Money can be hard to talk about. I know I’ve debated back and forth with myself on how to approach the subject here on our blog. On one hand I want to be honest and transparent with you all, but on the other hand I’m very mindful of our privacy and wary of oversharing. It’s not an easy balance to strike. That said, I know some of you must have wondered how we went from moving in with my mum to save for a deposit, to buying our own house just two short months later, and I think it’s important for us to explain how we did it. Our finances obviously play a crutial role in our journey to a simpler life, so it makes sense to talk about them a little bit here.
Now, let’s start at the beginning.
Katie and Reuben, The Sunshine Coast 2006
Reubs and I have been together eight years (eight years!) and during that time money has been an almost constant struggle for us. In the beginning we lived on the Sunshine Coast, in Queensland, in a little rental house that cost us $240 a week. We were both at university and working retail jobs around our study. We didn’t earn much money but somehow managed to pay the rent and bills, as well as cover all the socialising and spending that comes with being uni students. We never saved any money but we went out every weekend and regularly bought new stuff. During that time we racked up a couple of thousand dollars worth of credit card debt. It wasn’t a huge amount and we figured we’d pay it all back as soon as we got “grown up” jobs. In mid 2009 I finished my journalism degree and was fortunate enough to immediately get a job in magazine publishing, in Sydney, so we moved to the big city.
Sydney Harbour Bridge, 2011
As I’ve mentioned before, Sydney was really tough for us. As a graduate straight out of uni, in an industry that doesn’t pay particularly well, I was earning less than I would have been in a full time retail job, and Reubs was working full time at a coffee shop. The cost of living in Sydney was much higher than we were used to in Queensland. When we first moved there we lived in a studio apartment in Manly. Manly obviously wasn’t the cheapest option but I had family there and we really wanted to be close to them. We were paying $350 a week on rent and, on our tiny wages, were struggling to get by. After about 6 months the financial strain was really getting to us and the cracks began to show. We decided we needed to find somewhere cheaper to live and looked all over Sydney, but couldn’t find anywhere we’d be happy to live for what we felt was a reasonable price. We ended up moving out of the city, to a little house on the Central Coast that cost $260 a week, and commuted the hour and a half each way to work. After a few months of commuting three hours each day we were both exhausted. During our time on the Central Coast we had both gotten new jobs with better pay, so with a little extra money behind us we moved back to Sydney where we rented a two bedroom apartment for $420 a week. Not long after that Reubs was in a minor car accident and the cost to repair our old car would have been more than the car was worth, so we bought a new one. Our car repayments were about $450 a month. Even though by that time we were both earning reasonable salaries we couldn’t get ahead. As well as our expensive rent and car repayments we were eating out a lot (because we were too tired and frazzled to cook), we had pay TV and were spending a lot on utilities. We still hadn’t paid back the credit card debt we had accrued while we were at uni and the debt had grown a bit.
Crochet in the park, Sydney 2011
It was at this point that we realised something had to give. Our lifestyle simply wasn’t working for us. We were exhausted by the city, unhappy in our jobs, fed up with the high cost of living and tired of living from pay cheque to pay cheque. We began daydreaming about running away to the country and living “the good life”. Around this time we also started reading more blogs. We stumbled across Rhonda’s blog and other blogs about living a simpler life. Suddenly, our daydreams seemed somewhat viable. We began making plans to change our lifestyle, launched our blog and started sharing our journey to a different kind of life.
In early 2011, not long after we started blogging, my mum had surgery. Reuben and I took a couple of weeks annual leave and drove down to Victoria to help out while she was healing. Unexpectedly, while we were here we fell in love with the place. Particularly Bendigo. We were charmed by it’s old architecture and miner’s cottages, smitten with the local op-shops and markets, and in love with the quiet and relaxed atmosphere compared to Sydney. We had a lovely lunch at a cute cafe and adored it. Within days of returning home to Sydney we had decided to move to Victoria.
In August 2011 we reduced all our possessions to only what would fit on the back of a ute and one tiny trailer, and we came to Victoria. We stayed with my mum for one month while we looked for work. We were prepared to go pretty much wherever we could get jobs but happily, Reubs was offered a position at the very same cafe we had had lunch at the very first time we visited Bendigo! We found a little cottage to rent in Bendigo for $240 a week and moved in immediately. Meanwhile, I was feeling a bit lost career wise. I had despised the two years spent working in cubicles in Sydney, and was desperate not to return to an office job. One day, about a fortnight after we’d moved to Bendigo, I was shopping for some sewing supplies and got to talking with the lady who served me at the craft store. It turned out she was the manager and she just so happened to ask me if I was looking for a job! I decided it was the perfect job to while away a few months until I figured out what to do next, and started working there part-time a week later. Somehow, miraculously, all the pieces of the puzzle had fallen into place. It felt like it was just meant to be.
Our little home, Bendigo 2012
We spent over a year living and working very happily in Bendigo. We made new friends and changed our lifestyle habits. We got more serious about thrifting and began buying 90% of things we needed or wanted secondhand, or not at all. We cooked from scratch more and dabbled with a veggie patch (with limited success). We finally paid off our credit card debt. We quickly realised we didn’t want to leave Victoria and it was where we wanted to settle long term. We talked a lot about buying a house but knew that on our limited income it would take years for us to save a deposit.
By October 2012, after almost eight years of renting, we were feeling quite desperate to get out of the rental loop, so we decided to go stay with my mum for a while in order to save for our deposit faster. As my mum lives about an hour from Bendigo and we only have one car it was going to be impossible for us both to commute to our jobs, and I’d always intended for my craft store job to be a temporary thing anyway, so we did the figures and worked out that even without my job, with the savings we’d be making on rent and utilities (still paying our share) we’d be financially ahead. We also knew being further away from the convenience foods and entertainment of Bendigo would help us to save even more quickly. I figured I’d look for a new job closer to mum’s place once we got home from our November road trip.
Road trip, 2012
Almost as soon as we’d moved in, Mum took us to have a look at a house around the corner from her’s that was for sale. We weren’t considering buying a house so soon, as obviously we hadn’t yet saved a deposit, but the house was listed at just $109,000 and mum was convinced it was a good buy. We went to see the house and fell in love with it. It was old and rough around the edges, but cozy and so full of potential. Though my mum is far from rich she offered to lend us the money for the deposit. She had sold some assets and wanted to use some of the money to help us out. We did our sums, discussed it all at length and decided to go ahead and borrow the money from my mum, then focus on paying her back as quickly as possible. We made an offer on the house and it was rejected. Then we made a counter offer of $100,000 and it was accepted!
We went to the bank and our application for a home loan was approved, but then the sale that we were depending on for the deposit, fell through. Of course we were shattered, but we were conviced the house was a fantastic opportunity and a good investment, so I trawled the internet searching for a solution. Luckily, I found an alterative option for our home loan. The loan was the same as any other ordinary home loan (same interest rate, fees etc) except that instead of needing a deposit, applicants needed someone with a home of their own to act as a guarantor. Obviously this is not something you commit to lightly. Had my mum decided not to go ahead with it we would have totally understood, but after consulting a solicitor, crunching the numbers and thinking long and hard about it all, mum agreed to be our guarantor. This not only meant that we would not need a deposit, but also that we wouldn’t need to pay mortgage insurance (which would save us a sizeable chunk of money) and we wouldn’t have to worry about paying mum back. Win, win, win! We applied for the loan and were approved. At the same time we refinanced our car loan. This means that instead of paying about $1410 each month on rent and car repayments as we were in Bendigo, or $2130 as we were in Sydney, we will now pay just $520 per month on the one loan (though we intend to pay more so we can pay our mortgage back faster and release my mum as guarantor sooner). That’s a huge saving and quite affordable, even on a really modest income. Though having someone act as a guarantor is generally considered risky and ill-advised (for good reason), in our situation, where the loan amount was relatively small and paying it back was going to cost us much less than what we’d already been paying in rent and car repayments, it made a lot of sense.
Obviously we are very, very fortunate that my mum was in the position to help us buy a house and was willing to do so. We realise few people have that option. Luck has played a bit of a role in our journey too. That said, there are choices and changes we have made, and risks that we have taken, that we know have contributed significantly to us being able to buy our first home. The biggest one being that we chose to buy an affordable house in a tinyl rural town. We didn’t look for the biggest or prettiest house we could afford, or a house in a trendy location. We didn’t overcommit ourselves to high repayments. We made peace with the fact that in order for us to be able to buy a home now we’d have to give some things up (mostly the convenience of being close to things in Bendigo). We made a lot of compromises and bought a cheap house, that we knew we could work on and add value to, with repayments that we could easily afford on one income. Housing in Australia is increasingly unaffordable and the median price of a house in Sydney in 2012 was $642,000. The reality is, had we stayed in Sydney or moved to another expensive area, we may never have been able to afford to buy our own home. The realisation that we don’t have to be in the city, live in a shiny new house or have the latest material things to have rich, fulfilling lives has been a revelation. We’re fully aware that houses in the price range of ours are becoming rarer and rarer, but they are still out there if you are able to accept some tradeoffs.
Our new home, 2013
Moving to the country, changing our spending habits and adopting a “make do and mend” attitude has changed and improved our lives immeasurably, and made it possible for us to live quite comfortably on less than half of what we were earning while we were living in Sydney. And we don’t feel deprived! We still go out, buy nice things and enjoy ourselves, we just do these things much more mindfully now. The freedom from financial burden that has come with cutting back is incredibly liberating and has allowed us not to worry too much while I have taken a little time off work. I now have plans for some exciting projects, I’d like to start doing more freelance writing work and I’m considering returning to uni for further study. I’ve also got time to work on our new house! I don’t yet know where the future will lead me in terms of work but I feel very grateful (and so privileged) for the fact that simplifying our life has given us space to breath and time for me to figure things out. We could never have afforded for either one of us to take any time off before now.
So that’s our story so far! We know the choices we’ve made and risks we’ve taken might seem strange, extreme or even stupid to some, and our lifestyle certainly isn’t for everyone, but Reuben and I are so happy with where we are right now. We feel confident we have chosen the right path and are sure we are building a beautiful, bright future for ourselves. Really, that’s all we could ever wish for.