The average New Zealand houseland has about $400,000 in housing (March 2014).

The average household has about $32,000 in other financial assets, about $55 billion or 8 per cent of our wealth is outside housing, and about $775 billion or 92 per cent of our wealth is in housing.

The implications
Kiwis love houses and put all their money into them. Consequently houses will never be cheap unless people go and live a small rural town where jobs are likely to be scarce or don't pay much. But if we don't buy a house we have to pay rent.

Rent at, say, $500 a week averaged over 25 years (the term of an average mortgage) adds up to $500,000. And that's without the effects of inflation, although wages will hopefully keep up with inflation.

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Buying a house seems a much better option.

The real costs
Let's say you buy a $500,000 house and borrow $400,000 over 25 years at 7 per cent.

-You will repay $400,000 capital.
-You will pay $448,000 interest.
-You will pay say $8000 a year in rates, repairs, insurances.
-Total cost $1,000,000-plus.

That means you have to earn about $1,250,000 before tax to pay for it - ouch!

What if you can clobber interest?
If you can colbber that nasty $448,000 bank profit, you will have less stress of work, employers, and husband and wife both having to work, et al.

Less pressure on you, less pressure on your marriage - a better environment in which to raise your children.

No1: be someone else's landlord
Instead of buying a four-bedroom, two-bathroom home, buy, build a couple of two-bedroom units and rent one out - or alter a biggish home into two units - or add a sleepout. Even if it costs $100,000 more, the rent will knock a huge amount off your mortgage.

So the option is to borrow $400,000 for a house and pay $2827 a month to be debt free after 25 years.

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or borrow $500,000 for two units, with payments - payments $4100 a month.

You pay the same - $2827 a month and your tenant pays $1200 a month.

You will be debt free after 18 years, continue to get rental income, and own a more valuable property.

No2: live in a garage or a motel
Save the $2800 a month that a mortgage would have cost you by living in mum and dads' garage, or manage a small motel and get free accommodation.

-Save and buy a section for cash.
-Save more and build/relocate a minor dwelling for cash.
-Save more and build a smallish house on the property, and rent it out.
-Save the rent now as well as your $2800 a month and when cash permits, extend the house, make it really nice and move in yourself.

Your reward: a nearly new, debt-free home.

You can now rent out the minor dwelling and with some cash about, start to enjoy a much better quality of life - for husband, for wife and for your children.

If overall property and building costs were $500,000 to $600,000, you could do this all in 15 to 18 years. You could be free of debt plus have rental income by age 42 to 45.

Statistics say most of your friends will still have substantial mortgages at age 50.

No3: don't pay tax in New Zealand
Work offshore in a country that pays well and offers free accommodation or low taxes, or preferably both.

Buy a house in New Zealand and put a tenant in. Direct your savings towards the mortgage, too.

Rent plus your savings paying off the mortgage, and pretty soon you will be on the plus side of the drag curve, and you'll never look back.

So many more
Many people accept the status quo and borrow heaps to buy a house. You don't have to. Nothing ventured, nothing gained.

If you would like to help me to help others, email me your success stories and I will publish them in a future article.

Alan Clarke is a financial and retirement adviser and author. His second book, The Great NZ Work, Money & Retirement Puzzle, is available at www.acfs.co.nz
Alan is an independent authorised financial adviser (AFA) FSP26532; his disclosure statement is available on request and free of charge.