Any mum & dad investors?

Hi there, loving all the info on this forum :)

Just out of interest are there any investors out there that fit into the
family of 5 on 1 income cat? Can it really be done?
 
Do you have any equity in a home?

Have you got much personal debt (bad debt)?

Have you got any savings, and if so how much do you save?

Do your children like noodles :p.

Some more info would be needed to answer that Q.

I'm sure that there would be plenty of people with 5 children investing, if not here then in the real world :D.

One of the more successful investors I know has 4 children and they've been on 1 income since the children were born.
 
Hi weg thanks for your reply

Oh, i meant 2 adults 3 kids :)

We built a house in a nice new estate 17 months ago which is on the market at the moment. We have always wanted to get into investing in property, our plan is to sell this this place (we built it as a cash cow), walk away with enough money to pay out or debts, buy a decent car - cash & put aprox $40,000 into an IP & put another $20,000+ into an offset account.

We will have to go back to renting but understand that the cheaper we can find something to rent & the better we stick to a budget the more left over money we will have to put into the offset account. We would have loved to have kept this place & just used our equity but with our personal loan and 2 credit cards its just not do-able.

Any advice would be greatly appreciated :)
 
Hello Wealthy

Welcome to the Forum

Sorry - did I read this correctly?

You are prepared to sell your home rather than deal with the personal loan and credit cards?

In 'Building Wealth Story by Story' Jan Somers tells the story of a house she bought, from someone who had bought a whole lot of fancy furniture, and couldn't keep up with payments on the furniture and on the house.

So this person sold the house rather than sell the furniture!

Before you sell this nice house you live in, why not really think about what you are doing.

As soon as you sell the house and buy that 'decent' car and go and rent, you will find that your resolve to 'invest' and 'save' will disappear.

If you haven't got the capacity now to deal with some basic budgeting and to work on the most expensive debt - the credit cards - and then the personal loan and then you can start investing, what makes you think that once you have all that lovely disposable income your attitude to and management of your money will change?


Having consumer debt is not, in itself, such a bad thing. Selling an important capital asset to buy ‘decent’ cars is not the mindset of an investor.

Have you read Rich Dad Poor Dad? Kiyosaki says that he and Kim did not buy ‘decent’ cars until the income from investments paid for the cars

Many people want to ‘invest’ but find just as many excuses not to. I have worked with investors for nigh on thirty five years, and the most successful people I have met have one basic fundamental attitude in common:

True investors know the value of a dollar.

Do you?

What is the value of your house? No, I am not talking about what you think you can sell it for, once it’s sold it’s value passes to the buyer.

What is the value of the house – to you? That house can be the springboard to significant wealth but you must value it, it must be important to you, it must represent opportunity to you, not discarded as a ‘cash cow’, sold to buy a ‘decent’ car.

Take down the For Sale sign and read a few books, particularly the two mentioned above. Change your mindset before you change your address.

That house is a once-in-a-lifetime opportunity.

I don’t regret much in my life but I do regret any property I have sold. There was never any real reason to sell them and (with very few exceptions) there very rarely is.

Look before you leap. If you take this year to clear the servicing debts, prove to yourselves that you have the capacity and discipline to do it, and then next year you will be clear to use the equity in the house and to invest to your heart’s content.

I cannot and would not give you ‘advice’. But just take a moment and think this through before you take a flying leap. And read the books. Those books have more value than the price on the cover.

Cheers
Kristine
 
Hi Wealthynfree, welcome to the forum.

I second what Kristine has said, it is fabulous advice. I also believe that investing is a large part mindset followed by a good dose of get up and do it!

We started as a family of 5 on one income, then over the years we went to 2 incomes as we were self employed. so yep it can be done. when we started in 2000 I was driving a ***** 87 pintara :D
 
Great advice from Kristine.
I've taken a different path. I've "been there, done that" with the leay, Eastern suburbs home. I now rent as it suits my lifestyle and alllows me to have all my debt as tax deductable debt.
I can live in a home, in any suburb I choose for less than it would cost me to actually "own" the property.
This isn't for everyone, but it is a core component of my investment strategy and it suits my lifestyle. I can do it because I no longer have any emotional attachment to actually owning my home. That may change in the future, but for now, this alternative way of doing things is working very well for me.
Only you can make the decision after taking into account the various viewpoints. There's no right or wrong. Only what's right for you.
 
but with our personal loan and 2 credit cards its just not do-able.

Any advice would be greatly appreciated :)


To clarify...

I am reading into this post hat you ran up debt on 2 credit cards and took out a personal loan to actually fund the deposit to build the house?

Wealthy
IMHO talk to a few experienced mortgage brokers from this forum to explore your options to refinance & keep your home if it is close to schools & work.

Yes we started with 2 kids and did without, the budget was to be adhered to at all costs ( we hired the netball outfit for my daughter to wear for Saturday sport as we could not afford to buy a new one & son wasn't allowed to play a sport were travel to other playing grounds was involved as we couldn't afford the petrol nor the lost work time on weekends).


Kind Regards
Sheryn
 
We were a family of 4 on one very low income when we started. Now, the kids have grown up and left home, we still have one income, but it has grown during that time. I do bring in a small amount from a little bit of self employment these days, but it is sporadic, and not enough for anyone to live on, but it gets fed into the loans.

In your situation, since you seem willing to move in order to get ahead, I would suggest to firstly KEEP THE HOUSE. Move into cheaper rental accommodation yourself and use this home as an IP. You can move for up to six years and you will keep the Capital Gains Tax exemptions of a Personal Place of Residence.

Doing this will help in two ways. First, the existing loan becomes tax deductable, as well as any expenses relating to the property, thus bringing your taxable income down. Secondly, the extra income, plus anything extra you can spare, should now be fed into those credit cards ASAP.

Once you are debt free, you can choose if you want to move back into your nice home.

As for the car, well I would hold onto that. A car loses value the minute you buy it. It is simply a means to get from point A to point B. If it has expensive problems, then by all means replace it, but be careful on how much you spend. They are a sure way of hindering wealth creation.

We bought a new car before we started investing. A couple of years later we bought our first IP. We learnt our lesson the hard way and still have that car. It is getting a bit long in the tooth now, but until it stops, or starts needing a lot of money spent on it, we will be keeping it. It is a reliable work horse. On a side note, I could go out tomorrow and purchase a new car if I wanted, but I don't want to. It would be a waste of money at this point in time.
 
Hi,

If you have enough money to pay the loans and eat then the rest is all in your head.

You say that if you sell your home you would be left with cash after all bills, therefore you must have equity in your home.

Refinance get rid of stupid debt, use the new surplus cashflow to put in offset account, forget about keeping up with the Jones with the car, my car is worth about $8k, a very comfortable Holden Statesman, my daughter just bought a 10 yr old car with 120k on clock for $4k, very nice comfortable station waggon, start shopping for an IP that will be CF neutral after a hefty deposit.

Look to the future and not your image (ego)
 
We are a family of five, on one and a bit income (I work casually).

I think skater is into something. Keep your home, rent it out and rent something cheaper yourself - if you can afford to keep it.

It can be done, it just takes a bit of lateral thinking.
 
I sold my first house to buy a car. This was pre-boom, late 90s, after years of the market being completely flat, I had no idea the house would end up worth umpteen times what I bought it within a few years. I still have the car.

We'll be a family of 5 in a few days/weeks/hours and we only have more than one house because it just happened that way, no particular planning.

The main reason I can see to sell a house is just to pay down debts. I'd love to sell my old house. But then my old house isn't exactly in an area that is likely to go up much any time soon, and has no value add possibilities at all. But having said that, all it would take is for the wind farm to expand further north, or a mine to open, which with my luck would happen about 5 minutes after I sell it.
 
Just out of interest are there any investors out there that fit into the
family of 5 on 1 income cat? Can it really be done?
It can be done.
We've done it on 1 income and never looked back.

I think you are going about it the wrong way.
Selling and buying again will set you back between $30K and $50K due to buying and selling costs so it's best to avoid this option at all costs.
Why buy an IP when you already have a PPOR
which has capital gains tax advantages?

Assuming you've got sufficient equity get hold of a mortgage broker or talk to your bank manager and tell him that you want to consolidate your loans to help you with your cash flow.

Refinance your home loan and try to get a more favourable interest rate (do you get 0.7% discount?) and add the credit card debt to your homeloan. If you have serveceability issues tell your lender that you'll all going to live with your parents, or you'll rent somewhere cheap etc etc

Get rid of your credit cards and either move in with relatives or rent somewhere cheap for a while.

Problem solved...:)
 
I
Selling and buying again will set you back between $30K and $50K due to buying and selling costs so it's best to avoid this option at all costs.
I'd just like to emphasise this more. I'm selling a cheap house privately and I'm up for around $2500 in selling costs and I probably paid the same in buying costs plus refinancing the loan 2 years ago - thats about 7-10% of my house value right there, money getting thrown away.

Do the math. Work it out. As a dollar figure and as a percentage figure. It might shock you just how expensive trading a house really is.
 
....the family of 5 on 1 income cat? Can it really be done?

What kind of work is the cat doing? Must be something in TV to feed a family of 5 :eek:

How much longer can the cat keep up the commitments until it is a hasbeen? :D

**edit** on a serious note: yes you can do it on 1 income. Plenty do.
 
Thanks for all the relplies,
Ok ill give you the facts.

The house mortgage is $240,000
its on the market for $370,000
we have $50,000 of debit ($27,000 personal loan $20,000 credit cards)

We have looked into refinancing but it would leave us with huge repayments & no life with 3 children.

We feel that it would be better to pay out our bad debt and start fresh.
Investing in a smaller/cheaper property, putting money in an offset account, some money into savings maybe even shares, going back to renting our selves & of course setting up a good budget.

To us wealth = balancing family + work + investing for our future.

Any advice is greatly appreciated :)
 
We were a family of 4 on one very low income when we started. Now, the kids have grown up and left home, we still have one income, but it has grown during that time. I do bring in a small amount from a little bit of self employment these days, but it is sporadic, and not enough for anyone to live on, but it gets fed into the loans.

In your situation, since you seem willing to move in order to get ahead, I would suggest to firstly KEEP THE HOUSE. Move into cheaper rental accommodation yourself and use this home as an IP. You can move for up to six years and you will keep the Capital Gains Tax exemptions of a Personal Place of Residence.

Doing this will help in two ways. First, the existing loan becomes tax deductable, as well as any expenses relating to the property, thus bringing your taxable income down. Secondly, the extra income, plus anything extra you can spare, should now be fed into those credit cards ASAP.

Once you are debt free, you can choose if you want to move back into your nice home.

As for the car, well I would hold onto that. A car loses value the minute you buy it. It is simply a means to get from point A to point B. If it has expensive problems, then by all means replace it, but be careful on how much you spend. They are a sure way of hindering wealth creation.

We bought a new car before we started investing. A couple of years later we bought our first IP. We learnt our lesson the hard way and still have that car. It is getting a bit long in the tooth now, but until it stops, or starts needing a lot of money spent on it, we will be keeping it. It is a reliable work horse. On a side note, I could go out tomorrow and purchase a new car if I wanted, but I don't want to. It would be a waste of money at this point in time.

Some good advise here from Skater. From the figures you give I work out that after buying and selling cost and paying out your debts, you only have enough for a 10% deposit on a 300K house... no money left over for a car or shares (you'd need to borrow) that I see.

Infact all you have a big loss in equity and some extra income from paying off debt, which you can gain from renting out the house and using the home as a tax deduction. New homes carry a much larger depreciation than established ones do.
 
We wouldnt be able to rent out the house the repayments are $425pw and rent would only fetch $350pw. We wouldnt have any cash to back us up if anything went wrong.

$350pw rent from tenants
would still leave us paying rent of aprox $300pw plus we would still have to contribute $125pw ourselves & thats before a property manager, landlord insurance, rates etc
Plus the debt repayments.
 
Yes, and if you use the equity to consolidate and pay out the personal loan and credit cards, then your monthly payments will be much less than they now are and you won't have squandered the equity in the house

Think.

Do not be dazzled by what you think you will have left over.

You will be far worse off when you sell the house than you realise.

Think. It's free and the most beneficial thing you can do.

Think.

In the long run, the house is the greatest investment you can make.

Think.

Your children will thank you for it

Think.

Your children won't thank you for selling their home and moving to the cheapest possible rental property.

Don't be seduced by the glamour - what you have now is worth much more than all the glamour of imagining money in the bank

Right now you have a home

If you sell it, you won't.

How will you explain moving every twelve months to your children? I have a close friend (divorced with three children) and every time she has rented a property the landlord has immediately put it on the market, and every year she has had to move.

Your home is priceless. Sell it, it's gone.

So use the brains which God has given you, and think.

But if you shoot yourself in the foot, you only have yourself to thank for it.

Refinance to consolidate your debt, set a budget and stick to it.

Small children are expensive - all children are expensive! But if you sell this house you may never buy another home.

Think about that.

Cheers
Kristine
 
We wouldnt be able to rent out the house the repayments are $425pw and rent would only fetch $350pw. We wouldnt have any cash to back us up if anything went wrong.

$350pw rent from tenants
would still leave us paying rent of aprox $300pw plus we would still have to contribute $125pw ourselves & thats before a property manager, landlord insurance, rates etc
Plus the debt repayments.

Such good advice above from several posters. What car do you have now? Surely you can get by without buying a new car.

If you rent your house for $350 and have to meet a $125 per week shortfall you (or hubby) can do five hours night fill at a grocery store for $20 per hour and you also would be entitled to some tax refund due to being negative, which you could get weekly instead of waiting until the end of the tax year.

What about renting out one room to a boarder for twelve months, or a foreign student. That would bring in $150 per week, but obviously you need to be comfortable doing that. My parents with three children under three years old had a boarder in to enable them to meet their housing loan. It was hard work, but they wanted their own house.

I would do all you can to hold onto your house. Once it is gone, it is gone and so is the money spent on agent fees, advertising etc. When you eventually rebuy, you are up for stamp duty (which you have already paid for this house).

I'd live on baked beans before selling my house. I'd even sell my car if it meant keeping my house.
 
I'm all for one person staying home when you are comfortable with the way you're getting by, but when there's debt and it's affecting your lifestyles in a way that your not comfortable with, then I'd suggest that perhaps your wife gets a job for a couple of days a week (perhaps evening work).

This can be temporary till one or both of those 2 smaller debts are paid off. It's much simpler a solution than going to the lengths you suggest.

Great post btw Kristine.
 
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