Escaping the Gilded Cage - Requests for Opinions

Hey team,

Just some muddled thoughts, however hoping it makes sufficient sense to generate some good dialogue. I would love to hear others thoughts on the matter.

My partner and I are currently looking to purchase our first PPOR. We are in a fortunate position with an existing portfolio, some equity, and a statistically high combined income. As others have stated as an issue with rent-vesting, a majority of my cash is stuck in my portfolio and unless I liquidate some heavily positive geared properties, I am unable to access this at this time. So whichever place we are looking at, we will be taking on a mortgage for 80%.

So to the point, I am torn between two possibly conflicting thought processes.


1. Avoid a large mortgage, lower my standards

I did what I did to obtain freedom of time, and would feel comfortable with a smaller mortgage. This would take us to some perceived less desirable suburbs to live in

It brings me back to a comment made on a previous thread where it was observed around the 2000 boom, people escaping mortgage stress in Sydney moved to Qld and created a community where the poster observed there was a perceptible common mindset that money was difficult to obtain. They surrounded themselves with others with a similar limiting belief.

I could somewhat related to this observation as I was really interested in the tiny house movement a few years back, and reached out to members of that community. I noticed there was a strong lack of financial capacity amongst a majority of the community. I was interested for its environmental benefits, however most I talked to when breaking it down were just unable to buy property, and I strongly believe if they had any sort of financial capacity, they would have run far from that scene.


2. Live in our ideal suburb, take on a large mortgage

On the flip-side, I can push higher and purchase an apartment in say Neutral Bay / Mosman and take on a larger mortgage. I am just concerned I am building a gilded cage for myself. I can already see the apartment becoming too small, and then wanting to take on a house, then a bigger house, then the kids need to dress a certain way, go to certain schools, and take expensive holidays.

I visited a friend in Mosman the other day, and it was like a scene out of the Stepford Wives. At the local park all the women were dressed in matching Ralph Lauren jackets, using the ball stick in unison to throw the ball to their pure breed dogs.

I read a quote which went something like “luxury is a never-ending addiction”.


Talking to friends like Skater and Simon, their advice has been to not over think it and be patient. Yet I would like to nip this issue in the butt. I read the likes of Mr Money Moustache and then listen to Tony Robbins, and I’m taking it in as 2 mixed messages. Did I really put in this work to live in Mt Druitt, or is my desire to live in the Northern Suburbs subconsciously wanting to keep up with the Joneses’.

How can I increase my friendship circle to include other high income earning, yet thrifty friends.

I’m curious to hear from those on the other side. Did you lower your standards, or increase your capacity to meet your desire.

Looking forward to hearing from you.

Regards

Another confused Gen-Y.

 

I think the term is "nip this issue in the bud" (i.e. before it blooms and sets seed) but thanks for the smile

This might be my WSOH, but I like owning a few $M of real estate, running my own business, and driving Mercs etc. But I also like wearing boardies and thongs and being unshaven when I turn up to Open homes (when I'm looking for myself).

So just because you might live in Mosman (daaaaaaaaaaaarling), doesn't mean you have to comply with the school code, dress code, <insert your fav> code.

 

LOL, after 32 years...

A quick google search tells me, I'm not alone.

 

I'm slightly out of Gen-Y, but I think we're like you - Hubby an I both on good incomes but also budget savvy and have no interest in the Ralph Lauren/pure-bred dog scene. We have compromised by buying in the middle. We bought a house on the beach, in a weird area economically - lots of wealthy retiree's, mixed with bogans and battlers. And pretty much everything in between. Prices are about a third what you'd pay in the popular beaches like Scarborough or Cottesloe.

We LOVE it. Our mortgage is more than manageable, our lifestyle is perfection (to us - maybe not for everybody) and we don't have the huge pressure to keep up with the Jones's - this is super important, especially when you have kids.

 

Hey NHG,

Just keep pushing.
What may seem difficult now will seem easy for you in a few years time.
For that reason, I’d set up for where you want to be in advance and things will work themselves out as long as you adapt yourself to the conditions.

Good luck.

 

I tend to agree with this. I think Noel Whittaker used to say something like "bite off more than you can chew and chew like crazy". This is an approach I took personally when buying in an area I didn't think I would be able to afford. While I can't say I'm completely out of the woods yet debt wise, the signs are good and I don't have any regrets so far.

I like your honesty when acknowledging a possible subconscious desire to keep up with the Joneses' when contemplating a move to the north side. Though finding high income earning, yet thrifty new friends that share the same values as you in this new environment is likely to be a challenge...

Something else to ponder. Do your existing friends and family live in areas that you'd consider buying in? I ask because moving away from your family circle or social structure just to be in a more affluent area could make you feel pretty isolated.

Being close to friends and family was a big factor in my decision of where I was going to live.

 

Quote of the year

We faced the same decision 3 years ago - liquidate part of the portfolio and buy a house in the lower north shore (where we lived at the time, in an apartment) or retain the portfolio and buy a house just outside; we chose the latter.

We do feel a bit like we were priced out of the LNS, but we are much closer to early retirement and already enjoying the partial freedom of just driving there on our days off... with our pure-breed dog

If anything we are spending more leisure time in places of our choice (not just LNS) than if we had bought there and were always away from home in order to be able to afford it.

 

I also agree.

After a few over the chat conversations with people that reached out, I believe my issue is more with what I was trying to chew. The idea of taking on a $1M mortgage for an 80sqm apartment with 2.7*2.5m rooms just doesn’t sit right. I realise I don’t have an issue stretching for say, my dream home, as opposed to stretching for a shoe box I know I’ll be miserable in. Just not that motivating. I am looking slightly further out at townhouses around Iron Cove and LWN, a bigger stretch, yet one that seems to make sense to me lifestyle wise. I like the idea of being able to jog around Iron Cover after a hard days work, and being close enough to the beach to catch public transport.

Funny you mention friends.

1. My partner and I looked at Newport/Dee Why, it was within our budget, but it would have been a real journey to visit fam and friends. I barely have anyone visiting me in Surry Hills, they would never come visit me in Dee Why. Thus why we keep moving back to LWN as an ideal location for work and family. If I wasn’t family centric, I would have left Sydney for good years ago (already worked 8 years in rural NSW).

2. Every few years I notice my core group of friends tend to break and reform. If I break it down, we have similar levels of fitness, income levels, relationship status, etc. It is currently going through a breakup atm, between those that choose to wake up at 6am for a bike ride and breakfast on a Sunday and discuss business, and those that stay in to smoke weed on a Saturday night and the cliché lifestyles that surround those two choices.

Nothing right or wrong about it, just different ways to spend time, you gradually drift apart. The latter group all moved to Parramatta, which takes me to my original post about the impact a suburb can have on who you're surrounded by.

 

Pardon my ignorance @NHG, where's LWN?

 

I'm in the other camp.

IF you can afford it, rent/buy where you like to live. Life's too short.

And IF you can afford it, think a little more long term. With a kid/two, that unit in Neutral Bay/Mosman will soon turn into an IP.

IF you can afford it, I'd be looking for a house. If not LNS, then close...perhaps in Balgowlah and surrounds.

 

We stretched our search to Seaforth/Balgowlah, some great value to be had there but at the huge expense of being bottlenecked by the Spit Bridge - everywhere we regularly travel to needed an extra 20-30 minutes travel time factored in.

 

This might help.

Secret reports show work to start on northern Sydney motorways by 2021

Also, timing is ripe to bargain hard on properties in that pocket.

 

Pardon my fat fingers.

LNS.

 

Definitely a boon to the area; it'd be right back on our radar if we had bought the tiny Mosman triplex and were still on the hunt for a spacious PPOR

 

I read that too and could hardly believe that not only would someone post it, but another would like it. It's pure BS and if you buy into this kind of mindset, you might not be able to buy your way out later.
I don't mind wherever you decide. I know what you mean about those women and the (beautiful) designer dogs. You can bet there'll be some kind of sockless male fashion too.
Then again, some areas are just convenient and nice - the harbour is wonderful!

I'm sure you'll make either decision work out. But don't do it for that insidious game that older men play with younger men i.e. that they have made it and you haven't, and you won't unless you think a certain way. There are plenty of games played on the other side too, but this one I've seen with middle-aged men buffing up their image to younger men can really reel you guys in. Be careful.
If you need to, go deeper within yourself to find either the moderate path or the motivation and support that you will need to take the more expensive path.

 

Appreciate the sentiments. A very honest perspective. Actually grateful for the number of responses.

Upon further reflection, I'm seeing at least for the first purchase, I am not excited by the idea of pushing myself to buy into a shoebox apartment.

I can stretch a little more and get a townhouse, that does make me feel like it's worth it (let me look at what a townhouse in my budget looks like before I commit to that sentiment). My budget is based on what my partner can afford on her income. I can always liquidate an asset, or funnel business profits to fund the purchase. There are options.

Re: Mosman. My friend who lives there is looking to move ASAP. His wife doesn't enjoy it. They are Cambodian/Thai couple, and as she stated "i feel like the maid when i take my son to childcare". We were both at that park wearing PJs. We had nothing to prove.

Looking at the income stats for the area, unless everyone inherited or are magicians with trust accounts, I imagine a lot of the people living there are actually not doing so great financially.

Re: community, if you get a chance to listen to/read Jordan Peterson's book 12 Rules for Life. The chapter "Make friends with people who want the best for you". I found it relevant to the topic. Basically coming from a small town, he pushed hard to move somewhere better and surrounded himself with like minded people.

Mind further elaborating on your quote "Nothing has greater impact on your wealth & consumption than your choice of house and neighbourhood." I'm guessing it refers to attempting to keep up with the Joneses?

Cheers.

 

You got it. It's straight from The Millionaire Next Door; and How To Stop Acting Rich And Start Living Like A Millionaire - both by Thomas J Stanley.
btw I grew up on the north shore and my father's 2nd wife had a house in Neutral Bay (and Palm Beach and Bowral). I know what you're talking about.

 

If you prefer a more vibrant, affluent, yet multicultural area where anything goes, perhaps you should focus on the East, Inner West or further north eg Chatswood, Epping, Kensington/Kingsford, Newtown, Burwood, etc.

Mosman is a little homogenous, as beautiful as it is. Generally, the whole LNS isn't much different.

 

Best book. I was gna mention it before to you

Will have to re read it... after Jordan Peterson and the like of Joe Dispenza books. DAMNIT BOOK DEPOSITORY.

Actually, also using audible. Great to listen to whilst training to live in the LNS by riding my road bike in lycra (actually don't wear lycra... yet).

 

Aha you'd need it in the Eastern suburbs too.
A townhouse could be good? There are so many good places to live in Sydney, if you must. You don't have to be either LNS live wire or Parramatta mull head. There are so many variations on the theme.
Maybe if you're family-centered, you might be able to persuade the whole family to move to Brisbane? Or .... ?
Thanks for the Jordan Peterson recommendation.