Merry Christmas everyone! I’m getting in early because I know that realistically this is the only post I’m going to do before Christmas. Especially as I only post rarely anyway - CB’s post about the blogs being quiet motivated me to write a blog post.
I’ve been reading quite regularly but life has felt really busy lately so I never quite get to writing anything. Financially life has been really hard. Keeping our old house to rent it out emotionally was the right decision but financially with the eight interest rate rises we’ve received has put us in a bind, to put it mildly.
We have toyed with the idea of selling our old house because of this but the tenants have signed a 12 month lease which expires in August so do not want to make this decision until May next year. In actual fact though the tenants are amazing. They are keeping our house immaculate. We have seen the garden well kept and we got to go through the inside when their 3 month inspection was done and got to meet them. The inside is kept great too and they have stated that they are happy to stay on for years as they love the house so it is definitely motivating to try and keep the house rather than sell. DH and I pretty much said that even if we sell we want to offer them the opportunity to buy first. I guess we just have to see how many more interest rate increases we have next year - if we only have a couple more we might be able to keep both houses.
When we were applying for the loans we were told that it would cost us an extra $369 per month to keep our old house as a rental property so it seemed affordable and a good long term investment. With these interest rate increases however we are actually paying around $1500 per month extra, which is all the money we have left over after bills, food and everyday expenses. Previously we would use that money to pay for car services, medical expenses or other larger expenses that tend to crop up in every day life. So to have that money instantly vanish has been a huge worry, especially as we had to cancel all credit cards but one (although low credit card debt is helpful). We have really been feeling close to the edge in a lot of ways.
So it’s been important to increase income where possible and reduce expenses where possible.
I’ve been lucky enough to secure another 10 hours of work a week, so I’m now working 30 hours a week. I couldn’t work full time driving the distance I do as it would be extremely exhausting. B has also received a $5k pay rise a few months ago, which has been lovely too. But with basically every financial organisation raising their prices due to “cost of living” increases, life is still hard.
I downloaded my usual spending app onto my phone and worked out how much we earn per week with our new pays and how much each expense costs per week. I decided any expense over $50 per week will be looked into to see if there are cheaper options available. Highlighted was private health insurance, income protection insurance and trauma insurance.
So far we have changed over our private health insurance from a gold standard policy to a silver standard policy which still has a couple of inclusions in the policy that we needed. We have saved $37 per week on that policy.
In the new year we will look into the other insurances because they have gone up by $159 in a month. A lot of the financial organisations in Australia have decided that because they did not increase their costs during the pandemic that they would do it in October because the pandemic is deemed to be over and it is time to recoup. Because of this we have decided it is time to review! Any extra funds are better in our pockets than theirs after all. We haven’t looked at those policies in a long time so it might not even be worth having them anymore.
Finally the last thing that we have done is to change our mortgage payment to monthly. I thought it was a great idea initially to have weekly repayments to help pay off the interest quicker however the reality is that now we are dealing with high loan repayments with 5 week months occasionally, which is harsh. Right now we need as much stability as possible, so monthly payments will suit our needs better. The monthly payments start in February, with our last weekly payment in the middle of January.
It’s unbelievable how much pretty much most things have increased by! We’re spending roughly the same amount of money we have always spent but to do this I’m buying as much in bulk as possible, so pretty much any item over $5 I’m checking the prices. Sometimes it’s fun but other times it’s exhausting.
All the bills have been paid up to the end of the month (or have been scheduled to be paid closer to the date due), so our main priorities are Christmas shopping (not a huge expense anymore really - we only have 2 actual gifts to buy); and getting through our five week month of mortgage payments and spending through the holiday season.
This post has ballooned into a much longer post than planned!!! But this is really a rundown of what has been going on in our financial life since around August so I guess it’s kind of to be expected.
Wishing all my SA friends a lovely Christmas and a wonderful New Year!! Let’s hope 2023 plays nice for us all.
December 17th, 2022 at 02:45 pm 1671288343
December 17th, 2022 at 03:15 pm 1671290112
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December 18th, 2022 at 12:56 am 1671324981
I hope you have a amazing christmas and new years..may we have great weather...and here's hoping that 2023 is happy and prosperous for us all!!
December 18th, 2022 at 12:58 am 1671325095
Wink- yes we’re on a variable loan.. we asked our broker earlier this year about changing to fixed rates but we didn’t qualify. We can do interest only on the investment property loan but it only saves $30 per month so isn’t worth it. Switching to monthly payments on our biggest loan should help with our budget though.
CB- we definitely walked into a financial storm, that’s for sure! But we are so blessed with our tenants, they are great. And the upside is that we have two properties, so we are asset building. It’s just difficult right now because of the uncertainty with everything. But thank you, definitely hope too that things start evening out / calming down in the New Year.
December 18th, 2022 at 10:46 am 1671360375
December 18th, 2022 at 06:56 pm 1671389768
Good to hear from you!
Hope you have a blessed Christmas too!
December 20th, 2022 at 08:40 am 1671525657
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December 23rd, 2022 at 08:28 am 1671784105