Beginning life as a Moustachian in Sydney

[darrenjl]

First things first.
Myself: 29 years old, okay but not great salary $73k gross.
I live 20km from work. Currently drive a Honda Jazz (Fit in the US).
Only debt outside of the mortgage is HELP/HECS study debt of about $18k

Wife: 29, salary $110k gross.
She's 5km and 1km from work, as she has two different jobs.
No personal debt.

Our mortgage, 500k on an interest only loan at 80 LVR%. Home was purchased last year and current comparables in the area sell for in excess of 700k. So, we potentially have some equity that has been generated in that time.
Additionally, 100k cash in an 100% offset account tied to the mortgage.

3 year old son, attending childcare 3 days a week.
For the next 9 months, in-laws will be living with us.

Wife is adamant that we need to purchase an investment property as that is surely the road to financial freedom.
Of course if the IP is income producing, either through positive gearing, or negative gearing with a positive cashflow, then that of course can help to pay down the mortgage on our own home. Finding such an IP, is easier said than done.
As for other asset classes, I honestly need to look into them more.

Regardless of investment decisions, regardless of usage of existing cash at this point in time (Although advice is welcome), minimising expenditure is surely the first thing that needs to be done on this journey.

We don't spend excessively, but there are a number of things that could be cut down, when actually analysing our weekly spending.

One being, my commute to work (approximately 10-12.5miles) dependent on roads and shortcuts.
Would likely take an hour to commute each way.
I work shift work (0700-1530, 1330-2200, 2130-0730) on a rotating roster.

Haven't owned a bicycle since my teens. So need advice on where to find a decent commuter bicycle in and around the Sydney region.

[Gockie]

Hi Darren,
Welcome!
I think your incomes are fine. Definitely $73k is not low!

I'm wondering how you both are financially before looking at IPs. How's your budget?
Currently Sydney prices are sky high and I wouldn't overcommit. Also, just wondering why you have interest only loan on your home? Is it because you plan to possibly rent it out in future? If so, great, but if not, then that is something to look out for.
Personally I'd want to avoid paying too much interest on the mortgage and want to make the interest payments as small as possible as quickly as possible. I read once your repayments (principal and interest) are at a level matching what you would be paying if renting then you could start to look to buy IPs.
Otherwise property investments in perhaps country NSW or interstate (Brisbane or maybe Adelaide) are the go. Lower entry and you will have trouble in Sydney to get a good return rate - yields are only around 3-4% in Sydney right now. Even Western Sydney along the train line is very pricy now.

Re transport to work, since your work starts and finishes in non peak hour, (which is awesome by the way), I see no issues in driving (a frugal car of course), or carpooling or public transport is better. While driving for the most part is anti-mustachism, the fact is, you haven't ridden/owned a bike in a very long time and 20km is a fair distance if there are hills of any sort. Plus a lot of the time you appear to finish during night hours. So if you initially have the goal to ride to and from work on days when you start and finish in daylight, then that is a good goal to have. If you smash that, then you can try to tackle the days when you start or finish during night hours, just make sure you wear bright reflective clothing so you are seen by the traffic. To build you your bike riding capabilities, you can get yourself a bike (possibly get a road bike from Anaconda if you will ride the 20km twice a day - note the road bike is very strange to ride if you aren't used to them initially) then go for rides in your leisure time. Or find yourself a job with better transport links or close to home.
Good luck.
:D

[marty998]

Interest only with an offset is the best strategy by far with daylight second. I'll post again here soon, train just pulled into my stop....

[Nudelkopf]

I think your incomes are fine. Definitely $73k is not low!

Yeah, I almost stopped reading at that point.

What is your question? Are you after investment advice? Do you want to post your budget for us to analyse?

[stripey]

I think your incomes are fine. Definitely $73k is not low!

$73k is pretty comfortable, really. COL in Sydney is pretty much comparable with Perth at the moment (actually, COL in Perth is marginally higher) and my expenses in Perth have been about $30k (very comfortably, possibly a little extravagantly, incl. lots of eating out and the odd international trip) for a couple of years now as a single. If you're a family then COL per head has the potential to be much much lower than this.

I agree that 20km from work is a long way to cycle if you haven't done it for many years as a daily commute- it'll be a hard slog for starters! And cycling at night in town is particularly stressy as well, I do it (with lots of lights and hi vis gear!) but I don't like it, and I have about half the commute distance. I would stick to public transport (if bearable from where you are) or car, at a guess, until you're more accustomed to cycling again- work up to the distance for certain, though!

Can't comment on property, as I don't own anything nor intend to in the next 5 years.

I can't really offer any more comments unless there are some more figures for expenditure... other than to say welcome too!! :)