Case study: Ondine Grace
Ondine Grace has to pinch herself sometimes when she realises that she bought her first home in Dunedin at just 20 years old. Her friends are astounded.
Looking back, Ondine’s financial journey started young. Money was something that was discussed in the Grace household when Ondine was growing up. She knew ‘what things cost’ and learned the power of saving early.
The launch of KiwiSaver when Ondine was 16 years old started her on the road to saving to buy a house. Her parents encouraged her to sign up when they saw the benefits for first-home buyers.
At first, while still studying, Ondine saved small amounts of money from part-time work at the local New World supermarket.
When she began working full time as a client manager for an online language learning website, she started saving seriously. Ondine committed 8% of her pay plus $50 a week to KiwiSaver. Her employer also made contributions.
The goal of buying a house was very motivating and Ondine looked constantly for ways to ratchet up her savings. She lived with her parents and avoided drinking alcohol, which saved a lot of money.
Ondine would also check her bank account every few days to see if there was a spare few dollars to transfer to her savings. ‘Every cent counts,’ says Ondine. ‘Most people think saving one or two dollars isn’t worth it.’ Even she was surprised how quickly the savings mounted up.
As well as saving into KiwiSaver, Ondine opened a savings account with Whai Rawa, a personal savings scheme for Ngāi Tahu whānau. She saved $4,800 into that account, which grew to $7,000 thanks to matched savings, annual distributions and accumulated earnings.
Including the KiwiSaver and Whai Rawa money, Ondine built up a $22,000 deposit in four years. In July 2012 she realised her dream and bought a $182,000 four-bedroom Dunedin house.
Ondine says that having access to Whai Rawa sped up her savings. Without it, however, she still would have been able to buy a house – it just would have taken 12 months longer. Her parents were also willing to stand as guarantors on the property. Not all young homebuyers have parents who can do that.
Ondine still has a few tough financial years ahead of her. ‘The mortgage is about half of my pay and I also have to pay [renovation and utility] bills,’ she says. ‘After that I have about $100 to spend for two weeks.’
Her plan is to finish renovating the house, move in and collect rent from flatmates, which will ease the pressure on her pay packet. The rent will enable Ondine to pay down the mortgage faster – hopefully whittling it down to nothing by the time she is 30 or 35 years old.
As well as hard work, Ondine has some fun planned. That includes travelling to Europe for an OE in three or four years’ time.