Oily raggers are not ones to dwell on the negative so they're probably not taking a lot of notice of the negative talk about young people not being able to afford to buy a home. As oily raggers, we know that home affordability is more like a molehill than an insurmountable mountain, so we thought it worthwhile to remind those who are yet to be converted to the thrifty mindset.
Here are some key principles that will help you to become a homeowner ...
Start saving early and often. We have a general rule of thumb that 10c in every dollar that flows through your pocket should be captured and caged.
By captured we mean "saved", and by caged we mean "put to work in an investment account of some kind". If someone on the average wage did that during their lifetime then by the time they qualify for government super they will have more money than they would haveimagined when they made that first deposit into their savings account.
That's not exaggerated puffery, it's just how the numbers work - and compounding interest really is just as simple as 1, 2, 4, 8, 16 ...
Commitment also means giving up some of the nice things for the important things. Forget flash cars and fancy restaurants - put that money into debt repayment. Just remember, a mortgage repayment will have lifetime benefits. If that money was used instead to buy a car then it becomes a liability with diminishing resale value and increasing annual costs. Every dollar matters-.
Huge benefits are in store for those who have yet to buy their own home. There are thousands of free dollars waiting for you to use as a deposit on your first home. One would need to have cupcakes in their head to not take advantage of them.
Time Use it productively. Turn off the TV and use that time to generate some extra income or use it to save money by putting in a vege garden or doing some other money-saving activity. If you have a hobby, try turn it into a positive cashflow. Time is also about having a date for when you want to buy your first home. A timeframe creates an imperative that turns it into a goal, rather than an idle wish.
Don't expect anyone else to do things for you. If you want something it's up to you to get it. As much as you or others may wish, the Government will not give you a house. Unfortunately, there is a perception that it will, which tends to make people stand in a queue with their hands out while the rest of the world walks on by with a purpose. To get something, you generally have to give up something to get it. Figure out what is least important to you - and give that up first. We think booze and cigarettes are at the bottom of the "'needs"' list and should be first to get the boot.
A first home need not be a King's palace. The important thing is to get on the property escalator. A humble abode in a nice street is likely to turn into a tidy investment, especially when embellished with the savings that can be made by living off the smell of an oily rag.
Much more can be said about homeownership. But we think five words pretty much sum it up: commitment, KiwiSaver, time, mindset and humility.
Do you have a favourite winter tip you would like to share? Send it to us at www.oilyrag.co.nz or write to Living Off the Smell of an Oily Rag, PO Box 984, Whangarei