A year in

So, after almost a year of having a mortgage, how’s it all going?

I expected an impact on my spending. Nothing terrible, and I wouldn’t have taken it on if I thought I couldn’t sustain it. But the monthly repayment is about double what I had been paying in rent, and I’m no millionaire, so it has meant a noticeable change in the amount of spare cash I have lying about.

I’m no longer swimming in it. Perhaps wading gently, at least in months when car repair bills or other occasional big expenses don’t come in. Or in the weeks following really busy periods at work (since I’m paid by the hour).

Big outlays such as overseas holidays are off the agenda for the forseeable future, particularly since they not only include paying a lot of money, but lost income.

In the first few months of the mortgage I did manage to make extra payments onto the mortgage, so now I’m about five months ahead. Obviously this means paying a bit less interest, but it also gives me a buffer so I could theoretically not pay it for a little while before there were any interruptions to work.

But as for my goal of paying off 20% of the loan by the end of this year… When I made that goal in January I’d paid off 3.84%. Now I’m sitting at 5.18%… so not exactly rocketing through it. St George will be raking it in from me for a good few years yet.

In investment terms, figures out today show median prices in Melbourne up 4.2%. (In Bentleigh it’s about 5% for houses.) I suppose, now that I’ve bought, it’s good for me that prices are going up. But I do wonder about how my kids will go when, sometime in the next decade, they look for their own homes to live in.

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7 Replies to “A year in”

  1. Are you going to be one of those parents who spend their children’s inheritance? They will have your valuable house coming to them. It will give them ease of mind to got into debt to buy their own place.

  2. Daniel’s kids are going to be old and grey by the time they inherit anything off him. It’s not like the good old days, when your parent’s died when you were in your 20s or 30s and you scored yourself a house.

  3. Andrew, with modern life-expectancies, children could well be in their 50s or 60s before they receive an inheritance.

    So even assuming parents do leave their money to the kids when they shuffle off, it will more likely help with their retirement (or grandkids with education) rather than the mortgage.

    With divorces, re-marriages, blended families, etc it’s presumptous for kids to assume they’ll automatically get the fruits of the parents’ labours at an early age.

    The best financial presents parents can give kids are good values and a supportive environment. Some help with education so they don’t have a HECS debt wouldn’t be a bad start either. But after that it’s parents’ money and they should be free to save, spend, donate or burn it as they see fit.

  4. Thanks Peter and Josh. I am old and I think like an old person. I am sure Daniel’s children will be well prepared for the world. I worry about those who may never be able to buy there own bit of Ozland.

  5. Josh, you’re right in Daniel’s case. But I was just thinking that life expectancy is rising, but so is the age that parents have their first child.

    So the age the children get the house might not have changed very much compared to 30 years ago. Then parents had kids by their early 20s but were only expected to live until 70.

    With blended families, inheritances could be smaller, depending on how they’re divvied up. But if there’s fewer children (on average) they might be larger!

    So there’s no hard and fast rules, especially if the parent ends up leaving it all to a dogs’ home!

  6. “I plan to live forever… or die trying.” — Vila, Blakes Seven.

    At least with my generation, my sister and I have been through uni and are earning good money, and that’s something that (provided they want to) should be continued for my offspring.

  7. I wonder where I’ll be able to afford to buy a house!!! Currently I’m very used to the comfortable life I have living at home in my parents house in Beaumaris…but that can’t last forever…Damn when did we have to grow up???

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