Well, we took the opportunity to sit down together, and for the last 3 hours the wife and I have gone through our entire financial situation and structure, with a view to seeing if we can do this LOE.....and mores the point feel confident, no matter which way the wind blows, we'll be OK.
We had all the data at our fingertips, managed to squeeze the portfolio (with everything to do with cashflows, costs, incomes, values and debts) onto an A3 page, and we got a few blank pieces of paper, a calculator and our trusty pencil and started doing some projections.
More importantly, the wife did the calculations for a change to involve her more and get a feeling for the magnitude of things. For some reason the looming private school fees are a mental blocker for her, and up until now was unable to mentally scale these imposts.
Also, I wanted to make sure the wife selected the basic assumptions for the calculations, being conservative on both sides of the equation.....that is pumping up the costs to be 1.4x what we'd normally spend and keeping the appreciation rate on the assets down to only 7% p.a. I thought this was conservative given our performance over the last 3 or 4 years.....but who can tell for the future.
So, we finally put down our position and came to the realisation that we need an appreciation rate of 0.25% on our assets to meet our inflated living costs. Even my ultra conservative wife agreed that we would be OK....no matter what.
Our LVR at the moment is 59%. We projected the scenarios forward of me working for the next 15 years, or leaving work and doing what we want to do. Working for 15 years brought the LVR down to 20%. Leaving work and living off equity brought it down to 22%.
Hmmm, working 5 days a week for 15 years doing what someone else dictates whenever they say jump....just so that the LVR can be 2 points lower.....hmmmm...I don't think so.
I'm on a fairly decent wicket, but it's got the point where my salary is totally irrelevant. Owning assets really is more lucrative and more efficient than working. My contract runs out later this year, so it will feel good to inform the boss that I do not wish to extend the contract term.
I'm looking forward to splitting my time evenly between being a full time Dad (getting to go to all of the school events without asking permission from the boss for the odd special day) and doing some industrial property developing on the blocks we already own.
Anyway, I never thought it would come this quickly. It's been 13 years since we signed our very first real estate deal. This compounding curve thingy really does work.
Next cab off the rank I suppose for us is to have a wee chat with the Bank to see if they agree, after all, we'll be sponging off their money.
We had all the data at our fingertips, managed to squeeze the portfolio (with everything to do with cashflows, costs, incomes, values and debts) onto an A3 page, and we got a few blank pieces of paper, a calculator and our trusty pencil and started doing some projections.
More importantly, the wife did the calculations for a change to involve her more and get a feeling for the magnitude of things. For some reason the looming private school fees are a mental blocker for her, and up until now was unable to mentally scale these imposts.
Also, I wanted to make sure the wife selected the basic assumptions for the calculations, being conservative on both sides of the equation.....that is pumping up the costs to be 1.4x what we'd normally spend and keeping the appreciation rate on the assets down to only 7% p.a. I thought this was conservative given our performance over the last 3 or 4 years.....but who can tell for the future.
So, we finally put down our position and came to the realisation that we need an appreciation rate of 0.25% on our assets to meet our inflated living costs. Even my ultra conservative wife agreed that we would be OK....no matter what.
Our LVR at the moment is 59%. We projected the scenarios forward of me working for the next 15 years, or leaving work and doing what we want to do. Working for 15 years brought the LVR down to 20%. Leaving work and living off equity brought it down to 22%.
Hmmm, working 5 days a week for 15 years doing what someone else dictates whenever they say jump....just so that the LVR can be 2 points lower.....hmmmm...I don't think so.
I'm on a fairly decent wicket, but it's got the point where my salary is totally irrelevant. Owning assets really is more lucrative and more efficient than working. My contract runs out later this year, so it will feel good to inform the boss that I do not wish to extend the contract term.
I'm looking forward to splitting my time evenly between being a full time Dad (getting to go to all of the school events without asking permission from the boss for the odd special day) and doing some industrial property developing on the blocks we already own.
Anyway, I never thought it would come this quickly. It's been 13 years since we signed our very first real estate deal. This compounding curve thingy really does work.
Next cab off the rank I suppose for us is to have a wee chat with the Bank to see if they agree, after all, we'll be sponging off their money.
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