Lucky for me i purchased what i could afford, paid it off, all on one shitty wage, while bringing up a family.
Boy was it hard.
A tip for everyone.....live within your means.
I use to go to work with holes in my shoes and drive an old bomb.
Rent - Comfortably paying rent
Rent - Feeling the pinch
Buying - Own Outright
Buying - Comfortably paying a mortgage
Buying - Feeling the pinch and struggling to pay mortgage
Boarding - Just paying one amount per week
What best describes your situation ?
Look Here -> |
Lucky for me i purchased what i could afford, paid it off, all on one shitty wage, while bringing up a family.
Boy was it hard.
A tip for everyone.....live within your means.
I use to go to work with holes in my shoes and drive an old bomb.
I am paying rent while saving about $2500 a month, so yeah doing well.
I will be buying very soon, just waiting for the second release of a new estate that I want to live in and its miles from the city so prices are very good.
I am looking at building a 30 to 32sq home on a 1000sq block for around $280,000....not bad at all as for me the further away from the city, the better...
I picked owned outright, I have the parchment title document in the desk drawer, I owe no-one nothing.
My last mortgage was paid off in 1992 and I paid 17.5% interest rates.
Since then i pay cash for evrything.
My advice?
Buy a tiny house to top paying rent and save for a larger home.
Then pay CASH.
z80, it is well known that in 1992 the average house price was 4 times the average yearly wage.
Now the average house price is 7 times the average yearly wage.
Please don't patronize people by giving the impression you did it hard with 17.5% interest rates and then saying to save and pay cash for a house.
Edit: just out of curiosity how much was your house you paid off in 1992, price you paid for it, ball park will do..?
Last edited by shagga66; 03-03-08 at 11:46 PM. Reason: Spelling
I am very suprised as to how many people own outright. I have only ever met 3 people who have admitted to owning outright, but there is obviously more than I thought. which is a great thing. I am in the Feeling the pinch and struggling to pay mortgage bracket, but am very jealous and happy for those who now own there own home.
My concerns are more job related at the moment. If I loose my job it will be tight on payments in this house, but at the moment with two incomes its okay. However this was the plan, we always wanted to be well ahead of the loan and were never going to pay more than we were comfortable with even with rate increases. We knew that rates would never stay low and we also knew it didn't matter who we voted for because banks control the rate not the government (as can be seen at the moment where commerical banks lift rates when ever they like). Like Global88 said we have decided to live within our means.
I know a few retirees that own outright, but they are generally the only ones.
Coding in C is like sending a 3 year old to do groceries. You gotta tell them exactly what you want or you'll end up with a cupboard full of pop tarts and pancake mix.
Sorry young man, but not only did we have high interest rates we had wonderful taxes with a top tax rate of 60% plus medicare .
So your margin of argument quickly diminishes.
Yes we did it tough... a 100k mortgage was huge.
I can get you a 3 bedroom house, whithin an hour of Melb for $270k and that is about 5 times average earnings.
Cranbourne,Berwick,Narre Warren,Lara,Hoppers Crossing.
I don't care what average prices are, averages are distorted by Southbank penthouse anomalies.
I am talking about houses that people can buy comfortably to enter the market.
As I said earlier, if you want all the status symbols before you've earned the right to live in them then be prepared to lose the lot when things go sour.
I have no idea, we lived in it for another 9 years and in that time saved 300k and bought a much bigger place.......cash.
How can anyone expect to better their worth when a huge portion of their after tax income is going in a mortgage?
This generation has fallen for the capital gain hype that it will always be worth more later.
here:---
more
if you look hard enough you will find one for $260-280.
And here are average weekly earnings:-
$56k a year i make it to be as the average earnings 5x56k=$280k
plenty more here:-
If the house is $260-280k
A couple on average weekly earnings will pay it off in 3-4 years if careful.
z80, thanks for the long drawn out post, I think I got most of it...
You seem to be hesitant to say how much you paid for your house, back well before 1992 if so thats fine, just say so. I'm sure you would know as I don't know anyone that wouldn't know how much their first home cost them. I bet it wasn't $280k.
Have a look at my post a few up, I am one of those that intends on building an hour from Melbourne so I can pay it off quickly and without much fuss. I cant see why anyone would tie themselves into a loan for 30 years...
I am not saying buying a house is impossible, just 17% on $75k, I dont see that as being the hard road, even back in 1992.
Its almost impossible to compare the cost of owning a house from 1992 to 2008 as the cost of everything has gone up, rates, petrol, food, public transport, so many daily costs have gone up, the list goes on.
You see so many people just bring out the " I lived through the 17.5% days" when they had a $75 to 85k mortgage.
edit: and No I am not going to pay for your premium upgrade...
Just one clarification - the interest rates were 17.5% in 1989 - not 1992....
So comparing a 1989 real case scenario to today (for the sake of the 17.5% comparison).......
This is a 20 year loan and this was (and is) the absolute cheapest unit you can buy anywhere around Sydney...
Cheapest Unit in Sydney 1989.....$45,000 no deposit, 17.5% interest. First year weekly repayments in 1989.....$197 per week
Cheapest Unit in Sydney 2007.....$175,000 no deposit, 8.3% interest***. First year weekly repayments in 2007.....$479 per week
***actual interest is now 8.95%
Those "weekly" numbers are what the bank charged on the bank statements as of 1989 and last week.
I bought this unit in 1989 and sold it last year.
I'm helping my mate out who bought it with his paperwork & I have his permission to post this info.
-------------------------------------------------
in 1989 the body corporate rates were $172 per year
Water rates & sewrage : $196 per year
council rates $266 per year
all up about $12 per week plus the repayments = $209 per week in 1989
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in 2006 the body corporate rates were $1400 per year
Water rates & sewrage : $432 per year
council rates $1136 per year
all up about $57 per week plus the repayments = $536 per week in 2006
-------------------------------------------------
So for the cheapest "shoebox in the middle of the road" you are paying around $320 more per week than in 1989.
The higher the price of the unit or house the wider that gap becomes.....
If you look at the average weekly wage figures before tax it was $660 in 1989 and $1070 today (before tax OK?)
equate the repayments into the wages:
-------------------------------------------------------------------
This does not take into account the deductions such as income tax nor does it cover the increased cost of food, petrol etc.
1989 repayments were 32% of average single weekly income
2007 repayments are now 50% of average single weekly income
--------------------------------------------------------------------
In this particular area the average income for a storeman is about $18 per hour ($685 before tax)
This is not a good situation to be in but thats the reality of today versus 1989 for a first home buyer, and it aint pretty.
Thanks for going to the trouble and posting that info POWERZONE. Helps get an understanding of cost...
z80 stated that he paid off his house in 1992, so I dare say he purchased a lot earlier than that and at allot less than the 1992 average house price.
Shagga
I could only imagine the price of a cheap house within an hour of Sydney or Melbourne back then or earlier.
I remember in 1992 some new estates were set up in South West Sydney near Liverpool, 4 bedroom houses with double garage, landscaping, average 500m2 block were between $180k - $220k, and interest (cash) rates about 9% or probably about 12% for home loan rates...
And maybe from today, we might just get another 0.25% closer to that figure in 1992. House prices however, chalk 'n' cheese.
@powerzone- the take home pay on 50k is much higher now than when it was in 1989 in my case a large portion of my income was at 60%.
So mortgage payments that needed to be met from after tax income that had 60% tax deducted took a lot of overtime.
If you earned 50k in 1989 you took home about 23k
If you earned 50k in 2008 you took home about 32k
It's all about the ability in disposable income to make extra repayments.
I reckon i did it tough..
I don't see how you could ever have been taxed @ 60% to bring $1000 a week down to $460 a week after tax......
from the ATO......1991-1992
As you can see the highest tax rate was 47% and that only applies to every dollar you earn beyond $50K. Anything you earned below $50K was taxed at an even lesser rate in 1992.Taxable income / Tax on this income
$1–$5,400 / Nil
$5,401–$20,700 / 20 cents for each $1 over $5,400
$20,701–$36,000 / $3,060 + 38 cents for each $1 over $20,700
$36,001–$50,000 / $8,874 + 46 cents for each $1 over $36,000
$50,001 and over / $15,314 + 47 cents for each $1 over $50,000
From the ATO....2006-2007
Taxable income / Tax on this income
So lets go with $52K going off the above tables.....$0 – $6,000 / Nil
$6,001 – $25,000 / 15c for each $1 over $6,000
$25,001 – $75,000 / $2,850 plus 30c for each $1 over $25,000
$75,001 – $150,000 / $17,850 plus 40c for each $1 over $75,000
$150,001 and over / $47,850 plus 45c for each $1 over $150,000
1992 $52k - tax = $16254.... take home pay is $35746, or $687 per week.
2007 $52k - tax = $10950.... take home pay is $41050, or $789 per week.
So the difference is $100 per week,
and that's not including the medicare levy, GST, or any other price increases.......
Last edited by exited; 04-03-08 at 02:58 PM. Reason: added info
What exactly would you like to talk about Powerzone?
(one minute its 1989, then 1992)
My FINAL mortgage payment on 20th April 1992 or the 150 payments BEFORE it...a lot of them at the prevailing 60% tax rate?
we can talk about that payment or the 150 before that date...
How does that affect your calculations?
Furthermore there is no point in comparing cost of living between the two periods especially since GST has eliminated a variety of taxes that have caused dramatic price anomalies for the two eras. Some cheaper, some expensive.
My opinion? Overall it has become cheaper.
As far as I am concerned if someone can't make it at 9% then they ain't ever going to make it in Australia since it can easily get to 17.5%.
It may interest you to know that on the same property my wife and I signed the sale note of 90 days at 7.5%, by the time we moved in it was at 10.5%, 3 years later it was 13.5%.
And that was the Commonwealth bank not some building society.
(The building societies were 2% more in the 1980's.)
My contention is that all the people who reckon it is harder now are living in a fantasy, it has always been tough, and it can get much tougher.
It's all a question of how status orientated your lifestyle is.
If your ego writes cheques your body can't cash then you will pay dearly.
And another rise.
I own my home outright, I suppose I did it the hard way, I busted my ass for years and made sensible moves when we could profit from the sales of our houses.
Our last house that the banks had a piece of was purchased for $130,000.00 6 years ago.
We restored the house over a period of 12 months (it was a 100 year old QLD'er) and it was sold late last year for just on $400,000.00.
We then purchased a home in Innisfail for $200,000.00 and dont owe the banks a brass razzoo.
To get us to this point we have moved from Mooroolbark in Victoria to Cairns (several homes in and around the Cairns area) and thence to Atherton, where our old QLD'er was and thence to here in Innisfail.
Each move meant a better lifestyle and a profit on the sale of the house.
Where will we be in 5 years?
Retired and living on an acreage block out west, the home will consist of several 20 and 40 foot containers that we already own and have converted to living quarters and there will be no power or telephones connected.
(Ham Radio will be definately there though)
I will be 54 when I retire.
I am looking forward to it already.
MaXiLeeCH
Lord of his ring, keeper of his faith, master of no-one!
yep...have to agree.
You can make money from housing, provided that you are happy to keep moving further and further out....or into a different market interstate.
We moved to southern tasmania during the 80's and lost our 13.5% government cap on interest rates and i used my credit card to pay for a property that was a PALACE in Hobart.
But coming back lost bigtime, and had the deregulated 17.5% mortgage to add insult to injury as well as an average dwelling again.
So watch out...you will never be able to move to Mooroolbark again though .
Though driving through there the other day I'd say stay where you are
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