Archive for June, 2009

Hard to believe …

I think today I just realised that we have more than $16,000 ready to buy a home, nearly $5000 in an emergency fund, and at least $6000 in other accounts for a range of purposes!

I know I posted these figures recently, but today I really just looked at them properly and really thought about how much it took to get here. It might not sem like a lot of money to some people, but to us it is like reaching Everest!

After so many years of struggling financially, this just seems hard to believe. Our difficulties started about 10 years ago when my husband sold his business and the new buyers defaulted on the purchase – after they had started renovations and left the building looking like a bomb site. Without that money or the business income, we had just my (office junior) income and a big bunch of final costs and legal bills to pay.  My husband’s plans for a new business had to be shelved because there was no start-up money, just bills. He had put all of his money into his business and like that, it was gone. Now he had to find a job, and to his credit he took what he could find. He went from a successful business owner to initially being a cleaner at a hotel. He didn’t let his pride get in the way of bringing in a wage (I’ll always be proud of him for that). He knew it was only for the short term, and it needed to be done.

Then we had a protracted court case, resulting (nine years later) in a paltry sum that didn’t even cover the cost of the legal bills. I think it worked out at about $1000 per year! Luckily, we had just kept on plugging on with our lives as best we could, and worked through paying our creditors. Many of them had been business associates and friends, and many were very good about waiting for their money. Again, I’m proud we paid them back and didn’t run away from it. 

Then I went back to university for 8 years and we survived on one income – initially it wasn’t a very good one either. But we knew that my studies would be worth it in the future.

Over the years, hubby’s income got better. But we watched the price of homes in our area more than double, all the while listening to friends tease me for worrying about money because `when you get out of uni, you won’t have to worry about money anyway’! (Yeah, right! While thing are better, we are far from not worrying about money.)

Eventually things did get better. We started being generally more responsible with the little money we did have and started getting rid of the `dumb’ debt we had, like credit cards and the like. Eventually we got rid of all the debt … after a few years of absolute bare bones living.

And now, as of this year, we are on two quite good incomes and our lives have started to change. Not because we have made our lives any more fancy, but because we are starting to move forward.

This is more than just having more money. Going through this has made us into fundamentally different people.  We are so much more cautious with our spending, and value security much more than just making sure the bills are paid (which is what we used to emphasise).

I don’t ever want to be in that situation again, and maybe that is one of the blessings in what we have been through. The fact of being in big debt without a quick way out made us `wake up’ in a way that some people who don’t ever face big financial worries never do. Instead of just paying the bills and spending the rest, we want to move towards a life where we are relaxed and moving forward financially each month. Let’s hope we stick with that, and reap even more of the associated rewards.

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Over and above …

Well, today we hit $16,165 in our home deposit account and in so doing, we jumped over the end of our savings ticker ($15,000). This was always a bit of an artificial goal because we want to save way more than this, but it is still a bit of a milestone for me.

I look back and smile on the old days. I don’t think I’d ever had even $2000 in my bank account before I started paying down debts, and any time I did, it went somewhere the very same day. And I usually still owed someone else the same amount or more.

So it is a red letter day for my husband and I.

So what are our plans? Well, I don’t think we are going to make it all the way to a 20% deposit before we buy. But I have recently talked to a finance company specialising in finance to professionals (ie doctors, vets), and they tell me that even without the 20% deposit, we will be eligible for a loan  without having to pay Lenders Mortgage Insurance. This potentially cuts about $7000 from the potential loan costs and is great news. It also means that the First Home Owners Grant of $14,000 can all go towards our deposit.

So with our $16,000 currently saved and that $14,000 grant, we essentially have a $30K deposit already.  If we can find another $15,000 cash and at least $2K for costs of buying, I’ll be pleased with our progress and ready to buy.

Let’s see how we might do that. The $14,000 grant reduces to $10,500 at the end of September, so that is our deadline for saving the rest of the deposit, getting the loan and signing a contract.

Already, we have $3000 stashed in an account that we had intended to use to buy some shares, and I had already planned to use overtime to save another $2K towards that. So all of that cash could instead go towards the deposit.

We also expect to get about $5000 back from overpaid tax and child care rebate at the end of this year, so that should also boost our deposit up.

By September, the natural progression of our house deposit saving will mean we have about $9000 more in the bank (at $1300/fortnight).

So the deposit will comprise:

Current savings: $16,000

Continued regular savings by September: $9,000

“Shares” money: $5,000

Tax refunds: $5000

First Home Owners Grant: $14,000

TOTAL: $49,000

(including $2-4K for buying costs).

Sounds pretty good!

  I really don’t want to touch our emergency fund account, so somehow I need to make sure that money is sacred NO MATTER WHAT!

By then it should be about $7,500 or so and will be a good amount to have ready as home owners. It will also be important to keep that money coming out so that we have $10,000 by the end of the year. Naturally, we will need a loan with an offset account that subtracts that amount off the overall amount owed for interest purposes.

I feel like doing one of those evil laughs – “mwah, hah, hah, hah! My master plan is finally coming together!”

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