What is the general feel of a financial buffer
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Mackay QLD.....so what was your street address again...?
Just renewed my insurance, Smith & Wesson has full coverage!
pinkboy
I have been searching a lot (probably not hard enough) to find the answer to this, i.e. living of equity. My question is the same, I have purchased few properties so far and every time, no matter how much equity I have, I have to provide income. I wonder if low-doc loans any different.
I've got 3 kids as well and wife doesn't work (looks after the kids and this was a decision we've made).
My reasoning is, if I lose my job (I'm in IT), I'll have 6 months to find a new job. So my contingency is;
- I have cash in the bank (against an offset account) that will last me 6 months
- If I can't find a job with same or higher salary, say within couple of months, I might drop my salary expectations and I'll use the remaining cash in the bank to cover the difference (e.g. old salary and new salary). At this stage, my Missus will start looking for jobs too.
- It is highly unlikely that me/my wife can't find a job in 6 months. But, if this happens, I have to start selling on of my IPs which has equity and that will last another 12 months.
My reasoning is, if I lose my job (I'm in IT), I'll have 6 months to find a new job. So my contingency is;
- I have cash in the bank (against an offset account) that will last me 6 months
- If I can't find a job with same or higher salary, say within couple of months, I might drop my salary expectations and I'll use the remaining cash in the bank to cover the difference (e.g. old salary and new salary). At this stage, my Missus will start looking for jobs too.
- It is highly unlikely that me/my wife can't find a job in 6 months. But, if this happens, I have to start selling on of my IPs which has equity and that will last another 12 months.
Hiya
Am i allowed to say my Financial Buffer is my mum?
haha - good old parents.
My 6 year old just told me that I'd be buying her a house when she's older because apparently that's what I do for my clients.....just buy them all houses.
Cheers
Jamie
Just before my wife was going on mat leave I increased the LOC. May be similar steps needs to be taken before we actually lose our jobs.
oh.. don't forget about income protection insurances either. This can kick in if we are unfit to do our normal jobs.
I've always wondered how they determine our "normal job" though...
Does it mean you need to have a trade/quali?
I guess it depends on the policy (did I just answer my own question?
)Hiya
Am i allowed to say my Financial Buffer is my mum?
Is your mum looking to add to her brood
I've always wondered how they determine our "normal job" though...
Does it mean you need to have a trade/quali?
I guess it depends on the policy (did I just answer my own question?
I guess they are can’t expect a brick layer to sit in front of a PC. Similarly they can’t expect me to be a sales person either (I do data modelling). However probably they may expect me to do data entry!
I watch Suze Orman on CNBC and she tells everyone that they should have an 8 months buffer!
But that's fer a basket case of an economy.
For Australia in this day and age, it might be in the order of 3-6 months and might be industry specific.
If you're in the mining/construction industry, it might be higher, services industry might be lower.
But that's fer a basket case of an economy.
For Australia in this day and age, it might be in the order of 3-6 months and might be industry specific.
If you're in the mining/construction industry, it might be higher, services industry might be lower.
I would have said this the other way around the first thing the govt does in a downturn is build ... Anything and the first jobs to go are services jobs .
The GFC was great - think school halls, roads to nowhere and everywhere , plenty of work and plenty of money around.
I wouldn't waste 3 years income sitting around as cash. I try to be 3 years worth of expenses under my loan limits, and have two unencumbered properties, one of them OS where I can live on next to nothing if worst came to worst, and a few hundred thousand in shares that can quickly be converted to cash. Also use motor vehicles as a buffer, that can be traded in above market price, put the lump sum in my pocket and just pay a deposit on a new vehicle, can get back more than original purchase price, of course extra is added on to new vehicle. Have had assets that otherwise would have had to be sold at low points, double doing this.
Having unencumbered properties is the same thing if not a bigger drain on cash...
