Bin Diving to save on Groceries, the 50:20:30 Budget and a look at the First Home Owners Grant.

WeMoney
Dumpster Diving to save on groceries, The Pro's and Cons of the 50:20:30 budget and what you need to know if you're a first home buyer looking to cash in on the First Home Owners Grant.

The following is a transcript taken from episode 4 of the We Talk Cents podcast. If you’d prefer to listen to this episode, you may tune in here.

SPEAKERS

Dan Jovevski, Freya Gan, Blaize Pengilly, Natasha

Blaize Pengilly  00:09

Personal finance, budgeting, cash flow and investing don't have to be scary words. The Money Bites podcast is here to help you learn more and take control of your personal finances. The Money Bites podcast is not a financial advisor. This podcast is made for entertainment and educational purposes only. All information shared is of a general nature and does not take into account your personal situation, you should consider whether the information is appropriate for your needs and where appropriate seek professional advice from a financial advisor.

Dan Jovevski  00:43

For more information, please check it out wemoney.com.au slash disclaimer.

Blaize Pengilly  00:49

Hello, you're tuned into Money Bites, a podcast presented by wire money to help you on your journey to financial wellness. I'm your host Blaize your resident spendaolic,

Dan Jovevski  00:58

and I'm Dan, your resident finance expert.

Blaize Pengilly  01:01

This week on Money Bites

Dan Jovevski  01:02

Dumpster diving, we're going to meet somebody who saves their money on groceries in a very out of the box way. And the first home owners grant Not to be confused with the first home loan deposit scheme, which we discussed on last episode.

Blaize Pengilly  01:16

And we're launching a mini series on budget breakdowns this week taking a look at the 50 2030 technique. So should we get into it Dan?

Dan Jovevski  01:25

Let's do it Blaize.

Blaize Pengilly  01:33

So, Dan, do you use budget?

Dan Jovevski  01:36

I do Blaize I have been on such a journey with budgeting. I've tried almost every single conceivable method to go about doing my budgeting. I think I'm still trying to master it myself. But at present, I think we're doing a good thing here at WeMoney in terms of understanding how we will be able to track that a bit better. But we're still on a journey. How about you?

Blaize Pengilly  01:56

Uh, oh ohhh, I've tried budgeting. So you know, when I look at budgeting, like diets, I realised that there's something wrong in my life. And then I go, Okay, I should implement the some sort of change to fix this, whether it be losing weight or becoming fitter, or taking control of my finances. And I try it for a while. And then they usually fall off the bandwagon. So for me, budgets, I like diets because they they seem restrictive, right? But they're there to help you achieve something.

Dan Jovevski  02:28

Absolutely Blaize. And you know what you are not alone. The latest research in behavioural psychology suggests that keeping a budget is just exactly like keeping a diet or any type of commitment that you want to build a habit with. And I'm really interested about today's episode and how we might be able to explore some options on really helping us stick to budgets, and something that's really simple, easy to use, but more importantly, that develops a long term sustainable habit.

Blaize Pengilly  02:55

Yeah, great. So we know that having a budget is a really crucial step to financial wellness and getting your finances under control. Which is why we thought of the next few weeks that we take a look at a few of the most popular ways of budgeting in a mini budget breakdown series. So each episode will take a look at one budget style, the history of it, how to do it and how to figure out if it's right for you. This week, we'll be looking at the 50/30/20 rule.

Dan Jovevski  03:21

Sounds exciting Blaize.

Blaize Pengilly  03:23

Before we get into it, I want to quickly what is a benefit of using a budget?

Dan Jovevski  03:30

Blaize, the benefit of using a budget is it teaches us a sense of discipline on really uncovering where our money is going. And more importantly, how do we help either restrain spending or control spending in order to achieve our goals. We all have goals in our life, be that short term goals, what we're doing in the next week, in the next month. And more importantly, some of those bigger long term goals such as buying a home or paying down debt quicker. And a budget can really help us align to those long term goals that we've got in our lives. So we can help achieve those goals sooner. But more importantly, keep us disciplined to ensure that we do hit our long term objectives.

Blaize Pengilly  04:11

Yeah, awesome. All right. So let's take a look at the 50/30/20 rule. Now, this budget actually has a very impressive history. It was introduced by Elizabeth Warren who's actually a US Senator now. Before that she was a law professor throughout the 70s 80s and 90s specialising in bankruptcy law. Now Warren published the 50/30/20 rule in her book, all your work, the ultimate lifetime money plan back in 2005. The premise of the budget is pretty simple. What you do is you divide up your income after tax into three buckets. So the first bucket bucket one will have 50% of your income after tax in it and that goes towards needs so that things like your rent or your mortgage, your electricity bill healthcare Basic groceries transport everything that you need as a human to survive. The second bucket is the 20% bucket. Now this bucket is where 20% of your income after tax goes towards savings or debt. So this might be, you know, a holiday fund or an emergency fund or savings for retirement, it may be going towards paying off a loan or your credit card debt, but 20% of your income after tax goes into the second bucket. The third and final bucket is your 30% bucket, which is your once bucket. My personal favourite bucket. So this is where you can spend your money on holidays and movie tickets and your Netflix subscription or the more expensive cheese at the supermarket. If you're feeling a little bit boozy, you know that the bucket the third bucket is via once so where you can have more of your fun spending. Shall we put it

Dan Jovevski  05:56

Blaize, I'm gonna stop you there. Do you say Boozy?

Blaize Pengilly  06:01

Yeah, Boozy. What is the Boozy? Boozy? It's like you know your super fancy super cool. It's it's way way it's just splurge bucket.

Dan Jovevski  06:13

I get it. I get

Blaize Pengilly  06:14

it's like slugging and having the nice thing.

Dan Jovevski  06:16

I'm catching up with the cool kids Blaize? I think it's for bourgeoisie. Is that right?

Blaize Pengilly  06:21

I don't know. That sounds like some sort of food. What's bourgeoisie?

Dan Jovevski  06:25

I think it's a French word for like, something that's really cool and hip.

Blaize Pengilly  06:35

Oh, well, to be honest, I don't know. I've just heard it in rap songs. And so my wising of it probably isn't even correct. But 30% Boozy bucket, I'm sticking with it.

Dan Jovevski  06:45

I'm down.

Blaize Pengilly  06:47

Alright, so let's take a look at how the 50/30/20 rule would apply practically. So according to the latest release of data by the Australian Bureau of Statistics, the average Australian weekly income for someone working full time is $1,713.19 90 cents, or 89 K a year. So let's assume if you're on this wage, you're earning $1,360 per week after tax, if you were to apply the 50/20/30 rule, your buckets would look a little something like this, your first bucket for your needs would have $653 in it, which seems pretty reasonable for rent and utilities and all those sort of important needs. Then your second bucket, your 20% bucket would have $261 in it, and 20 cents towards savings or paying off your debt. Your boujee bucket, your third and final bucket would have $391.80 in it, which unfair at first glance, I think that sounds pretty fair and like a pretty easy way to sort out your money. But what are your thoughts Dan?

Dan Jovevski  07:55

Blaize. I think there's some pros and some cons. Let's think about the pros first. I think what I really love about the 50/20/30 budget rule is that it's simple and very easy to understand. And more importantly, it's very easy to action, three bank accounts, two cards, setting up automatic transfers on paper and boom, you're done. It really highlights the importance of allocating your money to certain categories. And you don't need to add up all your expenses, sit down and try to figure out how much love your life cost each and every single year. You simply divvy it up and spend within your means. I think this is really, really the the benefit of this type of budget because it reduces the cognitive load to understand how you can maximise keeping with your budget and then also as chiming some of your goals. So I really like it. One of the cons well maybe not achievable depending on your wage. For example, if you're a person that is really living week to week and living quite tightly in terms of meeting your minimum expenses, then this budget may not be a reasonable approach if you if you're really living on the scent of an oily rag blazes also some subjectivity you have to decide for yourself on what is the need and what is a watt for example, if you're going to buy home brand cheese, or do you think expectation

Blaize Pengilly  09:11

Never? Never the home brand cheese.

Dan Jovevski  09:15

Totally or is it you going to buy mainland or something a bit more fancier. So I think that additional cognitive step where you're going to decide and maybe fall into one of those traps when you're the supermarket aisles. Should I buy the less expensive cheese or the more expensive cheese that adds to some complexity? It allocates a lot of...

Blaize Pengilly  09:33

Dan, can I can stop you there. Because you said mainland cheese as a more fancy cheese. Now I don't think I don't have anything against mainland but if you're inviting me around for a cheese board, I would be very disappointed.

Dan Jovevski  09:46

Blaize, I'm not even gonna show you the wrapper so you won't even you won't be able to even tell what type of cheese I'm giving you.

Blaize Pengilly  09:53

Well, I'll be keeping that in mind. So what are some of the other cons for the for this type of budget Dan?

Dan Jovevski  09:59

Blaize some would argue that 30% of discretionary spending is probably a little on the high side. So if you think about achieving some of your goals again in your life 30% sounds like a lot of money. So even just looking at an arbitrary number of, say, $1,000 per week, that's $300, that's going towards things that you can probably live without. So some would argue that this is probably allocating way too much on discretionary spending. It's also not super specific. So it doesn't really tell you outside of the buckets on how you might be able to allocate your budget to more specific categories. It could also be hard to maintain, if your income is regular, if you are, say, a casual worker or a freelancer, and you've got very lumpy income, it may be very difficult to stick to. And finally, Blaize, it allows for lifestyle creep.

Blaize Pengilly  10:49

What's lifestyle creep?

Dan Jovevski  10:50

Simply put it when you start to earn more, you start to spend more. So if you're someone that's earning, say, $150,000, each year, every single year, your weekly income is roughly going to be about $2,000, after tax, and even write down those buckets at 50%, you'll get about $1,000, at 20% of the 430% another $600. So $600 on discretionary spending each and every single paper and that is a good brief, absolutely.

Blaize Pengilly  11:21

Makes it all the fun we could be having with that was and also $1,000 towards like housing and rent, you'd be living in a penthouse apartment, depending on what city you live in, of course, but I can understand that the bigger your budget, the bigger your income, I should say, the more likely you are to, to spend more than you really necessarily need to to get by.

Dan Jovevski  11:43

Absolutely. And I think some would argue and I tend to agree is that the $600 in the 30% bucket is probably a little on the high side, particularly if you've got some very aggressive goals in your life that you want to achieve. You're probably going to be better off and allocating that money elsewhere.

Blaize Pengilly  12:01

Yeah, great. So Dan, what's your final thoughts on the 50 2030 budget?

Dan Jovevski  12:06

Blaize a budget is better than no budget, it's a great place to start, particularly if you're just starting getting into understanding your money and understanding where you might be able to allocate it to and get yourself into a habit of saying, right, I know I need to address a money problem in my life or become more disciplined with money. This is a perfect budget to kick off with over the course of the next say, three to six months and see if it works for you. What do you think Blaize?

Blaize Pengilly  12:31

Well, so I've actually tried this budget, and it worked for me for a while. But then I did have the issue of not being able to distinguish my once from my needs, because if I want something my brain thinks I need it, even though maybe I don't need a fourth or fourth pair of flip pants for my costume collection. You know. But I do like that it encourages you to live within your means if you're on a smaller wage, and I do like the 20% savings, because for me and for for the lifestyle, I leave 20% savings is totally achievable. And also adds up nicely over time to what two nice figures. So I think that's really achievable. And yeah, overall, big fan of the budget and think it's Yeah, I agree with you, it's a good place to start.

Dan Jovevski  13:16

Absolutely, and Blaize. The other thing to make mention of is that, especially that last part we talked about last Caribbean, if you're earning a hefty wage, what I typically notice and this is very true for my life is that the only gifts and the more income you get your last are typically adjust disproportionately to the net of income that you earn. And if in effect, every time that you get a pay increase, people often wonder where did that money go to? Right? I didn't necessarily save more, and my bank account balance is relatively the same. And so the thing to really keep an eye on is making sure that your lifestyle doesn't increase as you start getting paid more as your career expands and grows.

Blaize Pengilly  13:58

Be grateful for what you do have and don't you don't have to splurge and spend money on things you don't really need, I guess is the lesson to not

Dan Jovevski  14:06

Beautifully put Blaize!

Blaize Pengilly  14:10

So Dan, if I was to ask you, what are your tips on how to save on groceries? What would you say?

Dan Jovevski  14:20

Blaize. The first ones that come to mind, probably the obvious number one, do not go shopping on an empty stomach. Right? Make sure you're the shopping centre  fully satiated before you jumped on those aisles and buy every single thing that you that you see. The other thing is to do online shopping. So instead of going and thinking about putting all that stuff in that shopping trolley and not knowing how much it costs by doing online shopping, it saves you that really painful process of understanding how much money you're spending as you go to the shops. So there's two ones that come to mind blows but I think you're gonna tell me something even more interesting.

Blaize Pengilly  14:56

Well then these are two really good ideas and something they Eating before you go shopping is something I should definitely adopt to myself. But I want to know, would you believe me if I told you that our next guest doesn't spend any money on groceries at all?

Dan Jovevski  15:13

What??

Blaize Pengilly  15:13

No money!!

Dan Jovevski  15:15

Get out

Blaize Pengilly  15:15

Yeah, I'm being serious.

Dan Jovevski  15:17

How is it possible?

Blaize Pengilly  15:18

We have a very...hahha... well, I will introduce her and you'll get to find out Dan. So today we have Freya Gan joining us, Freya not her real name lives in the inner west of Sydney. She's 33 years old and works as part of the COVID response team. She's an aspiring stand up comic and is passionate about sustainability. Freya spends $0 on groceries. Yeah, you heard that right. Then she spends nothing. And her secret is bin diving. So welcome to Money Bites Freya!

Freya Gan  15:25

Freya. Hi, thank you. I love that introduction.

Blaize Pengilly  15:59

Thank you so much for joining us Freya. Now. Okay, come on. Tell us. How on earth did you get into this? And we'll actually Firstly, what is bin diving?

Freya Gan  16:10

Okay. Some people call it dumpster diving, if you're from America, but what it really requires is scoping out the supermarkets that you shop at normally, figuring out where their skip bins are, and then having a look.

Blaize Pengilly  16:30

Alright, so very interesting, definitely unusual technique for grocery shopping or grocery diving, I should say. But How on earth did you get into this? And when did it start for you?

Freya Gan  16:44

Um, it's been something I've been curious about for a while. And then at one point, when I worked at a very, you know, upmarket supermarket, I noticed how much they would throw out into those skip bins. And at first I was appalled because I've always grown up, you know, finishing my plate of food and being anti waste. So when I saw all that being thrown out, I just thought, Well, I'm just gonna take a little risk and have a little look what keeps me doing it is that it feels like a potluck every time you know, it's just like, I didn't know what to expect. exposes me to new products makes it very exciting and creative when it comes to eating my food.

Blaize Pengilly  17:28

Freya What does what is bin diving skip dipping, however you call it? What does it look like for you? Like, I'm imagining like goggles on gloves on Wellington boots, like the maggots crawling out of corners of the beans? Is it dirty? They're fighting off been chickens? How does it? How does it actually practically play out for you?

Freya Gan  17:51

Okay, I've had people ask me that, like, do I wear gloves and things? I personally don't. I know some people do. And yeah, I guess wear some clothes that you don't mind getting a bit of, you know, binge juice on them. But overall, it's been okay, just make sure you hold your breath when you go in. I don't want to turn people off. But one time I went into a bin and I saw a rat dying in there and that that didn't turn me off but it more upset me. The one time I've been doing this for about over a year now. So it's really not that growth

Dan Jovevski  18:32

Blaize, I have to compose myself. Firstly, and for mostly, we're having a conversation with you first talked about, you know, Freya, I just couldn't believe my ears. And it was felt like we were doing a voice episode on, you know, chattering some unknown part of the world. And Freya I'm really fascinated. You know, it's it sounds like you've had a, you know, a pretty sort of interesting sort of career and upbringing. But when you tell people about bin diving, you know, what is the first immediate reaction? And then, you know, how do you how do you deal with the potential stigma of people saying, you know, why do you do this? And and what's your response to that?

Freya Gan  19:15

Good question, because it is something that I use when I go out, I'm single. So when I go out on dates, it's a bit of a test question to see how people's values align with mine, or their tolerance for something a little bit edgy, but people do ask me if it's germy and people asked me if I ate meat and seafood and eggs, and I do. And so far in that whole time, I've not been sick once. That's been pretty good. I guess. What comes with doing it is just learning skills and tricks of you know, figuring out what food is edible. So you know, there's things like the egg floating test, you can put an egg into a glass of water. And if it floats Don't eat it. Basic sniff test me Yeah. And you know in this COVID era just make sure you wash your hands after touching it and and all of that. Be safe be clean.

Blaize Pengilly  20:17

sees that meat and eggs and seafood what other things are you finding in the bins.

Freya Gan  20:23

So much my favourite Okay, I won't say the supermarket but there is a particular bin I go to to get all my random stuff. So the other day I got immunity vitamins. I got some hand sanitiser.

Blaize Pengilly  20:37

VITAMINS!!

Freya Gan  20:40

Yes. What, um,

Blaize Pengilly  20:42

people had a few months ago, we were fighting over ourselves in the shop and fighting each other in the shops just to get our hands on hand sanitiser and vitamins and you found them for free.

Freya Gan  20:51

I know they chucking them out. I don't know why. But the other day, I got some like a pack of men's briefs and I wear them.

Blaize Pengilly  21:02

Nice comfy, are they comfy?

Freya Gan  21:06

They're very comfy, lots of room.

Blaize Pengilly  21:09

So you found hand sanitiser, vitamins. You found food. You found briefs. So you do you never need to go shopping? It sounds like you're finding everything.

Freya Gan  21:20

Yeah, I mean, I even find boots in there the other day. I just finished off a lot of craft beer. So yes, I sometimes do go out and buy the fancy things like craft beer and truffle oil the other day, and fancy. And but when I finished that craft beer, I went to the bins like a day or two later, I found the same craft in the bin.

Blaize Pengilly  21:43

Even Beer!

Freya Gan  21:45

Yeah...

Blaize Pengilly  21:45

This is outrageous.

Freya Gan  21:47

It's just an exciting way to save money and explore and challenge yourself.

Dan Jovevski  21:54

Freya I would like to ask, what's your favourite bin spot?

Freya Gan  21:58

Well, my favourite place to go is very close to me in the inner West about a 15 minute bike ride. I try and keep it green. And it's a grocery store. So I get all my fancy vegetables and pasta from there.

Dan Jovevski  22:15

That is amazing. Freya. Have you ever been caught?

Freya Gan  22:20

Yes.

Blaize Pengilly  22:23

Is it legal?

Freya Gan  22:25

It's a grey area, I think even though they've decided to throw it away and discard it, which to me says they don't want it. Because it's on their property. It's still theirs. But I've never had anyone threaten to call police on me. I've had people say, Can you not do that? Or can you not take that whatever? And I just try and be polite about it and say yes or Yeah, my avenues just to be respectful and compliant. But I always get away with it. So it's fine.

Dan Jovevski  23:00

Freya, this just leads to more questions... in terms of your own financial life. How much money do you think you've actually saved by dumpster diving?

Natasha  23:12

Hmmm....I was thinking about this the other day, I think if I was to be buying only groceries to eat at home every night, that would be costing me $100 a week, I think. And then buy for the whole year be five grand at least.

Blaize Pengilly  23:30

Well, that's pretty impressive. And it sounds like you have lots of fun doing it as well. So what are your other motivations? So you're saving money? He said he liked the thrill of it. Is there anything else that really draws you towards the process?

Freya Gan  23:44

Um, yeah, it gets me out of the house. I think as well. It just exposes me to other products that I wouldn't normally buy. So I saw um, there was like a packet of what were they called vacuum bait chips. There were wedges and they looked just like wedge potatoes. But you break you know, like you chew it and it's crispy. I thought that was crazy. So that's, that's on my list of things to buy in future. Vaccuum bag. Um, but the good thing as well is what I didn't expect is if there's a whole lot of food, there's there was a time when I'd be going to one bin in particular and they would throw out their pastries from the day before. Every night. I would take the whole bag of pastries and because I can't eat it all by myself and I don't want to I would take it to work or share it with neighbours and friends and they know that it's discarded food but they're always happy to eat it. So I feel like that's a really nice byproduct of it, sharing it with my community around me.

Blaize Pengilly  24:55

You'll practically grocery Oprah just dishing out... All of your funds to your friends, family and colleagues.

Freya Gan  25:03

Yeah, I

Blaize Pengilly  25:03

wish I worked with you because I would I would love to benefit from a bag of pastries, although I don't think I'd have the self control you have. And I probably would eat them all myself.

Freya Gan  25:13

Yeah, it's funny. I do notice people do ask the initial question. And maybe I'll say, I just have a neighbour who works at Woolies. And you know, you can't, I just can't believe how much they're throwing out. So you know, I thought I'd bring it into work. And that's, that's all a kid asked. They're happy to eat it, even though they know it's waste. So

Blaize Pengilly  25:33

that's, that's pretty awesome. I do have some stats from us harvest about food waste in Australia. So do you know the Australian government estimates that food waste costs the Australian economy $20 billion each year. So it's not just costing us it's costing the economy $20 billion dollars. Also over 5 million tonnes of food ends up as a landfill, which is enough to fill 9000 Olympic sized swimming pools which are mind blowing just mind blowing the amount of waste that that ends up in in those bins. But I guess you're doing your part and and and reducing that.

Freya Gan  26:14

Well yeah, it's definitely fun to know that one I've saved money to had an exciting way of getting that so I guess it's kind of I feel like I'm hunting my food. Three. Whatever I'm eating is saved from landfill and further environmental pollution. So yeah, it's good all around.

Dan Jovevski  26:34

So Freya, when it comes to the shoppings that have changed? Do you actually think they're throwing out food? Way too soon? So do you think they could probably leave it on the shelves for a bit longer? Or? What's your thoughts there?

Freya Gan  26:48

I do you notice some of the food that gets thrown out might have little parts of them that's bruised or a little bit of mould, which Isley cut off an eat. But I think for them, it's really just stock turnover, right? I think it's just, it's part of a big chain, a big supply chain of, you know, incoming stock from the farmers and the other suppliers and the staff that work at the supermarket to get paid minimum wage. And I know that because I've worked there recently. They just have to follow the process of stock turnover. And it's just a, I guess, you know, they've decided that there's an amount of food, an amount of costs that they're happy to write off. And it doesn't matter if it means that perfectly good food goes to waste. I wish I wish there were more charities or more avenues for this food to be distributed to but I can understand that. Maybe for them, it seems more work than is necessary. Because really, they are profit driven. So if it costs them money to donate food to charity, it wouldn't really make sense to them.

Blaize Pengilly  28:03

That's a really interesting observation. Because in Australia, we do have food bank, and we do have AWS harvests and many other charities that take a lot of this excess food from supermarkets, and they do distribute it to those in need. But to say that even though those systems are in place, there's still a failure, there's still something not being met, which is obviously really beneficial for yourself and people like yourself that are jumping into bins and making the most of this opportunity. But it's also pretty disappointing to see that we are wasting so much food, especially when obviously there's people around the world that can't afford to eat or can't make ends meet like that.

Freya Gan  28:38

Yeah, I've kind of I see myself as being a little bit opportunistic, because I'm not my I'm myself not making great strides to try and prevent this waste, it's more, I just take advantage of it. And I posted on my Instagram so then other people can see it and also take advantage of it. It's too big for someone just like one person myself to try and change the whole supply chain process that they haven't put in place.

Dan Jovevski  29:07

So Freya, I'm actually not alone. How big is the dumpster diving community?

Freya Gan  29:14

Um, you know, it's funny. I've gotten friends into dumpster diving since I've told them about it. And as well I've met people while I've been dumpster diving, and found out that some people that I work with also dumpster dive. So I've made friends while I've been at the bin and said hi to them and said Oh hey, how long have you been doing this? And just now a friend's one of my friends from work we sometimes if we have time over lunch we'll we'll just say hey, you want to go check out the specials aisle as we call it and check out the van.

Dan Jovevski  29:55

Freya. Final question for me. Halloween is around the corner. What's going to be your costume this Halloween?

Freya Gan  30:01

Haha Oh my god, I haven't thought about that. Halloween is actually my birthday.

Blaize Pengilly  30:08

Happy birthday. Happy Halloween birthday.

Freya Gan  30:11

Thank you. Um, maybe I'll just, I'll just go as a bag of trash.

Dan Jovevski  30:20

Freya, I was going to say, if you if you remember a show of the ABC as we were growing up. Certainly Oscar the Grouch costume might be a fitting.

Freya Gan  30:32

That would be awesome.

Dan Jovevski  30:37

That's the only thing I was thinking about. Yeah, it's

Blaize Pengilly  30:41

Freya. I'm curious. So you find a lot of very different things. What has been your most random find? Or your weirdest find? Or your best find? I wanna know.

Freya Gan  30:51

I want to know. Yeah, I think my favourite is find has been, there was a children's toy thrown out in the bin. And it was a fake. It was like a place supermarket set. So it had like, little felt groceries you could get and play money and a fake credit card. I thought that is so funny that they've checked that out. That's how I get my head sounds really clean.

Blaize Pengilly  31:22

That's all we have time for today. But thank you so much for joining us prayer that was so fascinating, and a really out of the box way to save money and also have a positive impact on the environment and really adopt a sustainable lifestyle. If anyone listening wants to check out your Instagram at being cuisine. Thank you so much for joining us Freya.

Freya Gan  31:41

Thank you so much. It was really fun to chat about it.

Dan Jovevski  31:43

Thanks Freya!

Blaize Pengilly  31:44

Dan, What do you think? Do you think it's something you could do?

Dan Jovevski  31:50

Blaize To tell you the truth. I am shocked. I never knew this was the thing. And I never do someone like Freya would be interested in doing something like this. But the more I think about it, I mean, she does have a lot of valid points into why she's doing it. I think that the the area where I just would probably get the point where I've got my my dinner from last night coming to, to the top of my top of my throat would be just for the very first time. I personally don't think I could do it. How about you both?

Blaize Pengilly  32:22

It's I could I do it? I'm not sure. It's I think it's really interesting. And I think it's really, it would be really exhilarating. And I do agree with the whole no food waste kind of thing. And obviously saving money is a huge draw card. But yeah, I think I would I would only comfortably do it. If I knew where I was going. It was legal and the supermarket was okay with it.

Dan Jovevski  32:43

I think you've touched on a really good point here, which is our supermarkets, do we get enough to potentially give away food that you know, could still be edible and doing more to maybe help people more need or whether they're doing enough? And I think this is a really interesting topic that I think a lot of people are asking themselves these days is a massive movement to sustainability thinking all around. Certainly big topic for Gen Z's and millennials and I think a conversation like today with Freya is really going to open up the conversation for a lot more bigger companies to start considering how much they're doing to become more sustainable in terms of food wastage. So yeah, it's really great to meet Freya.

Blaize Pengilly  33:21

Now is a good time to jump in and say that the Money Bites podcast and we money do not condone or encourage any illicit or illegal behaviour. Please be mindful of the laws in the state that you live, as this may be a legal way you are, and we wouldn't want you to break the law or get in trouble. We're simply exploring the many curious ways that certain individuals save money. Last week, we chatted about the first home loan deposit scheme, which is the extra 10,000 places that government announced to help people buying their first home avoid paying Lenders Mortgage Insurance, so they can get a home loan with a deposit as little as 5% instead 20%. But what about the first home owners grant? Can we chat about that?

Dan Jovevski  34:09

Absolutely. Blaize Let's do it.

Blaize Pengilly  34:11

Alright, great. So Dan, I did a little bit of research, and I've taken a look at the history of the first home owners grant. Now it was introduced on the first of July in 2000. So 20 years ago now by the Howard government, when they introduce the goods and services tax. So to offset the rolling effect of this new tax of Ozzy's buying their first home, the first home owner grant scheme was launched nationally. Now the scheme was created to assist first home buyers to enter the market. But as far as I understand, it does a lot of criteria that you have to meet. And also although the scheme is National, the eligibility and criteria and benefits you can get vary from state to state. So how is it different across different parts of Australia and what does it mean for you if you're NWA or New South Wales or Tasmania? What do you need to know, across the country about the first home owners grant?

Dan Jovevski  35:08

Blaize, there's a lot of complexity when it comes to the first homeowners grant and the eligibility criteria. And there's probably a lot to go through on today's podcast that would take up quite a bit of time, we've went through all the details, but we've made it easier. If you jump on your way money.com today, you and have a look at our blog section, you'll be able to find out a breakdown of each individual state at a very high level, depending on where you live Blaize, the grant differs quite significantly. If you're living in say Western Australia, you can get a grant of up to $10,000. And probably some of the more generous states are say, Victoria and Taz with a grant can be upwards of say $20,000. To go. I know it's huge.

Blaize Pengilly  35:50

So I live in WA at the moment. But if I move to Tasmania, I can get double the amount of money. That doesn't seem very fair.

Dan Jovevski  35:58

I know tell me about it Blaize but not as fair as if you live in ACT.

Blaize Pengilly  36:03

What's why what's the deal in ACT.

Dan Jovevski  36:06

Well, ACT has scratched their first home owners grant scheme as of the first of July 2019. But it's been replaced with a new scheme, which has an income testing threshold, which basically means they're trying to even the playing field and people say earning a lot of money that probably will be incentivised to save more of a deposit as opposed to those who are lower income earners. So for example, if your income is say, $160,000, and you have no children, that you won't be eligible for the grant. However, if you do have up to five children, and you are under $176,000, or there abouts per year, you will be eligible for the specific ACT scheme.

Blaize Pengilly  36:50

Okay, so what's the benefit of the ACT's scheme? Is that a grant?

Dan Jovevski  36:55

So the benefit Blaize of living in the AC T and applying for the scheme is that you save a lot of money by not having to pay stamp duty for the person for property, which can be quite expensive, depending on how much the property is worth.

Blaize Pengilly  37:10

Sweet. Shack is if you're in the ACT sounds awesome. So Dan, state by state, what is the grant and what is the main eligibility criteria?

Dan Jovevski  37:23

Well Blaize if, for example, living in Western Australia, you'll get $10,000. Victoria, upwards of $20,000, as well as Tasmania, and other states are of a similar amount. But more interestingly, in the AC T, it's actually completely different. They've got a completely different scheme to incentivise people to buy new homes, which doesn't actually reflect the value of the property, whether it's new or established.

Blaize Pengilly  37:47

So Dan, most states, it's 10,000, or up to $20,000. But what's the criteria? Can I buy any house that I like doesn't matter how expensive The house is where the house is located? What's the deal with that?

Dan Jovevski  38:00

So Blaize, I think if people want to find a little bit more detail about the individual concessions for the first time owners grad, the best place to go is to the government website, first time.gov.au. And from there, there'll be directed to the individual state or territory to find out exactly what the restriction criteria's are, and how much money they can receive, depending on whether you're buying a first time, whether you're building your first time and what that means for you.

Blaize Pengilly  38:29

Okay, great. So that website was firsttime.gov.au

Dan Jovevski  38:33

that's the one Blaize

Blaize Pengilly  38:35

if you're applying for the first home owners grant, and so you're moving on with your partner. What happens if they own a home? Or have owned a home before or they've already taken out the grant for themselves? Does that mean I'm still eligible or no? How does it work?

Dan Jovevski  38:53

I think in most cases, you probably will not be eligible if your partner has already taken advantage of a first homeowners scheme before at some point, since it was introduced. But what we suggest is people check out the website first time.gov.au to see what that means for your own individual situation.

Blaize Pengilly  39:14

So in most cases, if you have a partner that's owned a home before you wouldn't be eligible. Why is that? Is that? Are they just trying to cap how many people get this or is it a property market thing? How why is that

Dan Jovevski  39:25

Blaize, I think it's to avoid the double dipping in the cases where people might be, you know, potentially looking into the scheme. So if you bought your first time you've avoided either paying stamp duty concessions or stamp duty or you've received the first home owners grant. I think the cabinet is just trying to catch up people and say, you know if you've already received the benefit before, maybe you shouldn't receive a benefit again, and maybe Monique cover all situations but into the day. I think it's better than nothing.

Blaize Pengilly  39:53

I mean, fair enough. They're doing us a favour giving us the first time this grant, we shouldn't take it for granted is what I'm learning from them.

Dan Jovevski  40:01

Absolutely Blaize.

Blaize Pengilly  40:03

So identify first time buyers, they can access the first time line deposit scheme, which is great, depending on their state and their criteria and eligibility, they could get the first home owners grant as well. Now, when it comes to buying your first home, what other fees? Or what are the other considerations you need to make that will cost you money, when you're buying your first house.

Dan Jovevski  40:26

Blaize, as they say there's any, there's only a few things that are true in life, death and taxes, as they say. So the government could tax you to death. And there's other fees that first home buyers are more likely to have to pay. So one of the things that people should look into is, so we'll get to the land tax, land tax may be different depending on what state you live in. You also have stamp duty considerations that differ quite wildly depending on what state you live in. And then of course, there's another type of GD or tax or the transfer duty that people have to pay when they buy properties in particular states. So there's probably a lot of fees and charges that people need to look into not just to do with, say, their buying experience of you know, buying the house, getting a home loan, getting the first home owners grant, there's a lot of government gotchas in that process as well that people have to look into and see what the total costs are.

Blaize Pengilly  41:23

To give us this three things, the land tax, the stamp duty and the transfer duty. That's like the old saying, take two steps forward and one step back, they're like, we'll give you two grants. But you do still have to pay these three taxes.

Dan Jovevski  41:37

I know, absolutely ridiculous. And I think we'd like to see some further simplification of a lot of these schemes and grants where, you know, it's the classic case of the left hand stealing from the right hand. And really, the confusion isn't really helping anyone. So I totally agree.

Blaize Pengilly  41:53

So Dan, I know all about the first home owners grant now know about the first home loan deposit scheme, which is great, but I want to know, is now a good time to buy. And the reason I ask is because I have several friends who saved up a nice chunk of money to go traveling this year. Obviously, COVID has thrown a spanner in the works, and they're not traveling anywhere, or very far at all. So now, these friends of mine, they're looking at putting their travel money down as a deposit for a house. So, Dan, the big question, is now a good time to buy?

Dan Jovevski  42:30

Blaize, it is all relative, if you're a person that has homeownership is one of your primary goals in life. Right now, if you're looking from the dimension of saying, alright, what's the interest rate that you'll be paying a mortgage, that is at all time record lows, with the RBA, sitting the cash rate at point two 5%. And a lot of people right now are probably looking at a mortgage of anywhere between two and a half to 3%, which if you compare that only have say, you know, almost 10 years ago, where rates for four and a half 5% It's a significantly cheaper time to borrow. But there is a double edged sword blows with lower interest rates, what that basically means is that when money becomes more cheaper, or interest rates become lower. Typically, what you see is that more people getting into the market, because they can borrow more and afford more on a loan. And what that does is push up prices. So whilst you're paying a low mortgage rate, what you're probably paying for is a really high price of property. So what does it mean in terms of Is it a good time to buy? Well, really, if you think about Home, home is going to be a place where you, your family live in for a very long time. You know, a mortgage now is typically 25 to 30 years. And depending on how long you have your home for, you know, it's a very long time. And so there almost isn't a good answer. It all depends on your own situation about where you see yourself in the next 10 to 15 years. If it's going to be one of those forever homes, it doesn't really matter because we're going to be paying one way or the other. We're either going to be paying for an increased property price with lower mortgage repayments, or high mortgage repayments, but a lot of property price. So it almost doesn't matter when you buy if it's something that you're looking to hold for a very long time.

Blaize Pengilly  44:23

So the payoff of having all these schemes and benefits in place that can help first time buyers enter the market at the moment, the opportunity cost is that the house because everything's so cheap, and it is so easy to buy at the moment has prices going up. So pros and cons?

Dan Jovevski  44:42

Blaize, the the pros are, is that if you want to get into a home right now, and if you've got good stable employment, and you can make the minimum deposit requirements, you can get onto the property ladder and establish yourself and start getting into a home. I think the only word of caution would be is that people don't overextend. themselves. So as a con, I would say that if, if you can't afford a home, make sure it's something that you can afford. You should also be making a sensitivity. Say, for example, if there's any particular changes your own individual circumstance, ie, if you lose your job, can you afford to make your mortgage repayments and also sustain your household for say, you know, six months or four months time, because what you're seeing right now is that a lot of young people, they're really getting themselves up to their eyeballs in debt, buying properties in really expensive locations. But if anything happened to their own situations to do with your employment or their income, they could be left really holding the bag of really high mortgage and having a lot of difficulty in making those repayments. So approach with caution. That would certainly be one con to look out for as you're navigating. Getting onto the property ladder.

Blaize Pengilly  45:54

Okay, Dan, so let's suppose and cons. As always, with everything in life. I'm guess the main takeaway from this is do your homework, probably ownership is one of your goals. Definitely do some research before you commit to anything and don't overextend yourself. So As tempting as a helipad and a lap pool is, it may not be the right choice if it's not a sustainable one for you.

Dan Jovevski  46:17

That's it Blaize.  Thanks for joining us on another week of Money Bites. If you've enjoyed the show, please subscribe and leave us a review on the App Store. We'll catch you next time.

Blaize Pengilly  46:31

See you later.


Disclaimer:

The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.

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