Delayed Gratification 11


Delayed gratification is a concept that the hubby and I have been battling with for years. Many of our friends can vouch for this – I think that more than a few of them think we are quite mad!

Our delayed gratification means that we have always lived in lower socioeconomic areas (except for one year of renting on Auckland’s North Shore) and have always driven older, sensible, economical vehicles.

Our honeymoon was 2 years after our wedding.  We felt that paying off the home loan was a bigger priority.

I was very fortunate when I met the hubby – he had already purchased his first home in Lower Hutt.  He’d also decided to cut back on his travelling with the tenpin bowling league so that he could put the money he wasn’t spending towards the home loan.

We met when I was a student at the University of Canterbury (it’s a long story!).  I was living in a caravan at a holiday park in Prebbleton.

When the hubby sold his house and moved to Christchurch (he also moved into the caravan) we found and purchased our first Christchurch home (which was the cheapest that we could stand to live in – that was our actual criteria!).  Hubby had the opportunity to attend University and complete his BSc in Computer Science.

There were times in that first year when we were down to our last $1.  We’d walk down to Burger King and buy a couple of icecreams.  It was an outing!

It’s interesting to look back now and see that we actually have come quite a long way – although it has been a long process too.

In the not-too-distant future we’ll be moving into our grown-up house in Auckland’s Whenuapai.  It will be lovely to have a decent amount of space, good garaging, and some room for a vegetable patch.  People will tell us how “lucky” we are.  We believe that luck is when opportunity meets preparedness!

I thought that you might be interested in the timeline leading up to us finally moving into our grown-up house.  This could be an interesting read for people looking to buy their first home and wanting to start at the level that their parents are at.  It is most definitely a progression and a ladder is a good description of the process.

February 2003 – bought first home together 90m2 dwelling on 570m2 with single garage, on busy road in Hei Hei, Christchurch

1st house

February 2004 – bought first investment property, 100m2 dwelling, cross-lease with single garage, on busy road in Hornby, Christchurch

September 2004 – got married with a small group of 20 guests and a budget of what would fit on the credit card!

August 2006 – finally went on our honeymoon to the Gold Coast, Australia

May 2010 – bought ‘upgraded’ home – 80m2 dwelling on 809m2 with dilapidated garage but in lovely tree-lined street in Redwood, Christchurch

2nd house

April 2011 – moved to Auckland (thanks earthquakes!). Lived in tiny sleepout on my mum’s property for 2 months.

Sleepout

June 2011 – rented a 1 bedroom ‘granny flat’ in Unsworth Heights, Auckland’s North Shore

July 2012 – moved to a different rental (first one went to auction for sale) in Glenfield, Auckland’s North Shore

November 2012 – bought 70m2 dwelling, no garage, tiny crosslease section, in Henderson, Auckland (after Glenfield rental also went to auction for sale)

3rd house

April 2014 – bought future home in Whenuapai. 120m2 dwelling, triple garaging, 1108m2 reasonably flat section with option of adding minor dwelling
April 2014 – promptly put tenants in the above purchase!  We were about to embark on our first serious overseas trip that had been in the pipeline for 5 years

August 2014 – depart on 6 week adventure in the USA and Canada

Grand Canyon

May 2017 – move into grown-up house!!

4th house

As you can see from this timeline, by the time we move into our “average” Auckland home, it will be more than 14 years since we bought our first home together.  Even longer for hubby who had already bought his house prior to meeting me.

I can honestly say that it is, and has been, tough putting up with less than ideal living environments for many years so that we have a chance at a comfortable lifestyle later on.

We have made things a wee bit more complicated for ourselves by not selling the previous properties when we’ve moved on (we have 3 rentals in Christchurch).  The reasoning behind keeping these houses is that we think it’s better to have multiple cheaper houses than to have 1 really expensive one.  Maintenance costs are definitely higher, but it does reduce our risk a bit when we have multiple income streams to help service the loans.  Hopefully by the time we retire, the properties might actually be making more than just their costs!

When we purchased our Christchurch properties, we had an old and wise solicitor who said to us “one day you have to be kind to yourselves”.  We’re almost at that point now.

We are also planning some serious travel in the next decade (including Africa and Europe), but we’ll have the security of assets to come back to.  We’ve come to the same conclusion as Emma at Money Can Buy Me Happiness.  We don’t want to struggle for another 10 years in the hope that we’ll then be able to retire.  We want to travel while we are still young enough and healthy enough to be able to.  That might mean that we can only go for a 6 week trip every couple of years, but it will also mean that we don’t need to toss in our jobs and hope to find replacements when we get back.  We both have great employers who will allow us 6 weeks off at a time so it works well for them and for us if we don’t have to quit.

Spending habits are immensely personal and I’ve met people who want to party and travel hard while they are young, and I’ve met people who want to save and invest so that they are not in poverty in their old age.

I think the key is a bit of balance.  Whilst I adore reading blogs of people who have sold everything to travel the World, I know that I would require some security to come back to.  I’m too much of a planner to not have a plan for returning home.

I would have loved to have travelled extensively prior to reaching the age that I am (I’m facing a big birthday this year!) but when we do go travelling we’ll be able to have a bit more luxury and comfort than would have been possible in our early 20s.

My best advice for sensible delayed gratification is to work out exactly what you want in life (realising that you can’t have it all!) and then making a plan to work towards it. It doesn’t matter if that epic trip is scheduled for 5 years from now.  That’s 5 years to work out if you really want it.  If you do, you’ll make it happen!

Please leave a comment below on your own experience in delaying purchase of things that you really want now.


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11 thoughts on “Delayed Gratification

  • David

    Loved your article. Seems to me these days those starting out want to start with their dream property take out a massive mortgage and live a life of absolute stress for the next 20 years. Nothing wrong with starting out with a modest house. Look at the loans on offer on Harmoney’s website and what they want them for. Holiday expenses, wedding expenses etc etc. So a few days of fun or one day of fun will cost you years of loan repayments. Just crazy. Of course trying to explain all this to my 18 year old just gets the responce “its different these days”.

    • Meg Post author

      Hi David,
      Thanks for your comment. I just read it to the hubby. He and I think that unfortunately young people need to make some mistakes before they will commit to getting on the right track. It is very difficult to watch though when you have life experience that can prevent them having to make those mistakes.
      Hubby maxed out his credit card when he was young. It took him quite a while to nail it again and since then he’s always paid it off in full each month.
      He also bought a $13,000 car that ended up costing over $20,000 by the time he’d paid it off. He was so angry with himself for doing that and it was a very valuable lesson – not sure if it was $7,000 worth of lesson, but maybe it was!
      I’d suggest the books “The Richest Man in Babylon”, “Rich Dad, Poor Dad”, and “Your Money or Your Life” for your 18 year old. Perhaps get them to do the figures before putting something on personal loan or hire purchase. It is much more enjoyable to own something that doesn’t require a chunk of your ‘life hours’ to pay for each payday.

  • Claire Adams

    Hey Meg, thanks so much for sharing your insightful experience! It’s a great message that’s often contrary to the ‘tomorrow will never come, today’s all we’ve got’ message that is parroted through culture. As you know my experience isn’t as vast as yours: me and my hubby live in our first (and only) home in Christchurch, a two-bedroom cross-lease (attached) with a very small property area – but the benefits of a very quiet neighbourhood and fantastic neighbours in a private lane. We were very grateful for your help while we were looking for something we were happy with 🙂 we didn’t spend long looking, would have rented if we hadn’t been accepted for this property, given it was 2013 and prices were starting to do crazy things… Given we have a small house, and a (reasonably) smaller home loan than if we had a bigger property, I’d read that we would pay less interest as a result. Is that true in your experience? I’m a little confused as to how to calculate it…
    Thanks Meg!
    Claire 🙂

    • Meg Post author

      Hi Claire,
      Thanks. 🙂 Sometimes it is pretty tough and sometimes we do wonder if we’re wrong and everyone else is right. Only briefly, though. 🙂 I know, that provided we don’t drop dead, we’ll thank ourselves in later years.
      You are doing great with your first home! 🙂 The idea is to get rid of the home loan as quickly as you can. You’ll be gaining equity much quicker that way because you’re reducing debt and the property is likely increasing in value (over the long-term properties do tend to increase a bit faster than inflation).
      The interest is calculated on the amount of principal owing, so the size of the loan is the biggest factor in this cost. Definitely having a smaller loan will reduce the amount of interest that you’re paying.
      Also, with interest rates so low at the moment, it would be a good time to be paying off as much principal as you can. If you (use one of the bank’s online calculators) work out what the minimum payment would be if interest rates were 8% per annum that could be a good rate to set your payment at. If you can afford more than that then go for it! Whatever you pay over the interest rate is going directly off the principal – reducing future interest costs.
      Banks are notorious for amortizing your loan over 25 or 30 years. You can shorten this term by paying extra.
      Also, be careful not to fix your interest rate for too long because that can limit the extra that you can pay off during the fixed term. A little bit of your loan floating, or as a revolving credit, gives you flexibility to pay off extra.
      Happy for you to email me if you would like me to give you some help in structuring your loan to knock it off quickly. There are companies that charge for this service now, but for you my friend – free. 🙂
      Cheers,
      Meg 🙂

  • faye

    really good blog and interesting to see your timeline laid out. we are on to our fifth house but have always put the funds from the previous one into the next one, Downsizing last time means we are finally no longer financially stretched. I too find the idea of “selling everything and going traveling” incomprehensible. I like my home base too much 🙂
    I agree with the concept of delayed gratification. I did not get an engagement ring, we bought our first house instead! We also had a budget wedding but we have been happily married just over 34 years and I do now have a nice ring 🙂

    • Meg Post author

      Aw thanks Faye! Wow, 34 years! Congratulations, that’s quite an achievement!

      Oh, the adventurous side of me would have no problem with the idea of taking off to explore the World. The sensible, financially prudent side of me has serious issues with selling everything. He he.

      It’s all about getting the balance right really.

  • Emma | Money Can Buy Me Happiness

    Aww, thanks for the mention! Also, I lived in Hei Hei Road in early 2003 – and was a frequent visitor to BK in Hornby! We might have been neighbours! Imagine 🙂
    You’re bang on here though – especially about prioritising. In our case we just want to travel loads, so we don’t care that we live in an ex state house in an ‘edgy’ suburb and drive an old banger. We can’t have it all, as you say, but we can have a great life if we focus our funds on the things that make us happy.

    • Meg Post author

      Hi Emma,
      Ha ha we were practically neighbours. 🙂
      Except for us having a dog rather than children, you and I do seem similar.
      We are just starting to travel and we are hooked!
      Thanks for stopping by.
      Cheers
      Meg

  • Mr Meg

    Nice work as always Meg.

    Wow, we have been doing it “tough” for a long time. Sometimes it is good to stop and see what you have achieved and appreciate the journey, rather than just plough on with the next goal.

    Instant gratification is easy and I had my share when I was young. I had a nice car that I was paying off (~$20,000 total after 5 years of payments); I had a credit card with a relatively big limit that I had maxed out ($5,000). It doesn’t sound like much by todays standards, but this was in the mid 80’s and my gross salary was $13,500.

    The driver in my switch from instant to delayed gratification was fear. Fear of retiring in poverty. I saw a small TV segment on an elderly gentleman who after paying rent and expenses had something like $10 left for food and entertainment from his pension. That five minute segment had such a profound effect on me. I swore to myself, I would not end up in that situation. After chastising myself for my foolish spending habits, I turned things around. Over the next few years, I paid off my debts, started a budget, started paying into a Super fund and bought a house. I met Meg and well, you know the rest of the story.

    I’m so lucky that Meg and I are on the same page when it comes to delayed gratification. I honestly don’t know how we could have gotten to this point otherwise.

    Fear is still a driver (I can’t help it), but not so much these days as I can see that we are at a point where we “can be kind to ourselves” and still have a comfortable retirement.

    It’s true, we are told how lucky we are (and we are) by people who see the end result and not the journey, but that’s life.

  • budget like a backpacker

    Hi Meg, so glad you are getting some well deserved traveling in. It is hard slogging it out for the long term gain- well done on what you have achieved so far!

    • Meg Post author

      Aw thank you! 🙂
      Sometimes it feels as though it is slow going, but I still think that we’ve done it the right way around – difficult though it is!