"How on earth do you sleep at night?"

[Corsa]

I have had an interesting week that I wanted to share. I have been working in Sydney this week and ended up going out with my travelling collegues for a meal. After spending most of the evening moaning and groaning about how the Corporation we work for is crap and how we all hate our jobs and want to quit etc etc etc. We have all been in the company around 7 years and have survived around 4 rounds of annual redudancies that have been ruthlessly effected throughout the organisation. This went on for several hours and then the conversation turned to property and shares. My collegues volunteered that they had bought houses PPOR in Melbourne recently with around 300k to 500k mortgages and they felt fantastic. Both are around 38 in age with one having previously bought another PPOR and upgrading to a bigger and better house with the other a first timer in the market. I told them how I had 7 Investment properties and was right into property. The reply was "how on earth do you sleep at night".

The main thing for both of them was that they would be in serious trouble if they were made redundant, and they both verbalised to me that they felt grateful that they had missed out on the latest round of retrenchments but admitted that they were looking around for other jobs. Reading between the lines they feared the large mortgages and were worried about the future. These are very highly paid people earning at least $140k p.a. I told them that I was investing seriously now as I did not want to be living month by month at the mercy of an employer that may tomorrow say that my services are no longer required. If anything I would welcome a redundancy as then I could use a large pay-out to buy a few more properties.

Even with a very large mortgage I feel safe that if I was made redundant that I could head down to the local pub and get a job waiting tables and pulling beers if I had to. I am not sure if these senior executives could do that or would be willing to do that. For the most part, my portfolio is positively geared so I dont worry to much about relying soley on my financial input, I let the tenants take care of that. One of the guys said he would seriously consider selling his home if interest rates rose and I told him that I would be fine if interest rates rose to 12%, after this time I would have to stop going out for dinner 3 times a week and pull back on my lifestyle.

How do I sleep at night? The question I ask is "How do they sleep at night?" They are almost wholey and soley reliant on their ability to earn an income from one source - a ruthless global employer who does not hesitate to swing the axe when needed. They are not ready whatsoever in the event that they lose their jobs or if interest rates rise. If anything they prey every night that they dont' lose there jobs so they can keep up with the payments.

All I can say is that I feel ready for anything that might happen, maybe not interest rates at 17% but I have a fair idea of how I am going to handle it and it wont be by panic selling or letting the whole lot fall down like a house of cards.

And by the way, I sleep very well at night!!!!

 

[Brenda Irwin]

WELL DONE CORSA!

You sound as if you are financially and mentally ready fro anything including how to answer all you work mates questions.

Betcha at least one of them went home with some serious thinking to do.

7 ips, you are well on your way to financial freedom, just a matter of hanging in there and let time do the work.

Cheers Brenda

 

[MarkB]

Corsa

I just wanted to say that your post is one of the best that I have ever read on this forum.

MB

 

[D.T.]

Hi Corsa,

Thats really great. Thanks for sharing that with us. With a mindset like that, how could a tidal wave stop you? If you dont mind me asking, how old are you?

Sounds like you work for Telstra tho? Someone I know who does work for telstra gets flown to the Sydney office occasionally to avoid their turn at redundancy.

-Kind Regards

Dave

 

[Alan H]

Hi Corsa.

I think you've summarised my feelings perfectly too...........

Your comments on retrenchment are also interesting. Amazing the culture of fear and anger that many companies have now generated isn't it?

While not personally being in the current 'firing line', I too was 'handed the bullets' today to start the process of getting rid of staff. I strongly expressed my informed opinion that not only will this particular decision cost us more money but it will also lead to a significant drop in productivity and development. My above purely clinical analysis exluded the fact that the staff involved have also given 200% to the organisation and me without ever a question. Was it being done for economic or practical reasons? No.......political.

I think unless we all take responsibilty for controlling our own financial destiny, we will be forced more and more into the role of 'executioner' or the 'executed' ...........and I for one want more choice in my life........

 

[Corsa]

Thanks for the responses it means a lot and is very touching!

dtraeger2k, I am 27 but dont work for Telstra.

Alan H, I am getting my first insight into the role of executioner and I have some serious issues with the whole thing. I am doing the Financial Analysis but not the People decisions thank god. It is commendable that you are trying to get people to see that the opportunity cost that is saved from losing staff will be far outweighed by the subsequent demotivation and disallusionment that the rest of the staff will feel, this is a difficult cost to measure.

With my collegues the other night the pure facts of it was that they needed there jobs more than their employer needed them which is a very vulnerable position to be in. The way they were safeguarding themselves was to be looking around for another job where effectively they are placing themselves back in the same vulnerable position.

 

[always_learning]

One interesting thing I consider is that anyone's first and most important activity in a company is to do the following:

a) Find out which roles are more important or will be in the near future this could mean inside your company as a whole or just in your department.
b) Make sure you are doing those more critical roles.
c) Become in the top 50% (the upper half) doing that role.


If you are doing a job recognized by the company as important, and you are in the top 50% of people doing it you dont need to worry about loosing your job (or should I say worry too much loosing your job ). It is rare event for a company to sack more than 50% of its workers? (Dot com bubble time for instance)

It has been my observation that the top (cream) of IT consultants never seem to be out of work for very long. The only times top IT consultants are out of work for long is after there has been a massive shift in technologies and their skills are just not needed.

 

[JimC]

Originally posted by Pitt St
Corsa

I just wanted to say that your post is one of the best that I have ever read on this forum.

MB

I absolutely agree.

 

[Corsa]

Originally posted by always_learning
One interesting thing I consider is that anyone's first and most important activity in a company is to do the following:

a) Find out which roles are more important or will be in the near future this could mean inside your company as a whole or just in your department.
b) Make sure you are doing those more critical roles.
c) Become in the top 50% (the upper half) doing that role.

Absolutely agree always learning, it is a case where the fittest survive and always ensuring the you are performing a role that is important and viable.


I know a few other collegues who have chosen not to enter the property market as they feel that there job is uncertain and would then worry about making the repayments. We have been working in an uncertain environment for at least the last 4 years so when will they ever take the plunge?

 

[Brenda Irwin]

When Hubby and I first decided to go in property investing, it wasn't all our decision.

We did an awful lot of praying and asked our Lord a lot of 'what ifs'. When we did take the plunge, we did it in the knowledge that it was with His blessing.

It gave us comfort that, come what may, we would be taken care of. So in we dived into property investing and we're doing 'swimmingly'.

Cheers Brenda

 

[ChrisOs]

AlanH,
Slightly off topic, but I felt compelled to comment on your statement "While not personally being in the current 'firing line', I too was 'handed the bullets' today to start the process of getting rid of staff."

Unfortunately, I too have been in a similar situation where staff were "let go". It was my task to select 14 staff to "let go" as well as tell them the news. It is not an easy task. No matter how much you may try and sugar coat the message, at the end of the day, what they hear is "You're fired!".

Hang in there - it is not a pleasant experience for you or them (i.e. the survivor or the victims) but life goes on and sometimes, the victims really land on their feet and move onto bigger and better things. You have alluded to productivity issues etc and you will need to help the survivors as much as the victims.

Regards,
Chris.

 

[Alan H]

Thanks Chris.

 

[bbg2003]

Great post Corsa and others.

I hear those comments all the time, and as an employer I can assure anyone that giving "the sack" is the most difficult task a "boss" will come across. (even when they deserve it somehow...)

There may be some times in our "investment career" that it may be a little hard to sleep at night, but as long as you have a clear plan & road map to get out of that situation, there's a more than good chance that it'll work out in the long term.

Any type of investment carries a certain degree of risk with it that needs to be managed. The hard part is analyzing and assesing the risk involved in a particular investment against the return that you expect. Most investors see this as being too hard and just don't pay too much attention to it,or ignor it all together. This is easy done after reading those glossy ads and attending those "go get'em" seminars, as "hype rids all fears".

I believe that in order to get above average gains, you need to take more "risk" (you need to define your version of what risk is).
Maybe some nights may be a little rough, but as long as you keep in mind what you did and why you did it and the end goal your chasing, unless abnormal circumstances arise, you should reach your goals. (late is better than never!)

my experience:
The last five years have given me enough CG to take my loans down to >40% of my total holdings, including my business loans.

I get the opposite Corsa ie people tell me "if i had that much equity i would do this & that etc etc". They tell me how they would buy & rennovate, or buy apartments or even go into developments. Yes they obviously read the magazines, it's easy to fantasize what to do "IF" you had the money....

Instead I sleep well, only "have" to go to work one day a week (staff get one day off!). I sleep in when I want, have coffee till 10am, come home for lunch (pool is already 23 C), or go out'n'about. Mostly though i create more work for my business.
The funny thing about all this is that i get more done now in 20hrs per week than i did 5yrs ago in 50hrs!

Yes their were the lean(very) years when i wore the same couple jeans & few t-shirts for 3-4 yrs, many sats spent at home, I don't remember the last holiday (1996??), and I choose long ago to give up drinking & smoking (maybe i was'nt that silly in my youth after all). But in the end nobody gives you anything, you gotta work for every dollar.


best of luck (we need it!)
bbg2003

 

[Corsa]

thanks for your note bbg2003

it is great to hear your feedback and for you to share your experiences in this thread.

Regarding your comments about how people say to you "if i had that much equity I would do this and that etc etc", I think part of the issue is that people don't have the skills, diligence, ability or the drive to put in the necessary effort in the first place to create that kind of equity, the kind of equity that can give you an LVR of 40%.

I was reading an article in the paper the other day about a couple who had run into troubles with a LOC and had only managed to pay off $6,000 from a PPOR in the last 6 years and had a high LVR. I think that people love the idea of the reno and the block of flats but in reality prefer the choice of a new overseas trip, car, camera etc (funded by a LOC).

I hope one day to be working 20hrs a week and enjoying the kinds of days that you describe. I know at the moment that I work around 50hrs a week for my employer and around 5hrs a week to manage the investing side. The Investment income is almost as high as my employment income but I dont spend nearly as much time doing one as to the other.

Thanks again to all who have responded to this thread, I realise talking about retrenchments can be difficult but unfortunately these are the work conditions we are required to work under and hence having an action plan can only be a good outcome in the long run.

In respect of my collegues, Brenda you were right, one of them did approach me this week to see if I could help them and I Have since recommended they read the book by Anita Bell "How to pay off your mortage in 5 years...by someone who did it in 3" and had a chat over coffee about managing risk, so its all good.

Best Wishes and sweet dreams!

Corsa

 

[grubar30]

All old thread, but I feel the need to comment:

Firstly, nice post Corsa....it was a good read

As for this,

Even with a very large mortgage I feel safe that if I was made redundant that I could head down to the local pub and get a job waiting tables and pulling beers if I had to. I am not sure if these senior executives could do that or would be willing to do that.

I feel the same way...actually, had a friend ask me the other week that what if I lost my job, what would become of my IPs?….I simply said I would walk down the road and get a job stacking shelves at a supermarket or whatever....and that's the thing - you do what you have to, to keep your ambitions rolling forward....and when I said this I could see his brain ticking over and not being able to grasp this notion....


George

 

[lizzie]

the only thing that stops me sleeping is plotting the next purchase (and the 2yr old).

sometimes being retrenched can be the best thing that happens ... i know, have been there ... thrown out of the comfort zone, a bit of instant cash to invest and being forced to start thinking. that's how i started in ip investing.

now just waiting for hubby to join me ...

 

[vandalic]

What a fantastic thread, thanks for really getting me thinking

 

[taylord68]

thanks for the great thread. having not yet taken the step of IP and now the '38' mark approaching, its starting to really gel the need to step up to the plate and just committ. Working for a fantastic employer (at the moment) doesn't mean that there isn't the fear of not entirely in control of my own future. whilst not being too arrogant, I am considered in the top half of my profession so employability in the current market is no probs

the bride and I have the PPOR at about 65% LVR and in a great growth area at the moment. (beerwah) We've come close to the IP a couple of times but always baulk at the gate when the sums show a neg gear of $100 per week up front (without considering the tax aspects).

and here's the question. How do we get ourselves over that barrier? Whilst we have some questions about how to address the issue of servicability, selection and analysis of the potential IP (lots of the other threads address this stuff and plenty of professionals are also available thru the forum), I'm really interested in how to make the initial step and resolve that fear of not making the grade.

thanks again

 

[ani]

thanks for the great thread. having not yet taken the step of IP and now the '38' mark approaching, its starting to really gel the need to step up to the plate and just committ. Working for a fantastic employer (at the moment) doesn't mean that there isn't the fear of not entirely in control of my own future. whilst not being too arrogant, I am considered in the top half of my profession so employability in the current market is no probs

the bride and I have the PPOR at about 65% LVR and in a great growth area at the moment. (beerwah) We've come close to the IP a couple of times but always baulk at the gate when the sums show a neg gear of $100 per week up front (without considering the tax aspects).

and here's the question. How do we get ourselves over that barrier? Whilst we have some questions about how to address the issue of servicability, selection and analysis of the potential IP (lots of the other threads address this stuff and plenty of professionals are also available thru the forum), I'm really interested in how to make the initial step and resolve that fear of not making the grade.

thanks again

Hi taylord68

Where are you looking at buying? Maybe revise the location if you don't want to be that negatively geared?

So say after tax it is $60 a week. What does that equate to......a meal out once a week instead of twice, not buying something for another week........
How hard would it be to find $60. Maybe put $100 away for a few months and see if it hurts or not. Then you will know if you can do it.

For me, somehow I always meet the mortgages. They come first and everything else comes second. And I was never "a saver" before I gave birth to mortgages

The first is always the scariest but once you realise you can actually pay the mortgage and the world doesn't end, you can do it again easily.

Good luck

 

[taylord68]

thanks Ani
it's that detail of selecting the right IP in the right location in order to be able to minimise the negative gearing that challenges us as well.

we've ramped up our cash saving amount to represent the equal amount of weekly IP amount to test our ability to survive. you're right,so far because its auto deduction, we've gone 5 months without touching the saving. discipline is a soft suite for me, the bride is much better.

the target area nmay have been wrong on oru first couple of attempts, tried the old home town and that seemed to be looking tuff. Given my reading since, we missed ensuring the town had something to offer in terms of rental market. Now thinking SEcorner Qld given the infrastructure increase and continued southern migration.

again thanks for the feedback and look forward to learning more from the forum.