Ask Paul: I'm divorcing my husband of 30 years and can't afford a house

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I'm a 50-year-old woman just divorcing my husband of 30 years. We are selling our family home in Sydney.

We have two children, 17 and 19, at school and university. The children will live with me as their father is moving to a different state. I can't afford to buy a three-bedroom home 
near the school.  

I work full-time and earn $107,000 before tax and will have about $500,000 in cash. I will also receive minimal child support.

ask paul getting a divorce trying to buy a house

I am thinking of either buying a two-bedroom unit for about $800,000 as an investment now, with the aim to move into in five years when the kids have moved out, and rent a three-bedroom for about $750 a week in the meantime. 

Alternatively, I could buy two investment properties in Adelaide or regional Australia, either outright or with small mortgages to offset costs. Or possibly one unit in Sydney for $800,000 and a cheap one elsewhere. Or I could even put some in shares or bonds.

What would the best option be for me? I am very confused. - Kim

You are not alone when it comes to being confused by big money decisions like these, Kim. In fact, you are in the majority, in particular in the middle of changing circumstances.

I can only give you some general information in a brief answer like this, but I am confident to say a couple of things. First, you are right to focus on owning a property that is there for your future.

Second, I would agree with owning a property that you think you will live in. It sounds like your future for the next five years at least is Sydney. Are your family, relatives and friends in Sydney or Adelaide? This one is very hard to predict, but as your kids will study in Sydney, do you think they will end up here or Adelaide?

Adelaide is a city I like a lot, and if you think it is your future, buying there makes sense.

Things are quite different now, with regional areas doing well due to COVID, but historically property does best in our big cities with job growth, public transport, hospitals, entertainment and so on. I am not so concerned about shares and bonds right now. You plan to keep working and your super will help you build wealth in these areas.

So, I'd keep it as simple as you can. If your life is in Sydney for some time, possibly forever, history says that buying a well-located apartment in this growing city will prove to be a good move.

Equally, it is so much easier to buy and own a property near where you live. If Adelaide is your future, I have no problem with you buying there.

So, your first suggestion of buying an apartment in Sydney and renting a home for a few years makes a lot of sense to me.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.