Our 1st equity Mil.

[Dazz]

Does it feel any different having that million or two in equity? Do you feel wealthier? Has the wealth mindset changed?

Good question Daniel Lee.


From our point of view, the only material difference is that I no longer need to go to work. That feels different to normal.


The house is the same.
The cars are the same.
The clothes are the same.
The holidays are similar - perhaps a little more frequent and a little flasher.


I guess it depends on what measures you determine make you "feel" different. Lying on a beach every day of your life sipping on a pina colada might do it, but I don't know one wealthy person that does that.


I believe the thrifty aspect of wealth creation in the early stages are naturally carried through as they form into habits. If they don't form into habits, you'll never get there in the first place, so it won't matter.


The big differences I have noticed are ;

1. You laugh more at the gangster shows where the baddies get all hot and bothered and go around killing people over some dispute worth 50 or 100K and you think - how petty. Why kill someone for such a tiny amount of money.

2. Banks treat you slightly better I suppose.

3. The everyday small domestic expenses become irrelevant. It's hard not to take notice of course because of that by-now ingrained thrifty mindset, but it's inconsequential to turn a blind eye to it and get slightly ripped off.


All up, nothing earth shattering to tell you the truth. Life just goes on. One nice side effect is one can concentrate nore on one's health, and the every day goings on with the children a little more, rather than feign interest in your boss' very important agenda....whatever it may be.

 

[D.T.]

Only difference is I'm on the countdown of quitting my employed job ( 39 days and counting)

Great kathryn, im in awe. I'm counting down the years until I can say the same as quoted.

 

[VYBerlinaV8]

Having a million in equity doesn't feel any different at all. Nothing changes.

 

[daniellee]

Hi Agent007, Kathryn d & Dazz,

Thanks for sharing for your thoughts.

Sighs... I am still as thrifty as even, probably only a little more relaxed about the daily expenses.

What got me thinking was when I got irritated at myself over printing a document at home instead of at work. That compounded with being down to 1.3 persons income and feeling like I am not moving forward financially.

I will have to sit on this issue for a while.

Cheers

Daniel Lee

 

[jingo]

My question for those who have got to $1m or $2m net equity fairly quickly is this...have you acheived this level of net equity mainly as a result of the large size of gross property holdings (i.e. $4m gross property value going up 7% p.a. means net equity increases another $280k in a year)?.

My wife and I have gotten to this position gradually and we started with a small asset base. (I think our net worth was something like $90,000 in 1998). - We first bought our PPOR in 1998 and started investing in 2001. We then bought IP's over the next few years when we were able and are looking to buy again soon. We reached the 2M equity mark in December last year. (Exclusive of super, but inclusive of PPOR).

Our aim is to gradually wind our work down over time and work part time. This will free up time for travel etc. Now that the asset base is of a reasonable level we can let time do it's thing.

I suppose it mostly comes down to what level of property capital gains an individual predicts for the next few years.

This is true - looking back, we built our asset base during the boom years which certainly helped. (All property is in Melbourne). Next few years will be different no doubt.

 

[jingo]

Agent007 (and other established millionnaire forumites),

Does it feel any different having that million or two in equity??

The difference I feel is that I know that I am slowly moving towards my goal of being able to work part time and spend more time doing things that I want to do. (Eg spend time with family, travel, etc).

Agent007 Do you feel wealthier? Has the wealth mindset changed?

The wealth as such doesn't interest me. (As funny as this sounds). I am wanting to buy time and the best way to do that is to build wealth which will create an income stream independent of paid employment.

Agent007 (and other established millionnaire forumites),I was saying to my wife just the other day that even with two IPs, I still feel somewhat poor and struggling. Now with a 7 month old kid, it seems at times we are not going forward financially.

Regards

Daniel Lee

It takes time and certainly sacrifice. Over time our IP's will continue to grow in value and the income will cover costs to enable you to buy more etc. The momentum will build.

Regards Jason.

 

[kathryn d]

The difference I feel is that I know that I am slowly moving towards my goal of being able to work part time and spend more time doing things that I want to do. (Eg spend time with family, travel, etc).



The wealth as such doesn't interest me. (As funny as this sounds). I am wanting to buy time and the best way to do that is to build wealth which will create an income stream independent of paid employment.




It takes time and certainly sacrifice. Over time our IP's will continue to grow in value and the income will cover costs to enable you to buy more etc. The momentum will build.

Regards Jason.

Jingo,
Yes, that is very much how it is.
Especially like the part where you say you are buying time.
I never wanted to be reliant on government pension in retirement.

So I always regard any governemnt/pension money as icing on the cake.

My co-workers, who don't know me quite as well, ask will I be able to get my company pension early. That pension is such a small pittance (maybe $100-$200 month) and it would be 5-10 years before I even qualify.

 

[kissfan]

We reached the 2M equity mark in December last year.

Our aim is to gradually wind our work down over time and work part time.

Now that the asset base is of a reasonable level we can let time do it's thing.

Hi jingo

Re the winding the work down, do you intend on your cashflow to come from incresed rents (that has increased over the years) or are you intending on LOE from the growth from the portfolio.

Always interested to see how others are funding their lifestyle using their investments.

Regards
Marty

 

[jingo]

Hi jingo

Re the winding the work down, do you intend on your cashflow to come from incresed rents (that has increased over the years) or are you intending on LOE from the growth from the portfolio.

Always interested to see how others are funding their lifestyle using their investments.

Regards
Marty

Hi Marty,

As the cashflow increases (from rent increases and debt reduction) my wife and I will gradually reduce our time at work. It will be a gradual process. We are not planning to LOE. In the meantime we are stashing cash into offsets and are looking to buy shares to generate future income.

We are planning to take a year off work in 2013 to travel (using long service leave entitlements) and will most likely return to work part time after this break. That's the plan at this stage anyway!

Regards Jason.

 

[kissfan]

As the cashflow increases (from rent increases and debt reduction) my wife and I will gradually reduce our time at work. It will be a gradual process.

In the meantime we are stashing cash into offsets and are looking to buy shares to generate future income.

Thanks for the reply jason.

Looks a very sensible approach and very similar to the path I am taking.

Regards
Marty

 

[el caballo]

The big differences I have noticed are ;

1. You laugh more at the gangster shows where the baddies get all hot and bothered and go around killing people over some dispute worth 50 or 100K and you think - how petty. Why kill someone for such a tiny amount of money.

Extremely good!

 

[The_Bludger]

1. We got a cleaner in weekly as well as an ironing lady. I work full time, wife works part time. This has been the best thing we did as it allows us more time to spend with kids and do our own thing on weekends. Only costs us about $100 per week.

2. I don't look for bargains any more(Talking about day to day stuff, not IP's) and willing to pay extra on a item that I would normally hunt around for at a better price.

3. I don't feel like a millionaire however, far from it.

4. Still worry about being financially free. Don't know when this will come, probably never as it's a mindset thing. When is enough enough?

5. I realise I need to make hay whilst the sun shines(and that's now). Both of us on good incomes, so got to make the most of it for at least another 5 years.

6. Bought a new car and thought, what's $50k? Chicken feed. I suppose my mentality is changing a little.

 

[monty python]

The biggest milestone for us was paying off our PPOR earlier this year.
This came about by re-thinking our share investments, selling some we had lost interest in, using this cash to pay off the mortgage, and borrowing from IP equity to buy other/better shares. Recycled bad debt into good debt.

I guess it's nice to look at the total $$ equity, but the best feeling is knowing that we own our home. We may wish to borrow against it at some point in the future, but we have a fair bit of borrowing capacity elsewhere so don't need to at this point.

As others have said, it gives us some freedom, but as we're both in our late-30s with children at school, we have no wish to stop working - it's not like we can just take off and travel for months on end - it's just nice to know we can work less if we want to. Also, the thrifty-mindset reduces a bit!

 

[DJBarnstar]

Wow, very inspirational.
It currently feels so far away though and that it is moving too slowly.
We are still just 30 and it just seems such a hard slog to get anywhere.
How do you keep your motivation up when all you fell like you are doing is paying Rates and Strata and maintanence bills.? I know we have good equity (no where near a mill though), but we live like porpers to get by.
End Rant.....

 

[Deltaberry]

Running spreadsheets actually keeps me motivated as it gives me a proxy of where I'm at. I like to think of what I'm doing as a mini form of PE.

 

[Gools]

Same here. Nothing like putting some figures into Excel and doing a bit of accrual accounting to keep you on the right path. A dollar saved today is equal to $2 by about 2020? Not that we try and save every penny, we try and enjoy today too but it helps keep you pushing forward to the target (whatever that might be). Plot a future projection graph of your assets and tell me it doesn't keep you motivated and makes you feel like the rates and fees are just a drop in the ocean.....

Gools

 

[jingo]

How do you keep your motivation up when all you fell like you are doing is paying Rates and Strata and maintanence bills.? I know we have good equity (no where near a mill though), but we live like porpers to get by.
End Rant.....

Hi DJBarnstar,

Would it help you to set up a line of credit against one of your properties, pay the property related bills on here and then when you get your tax return/s pay down the line of credit? You could do this on an annual basis and you wouldn't feel like you were using your cash to pay for these expenses. In the meantime you could save as much money as feasible into a Home Loan Interest Account - thereby building up cash reserves to use as a buffer.

Use your equity in your properties to help you hold them for the long term. I too was like you until the penny dropped and a forumite (extremely successful one who doesn't post much now) explained this to me. It helped no end!

Regards Jason.