Strategy: Take a Wage Haircut and Move to a cheaper area

Discussion in 'Investment Strategy' started by Terry_w, 23rd Jan, 2019.

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  1. BuyersAgent

    BuyersAgent Well-Known Member Business Member

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    Global trend. Not stopping from what I can see.
     
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  2. inertia

    inertia Well-Known Member

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    In my current workplace there is a bit of reluctance to allow too much working from home. I believe the boss was heard to say something like "we pay for the real estate, I expect people to use it". Also there seems to be a bit of a fear that if we do not in fact utilize the space, head office will come to the conclusion that this office is not actually required (I work at a satellite office in Newcastle with about 30 people, globally the company has about 60000 employees).

    All of this is quite amusing when I see people in the office having a skype conference call with each other.

    Cheers,
    Inertia.
     
  3. BuyersAgent

    BuyersAgent Well-Known Member Business Member

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    Case in point. Despite local management wanting to "protect" their office culture, for now, how long do you think it would take the CEO of a company with 60k employees to realise they can cut their real estate costs in half by reducing office sizes and embracing flexible work from home plus hot desking? A relative of mine was working for AMP Capital in the Sydney CBD and they moved from one office tower to another down the road half the size for this very reason. Some HUGE cost savings at stake for the big players to get behind it. It is happening slowly (because change is scary) but it is happening.
     
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  4. HenryF

    HenryF Well-Known Member

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    You can make much the same argument here about living in an apartment inner versus a house in the outer ring for the same price.

    How much is the commuting saved time worth & access to amenities? Depends on the person I'd say.

    I would say though that family is a huge driver of where people live/decide to say & live, particularly in some cultures over others=and it partly explains the reasons of areas becoming heavy in one culture long after the immigration boom has faded (e.g. Greeks in Oakleigh in VIC).

    I do think though aside from the happiness argument's put forward here I would also argue about the health arguments because technically health can be linked to costs=I have known people who have taken on a longer commute and rather than necessarily free time being sacrificed, it is exercise time that is sacrificed.
     
  5. Hayden94

    Hayden94 Member

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    I must be the minority. I can’t understand how anyone would enjoy living in Sydney, the traffic, business and high cost of living is a huge put off for me. I’m 24, live in regional South Australia with my missus, combined income over $200k, living with another couple, $70 a week rent. Saving 80%+ of our net income. We have a property in S.A and middle ring Brissy, looking to buy our third property soon and move to the Sunshine Coast to start a family. Life’s great, don’t even feel like I’m sacrificing as I love the clean air and the opportunity for self development without distraction
     
  6. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    I used to be like that. Now, I don't think I would want to go back - even for a holiday!
     
  7. Noobieboy

    Noobieboy Well-Known Member

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    My story. Been living in Sydney for 17 years now. Pretty well paid jobs both of us. A year we have decided to move to Brisbane. We live in the city (6 km from the CBD). It takes us an average 40 min to get to the CBD for work. We got so tired of traffic, crowds and high costs that we have decided to quit our jobs and take a leap of faith. We are moving to Brisbane before this year runs out.

    To be honest, Sydney is great. But it is ordinary as well. Beaches? We are tired of battling the crowd in Bondi and Coogee. We are only 10 min away from both of them but we can’t really enjoy them. Unless we get the at 6 am.

    Pay is good. But is it worth it? When you pay $800 a week for a 2 bedder? When regardless of how close you are to the city, you will be traveling for at least 30 minutes. And if you want a backyard you need to live in woop woop.

    Majority of our friends all ready moved to Blues or central coast. Those that had the guts moved to Lismore and Toowoomba. They are saying it’s the best decision they have ever made.

    Other than offering good paying jobs, Sydney is pretty ordinary. In return it sucks your soul out of you. Sydney is like a high maintenance girlfriend that is never satisfied no matter how hard you try.
     
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  8. Indifference

    Indifference Well-Known Member

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    As someone who has done this, I am living through the reality. Great topic BTW but rather than hypothesize, I'll share my realities:
    • Melbourne to Brisbane
    • Median property price 20% lower
    • Achievable income similar role 20-25% lower
    • Job opportunities however are far less ie. 50% or more
    • Other living costs are largely comparable
    • Lifestyle more relaxed & less stress however access to cultural & artistic activities also far less.
    • Social attitudes are far less cosmopolitan which could be personally challenging for some
    • Weather - massive improvement
    • Access to international travel hub - comparable
    • Regrets - professional opportunities yes some adjustments required, personal lifestyle overall much better.
    I hope this contributes to the topic of conversation
     
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  9. Gockie

    Gockie Problem solver Premium Member

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    But when you own a decent home in Sydney you can sell it and move pretty much anywhere. But its hard to do the reverse.
     
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  10. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Might be better not to sell as it is hard to get back in again if you want to come back.
     
  11. JesseT

    JesseT Well-Known Member

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    My wife and I (both from Sydney) purchased our first home in Port Stephens (North of Newcastle) 2012.
    After 12 months was forced back to Sydney for work.

    Now, 5 years down the track we have decided to move back in to the Port Stephens property, seems to make sense for lots of reasons at the moment and I am noticing many young families, 4 from my workplace recently, doing the same.

    Personally, I have only taken a 5% pay cut but moved into a property 100% offset.
    We were paying $600 per week rent in Sydney.

    This means my wife will no longer have to work, can enjoy the local lifestyle and look after our 1 year old daughter.

    Haven’t looked back yet.

    If your thinking about leaving Sydney, do it!
     
  12. Harry30

    Harry30 Well-Known Member

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    I don’t live in Sydney but travel their quite frequently. Probably made 150 trips in my life. I think it is up there with my favourite cities in the world. And i think it is probably the most beautiful big (capital) city in the world. And if you like real estate like me, well it really is ground zero. Would live there in a jiffy If my family circumstances allowed. When I visit, and look out at the harbour, I cannot help but see the city as that glamorous supermodel. You look at it, and you think WoW. But much like the supermodel, just below the surface, it is demanding, maybe a bit spoilt, and utterly over priced.
     
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  13. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Great stuff
    Have you quantified the savings?
    $30,000 less in outgoings (prob had to earn $50k to get $30k after tax)
    extra tax on the rental income if the property was rented out
    less petrol/car expenses
    child care expenses
    more time

    You are probably financially better off!
     
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  14. JesseT

    JesseT Well-Known Member

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    I haven’t done the exact numbers.

    I would estimate we are about $350 a week better off since the move, which is being poured straight back into home improvements and then some.

    I record savings every month/year (find it easier and more important than tracking spending)
    It will be interesting to see how 2019 compares to previous years.
     
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  15. lamecrocs

    lamecrocs Well-Known Member

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    @Terry_w can you post the scenarios where someone had enough investment portfolio in their young age (e.g. lot of FIRE community members in their 30s) and leave in an overseas location? I'm more interested to understand the tax implications and how best should they structure their portfolio like using individual name, trust, company etc.
     
  16. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Assuming a non-resident?
    That is pretty complex, especially with companies and trusts as non-resident trusts and companies have different tax consequences to residents.
    One for a future tax tip i think.
     
  17. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    There can be quite complex and generally adverse issues for non-resident individuals, companies and trusts that are non-resident. Few tax issues I can think of that are a free kick. One of the few ones is CGT for listed shares and trusts. These may escape Australian tax after departure. Other non-property assets can trigger a CGT issue on departure but that too has options. Then throw in super and its all horridly personal and complex.

    Land tax, non-resident tax rates, withholding taxes, lost CGT exemptions and concessions and so on. The persons country of residence may also impose tax on Australian property income that does not align with what we consider "taxable income" and some countries may not address dual taxation.

    eg UK treats property outgoings and limits some deductions quite aggressively. What is neutrally geared here may be subject to UK tax on a far higher income amount.

    Its generally an area for personal legal and tax advice well before planning departure is critical. And difficult to address the multiple issues in a series of online posts. Its so complex its barely addressed at university level and also needs to be addressed with an well experienced mind and forms part of post-grad qualifications eg Masters or professional qualifications in taxation. eg CPA, CA etc. Its a area where written advice would be very very lengthy and costy but where the complexity needs extensive discussion. Posting on PC would be very complex and could mislead and omit key factors. Throw in a range of estate planning and legal issues too.
     
    Last edited: 14th Feb, 2019
  18. Coastal

    Coastal Well-Known Member

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    You forgot to mention the summer. It has been relentless this year. Its f'en hot and humid, you cant walk outside.

    Agree with the jobs. If you lose your job, it will be hard to find another job, like any job. Lots of competition for jobs. In Sydney there's plenty jobs.