At 27 I’ve recently seperated and moved back with good ol mum and dad to try and repay about $12,000 of credit card debt.
I am very keen on getting into the rental property market but with no history of savings for the past few years doubt that i’d get a loan at this stage (and no deposit yet either)
I have approximately (minimum) $500 disposable income. The way i see it i can plough this into my credit card which would take at least 6 months to repay and THEN start saving for a deposit for a further year or so
OR would I be better of ploughing the money into a deposit and borrow a liitle extra to repay the credit card which means i could invest in as little as 6 months (i have a boat valued at approx $6000 that i want to sell to contribute to deposit)can anyone see a way to get into the market sooner based on the info given?
Thanks for all your help
Alex
Hi Alex welcome to forum.
I can think of couple of points to start sooner.
1) Ask your parents to help you if they got equity in their home.
2) Get some partner to invest with you.
3) Get second job to make and save money.
I would pay CC later and try to get into investment but you can decide what you will be confortable with.
Cheers
PropertyGuRu
[sultan]Mortgage Consultant
being conservative and boring, I would say pay off the credit card through a combination of salary and selling your boat and start saving as much as you can… clearly you’ve got some bad savings habits, and those habits are always some of the best ones to break…
also don’t be in too much of a hurry to get into property at the moment… take your time and be patient… for most people it’s get rich slowly instead of quickly, but good on you for visiting the forum and asking a question… it’s more than most people do…
cheers
rthanks for the quick responses.
My bad spending habits have come about from being in uni and with a partner who was not working either. we leaned haevily on the credit card.
Now that we’ve seperated though and i have a reasonably good paying job and living with parents again, i have a fair amount of money to play withParents are renting with few assets of their own and don’t know anyone else in a position to help – so its just me.
i’m not so much after a ‘get quick rich’ investment. just figured that with the CC, a small investment loan might work in well and supply some equity for future investments / home
if there’s any better way, i’m all ears?
thnks
I reckon pay off your CC with another CC[biggrin]…only kidding…
i’m not so much after a ‘get quick rich’ investment.– exactly – it sure is a long learning process rather than a fast money making process.
I agree with Richmond – from your previous bad experiences with savings, Id try to reduce your debt on your CC ASAP. Any debt that you have that is not incurring interest, ie. money owing to friends or family, I would leave this till later and build up your investments quickly – then let the return on your investments pay off your debt.
Kind Regards,
George.I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how
I would prefer to talk to you before I give advice – however you need to establish 6 months savings – sooner this starts the better.
All depends on your figures and goals as to what I’d recommend.
Regards,
Simon
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi alex
i have little doubt that paying off the credit card debt is your first priority. You will be better to refinance the Debt at a lesser interest rate , look for a personal loan that maybe say 10-12% rather than CC rates of 17%. That alone will save you a fortune. Even if you borrow $12,000 from Mum and Dad and pay them 10% interest then you both will be winners.
Look at the interest you are paying per month on 12,000 at 17% its $170 per month. Paying a less interest rate will pay the debt off quicker.
So, if i was in your situation unless i could find a way get a return of better than 17% i’d pay of the card.
I agree with Richmond, there is no great urgency to enter the Market at the moment, use this time of debt paying to read and learn as much as you can , you will end up being a wiser investor.
all the best
westanI live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database
Hi,
One of the first things I would work on is the way I think about money. I can reccomend ‘The Richest Man in Babylon’ by George Clason as a good starting point as well as ‘The Millionaire Mind’ by Thomas Stanley. I personally did not like ‘Rich Dad Poor Dad’ even though it is highly motivating.
If you have not learnt good money habits from your parents, finding a mentor who comes from a similar background to you may be beneficial.
Just my 2c.
Bent
Good advice Bent
I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how
Hi there,
Another good book to read is John Burleys “Money secrets of the rich”.He explains how anyone, reguardless of income, can be financialy free within 3-7 years.Cheers.
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http://www.growyourwealth.infoThere are various credit card promotions happening such as transferring you balance and receiving a 5.99% interest rate for the first 6 months (Amex). Maybe this is an option, but just be wary of having too many hits on your credit file – evry time you apply for credit a note is made on your file, and this does not look too good when later applying for loans,
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I just got a call from Amex confirming my deetails – I applied for it cause it offers 1.5 points for every dollar spent.[biggrin]
I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how
1) Ask your parents to help you if they got equity in their home.With all due respect Property Guru…Stuff that for a joke !!!
Yeah run to mummy and daddy, you’ve maxed out your credit card now sponge of people who are in their twilight light years and are looking forward to a bit of financial freedom!!!
How about a bit of accountability…??
Alex pay the bl**dy thing off and start again..learning from your mistakes and hopefully don’t repeat them.I have to agree somewhat with supafreak.
my parents are helping me more than enough by letting me live with them rent free to find my feet.
other than that, if i can’t get there with the help – i really don’t want to be there
but i am expecting to get there either way. its just a matter of time. i have every intention of repaying my CC debt. it was just one of those stupid thoughts you get in the middle of the night where i thought that i might be able to quick track a few things by saving for a deposit, paying the min repayments on CC and bringing forward my purchase date.
the disadvantges would be that i’m paying more interest on the CC in the short term
the advantage would be that with a house loan, my CC would get lower rates.
and from what i understand, that interest could be deductable since the property would be investment???
and also the difference in time between repaying the CC upfront or not would be more than covered by the rental return over that period.so…
option 1 – pay CC upfront
debt – $12000
week repay – $500
CC rate – 12%
repay time – 26 weeks
interest paid – approx $500
save goal $12000
rate $500
time approx 24 weeks
TOTAL TIME – 24+26 = 50 WEEKS
TOTAL OUTLAY – 13000+500+12000 = 25,500option 2
savings goal – $12000
weekly save – $500
interest rate – negligable
time to save – approx 24 weeks
CC interest – approx $650
weeks vacant – 10
weekly rental ret – 150
rent received – (50-34)*150 = $2400
TOTAL TIME – 24+10 = 34 WEEKS
TOTAL OUTLAY – 12000+650-2400 = 10250this doesn’t take into account the following…
would receive possible tax deductions on interest paid for CC in option 2
larger loan amount required in option 2 to cover CC – or less money for property
interest paid over life of house loan in option 2 – but spread over years and not months would be easier to manage so not important to me
option 1 interest paid is lower cos princliple is being lowered
option 2 interest paid is higher cos principle is not being reduced
neither option consider pitiful interest paid on savings accounts – partly cos i was lazy and this overestimates the savings which seems saferbasically, i’m leaning toward option 2 cos i save upfront money $15,250 and 16 weeks
– or is too simplistic an approach?
Originally posted by Supa Freak:1) Ask your parents to help you if they got equity in their home.With all due respect Property Guru…Stuff that for a joke !!!
Yeah run to mummy and daddy, you’ve maxed out your credit card now sponge of people who are in their twilight light years and are looking forward to a bit of financial freedom!!!
How about a bit of accountability…??
Alex pay the bl**dy thing off and start again..learning from your mistakes and hopefully don’t repeat them.it’s all depends on how serious you are. If someones parents are rich and got millions in equity why can’t they get help from them. Yes you have to be accountable for things which you are going to do in future. Some people wait and save and some people learn and make money. Without knowing once personality, eagerness and other personal circumstance one can’t comment.
Cheers
PropertyGuRu
[sultan]Mortgage Consultant
Hi Guys,
personally i would put the credit card off and pay that later, the credit card debt can always be paid later, but entering the property market is getting harder, but more difficult, personally i agree with PropertyGuru, but we think a like, and a small debt for a large profit (asset) that can be working for you immidetatly, will not just put you ahead, but in a short near future, help you pay down your own liabilities and doodas…
Cheers,
sis
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