6 months on.

[krisvm]

Hi guys,

It has been roughly 6 months since i registered at this site so i thought i would post what i have achieved during that time and my current situation.

The link below should take you to the thread when i first joined up here.
http://www.somersoft.com/forums/showthread.php?s=&threadid=11372

To be honest, becoming financially independent is a nice thought, but it has gone on the back burner a bit of late. I've been busy in all areas of my life except in making money. I'm not trying to make excuses for not owning 50 IPs by now! But i do feel frustrated that i haven't seemed to have got anywhere.


I'm 20 but 6 months older, still studying full time at uni. Still playing sport. Still working casually for roughly 150 bucks a week. I still give ~10 hours of my time each week doing volunteer work.

I don't have any credit cards.
I still have the car and it's still my biggest liability. (~$20/wk)
I have saved ~ $6500 and its sitting in both ING and St george saving accounts at 5% interest. I think i may have gained almost $150 in interest.

My HECS is still climbing. At roughly 6g's a year.

I have done a fair bit of reading but still feel pretty helpless in making a decent start at building wealth.
I've attended a melbourne gathering- some people from this forum attended and i found the night to be a big positive.

I've started and maintained a budget for the last 6 months. In which i basically record all my expenditures no matter how large or small and then tally all costs and income up at the end of the month. It has been interesting to see which areas i am spending most of my money. Though i'm not sure i'm getting the most out of my budget.

Is there a budgetting freeware program someone can reccommend or a excel spreadsheet i can download?

Any thoughts and advice always more than welcome,
regards,
kris.

 

[Jakk]

Originally posted by krisvm

...........But i do feel frustrated that i haven't seemed to have got anywhere.


regards,
kris.

Kris, congratulations.......what you have achieved already in six months, most people twice your age are having trouble achieving.

Take a bow, Scene 1 has been masterfully performed, now on with the rest of the show.

Regards

 

[Aceyducey]

Originally posted by krisvm
But i do feel frustrated that i haven't seemed to have got anywhere.

Is there a budgetting freeware program someone can reccommend or a excel spreadsheet i can download?

Kris,

Have you every heard the story about the Emperor of China and the inventor of the game of chess?

-----------
The Emperor offered the inventor one wish.

The inventor asked for one grain of rice on the first square of the chess board, two grains on the second square, four on the third and so on doubling through the 64th square.

The emperor agreed, not understanding the power of compound interest.

Two to the 64th power is 18 million trillion grains of rice - more than enough to cover the entire surface of the earth.
-----------

You may feel that you've done very little towards future financial freedom in the last six months, but the effects of your actions will compound. Now you understand a great deal more about budgetting and how money flows.....keep on learning and your effectiveness as an investor will improve faster & faster.


Here are a list of programs you could try out to build a budget.....alternatively, borrow a few books on budgetting (there are a number of Australian ones) & apply them to your situation.

http://tucows.netspace.net.au/expman95_license.html

Cheers,

Aceyducey

PS: By the way the story above didn't have a happy ending. The Emperor, learning he had been duped, had the inventor beheaded. I wouldn't take this as true in every investment situation

 

[Ross Sondergeld]

Spend less than you earn... then invest

Hi Kris,




The ability and habit of saving is the key...

Spend less than you earn... and invest for life

You'll be rich before you know it...

---


Money, wealth and knowledge... can compond very quickly

I spent years at uni... (and it was an experience)

But i always saved... even when I had very little income...



But with a little nest egg -- BIG things can happen




Ross

 

[ndavy]

Kris

Its sounds like your doing pretty well to me. Two years ago I was twenty, and in the last year I have bought two IPs. It is very hard to make money when you are at uni, the lifestyle of students is in direct conflict with the concept of wealth creation! As soon as I moved into full-time work things really got rolling. Keep it up and you'll be there before you know it.

 

[Peter Parker]

Hi Kris:

I would celebrate that $150 interest. Your first passive income. Money working for you!

To further boost your spirits, remember that the average GenXer (ie 10yrs older than you) gets only $300 in passive income per year (source: recent NATSEM report) which you will surpass with your $6500 @ 5%.

My strategy is not to worry about budgets so much but question every expenditure urge and ask what long-term benefit it will provide - usually the answer is none!!! Also as they say pay yourself first.

Back to your $6500. Think back to the age when you had $650, $65 and then $6.50.

You've increased your wealth by 1000 times in a bit more than 10 years, presumably by saving.

Now think about how you will increase it to $65 000, then $650 000 and (if you're game) $6.5m.

Even $6.5m is only 1000 times what you have now. You've already proved that you can multiply your wealth by 1000 times, though this time the journey will be a little different.

The move from $6.5 to $65k can be done mostly through saving and might take 5-10 years. But an increasing amount will come from returns on investments, so you might get to a situation where you're saving $5k per year but also getting another $5k in growth and yield. At this level you can start an investment portfolio and maybe use part of it to save up deposits for properties (unless you want to do property only, when you can start with $20-30k).

$65 to $650k requires a different tack. You might have to borrow to increase your portfolio. You might want more control over your investments. But you are now at a point where your investments are generating a significant slice of your income (maybe even enough to live on if you have $650k of high yielding property). If you save hard and follow sound and prudent principles, you should be able to reach this level fairly easily. But remember even $650k is 100 times where you are now and you've previously proved you can multiply by 1000 times!

As for $650k to 6.5m, I'll leave that to others with experience.

But I suspect that at this level you really need to be entrepeneurial, see opportunities others don't and achieve return on investments much greater than the normal <10% that most investors are happy with.

Regards, Peter

 

[Puppeteer]

Congratulations Chris,

You've done more in 6 months than most do in 10 years. I work with people who have never had more than a few thousand in the bank in their entire lives.

Let me re-inforce what others have said. The most important lesson that I learnt on a low income was to spend less money than I was earning. That can be challenging at times, but if you can master it while you are still at uni, then you will find that fining money to invest will be easy, when you are earning full time.

Don't think of the past six months in terms of wasted opportunities. Think of it more as a time spent building the foundations of your future. It sounds as though you have built strong foundations, so the life that you build should also be strong.

The six months that you have invested so far, is only very short, compared to the rest of your life. Investment is a game where the most important factor is the amount of time you play.

I'm sure many people on this forum wish that they were 20 with $6500 in the bank. They wouldn't be looking at what you hadn't done in the previous 6 months, they would be looking at the opportunities of the future.

 

[np2003]

Keep it up mate. You are doing well.

I just saw your thread and it made me go back and look at all my credit card spending and expense history, see what I need to nudge out, what to cancel. Thanks

 

[Jakk]

Originally posted by Puppeteer
I'm sure many people on this forum wish that they were 20 with $6500 in the bank.

Geez, I just wish I was 20 with $65 in the bank, especially if I could know then what I know now.

regards

 

[Learner]

WELL DONE KRIS

I CERTAINLY AGREE THAT YOU ARE A FEW STEPS AHEAD OF THOSE WITHIN YOUR SAME AGE BRACKET. I'VE JUST TURNED 27, HAVE ACQUIRED A PPOR WITH MY MOTHER AND HAVE ACQUIRED ANOTHER PPOR WITH MY GIRLFRIEND WHICH IS CURRENTLY LEASED OUT FOR SIX MONTHS AND WE WILL MOVE INTO IN A FEW MONTHS AS THE SIX MONTHS LEASE IS DUE TO EXPIRE. AT THAT POINT I WILL TRY AND FOCUS IN ACQUIRING A FEW INVESTMENT PROPERTIES AS SOON AS POSSIBLE. I CAN EMPATHISE WITH YOU THAT IT CAN BE FRUSTRATING WHEN YOU ARE TRYING TO DO THE RIGHT THING AND AREN'T REALLY SEEING ANY RESULTS; WELL AS SOME PEOPLE HAVE ALREADY SAID YOU ARE IN ACTUAL FACT PROGRESSING "ACQUISITION OF KNOWLEDGE" YOU SOON WILL BE IN A POSITION; WHETHER ITS A FEW MONTS OR A COUPLE OF YEARS, TO PURCHASE AN INVESTMENT PROPERTY. ALTHOUGH WHAT YOU MAY NOT HAVE REALISED IS THAT WHEN YOU DO REACH THAT STAGE YOU WILL BE ABLE TO MAKE A STRATEGIC DECISION AND MORE SO AN INFORMED DECISION FROM THE KNOWLEDGE ACQUIRED. SO A PAT ON THE BACK GOES OUT TO THOSE WITH THE KNOWLEDGE AND WILLING TO SHARE AND A PAT ON THE BACK TO THOSE WILLING TO TAKE IT ON BOARD.

ITS ALWAYS A PLEASURE HAVING A READ THROUGH THIS FORUM

LEARNER

* WHERE-EVER THERE IS A WILL, THERE IS ALWAYS A WAY*

 

[Aceyducey]

Originally posted by Learner
HAVE ACQUIRED A PPOR WITH MY MOTHER AND HAVE ACQUIRED ANOTHER PPOR WITH MY GIRLFRIEND

Learner, you are not legally allowed to have two PPORs, how are you structuring this???

BTW: using all caps when typing is considered SHOUTING on the internet and is generally regarded as rude. It's also much harder to read large blocks of text in this case.

Please consider using sentence case in future posts.

Cheers,

Aceyducey

 

[Learner]

Acey,

The way this was structured is that i am on title with my mother. I have also purchased the new property with my girlfriend which i will move into in a couple of months. Now my mothers place and thats how i see it will never be sold underneath her; fine once she passes then my brother and i will do something with it then; until then she can have it. With the new place "my girlfriend and i" have purchased it as an owner occupied ppty, moved in and then a week later decided that it will be an investment ppty for six months, in order to give us an opportunity to recoupe some of the costs associated in purchasing the ppty and also allowing us to save in a better way. This way when i move in, i would purchased the items i want for the place without having to rush around...have located auctions, sales and the what not, and now own everyday quality items which i appreciate more.

The way it has worked out i believe that i wouldn't have to pay capital gains on the property my girlfriend and i own "if" we ever wanted to sell due to it being a ppor....correct me if i'm wrong.

Also the above structure in regards to existing commitments would not have been a possibility if i didn't work for a financial institution as the existing commitment with my mother was not taken in consideration for commitments due to the above explanation, with this on board, it worked out favourably for me.

Learner.

P.s Sorry bout the Caps...hope the above is a little easier on the eyes........

 

[Aceyducey]

Learner,

That approach sounds fine to me.

Note that if down the track you & your girlfriend both move out of your PPOR and stay out of it for too long with it as an IP then the ATO may have some issues, but otherwise it works.

Cheers,

Aceyducey

 

[AJK]

Congratualtions Chris! What an age to be starting out of the path to wealth building. You wouldnt want to know what I was doing at your age. Definately not wealth building.

If you look at the figures commonly used, you can see that while eight people out of a hundred will achieve financial independence, only one out of one hundred will be truly wealthy.
And the average Australian is much closer to a poverty identity than a wealth identity. In many ways this is a reflection of the way we are brought up. This can make it even harder to escape the poverty mindset. Scary hah.

1. Keep reading books on wealth building. This will you help you escape the poverty mindset and slowly you will adopt the wealth identity. You wouldnt believe how important these concepts are.

2. Gain basic financial knowledge.

3. Decide for yourself what wealth means to you and what level of wealth you want to achieve.

4. Set your goals & adopt a wealth strategy. A plan.

5. And once you have setup a strategy go out and apply it.

6. Repeat. Momentum. Keep going.


Please dont fall in this trap. This is one major reason why people fail financially. This is a classic one, particularly of people in the 30’s. Confusing good income with financial independence. This is a classic trap for people in that age group. Because we live in the lucky country and we’re the most educated generation on the face of the planet. Most of us went to university and most of us had a trade. We’re all doing good, we’re all earning good money and we think that we’re wealthy. We think that $100,000 a year equates to wealth but it doesn’t. We must understand that income only equals lifestyle – Assets equals WEALTH. Consider you’re wealthy when you have a whole heap of assets and money is working for you.

Know the Rules and Play the Game.

It is there to be played. It occurs – it’s going on right now. The game of the wealth is being played right at this very second. There are people playing it and you know the good news you’re playing the game now. For if you even start thinking about becoming wealthy you are playing the game. But if you are not playing the game you are not becoming wealthy.

As Jim Rohn says:

“The philosophy of the rich v’s the philosophy of the poor is this… The rich invest their money and spend what’s left. The poor spend their money and invest what’s left. ~Jim Rohn~

Keep Dreaming, Keep Believing, Keep Creating, and Keep Succeeding!


AJK

 

[Ecogirl]

my road map

It's great to see all of these messages of encouragement. I started on the road to wealth creation 4yrs ago and I keep getting off the track. For the last 6mths I have been focussing on debt reduction.

I used to have a really high income but I reached burn out. On that income I used to buy whatever I wanted and I have the shoes, clothes and stamps in the passport to prove it. Now I still have a relatively high income (before tax anyway) but I am only now just learning to budget and my total focus is debt reduction (well I still go out all the time but don't buy many clothes or CDs etc - I still need to have a life).

It's really hard to not be able to do the things you've been able to do for the last 5 yrs.....but now my focus is not on instant gratification but long term passive income so I can choose to do what I want with my time (that will be a unique challenge but one that I want).

Reading these posts helps to keep me focussed - I have nearly paid off the visa and the temptation is to use it again....now I leave it out of my wallet and only use it to pay for wealth creation aides. My next challenge is to pay off my car and get more equity in my IP.

In 6 mths I will be able to start looking for another IP and bugging RE agents for their listings but to do this I have to keep my focus. Maybe I should tattoo that word into my forehead.

Jim Rohn is a legend of mine......

Thanks guys....

Ecogirl

 

[Jas]

Re: my road map

Originally posted by Ecogirl


Reading these posts helps to keep me focussed - I have nearly paid off the visa and the temptation is to use it again....now I leave it out of my wallet and only use it to pay for wealth creation aides. My next challenge is to pay off my car and get more equity in my IP.

Hey Ecogirl,

I had a flatmate who bought a 4 litre tub of icecream. When that was eaten, he filled it up with water and put his credit cards inside.

It then lived in the freezer.

If he truly wanted something he had to pull it out of hte freezer and wait for it to defroast.

It didn't get pulled out much...

Just an idea

Jas

 

[Aceyducey]

Re: my road map

Originally posted by Ecogirl
I used to have a really high income but I reached burn out. On that income I used to buy whatever I wanted and I have the shoes, clothes and stamps in the passport to prove it. Now I still have a relatively high income (before tax anyway) but I am only now just learning to budget and my total focus is debt reduction (well I still go out all the time but don't buy many clothes or CDs etc - I still need to have a life).

Ecogirl,

You sound like an enlightened version of a friend of mine....I watched her burn out 3 times in succession.....she never had any assets, but was always warning me about property being a bad risk.

I don't think she's managed to get off the debt roundabout yet - though I hope she has

Keep on plugging on & you'll get there. Just don't mistake a big credit card debt for a life!

Cheers,

Aceyducey

 

[Analyst]

krisvm

Krisvm

There are only 3 ways to make money

1. Business
2. Shares
3. Property

Spend your time and master just one of these disciplines and you could be successful. Master all 3 and you will be wealthly.

 

[Aceyducey]

Re: krisvm

Originally posted by Analyst
There are only 3 ways to make money

1. Business
2. Shares
3. Property

Spend your time and master just one of these disciplines and you could be successful. Master all 3 and you will be wealthly.

That's a quote from somewhere Analyst - you should credit it!

BTW, it leaves out a few other ways:

4. Invent - create Intellectual Property & license it

5. Entertain - make people FEEL (happy/sad/afraid...which is less important)

6. Match - put together buyers & sellers & take a share of deals

7. Lend - Provide money to others & charge interest

8. Rob - Unethical, illegal & usually immoral but feasible

Anyone else got any more?

Cheers,

Aceyducey

 

[Jude78]

sport- become the next tiger woods
author- become the next mcknight
seminar presenter