I’m about to slash my wrists…

Hi Andy,

More than happy to take a call about what the benefits and minuses of renting your existing PPOR will be. Phone call is better as we can explore a few issues at greater length.

No strings attached.

Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113

Hi Andy,
Sorry to hear about your predicament, although you will only lose 75k if you sell, can you afford to neg gear it and maybe rent something cheaper? Most people that bought a PPOR in 04 would be in the same boat if they were to sell now. We are building a new PPOR and for sure the valuation would be less than what is has cost us but we are not planning on selling. My agent told me he has sold one lately that the owners lost 60k, they moved from Sydney to Coffs Hbr and didn’t like it?
The problem with selling a home now that was bought in 04 is you are competing against homes bought pre boom which have more equity so owners can drop their price.
Good luck with your decision just remember it is only money, there is more to life than money and houses, when you hold your new baby you will know.
God Bless
Robo

andymitchell hang in there.
Many people have fallen into the trap of buying the best property they can afford.
Most of the time it works out ok however if there when the market turns its swimming up stream for sure.
Next time have a margin for error.

Have you had a talk to your bank, they may have a solution with IO or an increase in loan length thus reducing the monthly requirement.

Why not move into a smaller residence and rent out your PPOR.

While your wife is off work you can still work a second job,
Have a garage sale.
Get a weekend job.
Start a business in your spare time.
Collect aluminium cans etc.

Congratulations on your expanding family, there is the best reason there is to go on.[
biggrin]

Your friend Colin,
Email [email protected]
Home 02 46531376.
Fax 0246531079
Mobile 0425201055 (best contact as always working).
For all your CLEANING and GARDENING work.

hi andymitchell
sorry to say this but wits end is a good place to start because the only way is up.
so yes get the advice that derek gives you and anyone else that can help just remember it is only money and yes we do strive to gain it but not at all costs.
at the end of the day it is a tool and should be look at in that fashion I would look at keeping the property in this market and would have a chat about capitalising the interest with the lender.
we may seem like a few of us look down from our lofty heights and have made a bit of money out of this market but I for one have been exactly were you are know and have made it ok.
4 kids, happy home and networth of “”””””” so it is not the end of the world its just a ( as they say in this market) correction.
One thing to remember always look on it as a positive,
if it looks negative,
look at it again and try to make it a positive and sure enough you will find the away,
thats not just this correction its the same with any deal if you think its a good deal but its got problems find the positives and you will find either you do the deal or you drop it.
I can’t nor would I give advice on a board without seeing all the information but I will give you this advice money is only money but family and friends can’t be bought nor can money make you happy.
I’m happy because I have a happy family not a happy bank account.
as for some one to tell you what to do
first sit down and work out your budget that all expenditure.
next get someone to work out all your cost on the property(if your working the company they will have an accountant and won’t charge you anything)
next get tax relief if a negative position
then work out a plan and derek will give you guidence.
this is not dia-straights from where I’m looking you just need a little assistance and thats what these boards are for.
hope all goes well and look forward to the post that says I achieved it.

here to help
If you want to get involved in some of the projects I’m involved in email to [email protected]

Andy,
Send me an e-mail and tell me what you can about the unit and the complex. I’ll help you estimate depreciation. Digital photos would be great.
If you end up renting the place out, get in touch. I’ll find out which QS group were the ones on the project – that’s the best way to get a cheap but accurate Depreciation Schedule (as opposed to the cheap but dodgy ones around). I’ll get them to do it even cheaper than usual, too.
If there was no QS on the project, we’ll sort something out at minimal cost.
Whatever you decide to do, I would act soonish. If you’re moving, it’s much better to do it sooner rather than later, while your partner can still lift heavy things.
Scott

Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.au

Greetings All,
Whilst I cannot offer any advice ,–I can only concur that there will always be a good side to any situation–sometimes we just cannot see it—at our time of need, so hang in there and good luck.

I JUST HAVE TO SAY how amazing some of you guys are.
I know that it is not only on this forum but always and accross the board , that whtever people get involved in , there is always someone to lend a hand in times of trouble or anguish.
FREELY, ( I might add—)so to all those who have offered assistance—A BLOODY GOOD SHOW.
Cheers Len

Apologies for the length of this post.

Firstly, a disclaimer. I am not a financial advisor, nor do I profess to be. Any advice herein should be considered general in nature, as no or little consideration has been given to the specific financial position of the original poster.

Hi Andy, straight up, let me sincerely wish you all the best with this matter. Unfortunately, your situation highlights the darker side of the ‘boom’.

Thoughts of renting out the property are admirable. At least you’re ‘thinking outside the box’. But realistically, this unit would be so negatively geared that you’ll still be paying a third of the mortgage, leaving you looking for lesser place to rent… I doubt you’d come out much in front, but somebody better versed in taxation and with knowledge of your situation could do the maths for you… Speaking of taxation, do not underestimate the tax breaks given to families. You may be pleasantly surprised by how little impact there is on your family finances.

Let’s look at your situation from an outsider’s point of view. As far as your unit is concerned, why assume that anything has changed? Presumably, your reason for purchasing this property was that you liked it. Hell, it’s got to be good, you’ve promised to pay the bank somewhere between a half and a full million dollars (once interest payments are considered) for it! So, we’ll assume that you bought it because you wanted to live in it as your home, no? If not, if it was seen as an investment decision, I’d suggest the deposit and purchase costs could have been a tidy investment in alternative assets… but like I said, it must be a sweet place to live!

Sure, the resale price is not now what it was. You’d lose in excess of 10% plus costs if you sold now (although the quoted valuation is likely an additional 7-10% higher than expected sale price given current conditions). But you bought it because you wanted to live in it, and were prepared to pay the weekly/monthly cost of living there to the bank. Had the ‘new addition’ not come along, surely the repayments would not have been an issue? This is the price you WERE prepared to pay to live in your unit, and it really hasn’t changed.

So the problem is simply that you’ve lost a second income for a limited time. This is just a meagre 10-12 months. Not significant over a lifetime.

Before I go on, I need to stress as those before me, that IT’S ONLY MONEY. Your number one priority at this point has to be the support of your partner, and to fully committing to taking part in the joy AND troubles that come from bringing a baby into the world! Please, please, do not let concerns over money divert you from that course. And don’t hide your worries from your partner either. Be realistic, be honest, but be positive.

So, this 12 month ‘problem’. How do you tackle it? Sure, there are plenty of schemes offering to make you a quick buck, but at what cost? At what risk? There’s an old saying (often quoted for clearly the wrong reasons) that goes something like “If you want to get out of a hole then first you must stop digging”. The reason you are facing difficult times is all due to the debt burden you are currently carrying. By taking on additional debt, you are effectively “digging”. I would urge you to steer clear of any such ideas.

There are ways to cope with a 12 month shortfall in income. They tend to be old-worldly and unfashionable, but quite reliable. I’m assuming that you and I share a generational space commonly known as Gen-X (correct me if I’m wrong), and I recognise that these strategies are fairly distasteful to our peers whereas our grandparents might consider them the ‘norm’. But before I go there, another consideration.

Once your partner/wife returns to work, will the added financial burden (sorry, can’t concieve a more appropriate/less negative word right now) of your child make the mortgage unmanageable or will things get more-or-less back to normal? If you’re not going to be able to make the repayments at that point, I think your choices are singular…

Back to practical ways to make ends meet. Are you aware that there is something of a ‘frugal living’ trend taking place? Many people our (?) age (but still a small minority) are turning their backs on the current consumer / affluenza afflicted world. We look for real value in everything we do and buy, and ignore those who would look down on us for not subscribing to the MTV/VISA/Nokia/IPOD hype-inducing cultural vacuum. Let’s look at some frugal basics:

Do you have:
– a car loan? or 2?
– credit cards?
– mobile phones?
– broadband internet?
– a restaurant habit?
– worse habits? (ciggies & alcohol)
– an aversion to buying cheaper equivalents to branded products based on name rather than content?

Would you laugh if I suggested it is possible for a single person to live exceptionally well on $300/fn for food, petrol and clothes? For a couple to live on $500/fn? If you’ve answered yes to any of the above, you can be helped!

The existence of car loans provides a great opportunity. If you bought a car on a 5/7/10 year plan then your car is probably depreciating at a higher rate than your interest repayments. Sell it, buy an old clanger (it’s amazing what you can get for a few small grand these days), drive it for twelve months, and you’ll be able to re-purchase a similar car to the one you had (albeit 12 months older) and come out well in front. Got 2 car loans? Even better!

Credit cards… “Oh, I get 1-for-1 rewards….” Whatever! These are about the dumbest thing you can have in your wallet. Can’t afford it? Don’t buy it! Get an old one from the salvo’s! Sure, it doesn’t have widescreen/flip-front/25 megapixels/pockets below the knee… err, excuse me. You get my drift. Got to have it? Get an old one, otherwise save until you can afford it. And don’t get me started on ‘rewards’ schemes. Does anybody know how much you actually need to put through your card per month to get one lousy interstate flight per year? Trust me, it’s more than the entire PRE-TAX income of the median income earner in this country! Plenty of suckers are paying more in ANNUAL FEES than that flight would have cost them in the first place (if they were prepared to shop around, frugal-like!)

Mobile Phones. Are you a doctor? Firefighter? SES? No? Then you don’t need to be contactable 24/7. That 22/7 that you currently spend either at the office or at home should be enough. Besides, why would you WANT people calling you when you’re out with your friends, family etc? Isn’t it a little rude to interrupt your time with people who care enough to be with you, just to talk to those who don’t? Trust me, I have a 24 000 word essay in my head on the evils of mobile phones and how ‘cheap plans’ are being used to brainwash the masses and particularly children into an addiction… what happens when everybody (and many people already do) thinks/says “oh, I couldn’t live without my mobile”. Yup, the cost goes up.

Do you have a broadband connection at home? What for? Can’t wait 1.5 seconds to read what’s happening in the world? Sheezuz, they only update the news sites every ten minutes! Need to download the latest episode of ‘Lost’ or Britney CD? Leave your dialup running overnight, hell, if anybody needs to call you they can always try your mobile… Bingo, you’ve just spent $10 per month, a saving of 30, 40 or 70 dollars over broadband.

Go out to dinner once a fortnight instead of 3 times per week. Buy some cookbooks and have friends over. Make them bring the wine! Make cooking a fun activity with your partner, try new things… When you do go out, it will be a reward (particularly if your skills are still below par), and you’ll appreciate it more. Try that quaint italian/chinese/thai joint down the road instead of the flashy place with the stupid name, funny ceilings, weird and uncomfortably odd shaped couches. Let’s face it, the food’s not that good anyway, and your new-found skills will soon be producing finer foods for a fraction of the cost.

Finally, put your pride out with the recycling, and embrace the world of tag-free, parallel imports and ‘just like’. Take a trip down to GoLo/Reject/$2plus, and fill a trolley with cleaning products, toilet paper, soap, shampoo, toothpaste, toothbrush, detergent, washing powder and other necessities that you normally buy branded (hell, some of them will still have brands or even come from the same factory). Savings up to $40/month, cost – a little pride. Buy your wine/beer in bulk once every month or three, sticking within your budget. If you run out, you wait till next month. Try cleanskins if you’re into wine – chances are you’ll find something you like, and if your friends are likely to turn up their noses, open it in the kitchen and decant it – they’ll never know… or get them to bring their own.

Following these frugal principles (and these are just a sample), the average 30-something year old couple can easily save $500-$1000+ per month over what their friends do. I kid you not. You do the sums.

If this is still not enough, try negotiating with your employer for a pay-rise or overtime or extra pay over the next few months in return for less later. Discuss a ‘repayment holiday’ with your bank (tell them the alternative may be bankruptcy leaving them with the negative equity). Take a paid break and moonlight with a second job. Swallow your pride and ask the oldies for an interest-free loan.

Now if you’re prepared to make the sacrifices above, and you’re still $10 short per week, let me know and I’ll help if I can. But if you’re living the high-life while I’m contentedly achieving a high standard of living on my $250/fn living expenses, don’t bother.

Slow but steady. That’s what real financial stability is all about. Sure, the quick buck is nice, hell, I’m in excess of 35% up on my investments already this year thanks to junior resource stocks, but I could be many multiples better-off had I used other peoples money (OPM/gearing). Why don’t I? Because I sleep much better at night knowing that I only have my surplus cash to lose, rather than risking my future financial stability. And I’m a semi-single kind of guy (for now) – if there was another involved, I’d be twice as careful.

Best wishes,
F.[cowboy2]

Any percieved sarcasm was not intended to be such. I blame my clumsiness with the English language (although it is my native tongue). When I wrote “Go out to dinner once a fortnight instead of 3 times per week.” it was not intended as a personal judgement on Andym, rather a general condemnation of one of many ‘normal’ habits my generation has fallen into. I’ll try again.

Dear 24-37 year olds,
[baaa][baaa]

(except for andym whom I wish well}
Regards, F.[cowboy2]

Hey Foundation. Sorry if I accused you of sarcasm when it was not intended as such.

I totally agree with many of your ideas and practice most of them as well. As long as they don’t have to go into the shop my boys will wear the $70 boardies I get for $8 at our local Lifeline.

Not many poor looking people shopping at my local Lifeline. I have a friend who says she won’t shop there because it is meant for needy folks to cloth themselves for less than “normal” stores. I tell her that it is the “less needy” who shop there who keep the cash registers full. I love the hunt for a piece of treasure and I also give bags of it back to them regularly.

Just another piece of advice for andymitchell. We never did go in for the basinet or fancy decorating of the nursery thing. I am a no fuss girl and didn’t want all the trimmings because they are only babies for such a short time, and then you have all this “stuff” left over and have to paint out the decorative clouds on the ceiling, etc etc.

Our babies didn’t really start to cost us money until kindergarten, so unless you go in for the fancy trimmings, you can live fairly cheaply (providing you and baby are healthy of course).

I have a bit of an aversion to affluent (should I say effluent) foks because we know a family who pay to have the dog washed, the lawn mowed, the ironing done, the cleaning done, the pool cleaned and then the wife tells all and sundry how difficult it is being a stay-at-home mum. Spare me!

My advice, keep it simple, live as cheaply as you can and enjoy that baby.

Wylie

Very touching replies, Looks like there are still genuine caring people left in the world. I am very impressed. For what it is worth I was recently just a bit short of cash flow and the pressure of it nearly killed me . When I could not hack it any more Igot a part time cleaning job, 6 hours a week which brings in about $100 per week extra nett. I feel a bit more fatigued but that rotten financial pressure is gone. I will have piad out a personal loan by the nd of April which will give me more cashflow and have the freedom to quit the cleaning job if I so desire by then. Sixx months working extra part time 6 hours a week got me out of trouble.

Cyclist
http://qwertyu.colmkille.hop.clickbank.net