Author Topic: What to do in late 20's  (Read 4363 times)

Kiwi Mustache

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What to do in late 20's
« on: March 13, 2015, 12:40:32 AM »
My fianc'e and I are both in our mid/late 20's.

We have careers, earn combined $80k per year (in hand after tax), save around $25k of this, don't live extravagant lifestyles, have a house valued around $600k with $200k equity in it and plan to get married in one year and have children in 3-4 years time.

What should we be doing? What did you do when you were in our position? What do you recommend doing the same or different to what you personally did?

We live in Auckland, New Zealand.

hydrangea

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Re: What to do in late 20's
« Reply #1 on: March 13, 2015, 12:53:45 AM »
What's your car situation like? Having grown up in Auckland I know how obsessed everyone is with driving, and it's not unreasonable to jump in the car to go five mins up the road. Plus the public transport is not world class...

Do you both have Kiwisavers?

the lorax

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Re: What to do in late 20's
« Reply #2 on: March 13, 2015, 12:57:08 AM »
If you want to have children in a few years, think about what that might mean with regards to your income and figure out if you will need to save up a cushion/pay off extra on your mortgage so you can still make it work if one of you stays home with the kids.

humblefi

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Re: What to do in late 20's
« Reply #3 on: March 13, 2015, 02:06:26 AM »
My advice is not NZ specific.

You both seem to have a solid financial foundation set already and you are now seeking the next level of goals. Congrats on getting here so early in life!

As a next step, I would define what Financial Independence means to you and your fiance. For example, take a peek here for an example: http://humblefi.com/2014/07/21/what-is-financial-independence-to-me/.

On a non-financial note, please watch this video: https://www.youtube.com/watch?v=k4vzhweOefs This may give you some pointers for your next level of goals.

Hope that helps.

kiwigirls

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Re: What to do in late 20's
« Reply #4 on: March 13, 2015, 02:14:37 AM »
Live on one wage & use the rest of the money to pay down the mortgage, NZ interest rates are high and a 400k mortgage is a killer.  Paying it off as quickly as you can is your key to financial freedom.  Are you interested in retiring early? How interested?  Would you consider taking in  a border/flatmate for a year or two to help with debt repayment?   Would you take a second job in a bar for a year or two to earn extra money?  Life changes dramatically when you have children. These are the years when you have the most disposable income....

Also - make sure you are investing your minimum in Kiwisaver to get employer and government contribution.


KungfuRabbit

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Re: What to do in late 20's
« Reply #5 on: March 13, 2015, 05:52:27 AM »
My biggest piece of advice for your immediate financial future, don't get caught up in the expensive wedding craze!!!!!

Soooo many people get sucked up in all of the pointless expenses that just take away from the real meaning of the day.  Trust me 10 years down the road (or honestly 10 days down the road) paying an extra $2,000 for the name brand dress, $1,000 to hire a limo, $5,000 to get married in some massive fancy place....it's just not worth it.  A lot of "middle class" weddings are $20,000-$30,000 these days, and they can't afford it.  My favorite wedding i ever went to cost under $3,000, and they supplied food and beer to ~300 guests!!!  if your parents were planning on paying for it, or chipping in, ask for a check instead :)

O, and if you aren't engaged yet, same goes for rings, no need to spend $5,000 on a rock.

i don't know anything about NZ real estate, what does $600,000 buy in Auckland?  The most simple rule of thumb in the US for how much how you can afford is 3x your annual salary (before taxes), and of course a mustachian would do their very best to be as below that as possible.  Your before tax money is about $110,000 (unless you are taking more deductions to get to that $80k you cited other than taxes) so you are pretty far above that general rule, and also had an extremely impressive down payment for mid 20s.

2Birds1Stone

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Re: What to do in late 20's
« Reply #6 on: March 13, 2015, 06:49:44 AM »
I would try to bring up that savings rate before you have kids. Living off 50% of your income might seem hard at first, but it will allow you to really pad your stache before the kids arrive, and then with added expenses of children you will likely still be at a higher savings rate than now.

res

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Re: What to do in late 20's
« Reply #7 on: March 13, 2015, 07:14:12 AM »
 We are a couple of years older, and our house is in Wellington not Auckland.
First up, is living in Auckland your long term plan?
If you can handle living elsewhere then you already have a freehold house in most of NZ. I understand that you may have to live in Auckland for a while to earn $ , but do you have to live there after? It would speed things up a lot. We don't plan to live in Wellington forever for the same reason.
As to kids, we found out that one of us could get a expat contract overseas for a few years and we could bank the same on the pay as both of us working in NZ.
So this is what we did,and our son is now six months old with a full time stay at home parent. 
It's hard being away from NZ but it is speeding things up a lot for us.

Good luck

Kiwi Mustache

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Re: What to do in late 20's
« Reply #8 on: March 13, 2015, 12:27:31 PM »
What's your car situation like? Having grown up in Auckland I know how obsessed everyone is with driving, and it's not unreasonable to jump in the car to go five mins up the road. Plus the public transport is not world class...

Do you both have Kiwisavers?

We have two cars.

I cycle to work each day and my partner drives 15mins to work (as the bus doesn't go on her route).

Yes we are both in kiwisaver.

Kiwi Mustache

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Re: What to do in late 20's
« Reply #9 on: March 13, 2015, 12:50:45 PM »
My biggest piece of advice for your immediate financial future, don't get caught up in the expensive wedding craze!!!!!

Soooo many people get sucked up in all of the pointless expenses that just take away from the real meaning of the day.  Trust me 10 years down the road (or honestly 10 days down the road) paying an extra $2,000 for the name brand dress, $1,000 to hire a limo, $5,000 to get married in some massive fancy place....it's just not worth it.  A lot of "middle class" weddings are $20,000-$30,000 these days, and they can't afford it.  My favorite wedding i ever went to cost under $3,000, and they supplied food and beer to ~300 guests!!!  if your parents were planning on paying for it, or chipping in, ask for a check instead :)

O, and if you aren't engaged yet, same goes for rings, no need to spend $5,000 on a rock.

i don't know anything about NZ real estate, what does $600,000 buy in Auckland?  The most simple rule of thumb in the US for how much how you can afford is 3x your annual salary (before taxes), and of course a mustachian would do their very best to be as below that as possible.  Your before tax money is about $110,000 (unless you are taking more deductions to get to that $80k you cited other than taxes) so you are pretty far above that general rule, and also had an extremely impressive down payment for mid 20s.

We spent $500 odd for the wedding ring, I can't believe how tacky the $10,000 looked so we steered well clear of them.

We have a wedding planned for February 2016, we are looking at spending around $11k for this. We looked at hiring places and catering, etc. Family is very important for both of us so we decided the venue and overall atmosphere especially for our parents and grandparents was paramount. Some people on here will say.. What! $11k for one day! What a waste of money! - However, we generally don't splash out on much, we don't buy many consumer goods or go travelling far away. This is something we have talked about cutting down in cost but when we looked at all the alternatives to doing a wedding in Auckland for $5-8k or so, the places for hire and the catering options would have ruined the occasion. So even though we are spending close to 5 months worth of savings for one day, we feel like the payoff is worth the expense.

$600k doesn't buy much in Auckland. We have a two bedroom unit (duplex I think they are called in USA) and we rent out the other room.

I suppose our immediate plans are to pay down the mortgage as quick as we can and leverage the equity to purchase investment properties. Also to plan to go down to one income when we have children for a period of 3-4 years. I should hopefully be on a before tax salary of $65-70k by then.

Kiwi Mustache

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Re: What to do in late 20's
« Reply #10 on: March 13, 2015, 12:53:39 PM »
We are a couple of years older, and our house is in Wellington not Auckland.
First up, is living in Auckland your long term plan?
If you can handle living elsewhere then you already have a freehold house in most of NZ. I understand that you may have to live in Auckland for a while to earn $ , but do you have to live there after? It would speed things up a lot. We don't plan to live in Wellington forever for the same reason.
As to kids, we found out that one of us could get a expat contract overseas for a few years and we could bank the same on the pay as both of us working in NZ.
So this is what we did,and our son is now six months old with a full time stay at home parent. 
It's hard being away from NZ but it is speeding things up a lot for us.

Good luck

Good to see other Kiwi's on here!

Yes living in Auckland is the long term plan. I have turned down job offers in Christchurch recently. We have no intention of living in Wellington and smaller cities aren't our preference.

Do you mean one parent lives in Wellington with the child and the other lives overseas at the same time?

res

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Re: What to do in late 20's
« Reply #11 on: March 13, 2015, 05:57:07 PM »


Do you mean one parent lives in Wellington with the child and the other lives overseas at the same time?

No, we all live together and rent out our Wellington house.
We will be back in Wellington in time for our son to enter NZ schools. And we will both be working again then.