Her parents’ suggestion that she bunk in with her sister and rent out the spare bedroom helped a 21-year-old Naomi Simson afford the repayments on her first home in the inner-Melbourne suburb of Prahran back in 1988.
Tight times – but getting on the property ladder early resulted in forced savings, the accumulation of equity and the learning of a lesson which Simson has continued to follow in both business and personal life.
“I went from the next house to the next, to the next, then later on I used equity from my home to buy another investment which produced income,” Simson says.
“Whenever possible, try to earn an income on your assets, that’s something I’ve tried to do ever since – I rented out a room at the house, whatever – and it’s a concept I’ve tried to pass on to my own children as well.”
These days she’s a successful businesswomen and it’s safe to assume that Simson no longer has the same frugal approach to living.
The founder of RedBalloon, an online experience gift retailer which sells everything from luxury fishing charters to foot massages, Simson struck out for herself in 2001 when internet commerce was still in its infancy. She became a household name and widely recognised face in 2015, courtesy of her role as a judge on the Channel Ten reality TV series Shark Tank.
Employing a staff of 60, RedBalloon has made the ranks of BRW’s top 50 employers every year from 2009 to 2013. Simson herself has become one of Australia’s highest-profile female entrepreneurs. A global LinkedIn influencer since 2012, her blog posts are followed by 1.5 million members of the business networking site. This year saw her named as the most powerful Australian on the platform.
The difference between tough and impossible
But as a young adult, her priority was to get her foot on the property ladder.
“Mum and dad were very young newlyweds; they had my sister when mum was 18 and me when she was 20,” Simson says. “As a young couple they battled to buy their house because they knew that once they got into the market that would be something they’d always have.”
Their early struggles left them very keen for their two daughters to have their own homes as soon as they could.
“Because I couldn’t afford my own place on my salary I went in with my sister and we got a boarder in,” she says. “So we bought a two-bedroom place and rented out the second bedroom and I moved in with my sister. It meant she was getting a small income which allowed her to negatively gear her portion and it meant I could afford to get a place I could live in.
“Given that we did this when we were 21 and 22, it might sound quite complex but it seemed very straight up to us.”
The arrangement meant the difference between tough and impossible, in an era when interest rates went to 18 per cent and credit was hard to come by.
“I ended up living on hard boiled eggs and baked beans for a while – it was a case of whatever it took,” Simson says. “I never went out and if I did I only ever took a $20 note so I couldn’t spend more.”
This is a series from ANZ Women asking leading Australians to share important financial advice that has changed their life.