Renting

A lot of the articles you read in financial papers/websites talk about the pros and cons of renting versus buying in purely economic terms, focusing on the rate of return on investment, usually assuming that a renter is investing the money they are saving by renting.

As a long term renter I like to read these articles, as they often put the renter out in front. However, I have not been a good saver and investor, only recently getting my act together and still only having a small amount invested. And my partner and I do want to buy property and have been saving a deposit for quite a while now. However, due to crazy Melbourne house prices we have resigned ourselves to buying an investment property rather than a home to live in. We figure that at least we will have a property of some sort paid off by the time we retire, allowing us to live rent-free in retirement.

But I thought I would put together a list of all the good things about renting, not only to make myself feel better, but to make others feel good about their renting situation too:

• Rent is usually well below what you would be paying for a mortgage for the same property, even with interest rates this low. For example, I live in a house that would probably sell for a bit over $1million (even though it's old and run down, it's in inner Melbourne's Northcote which is prime real estate at the moment!) but we only pay $2064 a month in rent. An $800K mortgage would set you back around $3800 a month at the moment with 4% interest rates.
• If you are fortunate enough to find a long-term rental (which we have), rent increases are generally minimal, especially in comparison to market increases. Eg. I estimate our house would rent now for around $2400 a month, probably more given our improvements - see below.
• When things go wrong, you don't have to pay! ie. plumbing issues, hot water service breaking. Not your problem.
• You can move much more easily and cheaply if your situation changes. Around my area it's all about high school zones. When it comes time to choose a high school for my children, we could potentially move houses and even suburbs, to get into the desired school zone, without having to pay the premium house price and all the other associated costs of buying and selling a home.

 And a few other thoughts about long-term renting:

• If you have a nice landlord/agent who is happy for you to make improvements to the property, and you feel confident that you will be there for a while, consider investing a bit of money to improve the property. 
• For example, our house was very run-down and a bit depressing and cold when we moved in. Improvements we have made over the years to the house include: 
• Painting the interior of the main rooms (with the landlord's permission; she agreed to avoid rent inrease for a year, as we did it ourselves and were given the paint from friends);
• Installing gas ducted heating (the landlord agreed to go halves; about $1100 each);
• Changing blinds and lampshades (got on sale at Spotlight so very inexpensive but looks great!);
• Buying and installing a dishwasher (we paid for it ourselves, plus the plumbing, but it was the best $1100 I've ever spent!);
• Painting the interior of the rest of the house (I got the paint cheap from a paint store - mistinted paints but all versions of off-white - enough for 4 rooms for $120!)
• Fake grass for the concrete back garden. I got a large piece for about $600 and have filled the gaps over the last year by picking up off-cuts from hard rubbish and friends. It doesn't look perfect but it means my kids have a soft ground to play on. And I don't have to stare out the back window at concrete!
• A raised veggie box/planter. This can be taken with us if we move, but it makes the back yard look much nicer.
• So even though over the years we have spent a bit of money to spruce the place up, I estimate that what we save in rent has made it well worth it, and renting a cheaper house and fixing it up is a strategy I'll use again when we inevitably have to move. 
• For example, a freshly painted house with heating and a dishwasher in our suburb would be perhaps $130 a week more than what we currently pay, which is $500-600 month more or $6000 a year more! And we have been here for 7 years, so that's about a $42000 'saving' over this period! We will never move if we don't have to - but am sure that day will come. Fingers crossed it's not too soon. And I'd better actually start investing those savings!

Changing utility suppliers: Take 2!

Oh the joys! After deciding to stick with AGL for gas and electricity after they agreed to give me an extra discount off our already okay rates, I was pretty pleased to have saved some money with minimal effort. However, luckily I then checked the fine print when they emailed me the plan details (and next bill). Inexplicably, they had increased the base rate so substantially that I was now MUCH worse off!

I was naturally outraged and called them up.  I was put through to the 'resolutions' team, and the person I spoke to could not explain why the rates had gone up. She agreed to investigate and get back to me. Then nothing!

I called again a few weeks later and spoke to another person in the team, who also could not figure out why it had happened. Again, he agreed to investigate and promised to call back within 10 working days. That was about 4 weeks ago now and I've heard nothing.

So instead of going through the pain of calling them again, I've decided to switch. And it was surprisingly easy! I used the government site called Victorian Energy Compare and picked the cheapest electricity option, then went to the new company's website and signed up within about 5 minutes! All I needed was the metre number from a previous bill, and they then know all your details.  And my rates have dropped from a daily $1 supply charge to 71 cents, and usage from 19 cents to 15.4 cents. Which should all add up, plus there is a pay on time discount.

Now to sort out gas, but I was so excited about how easy it was, that I had to blog about it immediately!

Bread!

This is just a quick post about bread. I made my sourdough for my playgroup friends today and they were very impressed - even two ladies who had recently attended a sourdough workshop!

So here is the link to the recipe, which also includes a helpful video on how to make it. It's on Stonesoup, a very healthy and inspiring food blog.

I pretty much make it as she does, although my starter didn't use yoghurt to start it - just good old flour and water. It's now a year old, and definitely improves (!) with time.

Enjoy!

(PS. I can't seem to post/reply to comments at the moment - my apologies!)

School holiday blow-out!

This is my oldest son's first year in school and thus my first real experience of the school holidays (well, since trying to reign in my spending). And I have to say it's been a bit of a financial disaster! I feel like all the hard work I put in cutting back my spending over the last 4 months has completely gone out the door. These holidays I was a bit like a teenager with their first credit card - I was spending willy-nilly and saying 'stuff it!' and  'I deserve a treat!'.

Our grocery spend for the month of September ended up being about $400 over budget, mostly due to a week away with the extended family (why do kids in groups eat more than when at home?!), plus we threw a dinner party that I hadn't planned for. And the entertainment/food & dining categories were also way out of control. We treated the kids to the movies, and there were many cafe trips, lunches out, a zoo visit... Plus, a much needed date night got a bit extravagant with dinner, drinks and a movie!

Anyway, after spending this evening perusing the damage via my online banking portal, I think I can take away a few lessons.

1. It's very easy to fall back into old habits. But I'm not going to chuck the whole thing in. I'm going to be more vigilant this month and stick to our budget.
2. Next school holidays I'll be more prepared. I know the Simple Savings vault has heaps of tips on how to make the school holidays more affordable, and I'll also ask for tips online. 
3. The monthly shop is a good idea, but it doesn't cater for things that crop up (such as me deciding to host a dinner party), and I had tried to buy extra school holiday supplies/treats, but it just wasn't enough. So I'm going to try to keep more of the budget back to cater for these extra things. (I already set aside money for the weekly fruit and veg top up, so I just need to shop a bit smarter at the start of the month and put extra aside.)
4. It wasn't the kids' fault. It was mine. They would have been happy with home-made treats and a prima from Aldi, but it was me who was using the holidays as an excuse to break my 'limit cafes' rule. I need to plan better (including the kids in the planning) and get baking! I've been totally slack in that department recently.

So, it was a bit of a step backward, but we all had a lot of fun. And hopefully I've learned a few lessons!