8 Strategies for a Successful New Year

That time of year is fast approaching. Not the one with a million parties, last minute frantic shopping with everyone else and kisses from rellies you haven’t seen since…well…this time last year. No, I mean it’s time to make New Year’s resolutions, again!

Despite 6,000 years of civilisation (and 20,000 years of humans on the earth) and therefore at least 6,000 New Year’s totalling many resolutions, this year there’s a hot new trend. Actually celebrating the New Year is a fairly recent trend, the earliest recorded being in 2000 BCE. But if you, like me thought that resolution making was symptomatic of our navel gazing western society, you, like me would be wrong. The Babylonians and Romans were already onto it. Obviously there is something irresistible about the promise of a fresh new year.

So, now that we’ve cleared up the history, what’s this hot new trend and how do you get on board? Well, the fact that I’m posting this in early December, not the 31st is a clue. Yup, it’s time to put the Christmas partying and shopping on hold and start planning your New Year now. That’s what the high achievers are doing around this time of year in anticipation of making 2017 their best year ever.

One of the best things about living in this era is having the world’s influencers and thought leaders available at your fingertips. Bloggers in particular are great at sharing and in fact collaboration is one way to get noticed in the blogging world.

The result is tons of fascinating content that can change the way you look at your life. That’s what I got out of Achieve What Matters in 2017 where more than 30 well known influencers share the most important things they do right about now to set themselves up for a stellar year. Compiled by Michael Hyatt, it consists of 8 strategies that super-achievers use each New Year.

The big insight is to take some time *now* in early December to plan for the New Year. Setting goals that you are likely to achieve takes a bit of time and to set yourself up for success, you need to make sure your goals are reasonable.

Naturally enough, reflection is the first principle advocated by the high achievers. Taking some time out to consider the year that was is essential for working out where you want to go in the New Year. But in the context of reflection it’s the second principle that I think is the most insightful – stay positive. How easy is it to slip into negative thinking when reviewing the past year? All the things you didn’t do; the New Year’s resolutions you didn’t keep; and the missed chances and opportunities.

My New Year’s resolutions are usually based on my musings of where I have failed and what I am not, rather than building on my strengths. I rarely look back on the past year and think of the ways in which I have succeeded and how I can build on that success.

Failing is a part of having ambition and trying things. But developing goals from a foundation of failure doesn’t provide a sturdy base. It’s important to acknowledge the areas of your life where you have progressed as well as were you haven’t. And as I said last year, it might not be where you expected or planned depending on what life throws at you.

For example, I had hoped to get further with this blog. Instead I spent many of my waking hours teaching a baby to fall asleep. On 1 January 2016 I didn’t know babies didn’t know how to fall asleep, so I could never have anticipated the amount of time and effort I would devote to this task this year. But getting my baby to be a good napper is one of my greatest successes. It’s also a win I completely failed to acknowledge while reviewing my year through a negative lens.

Thanks to influencers in Achieve What Matters in 2017 I’m making my New Year plan based on my achievements rather than my failures. I’m not trying to change things I don’t like, just improve my life and it’s a revelation.

Do you take a positive or negative view when deciding your New Year’s resolutions?

The Smashed Avocado Debate

One small paragraph towards the end of a weekly column was all it took to ignite a fierce intergenerational debate about avocado, I mean housing. Are the Boomers hoarding the wealth and locking out Generation Y? Or is the current lousy generation more interested in their smashed avocado breakfasts and overseas holidays than working hard and saving for their first house like their parents did?

Bernard Salt wrote in “Moralisers, we need you!”:

I have seen young people order smashed avocado with crumbled feta on five-grain toasted bread at $22 a pop and more. I can afford to eat this for lunch because I am middle-aged and have raised my family. But how can young people afford to eat like this? Shouldn’t they be economising by eating at home? How often are they eating out? Twenty-two dollars several times a week could go towards a deposit on a house.

The response measured in column inches and blog posts was huge. Gen Y writers didn’t take Salt’s savings advice lying down pointing out the economic differences between now and the olden days when smashed avocado breakfasts weren’t available. I’m assuming it was Generation Y who created this glorious breakfast. And doesn’t anyone else see the irony of Mr Salt discussing avocado consumption?

Anyway, the older camp came up with more facts, savings suggestions and an explanation of what Salt actually meant to say, while my favourite Generation X writer Greg Jericho produced his usual series of excellent graphs and charts to explain the situation. None about national avocado consumption I might add.

So if both sides have presented facts that support their argument, above and beyond Salt’s avocado savings plan, then who is right?

Lies, damned lies and statistics

The argument over Gen Y’s access to the housing market has been going on for ages. Certainly since I can remember back in the early 2000s, when Australia’s property boom began in earnest. The smashed avocado debate is really the current manifestation of what Baby Boomers have been saying about their children’s spending habits for a long time.  The trouble is that while presenting a ton of statistics to prove their point, both sides miss the social and psychological aspects of the debate.

Baby Boomers suggest that if Gen Y just applied the same work ethic and commitment to buying a house as they did when they were young everything would be peachy. The point the Baby Boomers miss is that we live in a vastly different world to that of their generation. David Willetts sums in up perfectly in “The Pinch: How the Baby Boomers took their children’s future and why they should give it back” when he says that while we think of modern life as being fast and urgent, we are moving through the life stages much slower. Which means that where it matters, modern life is very slow. He asserts that while the current generations aspirations may be the same as those of previous generations, we are finding it more difficult to achieve the big things in life. I would suggest that this is because we lack the stability of previous generations.

Marriage is delayed. The average age is 29 for women and 31 for men. Which coincides perfectly with the time that math says is the perfect time to get married. Apart from a big party and debt, marriage offers many benefits including stability. Being married provides some confidence that the relationship will last, offering a good platform off which to make big decisions. Like buying a house, which is also easier on two incomes. As a bonus, marriage is an economic partnership that can really pay off, as married couples generally have a higher net worth than other family units.

For better or for worse, society has shifted away from marrying young and one of the consequences is that other major life decisions are also delayed.

The world is a more open, accessible place than it used to be. It also means our society is less homogenous and the choices about how we live our lives are not based as strongly on social expectations. There are many ways to ‘do’ life. We have the option to discover where we fit in the world through travel, connecting with others outside our communities and engaging with the world through the internet. We are presented with virtually limitless possibilities and I believe very few parents would encourage their children to abandon these growth possibilities in favour of settling down.

At the same time, the job market requires flexibility and being multi-skilled in order to survive. Jobs are far less secure and the idea of a job for life is virtually non-existent even in so called safe industries. Young people are often criticised for lacking commitment to their employers, with the suggestion that Millennials job hop voluntarily. I have no doubt that this happens, but in many cases it’s a chicken and an egg issue.

Contract work is more and more common statistically speaking and is born out anecdotally amongst friends and acquaintances. In all the businesses I’ve worked for, staff have come and gone not through a desire to move to greener pastures but because they were let go when there was no more work in the pipeline. This is just business as usual. You can’t retain staff when there is no work. But you also can’t suggest that it’s Gen Y who are driving the trend through a lack of commitment.

The price Gen Y pay is through a lack of financial security. Without job security, making a 30 year financial commitment to a bank can feel pretty daunting when you’re on a 1 year contract.

Attitude is everything

Since starting to come of age in the early 2000s, my generation have constantly heard how expensive housing is. That it’s out of reach for us at 6-8 times the average salary. For us, the Australian Dream is said to be over. And many have bought into it. Case closed, let’s go commiserate over a smashed avocado brunch.

But wait, it isn’t impossible for Generation Y to buy a house. At least 30% of us have done it and there’s always a Triple J Hack listener who doesn’t understand what all the fuss is about given they’ve just bought a house on apprentice wages. Bless ‘em! So what’s going on here?

Well, in some cases, attitude is everything. Charles R. Swindoll, author of The Grace Awakening, writes this about attitude,

“The longer I live, the more I realize the impact of attitude on life. Attitude is more important than the past, than education, money, circumstances, failures and successes and much more than what other people think, say or do.”

If you believe there is no way you’ll ever be able to afford a house, how do you expect to be able to afford a house? I’d rate the chances as pretty low.

It’s not to say that there aren’t many things standing in the way of home ownership particularly in places like Sydney. There are, both economic and social, but actions are born out of beliefs. And if you believe the Australian Dream is out of reach, then it probably is.

As I’ve said before, it’s not about foregoing coffee or smashed avocado brunches per say, it’s about the priorities that underpin those choices.

It’s interesting how people of a similar age, in the same job, earning the same amount of money can have a completely different take on their ability to get into the property market. Some will tell you it is impossible, while others have already bought a house or unit, or plan to do so in the near future.

Of course, there are situational differences. It’s not that everyone is under a false belief that they can’t buy a house. Not all Gen Y’s spend all their money on breakfast either. Some life situations make it difficult or even impossible. But I would challenge most people to take a good look at their situation and really test if their assumptions are correct. You might find that what you’ve heard actually doesn’t apply. It may very well be your beliefs that are holding you back, not the price of real estate.

Where do you stand on this generational debate? Do you think there’s a tastier breakfast than smashed avocado?

The Real Cost of Houses: Part 2

I previously wrote about the upfront cost of houses. Australia has some of the most expensive housing in the world and just getting into the market it tough. Add to that, one in five of us, feel the need to buy a bigger house than our friends; extending and renovating is a national obsession; and bigger is considered better. All this amounts to homeowners ending up in their private debt and deficit disaster.

That’s the upfront cost. The glamourous part where you get the nice house and all you have to do is pay a small weekly, fortnightly or monthly instalment for 30 years. The bit we never talk about is the small weekly, fortnightly, monthly or annual instalments you have to cough up regularly or unexpectedly direct from your cash stash. Yes, where talking about running and maintenance costs. Boring, I know, but this part really makes a difference to the lifestyle you have and how nice your home is 5, 10 or 25 years down the track.

Keeping it cool or warm: Running costs

Houses are expensive to run and the bigger the house, the more it will cost. Research has found that a household living in a more energy efficient house is one third less likely to default on their loan. That’s how significant running costs are. While houses these days are more energy efficient, their sheer size has wiped out most of those gains in efficiency.

Running costs don’t start and end with electricity and gas. Insurance premiums on a big house are also larger as you have more to replace should the house ever need to be rebuilt.

There’s also cleaning to consider. It’s not my favourite job in the world, but at least I can get to most nooks and crannies within a few hours a week. Double the size of the house and suddenly the cleaning time goes up. Should you wish to get a little help with the job, the bigger the house, the longer it takes, the more it’ll cost you.

Making your home a home: Furniture and fittings

And then there’s the furniture and fittings to consider. Many years ago, my boss ‘downsized’ from a large family home to an inner city apartment after the kids moved out. While it had fewer rooms, the spaces in the apartment were much larger and most of the furniture my boss had in the family home were just too small. The total cost of furnishing their new home with appropriately sized pieces was in the range of $20,000. In their circumstances it was an act of whimsy they could afford, even if it smelt strongly of midlife crisis. When you’re just starting out, the story is quite different.

Furnishing a four bedroom house with both formal and informal living spaces is going to cost a lot more than a more modest sized abode. In fact, it might not even be affordable when you first move in or the extension is finished. Despite how easy we think the baby boomers had it when they bought their first houses, not all of them could afford furniture and their houses were about 30% smaller.

There’s also another trend with large houses that can set you back significantly. The bigger the house, the more storage space you have. Which means you can buy more stuff, because there’s always a room or a cupboard where it can be stored. With a small house you have to stop and think where that gorgeous mushroom poof/stool will live. If the answer is nowhere, you just don’t buy it which in the long run is a good savings tool in itself. Even if it means living without cute foot stools, which is hard, but doable.

As an aside, when you’re young, insurance companies assume that your contents value rises by about 17% per year.

Keeping it looking great: Maintenance and renovation

Finally there are the maintenance and renovation costs. My favourite part of body corporate payments are the sinking fund. Since learning the term I’ve renamed our house to “The Sinking Fund”. Money keeps disappearing into it. Mostly at Bunnings. Things keep breaking or need to be repaired, improved or repainted and it seems like there are never ending withdrawals from our cash stash.

Strata title buildings have projected expenditure tables prepared by quantity surveyors that list the expected maintenance for the building over a 15 or so year period. This is a planning tool to have some certainty over when big outlays are going to occur and how much needs to be in the sinking fund to cover them.

When you’re in a new house it’s hard to imagine how much work will need to be done to it. Unfortunately nothing lasts forever and in fact the projected lifespan of many fitout items are surprisingly short.  Many items will need replacing well before the 30 year loan is paid off. For example, carpet only has a projected lifespan of 8-10 years; decking is only 15 years; and kitchen appliances a measly 9-15 years. Add to that the cost of repainting every 10 years, landscaping and general improvements and your house can feel like a major money drain. For a great maintenance table, check out page 9 of this ‘Cost Efficiency Booklet’ prepared by the Queensland Government)

A couple of years ago we had a valuation done on our house. Surprisingly the valuer commented that it was refreshing to see a small house. He’d been to many big new houses recently with high quality finishes that looked great (what a great job peeking inside people’s houses!). Apparently future expenditure is taken into account for valuations where a loan is on the table. While many a star struck new homebuyers couldn’t see it, he often felt they wouldn’t be able to afford to upkeep the house they had just bought.

So if you think the upfront cost is high, then consider how many thousands of dollars need to be set aside for ongoing costs. You might just be surprised at how big your sinking fund needs to be for the biggest purchase of your life.

Have you found the perfect zero maintenance house?

The real cost of houses: Part 1

How big is your house? Mine’s 85 square meters. It houses 3.  There’s 6 rooms. Four rooms are used frequently, the other two mostly collect dust. And junk.

When we announced we were expecting, friends asked wide eyed, “Where are you going to put the baby?”

“In the sock drawer,” I responded, “and when the baby outgrows that, in the linen cupboard.” Actually, I wish I’d said it, but couldn’t have. We don’t have a linen cupboard. To be clear, I was told by my midwife that in the olden days people used to put their babies to sleep in dresser drawers. In Finland, it’s a cardboard box!

How things have changed. Our house was built by our 70 year old neighbour’s family in the 50’s. A solid, postwar home, it initially housed 2 adults and 4 children. Our neighbour also brought up her 4 children in the house before moving next door. In this generation, it’s housed just 2 and is by today’s standards considered a very small house.

This is the story of houses across Australia. They’re getting bigger even while household size has been on the decline for many decades. Despite housing affordability levels being at their lowest, big homes are still the Australian dream. Anecdotally, home buyers desire the biggest house their budget can buy.

In my professional life I’ve been involved in many new home designs, both as a designer and energy efficiency assessor. I know about the hopes and dreams that are tied up in the idea of ‘home’. After all home is where the heart is. Home is a refuge, a place you bring up your children. A reflection of you; your personality, tastes and status.

Home is a special place and a national obsession. A glance at the TV guide will tell you that. As will Bunnings’ revenue of $9.5 billion in the 2015 financial year. Yes, billion. We’re a nation of builders and renovators.

I take great pride in my home and all the improvements we’ve made to it. I’ve also watched my fair share of Grand Designs and marvelled at beautiful dreams being turned into reality. But there’s a point where our national obsession goes too far.

Flipping through magazines or watching renovating shows it’s easy to forget that houses are to be lived in, not looked at. When our identities are tied up in our homes we can end up in serious financial stress.

While your home is generally your biggest asset, it shouldn’t sink you financially. It shouldn’t tie you to a job you don’t like for 30 years, or take you away from spending time with your children or be a source of constant stress and worry.

Financial stress is a major plot point in almost every Grand Designs episode as well as in the narrative of many people’s lives. As a nation, we’re building, renovating and extending with ‘bigger and better’ as the motto, leaving us with serious debt. And that’s before even considering that our houses are already some of the least affordable in the world. The question of whether to buy or not buy is a good starting point.

If you do decide to buy, then what?

Floor space is expensive. Back when I started in architecture, a project home cost around $500m2 while a once of design was $2000m2. Extensions generally fit into the latter category, while renovations also come with a decent price tag due to the uncertainty of what you might find in an older house.

Despite the cost, many of our friends and acquaintances have bought big four bedroom houses for the family that they were yet to have and then moved shortly after their first child was born, sometimes even before. Or worse, they got divorced. Others are renovating and extending using a second mortgage they’ve admitted to barely being able to afford.

One of the best pieces of financial advice we received from the bank (of all places!) was to renovate project by project once we had the cash, instead of getting additional loans. When we decided to renovate, we steadfastly refused to give into the extension trend estimating we would need at least an extra $100,000 for a modest addition. Our families thought we were crazy, but for over a decade our house has been the perfect size for just the two of us.

Living in a small house is okay. Really it is. Buying something that suits your current needs makes good financial sense. Would you buy clothes one size up or one size down for when you gain or lose weight? Probably not, because clothes are considered disposable. Yet, I’ve got several pairs of pants that I adore and I’ve had them longer than I’ve lived in my house. I bet you do too.

Just like with saving money, making a decision to do anything that goes against the trend feels uncomfortable. But your home should be your place to relax and feel secure. Will buying someone else’s dream offer you that? Consider your options and make a choice based on what is right for you.

Houses cost a lot to buy, but what comes next? Let’s talk about up keep and maintenance costs next.

Is your house a perfect fit for you?