Response to: Quiet Restraint

This post is in response to ‘Quiet Restraint’ at The Frugal Queen – one of my favourite frugal bloggers (even if her tone sometimes erks me – I’m not a ‘Dear Reader’!.  

Froogs makes the point that we only live once, but that there is potentially a lot of life to keep living in even if our long term financial outlook is poor. We need to plan for the worst, while still enjoying what we have.

Being worried about your financial future means that you’re at least thinking about it, but you need to do more than that. Frogs gives us a helpful list of her suggestions to be able to debt-free and save for your future.

1. Whilst young, unmarried or still at home, save 3/4’s of your income.

I absolutely did this. While I lived with my parents, I saved every penny I got my hands on. I started when I was a kid, and saved all my pocket money for things. I did have the advantage that I didn’t go out to the shops much to have anything to spend the money on, but it was a habit that stayed with me through high school.

2. House share or rent just a room for 5-10 years until you have a deposit.

I didn’t do this. I was lucky enough to have family members living where I needed them for university purposes, and so I stayed there enjoying free accommodation until they died and my study circumstances changed. I would have stayed past this point, but I found a partner willing to buy with me, and between us we had more than a 20% deposit to avoid mortgage insurance.

3. Don’t assume you can ever get by with just one job.

I never have! I’m used to being the only person working, and so if I’m offered additional employment work, I take it. While studying my undergraduate degree, I took surveys and tutored high school kids privately to supplement my Centrelink allowance. Now I demonstrate as many hours as I can get my hands on at the university I study at, as well as doing online tutoring.

4. Whilst you’re young and fit, work all hours and save.

I did this, and my first partner completely lost it at me. He didn’t understand why I wanted to work so much in my summer between high school and university study. At the same time, I didn’t appreciate the off time or family time that I could have been taking. My current partner and I try to work as many hours as we can get our hands on at the moment, simply because we want to be mortgage free. We both understand that we need to spend time together for our relationship to work though, so we do that. We just spend that time not spending any of our cold, hard cash!

5. Buy a house as soon as you can and keep that house for life- don’t upgrade, we’d all have paid off our mortgages by now if we’d stayed in our first homes.

We’ve done this! I bought a house as soon as I considered it financially safe (ie. a large deposit and a steady income). I’m not sure about not upgrading – we want to have kids, and a two-bedroom unit isn’t going to have enough room for them. I certainly want to have a good go at paying it off before we have to upgrade though.

6. Don’t expect to have your own home, a pension, savings and fancy holidays, cars, hobbies, meals out.

For me, I am lucky enough to have those things – in moderation, and only if I have the cash to pay for them. My partner and I have nice enough cars, purchased before we met each other. We also have a hobby – LEGO building – which can get very expensive, but we agreed to only buy pieces when they are on sale. My other hobby is reading books, and I have been doing so long enough I barely need to read any books to feed my habit.

A pension and savings are two things we don’t really worry about. Our savings is always going up, and we have put plenty of extra payments into our mortgage that mean that if we needed the money for an emergency we could re-draw without cost. In Australia, our employers have to put money into our Super Funds. We could opt to salary sacrifice more to that for the tax savings, but neither of us earn enough yet that it is worthwhile. We would rather invest in shares and stocks to be self-funded retirees.

The thing we don’t really do are meals out. We’ve been for about 5 meals out recently, and paid for 3 of those. Unfortunately, they were family things which we couldn’t say no to, and one was our Date Night. We do try and keep our meals out down to a combined bill of $50 though.

7. Keep taking qualifications and building your skill base, lots of these have to be supplied by employers.

This is a tricky one. My partner funded herself in order to take an additional course for her professional area, but it turns out that she doesn’t want to work in that industry any more. Luckily, she’s going to work until the end of the financial year at this job, and we will be able to write off some of the cost on tax.

8. When you get a home, furnish it second hand, learn to make do and mend.

I swear, I have tried to do this. We had both hoarded some general household goods for the kitchen and bathroom, but were missing some essentials. We didn’t have a mattress or any sort of blankets. I bought those new, and after looking for a while for a second hand bed-frame, we found one we wanted that was new, and yet cheaper. I wasn’t sure how I felt about it, but it does look amazing.

We’ve just renovated the bathroom, but we had to buy everything new for that. It’s not a justification. Our old bathroom had been poorly done, the tiles were cracking off and they’d forgotten to waterproof the shower. Not even the rusty towel rack was worth re-installing. I’m still trying to come up with something to do with the mirror parts I rescued from the old medicine cabinet. Any suggestions anyone?

9. If you can, buy a home with chimneys and when you can fit a wood burner. From then on, prepay for your heating and dry your laundry in front of the fire.

This doesn’t apply in Australia. You can’t build a new home with a wood fire, and very few suburban houses have them.  However, we do dry our laundry inside.

10. Other than a mortgage, never borrow any money.

Tick. I don’t even borrow my own money from my savings accounts to my spending one unless I absolutely have to.

11. Unless you have high incomes, or you are prepared to go without, don’t have children. Or have them anyway and pay someone else to bring them up? Tricky one.

We want children. Hopefully we will have a combination of those things going for us. One of us having a high income, and the other staying home with the kids and a casual job. In addition to having had a good financial basis to start off with (no debt!!)

12. If you’re going to university, have a genuine reason why. Have a career path or take a degree in something useful such as a science, maths, engineering, medicine or business. I kid you not but you can rack up thousands in student debts on a degree in puppetry. If you have no genuine career path, then get a trade training. You can make a good living from electrical engineering without a degree.

Ok, I failed at this one. I have three undergraduate degrees, one of which I will probably never use in a constructive manner (BA). The other two (BS, BBMS) are highly relevant to what I want to do, and have gotten me the casual job I am in now. My PhD? Well, when I’ve finished it I have a shot at some very nice paying jobs, but I have to get there first, and that’s three years without a ‘proper income’.

13. The alternatives? Spend it all when young, never own your own home, have no pension and be At the mercy of charities? As there may be no ‘state’ when we get there.

I’m pretty sure most young people haven’t discovered this yet. I’m a firm believer that all those things that apply in Europe are going to apply in Australia eventually, and I don’t want to be left uncomfortable in my retirement.

Froogs asks what I’d tell my young(er) self about these points, and what I would do differently. I probably shouldn’t have taken that BA and been more careful with spending on food!