Author Topic: Reader Case Study - Rapid House Purchase, or 1 More Year  (Read 1214 times)

TheManTheyCallJayne

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Reader Case Study - Rapid House Purchase, or 1 More Year
« on: March 11, 2015, 04:29:22 AM »
Income: $56,186 after Tax. Way too young to access retirement accounts, but they're meeting the national (Australian) standard rate (mid to late 20's). Government worker. I'm actually a technician in a relatively large group, and am paid above the average for the staff in the area. I also lead a small team, all older than me.

Current expenses (Monthly, averaged to two pay runs a month):
   Rent:                                       $1,160
   General (inc. Groceries):         $600.00
   Utilities:                                   $305.00
   Insurance:                               $164.82
   Entertainment (Zoo pass):      $18.00
   Child Safety/ Training:             $80.00
   Maintenance:                           $161.00
   Vehicle:                                    $187.00
   Communications:                     $220.90

   Everything excess is being sunk in to savings at a little over 3.5%. It works out a little over $1,400/month + about $40 in interest each month.

   Immutable Categories at this stage is pretty much anything - I've been fine tuning for a couple of years now and can't get them much tighter than they are. Maintenance covers extras like pest control, a buffer for the vehicles. Insurance is about as tight as it can get and the only real cutting areas we have are the "General" account, and the communications. We're on the tightest internet plan I can swing that meets the requirements of my small website (I run it for free, so my "charity" line should look like (-(power)(disks)(time)) but I don't think of it that way, plus a static IP gives me somewhere to sneak home to when I want to play games. We're with some of the smallest phone plans. They could be smaller, but we had BYOD handsets that died, and we splurged a little to get newish android phones as we otherwise don't go anywhere but the Zoo - regularly. General is immutable for reasons I will outline below.

        We do have two cars - a 323f and a 318i. In a lot of Australian areas you will find that this is probably the case. For the current year (from start of January to date) for both cars I have spent $177 on fuel and maintenance (registration is a yearly thing). This includes a $50 top up for a car I sold before replacing with the one my wife drives. Due to knee injuries I am not yet proficient enough to ride to work, but I am getting better. Assume for now that I won't be better by the end of the time frame I'm asking about. Both cars are paid for, and cost me less than $1,500 each.

Liabilities: Debt? None. No credit cards, nothing except the "regular" expenses already detailed.

Single income, despite having a pregnant stay at home mum for a wife (and a beautiful two year old daughter, naturally). This is why the General is immutable - I don't think of it this way, but it can be considered an "allowance" for my wife. She covers groceries, and I don't watch her spending for the rest because that's not very fair. We talk about large purchases anyway. With the cost of childcare and my ladies historical earning capacity, sending her back to work is not an option (nor is it one I am happy to subject my children to anyway).

With the second child on the way, we have been planning to purchase a house by about the middle or so of next year. Emotional purchase, for stability, something neither of us had. Unfortunately, we have recently been told that the rental we are in is being sold. The saving grace here is that it is being sold as tenanted, so we can ride out the term of our lease.

Finally, my question:

If we ride to the end of our lease, we will have saved (barely) enough to "scrape together" a deposit on a reasonable house, including stamp duty etc. to cover 5% of the amount. That puts us with a 97% borrow (some brokers will cover 2% of the Lenders Mortgage Insurance) and will - hopefully - have us in a home of our own by the end of the year.

OR we move house, commit to a 12 month lease, get to the end of next year and have about 9 or 10% saved. We still get slugged for LMI but it wouldn't be as significant. According to my calculations this won't impact more than a few months off my plan to kill the mortgage anyway.

Regardless of decision, I'm committed to the emotional purchase. I'm not hugely keen on uprooting my family twice if I don't have to, but I was wondering if anyone had any particular thoughts on which option I should take.

Introducing myself at the end - Hi all! Long time reader/lurker, but this sale thing has pushed me to join and post!
« Last Edit: March 11, 2015, 04:33:05 AM by TheManTheyCallJayne »