We moved from luxury to the hood to get our finances in order!
In Brisbane, Australia, they moved from luxury to the hood to save a ton of cash and get their finances in order. They increased our savings from 5-25%!
Two years ago, my wife and I decided we'd had enough of renting. We were 29 and had been renting for 10 years. Whilst we had spent 8 of those rental years living together, the two we had spent in share houses in the last years of our teenagehood was enough for us to never want to live in sharehouse again (you all know what I'm talking about!).
Our suburb was lovely
At the time, we were living in a 2 bedroom leafy green rental in inner-city Brisbane, Australia.
Our suburb wasn't one of the few shady inner-city areas of Brisbane. It was one of the fancy ones.
You know the kind. The suburbs with perfectly manicured lawns, picket fences, and very polite neighbors. The suburbs where by standing on a corner waiting to cross the road, you see four cars meet at the intersection and they consist of BMW's and Audi's. The suburbs where you never hear anyone having an argument because raising your voice in a particular tone and using swear words is inappropriate behavior...Yeah, you get the picture.
Our suburb was so nice we used to leave our garage door unlocked most of the time. In fact, I'd leave it wide open when I went off to the shops in anticipation for my arrival home.
We didn't have a lock on our garden shed, despite all the axes and hammers and other tools that could be used to break into our house.
We had no need for security cameras or window locks. And, I certainly wasn't concerned about our mail or any packages being stolen.
While I never quite felt like we fitted in, I loved the area and wanted to buy a house there. I used to fantasize about which house we would buy as I walked our dog around the streets each day. And, I'd think about which school our future kids would go to based on how snazzy the uniforms looked.
Realizing that we're not the Jones'
When we first started looking at buying a house, I hadn't had my financial epiphany and we, therefore, were not yet on our journey to financial independence.
In fact, Lifestyle Creep was in full swing. We were earning the most income we ever had but were also enjoying the most expensive bottles of wine, single malt whiskey and organic delicacies of our lives, too. Consequently, we were only saving 0-5% of our income each fortnight.
[Note from Steve: A fortnight = 14 days :)]
I loved our lifestyle and all the fancy activities we did. I loved going to our local Gold Class movie theaters for a few drinks, some dinner, dessert and a movie over the course of an evening. I loved eating at one of our local trendy cafes and sipping on exclusive coffee brews on the weekends. And, I really, really loved trying out local craft beers at our local hole-in-the-wall bars.
However, once we started to look into house prices, things started to change. I looked at our income, spending, and savings; and realized that something didn't quite sit right with me.
It started to dawn on me that having a line of credit, but not much cash, wasn't the smartest way of living.
All of a sudden, having a decent income but minimal savings didn't make me feel very good about myself. It made me feel financially insecure, which in turn made me feel like I was a poor provider for my family. I was putting myself and the family into a position of weakness.
It was during all of these realizations that I finally figured out that not only could we not afford a three bedroom house in our area, but we couldn’t afford a two bedroom house either.
Realizing that I didn't want to keep up with the Jones' anymore
Once I started doing the math, I figured out that we could probably live a partially comfortable lifestyle if we bought a vacant block of land in our suburb and then lived in a tent on that block of land for the rest of our lives.
I had visions of us living on our fancy street in a tent. We'd take our dog outside to go to the toilet each evening, and then slink off to the back corner of the property to do our own business outside of the prying eyes of our BMW owning neighbors...
It was at this point in time that I realized that our tastes and our wealth did not align. I wanted the freedom to become financially secure, but I couldn't do this in the suburb we were living in.
So, I decided that we had to say goodbye to the white picket fences, perfectly manicured lawns and intersections where the four cars that meet are worth more than a house... And, we had to say hello to a whole new world!
Venturing into suburbia
I knew before we started looking elsewhere that some suburbs and local Government areas of my city were just completely out of the question. Quite simply, I wasn't willing to sacrifice all forms of safety and security to achieve home ownership (I just didn't want to live in a bloody tent with a poop bucket 20 yards away).
As we had a large dog and wanted a big backyard, we were left with one of two choices:
- residential developments on 4000 square feet blocks where you're so close to the neighbors you can see them going to the toilet while you're washing up the dishes; or
- old houses on 8000 square feet blocks in "up and coming" suburbs.
My wife and I both grew up on properties in the country and were both used to open space and privacy as a result. Consequently, the idea of constant claustrophobia did not sit well with either of us... So, we opted for the "up and coming" suburb option.
Coincidence or destiny?
While we were looking at houses, a listing came up that we recognized. It was a house that we had almost rented when we first moved to Brisbane 5 years earlier. When we had looked at the house then, my wife fell in love. There was just something about the place that took her fancy.
We took the house's coincidental appearance on the market at the precise time we were looking to buy as a sign. And, although it was listed above our maximum limit, we knew we had to at least inquire.
So, we contacted the real estate agent and asked if an offer of about $50,000 below the asking price would be considered. To our complete surprise, we were in luck.
The whole process happened really quickly. It seemed like one minute we were just talking about buying a house and the next minute we were under contract.
Buying a house in the hood
We vaguely knew the suburb in which we were buying as we lived in a nearby suburb for 18 months. However, it wasn't until we were under contract and on our way to the settlement that I started to realize just what our new suburb was really like.
I told some colleagues at work where we had bought; and while they were happy for us, they couldn't quite hold their tongues...
My boss at the time mentioned that he grew up around there and used to do the paper run as a kid on our soon-to-be street. His comments were quickly followed up by the statement "I got mugged three times on that street".
Another colleague mentioned that her first primary school was in our suburb. However, she also quickly followed up with "I didn't last long there. It was a bit, ergh, rough".
Very quickly, my excitement about buying our first house started to fade. Instead, I was left thinking to myself "what have we done?!". Despite my reservations, the settlement went through and we became the proud (but concerned), mortgage-assisted owners of our very first home.
The first few months were quite an adjustment
About two months after we moved in, we received a police notice in our mailbox about a recent spike of robbery based crime in the area. Most of this crime had been opportunistic break-ins, but there had also been some well-planned, and slightly violent, nighttime robberies too.
This inevitably caused anxiety and we worried about the safety of our home, our dog and ourselves.
To alleviate our concerns, I decided to install some additional security measures. So, I set about installing security cameras, key locks for windows and additional door locking mechanisms to really batten down the hatches.
These security measures helped put us at ease. But, unfortunately, they didn't prevent opportunistic thieves from stealing a delivered package right off our doorstep in the middle of the day.
Adjusting to living in the hood
The first six months were hard. I really struggled to adjust to our new-found security requirements, the lack of lawn care along the street and persistent idiots driving around the neighborhood doing burnouts like rubber grows on trees (pun intended).
There were numerous occasions where I regretted our decision to leave our inner-city "affluent" lifestyle for that of the 'burbs'.
I wondered if buying a house was a big mistake.
I wondered if our stuff would still be inside our house when we got home from work each day.
And, I curiously wondered if the mindless sheep mentality would result in our diligent lawn maintenance routine rubbing off on our neighbors... It didn't.
Finding our inner peace
About 8 months after we moved into the hood, I started to notice how much money we were saving by living in the "hood".
The city was no longer as accessible as it once was. As a result, we stopped going into the city for regular drinks and meals. We also stopped going into the city for weekend activities.
Instead, we started exploring our local area by checking out what was on offer, such as creative markets, and using outdoor basketball courts on the weekends.
Exploring our new surrounds like this and taking advantage of what our local community has to offer started to make me feel like we could be happy here. Like we could belong.
After about a year, I started to forget what it was like to live in our former, fancy suburb. To be completely honest, I think I stopped caring about traditional upper-middle-class ideals.
When we lived in our fancy suburb, I was too proud to rummage through curbside collections. I was too proud to shop at Thrift stores. I was too proud of our aging car.
However, when we moved to the hood, I pulled my head out of my ass and started to take advantage of our new suburb culture...I made an effort to get to know our neighbors and seek bartering opportunities. I became a regular at our local public library and Thrift store. I became an eagle-eyed curbside collection scavenger; collecting numerous items for reuse or resale.
Coming full circle
When I realized that we weren't anywhere near as financially secure as we should be, I felt like I had failed as a provider. I felt like I was sabotaging my family's future by letting the desire to keep up with the Jones' have control over my financial choices.
However, when I realized that we may be able to change our financial status by moving to a less wealthy suburb, I had visions of a better future for my family. I fantasized about having a healthy savings account, about being able to take holidays with my wife without having to put any of it on credit, and about financial freedom.
Since moving to the hood 18 months ago, we've:
- increased our savings rate from 5-25%;
- paid off our car loan two years ahead of schedule;
- paid for 50% of an epic European holiday selling most of our unwanted shit;
- reduced our credit card debt substantially;
- built up our savings;
- established an emergency fund; and
- changed the whole way we view income, debt, and savings.
As a result, I now feel like we have our finances under control.
Like I don't have to stress every time an unexpected bill comes up.
Like I can finally take a deep breath and relax about our future.
... I never thought I'd say this, but moving to the hood might just be the best decision we've ever made!
Throughout her 20’s, Kara made a lot of silly financial decisions that are now costing her in her 30’s. She started theflawedconsumer.com to help fulfill her mission to prevent others from making the same financial mistakes she did in her 20's. To achieve her mission, Kara isn't afraid to admit her faults, poke fun at herself, or bitch-slap herself right in the face in order to get her personal finance message across.