Any One Else Out There?

[GeeVee]

Hi All,
I am wondering how many people have over-committed themselves and are now really feeling the bite?
We borrowed to buy mutual funds, then set up a margin loan against them. Double the income....double the pain...
It has now got to a point where we are feeling sick and not sleeping because there has been so much value gone out the window and the interest on the margin is capitalized, but the interest on the mutual fund is paid by us monthly. Add to that investment properties..... feeling pretty screwed!
I didn't think at the start we were that crazy, still here we are.
I wonder if we are the only ones in this boat? if you don't want to admit it in public, feel free to PM.
Thanks...
P.S. Ignore my signature quote.....

 

[josko]

geeVee,

Not many people admit it, and I admire you for taking the step. I found alot of comfort in getting it off my chest, and I have also received some fantastic advice and encouragement from members of this forum.

I have started to buy shares now with Super would you believe but my Property Portfolio has killed my cashflow.

In the wise words of Yoda:

Over-committed - I have.
Consolidating- I am.

Do what you have to do and get out of it. Sell properties etc. In the end, you will be no worse off than your friends or your neighbor- either renting or with a single mortgage. be thankful for your health and family and friends.

I have our PPOR on the market and three IP's to date. Once I actually made the decision to sell out PPOR and signed the dotted line on the Agents contract, I have slept alot better.

I have some 22A contracts to place another 2 IP's on the market. I'm having a hard time with it, but I need a back up plan C incase A and B don't work.

Above all, GeeVee,

Don't lose faith in yourself and your decisions. No-one could have predicted this turmoil, and your motivations for your actions were just. Think of it as a fantastic lesson and get excited about the next cycle. As long as we learn by our mistakes we will come out on top. I Promise!

Regards JO

 

[Simon]

This is what is fuelling the plunging prices.

The herd who thought they knew all are panicking and leaving.

I guarantee there will come a time when you will say you wish you hadn't sold those assets. But the trick is being able to afford to keep them in the meantime ...

Buy high, sell low ....

 

[mikew]

Hi All,
I am wondering how many people have over-committed themselves and are now really feeling the bite?

Probably at least a billion people worldwide. You're not alone.

 

[Chris.R_WA]

I just paid my first ever margin call...I thought they only happened to other people


Kidding, but it was a good lesson in exposure management.

Hence, I did obviously over-commit myself.

Rgds, Chris

 

[josko]

This is what is fuelling the plunging prices.

The herd who thought they knew all are panicking and leaving.

I guarantee there will come a time when you will say you wish you hadn't sold those assets. But the trick is being able to afford to keep them in the meantime ...

Buy high, sell low ....

gee Simon, you are SO SO smart.....
Regards JO

 

[Aaron Sice]

i think everyone is stretched - good of you to admit it.

i find that when i say "i'm not giving up" something pops up and allows me to afford it.

i require a positive mindset for everything i do or invest with. be patient and start learning about alternative income sources. work a second job. sell a property and get some sleep.

do what you gotta do to stick to your investment plan. if you take a hit, you're no less of a person for standing up and giving it a shot and failing - because it's short term. wear the battlescar with pride and know what NOT to do next time, and get straight back out there in smaller numbers to make sure you don't lose your edge.

it's all about mindset. know your goal and work towards it, even if you have to take a few steps backwards every now and then.

PM grossreal. he has some fantastic investment opportunities on the go.

 

[Raddles]

HI there Jane
sorry to hear about your situation - just out of interest - have you developed a plan? to start feeling a little less sick and so you can sleep at night?

For what it is worth - just this morning I was contacting my daughter about her spending habits and reminding her about what was said in the Richest Man in Babylon about how to get out of a bad situation - it was along the lines you need to divide your income as follows:

10% set aside for investment - something that will earn a passive income

20% set aside to pay down debts/creditors -

70% set aside to live on - food, accommodation etc

Good on you for dealing with the problem.
thanks

 

[willair]

Hi All,
I am wondering how many people have over-committed themselves and are now really feeling the bite?
We borrowed to buy mutual funds, then set up a margin loan against them. Double the income....double the pain...
It has now got to a point where we are feeling sick and not sleeping because there has been so much value gone out the window and the interest on the margin is capitalized, but the interest on the mutual fund is paid by us monthly. Add to that investment properties..... feeling pretty screwed!
I didn't think at the start we were that crazy, still here we are.
I wonder if we are the only ones in this boat? if you don't want to admit it in public, feel free to PM.
Thanks...
P.S. Ignore my signature quote.....

Just try and learn from the experience,i'm still down a lot from this time last year ,bought back in a few times on the way down thinking that was the low levels,and with all the uncertainty that is still to come over the next year the ASX is still like crossing a busy inner city road at peak times blindfolded..willair..

 

[Bon]

Not intending to rub salt into the wound, but no... I was out of the market 18-24 months ago and I was only back into several stocks for a matter of weeks and got out with a tiny profit.

In the process of settling IP#2 now, actually..

 

[Twitch]

Yes we too are stretched at the moment, bloody PPOR reno costs. Assuming I keep my job then we'll be OK..... 'assuming' being the operative word.

 

[Simon]

gee Simon, you are SO SO smart.....
Regards JO

Don't worry mate - I got feet of clay too.

Sorry if stating the obvious offended you. Maybe you need to get some Viagra and harden up a little

Maybe we need a collective tummy rub?

 

[lizzie]

i think you'll find a few of us are stretched - but know that if we can just hang on ....

at the moment cashflow is king. you need to do everything you can to ensure your cashflow is running at maximum. have you had a depreciation schedule done on your ip? we had ours done last week and we can claim and extra $20k off tax - unfortunately it was our ppor so is half and half, but if we could have claimed all the depreciation off hubby's tax, it means and extra $280/wk in our pocket with the aid of a tax variation form.

what is the negative gearing on the property? income less interest and expenses? if you work this out, you can also claim back on tax on a pay period basis instead of having to wait until the end of the year.

the tax variation ability allows me to sleep well at night as it means we have the cashflow to keep going.

 

[The Y-man]

Hi All,
I am wondering how many people have over-committed themselves and are now really feeling the bite?
We borrowed to buy mutual funds, then set up a margin loan against them. Double the income....double the pain...
.... Add to that investment properties..... feeling pretty screwed!
...

Been there, done (doing?) that.

Here's what we have done over the past 8 months:

1. Took a massive hit on our net worth closing out geared managed funds. It was painful losing the money and declaring defeat, but it was a great relief not worrying about where the next interest payment was going to come from.

2. Sold properties to fund the closing out of the managed funds to fund the shortfalls on the margin loans (pain on pain). We were lucky enough to catch a blip in the RE market earlier this year, but remaining properties for sale are not moving....

The good thing: selling off the assets has cleared a lot of debt off our books, and I am glad the boss directed us to offload when she did - as the markets have gone from bad to worse - and in our opinion, the worst is yet to come (we haven't got to the unemployment/hard to find jobs bit in Australia yet).

We still want to offload some properties - but the need to is not as great, so there is a lot less pressure. Also, as has been observed in many places, rents have been going up - making the remaining properties almost cf neutral.

Cheers,

The Y-man

 

[Sheryn]

We borrowed to buy mutual funds, then set up a margin loan against them. Double the income....double the pain...Double the loses

How much did you borrow to buy mutual funds?
How much is the interest repayments?
How much is the dividend or return on mutual funds?


How much is your margin loan?
What interest rate?
How much are mutual funds worth now?


What I do in to risk manage my margin loans is buy 10K of shares, if the price goes down 1K I sell.


I now take lots of small loses ( I have learn't the hard way too)


Regards
Sheryn

 

[kum yin lau]

Hi, Yman is wise man. You might want to follow his lead. Sure, your net worth will be seriously eroded but you get out of the hole & can start again at another level.

Happens to the best of us. The margin account is the decapitator. It's painful to throw good assets to erase it but you live to fight another day.

KY

 

[josko]

[

Been there, done (doing?) that.

Here's what we have done over the past 8 months:

1. Took a massive hit on our net worth closing out geared managed funds. It was painful losing the money and declaring defeat, but it was a great relief not worrying about where the next interest payment was going to come from.

2. Sold properties to fund the closing out of the managed funds to fund the shortfalls on the margin loans (pain on pain). We were lucky enough to catch a blip in the RE market earlier this year, but remaining properties for sale are not moving....

The good thing: selling off the assets has cleared a lot of debt off our books, and I am glad the boss directed us to offload when she did - as the markets have gone from bad to worse - and in our opinion, the worst is yet to come (we haven't got to the unemployment/hard to find jobs bit in Australia yet).

We still want to offload some properties - but the need to is not as great, so there is a lot less pressure. Also, as has been observed in many places, rents have been going up - making the remaining properties almost cf neutral.

Cheers,

The Y-man

Good on you YMan, I too hope to end up with some cashflow neutral properties.

Gee Vee, think of the positives and use it to your advantage. Turn your situation around.

I have thought today that my PPOR selling willl be a great opportunity for me to rent and buy property to renovate and sell on the upswing.. I've always wanted to do it, but it's too unsettling to keep moving the family around when you buy and sell. It's not my long term investing plan but it has always been on my list of things I want to do.

No offence Simon. Can't take Viagra though - especially as I am still breastfeeding.

Regards JO

 

[Francesco]

Hi Josko

The bad has happened to me also and I have admitted it at another thread. Lost $100k in shares and lost some annually in a poorly managed negatively geared property. However, detailed cashflow management, rent from other properties and other income streams and paperwork on tax variation all help to keep the financial situation neutral.

As you know it was scary when the govt and RBA threatened to derail LL mortgagors across Australia by raising IR in a bout of shadow boxing with inflation. They did manage to push quite a number of OO into foreclosures.

If you manage to weather the above situation, the current environment of unwinding IRs should release more income to you. However, I do not have a margin loan although I looked into it as a possibility. As some already suggested, preserve what you have although it is costly to pay off the threat from the margin loan.

All the best.

F

 

[GeeVee]

Hi all,
WOW!!! thanks for all the comments. The words of encouragement and advice. I am not sure about the viagra though!
Sheryn asked about the extent of the mutual funds.... over 100k with another over 100 margin loan 10.5% interest capitalized. In the first 6 months the dividend was sweet... over 25k, but for the next 12 months only 9 k !!! I was counting on a much better dividend to help float the whole thing, but it didn't happen.
Anyway, we applied to sell the whole thing down today, take what we can get, clear the margin loan and the concentrate on the evaporated equity from our IP's. At least at the moment we can hold them.
If only..... how many times we have thought and said those words.
From now on I will be much more thorough in researching any "advice" and make sure that we understand the good, bad and the ugly of any future investment. Remembering that there is no such thing as a dumb question...only the one you dont ask.
I also applaud others who have shared their story here too. I know that we are not the only ones who have tried, and will no doubt try again.
Better to have tried than never to have tried at all...
Thanks heaps,
GeeVee

 

[Novar]

Good Luck
I've never been one for big risk, like my sleep to much .. but with what's going on now you certainly won't be alone and with the unexpected like job losses etc, it will happen to many like us who have always done things with caution.

Like the others said, do you best to get out from under, dust yourself off and do things differently next time with a lot more wisdom.