Elizabeth Kerr says ‘playing house’ can be a trap for hopeful homeowners

By Elizabeth Kerr

Dear Elizabeth,

It just doesn’t seem fair. I’m university-educated in my early 30s, living in Mission Bay with my partner. I work for a recruitment company earning $70k plus bonuses located on the edge of the city. I think my expenses are reasonable and I manage to save about $600-800 per month. BUT no matter which way I look at it, I just can’t see how I’m ever going to afford to buy a property. I should be able to buy a home – I’ve done everything right so far – went to Uni, got a job, kept my expenses low. My partner and I are eager to settle down and start a family but I just can’t see how. Every time I read the news it reminds me that our home ownership dreams are slipping out of our reach because properties keep going up in value. We don’t want to move from Auckland because my partner has finally got the job of their dreams. It is really getting us both down.

Sincerely,

Hopeful Homeowner*

Dear Hopeful Homeowner,

You’re a bit whiny and I don’t really believe you when you say you want to buy a property. If you did you’d have figured out a way to save a hell of a lot more of that fabulous salary of yours than a mere $800 a month. (My calculations tell me that before you even earn any bonuses your take-home pay after tax, student loans and kiwisaver is about $900.00 per week).

I can tell from your budget (a word I use loosely in reference to that super-spendy spreadsheet you sent me) that you are clearly living a lifestyle that is inappropriate. Embrace being radically different. Radically different doesn’t just mean using a cheaper brand of toothpaste – it means overhauling your entire lifestyle and editing it to what is absolutely necessary for you. I know you think your expenses are reasonable because it’s not like you’re dripping in designer brands and driving a late model Porsche, but you have fallen into a few spendy traps that aren’t helping you here.

The Playing House Trap

Playing house is what little kids do to keep themselves busy. They set up a house with a sheet, decorate it with their favourite things, host tea parties with their teddy’s and it can keep them amused for ages. When adults play this game they rent a place, buy nice modern furniture, host their friends over to stay in their spare bedrooms and it too will keep them amused for ages. So much so they forget to save a house deposit and then wake up day all disappointed in themselves.

My laws of money dictate that you don’t get to buy a house if you’re already “playing house”. If you’re fully set up inside a rental then it’s likely you are spending money on all that involves and not on saving as much.That spare room you have for the once in a year visit from the parents is all good and handy for when you’re in the dog-box with the other half, but it’s no good for helping to save for a deposit. Give up ‘playing house’ and you will start to see some real savings action.

My suggestion is to sell everything but the bare necessities and your basic bedroom furniture and move into a share flat reducing your rent from $450 per week to just $180 per week.That increases your savings from $800 per month to $1880.00 per month. Cha-ching!

But we couldn’t live with other people. It’s far too small. I have too much stuff”. All those things all might be true. But your stuff does not have any feelings. Your couch will not haunt you if you sell it to some smoking crazy cat owners. Yes, you will have to embrace flatmates and sharing a bathroom – it’s not cosy coupledom – but this is what people do when they are serious savers. Just keep your eye on the home ownership prize and it won’t feel so traumatic.

Petrol and Parking Trap

Wowsers – driving to work and parking each day is costing you a fortune!!! Here’s a thought. Sell the car! If you move into a share house within walking/biking distance of your work you won’t need it.Ta-da – that’s an extra $660 per month in petrol and parking gone and its better for your body. You’re now saving $2450 per month and the money you get from your car goes straight into your deposit stash. That’s over 60% of your take home income saved. Booyah!!! On the rare odd occasion when you really need a vehicle to visit the olds in Cambridge then just hire one for the weekend. It still works out to be cheaper.

I hear you when you say increasing property prices are worrying. But first home buyers are still out there buying their first homes. The road for them to get there was not always paved with parents money; and more likely bloody hard work combined with some financial creativity and extreme frugality over a reasonable long period of time. Quite possibly they are now committed to eating toast for the next six months whilst trawling Trade Me for furniture bargains, but I bet no one can wipe the smile and satisfaction off their faces!!!

I sense that another reason you can’t get your deposit together is that you imagine this new house of yours is going to be your dream home where your 2.5 kids and designer dog will run around in your perfectly manicured grass with the sprinkler on.   Achieving that as your first home is ambitious. It would be more practical to focus on a starter home that suits you right where you are now. Remember a big house can be a big prison as well. The last thing you want to do is save so hard to get the house of your dreams and then find that your lifestyle is still under the pump because you’ve brought too much house and now can’t afford to pursue your other life goals.  

No one ever said it was easy getting their deposit together. But numbers can’t be distorted. Work super hard to get every bonus you’re entitled to and then get vampire on your expenses. Trim back your grocery budget, get creative with cheaper cuts of meat and vege, eat the same foods every week and invite colleagues to bring you their leftovers and offer to babysit their children. Your version of “TGIF Happy Hour” just became “Netflix me”. “Lets catch up for coffee…” just became “…I’ve brought my plunger, I’ll make us one here”; and when it’s your birthday there should be no confusion that you’d really appreciate store vouchers for life’s essentials and cash.  

In closing, Hopeful Homeowner* – I haven’t had to look very hard to find you an extra $2450 per month to save, so I’m sure you can find more if you put your own mind to it.  

And if anyone reading this today knows someone else who is saving for a house deposit, how about flicking them this column with some encouragement to keep at it and offering to drop them over a meal. They are probably well sick of 2min noodles and mince already.

* Hopeful Homeowner is a fictional email loosely based on the many email requests and my responses on this topic.