What’s It Like Living With A Mortgage?

Simon has recently purchased his first investment property and is now living with a mortgage. In this episode we talk about what it feels like to live with a mortgage and how Simon has had to chance his finances to be able to manage it.

0:00 – Introduction
0:32 – How’s the mortgage going?
2:03 – What have you done to be able to manage your mortgage
4:07 – Paying yourself first and being prepared for issues
5:23 – It’s tough to set up your bank accounts like the Barefoot Investor suggests
7:15 – How Simon manages his money now he just uses one mortgage account

Recommended Videos:

Success Story: Simon Bought His First Property – https://www.youtube.com/watch?v=HP376QV3qi4

Barefoot Investor Bank Accounts Explained – https://www.youtube.com/watch?v=YMKss1bLycw

Transcription:

Ryan 0:00
Simon has recently purchased his first investment property and is now living with a mortgage. And so we thought we’d just do a little quick video chat today talking about what is it like being a young investor living with a mortgage? What are some of the difficulties with a? What is that some of the good things if there are good things, living with a mortgage? And what is it like in general? So, Hi, I’m Ryan from OnProperty, helping you achieve financial freedom. As I said, this is Simon Everingham, buyer’s agent from Pumped on Property. So Simon, you’ve got a mortgage now, how’s it going?

Simon 0:36
Yeah, it’s, you know, it is what it is, like, definitely had to make a few changes in the way that I live. And the way that I divide up my expenses, which was a bit of an adjustment, like I’m about three months into it now. And I’m only kind of just starting to figure out how this is all gonna work. So you know, it’s not all roses and sunshine, investing in property, like, every single month, you do have that principal and interest repayment coming out of your account, you’ve got to prepare for that, you’ve got to make sure that all of your, like income is dispersed the right way, so that you never missing those repayments and like, it’s quite high as well. So, you know, for myself, it’s like $420 a week to put to this principal and interest. And then, on top of that, I obviously, have insurances I have, right? I have maintenance, all of the other little fees, property management costs that add up and I have to equate for, then, you know, I’ve still got a life that I want to live, I’ve still got savings that I want to put away for my next property. So it’s been a huge Jasmyn trying to figure out how to work with it. But now I have, it’s kind of simple. And it’s, it’s just taking away.

Ryan 2:03
So what what have you done to make it more simple and to be able to manage to not get overwhelmed by it? What are some tips you have, for other people out there living with a mortgage.

Simon 2:14
So what I did, I’ve got my Commonwealth account, which is what my loan is with. And that’s what I get paid into every single week. So what I do is I immediately schedule payments every single week for my expenses associated with that property. So $750, straightaway, goes into my home loan account, basically, that $750 covers everything associated with the property, you know, then I’ve got other expenses in my personal life, you know, I’ve got rent, I’ve got my car, I’ve got my phone, I’ve got Stan, I’ve got fitness applications, like all of these other things that are still coming out. So the way that I’ve set it up is the money that I get paid from working is to maintain my life. So it’s my savings, it’s my living, my discretionary fund, it’s all of my mortgage. And then what I also have is the rent that’s coming in every single week from that property. So that’s completely separate, it goes into a different account. And I use those funds, the rent that RSP rather than using the rent to pay off the mortgage, I use my income to pay off the mortgage, and I use the rent, to live my life. So that allows me to still, you know, go on holidays, you know, buy new clothes, whatever it may be, go out to dinner, go to breakfast, have a few drinks, whatever it may be. And that’s the way that I’ve personally done it. And I’ve found it, it’s pretty well. And it means that I’m not overspending, either, because the rent isn’t too sufficient. You know, it’s $390 a week, I obviously don’t want to spend all of that. But it’s nice to know that it’s there, if I want to spend that amount.

Ryan 4:06
Yeah, so basically, you’re implementing the pay yourself first strategy, which is when you get paid, that money immediately goes on to into your mortgage account, which I’m guessing that’s where your mortgage is drawn from monthly. So you know that each and every month that there’s going to be enough money in that account. So when your mortgage repayment does come out, there’s going to be money there to pay. And then you’ve kind of designed it so that you use your own income in order to set that up. And then when the rental income comes in, then you can use that for your own lifestyle, which I guess would prepare you for when you had that period where the rent didn’t come in for a while.

Simon 4:44
Yeah. Yeah, exactly like steps things can happen. You know, I was at receiving rent for a few weeks and it was stressful and it was tough, but that was what it was. I had to deal with it at that point in time and I still had a mortgage to pay. I still had a life to live i’d expenses in my life so you’ve just got to deal with it and not everything always works out so it’s you got to you got to prepare for that you got to budget for that but now i’ve got a property that’s rented out he back paid me for all of those weeks that he missed and it’s all good you know i guess um you know one of the toughest things was i read the book the barefoot investor and he’s told me to set my accounts off and all of these crazy ways so i’ve got you know different areas for different things in my life and when i got my mortgage i talked to my mortgage broker and he’s like what you want to do is you want to park as much money in your mortgage account so that you can offset some of the interest that you pay the more money that’s in there the better we’ll the less that you have to pay an interest for that property so that was tough because i had all of you know this money which i was like okay cool i know how much i’ve got for holidays i know how much i’ve got for expenses i know how much i’ve got for savings i know how much i’ve got for discretionary funds but then having to put all of that into the mortgage and then continuously top it off and go okay well you know how much of that is for my holidays how much of that is for if i need to get my car service or replace the tires or you know if i get injured and i need to go to the physio or things like that like working those little things out has been a tough adjustment as well because i want to offset the amount of interest that i pay so i’m not paying as much money to the banks but i also still want to enjoy those things in life or i need to pay for those certain they want

Ryan 6:49
to help you still want to have clarity around your finances which is what i found the barefoot investor bank account strategy did for me was it just gave me visual clarity on how much money i have each thing so i had like a big bills account so how much money was set aside for bills how much for holidays how much for splurge how much for paying off debt or investing it just made it all so clear so how do you manage it now that you don’t like those clear differentiations because it’s all just it’s all just in one big boiling pot now

Simon 7:21
yeah exactly so i had all of those different accounts as well and then once i’ve got my mortgage i needed to push all of that money into my mortgage account and it’s just all sitting there like it’s just you know i can still access that whenever i want but it’s like i don’t want to touch it anymore because it’s it’s offsetting some of the interest so as soon as i take out you know i’ve got to replace the tires on my car so as soon as i take you know 500 $600 out to do that you know i’m paying more in interest on my home loan so then i’m like get caught up in this like okay well this week i’m not going to do too much because i’m going to use the funds that are normally just for my the funds that i have for my everyday life to pay for this because i don’t want to touch that money but you know i think this is still me just adjusting to having a mortgage and i think all i’ll just have to get used to the fact like that’s my account for everything in it sometimes i’m going to have to pull money out for replacing the tires on my car or bills or going on a holiday and you know my interest is going to go up maybe a couple of $100 for that point in time but you know i know i’m still working towards the same goal at least i’m still paying off principal and interest so i’m still wiping down some of that debt

Ryan 8:44
yeah well i guess you have your financial goals you have your property strategy goals having the money in that offset is kind of just a bonus to you because you know that you’re going to achieve those goals anyway so yeah hopefully you don’t get too caught up in it and forget to enjoy your life and enjoy the process because i do believe you’re gonna get there anyway and then interest that you save yes it accumulates over time but it’s also not crazy amounts of money that is going to be saving i guess it depends how much money you have in there

Simon 9:16
yeah exactly like it’s just it’s just an adjustment but rather than just going oh it’ll be what it’ll be and dealing with it i’m spending time every single week trying to figure out the best way to do this so that i can still have that clarity in my mind and i don’t have to focus on those things so comes back to just wanting to be in the best situation that i can possibly be in and putting in the time and effort to figure that out so i’m pretty close to it right now and yeah i’m pretty happy how it all worked out it’s definitely not as hard as i was expecting it’s definitely not impacted my life as much as i thought it would which is always really positive

Ryan 9:59
yeah so Living with a mortgage. It makes life slightly more complicated, but you’re definitely finding it manageable.

Simon 10:06
Definitely.

Ryan 10:06
Yeah. All right. So there you have it. Just a little chat about Simon’s journey and his life living with a mortgage. We hope that you found this interesting. If you haven’t seen it yet, go ahead and check out the video we did, where we talked about how Simon bought his first property and what that experience was like I will link up to that otherwise until next time, stay positive

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