DDU is going to save for a house

By | November 8, 2017

Author: Mr and Mrs DDU.

A few months ago we made a post considering what we wanted out of life. We received a lot of thoughtful and helpful replies, so thanks if you were one of those of responders.

In that post we outlined that we weren’t exactly sure what we wanted to do with our money. We said we want to achieve FIRE, so we’re investing at least $1,000 a month into shares. We want a bigger emergency fund, so we’re saving $200 a month. We want a second child, but will very likely (who are we kidding – we will) need IVF again so we’re saving $200 a month towards our next family member.

We also said we wanted to buy a house, but we weren’t exactly sure when or how hard we were going to save for it. But, we would start by saving $200 a month.

Well, we did start saving $200 a month. So, by the time Baby DDU was born we had saved just over $1,000. Hey that’s enough to buy a house, right?

We’ve done a lot of thinking about where owning a house would fit in with the life we want, with FIRE, etc. This really came to the forefront when we recently asked the landlord to install one air conditioning unit in our rental place. We don’t have it yet, but it’s been a hassle and will cost us a fair few more dollars per week. It will be worth it for those hot summer days with Baby DDU though.

Anyway, it really highlighted to us the positives of owning your own place versus renting. There are other positives (as well as negatives), but freedom and not getting rental increases are pretty good reasons to own. Of course interest rates can go up, council rates can go up etc, but that seems as though we would be more in control of those somehow.

The plan

The high price of Australian property is as high as it ever has been, even with talk of a slowdown. The main difficulty for avo toast eating youngsters like us is the time it will take to save for a deposit.

So, to be realistic and ambitious, we’ve said we’re going to buy a house before Baby DDU goes to school, which is at five years old. We are going to aim to buy a house by Christmas 2021, which is four years and a couple of months away.

Who knows what the Australian economy will do between now and then? Who knows what Australian property prices will do? Maybe they will stop growing, perhaps fall a little. Whatever happens, we can’t control that part. What we can control is the amount we save for a deposit.

We’re going to save at least $1,000 a month, perhaps up to $1,500 on good months, towards our house deposit. It will take a long slog and dedicated effort to do it, but it will just be a matter of time before we achieve it. We’re also going to channel all of our cash dividends towards our house fund too.

Hopefully our deposit will be at least 10% of the price in 4 years.

From now on we will report how much we have put towards our house fund in our monthly savings rate posts. Today it currently sits at $4,408, so there’s a loooong way to go, but we have made a good start.

We are still going to be investing monthly in shares, saving for baby #2 and building our emergency fund. So, our savings rate will look good, but all of that cash will be put towards each of our financial goals.

We have no intention of selling any shares when we get close to buying a house. FIRE is still our ultimate goal and the dividends will help fund the future life we want. Hopefully the shares and dividend income make it a bit easier to get the best mortgage we can get.

There are lots of things out of our control that could hinder or help our journey to buying a house, so all we can do is save and hope for the best when we get there in a few years.

Final thoughts

It feels a little bit like we’re Frodo on the start of a huge journey. If we just keep walking and saving we’ll get there, step by step. Hopefully we have some happy news to share in 4 years from now.

Thanks for reading this article about our financial journey Down Under.

Onwards and upwards!

12 thoughts on “DDU is going to save for a house

  1. grogounet

    hello. interesting article. where are you guys located in australia?
    to me the comparison is also rent (expensive) vs repayments (even more expansive)

    Reply
  2. wealth from thirty

    Congrats on deciding to save for a house guys. It might take a little while but it should be worth it in the long run. And with $1k + a month, you should have a decent amount saved in 4 years. Are you using a high interest savings account for it?

    Good luck socking tons away!

    Reply
  3. Andrew

    Have you thought about putting off buying a house until your savings are compounding out of control after FI? At some point you should be able to pay cash instead of getting a loan. Especially if after FI you choose to move somewhere cheaper like a small coastal town. Mortgages put FI back heaps.

    Reply
  4. David

    Owning your own home is a great step to retiring early. Rent is one expense you cannot control if you don’t own your own home. i shudder to think how my current living standard would be if I was paying say $350.00/week!
    You should be keeping your eye open for small nooks in the areas you would like to live. There is nearly always a street or forgotten cut de sac where the prices haven’t kept up with the suburb. Ask your friends as well because nearly everybody knows of such an area.
    Also don’t buy the house you intend to live in the rest of your life, expect to upgrade after 10 years or so.
    Hold onto your shares they are a great backup if suddenly something disastrous happens.

    Reply
  5. Dividend Diplomats

    DDU –

    Congrats on not just the goal, but the PLAN to get there. It all starts with saving and I am all about that! Yes, the economy cannot be predicted between now and then, which makes me happy to see that you won’t stop investing either. No one can predict, but staying consistent always yields strong results!

    Best of luck and excited to read more on the journey.

    -Lanny

    Reply
  6. Miss Balance

    Congratulations on taking action on reaching your goals! It may feel like a long way off but with each small step you will be on your way to the larger goal.

    As some others have said, look around at where you want to buy and look out for a good deal. Money is made in property on the purchase, so don’t overspend.

    Best of luck and keep us updated on how much you have saved towards your goal.

    Reply
  7. dividendgeek

    Congrats on your decision. Owning is good. It is definitely cheaper than renting (where I live). It might be a good idea to pay of the mortgage early.

    Reply
  8. pia

    We were originally going to buy a house too. But the house we live in, I own it. We just wanted something that was jointly owned. Our decision is now to buy a house when we do get pregnant in the school zone that we want the kid to go to school in. I think owning will always beat out renting as the instability of renting just does my head in. That is a very personal opinion of course. You guys have always been so good at saving, there is no doubt you will be able to achieve this goal very easily !

    Reply
  9. J @ Hey, It's Just Money!

    Congratulations on this decision! I don’t think buying a house ever crossed my mind when I was your age. You guys are really doing a great job.

    Maybe we’ll be neighbours! I don’t know. At the rate that we’re going with our house hunting, we probably won’t get one until you guys do. Haha! Good luck!

    Reply
  10. MrSLM

    Owning is a lot different than renting, definitely way better on the “I feel like knocking down this wall, get me a hammer” side of things. Are you two going to be investing the money (in stock) you save for the house or putting it into more conservative vehicles?

    Reply
  11. Strong Money Australia

    I love that you guys put a date on it. That’s a powerful thing.
    And also focusing on the controllable (saving), instead of worrying about what happens to house prices.

    Who knows, with the extra goal you may somehow be able to increase that savings rate out of pure determination lol?

    We’re in the opposite camp, as we’ve just started renting!
    Not sure if we’ll like it, but it’s a good experiment.

    Reply

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