My take on the #smashedavo debate?
In The Australian last week, Bernard Salt suggested that young hipsters (like myself) should not be going to cafes and spending $22 on a smashed avocado on 5 grain toast . Some hipsters felt that their generation had given up buying a house so could spend $22 on a #smashedavo.
So who is right? I’ve tried to equate the café lifestyle into dollars that could be used for a home loan. If you and your partner go to a café 3 times a week and order a meal and couple of coffees, you’ll probably be out of pocket around $30 on each occasion. This is $180 a week or almost $9,500 a year. So if you told me you had an extra $9,500 a year, I’d tell you that you could service almost an extra $200,000 (principal and interest). This does seem to indicate that our café lifestyle is costing many the opportunity to borrow to the next level.
When hipsters argue that wages haven’t kept up with house prices, much of it can be explained by home loan rates being 1/5th of what they were 25 years ago – so theoretically people can afford to borrow 5 times as much.
In saying that, it’s no good taking out enormous loans and then getting burnt when rates go up. It’s also no good depriving yourself of a good #smashedavo with a side of smoked salmon (and perhaps a poached egg) every once in a while.
So like all things, moderation is the best approach and if that fails, start a newsletter like this one and the #smashedavo can be a tax deduction (my accountant sees this so I assume that’s right???).