Time for the Baby Boomer to Pay Their Way.....

Nee...eiigh...I was .......vamos...muchachos...we riiidee zee Rio Grande again.....

 

Here we go again....it's not the circumstances that make the difference but rather what one does in such circumstances. Hence life will change, circumstances out of our control will too, but what each and everyone does in such situations will matter!
As my mentor JR said:
- It’s easy to carry the past as a burden instead of a school. It’s easy to let it overwhelm you instead of educate you.
- Humans have the remarkable ability to get exactly what they must have. But there is a difference between a “must” and a “want.”
- If you really want to do something, you'll find a way. If you don't, you'll find an excuse.
- It’s easy to carry the past as a burden instead of a school. It’s easy to let it overwhelm you instead of educate you.
- You must take personal responsibility. You cannot change the circumstances, the season or the wind, but you can change yourself. That is something you have charge of.
- Your personal philosophy is the greatest determining factor in how your life works out.

 

Can I have some of that stuff you’re smoking!!!

 

Its under yo feet mon!

OK....'ere ye...'ere ye....alms for the poor.

 

You can take any generation, A-Z for all I care, teach them the skills, show them how to develop an optional mindset and philosophical outlook and if they follow it consistently, they will achieve financial success. It's not the generation , it's the individual.

 

Such a good point. Gen Y are about to inherit everything that the Boomers created. So they should stop complaining.

 

Care to post this data that proves your point? Seems this video (by a boomer) disagrees with that?



Also, 30 years ago. What war? What recession?

 

Why are they lucky? If property is just as easy to gain access to as it was then of what significance does an inheritance have?

 

He’s using an interest rate of 5.35% for 2018, most people are now paying low 3s so I’d say this video in inaccurate now.

He’s also using Adelaide as the example, making a few claims that interest rates won’t go any lower and growth will drop, funny thing is a few parts of outer Adelaide are now doing double digits, interest rates are low, and his numbers are wrong. Not the best example Timmy

 

Happy to update and look at Sydney, use the current all time low interest rates, and use the median as stated by Core Logic as of Jun 1, before any "recovery". Will keep the median wage the same (82,400).

Median = 945,000
20% Deposit = 189,000
Loan Amount = 945,800 x 80% = 756,000
Yearly Interest = 756,000 x 3.3% = 24,948
% of FTE = 24,948/82,400 = 30.27% (vs 34% in 1993)
Deposit/FTE = 189,000/82,400 = 2.29x (vs 0.98x in 1993)

So in order to bring the % of FTE down from 53.3% to on par, interest rates need to be at an emergency low rate after a "mid-cycle correction".

The Deposit/FTE goes without the need to say anything. No matter which way you slice it, the numbers speak for themselves. People will try to get granular with this data, but it using the same nationwide averages, with time as the variable, so it matters not, for a broad overview.

 

So by your own admission, your numbers, using Sydney, the most expensive market place in Australia and arguably some of the most expensive in the world according to many economists, it takes 30.27% FTE vs 34% in 1993.

Ie, as @John_BridgeToBricks mentioned it is cheaper now days to service a mortgage than 30 ago.

You then argued that point and disproved yourself with your own numbers..

What point are you making?

 

Aside from that being after the correction, and at record low interest rates, the alleged 6% bounce would put that back over. I was using the most generous numbers I could, I could redo with the 6% bounce if you'd like?

You also added the "service" component into his original comment. To meet the requirements of a mortgage a deposit is also required. Care to revisit the number attached to that data point? Any drastic increases there that might speak to the entry requirements into the property market?

 

Hubby and I purchased the home we currently live in 31 years ago in 1988. We became adults in the 1970s and got our first mortgage in 1980. Across the 70s, 80s and 90s the economy was very different from today, we had to contend with both recessions and inflation at different intervals, always with far higher interest rates. None of this 5.35% in 2018, I don't recall ever paying less than 10%. Mr Angel went through as much employment upheaval as our kids do today.

The war he mentions was in the early 1970s and some of the older Boomers were conscripted into it.

 

Nothing flash, but it's a FIRST HOME. It's what the older generation did. Bought old stuff, cheap stuff & progressed from there.

My daughter, early 20's bought herself a townhouse on the outskirts of Sydney as a single person on less than $50k, with no help from me. She saved 50% of all her part-time wages prior to full time work, and paid board while living at home.

PAY CASH! Sheesh, you're dreaming. Who pays cash for their first home?

You can't have 2 kids in a small basic 3 bedroom house on the outskirts of the city?

So true!

THIS!

It has always been my mantra to ask "How can I do that?" Rather than limit myself by saying "I can't do that". If you really want something, you'll achieve it.

 

I thought it was all just luck and out of our control no? Sneering at other folk's own efforts to achieving investment success seems to be all the rage these days.

 

Congratulations on anecdotal success. But the numbers don't add up. Refer above for the calculations on deposits.

You would have paid less than 10% for the greater part of your loan from 1988, if you were on variable or ever refinanced. You would have atleast paid it in the last 10 years.



Well aware there was a war in 1970s, but the conversation was regarding 30 years ago.

All that aside, recessions are part of the cycle. The fact we haven't had one in so long isn't good economic policy, it's just kicking the tin down the road. They shouldn't be treated as a bygone relic of a harder time, they will need to come again eventually.

In order to avoid the last one, we had to drop interest rates 4% in a very short time span. What do we do next time around?

 

Wonder if syd / mel has reached the point where buying a median house on a median wage as a fhb is like buying a median ferrari on a median wage.

 

Seems to be many sooky millennials giving us younger gens a bad name.
Won't bore with specifics but couple of properties, 2 kids, long time on single income, modest wage, no parental help annnddd no properties in Sydney - all done and dusted prior to 30yo.

Made some good choices. Made some **** ones too. Could be better. Could be far worse.

Don't require a pat on the back just highlighting - It can be done.

 

No ones saying spending money the bank says you have is hard. How would your budget look at the end of the month with interest rates at 6%?

 

Mostly luck. Being of the age to own property during unprecedented/economically unhealthy boom times. Don't get me wrong, it required hard work to be in that position to receive that luck. Though not as hard as today (refer to deposit/income factor).

But don't mistake yourself for Warren Buffet for happening to own property in Sydney during this time.