How to not be average Joe?

[Julia]

Tough one, Tyler. No easy answer there, especially for the Sydney property market.

Lots of Gen Y's today don't want to own a home and are content to rent (the same amount of dead money going out in rent as compared to the interest bill). But it's not always that easy if you have plans to start a family etc. So let's assume by starting this thread you DO want to own a home.

Your one advantage now is you're young (presumably) and you don't have kids (but a better half from time to time). The point here is that you have the advantage of 'roughing it' somewhat.

There are various views about the Sydney housing market but one I read suggested it has (or is starting to) bottom out. That may be so, but I can't see it rising for awhile because the overall economic climate here and overseas is so dull, so you're pretty safe accumulating that deposit for a couple of years yet.

In the late 80's and early 90's when I was in the market for my first home, prices were rising 3 times faster than I could save, so it made sense to jump in quickly.

When I did buy my first home in 1989 (in Canberra), I rented out two rooms and so it wasn't all dead money and I could do up the place a little. From 1989 to when I sold in 1994 it went from $82k to $124k so I'm not expecting capital appreciation like that in the next 5 years. But the point of that is that became my 'base equity' for every home changing experience since then (some good, a couple of really bad ones).

I'm 50 this year and I've decided I have to resolve all remaining debt in the next 5 years as I prepare for retirement. I'm trying to imagine what the last 20-plus years would have looked like without home ownership and I probably would have bought shares in a removalist company. It's a very unsettling experience.

But in this version of my life, I'll have a substantial asset to enable me to downsize in couple of decades' time and a bit also for my kids to get them started. So it's been a worthwhile experience (I'm also a terrible saver and might have frittered it away if it hadn't been in bricks and mortar).

Hope this helps

Great post.

Hell Burnsy that the best you've got to offer.
What every JOE AVERAGE including you think is the way to financial freedom.
Mine came from business/property/trading. Where you get this rant about how good I am comes from has me beat.---- tall poppy syndrome.

In this day and age find something you can become an expert in go into business.
Buy that house with potential ---- do it up and either use the equity or sell and do again. Timing/position and potential are everything.I know a 23 yr old who started this way. Now 30 he builds for profit as well as working full time. He rents one and lives in the other.12 mths later he sells one and lives in the other. 12 mths or so later he sells that and moves into his new one--- rinse and repeat.

He's no JOE AVERAGE.

Another young guy I know sells wine over the net.
Another imports and on sells imports from all over the world.
Both under 30

Not AVERAGE JOE'S

From 2001 to 2007 quite a few ABOVE AVERAGE JOE'S did extremely well.
My results are public knowledge with Techtrader.

So Burnsy
What was it you'd like to add? Errr rant.

Tech, sometimes there's much to be said for being average. I don't expect you will agree. But not everyone needs to feel 'top of the pile' and can do without the stress of competitive and ever-striving environments.

It obviously suits your personality to keep building wealth. Others will be content with less. That doesn't make them lesser human beings.

 

[Julia]

A mate of mine (who's a model and was living in NY at the time) woke up next to Paris Hilton after a pretty big night, not remembering who she was (or likely where he met her) he complimented her by saying "has anyone ever told you, you look like Paris Hilton".

 

[tech/a]

My point was you're expecting everyone to be wheeler and dealer such as yourself and it just doesnt happen the AVERAGE bloke buys a house pays it off and thats where his wealth lies.

I was in real estate agency for 20 years, also developing office buildings, buy refurbish strata and sell.

Building houses living in them for a year then selling is good for builders, no capital gains tax but try it when the market isnt booming you might find it a little more difficult to turn a profit.

So there you go big shot

I maybe wrong but I thought the thread title was
" How NOT to be an average Joe"

Your right about difficulty in a depressed market.
But it's only another difficulty.
If we all had your attitude EVERY builder in Australia
Big and small would be broke or well on the way.
EVERY investor would be out of the market because of
The GFC
They're NOT.

Now your suggestions are???
Ahh I see you don't have anything
Above average to offer.

 

[MrBurns]

I maybe wrong but I thought the thread title was
" How NOT to be an average Joe"

Your right about difficulty in a depressed market.
But it's only another difficulty.
If we all had your attitude EVERY builder in Australia
Big and small would be broke or well on the way.
EVERY investor would be out of the market because of
The GFC
They're NOT.

Now your suggestions are???
Ahh I see you don't have anything
Above average to offer.

Sure glad the help -

Many builders DO go broke because the market proves they aren't brilliant after all , I've seen it .....you may have even experienced it.

They are boneheads who just keep building (badly too often) and dont know when to stop until they find they are overloaded with stock and the bank wants a chat.

The title of the thread is How to not be average Joe but you havent offered anything other than blowing your own trumpet.

Deleted because it was uncalled for

 

[tech/a]

Ok
I'll keep out of It.
Actually thought I was helping out.

 

[MrBurns]

Ok
I'll keep out of It.
Actually thought I was helping out.

Sorry I didn't mean to offend you I was just defending myself, it's very easy for things to go out of whack on internet forums.
I admire those who have a go and win, but as you know the first thing you have to do is have the confidence to actually have a go, many don't realize it's not as hard as it looks and you learn a lot as you go (note to self - I should get back into it)

 

[StumpyPhantom]

A mate of mine (who's a model and was living in NY at the time) woke up next to Paris Hilton after a pretty big night, not remembering who she was (or likely where he met her) he complimented her by saying "has anyone ever told you, you look like Paris Hilton".

Would he recognise his own body parts if it appeared in a video with Paris?

 

[burglar]

... I don't really want that type of life,

John Lennon "Life is what happens to you while you're busy making other plans." ,"Beautiful Boy"

 

[McLovin]

Would he recognise his own body parts if it appeared in a video with Paris?

I think it was strictly sans cameras. He never actually bragged about it, it was only I saw he had someone in his address book called "Paris" and I asked who that was and the story came out.

You should see our pub trivia team, it's like a Victoria's Secret fashion show. And they're not there for their trivia knowledge!

 

[Bill M]

So I was wondering, is there any other way of owning a property without being like every other average person and working the rest of their lives to pay it off?

Yes there is! Mate honestly, been through everything you are thinking right now. I realised that the one thing in life that chews up 50% of your salary is your rent or mortgage. How can I beat that, I thought. My wife and I at the time were DINKS. We just both worked as hard as we could for 5 years, all the O/T and second jobs we could get. We saved our annual leave and took no holidays as long as we legally could. Then one day, bingo, it was all over, mortgage paid. It was done in 5 years. Really even if you have basic jobs, both of you together can make 100k a year these days. It wouldn't take that long to knock a loan on it's head, even in todays $$$.

Sacrifice a few years when you are young in order for a long term, less stressed lifestyle. My wife and I beat the average Joe at a young age, our house was paid off early through plain and simple hard work, not many people talk about that concept these days but it still works.

 

[MrBurns]

I think it was strictly sans cameras. He never actually bragged about it, it was only I saw he had someone in his address book called "Paris" and I asked who that was and the story came out.

You should see our pub trivia team, it's like a Victoria's Secret fashion show. And they're not there for their trivia knowledge!

Epic story though, he can spend the rest of his life telling that one.

 

[MrBurns]

Yes there is! Mate honestly, been through everything you are thinking right now. I realised that the one thing in life that chews up 50% of your salary is your rent or mortgage. How can I beat that, I thought. My wife and I at the time were DINKS. We just both worked as hard as we could for 5 years, all the O/T and second jobs we could get. We saved our annual leave and took no holidays as long as we legally could. Then one day, bingo, it was all over, mortgage paid. It was done in 5 years. Really even if you have basic jobs, both of you together can make 100k a year these days. It wouldn't take that long to knock a loan on it's head, even in todays $$$.

Sacrifice a few years when you are young in order for a long term, less stressed lifestyle. My wife and I beat the average Joe at a young age, our house was paid off early through plain and simple hard work, not many people talk about that concept these days but it still works.

Thats the way to do it unless you're a stock guru or entrepreneur of some sort, most aren't so Bills advice is the best you'll get outside of the winning lottery numbers.

 

[IFocus]

How to not be average Joe?

Make more money........

Move to better employment opportunities, move state, city suburb what ever.

Lower living costs, stop spending money on crap and start spending on your development.

Buy property (acres) in paradise thats not on the radar, Australia's population will only increase. Think about that Australia's population will only increase.

Oh and don't sell at the 1st hint of profit.

As for stocks........ trading will not make you rich ever (if you are on ASF it aint going to happen) but buying top shelf stocks in down turns like the run down 2008 / 09 will make you wealthy over a life time...........BTW 2008 /09 was a generational opportunity.

My

 

[Tyler Durden]

Yes there is! Mate honestly, been through everything you are thinking right now. I realised that the one thing in life that chews up 50% of your salary is your rent or mortgage. How can I beat that, I thought. My wife and I at the time were DINKS. We just both worked as hard as we could for 5 years, all the O/T and second jobs we could get. We saved our annual leave and took no holidays as long as we legally could. Then one day, bingo, it was all over, mortgage paid. It was done in 5 years. Really even if you have basic jobs, both of you together can make 100k a year these days. It wouldn't take that long to knock a loan on it's head, even in todays $$$.

Sacrifice a few years when you are young in order for a long term, less stressed lifestyle. My wife and I beat the average Joe at a young age, our house was paid off early through plain and simple hard work, not many people talk about that concept these days but it still works.

Thanks Bill, guess I'll just put my head down and do the hard yards. I'm turning 30 this year and single, so hopefully I get that raise I've been looking for.

How to not be average Joe?

Make more money........

Move to better employment opportunities, move state, city suburb what ever.

Lower living costs, stop spending money on crap and start spending on your development.

Buy property (acres) in paradise thats not on the radar, Australia's population will only increase. Think about that Australia's population will only increase.

Oh and don't sell at the 1st hint of profit.

As for stocks........ trading will not make you rich ever (if you are on ASF it aint going to happen) but buying top shelf stocks in down turns like the run down 2008 / 09 will make you wealthy over a life time...........BTW 2008 /09 was a generational opportunity.

My

Thanks, yes I'm waiting for another opportunity!!!

 

[Tyler Durden]

Remember the fool rents his house and owns his car.

The smart man owns his house and rents his car.
(well thats mainly for people who can claim car leases as a deduction)

Funny you say that, I have two friends right now who are renting yet looking to buy brand new cars. I've advised them they'd be better off buying a second hand car, but it's like talking to a wall.

 

[Starcraftmazter]

I have this preliminary plan of saving up for a home deposit by accumulating shares throughout the next 2-3 years.

But I am thinking...if I do manage to accumulate a sufficient deposit, I'd be effectively selling my income-generating assets to buy an asset that doesn't generate my income, and then I'd have to spend the next 30 years paying it off.

So I was wondering, is there any other way of owning a property without being like every other average person and working the rest of their lives to pay it off?

Quite correct. Never get rid of income generating assets (shares, etc) for depreciating assets which must also be serviced with interest (property).

When buying a property ask yourself, can you get a better ROI on your money in stocks or whatever other invests you choose to make, then the interest on a mortgage. If so, you would be mad to give up a cent more than is necessary to buy a property. That is, put the smallest deposit you can and invest the rest of your cash. Of course mortgage insurance comes into it as well - but you can likewise calculate the opportunity cost of a bigger deposit versus not having to pay it.


But let's face it - property is for chumps, for people who want to live a life of slavery to the debt of the central banks. With the money you save in 2-3 years, you should be easily covering rent and generating a decent income, so why bother buying property when Australia is past the biggest property bubble in the entire world, and the only direction prices are going to head for at least 1-2 decades is down? Pfft.

Why pay interest on depreciating assets, and be locked into a particular geographical location (and god forbid your neighbours suck)? Why settle for crap quality or have a nightmare mortgage? Why buy a property at all? Rent a higher quality premises that you would otherwise buy and service with interest, live in complete freedom knowing you can easily move anytime, grow your wealth through investment, and laugh at your colleagues drowning in mortgage debt while you have all the opportunities they don't. You can live in a new capital every few years. Hell, you can travel abroad and work in your favourite countries.

When you buy - you are a slave, when you rent - you have all the power.

If you want to invest in property, better do it somewhere like USA where you can easily get double the yields here, with very little downside in prices (in 2-3 years time).


The world is screwed economically - who knows what will happen. Why sign your life away to some bank, not knowing if you will ever be able to fulfil the obligation.

 

[ishakeel]

Interesting thread

 

[wayneL]

When you buy - you are a slave, when you rent - you have all the power.

Not without the security of tenure they have in Europe you don't.

By the way, it's a bit of a stretch to categorize property as a depreciating asset. In fact only the improvements depreciate, the land itself is a potentially appreciating asset.

Even the depreciation on improvements is on the appreciating cost of replacement.

For instance a 240sqm house cost around $25,000 to build in the 80's. Though there is theoretical depreciation and most certainly maintenance costs intervening, the value of such a building (sans land value) would be much higher than the initial cost.

Even if only valued at half replacement cost, that still represents marked appreciation for a purportedly depreciating asset.

 

[Tink]

Tyler, for most people owning their own home is about much more than just the financial implications. It's for that sense of pride of ownership, being able to do what you want with the house and garden, not being at the mercy of a landlord's whims etc.

I've made decent money out of every home I've ever lived in, but I consider that absolutely secondary to the pleasure and security I've had from owning these homes.

Agree Julia.

Great posts here

I really dont understand the concept of people that rent, at least paying a mortgage there is an end.

I have had this conversation with a few people through the years, and it just baffles me, so I say, each to their own.

 

[MrBurns]

But let's face it - property is for chumps, .

A mate of mine has been buying property since the 70's inflation and a couple of re zonings over the years means he's now worth around $20m

He's no chump.

I understand where you're coming from though, all things being perfect and the stars being aligned and if you have the right information you can make a lot of money with shares but for all those who try I'm betting the majority fail.

Generate as much income as you can and pay property off ASAP then do it again, cant fail if you dont over borrow and can service the loan/s.........even in bad times and there will be bad times do be conservative and work like a man possessed.