#guideyouhome
Q. In 2017, what stellar mortgage advice did Australian Businessman Tim Gurner (34) offer up to property hungry youth of the first world?
A: Put. Down. The. Avocados. (And something about $4 coffees and his disdain for the Kardashains).
The exact phrasing doesn’t actually matter because in reality, while managing to momentarily capture the imagination of the zeitgeist (and millions of media outlets) on a global scale, Gurner’s musings bore little insight into the unique experience of buying a home and much less into the inner workings of the millennial condition. Brunches can be expensive, sure. But have we really become so obsessed that we’ve completely ruined our chances at getting on the property ladder - and as a consequence - our future happiness? Nah.
Buying property is a commitment. It’s a journey. And, when the time is right for you, it can be one of the best, most exhilarating and fulfilling journey’s you’ll embark upon. Saving is an integral part of the journey and you have to be wise about. But, ‘wise’ doesn’t mean ‘total deprivation’ – even ‘everything in moderation’ has a much nicer ring to it.
If we caught you right on the brink of deleting your Netflix account in a last-ditch effort to reclaim that €10 a month, we beg you to re-asses and don’t let the panic take over. A Netflix user (substitute Spotify, or another streaming/subscription service of your choice) will spend, on average €10 a month to feed their habit. That’s €120 a year. And when you’re sitting in on a Saturday night (or afternoon because, brunch…) that Netflix subscription, in reality, is going to be worth far more towards your sanity than your mortgage application.
So, how do you decide what to cut and what to save? Consider the “50/30/20” rule, or at least a variant of it. This approach to budgeting and spending is practical, fool-proof and, if you stick to it, gets results. Coined by bankruptcy expert Elizabeth Warren, 50/30/20 helps you divide your earnings into 3 categories: Needs, Wants and Savings.
Weighing in at 50%, Needs prevail. Constituting your non-negotiables, needs cover off rent, utility bills, food – in other words, all that you can’t leave behind. When following this approach, traditionally, 30% then goes towards your ‘Wants’ (fabulous things you’d just love, but absolutely CAN live without) and the final 20% is put straight into Savings.
If you want mortgage approval and you want it now, it’s very optimistic to think allocating 30% of your earnings to ‘wants’ will get you to the finish line lickety-split. However, the objective of “50/30/20” is to identify what YOU need to spend and what you need to save, with - and this is the important one - room to live in between. Be mindful of your spending and remember, you’re playing the long game here. Identify where you need to cut back, set targets and stick to them. Beyond that, what you do and where you’re going with your savings plan is between you and your lender. Stop punishing yourself – it ain’t all bad. We should know.
