Stop Comparing, Start Owning: Conquer Doubt & Buy Your First Home

Breaking Down the First Home Myth

Daniel: Guys, welcome back to this week's Blueprint Podcast. I'm joined by my co-host, Rory. We're really excited about this episode because we're going to crack into some serious deposit-building maths, aren't we?

Rory: Absolutely. And we're going to talk all about the process of buying your first home. We're going to talk about some myths, like people saying, "You're never going to be able to afford your first home," and really break down the numbers of how we guide our clients through goal setting and actually achieving the goal of buying a house. I think a lot of people, when they first think about buying a property, can get overburdened by all the requirements—the deposit requirement, and alongside that, maybe comparing yourself to others. That's probably the biggest issue we have in personal finance today: people compare themselves to others. "Oh, this person's got these benefits, that's why they can get into a home earlier." You know what I mean?

Daniel: That's right. So, we're going to break it down and, as you said, bust some myths and shine a light on how we can make the seemingly impossible possible.

Rory: Yeah, absolutely. We want to start, because we love what we do and we're super proud of our team as well. And we got a bit of mail, Rory. We're going to start off with mail, alright? Hit us with the mail.

Daniel: It's a message from one of our clients, so it's very relevant to what we're discussing today—building up your deposit, working towards what can seem impossible, buying your first home. That journey can often feel discouraging. We've got a message from one of our clients who has just gone unconditional.

Rory: Nice.

Daniel: And you wouldn't believe it, but our adviser Jack—Jack, yeah, you know Jack?—was the one to sort them out. So, we're just going to read the correspondence he's got.

Rory: Enough suspense, mate. Read it out.

Daniel: Hi Jack, thank you for all your hard work. We got a confirmation from our solicitor that it's all confirmed now. It feels weird as our life hasn't changed at all, just less dollars in the bank account after we pay the deposit. However, it's so humbling to be able to own our first home in New Zealand, which has been our dream come true. We migrated to New Zealand 10 years ago, started from scratch and built our life in this beautiful country. Without your follow-up call, we wouldn't have considered buying a home this year, as we were told a few years ago that our lending power was so weak that we couldn't afford a home for our small family. Thank you for being our guiding light and being there every step of the way. Your genuine, kind, and down-to-earth approach really made us feel assured that it's going to be okay. Thank you again and stay in touch.

Rory: Oh wow, Jackie boy, what a glowing review, aye? If that doesn't get the blood pumping, you know what I mean?

Daniel: Yeah. It's inspiring in a lot of ways, aye. Firstly, the couple and family migrated to New Zealand to start a fresh life, so on the back foot, being told not so long ago that it wasn't possible for them.

Rory: Yes. And then they got in contact with the man, the myth, the legend, Jack Hammond from Blueprint Finance, and they're now homeowners.

Daniel: Yeah. I mean, it's such a good feeling, obviously for Jack as the adviser, but for us too, to be a part of that and share that in the office, you know, when you get news like that. Makes it all worthwhile, really.

Rory: This is a really good starting point for our conversation today. A lot of people get overwhelmed when they have those initial conversations and are told, "Hey, you're so far away." But it's all about making a plan. Where do you even start, right? You've figured out you want to buy a property, you feel like you're not close to where you need to be. Where do you even start?

Daniel: I mean, this is going to sound like a bit of self-promotion, but—

Rory: It does a little bit, but in saying that, you hit the nail on the head. I don't think our mortgage advisers here refer to themselves as guiding lights, but in a way, you could say that we are. For some people, we're talking about people that it seems out of reach, 100%, and talking to the right person at the right time can make it possible. Perhaps it's not as soon as you think, but you need to establish where the goalposts are so you can take aim.

Daniel: Yeah, and I think that's what Jack's done here, and that's the key first step for anyone looking to get on the ladder and own their first home: understand what they need to do, how they're going to get there, so they can then start taking the practical steps.

Rory: Absolutely. And I think it's about having that first conversation, no matter how far off you think you are. When we have our first-term strategy session, sometimes clients are ready to go for the pre-approval and they sort of know that they're there, but sometimes it's a couple of years away, and hey, that's fine. Don't be shy to reach out even if you feel like you're miles away or just having a look online. You've gone to the ANZ or Westpac website, used the calculators—how much can I borrow? You need to have that conversation and really reinforce where you're at, and understand where the finish line is so you can actually set a goal and move on from there.

Daniel: Yeah, absolutely. The sooner you do that, the sooner you'll own your first home.

Rory: Absolutely. And I feel like the biggest myth that we deal with, with first home buyers who are beginning their journey, is that you need help from your family to purchase, or that most people get help from their families.

Daniel: Yeah, and that can be a very discouraging thought. We find a lot of people who compare themselves to others they know who maybe got a big gift to help with a deposit. In reality, most people that we deal with actually don't get financial help from their families in terms of a cash gift. Many do, but most don't. Advisers at Blueprint didn't get those to get their first property, so yes, that's very helpful, it gets you there quicker, but you can do it on your own. It's just going to take some time. If you begin the process and set a plan, it's just a mathematical certainty that you're going to get to the deposit you need for your first home.

Rory: Absolutely. Family gifts, as you say, they're a leg up and they're fantastic. It's great when you've got that support network around you that can give you a financial kickstart. But as you said, it's the minority of people that do that, but it's easy to look at friends or colleagues or anybody around you in your circle that have received those helping hands along the way and think, "That's the path, which I don't have, and I can't do it because I don't."

Daniel: Yeah, precisely. It's sort of a psychological paradigm, and a lot of the stuff we're touching on is, as soon as you label something as impossible or too hard, it's a self-fulfilling prophecy. That's what we're trying to break down, because a lot of people are in the same boat. There are a lot of variables—people have different earning capacities—but in essence, we're in the same boat. There's equal opportunity here.

Rory: Absolutely. Help from your family—I think we'll touch on this further on in the chat—but it doesn't have to be a $50,000 gift. It could be being able to stay rent-free, or opportunities to earn additional income to save more. That really is help as well. That is, in form, a gift, right? Because you're able to get some advantages, so take note of what you have, what resources you have that could help you get to the goal, and write that all down and include that in your plan to get to your deposit.

Daniel: That's right. And maybe it's not even free rent, it's just tough love. If you want to go and get it, you know? Like Rocky Balboa, you know what you're worth. Go and get what you're worth. It's time to lock in and don't make it a thing where it has to happen before you're 30, or before you're 35. Everyone's on their own journey.

Rory: Correct. Everyone's on their own journey, and we've got so many people that we've helped who are buying their first home in their fifties. It's true. But don't let other people's journey interfere with your own, right? Everyone's on their own. Just because someone is ahead of you doesn't mean that you can't have your own financial success, and guaranteed, when you do it yourself, it's going to be that much sweeter when you get the keys on settlement day and now you're not paying rent, you're building your own equity. It's going to be that much sweeter. That's the kind of nectar you want to be sipping on.

Saving, Budgeting and Building Habits

Daniel: So, we're going to break our analysis into three parts. Part one will be looking at the saving side of things. Part two is going to be the earning side of things, and part three is going to be our investments.

Rory: Okay. Now with part one, we're really talking about the basics: saving, budgeting, what's important, how can we save more, and how can we actually break down a budget? We were talking about this a bit off-air—budgeting is a bit of a taboo word, right? Because as many people as you talk to, I feel like most people, if you ask, "Do you actually have a budget?" most would say no.

Daniel: That's right. It's just not very sexy, and it feels restrictive.

Rory: Yeah. I feel like, you know, I want to do what I want with my money.

Daniel: Why do you think that is, though? Why do you think personal budgeting is so unsexy?

Rory: I think the lack of a future financial goal impacts on saving and budgeting today. Because without that target, what's the point? So people who are budgeting without a financial goal, that would feel very restrictive. That would feel like you're not going anywhere, or you're holding back for no reason. You're sacrificing lifestyle today—for what? If you don't have that purpose. Obviously, owning a home is a big goal, or otherwise it could be a holiday, or it could just be your future self not having to work for a living.

Daniel: Absolutely. I totally agree, and I think another thing is with expenses, your annual expenses, your personal expenses, they go like this—it's not a straight line. If you're earning a salary or a wage, your income is a pretty straight line, but your expenses go up and down. Some months you have massive expenses—you've got the car payment, you've got to fix your car, you book flights, you go see family at the end of the year—and it always seems like it all comes at once. Those sorts of events and the way that expenses occur, I think, throw people off budgeting because they blow out one month and they say, "Crap, it's not even worth it." But the key is obviously factoring all those sorts of things in.

Rory: So, when we talk about budgeting and how we look at budgeting up here at Blueprint, it's about understanding your base fixed expenses and then understanding your variable expenses and setting parameters around the variables. We can't change our fixed expenses—we can't change our bills, our electricity bill, insurance bills—but we can change our discretionary spending. So, analysing what you spent in the past and then setting parameters around that.

Daniel: We were talking about how you and Sammy are using PocketSmith at the moment.

Rory: Yeah, we are very new, but it's a great tool. I think what you're saying there is the first step is to understand the lay of the land—what is your saving capacity? What am I earning? Get that written down. What must I pay? Get it written down.

Daniel: Exactly. And then you can start looking at forecasting—what type of deposit we can be looking at and when, based on our current situation.

Rory: Yeah, exactly. For the folks at home, PocketSmith is an online app that plugs into your banking, and it's a budgeting app, so it allows you to track your expenses, analyse your expenses, and it would be perfect for this scenario because it allows you to get real data on what you're actually spending and where you're spending. It categorises everything, breaks it down into food expense, bills, insurance, all that sort of stuff.

Daniel: Absolutely. Get the lay of the land. It's a live stream. You can have multiple accounts—so me and Sammy, it's great for couples. We've got multiple different accounts and they all feed in, and then you can categorise your spending. You can set, say, $1,000 a month for food, and there'll be a running total. If there's a week to go in the month and you've got $200 left or $20 left, you're constantly live.

Rory: Family of three on $20, aye? Make it work. You're going to have to rob Peter then, you know? So it's very cool, and it's got forecasting as well—30-year forecasting so you can actually make some long-term goals and see exactly where you're at at any point in time. That's really cool technology now, because the spreadsheet is fantastic, it'll do its job, but it doesn't track where you are at during the month or week or however you do it. And the personal spreadsheet takes a lot of effort to make it look appealing and spend a lot of time in the spreadsheet.

Daniel: We're talking as well about your banking app—when you're setting savings goals with certain banks, they've actually got a goal-setting feature where you can say, "I want to save $100,000." It tracks it and shows you how much you've got left and where your date is. It's got a little progress bar, and that's the sort of stuff that gets your dopamine going. Forget doom scrolling.

Rory: Oh, absolutely. It gets the dopamine going, and that's why PocketSmith's so good, because it allows you to visualise the tangible goal of your savings, whereas the spreadsheet's not as sexy.

Daniel: There's a reward mechanism built in there to see that progress.

Rory: Yeah, you're totally right. So, we start off understanding the expenses, and then we want to set a savings goal. Based on expenses versus income, we want to set a realistic savings goal, and we want to treat that like a bill. We want to treat it just like your insurance, just like an AP—an automatic payment. And you do everything you possibly can to protect that, and that is the foundation of your savings. Obviously, any extras you can get on top is great, but there has to be a monthly outgoing, even if it's the bottom—even if it's $500 a month, that's all you can currently save right now. There has to be a baseline that's just going out no matter what towards your future home, towards your savings. That is the foundation of your budget.

Daniel: Absolutely. That's the first thing we pay when that cheque comes in, right? You pay yourself.

Rory: We take pride in that. You pay yourself, 100%, because if you don't do that, you're going to spend the rest of your life paying rent and someone else's mortgage.

Daniel: It's true, isn't it?

Rory: Yeah, sorry mate. Sorry to bring the bad news.

Daniel: It's a tough message, isn't it?

Rory: It's a tough one to swallow, but the exciting thing is that we have free will and we can set something like that up, and it doesn't have to be $1,000 a month. It can start off at the baseline and you can slowly increase that over time.

Increasing Income and Side Hustles

Daniel: So, what happens next?

Rory: Dan, we've sorted out our savings and perhaps it's looking great, but we want to get there faster, or maybe it's looking tight and we're still feeling like it's never going to happen for me. What other steps can we take?

Daniel: Yeah, I feel like this next topic is quite trendy with personal finance, or has been—the concept that, look, it's really good to budget, that is the foundation like we just discussed, but what's almost equally as important, or more important in this game, is increasing your income or finding ways to increase your income. It's not the most direct, but any way that you look at it, the number one way to increase your savings is by increasing your income. Once you've set your baseline budget, you know that's what you've got, now pull that lever, that income lever, to actually get towards that house deposit. It's also this concept that you can only decrease your expenses so far.

Rory: Yeah, you're going to get to a point where it's easier to earn another $50 than it is to save another $50.

Daniel: 100%, yeah. You'll get to that threshold where you can't give—Is it beans and rice, or is it just beans or just rice? You know what I mean? It's not going to get you any further, is it? So you have to find a way to use your time or leverage your time more effectively to increase your savings.

Rory: So, where do we start? The number one place is always your main job, right? Understanding the scope of your income, earning ability at your main job. If you are on a salary plan—a lot of our public sector workers, teachers, nurses—they understand how their income's going to increase over time.

Daniel: Yeah, it's fixed, isn't it?

Rory: It's fixed, yeah. So, forecasting that out and saying, "Okay, when am I going to hit these milestones? Is there anything extra I could do to hit those milestones?" And then obviously in private, we're talking salary negotiations. So, everyone go to your boss, demand a 15% pay rise because you need to purchase a home.

Daniel: Is that the plan?

Rory: Well, look for opportunities where you're working, right? If you've been at a company for a few years and you haven't had a pay increase, and you've been taking on more responsibility, maybe it's warranted.

Daniel: Yeah, maybe it's warranted, and I mean, obviously everyone's got their own unique working and employment situation. We don't know everyone's situation with their employer, but I think it's good to share these goals with your employers and say, "Hey, this is where I'm heading. This is what I need to earn to reach that goal. Am I in the right place, or is there anything else I can do to increase my income?"

Rory: That's right. There could be another position coming up, and maybe there's some extra training that you can do to upskill that'll increase your earning capacity.

Daniel: Absolutely. So that's a big one. And then, we talk about the infamous side hustle.

Rory: The side hustle.

Daniel: What do you think about the side hustle?

Rory: Oh, it's pretty topical at the moment, isn't it? But I mean, what is a side hustle? It's just anything to make extra money, right? So, let's say there are no extra shifts to be picked up at work, and there's no extra or additional way of making money at your job. There's getting a second job—drive an Uber, mow some lawns, clean some windows, do some landscaping. Do something to make extra money.

Daniel: 100%, yeah. Roll the sleeves up, for Pete's sake.

Rory: Yeah, have a garage sale.

Daniel: Yeah, that's right. And when you start thinking like that, you'll discover opportunities. It's when you are laying low and not really thinking about it or putting yourself out there that the opportunities don't come knocking. You've got to go knocking for the opportunity.

Rory: That's right. Absolutely you do. Go out and seek it. Understand what you can earn, make a plan, and see how you can increase your savings.

Daniel: Absolutely. Because if you can do that, obviously it just speeds everything up, doesn't it?

Rory: Yeah. There's a property influencer in Australia—Property with Harley. Jack's a big fan of him, and he's a very young guy. He's got three or four properties, works as a mortgage adviser during the day—I think he's a mortgage adviser associate, or he was—and after his work, he goes and works at BP. There you go. Works at BP five hours and gets 20 hours a week doing that, and that's the extra income that he needed to get his next property. So, just writing loans and pumping gas.

Daniel: Yeah, and doing what it takes, aye, just doing what it takes.

Rory: Isn't that brilliant? If you've got time and you've got ability and capacity to work and you want to earn more, go get it.

Daniel: Yeah, yeah. I suppose rounding up on side hustles—Is sports betting a legitimate side hustle?

Rory: It could be... No, I don't think so. Unless—

Daniel: Unless you're really good.

Rory: No, no, it's not. And gambling causes a lot of issues on your mortgage application if they can see lots of gambling going out, even if you're making a profit, it can deter the banks.

Daniel: Yeah, touch on that—account conduct. What are the red flags? So, gambling is a red flag because we're talking about budgeting and this sort of ties in as well. If you've got a good budget and good plan and are a good saver, your conduct should be good.

Rory: 100%. Big red flags: gambling, unarranged overdraft—if you're letting your checking account go into the negatives—late payments on your credit cards or your debts or your bills as well. Also, erratic ATM withdrawals—it's kind of common, we actually see it a lot, but if you've got big ATM withdrawals coming out frequently, the banks can ask questions about that. It's $350 every Friday sort of thing. You see some crazy stuff, but those sorts of things—so make sure you tidy up your accounts when you're going for a loan. Big one. But the thing the banks love to see is consistent savings. If you can show consistent savings, the banks love to see that. That's why the automatic payment for savings is like the golden ticket when you go for your mortgage application.

Daniel: What about if you've got those transactions coming back from the TAB or the sportsbook? In the green, coming in?

Rory: Yeah, yeah, yeah. Still a red flag?

Daniel: Yeah. Massively. So, obviously, if you need to gamble, gamble responsibly and within your means. If they can see it's $50 a month or $200 a month, they'll just put that as a fixed expense on your application, assuming that money's not coming back, even if it is, and they'll put that as a fixed expense on your expenses.

Rory: Yeah, okay. Alright. Stay away from gambling. We gave it a chance. It failed the Blueprint baseline test. Didn't make the threshold.

KiwiSaver and Your Deposit Wrap-Up

Daniel: So, that's sort of touching on the income. You've nailed the savings, you're earning some extra income where you can, and now you're seeing this nest egg really starting to snowball. What's the other means of savings? The big one is KiwiSaver, isn't it?

Rory: 100%, the one that I'm super passionate about. We've had some recent changes to KiwiSaver, but it's still a great resource, isn't it? There are probably pros and cons and two sides of the KiwiSaver chat around contributions and how much we should be putting towards it.

Daniel: Yeah, we chatted about maxing it out, putting the 10% contribution in if you are really serious about buying a house and you want to lock that money down. Others would say do the minimum and save and invest that 7% elsewhere if there's no real advantage to the KiwiSaver, but whichever way you do it, KiwiSaver is a great resource to help accelerate our purchase of our first home.

Rory: 100%. I think you and I, when we often talk, Rory, I'm always saying to you—and I sound like a broken record—but so many of the first home buyers that we help, over 80% of the deposit is coming from KiwiSaver. People in their thirties who have started contributing in their early twenties and have just had this thing snowballing over time. Not the best savers, but KiwiSaver is a form of savings, right?

Daniel: Correct.

Rory: So, all the deposits come from KiwiSaver. That's super, super standard. It's undeniably a massive part of your toolbox when you're looking to purchase your first home. Making sure you're utilising that correctly is super important. When we talk about the things to focus on, obviously just starting off with the free money—government contributions, employer contributions—make sure those are coming through. Very sad news that the government cut the free contributions.

Daniel: Yeah, they've cut that in half, down to $260, which is a bit gutting.

Rory: It is what it is, aye.

Daniel: It is what it is. And they've made some other changes, which will still mean it grows. Obviously, mandatory contributions in the future are going to increase, which I think is really good. But yeah, that free money, that compounds, man, that really compounds.

Rory: Absolutely. And I think just hearing you talk about your first home buyers and the amount of money coming from KiwiSaver, that's a big tick in the argument to maximise your contribution to KiwiSaver. Making sure that it's allocated in the right fund, of course, and that's where having that chat with a mortgage adviser early and then potentially someone like Jono, who we've got in-house—KiwiSaver adviser. Making sure the risk of the fund is correct and relative to your time horizon of when you want to use those funds.

Daniel: Yeah, that's really, really important. And then, it's just making sure your timeline towards the purchase is in line with your investment horizon. So, if you thought you were 10 years away from purchasing your first home, it might make sense to be in a growth or aggressive fund after chatting with your KiwiSaver adviser. But if you are a couple of years away, you don't want to be in aggressive or growth. Then another COVID event or financial crisis and we see a 30% or 40% drop in the market and there goes $30,000 of your deposit, whatever it may be.

Rory: Absolutely. Jono is always talking about it—the risk tolerance and the investment horizon. It's really important to analyse that with your personal situation, because most people who are talking about purchasing their first home are probably less than five years away. So, you should be considering a balanced at the very highest risk, or even a cash fund, to just make sure that money's growing steadily and you're not putting your capital at risk, because you need to draw that out.

Daniel: 100%. So, from the top, Dan, what are our top tips to getting this deposit?

Rory: The wrap up—obviously your starting point is chatting to your adviser. Sitting down with your adviser, even if you think you're a couple of years away or four years away, chatting to your adviser, figuring out what needs to be done. Is my income at the right level? Where does my deposit need to be at? Setting those targets for yourself. That's number one, because like we said, failing to plan is planning to fail. There are a few things that we talked about that we didn't touch on today, but who's on this journey? Is it a couple? Is it an individual? Are you just a couple of years out of uni and a few of your mates want to buy a house together? There are a lot of different ways to skin this cat. So, have that chat. Define the parameters for sure—how it's going to go down. Visualise it and set up the framework—the blueprint, if you will.

Daniel: If you will, yeah.

Rory: And that's your foundation. Then from there, make a budget. Get those fixed expenses written down, get the variable expenses written down, and understand your income, and set the automatic payment for your savings as your next foundation.

Daniel: Crucial step.

Rory: 100%. Next step: income. How can we increase the income? How can we increase our savings—side hustle, increase of income in your salary, all those sorts of things. What do you have available?

Daniel: Yep. It might hurt a little bit, aye, that hustle.

Rory: Yeah, but short-term pain, long-term gain.

Daniel: It's going to hurt, and it should hurt a little bit.

Rory: It should, and that's life, right? You work hard and then you get that juicy reward.

Daniel: Yeah, that's right, isn't it? Success is painful, as much as failure as well. You've got to pay the price. Pick your pain.

Rory: Yeah, absolutely. And then we are going to analyse the KiwiSaver. What are our contributions? Are we maximising it? Are we getting the minimum? Are we putting in the minimum contributions to get the free money? And are we in the right fund?

Daniel: It's a mathematical certainty—God forbid, unless you get hit by a bus or something horrible happens, which you can have insurance for that—but you're going to get there. You will get there.

Rory: Yeah, 100%. And we're here to help. But, at the end of the day, it's you who's got to save the deposit. So, use all the resources you've got. Make a plan. You've got this.

Daniel: And hit the link below to book a call with Dan.

Rory: Yeah, or Jack. Book it with Jack. You've got this, man. Seriously, man and woman. You've got this.