WATERCOOLER: $35k on a wedding or home loan?

INTEREST rates are dropping, and will almost certainly go down further. 

The good news is that home loans are getting cheaper - the bad news is that prices in some areas are going up. 

And of course, as happens every few years, there are voices coming from everywhere telling us that young people can't afford a home any more.

Guess what - nothing has changed that much.  Buying your first home has never been easy, but it is certainly still possible.

First, get rid of the idea that home ownership is restricted to high income earners.  Right now across Australia there are people who are doing it tough and there are people whose finances are in good shape.  Guess what?  Their financial position has got nothing to do with their income - it's how they manage their money. 

Managing your money gets back to choices.  You can choose to take your lunch to work or buy it; you can choose to buy a new car or make do with your old one; you can choose to spend $35,000 on a wedding or $35,000 on a house deposit.  It is the choices you make, not your income, that will determine how well off you are financially. 

If you decide to divert some of your income to investment, your net worth will grow.  If you decide to spend it all on consumption, you will be forever battling the debt treadmill. 

WHAT do you think? Do young people have just as much chance of buying a home today as young people did 20 years ago? Have we lost the art of sacrifice and saving?

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The secret is to focus so hard on the goal that everything else becomes immaterial.  Start by looking at homes where you would like to buy, and then hang photos of them on the wall where you will see them every day.  Talk to lenders to find out how much deposit you will need and then make a sub-goal to save that within a specified time. 

If you were a couple each earning $850 a week after tax, you could decide to live on one income and bank the other $850 a week into a savings account.  In just twelve months you would have $45,000, which would be an adequate deposit for most properties. 

As your savings grow the success pattern you are forming will be reinforced.  Mark my words - you'll be more than adequately rewarded for your persistence.  

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noelwhit@gmail.com