Hi all,

I’ve found plenty in this thread that seems to be relevant to my situation, so rather than starting a new one, I’ll simply tack mine on here…

“What do I do next?” is a key question for me right now.

I am 29, and after 8 years working my backside off in sales, earning great commission and being ULTRA frugle, I have managed to fully pay off a 2BR unit in St Kilda, Melb. I paid $223,500 in Dec 2000 and it is now worth ~$340K (very, very conservative estimate)

For a variety of reasons, I have returned to University to study law (postgrad is only 2 years, whew!). For those Kiyosaki readers out there, I am treading the path of an “S” (I want to be a Barrister) but have a firm commitment to “mind my own business” and build up my assets. (The Mercedes can wait!)

My wife earns $45K pa and I am currently not working as the degree is so intense. Since we moved interstate for me to study, our St Kilda unit is rented out ($315pw) and we are paying $310pw rent here, so we’re slightly behind after property managment fees but nothing too bad.

Since we can’t quite live on her salary, we have taken a LOC loan against the unit to make up the shortfall in our living expenses and to clear some existing debts.

In summary, it is likely that I will start work again (article clerkship) in 2009 with:
– Around ~$40K owing on the LOC loan against the unit (therefore ~$300K equity)
– A combined household income of ~$100K (my salary will likely increase quite quickly after the articles year)
– Living back in the St Kilda unit
– No savings (it all went into paying off the flat)
– Another 1-2 years before kids!

My question:

Is it completely old fashioned thinking to want to pay off the debt as soon as I’m working again or should I ‘go for it’ and use more of the equity to buy another property? It is a concern for me that I have no cash reserves and part of me would like to build them up a bit before getting too far down the investing pathway, or is that old thinking too?!

Any comments/thoughts would be appreciated.

Stanners[strum]

I fail to see what any of this has to do with property investing but since others have railed this thread into a HECS debate/whinge fest, I’ll throw in my two cents…

#1 Who ever said a tertiary education should be free? We live in a ‘user pays’ society, deal with it…

#2 HECS is an interest free loan which is indexed to compensate for inflation so the Govt doesn’t actually LOSE money. The current rate is a poultry 2.4%. You try getting a loan for anything, let alone an education that will (albeit indirectly) bring you tens of thousands of dollars in income each year, for such a small price.

#3 4% of your salary in repayments once you start earning money is hardly going to blow the bank.

#4 This talk about expensive degrees putting students in frighteningly high levels of debt is absurd. Put it in perspective. If a new university graduate got a bank loan and went out a bought a $30,000 car at 7-9% interest, no one would bat an eyelid. Then consider that HECS repayments stop if your earnings fall below the threshold, i.e. if you lose you job. Unless you bank with some kind of benevolent society, I don’t think you would get that same kind of treatment from a lender.

<Steps of soap box and retires gracefully into the night>