8 January 2013

Reducing the cost of living 1

We were really moved by your kind and thoughtful comments yesterday. Hanno thanks you, I do too and though it might sound strange to people outside the blogging world, knowing there are thoughts and prayers being sent to us, makes a real difference.

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Sometimes I wish we were born with a rewind button. You sail along building debt with a home loan, credit card debt and a car loan that you thought you'd easily pay. Then on top of that there is your phone and your partner's phone, broadband, pay TV, gym memberships, insurance, your holiday, the kid's camps, entertainment, your new iPad, laptops for the kids, clothes and shoes for everyone, education costs and toys to make the kids happy. Oh, and don't forget food and fuel, both must be bought every week. If only you could press rewind, go back a few years and make more prudent choices. Life would be easier if you didn't spend like this. 

I'm sure there are people reading here who do live according to that first paragraph. There are probably some who see no problem with it, as well as some who wonder why they fell for it but see no way out. If you are that person, or you're about to become her or him, stop and consider this: debt with weigh you down, it will take you away from your family, it will suck the strength out of you because your hours will always belong to someone else. It doesn't have to be like that.

Don't get caught up in the ridiculous notion that the more you have, the better your life will be. Everything has a price attached. Most of the time, that cost is both financial and environmental. Very early on in my own change, when I went from spending a lot to becoming very frugal, I realised that the less I spent, the more I did for the environment, the more self-reliant I became and the more I was in control of my own future.


If you buy a house worth close to a million dollars (it will be two million when you calculate in the interest), and for overseas readers, many houses in Australian cities cost that much now, you will be working to pay that off for the rest of your life. Before you dive into that level of debt, consider what would happen if you get sick and can't work. Or if you just get sick of paying off the debt and can't do anything about it. You don't have to live in a big city. Life happens in other places too. You can get a very good home for $300,000 in most places outside the large city precincts. If you work hard, you could pay that off in 15 years instead of 30 years. Imagine the freedom you'd feel if you paid off your home 15 years early. It's possible.  We paid off our mortgage in eight years. 

We all live in a home of some sort so that requires either a mortgage payment, rent or the ongoing local council rates we all pay. We all eat, most of us have cars and need to fuel them, we have phones, we have to insure our possessions, many of us have health insurance. We all have financial commitments to cover the cost of our needs and to keep us sheltered and fed. Once you have those expenses covered, the less you spend on everything else, the less you'll have to work to pay for. That's the trick - keep those costs down and you'll be ahead all your life.


Over the next couple of days we'll talk about a more modest life, living within your means and taking the small steps needed to live well on less. If you step off the merry-go-round and follow a more frugal and prudent path, you will get your life back, you'll have more time with your family and you'll have time to do what you want to do.

But the first thing you need to do to make the whole thing fall into place is to change your attitude about what success means to you and to fully understand that money and possessions don't make you happy. There has been research done that found once our basic needs of shelter, food and clothing are met, we are not made happier or more fulfilled by having more. If you're not convinced of that, that is where you should start because if you change your attitude to accept a simpler life, all this will be easier for you.  And what a good place to end. Tomorrow we'll start talking about keeping day to day expenses low. If you have some financial tips to share on paying off a mortgage or how to keep the cost of housing low, please share them with us in the comments.

62 comments:

  1. I have been putting A LOT of thought into paying off our mortgage lately, I've been drifting for far too long, just paying what I have too. I'm about to turn 41, and I DO NOT WANT TO BE WORKING IN MY CURRENT JOB WHEN I'M 60! (Nursing, far to physical to be doing it at that age, some days I struggle now!) I have made a goal to be mortgage free by 50, and it starts today, so I very much look forward to these posts. Thanks once again Rhonda.

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    1. That's very good news. It's much better be mortgage-free well before you retire. I have friends who didn't think that was important and now, in their mid-60s, they can't keep up the payments and have given up their homes and live with their children.

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  2. Wow, what a wonderful post Rhonda - what fabulous advise! You are so right! I am in my early 50's but am still learning and your advise is so good, I am changing to the Simpler life and so far all is going well - wish I had done it years ago! Will keep following your blog, thank you so much for taking the time to share it with us. xx

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  3. i am really looking forward to the discussion on reducing the costs of living as we are in quite a tight spot and though we have made some significant reductions in spending we still living a bit beyond our means each month which i'd like to halt.
    i think it took us 10 years to pay off our mortgage, and i guess my tip about that would be to take a long view. we bought a do-up er which was significantly less than most houses in our outskirts of the city area and have gradually renovated it all ourselves; and gradually acquired lovely, but all second hand furnishings. it was kind of frustrating to live in an ugly house for so long when our friends mostly bought new builds, but here i am now down the track and its all but complete, garden and all and it really is the best feeling to look and say 'we did this' (and 'we own this"!) we must have saved at least $150, 000 all up and we don't have to work full time or fear job loss etc.

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    1. Max, there are a lot of ways you can cut back. Come back tomorrow and we'll talk about them. You can rightly feel proud buying your home the way you did. Well done!

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  4. Hi Rhonda

    What a great post. I am looking forward to reading more about reducing the cost of living. We were a two salary family and are now a one salary family. It is quite amazing how much less you spend with one person being at home. We found having two people in full-time work to be an expensive exercise and it has been liberating to see how you can succeed and manage well on one income. You have the time to budget (we use the ziploc bag system), menu plan, think about and research things. I am more mindful and focussed on what I am doing.

    Reducing our mortgage is a focus, so I am interested in finding out and hearing from others about how they did this on one income.

    Thank you Rhonda for your blog. You inspire me on a daily basis and I am very grateful for your encouragement each day on our journey towards a better way of living.

    Good luck again for today.

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    1. The easiest way to reduce the mortgage is to make payments fortnightly instead of monthly and to save as much as you can (using the tactics we'll talk about tomorrow) to make extra payments. I sounds like you're doing well with your homemaking - menu planning and budgeting etc. Keep up the good work.

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  5. Hi my name is Leigh and my partner is simon and we have been watching this blog for a long time.
    With a mortgage I have learnt the best way is make extra repayments even if they are small. Look at any extra income that you earn for example income from shares, term deposits or any other sort of interest bearing activity and transfer this straight onto the mortgage. With bank deposits make the interest payable to you each month not at maturity and then you will be able to make extra monthly repayments. Remember every dollar you do not have to work for is a dollar you can use to pay off debt quicker.

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    1. Great advice, Leigh, thank you. That is exactly what we did and it worked really well for us.

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  6. One way to keep the cost of housing low is to avoid clutter. If you avoid filling every nook and cranny with stuff, you will be less likely to outgrow your space. That will save you from the necessity of having to move to larger accomodation. At this time I'm trying to clear out the clutter so we can be more comfortable in our 1 bedroom (1K/month) apartment.

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  7. Living well on less is something I'll be focusing on this year Rhonda. We're in the middle of moving to a rural property and will be living in a shed for a while. We increased our debt to buy the place - so for now are doing everything we can to reduce our debt again. So - rather than rush into building a house and setting ourselves up with everything we need we are doing without and saving up to buy the things we need.

    This morning I washed using a flannel and bucket - a water tank and plumbing is next on our list. I also heated my porridge and water for my tea on a gas bbq. Last night we ate our dinner outside under the trees because it was too hot inside our un-insulated shed. Its a little like camping - but we are realising that realistically we don't need much to be happy.

    So my biggest tip is to learn to wait for the things you think you really need. After a while you may realise you don't really need it.

    Wishing you and your family a beautiful and healthy 2013. Tricia x

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    1. Tricia, I think you know what you're doing and don't need much advise from me. I would like to say though that now when I look back on my life with Hanno, it was the difficult stages we went through that kept us together and made our marriage stronger. When you see your partner making sacrifices and going without, it gives you strength and helps you do the same. Good luck, love.

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    2. Yes Tricia, I recently have met a friend who is doing the same thing.They have bought a shed and are making it their home. This enables the, to live on one wage and enjoy life. They are now lining the shed, and won't purchase an air conditioner until they have the money to pay for it.Their clothes are from the op shop, and she wears some stunning gear! They live very healthy on organic food and recipees. I really admire them. They are my friends and I'm so glad to have them. Unlike pretentious people where everything looks, and they have to have the best of everything and debt that goes with it.

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  8. I love this post because this is a subject that has been very important to me lately. My husband makes a great living now, but as we hurtle towards retirement I worry about all of the unavoidable expenses. For me in the U.S. it's health insurance. Just paying for that could take a big chunk of our diminished income. Even if we get the house paid off, there's taxes, insurance, big repairs, eek! I'm working now to learn to live with less so we will be more prepared. It's also to simplify my life, and that alone feels great.

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  9. Yes I often wonder if we would have purchased the house we did if we were living this lifestyle five years ago. Back then we were both working full-time and our loan didn't seem that big because everyone around us was in the same boat. We could afford it and still live the lifestyle we were accustomed to and we didn't see anything wrong with that. Now the tide has changed, we live on one full-time wage, have a daughter, and we couldn't be happier! Despite having the half the income we were used to we now make extra repayments on the mortgage and we are 'switched on', actively living life and enjoying the (sometimes literal) fruits of our labour.

    My big tip for frugal living is be not afraid to declare your limits to friends and family i.e. let them know you are no longer spending indiscriminately. It really takes the pressure off when people are aware and (hopefully) understanding. As the first of my friends to have a baby etc it took a little while for them to understand I couldn't meet them for cocktails and a fancy dinner out but soon our catch-ups were in the park, or even a pretty beer garden where they could drink and spend but I could sip a lemonade without the pressure to buy a round. Have no shame! Take pride in your lifestyle and enjoy living it! :)

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    1. That's a great tip. You need to be strong and not cave in when others expect you to continue on as before. Thank you!

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  10. I agree wholeheartedly. My husband and I have been living a simple, frugal life for many years; really, we have always lived that way, since we were young and getting married. We do without most of the things that other people see as basic necessities and we love our life. We are very proud to now be refinancing our mortgage to make it a 15-year instead of a 30-year and we will have paid off our home by the time our two young children are in college. Most people our age today cannot say that. We see the bigger picture, though; a little self-denial today will take us very far.

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  11. What a great post Rhonda offering hope and action to others.We have been downshifting for over 6 years now moving ever into smaller accommodation. That reduces the mortgage, the bills and makes living consciously. Prices are set to rise for food and bills so it all needs to be reconsidered. Looking forward to the next instalment.

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  12. If you take a look at "Apple pie, Anyone ?" blog....it has an easy and cheap way to make a kids Tee Pee, I am sure any child would get years of fun from this, and it can be used inside or outside, every kid loves a "cubby". Not sure you need 7 poles, I think 5 would do.
    These are quite expensive to buy, even a small one.

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  13. We are a single income family, I am a stay at home mother to two girls (aged 4 years, and nearly 5 months). My husband earns a fair wage for what he does, which is working in a call centre for a large insurance company. We have lived off just my husband's wage for 2.5 years, as I was working part-time, the cost of daycare etc meant I was working for about $7 an hour, which we agreed was not worth the time spent away from our kids. We have always survived, but not really thrived financially. Occasionally we've had to borrow money from family, and it feels like no matter how much we cut back, we are still living hand to mouth most fortnights. We only have a small (by today's standards) mortgage, we own both our cars (we have looked into only having one car but doesnt seem worth it for the changes and restrictions it would place on our lives), we have very little credit card debt. We shop at Aldi most of the time, buy meat from a fairly cheap butchers, we bake things from scratch a lot of the time. We don't have an extravegent lifestyle, and always try and do things cheaply. I find I'm struggling lately with other people putting pressure on us. My sister in law recently invited us out to lunch for my father in law's up-coming birthday, to a swanky resturant in the city (we live in Melbourne). My husband and I had a look at the menu online and in round figures the day out (including travel to the city, parking or train fares, and lunch) would have cost us over a week's grocery budget. My husband and I keep feeling a bit disheartened that we feel we are doing everything to save money where we can, but then people (whose income is much more than ours) still expect us to then waste our money on a few hours of 'fun'. I feel like either we are doing something wrong, which is making us continue to struggle (though I don't know what it is?), and it would be easier for me to just return to paid work in the hopes we'd have a bit more spare cash to throw away, but for us this is a last option. I'm sorry I don't have any advice to share (truth be told I think I just needed a sympathetic ear!), but I am very much looking forward to reading tomorrow's entry. Thank you for having such an inspiring blog. Larissa and family, in Melbourne.

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    1. Larissa, I feel for you. Come back tomorrow and we'll try to work out a plan for you. xx

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    2. Larissa, I encourage you to stand strong against family and friends who think you should spend money you don't have. You say that you have always survived financially - sounds like good money management to me. Pat yourself on the back, girl! A lot of us have to live cautiously while our families are young. The thriving will come later.

      It is much better for your children to have you at home, and for your peace of mind too. No one can care for your children as well as you do.

      This is the season of life that you are in for now, it will be gone before you know it.

      I have always paid our mortgage weekly, it reduces interest even more quickly. We will have our mortgage paid off in March (we are nearly 60). Yippee!!!

      Hope Hanno's tests today are encouraging, Rhonda.

      Best wishes
      Lyn in Northern New South Wales.

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    3. Sympathetic ear here from another stay at home mum (my kids older now though)who has been there.

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    4. Ooh thank you everyone, it's so nice to hear some encouraging words! It just feels sometimes like we're the only ones who are cautious with our spending - a lot of our friends don't have children so them and thier partners are both working, and some of them are still living in thier parent's homes, so they have no perspective on what it's like to be trying to juggle a mortgage plus a family sized budget. My side of the family are more understanding, but my in-laws don't seem to have any idea. My sister-in-law's husband earns roughly double what my husband does, and thier lifestyle reflects it, (though oddly they always whinge they have no money!)... thank you so much for the sympathetic ears and lovely words ladies, looking forward to tomorrow's post!

      :)

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    5. Larissa,
      I commend you for your choice to stay home with your kids! That is wonderful! You will find more happiness and joy being home with them than you could ever buy with a few extra dollars. I also commend your husband for working so hard and being such a good provider. It doesn't matter what his occupation is or how much money he makes just that he is so willing to work for his family tells me that he is a good man.

      Try not to compare yourself with others. Focus on gratitude and count your blessings. Keep being wise with what you have! I know some days it is hard but it is always worth it. For me I find the secret to happiness is simply being content.

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    6. Larissa we are in the same boat but renting astronomically without any real prospects of buying a home. On one wage to save a 10% deposit will take us the bet part of five years our kids will then be finishing school. We have always done well with only one income but I guess we haven't really gotten anywhere except for paying of. The land lords mortgage which is depressing.

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    7. Hi Larissa. To give you a little perspective form both points of view. I am trying to live a frugal life as I dont believe I can keep working in my current reasonably well paid job ( high school teacher) forever so I want to pay off my morgage ASAP but at the same time have a bit of a life. A friend of mine who is on the middle of building her house was going through a particularly tight time money wise and could not come out to dinner ' with the girls'. since this is something I do about once or twice a year ( im a single mum ) a couple of us still went out. But then I met my freind in the park and had a play date with the kids. All worked out well. She didn't feel like she missed out and neither did I. As friends we have to understand each others situation. If we dont are we really friends.

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  14. I can really relate to the taking on debt and then regretting it piece. I live alone on Social Security and it is not enough to cover my expenses so every month I have to take the rest out of my savings, which are not going to last beyond a few years. I have very low rent and utilities but the three no interest loans I have for a new bed, a new computer, and a new TV, all purchased within the last two years, are too much. I am definitely not a big consumer, I cook almost all my meals, I shop at our excellent farmer's market, I sew a lot of my own clothes,, and I limit my car use. I think my main mistake since I have been retired is not looking far enough ahead to plan financially. I am really not sure what I am going to do once my savings are depleted. Things look pretty bleak.

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    1. Stay with us Barbara. Hopefully we'll have a few ideas for you. xx

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    2. Hi Barbara, I really feel for you. It's hard having financial problems & no-one to share the burden but there are ways to help. I want to retire but know I can't yet so I've been following this blog & made some changes which have already saved me heaps! Making the washing powder / liquid (cheap and works better), baking bread, basic cleaning products (soap & water, vinegar...), thinking "do I really need this?" before I buy something (still need to work on this). Even if you don't have outside space you can still grow some veggies in small containers (1 tomato plant, a few herbs for cooking / making a tea/ pretty up the house with their fragrance and flowers) - could get pots & cuttings for free from neighbours or a local garden group. One thing I'm looking at is whether to get rid of the car as it has a high cost just sitting there let alone petrol to run it (rego, insurance, mantainance, tyres, ....) -with a pension card (don't have one yet) public transport is very cheap as long as I am physically able to use it and shopping / library etc. are accessible. Selling the car to pay the debts might be something to consider IF this doesn't isolate you socially or in other practical ways?? I'm not sure about that one yet and I don't mean to say this is what you should do but like everything it is good to look at all the possibilities. With this in mind I'm reviewing my health insurance, internet and phones for a cheaper / better deals. Good to see you are looking long term and actively seeking solutions for this now.

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    3. Thank you Hadassah for your sympathy and suggestions. I have done some of the things you mentioned. Selling the car is not an option for me as I need to be able to go about 4 hours away to see my daughter, Mom, and sister. And as is typical here in the USA, the public transport system is not good. The town I live in is pretty small so getting around doing errands and shopping is relatively cheap. Even so I do many tasks on one trip out and about. I have also found the best deals possible for cell phone, cable TV and internet. The gardening is hard, no outdoor space, and I have a bad back. I am going to experiment a little more with growing indoors.
      Best of luck to you too.

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    4. Hi Barbara, have you considered dropping the cable tv and putting that money aside as a saving? You may find there is enough to watch on free tv and the internet.

      Sally

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  15. Hi Rhonda
    My tip for mortgage freedom, is to pay your mortgage weekly and increase your payments every January by $10.00 or more a week. Put tax return in, have redraw facility if needed for emergency, thats where you keep your emergency fund. Over 4 years taken my mortgage down $100,000. Hope to have it paid off in 7 more years. My new hubby and I had to start again after our ex's spent every cent, and some. It so helps to have hubby and family on side. Di

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    1. Wow, that sounds like a fantastically simple tip, does it really make that much of a difference? I'd LOVE to be able to chop down some of our mortgage, but always wondered if just a little bit extra would really help!

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  16. The warm fireplaceJanuary 08, 2013 9:08 am

    We have been working hard to squash down our overheads, we are lucky in having paid off our mortgage 5 years ago, and when my husband had to change to a poorly paid job we have got rid of all expenses that werent needed, is going to be a hard year for us, as food, bills are going up here in the UK , salaries dont seem to be, we are going to grow as much as we can, meal plan, and use cash only,as i feel that helps i keep a book in my bag and list all i spend and what is left in my purse, we dont owe anyone any money, our big thing is paying into 2 pensions so we have something of a retirement, is like having a mortgage but hope the sacrificing will be worth it. I use charity shops now which are brilliant,we also told family we couldnt spend what we used to ie:christmas it did take the pressure off and all were very understanding.
    Sue

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  17. I feel in many ways I am not apart of my generations viewpoint. At 29 I have of those debts you listed, a mortgage. When my car was written off last year I bought a car that I could afford in full so there would be no debt incurred. My mum taught my siblings and I to only get what we could afford with ral money - not credit cards or loans, apart from a mortgage essentially. I have a credit card that gets paid as soon as its used. And its only used maybe once every 4 or 5 months. I made the decision to get broadband and no pay-tv. I bought a house instead of travelling. I invested in solar panels instead of a brand-new lounge suite. And I look at some of my peers and am very curious as to how they will manage it all as their families expand and they want more and more.
    But still like tips on how to pay off my mortgage!

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    1. Rosie, sounds like you are off to a flying start financially!

      My husband and I are 39 with 2 kids, I have just started looking at simplifying in the last 12 months. We have high incomes but significant debt (mostly investment related) that I want to pay off as soon as possible. My husband would love to go part time at his work when we can afford it and I think we can make it happen. Our home, which we have nearly paid off, is smaller than most of our peers' but I think it's just right. We have solar panels and have planted as many fruit trees and veg as we can fit on the 500m2 block.

      Sally

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  18. Hi Rhonda,

    Maybe some of your readers are visual people, just as I am. I went to great pains to set up a manual graph of every single debt my husband and I had. The very top of each column began with the opening balance in red pencil blocks and ran down vertically to zero. As we made payments, I erased the blocks by the amount we paid so that I could literally see our debts going down toward zero on the manual graph. Sometimes I could erase only a very tiny part of a block, but what a huge incentive it was to erase even the very smallest amount paid. When we finally got to the bottom of the graph and all accounts finally showed zero balances, I cried with joy at the relief of being out from under debt. There is something to be said for a manual graph rather than a computerized one. I could still see faint red blocks on the graph and they reminded us never to allow ourselves to become slaves to debt again. We've remained true to that promise. For us, there is no material possession, no matter how luxurious, as precious to us as being debt free. It took a long time to climb out from under credit card debt - more than three years, but if I could give your readers only one piece of advice, it would be to keep trying, even if you fail several times, keep trying to become debt free. As they say, you will miss 100% of the shots you don't take, so keep taking shots at eliminating debt.

    Can't wait for these next posts! Your wisdom is worth money in the bank!

    Diane in North Carolina

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    1. Jimmie I'm a visual person too and often plug our data into an online mortgage calculator. It's so nice to see the difference on that graph i.e. how soon our mortgage will be paid off compared to if we only made the minimum payments! I might have to give your manual graph a go! :)

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  19. I'm quite thankful for some of the good fortune that we've had across the years. Just one example is the family friend who convinced us not to get a huge mortgage and to be really careful to buy our home at a good price 'you make your money when you buy'. By contrast, I've met people who have lost a car or even a home because they have over-extended themselves - this is very disheartening! I'm looking forward to implementing at least one or two tips :)

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  20. A very timely piece, Rhonda. I have been thinking about this a lot of late. I am in my late 20s, have rented all my life, and I am getting to the point where I don't want to rent anymore. I am keen to get away from the uncertainty--of whether the owner may decide to sell up someday and terminate the lease--and lay my roots. However, I don't want a mortgage. The idea of paying back hundreds of dollars a week--having to earn those hundreds of dollars--isn't sitting right with me. Hence, over the next year or two I'd like to save 50-75% of my salary--my frugal ways are getting me close to being able to do this, save a few debts I need to pay off first--and buy a small block somewhere, maybe in rural Tasmania, and build my own small house. I want my freedom. Debt doesn't allow for freedom. Debt insists that you become a wage-slave and appreciate meagre amounts of leisure time that it teases you with. I want a good life, not the expected life.

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  21. firstly i just want to say how sorry i am about your grandson... what a heartbreaking christmas for you all... and i hope Hanno's health improves as well... family really is the most important thing and i hope you can keep each other close as you heal and move forwards...


    and then, this wonderful post!you could have taken these words out of my mouth rhonda! i finally convinced my husband 2 years ago to leave sydney because i felt we had been tricked into falling into the city-trap (like many other young working families)... that we needed to make a lot of money to buy a house we couldn't afford and send the kids to a school we also couldn't afford... and we'd be stuck doing that for the rest of our lives- living a life we couldn't afford to and didn't enjoy, working ourselves into the ground just to stay afloat... my husband was brought up in the city so really struggled with the idea of moving out of the city- what we were doing was just the way things were done in his family... and would life end because we weren't 5 mins from shops and takeaway stores?

    i grew up in a rural area and my parents didn't have a lot of money, but they made the most of everything they had and we had a rich, blessed childhood...

    and that is what we are trying to do for our children now... we left the big smoke for a quiet rural area 2 years ago... and feel like we are living like kings! instead of living in a tiny flat in the city that we couldn't afford with crappy neighbours who couldn't give a hoot whether you live or die- we now have a gorgeous 4 bedroom home, on a small amount of land with a pool and beautiful gardens for MUCH less than our dingy little flat was costing us... our neighbours now come over to say hello and will help us mow our back paddock with their slasher, we have a lovely little community and i am able to stay at home with the children because we aren't so financially stretched! We have a vege garden and fruit orchard and we think we should be able to pay our mortgage off in the next 10 years (that's what we are aiming for! as opposed to a LIFETIME of work to pay off the mega mortgage in the city)

    My husband who was very dubious about the move tells me he never wants to go back to Sydney to live anymore and can't believe we lived there for so long! He didn't realise how awful our quality of life was until we left and it makes me so pleased I nagged him for years to just "give it a shot" and that he finally agreed!
    Amy

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    1. My husband and I are also considering doing this! Sydney is a real nightmare. It just looks like a bleak fututre money-wise if we stay here.

      May I ask where abouts you have moved to?? We are just really struggling to pick a place outside of sydney.

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  22. Thankyou for this well written and honest post. I will be following closely. DEBT - oh how I wish I could turn back back the clock. If just a few people stop and rethink their plans to take on more debt just by reading this post then all your hard work is worth it. Following closely and will share where I can any knowledge I have but truth be told I am the one looking for advise.

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  23. Great post Rhonda, I will follow with interest. Just our mortgage to be paid off now, and I would love to do that within the next five years :)

    x

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  24. I too look forward to reading tomorrows post. DH and I are trying to pay off alot of stupid debt, and long to make our home, OUR HOME!
    See I stupidly took out a student loan to become a primary teacher, but due to having my 1st child at the end of study and postnatal depression I didn't get to work as a teacher. But still had that loan. Then years later before having my 4th child, we were in a great spot (or so I thought). My husband had a great job with good money, as well as he was starting his own bussiness fixing computers. We were able to buy our first home, and then save and buy our first car without a loan. I was working hard to save as much as I could to pay off my student loan and have less mortgage. But money seemed to dissapear, and I couldn't work it out. Then after my husband brought a $100 t-shirt without blinking an eye. Then truth came out he had a $10,000 bussiness loan as well as $3000 credit card. And we were getting more in debt each month. So we sold our home, paid off the $10,000 bussiness loan (DH closed his bussiness). We were going to buy a smaller priced home and work on the credit card. But Dh hubby didn't like any of the homes I wanted. They were to simple, to much of a do up etc. So we rented, and I had my 4th child. Then DH needed a 2nd car for work and took out a $9000 loan. He brought a grunty sports car, and life got worse with more debt. It took me leaving with the kids to wake DH up that there were some issues in his life he needed to get sorted. Phew I'm near the end honest. We are back together, and I'm fully incharge of our money. That $9000 loan is now $3870.43, and that credit card is $2453.72. I still have that horrible student loan, look forward to knocking that down it's $16328.50. We don't have any savings, but I hope to change that. It kept being used for emergencys. We are paying my parents rent to live in our home at the moment. But I dream to own it one day. But the banks won't give us much until those debts are paid off, and we have a deposit.
    So now I will wait, ready to take notes tomorrow :)

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    1. I went through a similar situation, wondering where money went then finding out ther were multiple credit cards. He tried to tell me about it to some extent but was not open about it all and so not everything was resolved until I was gratefully able to get info from the bank about the situation that they probably shouldn't have given me. They also met with us both and we're helpful but not judgmental to my hubby, or react to my need to have everything happen there and then and have written evidence of it all. The stupid thing was although it used almost all our savings, it wasn't that we were unable to pay it all off, he just is not great at managing his personal finances and wanted to fix it himself but was unable to.
      One of the really helpful things we did was to give ourselves an allowance, we both get the same, $50 each fortnight that is ours to spend with no judgement or complaint. It makes us feel like we have more than enOugh while still being really frugal in other areas

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  25. Thanks Rhonda for your site,I love reading it.This year to save money we're been thinking of retiring our credit card and having to take the actual money out to pay for everything in cash so we can see in reality how much everything costs.I don't know whether it will change anything but at least for the next 6 mths we want to see if it makes a difference.I've always paid off the credit card every month so the bank gets no interest from us and we've owned our own home for the last 8 yrs.We're in our mid 50's now and two yrs. ago we took out a mortgage to buy 7 acres in Tas. as my husband's always wanted a cooler climate to retire in but I'm not so sure. I love where we live in Adelaide,we have a nice 4 br house close to shopping,public transport and medical centres which you have to think about when you get older so I may have to send him over on his own (he's a bit of a gypsy and we use to move every 2-3 yrs. but since the kids arrived we've been in our present home for 8 yrs now,which is great. Wendy 2

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  26. No matter what our incomes are or our level of debt, reducing our living costs is always a good thing. And the start of a brand new year is a great time to really rally behind the idea.

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  27. Eee Gads! Million dollar houses are the norm in Australia? Wow. I bought my house for under $65K. Of course that was 18 years ago, but still... I'm 11 months away from having my mortgage paid off. I wish I had started sooner, but I'm still happy about it.

    I think part of the trick is to evaluate how much of your life you're really willing to spend working to pay for housing. I live in "the land of crackerbox houses" in one of my city's poorest neighborhoods. Sure, there are some problems with crime, but by in large my neighbors are all hard working, "salt of the earth" type folks, and there's a real sense of community here.

    In choosing to live here I have an entire 900 square foot home with a huge yard, garden, garage and full basement for less than the cost of a studio apartment. I have pretty much everything I need within walking distance, and I work from home, so I drive WAY less than 1000 miles per year (in my 23 year old Honda.) It allows me to be "frugal by default" and has opened up a whole world of opportunities that I'd never have been able to enjoy if I'd been chained to enormous payments each month.

    My house is wonderfully functional although not heavy on "pretty." It hasn't really been updated since the 1970's but in the broad scheme of things the avocado green shag carpeting and yellowing kitchen tile don't detract at all from my happiness. I'd much rather have time and freedom than vaulted ceilings and granite countertops.

    I'm sure somebody must have mentioned this by now, but if not, I HIGHLY recommend reading the book "Your Money or Your Life" by Joe Dominguez and Vicki Robin - it's a real game changer.

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    1. "Your Money or Your Life" changed my life! It was given to me by my (then) new boyfriend and I read it one weekend when sick in bed with the flu. I was a student, single parent and had huge debts inherited from a divorce and a student loans along with negative equity in a house. Fifteen years later we are still together, have our own business, two daughters and no mortgage. We own everything outright and we have some lovely assets and a heap of money in the bank. Changing the way we thought about money and spending and how we lived made such a huge difference - and fifteen years of working at it means that we are free - not just from debts - but free to make choices that weren't there when we were tied by what we owed and the habits we had. I wish I'd had this blog to help along the way, it was harder when we were doing it on our own.

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    2. I agree, Your Money or You Life was one of the books I read when I first started to change and it formed all the ideas I still have now about money management. It's an excellent book that is still on my book shelf now.

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  28. Dear Rhonda,
    I'm following your blog for a year now.
    I put the link in our (private) family-blog, because the direction you're living and writing is like mine
    and I want the children to read it ;)

    The industry and the government are telling us,
    the economy system can grow and grow (and we have to buy and buy)
    but at one point I understand:
    n o t h i n g in the world will grow for ever and endles buying and wasting will destroy our earth - the only home we have.
    I stopped believing them and I'm sure this system will crash one day.

    Then I begin thinking about an alternative - and where's the truth behind all the official lies. I was something afraid for our future.

    And voilá - since last year we own a small piece of land in a small village, half an hour from our house in the city. In Oktober we bought a circuswagon.
    It's like a one room house with a wood-fired cooker - no other energy, no water. With an outhouse :)
    So we're able to stay overnight and execise us in simple (traditional)living.
    Last year I learned to scythe and grow potatoes there (with the aid of the villagers) and we had apples and plums!
    I'm a beginner in all that, but happy and proud -and less worried now!

    So you see: I'm on my way 'down to earth'.
    With my life in every way ...
    I'm 55 and mother of five, living in germany.

    That's what I want to tell - and thank you.
    (Please excuse my poor english)
    Anne

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  29. Great post. My husband and I are debt free so we are staying our money to fix up the house. We have been discussing lately how we seem to be more conscious about what we spend our money. This year we are becoming more self-sufficient, we just made our laundry liquid and we are putting in another vegetable plot. Can't wait to read tomorrow's post.

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  30. My second try at posting this:
    That debt-ridden merry-go-round you described was where I was headed on 1 Jan 2012. Then I found your blog (thanks to Jamie).
    Life is so very very different now.
    I am happy. And I am working on living a simpler life.
    I bought a house within my means.
    I have tank water, solar panels, a septic system, a vege garden, immature fruit trees.
    I do not watch TV. I do not read magazines. I do not go into large shopping centres. I found this is the only way I can avoid the consumerism and materialism rammed down our throats in our culture.
    I have to work full-time as I am a single mother of two, but I am working on reducing my hours slightly.
    I do have debt - $50000 student loans and my mortgage. But I don't think about them - I won't allow the debt to control my life, and I feel free.
    Thank you so much for your blog Rhonda. I am so excited about 2013.
    Kali

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  31. A thought provoking article and I am looking forward to tomorrows post.

    In my circumstances, we bought a 3 bed semi house and decided to stay here rather than move to a larger house (as most of our friends have done). This house is big enough for us and the insulation we have undertaken means our heating bills are low.

    We have seen many people take on larger mortgages for what? a spare room to do what with? I take in foreign students which means we can overpay on our mortgage and we ask them to 'buy' into our lifestyle choice which shows them how to conserve resources, save money and live a fuller life. How marketing encourages them to want more and how you end up with less.

    I wish I could grow more of our own food but space is limited but this year I will be more imaginative on how to overcome this.

    What I am trying to say is do you need a larger house with larger costs?

    Careful consideration should be made when you think about buying your first home which will suit your purposes now and in the future (single/married and when children come along) then the money saved on not moving many times (in the uk approx £10k per move) then this money can be used to pay off your mortgage quicker. It may be a hard slog short term but the long term benefits are pronounced.

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  32. Dear Rhonda--I'm a longtime reader, infrequent poster, but I had to write and send my sympathies for your recent sorrows. May the new year bring better things for your family and your daughter's.

    The US news has been showing lurid photos of the wildfires across Australia, and I will also keep my fingers crossed that you & yours are not affected.

    Be well,
    Mary

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  33. It is definitively getting harder for a lot of people to even have a choice. Some people cannot afford ANY kind of home; let alone a million dollar one. That price is not far off here either; I look at the cost of homes and the cost of the rising prices of food and other basic needs and cannot for the life of me figure out how someone could add the payment of a brand new vehicle to it all! It would not make me happy in the least to have to pay for all of that.

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  34. Rhonda, I love that you're pointing out the reality of this.

    On the point you made about never knowing when you'll get sick; my partner and I are 39 years old, and 2-3 years ago, he stopped working due to paint poisoning from the workplace. I find this really hard to get through to a lot of people that IT HAPPENS. People who work can and do get sick, and no one ever, ever plans it. We were renting at the time.

    We also received an inheritance a few months later. It was half the sale of my partner's mother's house. We bought a 100 year old house with a shop attached, in the middle of nowhere, for $110,000 dollars.

    That house had a fire, and we used the insurance money to then buy a $96,000 house in nicer, still rural town. Our neighbour willingly bought the burned house at a huge reduction, with the intention of fixing it up himself.

    We are pensioners at a young age. My partner is on disability pension and I'm his carer. We are mortgage free. I have a lot of people tell me, 'yes, but you got an inheritance handed to you', and that's true.

    But, a lot of people are saving deposits of the amount we have spent on whole houses! It's doable.

    We have people tell us there is no work in towns like this. There is. Country people have the same needs as city people. We need bankers, doctors, teachers, nurses, specialists, all that stuff. If someone is willing and able to work, they can find work in the country.

    The schools are smaller out here, and our kids are thriving so much more, and learning wonderful things about life. They know where canola comes from, as well as wool, and the fruit they eat. It's a good life, and I think if more people look into it, it'll change their lives. But people need to be a little brave to move a fair distance away from their cities. We have no regrets here, and I can honestly say that as pensioners, owning a house outright was the best decision we could've made.

    I forgot to mention, that we live in NSW.

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  35. I live in Tasmania and we are striving towards a sustainable life. My latest project is making a range of "Dry Mixes" to put in the pantry - ready to go recipes - just add the wet ingredients. I found this idea of pantry arranging good for us because we live in the country and its great to have easy things to prepare to eat without wasting petrol to go to the shops. I studied this a lot and couldn't find what I wanted online so I have just started giving away the printables on my blog so everyone can make their own dry mix recipes. I think its a great idea and I hope to research and produce many of these - easy life is the way to go :)

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  36. I LOVE THIS POST!!! Especially when you said "You don't have to live in a big city. Life happens in other places too." I cannot tell you how much my life changed when I came to realise this! When Reuben and I lived in Sydney we thought we would never be able to afford to buy our own home (and if we'd stayed there that probably would have been the case) but just 18 months after leaving the city we are about to close on our first house. It's a comfortable, decent sized house and we snagged it for precisely $100,000! Affordable homes are still out there, they just aren't in the big cities! We now earn about a third of the income we were on while living in Sydney and yet I feel we have more than ever before. A change of attitude can change absolutely everything.

    Katie x

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