How To Buy Property Without The Bank of Mum and Dad (or a 20% Deposit)

My name's Natasha Bambleett, I'm a proud First Nations woman, and I'm here to acknowledge country. T. Glignan Ganya, Nayana Kakayali and Ben Awaka, Nayana Kakali and Beni Yakarumja, Duminya Gumiga, Duminya Ithawaka, Nidawaman, Daman Imalan, Momobangara, Bama Indian, Nyalanwaka, Ganya Nyakarumja, Wutuna Rana, Helibutiful friends, we gather on the lands of the Aboriginal people, we thank, acknowledge and respect the Aboriginal people's land that we're gathering on today, take pleasure in all the land and respect all that you see. She's on the money podcast, acknowledges culture, country, community and connections, bringing you the tools, knowledge and resources for you to thrive. She's on the money. She's on the money. Hello and welcome to She's on the Money. The podcast that helps you turn big money goals into every day realities. If you've been quietly thinking, "I'm never going to own a home unless I marry rich," or "I win the lottery," my friends, this episode is going to be for you. Because you don't need an inheritance, you don't need a partner, you don't need to earn six figures, and you might not even need to have a whole 20% deposit for your home. What you do need though is a strategy and one that works to your reality. I'm victory divine and you may be wondering, "Well, where's Beck today?" My friends, she's off Galavanting, but don't worry because you are in very good hands. Because today, I am joined by Ms. Jessica Yuchi, who's currently on her own journey to buy a home without the bank of mum and dad. Jess, welcome back to what I would say is your own show. Thank you. At this point, why not? Do you get all that? Any opportunity to make it all about me? Any opportunity for me to get you on the show and talk about property? I feel like works really well because you're the one that's in the nitty-gritty of it at the moment. And I couldn't think of anyone better to do this episode with me because you're not only doing it without the help of your parents, but you're buying solo without the help of your partner as well. So tell me about that. Yeah, so I feel like most people probably know this story by now, but my partner and I were just in very different financial situations. I've been working full time since I was 18. He's been in and out of a few different university courses, kind of figuring out his life path. And so that meant that I had the benefit of time on my side where I've kind of gotten myself into debt, gotten myself out of debt. He moved up a house deposit, done all these journeys. Yeah, before he even really entered the workforce properly full time. So I was in a financial position to purchase and he wasn't. And also I think for me, I really like the idea of having my own asset, the sense of security that that will give me will be really significant. And hopefully, you know, I buy the first house, we live in that together, and then eventually when he's ready, we buy our forever home together. Exactly. And I feel like for those of you who might not have heard, you know, Jess's journey or like what her plan is before, I feel like it just really proves that every single person's path is very different to home ownership, which is why getting clear on your own why is the first tip that I have put on my list for today. You need to know why do you actually want to have a forever home? Jess, you've talked a lot about the importance of having a forever home for security. And like, you know, you want to make sure that you've got your own back or like some people are looking for, you know, a for now home because they want to get their foot in the door all there, you know, foot on the ladder or whatever we're calling it. We need to ask ourselves, is your timeline tired to like specific life goals? Like maybe you want to start a family in like five years or you're planning to move into the country. You need to ask yourself, are you in it for capital growth? Like are you looking at this as an investment? Is this an asset class? So should we be looking at potentially rent-vesting instead? Like if that's the case, where can we get the biggest bang for our buck? And are you only considering it? And this is a big one. Are you only considering home ownership because society has been telling you that that's a good idea and something that you should do? Like I know growing up a part of my like narrative that I'd made up in my head. By the way, I was probably going to be married. I would have had two kids by the time I was 25 in my head right because like 25, oh my god, so old, yes. And I would have owned my own home. But that's because ingrained in me was the great Australian dream. Everyone does that, right? It's kind of like a ride of passage. Yeah. And that's not the reality anymore. So I think we really need to think about our goals because yeah, buying a home's massive. But it doesn't mean it's always going to put you in the best possible financial position. Like I've done so many projections when I was a financial advisor for clients that said, actually, you're in a better financial position long term if you just keep renting and we invest this money somewhere else or we do something else because they were like, oh, V, I don't actually care about this. And I was like, right, well, in that case, let's look at all of our options. So it's important to understand your why because from my perspective, that is going to shape literally everything that you do. It's going to shape your timeline. It's going to shape your budget. It's going to shape the strategy that you implement. Where we're buying, what that actually looks like. Jess, you are so Taipei. And I love it. But that means that you have some very specific property goals. Like you were talking yesterday about this potential block of land that you're going to buy. And you were like, look, I did tell them that I would have either a Easter or West facing, but nothing else. I was like, oh, my God, you are so specific. So tell me, what are your property goals? So it's not going to be forever home because I'm very, you know, aware of the fact that buying by myself, I only have so much money available to me, right? And so unfortunately, that means I can't build my ultimate dream home, which is okay. So I am really, I've kind of done a lot of work on what are my non-negotiables, what am I not willing to compromise on versus what am I happy to compromise on? For me, orientation of the block is a big one because I freelance in content creation. You know, it's also just a big thing for my mood to someone who suffers from SAD. So it's having as much light in there as possible is a really big thing for me. And Eastern West are the two optimal positions where I was in West, wasn't I? Yeah, good memory. High ceilings I've said before is another one because I am going to have to buy a smaller block that fits within my budget. High ceilings makes the space feel bigger. Yeah, it's more likely in that sort of thing. And the other thing that I was looking at a lot is I'm looking in a really specific area. It's the area that I currently live location-wise, it could not be more ideal for my lifestyle, but there's also, from my perspective, really good opportunity for capital growth because of the location it's in. And you're getting lots of infrastructure in that area in the next channel as well. Exactly right. So I think without getting too specific because I don't want to give away, hopefully, what was the address you were looking at? But there's lots of things happening that I think will make it really appealing to potential buyers in the future when I do eventually move on from the property. So you've got to have a think about how you're going to pitch this to somebody else. If you were selling their property, is it close to schools? Is it close to public transport? What does that actually look like? Because sometimes we can get our heart set on something, right? We've got this client at the moment who is trying to sell a property to move into their next one, but they bought their dream home in the country, stunning, but really niche, and it's been on the market for two years. So it's been really hard for them to sell. And like, that's okay, we kind of anticipated this, but what does that look like for you? Is that something that you're going to have to consider? And I guess once you've got your like, why am I buying what would that actually look like? I think that's, you know, where we actually do have to do the zoom out and we do have to do the what I'm going to call like a market reality check. You need to know what your goal is actually going to cost you. Because like, Jess, I think if I sat you down maybe like even five years ago when we started talking about like you saving your home deposit, we probably had these really big wish list of things that we want. Yeah, I want a really big block. I want a really big house like all these things that I think we all really want, but that doesn't mean that that's going to be our reality. That doesn't mean that that's what we're going to be able to afford. So what we want to do is get super familiar, not just with the area, but with the market. And this isn't just about like doom scrolling because I doom scroll, we really stay calm today. Yeah, I don't know about you at midnight with a glass of wine. It's about let's look at what our goals are going to cost us. Let's look at very clean, sold prices, not asking prices. What is property moving for? If you're in it for an investment or capital growth, I want you to start learning what makes a good property investment. If you don't know, you need to know. We're not buying an investment property without understanding what rental yield is, what it looks like for capital growth, what it looks like for, you know, tenancy. What does that, how much is that going to cost you? If you're going to pay a real estate agent to manage your property, how much is that? Do you understand what is gentrification potential? Are you buying in an area a bit like Jess, where you know that in the next 10 years, there's going to be new schools, another hospital, things popping up and you go, okay, cool. I can see how this might become a little bit more expensive. And Jess, you and I actually did another episode recently. And we'll put a link in the show note to the episode about how to find your dream property. And this is going to sound like a little bit like I'm being a downer and I don't mean that. But like, we don't just have to look at the property. We actually have to get really, really about our own numbers as well. Jess, when you were starting to work out, okay, I want to buy. What did you do to work out what you could afford? I mean, speaking to a broker, it's probably the most obvious. They're going to be able to do it. I think so, but like, what else? Yeah. Doing a detailed budget, I think, is a really good you need to understand what are your bare bones, living expenses. Like, what does it cost you to exist? Because at the most extreme that you can cut back to, I think, because we've seen over the last maybe four years, there's been so many ups and downs with interest rates and, you know, at its peak, there were people who were having to sell because they couldn't afford to live their life and make their mortgage repayments. So having a really clear understanding of your budget, what you're spending, what can you realistically pay towards a mortgage? And what could you comfortably pay to? Because just because you can live off that bare bones doesn't mean that you want to do that for the next, you know, 10, 15, 20 years. Yeah, because like, you could be, when you said before, talk to a mortgage broker, but you could sit down and talk to a mortgage broker and they might go, okay, Jess, well, you can borrow $800,000 and you might go, oh, well, that's fantastic, but I've kind of done my budget and I don't really want to afford the repayments on $800,000. Like, my lifestyle looks more like $600,000. And I think it can be really exciting talking to a broker because you go, oh my god, I didn't realise I could borrow so much and that sometimes happens and then you need to be really real. Do you actually want to borrow that amount? Because, you know, the bank might say, Jessica Rickey, you can borrow a million dollars. That must be very nice. But, no, but the repayments on that would be co-pulling and it would take up all of your income and you wouldn't have any lifestyle. And as much as I think we are so happy to, I don't know, scrimp and save when we're getting our deposit, do you want that to be the reality for the next 30 years as well? Like, I feel like we just want to get our deposit and like, we're willing to make a million sacrifices. But then, once you are in the house, are you actually happy now you're here and now we've achieved the goal to just eat two-minute noodles every Friday night because we can't afford anything else? Yeah, do you want to put furniture in the house all those things? No, you don't need furniture. We've got no creaks. We can sit on the ground. So it's, yeah, understanding that, understanding your borrowing, capacity and two, because depending on your circumstances, just because I can save $3,500 a month doesn't mean that a bank will necessarily learn me a mortgage that would be $3,500 returns. So understanding what that borrowing capacity is. And it looks really disappointing too. Absolutely. And so, you know, there's schemes and grants and things which is, I guess, where your broker comes in to kind of help you look at all of the options, understand your serviceability and also, you know, checking in on all of your just other financial health stuff. Do you have debt that you want to pay down because that might increase your borrowing capacity? Do you have day-to-day spending or a credit score that you need to improve because by improving your credit score, you might increase what you can borrow from a bank? Lots of little things, but I would say talking to a broker is probably the cleanest easiest way because they can be really holistic in the way they approach it with you. Yeah, I don't think this is going to surprise anybody, but as an ex-financial advisor when my husband and I were sitting down to work out, what we could borrow for our first timely, we'd worked it out. We'd spoken to a broker because even though I own a mortgage brokerage, I don't do it myself. I actually have one of our brokers do the work for me because I'm like, I don't want to just, you know, do it myself and then mess it up there better at it. They told me I could borrow more than what Steve and I had, like, quote, budgeted per month for our repayments, which was a nice position to be in, but we didn't want to do that because we had plans to have a family. We had plans to have a wedding. We had like all these other things that I was like, so it's not a debt, like, you know, it's not a repayment now, but like, what would it look like if we had a baby? Yeah. Do we want to be able to live off one income still? Like, you know, what would maternity leave look like? What would maternity leave? Do you know what I mean? Like, there were just lots of conversations to be had and it can be, I don't know, boring and confronting, but like, do all of that. So you're putting yourself in the best possible position. So just next step, we're going to be aligning our goals with being realistic. So I guess we've been kind of like hinting towards that. Like, oh, you can borrow a million dollars, but maybe you shouldn't. Yeah. If your numbers don't line up with the dream, so like, you go to a mortgage broker and you've in your head been like, okay, cool. I've saved 20% of a million dollar mortgage, which some people do, right? So that would be $200,000 to save $200,000. My goodness, that is so much money. Like, one, quite unrelatable. Please don't come at me for that. But like, quite unrelatable. But like, let's say you've done that because you and your partner, you've sat down, Jess and I always sat down. We're like, we're going to do this. We can sacrifice and scrimp and save. We get to that $200,000 mark. And then we go see a broker and they go, that's great. We could lend you, we could lend you $800,000. No, no, no, I've got a 20% deposit for a million dollar home. And they go, no, no, no, even though you have that deposit, it's not just the 20%. It's like, we looked at your incomes and with your incomes, you can only service $800,000. So I think for me, that's where you want to have conversations earlier around, well, what would our budget be? What does our service ability look like? Like, what would, if we had 20%, what would the bank lend us? Now, it can be heartbreaking. And that's why I'm like, hey, here, can we work that out early so that you don't save a full 200? And this is obviously unrealistic. But like, you know what I'm getting at. You don't save 200 grand and then go to the bank and be like, knock, knock and they go, bye, we're shot. You need to make sure that if your numbers aren't aligning with your dreams, we can either adjust our dream or build a bridge to get there. So if your dream suburb is like out of reach and you still want to buy property, could we potentially rent best? You could go live in the suburb, but we could buy a property somewhere else and lease it out. So we're still on the property ladder. Are we looking at a suburb that is maybe a little bit further out and is cheaper, but still gives you the lifestyle that you're looking for? Would we look at maybe lower priced properties so that we could access government schemes? Because on these government schemes, like the first homeowners grant, they are capped. Different states and territories have different amounts, but they are capped. So do we realign to just buying under that so that we still like kind of slip into having some, you know? Some nice subsidies. We don't have to pay our stamp duty or we might get a little bonus. And then once we're happy, we can talk about moving on to having a strategy. Because it's so nice to have dreams of plans and conversations like this, Jess, but then we need to get into strategy. And you and I are going to do that right after this break. All right, Jess, we are back. And I don't know if this is the juicy stuff or the boring stuff, but I'm going to get into it. And that is the strategy. Jess, I want to ask, how did you work out your deposit strategy? So I kind of did the math, shocking for me as someone who hates math, but you've got to do it. You've got to do what you've got to do. Absolutely. So you kind of got to work backwards. You've got to do all that pre-work that we were talking about before. Do your research, figure out what you can borrow, look at what is achievable for you in terms of what more you do want to take on, and then go, okay, well, what deposit do I need? Are there any schemes that I qualify for? You know, there's the schemes that allow you to purchase with a 10% deposit instead of a 20, and still avoid LMI. There are all of these different options that may or may not be available to you. But you don't necessarily have to have that traditional 20% deposit. So work out what kind of deposit you would need, and then work backwards from there. So if you want to buy in the next two years, but you can't save your deposit in that time, you're, okay, well, we might need to readjust that timeline. Like, we need to be realistic, because especially in this cost of living crisis, you can only work with what you've got. And so sometimes that does mean exactly like me. Like, you've just got to push the timeline out and keep looking and keep saving. I would also say, remember to factor in the upfront cost. Yeah, and that they're so hard, because sometimes if you've gotten so far down the process, you're like, wait, what? There are so many, I don't want to say hidden, because they're not hidden, but costs that you don't consider. So if you don't qualify for a stamp duty exemption, stamp duty is so much money. Conveying, getting people to review contracts, building and pest inspection costs, moving costs. So moving costs get me, because like you forget, and then you've spent all your money on your stamp duty, and like you've paid your conveyance, and then settle when it happens. And you're like, I'm so excited. And then you go, oh, get a quote for a moving vehicle. You're like, what do you mean that's $1,000? It's so exciting. What do you mean? So on top of your deposit to just pay for the house, you also need to lump some of cash to help get you across the line with all of those other things too. A broker will do that for you. So a broker is always going to give you a little budget that says, okay, call this is what stamp duty on that property would look like, conveyance in costs inspections. Like they will absolutely let you know. So if you're worried about like, oh, what have I not taken into consideration, your broker's going to know? Yeah, and they should be able to talk you through what all of that looks like. And then once we've got those two kind of things, once we know how much of a deposit we will need to get into the property and what our timeline looks like, you pretty much just dividing it, right? You're going, okay, well, I need extra deposit. Let's say I need the $200,000 and I want to do it in two years. How much do I need to save him up? And then you might go, oh, my God, $200,000 in two years is kind of insane. And that's actually not going to happen for you. And then we readjust the timeline. So we've got to work out what's practical for you. I think having said a really sick goal too, because it's easy and good to go. Oh, I can say. 75% might income no problems. If you're doing that for five years, it can be really tough if you have to constantly be making sacrifices. So think about what's doable for you, what works with your lifestyle, with your budgeted spending, for just existing in the world. Yeah. Because I think as well, because it can take so long now to save it to posit. If you're not realistic with yourself, it can be really disheartening and it can feel like you're just swimming up your constantly. And that's why I keep saying things like, oh, I don't need to be a downer, but because I need to be realistic. Yeah. But it can feel like trash. Absolutely. So set yourself up for success. And if we can shorten that timeline great, but I think give yourself some room to breathe to get 100%. And I think we always think about the destination and forget that maybe we should enjoy the journey as well. Oh, yeah. I would much prefer it to take you another year, but you've had like a banger of a few years, as opposed to you've scrimped and saved and you feel like you're just drowning. Like, that's not fun for anybody. And I guess the good news is once you've done all of those hard parts and you've built the plan, there are ways to speed it up. So let's have a chat about how you could potentially turbocharge your saving strategy and then get there sooner. So should we say, I guess, let's start with like my favorite mouthful, which is the first time super save this game. Just rolls off the tongue. Jess, you've kept that out. You've maxed out your first tone super save a scheme. Can you tell us how you did that? What did that look like? Why did you do that? Well, I did it because you told me to. No, no, no, sorry. Backtrack, I am an ex financial advisor. I would never give you that advice, Jessica. No, I mean, I showed you it and you said, wow, that's such a good idea. I off my own back would absolutely love to do that, Victoria. Exactly right. But it is a really great scheme. So it allows you to put your money into your superannuation fund and take advantage of the tax rate that exists within Super. So that's 15% and most people listening to this podcast are going to have a 30% tax rate. So that's half off. Correct. Money win. Is that basically like legal money laundering? I think so. Potentially. It's really nice. I made post tax contributions. So because my money had already been taxed before it got paid to me, I would just transfer from my bank account into my superannuation fund. Yeah. And at tax time, I would let my account know what you can put it in when you do your tax on my gov. And I would then get 15% of that money back, which was it felt like free money. It does feel like free money because that's kind of what it is. Yeah. So it's kind of for savings. You're paying potentially 50% or more less tax on, you know, the money that you're getting, you can put a maximum of 15,000 dollars in per financial year, and you can contribute up to a total amount of 50,000 dollars. So if you wanted to, you could contribute. So you're like rich rich, you've got like 50,000 dollars sitting your first time. So it's really great because you can also withdraw 100% of the non-conventional contributions, the money you put in, but also 85% of the associated earnings. So it's been there a while and it's just been banking up and maybe we got like a 10% return last year on the Australian share market. Where's that going, Jess? Your back pocket. It's going right into my house deposit fund and it is saying thank you so much. We needed that little boost. So I would really recommend looking into it. We've said before if you're planning on purchasing soon, look at the timeline in terms of financial year because the contribution is per financial year. Theoretically, you could contribute, you know, once in June and then once in July. Yeah. Technically. And I mean, this is going to drop after that. I mean, it's July now while we're recording this, but if you're planning on buying next July, at the end of July, you could drop it in now and then wait and then drop it in in July and then pull it straight back out. But we can't give tax advice. We definitely can't, but if we're keeping in mind because I think that like that gives you such a huge advantage because that's 15% more that you could just put straight back into your fund. 100%. And I think just the idea that it's out of sight, out of mind is also quite helpful for first home buyers because I don't know about you. No, actually, I do know about you. I know you wouldn't do this, but I personally, I'm really good at dipping into my savings if they're easily accessible. It's kind of like them being locked away so that you can't touch your home deposit, which feels really nice. And I mean, for most of us, saving $15,000 a year is honestly capping out what we can save. So like, yes, there's caps on how much you can contribute per financial year. And I remember talking to you, not giving your advice, but talking to you about your options with the first home super saver scheme. And you'd actually saved up a heap in your bank account. Yeah. And so you were making lump some contributions and kind of like taking the money you'd already saved, popping it into the first home super saver scheme to then get the tax back at a later date, which ended up being a money win. And I think a lot of people think, oh, well, I didn't use it from the start. No, you can just use it now. Like, I think that's the benefit of it as well. I totally agree. Now the next one gets a bit of a bad rap. And I know that a lot of people really want to avoid it. I'm also one of those people I'm not going to lie to you. But for everyone at home, can you explain a little bit about LMI? Okay. So LMI is something that our community seem to think is the devil. And I would like to let you know that it is a really good tool in some aspects or for some people. It stands for lenders mortgage insurance. And it's an insurance that you pay that has nothing to do with protecting you, Jess. Doesn't protect you at all, which is why I think a lot of people hate the idea of it because if you pay LMI, you are protecting the bank not yourself. And the reason you're paying that is it's an insurance that the bank says you don't have a full 20% deposit Jessica. So because you don't get any LMI waivers, there's no benefits here. We're going to make you take out this insurance and you're going to pay for this insurance because if you can't pay for your home loan, the insurer will. And that's a good deal for us. But you're the one that kind of pays for the insurance on behalf of the bank. Now in Australia, LMI is usually payable and there's lots of exemptions. But LMI is usually payable if your deposit on your first home or any home is less than 20% of the property price. So the amount is going to be really dependent on your deposit amount to the property price, your loan provider. And yes, you'll pay more. But let's go back, Jess. And like hopefully maybe reframe LMI. So you hate LMI. I know you do because you don't want to pay for something useless and I totally get that. But if I set you down and said, OK, Jess, you can purchase three years ago because you only have 10% of the deposit. And then you'll have to pay. And then this goes on to your mortgage so you don't have to have this in savings an extra $10,000. And you can purchase today. Tell me whether you would have taken that up three years ago given the property price increases in your area. Yeah. I mean, hindsight's 2020, right? Like you can look at and go, oh, wow, the growth has been crazy over the past few years. But yeah, it definitely can be worth it. I think it's going to be the difference between that time in the market and potentially avoiding such significant increases. And I think that that's where we need to frame it. Like obviously we don't want to pay for things that are unnecessary. But often LMI is a tool that you can use and pay for to get into the market sooner when you don't have the full deposit. Like if you've only got 10%, you're like, oh, getting to this 20%, like I've now a maternity leave or you know, my partners job changed or I want to do something all, you know, we want to get married. So like now we're saving for a home deposit and a wedding. We have a 10% deposit though or we have a 5% deposit and we need to talk to a mortgage broker. Maybe paying LMI gets you ahead. And I think with the astronomical amount that property has been increasing for a lot of our clients when we do projections, paying LMI actually makes a lot of sense for them. But I totally get not wanting to pay for an insurance that one doesn't benefit you. But too just feels like another bloody cost. Totally. Yeah. So yes, sometimes it is cheaper to pay LMI now and get into the market sooner and start building equity. And I guess that's where I'm not saying, oh, it means that blanket is good for everybody. It's not. You need to talk to your mortgage broker and then they'll like mock up a few scenarios for you to go, okay, cool. This looks like this or this looks like that. Now, Jess, do you have any other hacks or tips or tricks for getting our deposit? Yeah, totally. I think automating your savings, paying yourself first and being really strict in the four. It is hard. But you kind of have to go, okay, if we're doing this, we're doing it. In the four years that I've been saving my house deposit, I have not, like if you look at the bank account that my deposit is saved in, there is not a single withdrawal in that four years. Okay, little misflex. And she never comes out. Like in my mind, and that's where having a really clear budgeted decision in place really benefits you. Like some months I might contribute more than others. And you can automate that. Just drop the eye. So automating is a really great way using a high interest savings account too. If you can to take, you know, get what you want. Exactly. If I look at the interest that comes into my account, every month, the bulk of it comes from my house deposit. And that's lovely because then I just chuck that in there too. It's very nice. 100% that must be nice. And if you ask someone who's tempted to touch your savings, you need to add some kind of friction to prevent yourself from doing that. So is it having a completely separate bank from, you know, your existing? Is it a bank account that you can lock? Is it something that requires double authentication or a password or just something that will stop you from going, oh, I need quick money now. Where can I take you? - You are not taking him from your home deposit. - The money goes in there to die. - That's future you. - Yeah. - That's future you. Do not steal from her. - Exactly right. - The other thing, Jess, that you and I talk a lot about is lifestyle creep and I hate it. Because I feel like over time, life just gets more expensive because I think in my head I deserve nicer stuff to go to nicer restaurants to buy more expensive makeup. We're shopping at different, more higher end stores. I'm not saying that's a bad thing, but doing a little bit of a lifestyle audit can be really helpful. Like if you are a Jessica Richie, you want to save your deposit as aggressively as possible. Like let's have a look at some scenarios. If you're like, I'm gonna crack down for 12 months. Could you live somewhere cheaper? Like if you rent an apartment, could you maybe live in a house for 12 months? Could you actually use your car? Could you sell your car and go car free even for 12 months 'cause you're gonna save money on petrol. You're gonna save money on red joy and insurance. Like there are heap of benefits there. You could pick up a car in 12 months. Like what would that look like? What other expenses are you able to cut? I'm not saying you have to get rid of every single subscription. 'Cause for me, it's about the journey. But like go, what are you spending money on that maybe you don't need to for a little while? Because sometimes I think when we're cutting things from our budget, we go, oh my God, no. I'll want that in the future. Okay, but like we could cut it right now, save some money and you can have it later. And I guess the other thing is serviceability, which is how much money the bank is gonna be able to lend you. One of the things that can really play into that and really play into turbo charging your ability to get to the deposit amount you want, how could we increase our income? Can you talk to your boss about a pay rise? Could you be switching jobs for better pay? Could you pick up like a side gig or a side hustle? Is there something that you could do or make on your own that you could sell or rent out? Like Jess is the queen of side hustles. Not only do you have your own little content creation thing on the side, you also rent dresses out, you're selling everything on bloody market. Like you are the golden child for a side hustle. And I love it. But Jess, what are some things that you've actually sacrificed to increase your deposit? - I think a lot of it has been, yeah, very much lifestyle things. Like we only get to be reborn now. - I honestly, well I know it. But you take out once a week, you know, I talk a lot about being circular. So like I still want to buy a new clothes, but if I want to buy a new clothing, I sell old ones. So it's, I'm not necessarily spending more money. Shopping secondhand is such a big thing. Like I can do things more affordably. So like yes, I'm giving up that instantaneous culture of going in and buying the newest, latest, whatever. But I think it's maybe a much more conscious consumer. Also, when we've had to make adjustments for cost of living, you know, I have reduced the amount of money that I invest, which I don't love. But with money going not as far these days, you kind of have to pick something to prioritize. And for me right now that has been my house deposit. I'm still investing, but I'm not investing as much as I used to. And like yeah, that does suck. Honestly, there's no two ways. - But it comes into strategy, right? - That's what sacrifice is. - Exactly. And you would have had to weigh up, okay, cool. Like I could still invest the same amount into my investments, but it's just going to take me a bit longer to buy house. Or I could flip it around and sacrifice my investments for now and still be able to buy on my timeline. And that's more important to you. - Yeah. - And strategy isn't just about what's best quote on paper. But also like what do you want? What do you want to achieve? What do you want your lifestyle to look like? And you've made decisions based on that. And I think that that's the most important thing. - The Segway of all, Segway as my I just say. Something people ask us a lot when we're talking about saving up your house deposit is, should I invest my house deposit? Oh, that's it. That's it. That's the end of the show. Do not invest your house deposit. Why? Because you don't know what the market is doing. And we want to make sure that we are investing for the long term. Like I am not a penny stock trader. I am not somebody who invests in things because I'm hoping it increases by 100% in one year. Like low and slow. Like I want to be rich AF. I don't think that's a secret. - Do we all? - Exactly. But like my plan is going to work because it's low and slow consistently over the long term. I'm investing into some relatively boring things. You guys know most of my shares are in ETFs and I'm picking really boring managed funds. But your performance over the last 10 years has been more than 20% because of that. And that's not actually reflective of the market. That's just reflective of my personal portfolio. But it means, and because the average rate of return of the Australian share market over the last 30 years is sitting at about 9% and all time it's sitting at about 11%. But I think it is so important because over that time, my share portfolio has gone down. And if I had plans to purchase that year, I'm sorry I wouldn't have been able to because my portfolio would have been down by 11%. - Yeah. - And I've therefore got 11% less as a deposit. And so should you invest your deposit? No, that's why we recommend and talk to you about high interest savings accounts because you're usually not saving a house deposit for more than 10 years. - Yeah. - All right Jess, I feel like that's probably a very good place to leave it. Hopefully this chat has made buying a property feel a little bit more within reach and even if you're doing it solo, my friends you're not alone. We are right here cheering you on. And if you want a little bit more support, as it turns out, this is literally my job day in, day out. So if you've been meaning to talk to a mortgage broker and you want one, that's basically like Jess and I, a bestie on your team. I will put all the information to my business cellar money in the show notes. But Jess, thanks for doing this little property episode with me, it's been good. - Anytime. - Thanks for having me. - And guys, if you loved this episode, please make sure that you follow the show, leave us a review and share it with somebody else who's dreaming of getting into the property market. And if you want more episodes just like this, let us know in the comments 'cause guys we are always watching and we are always listening. Have a good week guys, bye. - Bye. (upbeat music) - The advice shared on She's on the Money is generally nature and does not consider your individual circumstances. She's on the Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs. Victoria Devine and She's on the Money are authorized representatives of Money Shaper, PTY, LTD, ABN, 321, 649, 27708, AFSL, 451, 289. (upbeat music)