Balancing investing with other life goals

[cimbom]

Hello,

I'm certain there was another thread about this but I can't seem to find it. I know all about compromising and all that but I'm more interested in the timing side of things when it comes to life goals rather just doing or not doing certain things.

One of the most obvious aspects of this is having kids. I can't have kids myself (well I can but medication I'm on in contraindicated in pregnancy plus there are other genetic issues - long story) so if we go down this road, it will need to be done using other methods which are very expensive. Then there's the additional cost of raising said kids.

Secondly, there's the PPOR mortgage. My aim is to have this paid off asap so we no longer have to worry about housing costs. By my calculations, this will happen around the age of 36-37 if we save according to projections. But of course, this will be unlikely if children come in the picture before then (if we have them, i would prefer if we are 32-33ish). When I say "if" it's more because I'm still a bit uncomfortable about the methods rather the actual idea of having them.

In addition, we would like to expand and diversify our investment portfolio. Our only IP at present is in a regional area and I'm uncertain about future CG (at least in the near future) so we may need to save 1-2 more deposits on our own so we can make further purchases as well some to put in other investments.

Then there's other things like travelling, other hobbies and the like. Just wondering how the rest of you all planned this? I'm a big planner and like to have at least a rough timeline of sorts to prepare and make best use of our resources.

Thanks in advance

 

[Anh]

Hi Cimbom,

I thought i might share my story: i never though about kids when i was youngest ( early 20s) then got married, and kids, one income at one stage then i went back to work full time as i wanted to pay off the mortgage quickly, and the 2nd one went to childcare at 5 months. It was hard then. Apart from the child care cost around $6k/child/y, they did not cost much in term of money. We did not travel overseas/expensive trips for 6 yrs straight, knocked the mortgage down and then we started travelling. If you are planning to send them to private schools then yes, they cost money, else public schools cost about $1k/y/child for us. If they are good enough to get scholarship to a private high school or a public selective high school then again they don;t cost much else $10-20k/y/child. Their extra activities like music, sport, swimming etc.. can be costly around few k/y/child.

In term of hobbies, i guess some hobbies cost money, some don't. When they were little there weren't much spare time since i work full time, but now plenty of spare time and i take on free hobbies

But yes i agree there will be compromises/sacrifice to make and it will be hard when they were little, but once they go to school life will be a lot easier. And they bring joy and laughter money can't buy, so for me if i could turn back time, i would want to have them earlier

Some people i know work part time, some stay home and spend more time at kids schools.

Good luck with whatever you decide to do, i believe it will be the right decision for you.

Ta

Anne

 

[Aaron_C]

I'm in a similar position to you cimbom so would be interested to see how others approached it. I guess what I've gathered so far is that you just deal with the kids when they come and you somehow make it work.

 

[devank]

they bring joy and laughter money can't buy

^^ That's it ^^

They also bring sleepless nights

 

[Corey Batt]

^^ That's it ^^

They also bring sleepless nights

Having a dog sounds easier.

 

[Colin Rice]

I've got three and another on the way plus the wife stays at home for obvious reasons.

My challenge is to out earn the expense it takes to keep them in relative luxury and have enough surplus to invest the difference.

I have an abundance mindset and have always believed things will work out well for me and they always do even though it appeared the exact opposite until my late 20s (more so to the rest of the family).

Love my family and my business and if it all goes pear shaped I have four children to choose from to go and live with

Go forth and multiply if you can.

 

[BayView]

I'm in a similar position to you cimbom so would be interested to see how others approached it. I guess what I've gathered so far is that you just deal with the kids when they come and you somehow make it work.

It is very difficult to plan where kids are involved, but to have a rough outline and timeframe like Cimbom has described is better than what most folk actually do; from my experience.

I think for many folk the plan evolves and has to be changed as you go.

Some folk like every day a routine. I can't do it; I go insane...a little bit of structure, but that's it for me.

If you like to be super-organised in advance etc, this will be frustrating, but for many folk the unpredictability and surprise is part of the excitement - especially with kids (we have 3).

Our kids have a few activities planned on certain days each week, but outside of that we play it by ear to a large degree. The most in advance we are right now is getting our oldest son ready for High School next year, and we have a 20 year wedding anniversary holiday planned for April 2014; so that's it.

The other thing with kids is them. They all have different personalities at different stages, different wants and interests and so on.

Sleepless nights are a given - all 3 of ours have been terrible sleepers as younger kids (one still is).

The best we can hope for is they are healthy, happy - and we have to love them and give them lots of hugs and spend time with them.

 

[devank]

Having a dog sounds easier.

Just like dogs... all three kids race as soon as you walk in at the end of the day. You simply can't put a value to that 'feeling'. I look forward to the the whole day!

 

[Jamie M]

Having a dog sounds easier.

lol - depends on the dog. Mine decided to let the whole house know that it was time to wake up just before 6am in the morning by running around in circles barking.

I then spent some of the morning chasing him around the backyard trying to retrieve a nappy...he also decided to have a wee on the builders vacuum cleaner that he left behind (in the house).

At least when it gets too much I can pop in the laundry for a short while....can't really get away with that with an 8 month old bub

Cheers

Jamie

 

[see_change]

We found it easier to pay off our PPOR's by developing and investing .

In my mid 30's a financial advisor told us the best thing to do was too pay off our PPOR , so we started trying to do that ...

Day after my 40th birthday I did a back of the envelope caculation on how long it would take to pay down our , then PPOR while paying school fees and putting money in Super . Worked out at around 25 years .

Via investing and a one to two block subdivision we were living in a mortgage free PPOR ( not the same one - needed work ) within three years . About five years later we were living in a really nice house , mortage free with a significant amount of equity .

Cliff

 

[cimbom]

Thanks for all the comments and insight - it is really helpful.

If there are no major financial issues in the meantime and we have kids when we're 33ish, then by the time they start kindergarten, our PPOR will be just about paid off which will be great timing in terms of freeing up funds for school expenses. I'm not sure about private schools in the traditional sense (i.e. Anglican/Catholic) but do like the small ones like Montessori etc better. Unfortunately, the price is pretty similar! I guess it also depends if we stay in our current area or move as well.

 

[sanj]

We found it easier to pay off our PPOR's by developing and investing .

In my mid 30's a financial advisor told us the best thing to do was too pay off our PPOR , so we started trying to do that ...

Day after my 40th birthday I did a back of the envelope caculation on how long it would take to pay down our , then PPOR while paying school fees and putting money in Super . Worked out at around 25 years .

Via investing and a one to two block subdivision we were living in a mortgage free PPOR ( not the same one - needed work ) within three years . About five years later we were living in a really nice house , mortage free with a significant amount of equity .

Cliff

that realisation of the fact that there is a much better and easier way is a beautiful thing isnt it?

 

[beachgurl]

We bought a number of properties in quick succession just after we got married. The plan was to buy even more in a short time frame. Being in our early 30s we thought about kids and soon we had to make choices. I was 'encouraged' to leave my well paid job while doing ivf. Completely threw our investing plans out of the water. We now have 2 kids and while we have bought and sold a few in that time, it is nowhere near where we wanted to be financially. I kept working after the second child was born to get ahead but then realized I wanted to be with the kids. Our financial goals suddenly didn't matter so much. We are comfortable and have a small self sustainable portfolio. Once the little ones are at school we'll see if we want to be aggressive in our buying again. We will be in our early 40s then.

While sometimes I feel disappointed that we've lost our way and focus on investing, the reason for that is absolutely worth it

 

[Peter_Tersteeg]

A while ago I wrote a post about my experiences with IVF and trying to have children.

http://somersoft.com/forums/showthread.php?p=1080296#post1080296

Whilst we don't know for sure what has stopped us from not being able to conceive, age is a very likely the major factor. At one point we were reluctant to have children because we were worried about our financial situation and we now deeply regret that decision.

After the age of about 35 a woman's fertility drops significantly. I know there's plenty of stories of people having children well into their 40s, but the actual odds of conception are less than 5% at that point. With a few other known (and quite common) factors, my wife's chances of a natural conception are now estimated to be closer to 0% than 1%.

My other observation is that regardless of their financial circumstances, people still manage to raise families successful. Life has a way of figuring itself out if you put a little effort into it. Don't put off investing, but don't put off children too long either.

Best of luck...

...My sister (Max's mum, the baby in the photo in the other post) hasn't slept in months and I'm fairly certain she's going mildly insane...

...Also I have two awesome dogs. One peed in the kitchen this evening...

 

[Propertunity]

Secondly, there's the PPOR mortgage. My aim is to have this paid off asap so we no longer have to worry about housing costs.

I've never understood this way of thinking PPOR repayments generally represent about 30% of your income. So let's say you do pay off your PPOR mortgage. You still have to fund 70% of your living expenses. Food, cars, schooling, entertainment, medical etc etc. What's the point?

I'm a big planner and like to have at least a rough timeline of sorts to prepare and make best use of our resources.

If you are a big planner, and you do end up with some children, you are going to be sorely disappointed.

?That's what happens to dreams, life gets in the way.? ― Jodi Picoult, Handle With Care.

You can't plan for accidents, chilhood illnesses, or anything else.... such as your next breath. I'd try to relax if I were you and stop overplanning. Although I do recognize the need to plan - becasue if you don't have one, you'll be sure to get there. I guess what I'm saying is build in some flexibility to your plans.

 

[cimbom]

PT_Bear, yes I remember that thread and I think I posted a reply as well. As I mentioned in my first post, we will need to do things a bit unconventionally due to my health situation so the factors you mention are not really relevant to us (sadly). Even if it was, my husband needs to be done with uni and working FT as well. I wish you and your wife well with everything though.

Propertunity, I understand where you're coming from. I guess it's just a psychological thing of having one less bill to worry about paying. The opportunity cost of the interest if we just paid the regular payments is pretty big too. I'd rather just knuckle down and get it out the way in several years.

Also, in terms of planning, it's more a big picture type thing (ie yearly milestones, lots of advance research and that kind of thing). Not really micromanaging on a daily level. I'm not that crazy!

Thank again for all the input.

 

[Corey Batt]

lol - depends on the dog. Mine decided to let the whole house know that it was time to wake up just before 6am in the morning by running around in circles barking.

I then spent some of the morning chasing him around the backyard trying to retrieve a nappy...he also decided to have a wee on the builders vacuum cleaner that he left behind (in the house).

At least when it gets too much I can pop in the laundry for a short while....can't really get away with that with an 8 month old bub

Cheers

Jamie

Yeah I revise that. Today I had to take mine to the vet for some shots, he really doesn't like vets.

I now have a bruised jaw from when he bounced up whilst I tried to hold him.

Guess a kid won't do that.

 

[Rentwithpets]

Yeah I revise that. Today I had to take mine to the vet for some shots, he really doesn't like vets.

I now have a bruised jaw from when he bounced up whilst I tried to hold him.

Guess a kid won't do that.

Poor dog Hope he wasn't too traumatized. Many dogs can be taught to like vets - depends on how to vet relates to dogs, and vet clinic environment. Also how often does the dog go to the vet for treats only and no needles?

I practice mindfulness with my animal patients, take my time playing with the animals on their level, and I sedate for any procedures that could be traumatic for them. It makes a huge difference to the comfort levels of the animals!

Dogs are the most loyal children. They will always greet you at the door no matter how old they are, never shut themselves in their room and ignore you for their video games

 

[Angel]

Hi Cimbom

Please don't pay off your current home directly, but rather use an offset. I think you do that? Then if you relocate (like to Brisbane) you can use those funds for another deposit.

When our kids were little, it didn't cost us much to look after them. As a SAHM we didn't need a massive income because I was able to do many things for free as I had the "time". ie our grocery costs were very low as I cooked everything, purchased lots in bulk and didn't have any commuting or employment-related grooming expenses. No child-care fees either, and absolutely no desire to go out drinking or spending a week's grocery budget on one night's dinner at a restaurant.

At least the resorts have introduced the "kids stay and eat free" policies so you can still do those precious trips away.

You'll be fine.

 

[jingo]

Hi cimborn,

I enjoy reading your posts. I've put some of my own thoughts and experiences below.

Hello,

One of the most obvious aspects of this is having kids. I can't have kids myself (well I can but medication I'm on in contraindicated in pregnancy plus there are other genetic issues - long story) so if we go down this road, it will need to be done using other methods which are very expensive. Then there's the additional cost of raising said kids.

I'm sorry to hear about these complications and hope they can be sorted soon.

Secondly, there's the PPOR mortgage. My aim is to have this paid off asap so we no longer have to worry about housing costs. By my calculations, this will happen around the age of 36-37 if we save according to projections. But of course, this will be unlikely if children come in the picture before then (if we have them, i would prefer if we are 32-33ish). When I say "if" it's more because I'm still a bit uncomfortable about the methods rather the actual idea of having them.

As others have said, establishing an offset account (which I think you already have) and putting any savings into this is better than paying off your loan. Another possibility, if you haven't already, is to pay interest only on your loan. The reasons for doing this is that it opens many options, including:

a) Upgrading to a larger home at some point in the future and turning your existing home into an IP.

b) Gives you a cash buffer.

c) Paying interest only on the loan will free up cash flow which may enable you to invest in another IP sooner rather than later.

I think you'd be better to buy another IP sooner rather than later (depending on your borrowing capacity and serviceability of course) in a growth area rather than trying to pay off the PPOR.

In addition, we would like to expand and diversify our investment portfolio. Our only IP at present is in a regional area and I'm uncertain about future CG (at least in the near future) so we may need to save 1-2 more deposits on our own so we can make further purchases as well some to put in other investments.

If you can, keep investing - but take your current circumstances into consideration and make sure you still have the funds to be able to go down to one income if you decide to have a family.

Then there's other things like travelling, other hobbies and the like. Just wondering how the rest of you all planned this? I'm a big planner and like to have at least a rough timeline of sorts to prepare and make best use of our resources.

Thanks in advance

Before I knew better, we paid off our PPOR. Then, we basically bought as many IP's as quickly as we could and established offset accounts to put the extra cash into. Now, we are looking to buy commercial property and shares to provide an income stream.

We planned, but basically worked hard over the years, bought what we could and saved as much as possible. I think persistence and mindset are the keys.

Soon we will return from our 3 month trip to the UK/ Europe where, with our daughter, we have visited 10 countries, spent more money than our first home loan and had the time of our lives!

Be flexible in your plans, enjoy life and everything will fall into place. Family and friends are the most important things in life - being financially comfortable is the icing on the cake.

Kind regards,

Jason.