As a FTB how will you be affected by interest rate hikes?

I'm based it on 40 hour week and your right 52 week year but I find with contract positions that u earn a little bit more due to workload(having said that I have only contracted in private industry not government agency.

My girlfriend has just started a full time position earning
$105k aud which works out at approx $60k-$65k.

Current financial accountants here can now earn $60AUD ph(market has really moved in last 3 months partly due to no backpackers)

Last year,I only worked 35 weeks earning about $65k AUD,main reason I could do this is cost of living is really cheap.

I couldn't go back to Ireland on full time basis,great country but its' just too expensive at the moment not just house prices.
Another reason is I like the lifestyle in sydney

Drink,transport,restaurants etc are double the price of sydney but wages are closely aligned to sydney-in fact it amazes me how people survive at home because everybody seems to be going on a couple of holidays a year
 
macbri said:
... it amazes me how people survive at home because everybody seems to be going on a couple of holidays a year
Click to expand...

Cheap credit backed by spiralling house price inflation.
 

I spoke to a very wealthy self-made businessman, who advised me that you'd want to be earning twice as much working for yourself as you would in normal job to make it worth your while. I would have to agree with him on this especially when it comes to things like health insurance, sick leave, pension provision, BIKs, childcare costs, being able to get a mortgage, life assurance, stress levels, holidays, being able to go home at 5, etc.
 
Agree but my situation is slightly different.

I went out into the contract market for the last 5 years in Ireland & Australia to lower my stress levels,have flexibility and have a better quality of life.

Financially and carreer wise,its' not as rewarding as permanent position but I can make $60k-$70k AUD here and have 3-4 months off every year.
After tax,theres' not much difference

As well,each contract brings with it new challenges but theres' light at the end of the tunnel as usually last 4 only 3 months.

I found when in pernament emloyment, that I rarely finished at 5pm more like 6-7pm,stress levels were high due to deadlines/new expectations(in fact 1 guy went on sick leave because of this) and holidays restricted to only 4-5 weeks per year.

As well,office politics were part of the game which I have no interest in.

As for being a problem with housing finance,don't think its' a problem given that financial institutions are literally throwing money at people as evidenced by previous posts(personally I'm happy to rent at current prices in sydney).

Pension wise,I'm still contributing to Irish contributory pension as well as putting my own funds into a private fund same as health fund etc.

To summarise,if u are looking for carreer path and security permanent is the way to go.

However,these don't interest me and flexibility and lower stress is the key
 

Totally agree with you. I am toying with the idea of heading back to Oz and will go contracting again as it really is stress free. Office politics can be the most stressful part of being permanent.

Can I inquire how you are still contributing to your Irish pension ?
 
I worked in Ireland for over 10 years so have more than 520 prsi contributions.I make voluntary contributions once a year which entitles me to a full Irish contributory pension provided continue until I'm 65.Last year this cost me just over 350 euros.

The beauty of this is that Irish pension will go a lot further in Australia due to as u know difference in cost of living.

They also changed the superannuation rules here where proceeds from your super will be tax free so I'm topping that up as well.

Demand for contract accountants is sky high at the moment especially from a UK/Ireland background(this is what agency told me anyway??)
This will probably ease when backpacker market comes in during September/October.

Good website to go on is www.seek.com.au

Rates I quoted before is sydney market which in fairness is higher than rest of Australia..

Australia is a great place to migrate if u have funds to bring into the country like me as I sold my house in Ireland in 2002.
The only warning I would give u is that u will find relocating back to Ireland very expensive if u live here a few years.
 

Thanks for the info. If i decide to head back i'll do the same. Receiving an Irish pension whilst in australia is a clever idea.
I've dumped my property and have invested in a long term german property fund company. Buy low, sell high. Hoping proceeds in 7 years will mean that i wont have to work in oz.

Can you contribute to a personal pension if you are working in australia?

(p.s. heard howard is going up for election again. will he ever go?)
 
You can salary sacrifice into superannuation-maximum $50,000 AUD a year if u want to.

They change the rules where u can access your superannuation at 60 and the beauty of it is,its' all tax free.
As well at 60,the 1st $25k aud of other income is tax free which currently is 80% of Irish pension.

I'm looking at $50k -$60k tax free without having to put too much into my super.

Thats' primarily why I'm in the contract market.I'm going to live off my savings 4 the next 20 years and work 30-40 weeks a year.

I like working the contract market as its' good 4 social reasons plus theres' no harm having a little stress in your life now and then.

Its' funny what funds I brought into Australia would pay half of average house price in Dublin.

I find it funny when people tell me 'rent is dead money'
We have a pool,sauna,jacuzi,numerous restaurants and 15 minute walk to city.

Maybe asset rich,high mortgage is the way to go 4 security but quality of life has to come into it somewhere?
 
macbri said:
I'm going to live off my savings 4 the next 20 years and work 30-40 weeks a year.
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Do you mean that you are using up your cash as of now so as to avail of tax advantages of paying into a pension.

(so besides maxing out your australian pension and contributing to irish any other smart ideas ?)

That 25% tax free....i assume that is only in reference to pensions and not any other income.

I have maxed out my pension here as i have a little saying

...whats worse than being poor, is been old and poor...
 
SteelBlue05 said:
This discussion has gone way off topic!
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Thought so aswell Macbri i have pm'd you if you want to continue discussion off-line.
 
This is my last line on pensions-apologise for going off topic

All super income drawn down from age 60 onwards is tax free(basically not included in your income calculation)

All other income is taxed although 1st $25k is tax free if your over 60(this will basically be my Irish pension hopefully).

Yes,I am going to draw down my savings over the next 20 years but will still work and put most of it into super.

To go back to topic,if I bought a house in Australia,I wouldn't be able to do this as funds would be tied up in deposit/paying back mortgage for 25 years.
 
macbri said:
Yes,I am going to draw down my savings over the next 20 years but will still work and put most of it into super.
Click to expand...

Good plan however to use a cash deposit as 'income' negates any real advantage of having that lump reserve. Its akin, if you like, to eating your seeds rather than planting them.
 
OK and this is really my last word on this.

With my lump sum,50% is in cash which I'm getting 6.5% on,the remainder is in shares(mostly Australian who are paying a minimum 7.5% dividend yield) also have some non Australian shares which I hold 4 growth potential.This is currently giving me income of $30k pa.

I need $1000 aud a week to cover the luxeries in life so salary/cash make up the rest.

If shares go down,will put less in super-super is very tax efficient and I have saved enough and confident in my share strategy(been investing successfully for over 10 years).

I'm not worried about life after 60 based on what I said before.

I suppose have changed from generation X to Y.

We all have different strategies and mine is based on enjoying the luxeries of life whilst maintaining income stream in the future(don't want to be asset rich,cash poor-rather cash rich,asset poor)

If I bought a house as a ftb in Ireland/Australia would turn straight away into asset rich,cash poor
 
Just announced today a .25 % increase in interest rates by Australian Reserve bank,based on the average mortgage in Australia of $220 k Aud will increase repayments by $35 pm.

FTB in the last 2 years are finding it increasingly hard to survive in Australia as rates have gone up by over 1%-the same will happen in Ireland if rates rise accordingly
 
Good strategy. Low risk and highly flexible. And in keeping with the 'no worries' lifestyle of oz. Am planning to follow similar strategy but am sacrificing for the short term quality of life in order to max my contributions in pensions here and avail of some sound investment schemes.

Then i go back to snorkeling in gordons bay.

macbri said:
OK and this is really my last word on this.

With my lump sum,50% is in cash.......
If I bought a house as a ftb in Ireland/Australia would turn straight away into asset rich,cash poor
Click to expand...
 
Reserve bank of Australia announced another rate rise to 6%
Average bank variable rates here now 7.8%.

If I buy current apartment we're renting,it would cost $450k,assuming a 50k desposit,this would leave us with a mortgage of $400k.

At 7.8% over 25 years,this would equate to $3200 pm which works out at $40k a year(equates to $65k gross salary)
-in other words buy the apartment but have no life afterwards.

Theres' talk in the papers here of repossessions,people not using their car,restaurants,hairdresser retail sales all down.

Interest rates have only increased by no more than 2% in the last 3 years maybe even a little less but it has a profound effect on the market especially on the ftb.

Interestingly as well,financial institutions are starting to offer 40/50 year mortgages and interest only mortgages,theres' even talk of banks taking some equity in the property -this is obviously geared towards 1st FTB market
 
macbri said:
Theres' talk in the papers here of repossessions,people not using their car,restaurants,hairdresser retail sales all down.
Click to expand...

What is the general opinion (co-workers) of the forecasted slump (10% i read) in property. Do you know of home-owners (purchased in last 3 years) who are regretting their purchase.
 
Funnily enough had a discussion about house prices with workmates yesterday(all accountants). It was mixed with half currently owning and half renting

They all argued that house ownership was the way to go and rent is dead money-I was the only 1 with the opposite view.
1 guy even argued that it didn't matter what the mortgage was

I still can't understand their logic-I can easily make 7-10% with very little risk and pay 30% of mortgage as rent.

As well,I don't see the security/point of having a $m house when my mortgage is paid off ie 60/70(maybe I'm missing something?)
 
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