Author Topic: Returning to Australia, advice wanted  (Read 7192 times)

mustachebros

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Returning to Australia, advice wanted
« on: March 15, 2014, 08:33:45 AM »
Hi - I was hoping some of the Aussies here could answer the following question for me:

Is it possible to live frugally on $18,200 a year in Australia assuming no costs for rent?

I'm an Aussie who has spent a decade working overseas and I'm thinking of coming back some time soon. I have made several trips home over the past few years but this last one shocked me a little as prices and living costs seemed to be a lot higher than I remembered, but hey 10 years is a long time etc.

Some of you will recognise the $18,200 figure above as the cut-off for the zero tax tax bracket. 10 years ago it was 6 grand, and while I know living costs have increased I just want to make sure they haven't tripled as the number would indicate.

(if anyone knows the reason for the massive jump I'd be keen to hear it too)

Because if it is possible to survive on this then I'll just bring 450K back to Australia, buy some Vanguard and withdraw to the tune of 4% (ie $18,200) per year, problems solved.

limeandpepper

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Re: Returning to Australia, advice wanted
« Reply #1 on: March 15, 2014, 08:54:46 AM »
Hi randomcow, a person can most certainly live frugally on AUD$18200 a year in Australia, or less, especially if you don't have to pay rent! I live on less than that, and it even includes my rent, which admittedly is pretty cheap, I got a good deal. If you don't have to pay for accommodation at all, and don't have any dependents, I think that amount could even be considered luxurious. Of course, it also really depends on your personal needs and wants.
« Last Edit: March 15, 2014, 08:58:46 AM by limeandpepper »

Jules13

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Re: Returning to Australia, advice wanted
« Reply #2 on: March 15, 2014, 09:51:56 AM »
I am super interested in this thread as I would never have thought you could live that cheaply in Australia.  We have been away from Oz for about 12 years now and every time we visit we are still always astounded at the prices of things.  Granted, we live in the US, where nearly everything is just so much cheaper. 

Limeandpepper, I would love to see your budget and how you manage to live so inexpensively.  We don't have plans to move back, however would love to have an extended stay of a few months and wonder how we would be able to afford it.  We have two boys (who seem to eat like adults), which seems daunting with food prices as they are. 

Thanks!

limeandpepper

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Re: Returning to Australia, advice wanted
« Reply #3 on: March 15, 2014, 11:33:09 AM »
Hi Jules! I don't track my expenditure these days, but I estimate my monthly and annual savings (and therefore, expenses) based on how much my net worth goes up each month/year. I was able to predict months in advance what my net worth would be by the end of last year, by a pretty accurate margin, so i think my estimations aren't too far off reality. (Most of my money is still in high interest savings accounts / term deposits at the moment, so there are no wild fluctuations in the net worth to throw off the estimations by too much. I know I should start investing more in shares, though!)

I've posted a budget somewhere else on this forum before, but it has changed a little since then. I pay only $400/month for rent, which really helps - I share a 2-bedroom apartment with a couple. My share of utilities (Electricity, Gas, Water, Internet, Phone) work out around $115/month based on last year's bills. I don't use a heater, it doesn't get that cold here anyway. Private health insurance is $67/month, but there is universal healthcare so it's not absolutely necessary. For things like clothing/shoes, personal care, etc., this will vary, but I don't spend too much on them. I don't have a car, and either walk or take public transport. Even public transport is quite expensive now, and I've started walking to work when the weather is decent enough.

Food can be pricey, but my trick is to go to the markets near closing time, and get discounted fresh produce. My meals are usually based on staples like rice, pasta, noodles. Meat can be part of the dish but I don't tend to use too much of it, plus I tend to go for whatever's cheaper. I still have luxuries like eating out and travelling, I just make sure I don't go too crazy with them. Generally go for meals that are ~$15 every now and then, and travel for less than $2000 per year. (That's about to change though, I'll be quitting my job later this year to travel for months...)

There's another Australian who lives on even less! Check out this recent thread here, it's inspiring: http://www.mrmoneymustache.com/forum/ask-a-mustachian/reader-case-study-can-this-artist-semi-retire/

And there are quite a few Australian journals on the forum, too, so check out the Journals section.

Nudelkopf

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Re: Returning to Australia, advice wanted
« Reply #4 on: March 15, 2014, 05:32:27 PM »
Is it possible to live frugally on $18,200 a year in Australia assuming no costs for rent?
Are you single? Then, yes.

mustachebros

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Re: Returning to Australia, advice wanted
« Reply #5 on: March 15, 2014, 05:56:29 PM »
Hi guys - thanks for the replies so far. In the last 12 hours or so since I posted I have done a lot of reading of the Australia-specific posts on these forums, and I see now that $18,200 is very doable.

Are you single? Then, yes.

OMG you just made me realise something. If I find a wife and bring her back with me then this figure DOUBLES!

HappierAtHome

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Re: Returning to Australia, advice wanted
« Reply #6 on: March 15, 2014, 06:01:25 PM »
Yes. Nudelkopf and I are both attempting to spend less than $12k this year.

I don't pay any housing costs (other than a share of utilities) but I do have a car. My partner spends slightly more than $12k (but certainly less than $15k) excluding his mortgage; he does not pay maintenance/registration etc for the use of a car but does pay strata fees, maintenance costs etc associated with housing.

What kind of lifestyle are you planning? Will you need to run a car? Is the "free" housing a permanent arrangement? Will you want to have a social life that involves pubs and bars?

It's true that Australia is a lot more expensive than the US. But that just means you have to get a little bit creative about designing your lifestyle.

mustachebros

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Re: Returning to Australia, advice wanted
« Reply #7 on: March 15, 2014, 07:30:47 PM »
Hi HappierAtHome - thanks for the response.

The "free" accommodation is my parents' holiday house in country NSW. Let's assume it is free indefinitely, but I will be taking steps to build in a margin of safety over time once I have found my feet.

I'll need a car unfortunately. However there is an IGA supermarket about 15 min away on foot and a lot of my "recreation needs" will be within walking distance. At the moment I eat (and drink heh) out once a week which is a bit of a blemish on my 'stache but I look forward to it all week. Not sure what will happen in this regard back in Australia.


travelbug

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Re: Returning to Australia, advice wanted
« Reply #8 on: March 15, 2014, 11:29:15 PM »
It would depend on the lifestyle you wanted.

You could, but IMHO it would be close.

We have 2 children, so spend a lot more than that. If you add in car, insurances, hobbies, travel....it would depend.

We are looking to leave Australia for our ER as the lifestyle we can have almost anywhere else in the world is much greater than our basic COL would be here. We will always have a buffer for re-entry and that is why even though we are FI we are doing another 2-3 years.






LonerMatt

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Re: Returning to Australia, advice wanted
« Reply #9 on: March 15, 2014, 11:50:28 PM »
I think it depends on a lot on where you live.

Living in the country make it easier to grab rent for $100-$200 a week.

If you're on your own, no house sharing in Melbourne or Sydney that budget would be tough.

mustachebros

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Re: Returning to Australia, advice wanted
« Reply #10 on: March 16, 2014, 12:36:10 AM »
Hi travelbug - Yes not looking to do the "lawn bowls and yellin' at kids to get off the lawn"-retirement but just wanted to get an idea what it will take to keep my head above water.

At the risk of derailing my own thread, may I ask which countries you are considering? Bali? Chile/Equador/etc? I hear Malaysia has decent residency options for foreigners. And congratulations on getting to the stage you're at.


kaetana

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Re: Returning to Australia, advice wanted
« Reply #11 on: March 16, 2014, 02:36:00 AM »
$18,200 is DEFINITELY doable in Melbourne for a single person. My husband and I live on $30,000/year at the moment without rent, and that's while servicing some debt (mainly $630/m for our car, which was a pre-mustachian mistake). We also live 40km from work.

Personally I don't buy the "Australia is too expensive to live in" sentiment. We intend to travel, sure, but we think Australia is one of the best places to retire when you take into account the medical expenses and government aid. Having lived in a third-world country, I have no desire to go back.

Kepler

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Re: Returning to Australia, advice wanted
« Reply #12 on: March 16, 2014, 04:05:19 AM »
Per person, if we subtract out accommodation, we live on much less than that now in Melbourne.  Our expenses would drop much lower if we weren't both having to travel to, and participate in, professional work environments. 

I don't think it would be a problem for a single (early) retiree to live off that amount, with accommodation paid.

marty998

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Re: Returning to Australia, advice wanted
« Reply #13 on: March 16, 2014, 04:53:12 AM »
My total expenses are about $18k, and that includes interest on my mortgage.

To answer one of your original questions, the tax free threshold was increased in conjunction with the introduction of the previous government's carbon pricing scheme.

The idea was that the way to compensate low income earners was to increase the tax free threshold from 6k to 18.2k but to increase the marginal tax rates above that up to 80k.

The effect was that everyone up to 80k got a tax cut but it was targeted more towards the lower end of the scale. A change from the usual tax cuts which simply change tax brackets and are not as targeted.

Including franking credits and other tax offsets such as low income (LITO), it is possible to earn much more than the tax free threshold and still not pay income tax.

I appreciate the sentiment to try and pay no income tax, but then don't forget about GST, petrol excise, council rates, beer excise, wine equalisation tax, land tax, stamp duty, and then a whole range of levies and fees charged by government agencies.

If you are alive, one way or another the gubbmint will extract its pound of flesh from you.

mustachebros

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Re: Returning to Australia, advice wanted
« Reply #14 on: March 16, 2014, 08:09:50 AM »
Thanks guys.

Marty thanks for the explanation - that would do it. I was tending toward thinking maybe Gillard had a few closet 'stachians in her cabinet but looking again at the budget she pushed through I should have known better.

OK I might have to start a new thread in the Investments section. I have been doing some reading on CGT etc and I seriously don't understand this stuff.

stripey

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Re: Returning to Australia, advice wanted
« Reply #15 on: March 16, 2014, 09:47:24 AM »
Yes certainly possible as a single. I am pretty much at the poverty line (which is $24k) incl. rent in shared accommodation but excl. the very occasional overseas holiday. I consider myself to have a pretty decadent life (donations to charity, eating out, alcohol, car that I actually use)

happy

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Re: Returning to Australia, advice wanted
« Reply #16 on: March 17, 2014, 02:24:02 AM »
Frugal single person with no accommodation costs, yes definitely possible. Most benefits/pensions here are around 20k single person and 30k couple so the govt expects you could survive on that amount including accommodation.

I don't live on that with a family but I projected my retirement expenses once the kids leave home and it came out at 19k.

steveo

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Re: Returning to Australia, advice wanted
« Reply #17 on: March 17, 2014, 04:08:57 AM »
If you are single I say you can live really well on 18k. My family (wife and 3 kids) spend about 38k excluding childcare and mortgage repayments. Our goal is to be able to retire on 25k per year however we will probably end up with more because the 3 kids will probably delay our time getting to FI. I doubt we could spend only 25k with the 3 kids.

Notch

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Re: Returning to Australia, advice wanted
« Reply #18 on: April 02, 2014, 01:23:27 AM »
OP: Definitely. I am a single 24 yr old living on $18,000 including rent.  Still have money for international ski holidays! And even drive to work in my 2006 Kia Rio.

agent_clone

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Re: Returning to Australia, advice wanted
« Reply #19 on: April 02, 2014, 05:37:12 AM »
If you are single, I would say yes, reasonably easily.

As an indication in 2004-mid 2006 during university semester I managed rent in a shared house (always less than $100 pw), food, internet, necessessities such as tooth paste, and utiltities on $350pw.  This was essentially survival rate and did not include things such as clothes.  At the time I felt I would be living in luxury on $250pw.  The student lifestyle however is different to one as an adult.  For an indication Newstart Allowance is a maximum of $510pw for a single non-renter, a number of people would be living/surviving off this.

February 2013 - February 2014 I spent around 30k, inclusive of rent in a share house ($220 pw), petrol for a commute to and from work and moving stuff interstate.  I would consider myself as living a modest but not particularly frugal life.  Unfortunately I am unsure on costs of food in country towns and it may vary town to town.  For example while meat may be cheaper, fresh vegetables and staples such as milk and flour cost more.

From my point of view the main cost of living that has gone up is accomodation particularly if you wish to buy a place.  However if you are in the country the cost of housing would not have gone up as much.  For the Mars Bar Price Index (Some relatives use this as a pocket money indicator for grand kids) they are around $1.90 at the supermarket at the moment I think.

stripey

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Re: Returning to Australia, advice wanted
« Reply #20 on: April 02, 2014, 09:02:05 AM »

 For the Mars Bar Price Index (Some relatives use this as a pocket money indicator for grand kids) they are around $1.90 at the supermarket at the moment I think.

Haven't heard of the Mars Bar Price Index, but I like the concept!!!

Melody

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Re: Returning to Australia, advice wanted
« Reply #21 on: April 05, 2014, 06:32:56 PM »
I'd say yes, easily :)
I spend about $33/k a year, but I'd call this a reasonably luxurious lifestyle (lots of travel, shopping, entertainment, hobbies, nice car doing about 1500km a month) and I pay rent of $10k a year. If I took rent and travel out of my budget I'd be at $18k.
As Happier mentioned you'll likely have "house owner" expenses (as I am assuming you'll pay for any maintenance and rates that come up while you are living in the house), so you'll need to budget a few grand a year for that. You'll also need a car that's easy on fuel (I used to have a Toyota Echo that was great in that respect) and you'll need to put aside some money each year for it's eventual replacement. You may need to also a budget a few hundred a year for new white goods/furniture (you can get these very cheap off gumtree, but in country areas you may have less options). Then you'll need to budget all your week to week stuff. Have a look at some of the Aussie blogs on the forum to get ideas for prices, though as others have mentioned food really could go either way (cheap farmers markets for produce, expensive small IGA for toilet paper and light globes!) Depending how far you are from Sydney/Newcastle/Canberra/Gold Coast it might be worth the odd trip to the city to do a major grocery shop if you combine it with something else you want to do there. My friend who lives in a small town 2 hours from Perth comes to Perth once a month to visit family and stock up her pantry. The savings more than pay for the fuel.