Old workers mentality

Hi everybody

I just wanted to post a little thing that happened to me today.

I was talking to my Boss who is almost 60, he has been working full time all his life and has owned a business for 10 or so years.

He wants to pack up and retire very soon (better start looking for another job then I guess)

We got to talking about his assets.

Assets
Own home fully paid out worth $500k

Business fully owned at $400k for building and around $400k for stock.

One rental unit fully paid off worth $330k returning $450p/w rent.

Unsure how much super. Has SMSF.

He plans on selling the business which could take a few years, could take weeks also but who knows.
He will purchase another one or two properties and live off the rents with the profit of the sale of business.

I also told him it would be good to know that if he ever wants anything he feel cannot afford like a new boat for instance, that he could easily pull $50k from a credit line and either pay it off or leave as is but he said this to me

"There's no way I'm going into debt again, I've been paying off loans all my life and I don't want anymore"

It was then I realised that this is one of the major reasons those who've worked all their lives aren't much richer than they end up. They're simply afraid of debt and don't understand the leverage it could, or could have bought to their table.

He said to me " its ok for you young people who don't make much money because you've got all your lives to pay it off"

He also asked if my newly aquired principal place of residence was interest only or P&I, he sighed when I told him interest only but was in better spirits when I told him it was the only way the bank would let me buy lots of other houses as well so I was much further exposed to the market.

Just had to tell. I respect the man for all he's done for us as employees and also the achievement's for himself and Family.
Hes done very well for someone who did not really dabble in any investments until he bought the 1 investment unit a year or so ago.
 
I don't think we can ever really judge one's decisions in life without knowing what they were brought up with or have lived through. Whilst I agree with your thinking investor2009, have you ever thought that we are in a lucky situation today to be able to do this. People who grew up through the depression for example or had parents that lived through it (and therefore may have received some influence from their parents), may be less likely to take risks because they've seen what happened when they did. I've heard stories of some distant relative of mine who owned a fair amount of property before the depression and lost it all during it (rent couldn't be paid, then bills and repayments can't be made and bye bye investments). A few years ago, we were cleaning out my great aunt's estate and found a few wads of cash stashed in her belongings. Again, that seems absolutely insane to us, but then we've never lost our life savings when banks crashed and then are so poor we can barely feed ourselves. I think we need to consider ourselves lucky (hopefully it will stay that way) and make the most of what we can with what we have and respect decisions made by previous generations who have lived through things we hopefully will never have to face.
 
It has nothing do with age, its the amount of risk a person is willing to take.

You will find there are a few Somersoft members in their 60s and coming up to 60 who have not been risk averse and who are enjoying the benefit in their older years. :D

Chris
 
"There's no way I'm going into debt again, I've been paying off loans all my life and I don't want anymore"

It was then I realised that this is one of the major reasons those who've worked all their lives aren't much richer than they end up. They're simply afraid of debt and don't understand the leverage it could, or could have bought to their table.

.


Anyone over 40 has seen what trouble too much debt can get people into.

I started work on the farm in 85. Dad bought another place so we could be bigger. Interest rates went from 11% to 16% in a few years. We were paying 23% at one point since farmers were regarded as a bigger risk. Nearly lost everything, and it's why I'd never hold the amount of debt some on here are proud to boast about.

See ya's.
 
he's 60 dude! why TF would he want MORE debt?

he's prob happy - the business wil reap a windfall he could put into a high yielding share portfolio and just leave it.

with enough rents coming in and minimal outgoings he's prob set for life with his income. think about it - no mortgages. if i had no mortgage i could live off $500 a week.
 
Gotta agree with Blue card - the guys doing ok. Hes worth somewhere between 1.5 and 2 million bucks! He is in the top 2 percent of rich people on the earth!

Give him a break hehe!
 
Gotta agree with Blue card - the guys doing ok. Hes worth somewhere between 1.5 and 2 million bucks! He is in the top 2 percent of rich people on the earth!

Give him a break hehe!

Totally agree here. Not too many 60yr olds with this much equity. All paid off.
I think he has done well for himself considering the fairly conservative generation he is in.

As TC said the older ones amongst us have seen what has happened and what could possibly happen again. I also do not wish to go too far out on that limb but hey I aint too conservative either.

Good luck to him
 
I agree this particular man has done very well - I'd be more than happy to have assets exceeding $1M all paid for when I'm 60, plus a PPOR paid off.

My comments were more directed towards a generalisation of the older generations and as to why they may not wish to get themselves into too much debt. I agree with a few of the others here, I too am going to be a bit on the conservative side - I won't be borrowing and borrowing until the banks say no. I have my goals to set myself up comfortably for my future, whilst enjoying life on the way and not getting into an insane amount of debt.
 
He's doing fine. I agree with him that its a great feeling having no debt. (the only debt i have is low LVR cashflow +ve IP's)

My first priority was to pay out the ppor mortgage years ago. A lot of people disagree with that strategy but its priceless security fro my wife and kids and separates everything (in a financial and risk sense) i do from the ppor.

I've seen people with even moderate debt do fine when things are going well but when things turn a bit south, they struggle (wife has to go to work, put kids in state school, severe budgeting etc)

If you have no or very little debt your lifestyle sort of never changes regardless what the economy, interest rates, the neighbors etc are doing. It doesn't affect you. And that is a fantastic place to be in.

He sounds like a very smart man to me. Only time & experience can give you that perspective. No theory will do it.
 
One of the earlier legal matters I worked on was for a small lender that was suing its barrister/solicitor/business clients for recovery of unsecured line of credit funds. This was in 1990. The maximum unsecured line of credit loan was $50k. The default rate of interest was 27% and as the unpaid interest compounded the amount owed quickly blew out.

Many of these barristers/solicitors and business people have gone on to acheive considerable success since.

The court default rate of interest was 19.5% if I recall correctly and RBA rates were about 17.5%.
 
You can still loose all your money even if it is in a bank, even nowdays

My in laws in the last couple of years put all of the proceeds from the sale of their PPOR in the UK into a term deposit with a bank in the UK. They thought they were doing the right thing as they were going to emigrate to Australia to be with their kids and grandchildren.

The bank collapsed and they lost all of their money. All they have is 60k put into a bank account here.

They are 64 and 61 and have no hope in hell of ever regaining that lost money.
 
My first priority was to pay out the ppor mortgage years ago. A lot of people disagree with that strategy but its priceless security fro my wife and kids and separates everything (in a financial and risk sense) i do from the ppor.

my plan exactly.
 
I think your boss has done really well!

He could have more if he just always had at least a little bit of debt working for him, no need to ever fully pay the lot off, but he's obviously done very well and having full ownership of everything, with no debt at all would feel very secure.

If i was in his shoes today then i'd be out shopping for more investments and for more loans for sure, but maybe if i was his age i'd probably also say "fcuk it, enough is enough!"
 
Hi Investor2009

The thing with us Baby Boomers is that back when we were in our twenties/thirties/forties, real estate investing really hadn't been invented to the extent that it is today. There were no seminars, books, TV shows or any real information like there is now on just how to go about RE investing . If people did it ,it was pretty much hit and miss and the only way to learn was by experience. And few did it anyway. Now RE investing is dinner table talk and everyone has an opinion and is a bit of an expert if you believe what they say. Plus now with the internet, all classes of investments have become more transparent and therefore safer if you care to do the research before you dive in. So yep, us old fogeys blew lots of opportunities because of ignorance and lack of knowledge of the subject. That's why there is no excuse for a young person today with all the readily available info and mentors around, to not do it right and make sensible RE investments for the future. But human nature being what it is, I would bet that the % of people who retire wealthy will not change much in the future, as information or not, the majority of the population will still continue to live and spend for the moment and put investing in the too hard basket. :)
 
When I'm 60, I won't care how much debt I have - as long as the income attached to that debt can pay off all the loans easily and afford me a bloody good lifestyle on top. ;)

Mind you, by then I might be into the frame of mind to sell off some assets to pay out the debt, but we'll see.

Look at Warren Buffett. He's what; 70 or so?

Last year during the peak of the GFC he spent another few $billion acquiring some more businesses.
 
It's different stages in life and therefore different generations, when he was a boy, you were very wealthy if you were a millionaire. Forty years ago a mate of mines father won tattersals lottery of 10 thousand pounds (20,000 dollars) and invested this and retired.

As far as your boss is concerned, I would think he's done well to be where he is compared to the majority of his peers, he's run a business, probably raised a family, paid his bills, and accumulated more than he ever thought possible.

A lot of it is relevant to happiness more so than bulk wealth, you need to enjoy the time aswell, I am at the stage somewhere between having my first heart attack at 48, and burying most of my mates in there late fifties and early sixties.

Something to consider.
 
I plan to have zero debt at age 60. I'd love to have zero debt at age 45.

I think that while everyone has a different tolerance to risk, is worth understanding that the younger you are, the more risk you can generally take.

My plan is, and has always been, to stop buying more assets with borrowed money by the time I'm 40. That way I'll have 5-8 years to get the whole portfolio generating a nice after tax income (it already makes positive cashflow after tax), and pay the debts get paid off from there.

My goal has always been to have income generating equity of $3M making me about $150k per year (all in 2005 dollar terms) by the time I'm 45. If I can achieve this and get to a point where there's no debt, so much the better. For me, it's about moving from 'acquisition phase' to 'consolidation phase', and finally onto 'living comfortably without having to work phase'.
 
Whats' wrong with ppor fully paid then let the government of the day to take care of us baby boomers ?! We worked hard all our lives and paid enough taxes, it's time for us oldtimers to be looked after.
 
Hubby's parents were on the pension. Fully paid home, fully paid car, fairly new appliances and they did quite well. Now his dad is on his own and manages really well on the single pension with a small DVA supplement. Complains that he is getting more money than he needs.
Marg
 
Whats' wrong with ppor fully paid then let the government of the day to take care of us baby boomers ?! We worked hard all our lives and paid enough taxes, it's time for us oldtimers to be looked after.

because it's an entitlement mentality that has caused problems for those workign within it, like the pension not being indexed to CPI.

live by the sword, die by the sword.
 
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