Help a young man with a decision..

[iwfc]

Hey all,

So here's my dilemma - I'm currently torn between the heart and common sense. Situation is this: young man, 24 going on to 25 in January, gross salary of 75k+, currently drives a (hold your giggles) 2008 Suzuki Swift, and wants (and has wanted for a while now) to own a VW MkV GTi (with leather, in white please, and a sunroof would be amazing), but also wants to have enough dough to buy a 2 bedroom apartment next year. His greatest initial fear of not taking the plunge was the difficulty of selling his Suzuki and maintaining 2 cars at once, however the opportunity of a family friend wanting to buy the Suzuki has emerged. What should he do, and how much should he be spending if he decides so?

I know that this is a VW forum and chances are that the answers will be biased :P, but I don't want to be "just another Gen Y". Life advice counts!

Thanks in advance :)

[stickshift3000]

Sell the swift.

Buy a pushbike and pay off your flat quicker.

[poyta]

Keep the swift, buy the apartment first - if you can still afford the GTi after that then buy one. Priorities my friend.

[jessv3]

You haven't really mentioned what savings you have. I personally rarely have any savings and I am around your age and have had a Mkv GTI for almost 2yrs now, which I pretty much own in full. However unlike many of my friends I don't have a mortgage, I was happy to hold off on that 30yr commitment in loo of buying a nice car. There is no reason why you cant buy an Mkv now, and in 2 years time buy a unit, or alternatively buy the unit now and keep your swift, it really depends where your priorities are at.

[iwfc]

You haven't really mentioned what savings you have.

Savings wise, I have about 30k in the high interest account, 15k in one of those first home owners account, no debts, and about 5k in stocks (which is dwindling down to nothing)-- so not too bad.

My aim was going along the lines of this - use 10k of cash, 11k from the Swift, take a loan of 10k and pay it off in under year (CUA seems to have a very tempting car loan scheme).

Crazy how I just typed my finances, but shows how serious I'm taking this decision :).

[Ideo]

Do whatever you feel is right for you. Not what some nameless, faceless person on a forum tells you.

Property is overrated as an investment. The only reason it is attractive is because of a pathetic taxation system designed to help baby boomers.

If I was you I'd sell the swift, use that money to have a decent overseas holiday and then consider whether you want to enjoy life while you are still young, and have the odd overseas trip, or be that friend who never goes out because every last cent goes on a mortgage.

[jazd]

You haven't really mentioned what savings you have. I personally rarely have any savings and I am around your age and have had a Mkv GTI for almost 2yrs now, which I pretty much own in full. However unlike many of my friends I don't have a mortgage, I was happy to hold off on that 30yr commitment in loo of buying a nice car. There is no reason why you cant buy an Mkv now, and in 2 years time buy a unit, or alternatively buy the unit now and keep your swift, it really depends where your priorities are at.

You are ringing some bells there, I am the same age too and have no savings, no mortgage, just a car loan. Gotta have fun while you still can!

Buy the MkV, they are so cheap now.

[Drift]

The car can wait. You already have a usable car thats only a few years old but you don't have your fingers in the property pie. When I was your age (about 10 years ago), I had a brand new car, jetski, motorbike and was renting a flash pad in a flash suburb. The place I was in came up for sale and had I not had all my toys, I'd have been able to afford to buy it. The place doubled in value inside 5 years and I'd just bought an average home in an average suburb for more than what I'd have paid for the first place.

If I had my time over, I wouldn't do it the same way. Although I've got my toys now and property, I'd have been out of debt completely right now inlcuding a wholy owned property, instead of having a mortgage. There's plenty of time for toys and there'll always be somethine better faster and more sexy just around the corner. Property however always increases in value even though the increase has slowed in recent years.

[Wolfgang]

I was in the same dilemma a couple of years ago at age 26, heart wanted a MkV GTI, head said property. Then found out my job was ending in a about year, so I thought I'll have some fun and won't commit myself to a mortgage yet so I spent some of the sizable deposit I had on the Golf and an overseas trip (and another a year later, goodbye redundancy and then some). After looking at property prices a few weeks ago I wish I had bought back then. Now when I take the plunge it looks like the Golf is going to have to go to help with the deposit that I'm still trying to get back to where it was.

Guess it comes down to what is important to you in life. 25 is still young, property is a big financial commitment. While I regret not buying a property back then, I'm richer for the experience heading on an overseas trip (or two), something I couldn't of done with a mortgage.

[benough]

Houses will always be there, your youth won't.

Also the prices are going to go down anyway. $10k is a small gap to wait for a car your heart has always wanted.

Hurry up and buy!

[TomC]

There's plenty of time for toys and there'll always be somethine better faster and more sexy just around the corner. Property however always increases in value even though the increase has slowed in recent years.

I'd probably agree with this advice. Even if you bought a house now and bought a GTI in 10 years (an MK7/8 by then no doubt :P) you'd still only be in your mid-30's, hardly over the hill!

Sure house prices have slowed and it might not be the most aggressive investment, but if you are planning on living in the house then the investment factor only makes up part of the decision to buy. If you hate renting, want your own place to come and go and change as you please, then there is some emotion involved in your purchase.

If you are buying a flat simply as an investment, well maybe that's a different story :D

[jessv3]

I'd probably agree with this advice. Even if you bought a house now and bought a GTI in 10 years (an MK7/8 by then no doubt :P) you'd still only be in your mid-30's, hardly over the hill!

By then a GTI will probably be too refined and common to be fun like they are now. Thats why I am taking the most of having a turbo petrol who knows what will happen in a few years, a hybrid GTI maybe all thats available :facepalm:

[DkN]

house prices 5 / 10 years ago is not comparable to what it is now at all. Yes it's doubled or in some cases even tripled since then, but the result is some areas of melbourne and sydney have among the highest house prices in the world - it really isn't going to go up anywhere anytime soon. The OP is in Brisbane, and I can tell you if you waited a year or so you'd probably actually see lower prices. Think of it as stock that's climbed crazy fast in a relatively short period.. You don't want to buy when it's at the tip of the price curve.

There's, no doubt, lots of regrets for people who didn't buy a house 5 or 10 years ago but it's rather misleading to apply that to the current situation...

Rationally I would say each choice is as good as the other. Your enjoyment is worth something too, it's not always the money, and it sounds like you're doing pretty well financially anyway. So.. go with your heart :wink:

Besides, who knows what's gonna happen in 10 years. Maybe you'll be on $200k a year and buy Audis for toys, or maybe you'll lose your job and drive an 87 Daihatsu. It's great to plan ahead but at the same time don't lose sight of youth - that's my philosophy anyway, I'm still young (probably too young to give any advice at all :grin:)

[iwfc]

Thanks all for your wise thoughts and opinions :).

I am ever so tempted in following the heart because after doing some rough math, I figured that the ride would put me off buying the place by about 6 or 7 months, which isn't too long considering my First Home Account only matures in July next year (4th year rule) -- and instead of renting, I might (sigh) move back with the old folks for 4 or 5 months (they would love that, seriously) to save that extra bit of coin.

The car that I have my eye on is this (2008 VOLKSWAGEN GOLF GTI DSG PIRELLI V MY09 Cars For Sale in NSW - carsales.com.au - carsales.com.au (http://www.carsales.com.au/all-cars/dealer/details.aspx?R=11030867&__Qpb=1&Cr=7&__Ns=pCar_RankSort_Int32|1||pCar_PriceSort_Decimal |1||pCar_Make_String|0||pCar_Model_String|0&keywords=&__N=1216%201246%201247%201252%201282%204294962746% 204294962677%204294789929&SearchAction=N&silo=1011&seot=1&tsrc=allcarhome&__Nne=15&trecs=10&__sid=131CDBF9D4E3)). Is this a good deal? How much should I be expecting to be paying for something like this? How much can you haggle off the dealer? From what I hear, things are getting desperate (fear of a second dip financial crisis etc).

I am in no real rush, and if it goes before the sale of my Swift, it goes and so be it. :).

[Transporter]

Thanks all for your wise thoughts and opinions :).

I am ever so tempted in following the heart because after doing some rough math, I figured that the ride would put me off buying the place by about 6 or 7 months, which isn't too long considering my First Home Account only matures in July next year (4th year rule) -- and instead of renting, I might (sigh) move back with the old folks for 4 or 5 months (they would love that, seriously) to save that extra bit of coin.

The car that I have my eye on is this (2008 VOLKSWAGEN GOLF GTI DSG PIRELLI V MY09 Cars For Sale in NSW - carsales.com.au - carsales.com.au (http://www.carsales.com.au/all-cars/dealer/details.aspx?R=11030867&__Qpb=1&Cr=7&__Ns=pCar_RankSort_Int32|1||pCar_PriceSort_Decimal |1||pCar_Make_String|0||pCar_Model_String|0&keywords=&__N=1216%201246%201247%201252%201282%204294962746% 204294962677%204294789929&SearchAction=N&silo=1011&seot=1&tsrc=allcarhome&__Nne=15&trecs=10&__sid=131CDBF9D4E3)). Is this a good deal? How much should I be expecting to be paying for something like this? How much can you haggle off the dealer? From what I hear, things are getting desperate (fear of a second dip financial crisis etc).

I am in no real rush, and if it goes before the sale of my Swift, it goes and so be it. :).

If you ask me, it's not a good deal and I even didn't open the link. :eek: You're replacing secondhand car with another secondhand car and want to buy a house. Getting a new car and keeping it for longer to pay the house off sooner makes more sense to me. :)

Good luck with the decision!

[jessv3]

Thanks all for your wise thoughts and opinions :).

I am ever so tempted in following the heart because after doing some rough math, I figured that the ride would put me off buying the place by about 6 or 7 months, which isn't too long considering my First Home Account only matures in July next year (4th year rule) -- and instead of renting, I might (sigh) move back with the old folks for 4 or 5 months (they would love that, seriously) to save that extra bit of coin.

The car that I have my eye on is this (2008 VOLKSWAGEN GOLF GTI DSG PIRELLI V MY09 Cars For Sale in NSW - carsales.com.au - carsales.com.au (http://www.carsales.com.au/all-cars/dealer/details.aspx?R=11030867&__Qpb=1&Cr=7&__Ns=pCar_RankSort_Int32|1||pCar_PriceSort_Decimal |1||pCar_Make_String|0||pCar_Model_String|0&keywords=&__N=1216%201246%201247%201252%201282%204294962746% 204294962677%204294789929&SearchAction=N&silo=1011&seot=1&tsrc=allcarhome&__Nne=15&trecs=10&__sid=131CDBF9D4E3)). Is this a good deal? How much should I be expecting to be paying for something like this? How much can you haggle off the dealer? From what I hear, things are getting desperate (fear of a second dip financial crisis etc).

I am in no real rush, and if it goes before the sale of my Swift, it goes and so be it. :).

It looks nice but its fairly expensive considering you still want to buy a house in the next 6-12months. I would be looking at GTI's in the mid 20's, sure it wont be a pierelli edition but if you look hard you will find one with all the option's, and you can always chip it if you want that extra bit of power.

[mfl]

It looks nice but its fairly expensive considering you still want to buy a house in the next 6-12months. I would be looking at GTI's in the mid 20's, sure it wont be a pierelli edition but if you look hard you will find one with all the option's, and you can always chip it if you want that extra bit of power.

+ 1 to that. property prices in Brisbane, will probably go down further before they start to go up and you are only talking about a 6 - 7 month delay.

get yourself a GTI in the mid-20s then you have the ability to customise as much or as little as you want. Bluefin Stage 1 upgrades are good beacuse of their price-point.

you don't want to be sitting on the porch of your house, wishing you had bought the Golf , life is way too short.:)

[deek]

Buy the property and take out a novated lease on the car for say 3 to 5 years. Then if you can afford it, buy it or re lease it

Cheers
Deek

[brad]

Property however always increases in value even though the increase has slowed in recent years.
Maybe in WA they haven't gone backwards.
My house in Sydney (20km from the CBD & a good suburb) has dropped 10-15% in the last few years. We've been here 13yrs & it's gone up about 60%. That's not including maintenance costs, loan costs, etc. None-the-less, it's better than paying rent & having a landlord.

To the OP: There have been a fair few GTIs on the forum that have sold in the low $20s. How a bout going halfway & looking for a GT twincharger?

I'm in 2 minds. I did the "be sensible & knuckle down" thing when I was early 20s & bought a house & initially missed out on a lot of the experiences my friends had. OTOH, I had a boatload of fun buying old cars, thrashing the daylights out of them & buying another. Also, most of the stuff our friends did early (Europe trips, etc) we did in our late 20s & did for longer, did more & remember it all because we weren't stoned/drunk all the time.

[Jamie]

The only reason it is attractive is because of a pathetic taxation system designed to help baby boomers.

Hey... I'm a middle income baby boomer without kids & I can tell you the tax system does SFA for me... The top few get cuts, the bottom gets benefits... but the middle... meh :(!

Jamie

[iwfc]

:) Thank you all.. I am indeed leaning towards getting one. I've put it this way -- life's not worth living without some fun; in saying that, it is not like I am blowing all my money on the GTi, but I'll still manage to scrape on through in about 6 to 7 months time on putting a decent deposit down on the place.

In my research/observation, I notice that the standard edition GTi's seem to hold better value than that of the Pirelli. I say this based on my observation when I was browsing at the dealership after hours (it's my reward after I physically run out there and run back satisfied) that the Pirelli with 23k's on it and DSG is going for $34.9 whilst an 08 manual GTi, with 43k's and no sound system (?!) but with leather is advertised for $33.9. What's the deal?!

[stickshift3000]

What they're being advertised for isn't necessarily the price they're sold at....

[jessv3]

I wouldn't be basing a price guide on whats at your local dealer, chances are its 20-30% overpriced anyway. I would be spending my time looking on carsales particularly at private sellers, you can gauge a lot by meeting the owner, and seeing first hand what type of person he or she is. If anything Pirelli's are more likely to hold their value due to their rarity and obvious better specs, personally if i was paying mid 30's for an MKV it would want to be a R32.

[MariusGT]

someone said it earlier.. buy the house first - then see how many $$ are available for your car purchase/lease.

especially if you are buying the car with finance - it's a debt you don't need when going for a mortgage. also the bigger the deposit the less (if any) lenders mortgage insurance you pay. and that is a big one - yes it's tied into the loan but it's still a big whack if you only have 5-10% of a deposit.

car now + house later.. and things don't work out because the car is costing you too much = bye bye car
house now + understand your budget + car later = an all round better option.

either way the one will come a few months after the other - sooner you get into the property market the better IMHO and there will always be plenty of 2nd hand GTI's on the market waiting to be snapped up.

[stickshift3000]

What Marius said. ^

I was in a very similar situation to yourself 6 months ago. Just bought my first house and loving it. :banana:

Property prices are going up, gti prices are going down. Hold off for a while on the car, it's a no brainer to me.

But it's your life and your decision.

[bindolla]

I would say get the car (and doesn't have to be the Golf V). Pay a good portion upfront, but enough savings to purchase your house down the track.

Try pay the car off within 1-1.5years.

While you're enjoying the car, do your research and study the market, go to auctions. When the time comes to buy, hopefully you'll know what to expect.

[jettapilot]

I know you guys love your gti's but they're expensive. Why has nobody suggested a compromise upgrade to a non-gti mkv??
TDI maybe?

[Drift]

I would say get the car (and doesn't have to be the Golf V). Pay a good portion upfront, but enough savings to purchase your house down the track.

Try pay the car off within 1-1.5years.

While you're enjoying the car, do your research and study the market, go to auctions. When the time comes to buy, hopefully you'll know what to expect.

With the market slowly entering recovery, he could likely buy a brand new GTI with the extra he'd pay on a house in 18 months. Not a smart move IMHO.

[Ideo]

With the market slowly entering recovery, he could likely buy a brand new GTI with the extra he'd pay on a house in 18 months. Not a smart move IMHO.

Awesome.

Did you study chicken entrails or just consult some tarot cards to get that?

[MariusGT]

Awesome.

Did you study chicken entrails or just consult some tarot cards to get that?

that reply makes ZERO sense. unless you are fishing?

the guy has asked advice - he is receiving many and varied responses, aside from yours - which is pointless (yet rather funny..).

[brad]

that reply makes ZERO sense. unless you are fishing?

the guys has asked advise - he is receiving many and varied responses, aside from yours - which is pointless (yet rather funny..).
Ideo's reply made perfect sense to me.
Market slowly entering recovery - how many times have I heard that from a broker or real estate agent in the past 3 years. sheesh

[greasykitchen]

I've no advice other than to say for a 24/25 year old you're doing pretty well (esp at $75k). I'm 10 years older and I've only just moved into that income bracket (after many years of study and now a PhD) and just bought a MkV. (When I was 24 I drove a '72 Beetle, lived with my folks and barely had any savings. These kinds of decisions were just not on the horizon for me and many people my age.)

So, I'd say don't rush into anything - there's plenty of time to think it all over and make the right decision for you. You're still young and have plenty of resources at your disposal. Houses aren't going anywhere, nor are cars. Most likely there'll be both out there to suit your needs and budget when the time is right for you.

[MariusGT]

Ideo's reply made perfect sense to me.
Market slowly entering recovery - how many times have I heard that from a broker or real estate agent in the past 3 years. sheesh

sure it sounded like a sales pitch. and taking the OP's age into account i suppose a splash on a car is no great surprise - many of us have done it.

in hindsight though i should have thrown a bit more $$ at real estate than wheels when younger. I corrected my priorities about 5 years ago and am reaping the benefits now with capital gains and a booming inner west (sydney) market. My MKV is leased for tax reasons and all is swell.

end of the day you need to make a decision based on your goals and financial position. Either way you technically win - option one you have a foot in the real estate door, option two a great car.

[Ideo]

Ideo's reply made perfect sense to me.
Market slowly entering recovery - how many times have I heard that from a broker or real estate agent in the past 3 years. sheesh

That was my point.

I work in the field (land release/planning side of things) and the market is slowing more and more evey day. New approvals are going down, sales are falling and a lot of smaller, and some bigger, developers are in trouble.

It is a very uncertain market, and the Australian property dream may soon become a myth.