that's a decent timeframe
away in terms of that money that that she's saving
this $410 a month that she said that she saves.
(05:03):
Maybe there's something that she could be doing with that
that's not just putting it into a bank account. Like,
you know, you could be putting that into a term
deposit or something like an ETF or some sort of,
you know, other investment like that which would see your
money appreciate in a sort of a more significant way
than than just to sort of leave it in the bank.
S1 (05:21):
Yeah. Although I mean, I was looking at some online
savings accounts because this is like also a radical thing
for for younger generations, if I can include myself in that,
is that you can actually put money in the bank
and earn interest. You know, look, I just Google canstar
or finder and best savings accounts, 4% is about the
(05:42):
interest rate that you can expect to get on your
savings at the moment. And to get that, sometimes you
usually have to be making, you know, regular contributions and
sometimes you have to be contributing $2,000 a month, which
is going to be ambitious. But there's even like one
with St George where you just you're popping in $50
per month. If you're over 21, you can earn a
(06:03):
bonus total interest rate of 4%, you know, with, with
I don't think any fees associated. So you know, I
think people if you are sort of looking at that
five year horizon, maybe you can be looking at shares
and you can ride out some of those fluctuations in
values because if you've been trying to save for your
first home in shares for the last year, you might
(06:24):
be very disappointed because share returns have been very modest,
if not negative. So, you know, I'm actually all about
putting money in the bank. Don't you know, it's guaranteed
if you have under $250,000, you know, you won't lose
your money and and you get the interest rates that
are on offer and rates are still going up. So
(06:45):
and there's a lot of pressure on banks to be
passing that on even from here. So maybe four, four
and a half, will we see a 5%, you know,
savings rate? Hopefully we will. But as you say, term
deposits too, could be a good option, although you tend
to need to have a big whack to sort of
pop in up. For that.
S2 (07:06):
Something else I was thinking about is this that at
the first home super saver scheme, which the government has,
where you can put additional sort of contributions into your
super and then take them out as sort of like
a tax free sort of savings for a house and
use that that sort of additional money that you put
in as a deposit and you get all obviously all
the gains of all the, you know, hopefully gains that
(07:28):
you would have gotten on your on your super. But
you were mentioning just that that might not be so
applicable because that some sort of not so much of
a tax break when you got a lower income.
S1 (07:36):
Yeah, well, contributions to super are taxed at $0.15 in
the dollar. So if you are on a lower income
and you maybe most of your income is, you know,
zero tax, you pay zero tax up to your first
$18,000 of income and then you get popped on the
19th century marginal rate. So, you know, it's a saving
(07:58):
$0.15 in the dollar versus $0.19. But what I think,
you know, when Jules is in that full time position
and her annual income is going up, and I think
she said she is going to or interested in being
a kindergarten teacher. I'm not sure what the salaries are
actually for that at the moment. But if you're getting
to the point where you're over the threshold for the 32.5%
(08:21):
tax rate, then you're popping your money straight into your
super and paying $0.15 in the dollar rather than taking
it home and having the tax man take 32.5 cents
in the dollar can be a great way to turbocharge
your savings, and yet you're allowed to pop money into
your super account and withdraw it later on. As long
as you've checked with your super fund that they will
(08:42):
let you do this and actually release the funds to you.
You can save up to $50,000 in total split across
a number of years and withdraw that to use as
your first home deposit. So possibly something worth checking out
there or having a Google first home super saver scheme.
So we've probably covered off on some ways or places
(09:05):
to put Jules's savings once she has diligently accumulated them.
And it does look like she is regularly saving, which
is fantastic. She did provide us with some of her figures,
so she's on a roughly a monthly income take home
of of 1950. So as we said, she's studying and
so this is a part time income and that's sort
(09:27):
of the the base amount that she expects to get
from her regular part time job as an early childhood educator.
And big shout out to the early childhood educators out there.
It's amazing. Absolutely. It's often you should be paid double
what you're paid, but thank you for the wonderful work.
So of that she's tallied up that she's got monthly bills,
(09:49):
probably of about 821 per month. And so she's got
that savings she wants to make. And it does look
like she is in a bit of a surplus after that.
But let's have a look at some of her major costs,
because I was wondering if we could save you money.
One of the best ways to save money is to
reduce your expenditures. We did identify that there's a big
monthly direct debit for a phone, her phone plan and
(10:12):
the the handset, which is $174 per month, that's already
sort of locked in for the next 23 months. But
can you talk us through is it is it a
good idea to buy the handset and sort of be
paying that off monthly or, you know, what's the best
way for people to save on a phone plan if
they haven't already locked in?
S2 (10:31):
Yeah, it's a bit tough once you've already sort of
committed to it. But yeah, I mean, I've always been
a big believer in the buy a phone outright and
go on a prepaid plan. Obviously, buying a phone outright
is a significant outlay and this is why these plans exist,
because it means you don't have to pay anything upfront,
but you end up paying, you know, the full market
(10:51):
value of the phone and then some of the sort
of 12 to 24 months that you've got onto these plans.
So I mean, hundred $74 a month for your phone
and handset is is quite a lot of money. But
so this is where it's always a good idea to
look at sort of second hand phones unlocked, phones, all
that sort of stuff. Like that's how you sort of
save a bit of money on these on these big
direct debits every month because you get prepaid plans like
(11:14):
30 bucks, like 30 bucks a month. That's that's cheap chips.
So this is definitely sort of an area, I think that,
you know, Jill's if you had your time again, maybe
that's something that you could could look at. But obviously
that's locked in now. So this there's not a great deal.
I also want to talk about the $60 of guinea
pig expenditure a month, because Jill's very kindly also send
(11:34):
us in some lovely photos of her pet guinea pigs,
which I wish we could show you on the pod,
but obviously we can't. But it's imagine some very cute
guinea pigs.
S1 (11:42):
Two beautiful girls called Billie and Zita, and they're very
cute guinea pigs. And I didn't know how much guinea
pigs cost to feed, but apparently they eat a lot
of hay socials and spending about $30 per month on hay.
And then they get pellets and also fresh fruit, fruit
and vegetables as well, which is adding up to $60
per month, 60.
S2 (12:02):
Bucks a month. Not that bad. You know, other pets
cost a lot more. So, look, 60 I think there's
no issue there with the guinea pig expenditure. I just
wanted to point it out because it was.
S1 (12:11):
Just.
S2 (12:11):
Unusual.
S1 (12:12):
It's so cute. And she's also paying $390 a month aboard.
So that's a payment to her parents to sort of
cover some of the costs. And so I think that
is a great you know, not everyone can live at
home completely rent free with the with the parents. So
wonderful that she's contributing. And that's, you know, building discipline
(12:32):
as well of sort of paying for those housing costs,
which will be much higher. Yeah. If she's successful in
getting into home ownership, I also see there's there's $12
for Google, a slash YouTube monthly direct debit. So that's
the kind of thing you could maybe look at is
axing that kind of thing unless, you know, you know,
everyone needs a streaming service or two. So, you know,
(12:56):
if it's only the $12, that's pretty good. And $30
for the gym per month, which which sounds like a
good investment to me.
S2 (13:03):
That sounds super cheap. I wish I could pay $30
for the gym each month. Yeah. Yeah.
S1 (13:08):
So there's not you know, there's not it doesn't appear
to be a lot of frivolous spending going on. And
just to say that she tracks her spending using my worksheet.
So that's that's amazing to hear. And just having that visibility,
she's going to be seeing it. Any of the unexpected
expenses that come up. And I just in general, I
was going to caution jewels and just everyone, you know,
(13:30):
unexpected things come up in life. And there's a very
ambitious savings goal here to get the deposit within the
3 to 5 year time frame. And I just, you know,
urge everyone to just just be aware that life happens.
And sometimes there is the big expense that's going to
come you know, maybe there's no mention of a car.
You know, if you moving to Ballarat, you might you're
(13:51):
going to probably need a car as well. So there's
all sorts of expenses that come up. But I just
love the commitment that we're seeing to sort of have
start doing the savings. But just being aware that, you know,
life does throw things at you. And one of the
things Jules is doing is trying to build up an
emergency fund, which I think is a fantastic goal, which
(14:12):
can just help you cover some of those unforeseen expenses.
S2 (14:15):
And there's also the $50 a month going in each
fortnight to its label, as is Future Jules. But it's Rize,
which is the micro investment app, I believe. So it's
good to see that. You know, Jules is also sort of,
you know, she is doing a bit of investing on
the side, which is, I think, a wise thing to
do if you can afford it. But, you know, that
is also money that that you could just put straight
(14:36):
into savings. So that's sort of a decision to make
as well. Like you could be putting another hundred bucks
a month directly into a house saving. So it's sort
of a toss up to think if you're going to
get a better return for that hundred dollars every month
through micro investing or if you're going to get it
through just putting the cash in the bank.
S1 (14:53):
And I would just say to check the monthly fees
that apply to some of those micro investing apps and
just make sure, you know, add up how much that's
going to be over the year. Depends how much you're
putting in there as to whether those fees are worth it.
So that's just something to to watch out and check for.
S2 (15:11):
I mean, all in all, it's great that Jules is
tracking your spending in this way. I also think it's
great that she has the opportunity to stay at home
and live with their parents. You know, not everyone can
do that. And it's a great way to save, obviously.
And it's a way that so many people say for
for that first time deposit. So it's also really good
to think about other ways to get into the housing
market without having to sort of go for that really
(15:33):
onerous 20% deposit. Even in a place like Ballarat where
you can get lovely houses for, you know, way cheaper
than you get them in Melbourne, you're still looking at
a fairly sizable deposit. So I mean just what sort
of screams out there and like is there anyone that
you can sort of go to to help sort of
talk about this sort of stuff with?
S1 (15:48):
Yeah, Look, I mean, I think for Jules, the priority
now is heads down, bums up, get through, study, get
into your full time job that's going to really turbocharge
what you're going to be able to save when you know,
she is hopefully working in that full time job and
earning that full time income. I would just encourage you
to go to speak to a mortgage broker as soon
(16:09):
as you feel like you're really serious about wanting to
to say, you know, not you don't wait till you've
got your whole deposit, You go and have a chat.
Mortgage brokers don't charge you anything upfront, you know, if
you then do get a loan through them, there can
be commissions that they receive in the background. But you know,
mostly they're very open to to helping you, to talking
to you, and they can talk you through that. There
(16:31):
are various strategies that can enable you to purchase if
you don't even have that 20% deposit. The Government has
the first home deposit scheme where you only need 5%
of the purchase price and there's a limited number of
spots available each year under that scheme. But that can
be something that you get. The you only put down
(16:53):
the 5% the Government sort of agrees to essentially go
guarantor so you don't have to pay the lender's mortgage insurance,
which can be a large cost. And yet many lenders
are actually quite willing to write home loans to people
who don't have the 20% deposit anymore. So if that's
what's in people's heads to think, I have to wait
(17:15):
until I get that. It's not necessarily true. I think
once Jules has the regular income coming in and she's
got this demonstrated history of of saving regularly, that's going
to be more than enough to sort of think that's
the time to go and talk to a mortgage broker about,
you know, how realistic is this? How long do I
need to save for? And I think, you know, mortgage brokers,
(17:36):
you know, can can give you a really good steer
on what where you might need to. And they even
look at your expenses and ask you and sort of say, well, look,
that does look high compared to other applicants that I've
got and ways to save. So I think, yeah, heads down,
bumps up with the savings now for Jules and I
think she's doing a great job have having a budget
(17:57):
on paper and and really it's just writing down She's
estimated her income and expenses and she's tracking a spending
that's going to evolve over time. She's going to get
a better view of a budget and it's going to
change when you start working the full time. And, you know,
it's and it changes again when you're a homeowner because
there's lots of other costs of home ownership to consider.
And it's really cute. She's the 3 to 5 year
(18:18):
time frame that she's mentioned is because she would love
to move into the dream home in Ballarat while she
still has her current guinea pigs. And I'm devastated to
learn that guinea pigs don't actually live for much longer
than eight years, 5 to 8 years, and they're already
two years old. So you know that that is the pressure.
That's the dream. As to why I would like to
get into the dream Ballarat Palace. She described in an
(18:39):
email to us and lived there with the guinea pig.
So I think that's a wonderful dream board to have.
Life might get a little bit more messy and be
a little bit more challenging, but I think with the
commitment to making regular savings and finding a good, you know,
if it is the online savings account or if it's,
you know, another method of saving, just starting to build that. Supplied.
(19:01):
That's a fantastic base for building the financial future going forward.
S2 (19:07):
Yeah, absolutely. And look, I think big thanks to Jules
for submitting her expenses and letting us have a look
and and calling into the podcast, so to speak. We
love how we look at it. We love we love
giving you our thoughts and we'll be doing it again
next week with with someone new and some some new scenarios.
So hope you enjoyed hearing all about Jewel and Billy
(19:29):
and Zetta and thanks very much for listening.
S1 (19:32):
Thanks everyone for listening. And yes, do keep the voice
memos coming. If you just record it on your iPhone
and email it to us that it all adds up
at nine dot com today, you and we are listening
to those and very much enjoying hearing of our own stories.
See you next week. This episode of It All Adds
(19:52):
Up was produced by Chee Wong. The information discussed is
general in nature and does not take into account your
personal financial situation, goals or objectives. You should always do
your own research or get professional advice before making any
major financial decisions. If you like today's episode, hit follow
in your podcast app, leave a review and recommend it
(20:14):
to all your friends. You can submit your listener questions
in text or audio format at it all adds up
at nine dot com you.
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