A Sydney home owner is made 1 Smashed Avo at a time

Ah, the great news piece of our time, with wealthy property millionaires suggesting restraint on one side and a generation of overly indulgent kids on the other side creating a straw man argument to quickly hit back.

The dishonest, ‘get views and revenue at the cost of journalistic integrity’ Australian media quickly picks up this straw man and runs with it to make a quick buck.

For anyone for which the analogy flew right over their heads or for the media that play intentionally ignorant, let me distil it down in a way that is a little more direct

Smashed Avo = An analogy for multiple, excessive and unnecessary indulgences that when combined add up to considerable costs over time. If forgone, would allow one to save enough to buy a house.

You see it is an analogy,  most of us learnt about these in high school, right?

This should be something that high school educated people understand. Let alone the University degree qualifications and years or decades of experience a journalist has when they write an article like that linked above. Not to mention the multiple editorial checks that an article must go through to be published on a major news website.

Luckily for those millennials now feeling a sense of futility about saving for a home deposit, Pat the Shuffler is here to be honest. This is because Pat the Shuffler actually writes this shit for fun and not just to extract the maximum page views possible.

My first and foremost opinion is that buying Sydney Real Estate is Insanity. You can choose to completely sidestep this issue because it is actually your choice.

Those who still choose to ignore the opinion of Pat the Shuffler, they do so at their potential own demise. However Pat the Shuffler is still here to show you that you can indeed save enough for a house deposit. That’s because I don’t like the lies and misinformation that do nothing to help those that so desperately just want to reach their goals in life.

Some people who talk to me say things like

“Pat, you earn a fuck load, why do you bother saving $4 on coffee?”

The answer is simple, I actually understand how small purchases add up to be enormous over time. Those familiar with Mr Money Mustache may be familiar with his article “A millionaire is made 10 bucks at a time” which is a nice distillation of the concept and part inspiration for this post. One $4 coffee really isn’t much, but if I thought that way about all small purchases I would spend far more than I do.

Here is how much each of your habits costs an aspiring home owning couple over a relatively short deposit saving time frame such as three years

These are all the smashed avos the filthy rich baby boomers are talking about and they add to more than $75,000 over 3 years!

So the truth is finally revealed for all to see, smashed avos really do get in the way of home ownership. However these people then may respond with something like

“But you don’t want to deprive yourself”

“You only live once”

“That sounds like some extreme frugality”

Lucky for all of the naysayers I have some previously prepared responses to this extremely flawed logic as well! This is down to a simple misunderstanding about what makes us happy and hedonic adaptation. Before writing any angry comments below you must read these 2 posts.

The real math of Smashed Avo and home ownership

Again I would like to emphasise it is not my suggestion you do any of this. I am simply showing it is possible for those who are intent on doing so. I will lay out the math for a couple wanting to buy a family home. A single buying a smaller place would have a slightly longer saving time frame.

The median house price in Sydney is $1,151,565. However if you are a first home buyer, you have no business buying the median house. You need to do what my parents did and what the vast majority of current home owners have done, that is buy well below the median and upgrade later. Suggesting otherwise is being awfully entitled.

This means a house much further out than you would ideally like or an apartment. Remember life isn’t about impressing people, it is about making good decisions to do the best you can for yourself . A quick perusal of the realestate.com.au invest page shows large apartments that would easily house a young family can get down to $700,000 in the city’s west.

A lot of those straw man arguments like to shout the 20% deposit requirement. This is baloney, I do not know a single first home buyer that saved a 20% deposit. Nor do I know of a property expert that suggests you should wait until you save a 20% deposit. I will instead work with a 10% deposit as a compromise between the minimum 5% requirement and the no LMI 20% requirement . So that is $70k

Stamp Duty in NSW on a $700,000 property will come to $10,767 (Thanks to the new stamp duty partial exemption). Along with a few other fees associated with purchasing we can round this up to about $15,000.

So our aspiring young home owners need $85,000 to get the deposit on their first home.

This may seem quite daunting, but with a little hard work and will power, that $85k will melt away.

I think this can be achieved in 3 years by a suitably motivated couple both working on any full time Australian incomes*

So each of the couple need to successfully sock away $14,167 per year. This means that they each need to make only 2 smashed avo value ($20) decisions each day. Some of these are completely automatic like choosing to flat share and living near work to forgo the costs of car ownership. Others need to be thought about, like making all of your own meals, and choosing to spend your free time at a better venue than the shopping centre.

Australia’s minimum wage of $18.29 per hour is only $624 per week after tax, so this may sound impossible. But our young home owner aspiring couple are suitably motivated and realise it is a dog eat dog world out there, whether rightly or wrongly.  So they get a second job, do some overtime, or get a side hustle. This is again what my parents did, and what I do. With an extra 8 hours per week at the minimum wage, our aspiring home owners now earn $1440 per week together after tax!

A minimum wage earners home deposit saving budget

Those with keen math skills will note that this is enough to save over $100,000 in 3 years! Holy shit, it turns out there is over $20,000 of extra fat in my calculations for financial mistakes, emergencies, presents and even more unnecessary luxury. If even a couple of minimum wage earners doing a tiny amount of overtime can do it, then surely comparatively wealthy people can too!

Now that is settled we can all choose to move to Brisbane, because even though it is possible to save a deposit for a Sydney home, it doesn’t mean it is a good choice to actually do so.

For a bit of fun play The Wealthy Bogan’s fun deposit saving  android App “Smash the Avacado

Shuffling away to another part of the country (eventually)

Pat the Shuffler

*If you don’t have a full time job or at the very least equivalent full time hours, you need to solve that problem first before considering home ownership.

9 Replies to “A Sydney home owner is made 1 Smashed Avo at a time”

  1. I love breakdowns like this for all the naysayers!
    I can buy 3 large avocados for $5 and a loaf of bread for $2. Smashed avo all week for $7!
    I won’t let you near my budget though as there is plenty of fat to trim there 😉. Luckily for me I earn above minimum wage so don’t have to be this strick, but always good to be reminded you can do better.

    I’ll remember not to complain about Sydney house prices near you, I too think they are crazy so don’t plan to buy.

    1. Smashed avo on toast is one of my favourite luxuries at home, like you said I can make it for alike $1.5 per serve. Yeah I would absolutely tear a budget to shreds that has too much discretionary spending :s

      I do indeed also think they are crazy and that one should not buy here. Yeah generations prior may have had it easier, I just felt the need to clear up the completely fake argument so that we can sit down and have a real discussion. That real discussion isn’t about affordability at that price, it is about desirability at that price. It also has to do with our habits/expectations and social norms around casual and discretionary spending, and how they may or may not have changed over the last 3 decades.

      I described above an awesome life with safe, clean and uncrowded shelter, an over abundance of food, a generous discretionary spending budget, a high data phone plan, very generous gas and electricity usage (for the over consumer), and somehow this is considered “cutting away all discretionary spending” or “deprivation”. Shit this is pretty well my life at the moment and I have more than I could ever need. Everything else is just a distraction. The only way I can see this being better is having more time to travel see family and friends and raise kids.

  2. Sydney’s prices are out of control. Even Melb’s prices. I will stick to Adelaide’s prices, thank you. Your breakdown rings home loud and true this week because for the first time in a long while, I went to get myself a hot chocolate from a cafe. And walked out of the cafe reeling from the price. No wonder people are having issues saving for a deposit! $6.50 for a hot chocolate with soy milk!? This is my incredulous face.

    Good post as always, thank you for letting us shuffle along with you.

    1. Wowser! $6.50! That is enough to feed me for over a day! The prices are increasing at an alarming rate. I do believe that the prices are genuine i.e. that is genuinely how much it costs them to make that for you including rent, wages, materials etc. I just do not see this as an efficient use of ones personal money.

      No worries Pia, thanks for stopping by, Keep shuffling 🙂

  3. We made the decision to buy way back in 2011, and had a maximum upper limit in mind that we could afford. Our mortgage right now works out to be about $325 per week (minimum payment anyway) for a 3 bedroom fibro house with garden, so not too bad. I am not quite a shuffler – though am Scottish so watching my pennies goes without saying for the most. 🙂 I am hoping to be able to tweak my spending and budget as much as possible to maximise what I can save from my salary. It’s currently about 25%, unless I need to use it to purchase something.

    Back then, we didn’t think we’d ever manage to afford a property, but now I’m glad we went ahead as the prices have almost doubled where we live! I honestly don’t know how anyone – and by that I mean even a couple on 2 average incomes – can afford anything above $700k, let alone the median.

    Keep up the great blog and even greater savings towards FI!

    1. 2011 from this vantage point with all the hindsight available to us appears to have been the best time to get into the current bull market. With a house that you only have to pay $325 per week on you are in an incredibly strong savings position, even on a relatively modest salary. Shuffling to financial independence is inevitable on your current trajectory it is only a question of how quickly.

      I like to think it is still within reach of high income earners living in the area to buy the median, but the real question is why would anyone want to? I’ve heard all the arguments about family and friends, global city etc. But these all pale in comparison when you are drowning in so much debt that you need to work several decades just to pay it off and finally have real time to actually see those family and friends for more than a few hours per month etc I think it is delusional to think that the massive run up in prices to today’s crazy levels can continue for long.


  4. I have family (in laws) who’ve just bought a run-down property in Sydney for $1.4m. I don’t understand why home-owners in Sydney don’t just sell up and retire already. Where I live (not a capital city, but a major one with everything) a decent house costs the $0.4m and the leftover million could fund retirement… I wish I was a Sydney home-owner so I could shuffle my ass right outta there!

    1. HAHA

      I know right! If I had bought a home before the current boom, I would be selling up right about now and moving to another part of the country . My brother and his wife are pretty well in this position right now also with a couple of investment properties, but continue to work to pay down this monstrous debt they currently have, they have actually started talking seriously about selling one up, paying off all their loans and living a pretty stress free life.

      1. This is exactly what we are setting ourselves up to do. Although won’t net the $1 million as most people in Sydney don’t have paid off homes to make that math work. But we certainly can sell and buy a place mortgage free. That gets us a lot closer to FI.