Please talk some sense into me....

[steveadl]

The worlds fastest ambulance.....

Wouldn't be the world's fastest police car though! The Italians came up with this:

http://www.itechnews.net/2006/11/17/lamborghini-police-car-in-italy/

Not to be outdone, here come the German officers:

http://www.businessweek.com/autos/content/dec2006/bw20061207_417940.htm?campaign_id=rss_daily

 

[alexlee]

As I've said previously, my goal was to buy my PPOR asap and then spend the year doing as much locum work as i can and knocking off as much of my mortgage as i can.

In terms of financial independence, that's not a very good plan.
Alex

 

[aussieboy2010]

In terms of financial independence, that's not a very good plan.
Alex

Could you please elaborate?

 

[coastymike]

Well I can tell you that this is a superb vehicle because it is exactly what I drive for my every day car. Now let me give the caveat. I am 35 years old and have already made quite a few million through property, shares and business investments.

My first car was a VB commodore, second a Nissan Pulsar, third a Calais, fourth a BMW, fifth a Porsche Boxster S and BMW 5 Series and now added to that a Porsche Cayman S.

My advice. Forget the luxury cars until you have $1M equity at a minimum. I would say now at least $2M. I can assure you that by delaying the decision and waiting 10 years then you will easily have accumulated that sort of wealth on your income levels. Stay the course and it will come.

Advice from someone who has been there and done it.

 

[alexlee]

As I've said previously, my goal was to buy my PPOR asap and then spend the year doing as much locum work as i can and knocking off as much of my mortgage as i can. This was the plan until i saw that car, thus my reasons for coming on here and asking for peeps to slap some sense into me.

You buy a PPOR and pay it off as quickly as possible. What then? You still don't have anything that's income producing, and you have a home you're emotionally attached to. You're more likely to spend extra money improving the place than borrow against it to buy other assets.

A better plan would be to buy assets (IPs, shares, etc) FIRST, build up your wealth and then buy your PPOR when you're ready to settle down. Gives you more flexibility about where to live. For example, you might decide you want to go locum in England.
Alex

 

[JIT]

That's almost the equivalent of having a weekend break.

No it's not! - you just finished a night shift, so you might have to sleep the next day, and might take 24-48 hrs to adjust. If you're lucky you might have a quiet night and sleep right through the night without an annoying call at 3am, but no guarantees there!

...This was the plan until i saw that car, thus my reasons for coming on here and asking for peeps to slap some sense into me.

If I haven't slapped any sense into you still despite my efforts, I'm not wasting my time any further...buy/lease the Porsche and see how you go.

 

[JIT]

You buy a PPOR and pay it off as quickly as possible. What then? You still don't have anything that's income producing, and you have a home you're emotionally attached to. You're more likely to spend extra money improving the place than borrow against it to buy other assets.

Probably upgrade to a more expensive PPOR, and continue the cycle of spending!

 

[phil]

Just catch the train and bus like most people your age started out doing. It didn't hurt them / us, and it will do you the world of good.

Phil

 

[Perp]

Just catch the train and bus like most people your age started out doing. It didn't hurt them / us, and it will do you the world of good.

Phil

Tee hee, Phil, I just can't get Monty Python's "The Four Yorkshiremen" sketch out of my mind when you say this...

http://www.phespirit.info/montypython/four_yorkshiremen.htm

 

[coastymike]

Just for the record not all of us who own Porsches are 60 year old, balding fat men with blonde bimbos who are try hards pretending to be wealthy. Some of us have in fact made our own wealth and worked hard for it and rewarded ourselves and like the car. Funny how people complain about a $150K car but I doubt they would complain about my $5M PPOR. Anyway end of ***** season.

 

[aussieboy2010]

You buy a PPOR and pay it off as quickly as possible. What then? You still don't have anything that's income producing, and you have a home you're emotionally attached to. You're more likely to spend extra money improving the place than borrow against it to buy other assets.

A better plan would be to buy assets (IPs, shares, etc) FIRST, build up your wealth and then buy your PPOR when you're ready to settle down. Gives you more flexibility about where to live. For example, you might decide you want to go locum in England.
Alex

I buy my PPOR, put as much money into paying it off as possible extract equity from it and purchase IP's. I never said i would pay off the house completely before i began investing.

What is wrong with the following logic? Every dollar you use to pay off your mortgage is essentially the equivalent of getting a 7% (or whatever the currect Interest Rate is) return, since you don't end up paying interest on that dollar of mortgage. And it's no risk.

The investment properties i'm interested in anyway aren't properties that will be income producing. Not particularly interested in purchasing in the country atm and units don't appeal to me. I'm interested in properties with land for investment purposes and from what i can see it's very very difficult to find said properties that are neutrally geared let alone positively geared to produce income.

I don't profess to be an expert on this matter so please let me know if my logic is off.

 

[coastymike]

That is exactly what I did aussieboy. I purchased 5 acres in West Pennant Hills back in 1992 (with the help of my parents ) and paid it off as quickly as possible. Once I had enough equity in that place I leveraged up to 60% (which is what I felt comfortable with) and purchased IP's. I think it is a safe and sound strategy.

 

[alexlee]

I buy my PPOR, put as much money into paying it off as possible extract equity from it and purchase IP's. I never said i would pay off the house completely before i began investing.

You're kidding yourself. As soon as you move into your PPOR you're going to be emotionally attached to it. Extra money will more likely be spent renovating the thing or buying things to put in it.

What is wrong with the following logic? Every dollar you use to pay off your mortgage is essentially the equivalent of getting a 7% (or whatever the currect Interest Rate is) return, since you don't end up paying interest on that dollar of mortgage. And it's no risk.

And every dollar you DON'T pay into the mortgage, but buy another property instead earns you more than 7% a year over the long run. By trying to pay off your mortgage you're decreasing your leverage, and the opportunity cost is all the assets you DON'T buy because you're chasing a 8% return on your money. It's no different from saying 'I'll put my savings into a high interest bank account instead of buying investments'.

The investment properties i'm interested in anyway aren't properties that will be income producing. Not particularly interested in purchasing in the country atm and units don't appeal to me. I'm interested in properties with land for investment purposes and from what i can see it's very very difficult to find said properties that are neutrally geared let alone positively geared to produce income.

At first, anyway. I can find metropolitan properties yielding 5%. With the 7-10% increases we're seeing in rent.... in any case, it wasn't so long ago that you COULD get neutrally and even positively geared properties in the capital cities. Those times will come again if prices go down, rents go up and interest rates go down.

Your logic is fine, but you're not seeing the bigger and long term picture. Your plan is to aim to not lose: you're focusing on not taking risk. As a young person with a good income and no dependents, you can afford to take more risk.
Alex

 

[JIT]

Alex he's still weighing up property vs. Porsche (+ live with parents) though.

A PPOR OR IP is still better than the Porsche to start with.

 

[aussieboy2010]

You're kidding yourself. As soon as you move into your PPOR you're going to be emotionally attached to it. Extra money will more likely be spent renovating the thing or buying things to put in it.



And every dollar you DON'T pay into the mortgage, but buy another property instead earns you more than 7% a year over the long run. By trying to pay off your mortgage you're decreasing your leverage, and the opportunity cost is all the assets you DON'T buy because you're chasing a 8% return on your money. It's no different from saying 'I'll put my savings into a high interest bank account instead of buying investments'.



At first, anyway. I can find metropolitan properties yielding 5%. With the 7-10% increases we're seeing in rent.... in any case, it wasn't so long ago that you COULD get neutrally and even positively geared properties in the capital cities. Those times will come again if prices go down, rents go up and interest rates go down.

Your logic is fine, but you're not seeing the bigger and long term picture. Your plan is to aim to not lose: you're focusing on not taking risk. As a young person with a good income and no dependents, you can afford to take more risk.
Alex

Mate, thanks for your response.

Trust me, i wont get attached to my first home. My taste is too expensive for me to get attached to my first home when later on I can afford the home of my dreams.

Understand what your saying about opportunity cost but you're talking as if performing at the norm is a bad thing. Furthermore, the 8% return is gauranteed, risk free. Considering the uncertain times that are ahead, i think that's a decent move. How is owning your own home a poor investment strategy?

 

[aussieboy2010]

Alex he's still weighing up property vs. Porsche (+ live with parents) though.

A PPOR OR IP is still better than the Porsche to start with.

haha

mate, i'm gonna follow the advice of the majority here. Porsche will have to wait.

 

[alexlee]

Trust me, i wont get attached to my first home. My taste is too expensive for me to get attached to my first home when later on I can afford the home of my dreams.

Bet against human behaviour at your peril. In your case, you're probably going to keep selling your own PPOR and upgrading. You'll end up with a kick-a&s PPOR in your middle to old age with no other assets to speak of. You don't have to believe me, of course.

Understand what your saying about opportunity cost but you're talking as if performing at the norm is a bad thing. Furthermore, the 8% return is gauranteed, risk free. How is owning your own home a poor investment strategy?

Mate, what did you score in your TER? What job are you doing? Is it bad just having a 'normal' job? Your whole life has been abnormal. Why slum it when it comes to your money? Performing at the norm (read, everybody else) means you will probably have a decent retirement at 65, but that sure isn't going to include the expensive toys you already want NOW, much less in 40 years. 'Normal' people do NOT retire with Porsches, I'll tell you that.

Because you have expensive tastes, you need an overperforming strategy, no? In any case, why aim for mediocrity this early on? Go back to mediocrity if you stuff it up.
Alex

 

[JIT]

Bet against human behaviour at your peril. In your case, you're probably going to keep selling your own PPOR and upgrading. You'll end up with a kick-a&s PPOR in your middle to old age with no other assets to speak of. You don't have to believe me, of course.

Sorry Alex you're wrong there, he'll defintely have another 'asset', ie. a Porsche by then .

 

[aussieboy2010]

Bet against human behaviour at your peril. In your case, you're probably going to keep selling your own PPOR and upgrading. You'll end up with a kick-a&s PPOR in your middle to old age with no other assets to speak of. You don't have to believe me, of course.



Mate, what did you score in your TER? What job are you doing? Is it bad just having a 'normal' job? Your whole life has been abnormal. Why slum it when it comes to your money? Performing at the norm (read, everybody else) means you will probably have a decent retirement at 65, but that sure isn't going to include the expensive toys you already want NOW, much less in 40 years. 'Normal' people do NOT retire with Porsches, I'll tell you that.

But i'm working off a higher base than the "norm", in terms of salary?

 

[GreatPig]

And every dollar you DON'T pay into the mortgage

Is a dollar of non-deductible debt you're left with.

you're probably going to keep selling your own PPOR and upgrading. You'll end up with a kick-a&s PPOR in your middle to old age with no other assets to speak of

Most people would be happy with just a kick-@ss PPOR by their middle age, instead of an ordinary one with a big mortgage.

GP