Mortgage in Australia

HotCopper

Well, I just feel like giving up. My husband does not follow the envelope system. He gets really narky if I point out budgeting to him. We went to a friends BBQ at the weekend and we only had enough for 6 beers, but he said it's not good value to buy six beers, it was better to buy a slab instead. Which we could not afford. Last night he went to Dan Murphy's and spent a hundred dollars on alcohol. He isn't on board at all. How do other people cope with spouses who just won't stop spending, or who just don't support the whole mortgage free wannabee thing?

jamesd

Just go back and read your posts about him being a wonderful husband and the pair of you ending up paying $106k off the mortgage in one year.

What I really wonder is what your actual spending could be and how much of that is going towards the mortgage. When you wrote could not afford I wondered if that's an absolute couldn't afford or not afford using the plan you want to see followed.

It's not necessary for him to follow an envelope system or any other system. It is necessary for the two of you to reach some agreement about how much of your income to spend and the first thing to do as a basis for that is to look at the actual spending, so neither of you feels unnecessarily cramped by whatever the targets are. If he spends $4,000 on a bike and you spend $3,000 on a trip to the UK include an allowance for say $5,000 in the planning and be happy if it comes in under that. Then you get to be happy, not upset, and given the apparent spare income, to be paying off the mortgage at a high rate also.

As an accountant he can undoubtedly see if there seems to be any surplus of income over expenses in the household, so would know if there is no actual need to be particularly strict about budgeting. But he also knows about the time value of money and interest cost so he'll know that it's a decent long term plan to reduce the mortgage over time.

The bike and trip to UK are both quality of life spending. Both good things from that aspect of life even if not good for the mortgage clearing part.

How are your retirement plans coming along? Well on target to do something like retiring well off at 55, say, if you want to?

Here in the UK it's generally a waste of money to pay off a mortgage if the alternative is investing. Only makes a lot of sense for people who won't invest and don't mind that making them poorer than they would otherwise be. The payoff at your interest rates is high enough to make it quite a good deal, though it'll still pay off less than good investments will.

For investments, do try not to be over-concentrated. Global and emerging market collective investments are likely to be a better idea than picking a few shares.

At the moment the total value of my savings and investments is around 89% of my gross pension contributions plus net pay over the last seven years. And I also have an interest only mortgage with no intention at all of paying off any of the capital before the end of the term, because I do invest and that's way more beneficial for me than paying off any of the mortgage at UK interest rates. My first objective wasn't mortgage first it was financial security first, which means being able to live if I can never work again, then early retirement. Paying money off the mortgage would harm both of those objectives. The purpose of this paragraph is to illustrate that there are other ways to view things than the get rid of the mortgage way. Always different balances that can be struck between different objectives and none of them is necessarily bad, just different.

HotCopper

Hmmmm. he is a wonderful husband, no doubt about that. And when we work 'together' we definitely achieve the most.
I think what I am going to do is completely hand the reins over to him. Perhaps I have been too controlling, and too penny pinching. Your response assumes he looks at our personal accounts at all. He does not. He just sticks his cashpoint card in the wall and buys what he wants when he wants. That's not to say he buys loads of unecessary things, but he just always assumes the money is there. He does not look at the credit card statements, and pays no interest in the bills.
I think if I take a back seat, maybe he will pick it up? Perhaps we just do things differently and I need to trust his way more. Or at least try and find out if he has 'a way'. Certainly I have never seen him budget ever, but he says before he met me he paid for everything cash. But he has said this would not work now with children.
In regards to retirement savings, we have none. We both travelled and partied our way through our twenties, and then lived abroad, and I had children and didn't work during probably half of my thirties. In Australia they have a forced superannuation scheme, but we have only been contributing really for the last 6 or 7 years since we returned to live here, so the balance in it is paltrey. I too want financial freedom, and so I figured the quicker we paid off our own debt, then the quicker we can spend on investments for retirement. In principle he is on board with that.
I think I will just hand over the reins to him. At the very least he will appreciate how much our bills and expenses are and how much work is involved in keeping it all ticking along.
I'll keep you all posted.

dktreesea

It's hard doing the financial management if your OH is not on board. Been there, doing that :-). I know paying interest sucks, but maybe it would be better to relax a bit and pay the mortgage off a bit slower? You do have a child in private school now.

At least, when your partner does spend on things they sound like reasonably good quality. Mind you, in a place like Melbourne I wouldn't pay retail for anything. Maybe a couple of the auctions would be worth checking out, just so your partner can see just exactly how much of a premium he is paying for things? There's a really nice auction in Armadale, (Leonard Joel, Malvern Road). For more ordinary day to day things, Pickles out at Tullamarine have their interesting moments. Youngs is meant to be good, though I have never been to it. Somewhere in the eastern suburbs.

Almo

Youngs is in Camberwell, auctions held every Friday. It has some interesting stuff although I personally would say more interesting collectables etc than every day stuff, although I only ever glanced at the every day stuff so might not be totally correct.

My favourite was Nobelius, in Surrey Hills, now sadly closed. You could get things for considerably cheaper there than Youngs (which I used to check most weeks), Youngs was never cheap for anything I looked at or bought. I never went but the auction house in Murrumbeena is supposed to be good and there's another one called Christopher Bragg in Hawthorn East.