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Out parents love us, right? Albeit frustrating to spend time with mine the majority of the time, I know they have the best of intentions. I’ve been reading a lot on the differences between the generations lately and it’s pretty interesting stuff.

To a lot of people, us Gen Y’s are just plain annoying. I’ve read about how Gen X’s are probably the most sour about everything. They are a generation with the biggest mortgages, transport and living costs. As it stands, they have the most to gain from Australia’s economic “slowdown”. (Makes me laugh when they use the term slowdown). Falling interest rates and petrol prices are set to benefit the Gen X’s the most. Essentially, they have had a “hard life”. They’ve worked hard to get nowhere in their eyes, while the Baby Boomers get rich from specufesting (speculation investing), and the Gen Y’s seem to get all of the good jobs while treating their employers terribly.

What the majorities don’t realise though, is that the Gen Y’s are both the Baby Boomers’ only hope to retire on a healthy sum of money, and the best way to keep the Gen X’s in a property that is actually worth something at the end of the day.

Unfortunately what most also don’t realise is that in Australia, the Gen Y’s are the equivalent to a subprime investment. The majority have a huge HECS debt, credit card debt, have little to no savings as they haven’t been earning for long at all (due to studying), are quick to sign any contract (car, laptop, mobile, internet, pay-tv) and so on. Financially… woeful!

Work is becoming harder and harder to find for a lot of Gen Y’s. I know very intelligent people who have attained high grades in university, and some two years after finishing uni are still working casual at a pub. If you’ve got a job, great, but if you don’t, times are already tough.

Now granted these are generalizations.. I also know a lot of Gen Y’s that are good savers, have very safe jobs, and are financially “on track” (whatever their path may be). I also know a lot aren’t though.

None of this really concerns me. What is the big deal about having a twenty grand debt? Sure, to me it seems like a waste of money to me, paying interest on that money, but it’s not a massive amount of money and it doesn’t affect me directly if someone else wants to do that.

What does concern me is this big juicy First Home Owners Scheme (I imagine they don’t call it a scheme for a reason). $7000 FHOG, $7000 “Boost”, $4000 from the SA Government (different schemes in different states), and an extra $7000 if you build. $25000 in free money!

“House and Land Packages from $300,000. Take advantage of the First Home Owners Grant and low interest rates. Rent money is dead money!”

Although loans are becoming harder to get, things haven’t hit home in Aus yet. Notice how there’s a for sale sign in just about every street of the country? They are the smart people. Well they are the people that are smarter than most. The really smart people sold up at the peak a while back, but these ones are happy to cut their losses and get out now before anything worse happens. The Baby Boomers are selling. The Gen Y’s are buying (and allowing the BB’s to retire early).

The FHOG is keeping the housing market afloat in Australia. Practically every Baby Boomer in the country is telling their kids to buy. Interest rates this, FHOG that. Despite their kids only having a few grand in savings, and a job that they have only worked for 8 months. “Get in before the next boom”. After all, “house prices don’t fall, they double every ten years in Australia”……

Now believe me or not, I’m going to say this. From an economic point of view, it is widely accepted that house prices will fall in Australia. It’s happened in history (as above), it’s happened all over the world, and it happens in any other investment market. A LOT of people have something to lose by this happening, hence the naysayers. I won’t go into the specifics because that is a massive rant in itself, but if you want to do some reading check out bubblepedia.net.au.

So we’re going on hypotheticals, because you’re probably skeptical that this will never happen, but lets just say it does…

The Gen Y’s all buy up on housing from the “smart” Baby Boomers. The BB’s are selling their investment properties due to a looming house price crash. First Home Owners Grant and all, Gen Y’s are buying up big, their parents are oh so proud, and celebrations are in order. Then as it happens, the “slowdown” that Australia was having turns out to be a “depression” after all. Whoops, who saw that coming? Unemployment is rife, with the Gen Y’s to go first since they have had no job loyalty in the past, and really they are just an annoying eccentric kid, right Gen X’s? They try to keep above the water for a while, try to keep paying off their loan. Maybe renegotiate with the bank and take an interest only loan for a few months while they find a new job. Rent out the house even? Unfortunately the rental market is at an all time low due to a housing surplus too (not a housing shortage as all of the developers will have you believe… coincidence?), plus all of the other unemployed people are moving back in with their parents or sharing with others.

Time for the subprime of Australia to start declaring bankruptcy. What a nice start to life Gen Y’s. Good luck getting a loan in the future with your credit status now.

But mum and dad love you, it’s a big mean world out there. It’s not your fault things didn’t go your way, nobody saw it coming. Nobody except all of the people that tried to tell you not to buy before you did.

How much do you need to earn to sustain your lifestyle?

My mates pull figures out of thin air. On the weekend one of them said that if he could earn $100,000 he’d be happy, and he’ll do anything to earn that sort of money… “Even work 80 hour weeks!”

But to me, I think we’ve all got it a bit wrong sometimes. Why is it, that when I earned around five grand a year working for McDonald’s, I never had enough money, yet now that I’m earning over ten times that, I still “don’t have enough money”. Well, to be honest, that last bit is a lie.. I do have enough money, but only because my lifestyle has changed. My change of income hasn’t changed my situation, but rather my change of mindset. For most people I know, and most people I don’t know, they simply never have enough money because they always spend the extra money they earn on more “stuff”.

It’s not our fault that we always want more “stuff” (it’s what we’ve been taught for a long time), but it really locks us into our working life. Put simply, I have no intentions of working for my whole life. I am working full time now while I’m “getting set up”, but later in life I hope to be able to have my wife as a stay at home mum (as that’s what she wants), and ideally I will just work a few days a week.

I think the biggest issue with being able to do this is the ongoing costs that come attached to almost everything in our life nowadays. Mobile phone contracts, Internet contracts, pay tv contracts, petrol, car rego, club membership, insurance, etc. We’re committing to more than we realise. Now obviously some things you can’t live without, and obviously most people need to spend money to make themselves happy sometimes. For instance, I enjoy using the Internet, and I spend more than most people I know on it, but it’s a genuine interest of mine. I don’t have pay tv, because I don’t really watch much TV. I feel as though I can justify that expense.

The issue is that most people don’t really think before they commit to things (eg, $99 a month on their phone), and before long they are so used to having it, they “need” it. Now when you stockpile all of these weekly, monthly, yearly financial commitments up, plus the combination of getting into the habit of buying things regularly (eg, DVD’s, clothes, even expensive food), you end up broke. (Once again, I’m not saying “you should never buy a DVD”.. Some people love collecting them, it’s their hobby. Good on them. But so much stuff is thrown at us, that we just don’t think sometimes and that pay packet ends up spent.)

I tried to explain to my mate that if he earned $100,000 a year by working an 80 hour week, he wouldn’t have the time to service his car. He’d have to get someone else to paint his house… And so on. Heaps more outgoing funds, so his massive income would be eroded.

I’m actually starting a veggie patch at the moment. I intend on having a big one eventually, but I don’t really know what I’m doing so I’m starting small. A veggie patch is a prime example of an area where time means money. Later in life, my family could end up being self sufficient, but it would take a lot of time to do that. I don’t believe you could work full time and be self sufficient. But even having a small veggie patch, and working on it after work would save a family quite a lot of money. If you work an 80 hour week it’s the last thing you’d want to do in the dark when you get home, so inevitably you’d just end up buying more from the shops. More outgoing funds that erodes the huge pay packet.

I link to a blog by a dude that calls himself durianrider. He’s pretty “out there” for a lot of people, but I admire the guy. He’s stoked on life, yet works very little and just earns enough to eat and live. Now I’m not saying that I want exactly that, but I think it’s a perfect example of the other extreme. How can one man that earns next to nothing, be so happy, yet others that earn more than most of us can comprehend be so depressed that they have to be on drugs daily, and often end up killing themselves in the end because “it’s all too much”.

It gives me hope that in a financial sense, there IS more than one way to live your life. I intend on “playing the game” for the next few years and getting setup for life, but after a few years I intend on scaling back work so I can enjoy life with my family.

I work to live, and I only ever want it that way.