The Fierce Girl's Guide to Finance

Get your shit together with money


September 2018

The property market right now: headed for a full-blown Britney meltdown?

If the residential property market was a person, it would be an Instagram influencer selling you slimming tea right now.

Any article about house prices is clickbait gold for publishers.

If you have a property, you want to know what it’s doing.

If you don’t, you want to know if you’ll ever afford one.

(If you’re a communist hoping for the proletariat to expropriate the bourgeoisie from private property, it’s less relevant).

So it’s in the media’s interests to run story after story predicting housing Armageddon.

The other night, a story on 60 Minutes proclaimed the end of days for property. It was alarmist claptrap. Some of the points were accurate, but the tone and conclusion was an irresponsible media beat-up.

Making sense of the drama

I work in an investment firm specialising in real estate, and I spent last year working in the mortgage broking industry. So I’ve seen it from a few angles.

Nobody has all the answers (and don’t trust anyone who says they do). But this post will hopefully give you a bit of insight into the headlines.

Are we heading for a property market crash?

Nobody knows for sure. But it’s important to remember that property follows a cycle. Just like sharemarkets, property prices rise for a while, get so high they are unsustainable and then come back down.

This is as normal as your menstrual cycle. Home prices will moderate eventually, just as sure as I will turn into a bloated eating machine a week out from my period. (Hey, I did the sums in MyFitnessPal today and was totally allowed to eat that TimTam).

But the crazy thing about cycles is that when they’re peaking, people forget they end.

You know how when you’re drunk at 2am and having the best time of your life, you assume you’re gonna feel like this forever. Life is ah-mazing.

Well, house prices in Sydney, Melbourne and Brisbane have had a long, intense party. Many tequilas were slammed. Many tables were danced on. But in the end, the ugly lights have come on and the bouncers are shooing us out.

What we do know about these cycles is that the pain will be unevenly shared. Some areas will fall faster and further. Outer suburbs and regional towns are often in the firing line.

Inner city areas and premium areas will fall a bit, but it’s very unlikely we will see the 40% price falls one analyst mentioned (although he only said there was a 1 in 5 chance of that).

For one thing, our population is growing at 2.6% a year (ABS stats), which creates ongoing demand for housing. There is also pent-up demand from buyers who have been priced out of the market until now. When prices cool, first-home-buyers and upsizers pounce on the discounted properties.

Long story short, most industry people see this as a market cooling – not crashing.

Is there a massive debt bubble that will burst and cause havoc?

Probably not. But there may be some pain ahead for people who are stretched to the limit. One of the big issues is interest-only loans. Strap yourself in for a quick primer on this – it’s kind of important.

A normal principal-and-interest (P&I) mortgage sets the minimum repayments based on the interest, plus the amount you borrowed – remembering that in a 25-year mortgage you can end up paying almost as much in interest as you borrowed originally.

mmm, cheesecake…

So if you think of it like eating a cheesecake – in a P&I loan, you eat some of the cheesy goodness (interest) and the crumbly base (the principal) all on one delicious spoonful, a mouthful at a time.

But in an interest-only loan, you just eat the filling and leave the crust till later. Sure you’ve spent less calories but now you’re stuck with a dry old base.

This is where the analogy probably falls apart, but the outcome of interest-only (IO) is it’s cheaper at first, but somewhere down the line you probably have to stump up for the principal repayments.

Traditionally these IO loans were given to investors for tax reasons. They can also be good if you have temporary cashflow issues like two small kids in daycare.

But they became much more popular when property prices went through the roof. Why? Because it’s hard to afford the repayments on million-dollar mortgage.

So some greedy/stupid/careless lenders and brokers have shoveled a bunch of people into these loans. And the regulator, APRA, took a look at it and was like:

So they told the banks to dial it down as part of several ‘macroprudential reforms’.

And the best way to reduce demand for a product? Make it more expensive. IO rates went up, the loans were harder to get and APRA was happy with the reduction in new loans.

However, there are literally millions of old IO loans kicking around. Two-thirds of these are going to hit the end of their five-year IO period by 2020 (source).

Some borrowers will be able to roll those into another interest-only period, but others won’t. And some will be shocked and/or disappointed about this, as it can be a big jump in costs. Some people may be forced to sell if they can’t afford it.

Either way, it’s going to be a period of transition in coming years.

If you’re interested, I recommend this speech by the RBA’s Christopher Kent. But the TL;DR is that it’s not going to be a total disaster. He is pretty chill: “For the household sector as a whole, however, the cash flow effect of the transition is likely to be moderate.”

There are other commentators out there saying otherwise, because they like drama and headlines. But if our nation’s central bank is chill, then I’m chill.

If you personally have an IO loan and you haven’t thought about how you’ll afford it when it rolls onto P&I, then you’d better start. Because there’s no guarantee you’ll get another crack at IO.

What’s the verdict then?

Is the housing market about to do a Britney: mess up at the VMA’s and shave its head in public?

I don’t think so. It will go through some tough times. Gain a few kilos. Have a few drunk nights. Marry a random in Vegas maybe. But it always does that when it’s stressed.

Overall, it will be ok.

You know, I really could go on and on about this stuff because I find it super interesting. But I’ll stop here, and encourage you to get in contact with me if you have questions or ideas for related posts.

Three tips to impress your friends while secretly saving money

Since unveiling my new kitchen I’ve been on quite the entertaining streak.

I’m not afraid of a mid-week dinner party, because a) it’s cheaper than going out and b) I can control my protein/fat/carb intake.

So, I’ve had some requests from my dinner guests to share some tips for knocking up a midweek feast with maximum taste and minimal cost (to both your wallet and your hips). Even if the word ‘dinner party’ strikes fear into your heart, I promise you can nail these meals.

1) Everything is better roasted

When I say everything, I mean vegetables. Somehow, roasting takes them from humble to sublime in less than an hour.

My fave roasting subjects are:

  • Cauliflower – cut into florets and sprinkled with sumac (a fancy spice that you can buy at the supermarket)
  • Brussels sprouts – cut them in half first for extra crispiness
  • Zucchini and carrots – cut in quarters or eighths lengthways, depending on size
  • Broccoli – yep, roasted broccoli is a game changer. Just be careful as it usually cooks the fastest.
  • Beetroot – peeled and cut into segments. Take mental note that you’ve eaten them though, so you don’t pee the next day and think you’re dying cos there’s blood in your urine.
Roast ’em up baby

You can also roast the usual suspects like potato, kumara and pumpkin. Spray everything with olive oil, and salt it after its cooked.

I also use a silicone baking mat to make cleaning easier and avoid the waste of baking paper. The key is to give them a bit of space between each other so they crisp up – jamming them all up close means the air doesn’t circulate enough.

If you want to go one step fancier, put them all together on a platter, sprinkle crumbled feta, drizzle over some caramelised balsamic glaze, and call it a warm vegetable salad.


2) Fresh salsa makes everything fancier

What to serve with the veggies? I’m fond of salmon fillets with fresh pico de gallo salsa. But you can add the salsa to anything, like steak or chicken.

I get my salmon from Aldi because it’s close to home and I can buy it fresh. Comes out about $4 per person, which is pretty cheap really.

I either pan fry it for a few minutes each side, or wrap it in baking paper and do it in the oven (while our little veggie friends are cooking). Pan frying is easier if people have different preferences – I like mine fairly pink inside but others find that gross.

For the salsa, it’s basically:

  • Tomatoes – I prefer cherry or grape tomatoes because they are sweet and firm
  • Red onion
  • Coriander
  • Fresh jalapeno (optional)
  • Fresh lime juice
  • Olive oil

Dice them all up as finely as possible and throw them together in a bowl. Simples!

How much to use? Just guess. Probably half a punnet of tomatoes, quarter of a red onion, handful of coriander, one lime and a splash of oil. I deseed the jalapeno to take the heat out, but that’s also optional. Basically, it’s flexible depending on how many people and what’s in your fridge.

This salsa is also what they serve with corn chips at nice Mexican restaurants, so don’t be afraid to make a bunch of it and eat the leftovers.

If you have hungry guests with carb-a-licious expectations, you can also cook up some rice to have as a side dish. Although I would argue most people won’t notice the lack of carbs if you load up the veggies.

3) Pre-cook your way to dinner party triumph

One of my go-to, make-ahead dinners is a pasta-free lasagne. Ok, it’s more ‘inspired by lasagne’, but who cares about labels. You can make a vegetarian version or a meat one, depending on guest preferences.

Ingredients (they don’t have to be exact, you can just wing it)

  • 500g Mince or 2 x tins of lentils
  • 1 onion
  • Cumin, coriander, paprika, cayenne pepper
  • I jar passata or tin of chopped tomatoes
  • Half a butternut pumpkin
  • 2 x large zucchinis
  • 1 x eggplant
  • Olive oil spray
  • 1 x tub ricotta
  • 1 x tub cottage cheese

Make the filling:

  • Chop and sauté and onion in a frypan. Add either 500g of beef mince, or a couple of cans of lentils, and any spices that take your fancy. (Try paprika, cumin, ground coriander, cayenne pepper or some combo of those).
  • Add a jar of tomato passata, or just some tinned chopped tomatoes. You don’t want it too sloppy, so add about half the jar and see how it looks, then add a little more at a time. Add some salt and pepper.

You can also add some chopped frozen spinach if you’re thinking about your leafy green intake. Which I often am.

Make the layers:

Slice up  eggplant and zucchinis lengthways, as thinly as possible (about 0.5cm-1cm is fine). Peel and slice the butternut pumpkin into thin discs. You can always add some big pieces of capsicum if you have one.

Place them all on a baking tray and spray with olive oil. You want to roast them for about 15-20 mins or so, just to soften them. They will be the equivalent of your pasta sheets.

Make the sauce:

Take a tub of ricotta and a tub of cottage cheese and mix them up together. That’s all for this step!

Assemble the layers:

Grab a lasagne tray, casserole dish or whatever you have. Start with the vegetables – I find eggplant is a good base. Then simply alternate the layers between meat, cheese and veggies. It’s best to end with cheese on top.

It’s totally freeform. I made one this week with no eggplant and only a small tub of cottage cheese (bit of a grocery shopping fail). But I added a bunch of fresh spinach and it was all good in the hood.

And that’s it kids. Just serve it up and let the conversation flow.

PS: Yes, that is my table in the pic. Those are the flowers I rescue when they get rid of them at work every week. The placemats are from Kmart. Fierce, I know.

Three truths about money to make you feel better

We could always be doing better than we are today.

I could be a little leaner, could lift heavier weights, could be more flexible.

But hey, I’m trying. I’m lifting four days a week, tracking my food, making it to yoga when I can. I’m putting in the work.

And while I’m not perfect, I’m in the gym four days more than the person who stays in bed. And I’m making choices my future self will be grateful for.

The same goes for money. None of us are perfect. We often feel like we should have saved more, invested more, been further along, have learnt more about this finance stuff.

But I’m here to tell you: you’re doing fine.

If you’re reading this blog, you have taken one small step. And you’re doing better than the person who’s currently reading about a Kardashian on their phone.

So I wanted to share a few thoughts to inspire you on your money journey.

Truth #1 – Success flows where attention goes. 

I met comedian Claire Hooper at an event last week. If you haven’t listened to her podcast, The Pineapple Project, you should get on that quick smart. She tackles money as someone who has no idea about it, and asks a bunch of experts for their help.

Not only is it entertaining and educational, she also showcases some amazing talent. Like, oh, I dunno – me. Yep, check out this episode for my two cents’ worth.

Anyway, I asked her about her life since she made the series, and whether she’d got her finances in order. “Yes, I’m fabulously rich now!” she said – jokingly of course. In all seriousness though, she said since focusing on money, she had really improved her situation.

I quoted Truth #1 to her and she agreed. So many times in life, we let things languish on a to-do list at the back of our brains. We don’t know how to start, or we think it will be too hard, or we are too dumb, or whatever.

But once we actually pay attention, it comes together. We have useful conversations that move us along. We start reading things that make sense. We take small actions – whether it’s setting up bank accounts, reading our insurance documents or calling our super fund. And then, all of a sudden, we’ve got our shit together with money!

Truth #2 – There is more than one right answer

I sometimes toss around the idea of buying an investment property. Other times I think about whether to buy more shares. But the property market is in flux, and now is not the time to move. Sharemarkets have been doing so well that it’s possible there will be a correction soon.

So, I’m just chucking a bunch of money at my mortgage, paying extra into super, and sitting this one out. I’m totally fine with that.

You see, there is no one right answer when it comes to investing. There are people in the industry who would fight to the death in a cage to prove their investment style is the best. Not just their asset class (shares! property! bonds!), but their style within it (value! passive! unconstrained!).

I’m here to tell you, the successful investor is the one who invests. Of course, follow the basic rules of investing. Like balancing risk and reward (read more here). Not putting all your eggs in one basket (hello diversification!). Reading the fine print. All that grown-up stuff.

But the key thing is to do something (other than piss your money away on shopping and dinners and drinks and manicures and whatever).

Ultimately, the way to build wealth is to spend less than you earn and do something productive with the leftover money. That’s kind of it. As simple and as hard as that.

If you’re wondering how to get started, check out this post.

Truth #3 – You have time on your side 

This could also be expressed as ‘it’s never too late’. Of course it’s better to start early when it comes to investing. There’s a wonderful concept called compound interest, which means the longer you let your gains pile up on each other, the more you make.

But there isn’t a magical number where it’s too late to get started. Ideally, you’d  kick off your great saving and investing habits in your early 20s. But really, who does that? (Well, I did make extra superannuation contributions).

By your thirties or forties you still have a LOT of decades left to live, based on average life expectancy. In fact, at around age 42 you’re still only halfway along the journey. So don’t tell me you can’t do some solid saving and investing for the remaining four decades.

In your 50s, there are still plenty of things you can do for your 80-year-old self. By your 60s, sure there are more challenges, but there are still positive steps to be taken.

You can get started with better habits on any day and at any age. Don’t waste time – even small steps now can make a difference to your bad-arse 80-year-old party-girl self.

Instafamous nanna, Baddie Winkle – Source: Instagram @baddiewinkle

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