She's On The Money - MONEY DIARIES: The Art Of Calculated Risk-taking

Episode Date: August 13, 2023

What's your tolerance for risk? Well, this Money Diarist bought a $1.5m home (sight unseen) in her dream suburb with her partner, then rented it because they couldn’t yet afford to live in it. Like the rest of us, with their repayments increasing, her partner also just took a $50k pay cut. But in spite of this, they are about to move in, and she wants to share her story of calculated risk taking with the community! Oh and she's FULL of smart budgeting tips too, so don't miss this episode! Acknowledgement of Country By Natarsha Bamblett aka Queen Acknowledgements. The advice shared on She's On The Money is general in 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 authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708,  AFSL - 451289.See omnystudio.com/listener for privacy information.

Hello, my name is Natasha Nabanunga-Bamblett. I'm a proud Yorta Yorta, Kernai, Wolperi and Awadjeri woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on Awadjeri country, acknowledging the elders, the ancestors and the next generation coming through. As this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow. Let's get into it. She's on the money.

She's on the money. Hello and welcome to She's On The Money, the podcast for millennials who want financial freedom. Welcome back to another one of our money diaries where I get the absolute pleasure of talking to one of our incredible She's On The Money community members all about their journey. Let's jump straight into it because this week I got a message and it went like this. Hi V, I'd like to share my property story as in amongst my friendship group, my partner and I are definitely on the more risky side of things. We bought our $1.5 million home in our dream suburb, then rented it because we couldn't afford to live in it. Earlier this year,

my partner took a $50,000 pay cut and like everyone else, our repayments are increasing. We're about to move in and I want to share my story of calculated risk taking with the community. Money Diarist, I'm so excited about this. That's a really good summary actually. I mean, it's not bad, is it? You wrote it, so I'm pretty proud of it. My bad, though. I'm really excited to hear about your story because I feel like in this day and age, with the property prices increasing in the way that they are, $1.5 million is kind of becoming the norm for a family home. And it's also becoming really overwhelming. Like to me,

that sounds like just so, so, so much money, but let's get into it. Are you ready? Yes, I'm ready. All right, Money Diarist, the first question I always start with is, if I asked you to grade yourself and your money habits on a scale of A through to F, what would you grade yourself? I think I would grade myself a B plus. B plus? She's got a $1.5 million home, guys, and she's a B plus. All right, all right, I'll sit down. My favorite question, as always, let's dive straight into it. Money Diarist, can you tell me a little bit more about your money story? I suppose, like everyone, my money story would go back all the way to childhood. I had a pretty unconventional childhood. My biological parents, they split up when I was around four

years old and my mum remarried at that time and she sort of quit her career and joined my stepdad in a property development business which like many of the property development businesses out there went pretty much belly up everything was in her name and she declared bankruptcy she had to you know pull money out of super for financial hardship reasons and we didn't really have a stable family home we always lived in the same area but we had to move around a lot four or five times to different rentals then my mum had to go back to work and she completely changed careers at that point and my stepdad he he's a bit unconventional he never really believed in a and Honest Day's work. I mean, ever since then has been trying to sort of make it in quotes

in sort of like get rich quick schemes. And basically their situation hasn't really improved. My mom still doesn't really have any assets. Her rent to this day is going up $180 a week. So I guess that's where my money story begins because I never want to be in that situation. I want to create something for the future, assets for the future. And yeah, I never want to be left with nothing. Oh, wow. When you started to say, oh, my stepdad and my mom started this property development company, like my mind was going one way and it completely went the opposite.

Do you think that this narrative has really, I guess, driven you to want to be in property just because of the stability and the security or has it made you want to shy away like what's your thoughts on property especially after going through that during childhood yeah so in terms of property most of the people I know have bought a home before I did it was never really my my goal to get a property as soon as possible or anything like that but I think there was that instability of the business that they were in that has sort of made me a bit shy towards debt. But there was also the fact that my family home when I was young is just gone. That makes me want to secure something like that, to buy something like that so that, you know, if I ever had a kid,

I don't have to move my kid around to lots of various rentals and suffer the consequences, you know? Yeah. Wow. All right. Let's fast forward. You now have a partner. Can you tell me a little bit about that how did you meet your partner how did you decide property was the plan what's going on there I want to know meeting my partner so I met my partner on a dating app same babe same not the same as your one I met my partner on plenty of fish oh how exciting and then did you just know you just matched and you knew or like what's the story come on we need the juicy goss so we started messaging for a few weeks on plenty of fish and then we had our first date it wasn't the sort of date where you just want to have dinner and then part ways and then leave and

see you next time we wanted to you know keep going for a walk we wanted to find coffee and and all that so it was sort of the one where you stretched it out yes we stretched it out and he dropped me home and then I think at first he was a bit more keen than I was and he started meeting me for lunches when I worked in the city and then it went really fast from there basically but we we tried to keep it traditional so to speak and we waited a whole year before moving in together but as soon as that one year mark crossed it was a free-for-all yeah and then you a few years later. Now we've got the dog in the house. So how exciting. I love this so much for you. It's actually really, really fun to hear about, I guess, how people met and what's going

on. And I think it's so much more common these days to be like, oh yeah, met my partner on the dating website. I mean, I met my partner years ago and I remember at the time being so embarrassed that I'd met him on a dating website. Now I couldn't care less. But at the time I remember being like, what am I going to tell my parents that I was on a dating website? Like, oh, I don't know yeah I mean that's the thing I never would have met my partner if I didn't go on this dating website because we lived on different sides of town at the time we don't run in the same circle so yeah it was a really good thing that we both went on this dating app I love it all right tell me a little bit more about you what do you do for work and how much money do you earn yes so I'm an

accountant, a manager level, and I work from home full-time and I earn $109,000 plus super. Very nice. And what are you currently working towards? Obviously, you've already bought your $1.5 million dream home in your dream suburb. What's next? So we're not married yet. We're not engaged yet either. I think that's what I would like to come next and then maybe a little bit down the tracks and children but we as a couple we want to sort out our finances first so yeah at the moment it's a little bit hard to try and put aside money for a wedding and a ring I mean I know the guy is supposed to buy the ring but in reality if he buys the ring then it comes out of our shared pool of money you know at the end of the

days. So it's still something that both of us have to think about. But yeah, I mean, I think like big, big term, long-term goals, I'd want the, you know, like the white picket fence life with the dog and the house and the two holidays a year, one's overseas and all that. That's what I want. I love that. And what is your partner's take on this? Is he totally on board with the marriage engagement ring side of thing? Or is this something that you're like, you know what, I'd really like this, but he has no idea. No, we talk about it all the time. Oh, good.

We talk about it all the time. He's on the same page. Oh, good. How exciting. All right, let's go to a really quick break because I have heaps more questions and we'll get to them in a hot minute. All right, Money Diarist, we are back. And I want to know, you've bought a $1.5 million property, but do you have any investments?

I do. So I have about $15,000 worth of shares and ETFs and I've got my super balance, which is currently $83,000. Oh, very nice. And that's really it for investments. We cleared most of our investments to pay for the property last year. Very, very fair. Tell me a bit more about the $15,000 you have in shares. How did you pick the shares and ETFs that you hold? And like, what was your kind of like gateway into investing? So my gateway into investing was probably just talking about it a little bit. So my dad, my biological dad, which he did move overseas when I was little, but he came back to have a relationship with his daughters when I was 15. Anyway, he has

always had an interest in the share market. So, he would talk to me about it a little bit. Obviously, with my job, because I work in tax, I'm fortunate enough to see what portfolios other people have. So, I can see, you know, ooh, this client has CSL that they bought way back in the heyday, how do I do something like that? I can see both the smart and the not so smart on paper decisions that clients have made just in my everyday job. A lot of the shares as well, I bought during COVID, during the low side. So I picked, say, a bank, a retail, a tech, just trying to sort of diversify my portfolio a little bit plus the ETFs I have are in you know iShares those listed ones yes those ones just traditionally for me they've seemed pretty

pretty conservative safe yeah just something you can just buy and then leave very cool and you mentioned before that you bought some shares during I guess the low point during COVID did this contribute to your house deposit is this something you said before like oh we sold down some of our shares like is this what contributed to your house deposit or tell me how you got to have a house deposit for a 1.5 million dollar house so it's a combination of things so the house purchase was actually 1.475 as per the contract but then we had to pay around 65 000 of stamp duty yeah ill ill yes I know ill but our loan was for 1.275 so that leaves about 265,000 in cash that we had to cough up yeah wow so that was funded by a combination of things

So, one thing I had is back in, I think, May 2019, I started putting money into Colonial First State. I was putting in $1,000 each month, pretty much up until January 2022. And then I pulled all that out and sold it for the house. there was also shares that I had purchased during COVID during the low period so I've kept some but I've also sold some plus there is just general cash savings so one thing we did is we negotiated for a 90-day settlement so that would give us three months to yeah a bit more flexibility yes Well, to live very, very cheaply and save all the cash we could. The other thing was that my partner also had about $120,000 in colonial first state, plus

he sold some Bitcoin that he had bought back in, I think, 2017, 2016. That's mainly where the cash came from. so obviously my partner contributed more of the cash but my borrowing capacity accounts for most of the loan because he has already got two properties right so he's got two properties the one that we live in currently which is owner occupied and then another investment property he bought both of those that's a good catch that's a good man to find on plenty on fish I like that you know what happened is on our first date I asked him where are you living are you renting somewhere because you know that's what I was doing I was renting yeah or do you

live with your parents yeah which one is it and then he said actually I'm living in my own home so I was like wow that's sexy 10 out of 10 and then a few weeks later I met some of his friends and then it just sort of popped up that he owned another property and I was thinking, what? How do you own two and I don't own any? The pressure is real. Yes. That's actually really cool though that he was so financially stable

when starting to date because I feel like that's not common. It's not common but his dad is a financial planner. Oh, what a genius. he didn't grow up with very much either. Yeah. Okay. So it's just a really big priority to him. Yes. He has that, you know, that money motivation, you know. Absolutely. So talk to me about the next question I want to ask is really about debt. So you've taken on a $1.275 million loan. How does that play into your cash flow and with current interest rates, how are you feeling about that, especially because you're

about to move into it. Yes. So what we did is we got our loan for the house and it was at a quite a low interest rate and we fixed it for 12 months. So the fixed period has ended. And now it's painful? Yes. So, our repayments were $5,615 and now they are going up to $7,686. Wowie. And how is that going to work into the cash flow system each month? So, because we rented it for the first, you know, I think it's 12 to 15 months, we have saved a buffer. So, we have about $60,000 in cash now so that we can cover the difference, the $2,000 difference. each month and I am also sort of hoping for or banking on a salary increase this month it does normally happen in August it should be the you know the seven percent yeah that I'm expecting

and then what will happen is we'll move into our home in our dream suburb and then the home that we're currently living in, we will try and rent out. It won't be the same level of rent. No, of course. Yep. Just because we're moving into a better area, but it'll still help. Yeah, absolutely. I'm feeling like you guys are so financially literate to be like, all right, well, we had shares and we had this, we sold this, and then we've got some cash over here. And my partner here had two properties and, you know, we leased it out for 12 to 15 months. And now we've got a $60,000 cash buffer. How did you do that? Because to say, oh, in 12 to 16 months,

we've organized a $60,000 cash buffer. Are you a money wizard? No, I'm not. Because that's so much money. So I should disclose that our rent was $900 a week. So there's that. And then we also save each month. So I get paid monthly and I've been saving 2,500 a month. How good is that? Yeah. And then my partner's also been saving a little bit each month, but we weren't actually looking for a house to buy until just by chance, my partner saw that there was a property for sale in one of the streets that I used to live in. That was a very Good Suburb. Oh, I love it. And I think it was on sale for maybe $1.35 and he looked at it and just crunched the numbers one day and said, you know, if we rented it, we could afford a place

like that and then we could eventually move in. So that's pretty much where it started. Ah, exciting. And then where did you purchase close to where you used to live and where you grew up so we didn't actually purchase in that area so the area that I'm talking about was when I first moved out of home I moved into a suburb in Brisbane that's quite in the city yeah and that's where he saw the other house that was for sale but we were priced out of there very quickly the market moved so quickly at that time and you know houses that could have been like 1.4 were going for like 1.7. And so we had a look at another inner city suburb that looks and has like a great sort of neighborhood feel, but it's still inner city. And that's where we bought in

the end. Yeah. Wow. All right. Well, tell me about how you purchased your property. Was it off market? Were you just straight sale? Did you purchase it at an auction? Like was it most stressful thing in the entire world or was it super easy? Like I want to know more about that because if you're going to spend $1.5 million, like I feel like you're already nervous. Yep. You're right about that. So we were looking for houses that were in a good area that we could rent. So that means we couldn't buy some bomb in a good area because then we'd have to spend money fixing it up, which we don't have the cash for. So I did see this property one day and I saw it was listed and then a couple of days after there was going to

be the first open home it was like a champagne viewing something like that that's so fancy yeah it sounds fancy right it sounds so fancy they're like can we have all your money and so it's a three bedroom two bathroom and um two garage or two car space sorry it was after work one day and I told my partner to go to the open home and just have a look. It looks like it's out of our price range, but just have a look. And he had a look, showed up to the champagne viewing with his sneakers and his, you know, very old white t-shirt. And then he came home and he said, it's perfect. It's exactly what we're looking for. And so we called the agent that night and made a verbal offer for a little bit under the 1.475. I think we offered 1.45. Yeah. And then the agent

said, look, I'll talk to the sellers and then I'll give you a call first thing in the morning. And so you didn't sleep at all that night? We were just crunching numbers the whole night as to how far we could stretch. And 1.475 was our max. And so, the agent called me in the morning and that was my offer, 1.475. To try and secure it, I said, we'll do a 10% deposit, but we need a 90-day settlement. And then it was kind of underwhelming in a way because was a few hours later we got the docusign for the contract just a docusign like no call no champagne nothing just like hey sign here babe yeah sign here babe and so we both did sign there and then a couple of hours later we got completed docusign back via email and that was it that was the whole

sales process and then half an hour later the agent called and said congratulations you guys were super aggressive but clearly it worked that was it oh my gosh and you were like we didn't even realize like you didn't call me you didn't communicate this to me you just sent a docusign and I thought it might have been a mistake but I signed it anyway so I didn't actually see the house oh my gosh you hadn't seen it at this point you just had to trust your partner yes but I did go and see the house because there was another scheduled open home the weekend following even though you'd signed the contract. Yeah. So I think the agent just kept it open as is for bio research opportunities. Geez, Louise, I would have been like, get out. This is now my house.

Well, there was no one else there because it was already marked as under contract. Yeah. But I showed up and I took a friend with me and I said, this is actually my house. I just bought it. That's so funny. Yeah. Real estate confuses me because like I have no, like if you are in the market to buy a property and imagine if somebody else saw that house like that was your dream property I'm sure someone else would have looked at it and been like oh my gosh that's also my dream property imagine turning up and then being told oh well this one's actually resold we're just doing some research I would have been off my head I would have been so annoyed and be like don't waste my time because when it comes to property as well like often they're only

open and like a set on a Saturday from like 11 till 12 and you've got to work out which properties you're going to see. I would have been very salty about that situation, but I'm so glad that you got it. That's literally the best. I feel like that's a dreamy story. Like that's just too easy, my friend. I think I'm making it sound easy, but it would have been very stressful. In the background, there's a lot of spreadsheets. You know, we've even to, to look for the house we wanted, we've got a spreadsheet with all the different factors that we were looking for. Like, does it have a wide frontage what are the schools like how many bedrooms and bathrooms no I love that that's so smart is there a dog park nearby a thousand percent is it in the flood zone everything

no that's really really important like literally so important on our podcast the property playbook I teach that all the time I'm like document it go and do your research understand what you're looking for because I'm sure Manny Darius that that was why you were so easily able to say oh no, no, no, we'll buy this one. And you hadn't even seen it. So I became quite knowledgeable with just the kinds of properties out there. I learned what a character home is, what a pre-war versus post-war is. So I knew which ones to avoid, which ones would need lots of fix-ups and council approvals and all that. How good. All right. Tell me a bit more about you. I want to know, what is your best money habit? So I think my best money habit would be I don't like to buy

anything at full price. I will always wait for the sale. That's fair. I like that. That's a very good money habit. Yes. But just on a monthly basis, what we do is we do have our own everyday accounts and savings accounts and things like that. But we've also got a joint everyday account and we each tip in $550 for the month, which we use to spend on internet subscriptions and food. And basically, if there's something extra that we have to pay for that month, like a gift or something, it will come out of that pool as well. But if we find that we don't have enough money left over for the essentials we will tip more in to compensate for that extra thing but if we find out we've got extra cash at the end of the month then that's sort of like a bonus and we'll either

decide to save it or use it to go out for a nice dinner or something. Oh cute I like that I feel like that means that you're kind of sticking within budget but still living your best life. Trying to. So we do live on the cheap in some respects. So we do place limitations on ourselves. Like we might go out for brunch on a Sunday, which is probably one of our worst or one of my worst money habits. I just love going out for brunch and sitting in the sun with my dog and a coffee and whatnot. But we limit ourselves to a bill of $35. So nothing more. I like that. Does that mean you just order coffee because in this day and age, like you can't get much for $35? No. So you can get a basic main with say eggs and

sourdough. Is this $35 each or is this $35 total for two? Total. Oh my gosh. I feel like every time I'm going for brunch, and this is absolutely showing my privilege, my friend, it's between 50 and $60 easy. Okay. So teach me your ways. Two coffees might be... 10 bucks minimum. No, $6, $6 each. Oh, okay. $12, $12 for coffee. $12 for coffee. Plus you can get, in some places you can get a main, which is like scrambled eggs

and sourdough for like $15. Yeah, okay. All right. And then you can get a banana bread or almond croissant. Oh, and you share it. Yeah. Oh, I love that. That's actually quite smart. I'm probably not going to do that because I am greedy when it comes to brunch and I want my own plate. And if I see French toast on the menu, I'm not sharing that. So you have a lot more willpower than I ever will possess.

But I think, I think that's really smart because that actually makes it so much more budget friendly. Like $35 is so much more palatable than $50 or $60. So the $35 rule, I don't want to call it a rule, but it is a rule. It's kind of a rule. Yeah, it's kind of a rule. Just call it what it is, my friend. It's anonymous. So the $35 rule came from when we went out for dinner one time and we only spent $35 total. How? Where are you going out for dinner? Like, I feel like this shouldn't have been about property. It should have been about your food hacks. So we bought two ramens. Yeah. Okay. Two ramens, which are what? $17.50. Is that right? Yeah. Maybe in Brisbane, in Melbourne, they're at least $25 each.

Now we look for things around that price. And it's normally going to be Asian food. If you go and get, you know, Vietnamese pho or you get some Malaysian noodles or something like that. And that's how you don't exceed that $35 limit. But does this become kind of fun? Because I feel like to you, this might not be limiting at all. It's kind of like fun to kind of like game the menu and work out what you're getting and how that might work. I feel like it's fun. It is fun. You have to go outside the CBD to find these places, but often that's where you can find the authentic foods as well.

Yeah, a hundred percent. And like Asian food is much better when it's more authentic. Yes, absolutely. Absolutely. Oh my gosh. I kind of love the $35 rule. I now need to know, because like you told me that brunch was your worst money habit but then you told me it was like a money hack what is your worst money habit well what I said before about only buying things on sale yeah sometimes I will buy something that I don't need just because it is on sale yeah okay so like the other day I bought because we're moving into our new house I bought a marble coffee table. Stunning. But it was probably on sale. You're basically making money by buying

that marble coffee table, right? So it was on sale, but we don't need it. We don't need new furniture. We've obviously got furniture, but it was on sale. Yeah, that's fair. That's fair. And a marble coffee table, that's an investment. I'm just trying to enable you to make you feel better about this decision, my friend. But I totally get that. When I moved, I was basically like, new furniture? Absolutely. Do I already own a couch? Yes. Do we need a new one? I think so. It's really toxic. Oh my gosh. All right. Now that we've had a good chat, I feel like I know so much more about you and oh my gosh, I wish we'd learned about the money hack for brunch earlier because I feel

like that's such a good deal. Like I'm going to try that one day and see what we can do. Yeah, absolutely. But at the very start of this episode, you told me that you were a B plus and I'm just feeling like you're pretty good at money. Like you're a tax accountant, you've done all of this really cool stuff. You've bought your dream home. Like you've managed to save up a $60,000 buffer. Like you've got really, really good clarity around your joint account with your partner and how much needs to go into that. Like you're even hacking brunch. Do you think that you're still a B plus? And if you are, what's it going to take to get to an A

plus? Look, I do still think I'm a B plus because there is so much more that I could do. Like for starters, maybe not buy marble coffee tables. Correct. But also, was it the best decision to sell the majority of my investments that I thought were going to be long-term investments to buy a owner-occupied property? Maybe that's not the best. I could be doing more by starting to to do the regular monthly investment plan again. It's just probably going to be very tight right now. I did start putting in $200 a month. You know, it used to be a thousand. I started putting in $200 a month, but then obviously we came off our fixed rate. And so I thought maybe it's not the best idea there's still lots of things lots of things that that I could do to improve so I

yeah I think a B plus is fair all right I'll let you have the B plus only because I can see that you're really thinking about it but oh my gosh I just think you're doing so well and I'm so glad that we got to share this story with our community like I'm so glad that you wrote in and you were talking about I guess taking calculated risk and it all just it all makes sense and to create the life that you want to live, you're absolutely doing that. And I, I'm just, I'm in awe. I think it's so cool. So one, congratulations. That's very exciting. But two, thank you for sharing this story with the community. I know so many people are going to be listening along and then come Saturday, they're all going to be having $35 brunches. Like this is a money win for everybody.

Well, I hope some people can relate to the, you know, the property story too, because. Oh, totally. Yeah. Just in the news and, you know, my peers and, and all that. I read stories about a couple that is struggling because they're on a similar income to us and their mortgage is only 800,000. And that's the sort of thing that makes me feel bad because I can't, I can't relate completely to that, but I'm also not complaining because I chose this. So. No, I love it. I love it. And I feel like you've set yourself up to be successful regardless, like you're really forward planning what that means to have a buffer like I think it's just so intelligent so thank you I feel like lots of people are going to get lots out of this story but unfortunately that

is all we have time for today so I'm just super grateful that I got to have you on the show thank you thank you so much Victoria the advice shared on she's on the money is general in 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 authorised representatives of Money Sherpa PTY LTD ABN 321 649 27708 AFSL 451 289.