finance

'I quit booze, pricey hair cuts and... brunch.' How Nicole cracked the property market at 31.

When Nicole Haddow hit 30, she got a harsh reality check. After living it up in her twenties, as one does, she found herself broke, in serious debt and living back home with her parents. 

In her new book, the hilariously titled Smashed Avocado, Nicole explains how she transformed her financial position and managed to crack into the property market. She shares her story here.

A few weeks after moving home, and having pulled myself together after my 30th birthday meltdown, I sat down with Dad at the dining room table and took a financial whipping. His accounting experience makes him pretty handy with a spreadsheet, budget and projections.

I laid all my bank statements on the table. He was appropriately mortified. The taxis, drinks, brunches, clothes, haircuts, travel and spontaneous weekends away had added up to an account balance of precisely nothing. Actually, less than nothing, with the credit card debt. 

But Dad looked at my income and said, ‘You can almost certainly afford a unit if you save for the next 12 to 18 months. You can manage mortgage repayments with your salary. They’re not much more than the rent you were paying. All you need is a deposit.’ 

I was stunned, and cautiously excited. I hadn’t thought it would be possible on a single salary. I’d been waiting for a guy to come along and work with me to buy a dream home. ‘No, Nic,’ Dad said. ‘You need a financial plan of your own.’ I realise the way I’d been thinking was pretty outdated. I’d been fiercely independent in my career, but buying on my own felt like too big a weight.

Mia Freedman talks to Nicole Haddow about starting from scratch at 30. Post continues after podcast. 

I’d viewed home ownership as something marking the beginning of a partnership, perhaps a family. But what if I followed a different path? And even if I did meet someone, that didn’t guarantee financial security. 

I was embarrassed that I’d arrived at 30 with no understanding of how to manage money, but I was pretty sure I’d never been taught. I don’t remember financial planning ever being part of the school curriculum: weeks of precious teenage years were wasted on Pythagoras’s theorem, but the most fundamental mathematics of all, learning how to budget, had weirdly been overlooked.

Which is why I’d spent years buying things, looking at the remaining sum in my account and thinking, yeah, that should do me till payday. I believed things would somehow magically come together at some point in the future. How naive.

If I hadn’t had Dad, I would have needed to consult a financial adviser or talk to a friend with accounting experience. If you don’t have a numbers nerd in your life, I highly recommend getting one. The early financial outlay could help you pocket heaps in the long run.

That said, a financial adviser can be expensive – you could be up for thousands if you commit to a full financial plan – money that could go to a deposit instead. However, some banks offer complementary finance consultations, and many financial advisers will give you a first session free.

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Alternatively, seek out a trusted family member or friend with a finance background. Perhaps offer to buy them lunch in return for some financial tips that apply to your personal situation.

Whoever you get to help you, the first step is appraising where you’re spending money unnecessarily. In my case, it wasn’t the smashed avocado or even the designer clothes that had done the most damage. It was booze.

 

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It’s best not to tackle a big writing project in a country that has 7000 pubs, it turns out.

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At a minimum, I’d been buying a couple of bottles of wine a week since I was 20. If I spent $45 a week on wine, that’s $2340 a year – $23,400 in a decade. And that figure is conservative.

I shudder to think about how much money I’ve wasted in the pursuit of merriness. I drank a deposit and I know I’m not alone. If you spent your twenties living like me, you can’t crack the shits about house prices.

It was absolutely my fault I didn’t own a house yet: I’d spent everything I earned. That’s not to say I’d have been able to buy a home where I wanted to live if I’d drunk less, but had I consistently put away $30 or $40 a week from my early twenties onwards, I would have been close to having a deposit on an entry-level investment, instead of having to start from scratch at 30.

The next step is getting realistic about what you can afford. Dad and I got on Domain and looked at properties in the $300,000 to $350,000 range, which is what we estimated I could handle. At that time, in early 2013, I could get a two-­bedroom apartment in a decent block within a twenty-­kilometre radius of the city.

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Looking at pictures of sweet little kitchens and light-­filled bedrooms with bright outlooks, I began to imagine what life could be like if I actually pulled this off. Sure, this was more than six years ago and prices rose after this, but in many locations they then started to decline again. Market fluctuations vary from state-to-state and suburb-to-suburb, and first-homebuyer incentives help enormously. So stay with me, friends. 

 

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Dad drilled into the numbers in more detail. I was now making about $4000 per month as a social media and content consultant for a public relations agency and in my spare time writing freelance articles that brought in between $500 and $1500 per month.

I was often working a six­ day week to make this kind of cash, but despite that, I was wasting it. ‘In a month where you make $5500, you could be putting away between $2500 and $3000,’ Dad explained.

There were tax requirements that I had to factor in with the freelance income, but when I looked at how much I’d been blowing and what I stood to save, I resolved to knuckle down. All I had to do was give up everything that wasn’t essential.

We drew up a power-­save plan. I set myself the ambitious goal of saving $25,000 to $30,000 in twelve to fourteen months. I didn’t want to live with my parents any longer than I had to. It was going to suck for a year. After that, I’d work out what I could do with whatever I’d saved and return to living like an independent adult.

At this point, I still didn’t know if $30,000 would be enough for a deposit, but it was a feasible target. When it came time to start seriously researching properties, I’d learn how to use my savings to get a loan. 

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Geelong: where you can get a kitchen the size of a footy field for $440,000+ ????

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I’m lucky to work in an industry that lends itself to making extra cash, but there have never been more ways to pocket a quick buck, even if you don’t have a degree or formal qualifications. I wouldn’t be in the position I am now if I’d lived on a salary alone. Whether you do odd jobs, take on a casual nanny role or drive for Uber, making money in your spare time is the key to getting ahead.

Growing up with property prices that seem impossible to reach has made many of us feel that perhaps we should give up on saving a deposit and enjoy ourselves instead.

Study after study shows that we are poorer than previous generations. Rent is astronomical, property prices even higher. We’re paying off university debts, and the salaries for entry-level jobs can be laughable. Plus, the gig economy has changed the market – creating more freedom for those who want it, but also reducing security.

But, whatever your circumstances are, it’s really dangerous to spend everything you’re earning.

A smart property investment could make money faster than you can. Sure, it probably won’t be a little cottage with a bench seat on the front porch, a brightly coloured front door, iceberg roses lining the footpath and a white picket fence, like you – and I – imagined, but it’ll be a start, and as the value rises, and the loan is paid down, you can use the equity to take steps towards owning something more desirable. 

 

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taking my new porch for a spin with @clarencethepuggle ????????

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To get serious about saving, I first had to work out my essential and non-­essential expenses. Essentials included car repayments, credit card repayments, phone bills and board.

I paid $150 to my parents weekly to cover my share of expenses and my room. At this time, I didn’t aim to pay off my credit card debt. Dad had suggested it was better to just make the minimum repayments while I saved a deposit. I could deal with the cards once I got into the market. Paying off the cards first would have set me back another year and at that time there was no sign property prices would drop. It was better to get into the market as soon as possible and pay down my consumer debt second. 

Non-­essential expenses included big nights out, taxis (Uber didn’t exist yet), make-up, new clothes, hair and . . . brunch. With that, I quit the shops and pricey haircuts. I started searching for bargain cosmetic deals and stopped going out.

That was easy. What I didn’t anticipate was the headf*ck that came with dialling down my social life.

Many of my friends worked in the media industry. We’d read the articles about the inflated property market. Hell, we’d written some of them ourselves. We’d swallowed the doom and gloom message together. ‘Oh, we’re poor, might as well go and sink pints at the pub, it’s no life without big nights out,’ we’d tell each other.

It was bullsh*t. We were pissing away a fortune on booze, dinners, vices and pointless crap.

Stay tuned for Part Two, where I attempt serious adulting (really seriously this time).

This is an edited excerpt from SMASHED AVOCADO by Nicole Haddow (RRP:$29.99)  OUT NOW through NERO books. Available to purchase online at Booktopia or wherever good books are sold.

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