"How on earth do you sleep at night?"

[Pablo]

Then you have the other side of the picture, the ones that want a payout but cant get one

I did the following to maximize my income.

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.

When it was announced that my company was offering seperation packages I quickly filled out an application but they came back and told me I was needed

I had already lined up another job with the exact same money, the payout would have paid off all but $20k of the home loan, I would have spent 6 months paying this final amount off and proving to the bank that my new job was stable then I would have declared full scale war on the rat race!!

Seems like I should have had a few more sickies.

 

[The Y-man]

When it was announced that my company was offering seperation packages I quickly filled out an application but they came back and told me I was needed

I had already lined up another job with the exact same money, the payout would have paid off all but $20k of the home loan, I would have spent 6 months paying this final amount off and proving to the bank that my new job was stable then I would have declared full scale war on the rat race!!

Seems like I should have had a few more sickies.

I too was figuring on getting out - never actually applied, but my position looked dead end. I had a second casual job - so no major hassles.

Strange thing was, my boss got kicked out instead

As it stands, I am still holding 2 positions....

Cheers,

The Y-man

 

[DavidMc]

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.

Great post.

That freedom you describe is amazing. Knowing that as I drive my car to work in the morning I can at any time do a U turn, head to the airport, book a flight to Thailand, live on a beach for 6 months then come back and compete with you for that pub job is the most therapeutic thought in my head.

Initially I achieved this through simple living/always spending less than I earn/being content with less (less clutter, anyway). 4.5 years of university living on Army Reservists pay and then Austudy sort of ‘helps’ you do that anyway. As my income has ramped up so has my lifestyle. If I ever had to going back might be hard mentally however hopefully my portfolio will really get into full swing at that stage.

Your comment above has been my aim ever since I left the nest (I’m also 27 at the moment).

 

[DavidMc]

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

My advice – if you’ve got 35% equity in your property see if you can do this. Purchase the IP with the minimum cash outlay. Consider a 90-95% loan (or even STG’s 100% loan). Get another loan as a LOC of around 20k. Use this as a ‘kitty’ to fund your minus $100 per week. Pay all expenses out of this, funnel all rent into this and pay the interest on this amount from your salary (it should be stuff all). Or you could let it capitalise. This should last for almost four years at this rate. If you have carefully selected your property you hopefully should have achieved at least another year or so worth of ‘kitty’ in equity, so increase the LOC and away you go again. If you haven’t, then start digging into your personal income. Maybe rents have gone up a bit too so this won’t be so bad? Service debt with debt. It’s not for everyone but I like it.

 

[Les]

G'day all,

If this wasn't already a 5 star thread, I'd have rated it thus (might've swung the pendulum.....).

Thank you all for the great thoughts, and the detail provided,

Regards,

 

[taylord68]

My advice – if you’ve got 35% equity in your property see if you can do this. Purchase the IP with the minimum cash outlay. Consider a 90-95% loan (or even STG’s 100% loan). Get another loan as a LOC of around 20k. Use this as a ‘kitty’ to fund your minus $100 per week. Pay all expenses out of this, funnel all rent into this and pay the interest on this amount from your salary (it should be stuff all). Or you could let it capitalise. This should last for almost four years at this rate. If you have carefully selected your property you hopefully should have achieved at least another year or so worth of ‘kitty’ in equity, so increase the LOC and away you go again. If you haven’t, then start digging into your personal income. Maybe rents have gone up a bit too so this won’t be so bad? Service debt with debt. It’s not for everyone but I like it.

wow, thanks for this. so its in the growth of the property and the rent increases combined with the tax aspects that we gain? and the loan is a P&I or just interest only?

the light bulb went on in my head for sure. does anybody else see pros and cons for this?

cheers
david

 

[Les]

G'day taylord,

I see +ves in IO - others see +ves in P&I - I guess it's an individual thing. The bit that I like about IO is that I can CHOOSE to pay down more off the mortgage, but it's not carved in stone. And Offset acounts are a great help in this regard (i.e. they can "simulate" a P&I loan, but don't HAVE to - YOUR CHOICE!!) Sounds nice to me,

Regards,

 

[taylord68]

thanks les
cheers
david

 

[Rolf Latham]

Hi tay

Get along to the next BIG meeting In Brisbane to meet some like minde folk

On the issue of PI and IO, there is no issue, it should be IO almost all the the time. That way you control the P, not the lender, just another small part of risk management

ta

rolf

 

[DavidMc]

On the issue of PI and IO, there is no issue, it should be IO almost all the the time. That way you control the P, not the lender, just another small part of risk management

Agreed. Debt remains constant, value of IP (and therefore equity)increases . My Dad had a hard time comprehending as he is opposed to all debt. I explained to him imagine if he bought that house he was renting in South Yarra for $33k in 1977 and never paid a cent off...

Yes taylord68, in my opinion the growth of the property (capital growth) is where you are going to make serious money, not so much a surplus $30 per week on the cashflow.

It only took me 5 years of property investing to realise that 'kitty' concept I explained below

I'm on a kudos collecting mission so if you liked my previous post click on those scales in the top right corner of my post

 

[DavidMc]

the light bulb went on in my head for sure. does anybody else see pros and cons for this?

I'm happy to discuss this more (and I'm sure others are ready to shoot me down in flames), but it's moving away from the original discussion of this thread. It's a really good topic and it's enjoyable seeing it discussed more.
Maybe after having a bit of a search around the forums for some pros/cons/answers you can post any questions as a new topic (search for 'service debt with debt' or similar).

In other news, I just found out something interesting! My 'mentor' I had when I was a graduate at my first place of work who was trying to talk me out of property investment because of 'it's commitment' (mind you I see my properties maybe once per year, if that!) dived in and bought four just before the peak!

I have about five other workmates who 'have just been waiting for the right time' for the past 4 years...

I do get scoffed at my investments by my brother in law's parents. They think I can afford them simply through my big salary. I tell you they seriously must think that I service all loan repayments entirely out of my own pockets! It's obviously due to lack of knowledge and their enormous fear of debt prevents them from learning how it actually works.

I think they also have a bit of a tall poppy thing in their family, as the 'wealthy sister' of the family is the outcast for some reason (I really don't know why, when I first met her I was expecting a mega bi**h but she's a lovely person!).

 

[Carolyn]

I have not been employed for over 6 years....

firstly, this is a great post.

There is something extremely empowering knowing that you can make your own choices..and destiny.

I have not been employed for over 6 years. Goodbye office politics, Managers with PMS, playing the "game" to get ahead, and that pain behind your right eye!!
Initially my husband earned a very healthy income that meant I did not have to go to work after having children. But it also meant that he was a slave to time (billable hours equals money)

It became my burning passion to have him at home with myself and the kids and not working ridiculous hours - funnily enough - guess what happened.

Now I create 70% of our income working when I want, we live by the beach, we dictate what work we do and we are earning income doing what we love.

You cannot have an extra ordinary life doing what everyone else does. Of course you will get the majority of people - friends/family/colleagues - think you are mad. "ooh it's risky, what about those bad tenants you see on tv and 1000 other negative comments". It is all because it isn't what most people do, being different isn't easy. It takes conviction, passion ,committment.

Most people on this forum are not ordinary Australians. We have all made decisions to take us that step closer to our goals. (Yay)

My husband recently went to an amazing course by Bill Zheng in Melbourne (my turn next year). If you really want to take your journey to another level where there are no limits and where you are your only barrier to success - you have got to check this out.

I am on no kick backs etc . I just know that when you have a real and burning passion to do something it becomes a reality
I am just searching for my next goal now.

 

[yadreamin]

Great post Carolyn
Your passion and enthusiasum really came through.However you didn,t say how you come good with 70% of the income.Would love to hear your story.If you care to share.
Above all, after reading all the posts on this thread and many many others on the forum it really does seem to come down to guts, determination and not accepting the norm, oh and stepping out of/away from the mould/comfort zone of others, who aways seem to know better.!!!!
Have a great day on the beach tomorrow Carolyn
cheers yadreamin

 

[Carolyn]

Yadreamin

the ocean is fabulous today thanks, it is that gorgeous turqoise colour that makes you just want to swim in it forever! (Perth has the most fab beaches in the country, would live there except it's so far from the east!)

The last 18 months of our seachange has involved me doing renovations - about to go on to our 5th. We have kept some propertys we have reno'd and sold some. Whilst I would love to keep everything, I don't want to have a lot of property where we live (regional/coastal qld) so I would rather sell some and get all of my money out to into some capitol city purchases next year. I also have a dvelopment I have been working on in Townsville and am looking for a small site here to do after Christmas.

The way our trust and companies are structured we fair prety well with CGT - I know it's what everyone thinks of when you sell an IP quickly. You have got to have an above average accountant if you want to do things differently.

My children are still young so I do it in between school times and of a night. My husband still does some consulting but very part time. It helps that it is a lot cheaper to live here than down south also. It's just so exciting to do something that you love...AND...GET PAID FOR IT. WOO HOO.
(PS I dont do the work on our reno's , multi talented white/blue collar husband and backpacker labour do it).

 

[DavidMc]

My husband recently went to an amazing course by Bill Zheng in Melbourne (my turn next year). If you really want to take your journey to another level where there are no limits and where you are your only barrier to success - you have got to check this out.

Hi there Carolyn,

Did you husband do the 90 day mentoring program or just the one day seminar? I went to a one day seminar and thought it was great and am looking for some feedback on the 90 day program.

Cheers,

David.

 

[Carolyn]

Dom

He did the 90 day program. the only reason I didn't do it at the same time - was because of where we live we had to be away for 2 nights as we couldn't get flight connections. We didn't have anyone to look after the girls at that stage - so I will do it in the new year - can't wait.

Russ is definitely a thinking, verifying type, ex suit wearing , show me the bottom line kind of driver (management consultant) not a stereo typical earthy spritual type as you might think is the type of person who would go on this course.

He was really ready to do something like this and it has been great already - it is just the next step for us in where we want to head.

The interesting thing is that Bill spent approx $400 000 over the last X years doing courses with billionaires/mulit millionaires in the US and Europe and this is the course he has developed from what they practise.

You have to want to change and to commit to facing your own issues. I think he is doing one now and then not till after holidays.

It was also Bill's finance strategies that also showed us that we could get out of the "rat race".

I really admire the man.