Why are you doing this?

[Of The Vultures]

I was talking to some friends the other day, a married couple. The conversation turned to investing, property and the things one must give up to achieve their goals.

It was interesting because they questioned my reasons for trying to attain financial independence. My "why" relates to freedom. I'm not pursuing money for its' own sake, but money buys time and that to me is freedom. Freedom to do all the things I don't currently have time and/or money for, such as read/travel/study (there's more, but I'll keep it succinct). Their response was that the only time that matters is NOW, and they are not willing to put their lives on hold and live for a future which may never come.

All the things I want to do, they are doing now. They read, they travel and that is their definition of freedom. (I do read... but they're investing books not literature!)

My (probably unrealistic) goal is to be out of the paid workforce within 5 years. I don't consider that to be a long time frame... but I can't help but get slightly uncomfortable at the suggestion I'm living for the future which may or may not eventuate. On the other hand, if I do nothing I know I will regret it so my resolve to get to my goal has not weakened.

So fellow forumites, please kindly share your "why" and what you are willing to give up and for how long, to get there.

Cheers

 

[westminster]

That's a tough question. We gave up a lot for 7yrs to build our PPOR in 2003. Then we gave up other stuff to have kids in 2006 and 2008 (to add to our 1999 progeny). Then we scraped off more stuff and bought an IP in 2007.

Finally in 20011 we started rewarding ourself a little and took our first family holiday. And wow it was great! I decided then that I needed some balance.

So my plan is probably more longer term now but I don't want to rush it. I need to enjoy some time now with the kids who are 4, 6 and 13. My day job is good and I love it so I don't mind working too much and I get a nine day fortnight which helps with the balance.

So I will keep growing our IP portfolio - 3 this year, 4 next year. I don't think it will keep growing at that rate though! We'll see The goal will be to earn enough to give up the day job - but the competition from my day job is pretty steep as it's a good job.

Next week we are off on our family holiday. It's all paid for already and I shall sit by the pool and enjoy every minute off it.

 

[natedog]

To me it's all about finding that most difficult to get right "balance" between living and enjoying the moment AND making good choices for a more secure financial future.

If you can find this balance, then it becomes less like sacrifice and more about living the way you want from a holistic point of view.

I actually take comfort from the fact that we have put things in place for our future which I know makes me more relaxed RIGHT NOW than if I didn't have those things in place.

So this isn't a sacrifice in my eyes....it's giving me an instant return (psychologically) and my wife and kids get a calm happy husband/ dad.

Not sure if anyone can relate?

 

[Dazz]

Their response was that the only time that matters is NOW, and they are not willing to put their lives on hold and live for a future which may never come.

...but then, if you choose that line of thought, that word 'may' becomes mightily important.

Statistics prove that the vast majority of people do make it to old age....and that is increasing all the time.....so it might sound contrite to say that a future may never come and you could be hit by a bus or a great white shark tomorrow....but chances are you won't, and you'll actually need to give some forethought to how you are going to fund your life.

Like most things in life, the good things come from doing the hard yards.

It ain't easy, that's why "most people" end up poor, cos they weren't prepared to sacrifice whatever it took to better themselves. It's only when you see them decades later that the shine starts to wear a bit thin on their argument.

 

[joeExpat]

"Life is short and unpredictable, so have dessert first".
A lot of people live by that, & it pays sometimes.
If you sacrifice too much, you can end up missing out altogether.

 

[spludgey]

"Life is short and unpredictable, so have dessert first".
A lot of people live by that, & it pays sometimes.
If you sacrifice too much, you can end up missing out altogether.

True, that's why you have to make sure that the main course in life is palatable as well!

I could spoil myself a lot more than I currently do as I'm putting about half my take home pay into IPs, but I personally don't feel that I'm missing out on anything. For example, all my overtime money is play money, I can spend it on whatever I want, holidays, gadgets, whatever.

Delayed gratification works for me, but it doesn't work for everyone.

 

[wylie]

Dazz's post is pretty spot on in my book. What I believe you have to watch out for is being "tight" way past the time you can let loose a little.

We lived tight for many years, but always with the knowledge that we could sell an IP and live it up a little. Luckily, our version of living "tight" didn't ever mean we missed out on things that were important to us. There was always food on the table (but sometimes not enough money for a beer to go with it).

When the kids were little, we couldn't afford (without selling an IP) to go on a big holiday, but honestly, with little kids and even with teenagers, friends having sleepovers, days out and a week at the beach were what they liked for their holidays. A big overseas trip we took when they were 17, 14 and 10 was enjoyable, but it was hard work too (packing, trying to please three kids with different ideas of what they wanted to see and do, negotiating the same sibling rivalry and arguments we had at home, but in a different country).

When our oldest went to New York when he was 20 we gave him some spending money. When he went to England last year, we gave him $1000 to see Paris. At this stage in our lives (53 and 52) we can afford to help them out in their travelling and have been able to help the oldest into his second property in the form of a family loan to be repaid when he renovates and can refinance.

That is what scrimping during our early years has allowed us to do at this age.

Luckily, hubby and I were not "travellers" and our inability to afford to travel when we were younger was not a problem. I had girlfriends who bought new cars every couple of years or travelled. I wanted to buy a house. We all choose which spending path we travel.

 

[HotRod]

Freedom to do what I want, when I want.

My views on the difference between a job and financial freedom:

Finacial Servitude

You give up your personal time and someone else compensates you for that loss of personal time. You will always have to ask someone else for permission to do things in your personal time.

Financial Freedom

You use your own time and you use your own money. You only need to answer to youself.

 

[HiEquity]

A day at the beach, a walk in the park, a bike ride to get the groceries through tree lined streets out in the fresh air with the sun shining. Time with the kids at the playground. Having a BBQ picnic, kicking a footy, throwing a frisbee, flying a kite. Going for a swim, getting out and about, reading, learning, talking to people. Taking the kids to school and to their play dates and parties. Time with friends and family. Time to do some gardening - grow some veggies, do some house / IP maintenance, keep some chooks, take the dog for a walk. Go camping with the family. Do some home cooking. Enjoy some adult time...

These are just a few of the things I want to do with my time. I notice a common theme - hardly any of them cost much at all but they are all very enjoyable and satisfying when I can take the time to do them.

Freedom to do these things such that I can enjoy my work (when I choose to do it), family and leisure time is what I am after. It doesn't have to cost very much or be an expensive lifestyle - I've come to the conclusion that the very best things in life are also some of the cheapest. The rest (overseas trips etc which I've also done) are just window dressing by comparison. Consumer goods hold pretty much no attraction above the basics.

Having said all that, in the first instance, I want to be able to do these things in an environment of financial security for my family. I wouldn't enjoy them at all if I felt our financial future wasn't secure. I'll keep working until I can get that level of confidence, otherwise it's all just a mirage. Hopefully not too far off now...

 

[kum yin lau]

Hi, it was a long time ago but I did it out of FEAR.
A ka-chng moment was 'if money is so important, I must make sure that for the rest of my life, I do not want'

I was afraid that if I were old, I would not have enough money to pay for heating [I get cold in the Winter]

KY

 

[greedy2000]

In my view there are 3 different version of you. past you, present you and future you.

"Past you" has generally screwed you, spent all your money, wasted opportunities and left you with debt.

"Present you" is currently paying for for "Past You's" mistakes and will spend whatever's left over.

"Future you" hopes that "present you" will learn from "Past You's" mistakes and will put aside something for the future.



I wouldn't stress too much about your mates, one day they will see the finish line and realise that don't have enough and there is nothing they can do about it. It's a good thing that "Present You" has "Future You" in mind.

My motto is to live within my means and put away something for my future each pay period. I don't believe in sacrificing everything at all costs to get there but if you are young enough a few hundred dollars invested wisely per week compounds into a very large amount over time with minimal risk.

 

[willair]

I was talking to some friends the other day, a married couple. The conversation turned to investing, property and the things one must give up to achieve their goals.

It was interesting because they questioned my reasons for trying to attain financial independence. My "why" relates to freedom. I'm not pursuing money for its' own sake, but money buys time and that to me is freedom. Freedom to do all the things I don't currently have time and/or money for, such as read/travel/study (there's more, but I'll keep it succinct). Their response was that the only time that matters is NOW, and they are not willing to put their lives on hold and live for a future which may never come.

All the things I want to do, they are doing now. They read, they travel and that is their definition of freedom. (I do read... but they're investing books not literature!)

My (probably unrealistic) goal is to be out of the paid workforce within 5 years. I don't consider that to be a long time frame... but I can't help but get slightly uncomfortable at the suggestion I'm living for the future which may or may not eventuate. On the other hand, if I do nothing I know I will regret it so my resolve to get to my goal has not weakened.

So fellow forumites, please kindly share your "why" and what you are willing to give up and for how long, to get there.

Cheers

No one knows how many weekends they have in life from start too the finish,but i just think 5 years is a bit thin,not saying it can't be done plus the next 5 years may be unlike the last ten,and the ten prior too that,freedom to me is standing behind the 3 Asian Gold buyers at the antique auctions today,looking at their scrap gold buying list and going the extra 20 bucks per bid and take the lot home,they work on 40% markup i work on 20% and all the opals cloured stones are free..

 

[lamp]

Think unless we are born in a rich family and inherit the wealth, otherwise, saving is an essential "first" step in everyone's life towards getting our financial freedom.

My partner and I have paid off our home and have been putting aside almost 70% of our monthly earning saving for our 2nd IP. Our short term 5-year goal is to hopefully we can pay off 80% of our 2nd IP and either acquire our 3rd IP or a small business. A longer term or ultimate goal, say in 15 years later, when I reached 55, my partner 44, we can fully owned 3 properties and an option to keep working or completely retired or run business. We always hope that one day we can own a small business not only can earn enough to cover our daily bills, but can be used as a platform to give those who is less competitive in the job market a chance. Last thing I wanted is to rely on the government to feed me when I became old.

The saving part for us is not too difficult, we simply cut anything that is unnecessary, e.g. rather than using a smart phone, I'm still using an antique outdated mobile phone, don't need an iPad, could have bought a brand new 4WD and look flashy, but still drving my 2000 Toyata Echo, which I bought 10 yrs ago, clothes from K-Mart is just as good. As my partner thinks that I'm a pretty good cook, we don't really need to dine out, probably once a week for a treat

 

[WillG]

please kindly share your "why" and what you are willing to give up and for how long, to get there.

Why I am doing this ...
- so I can do what I want when I want - within reason

What am I willing to give up & how long?
- wastefull expenditure such as expensive cars, house, boats, first class travel etc
- I don't believe you have to sacrifice anything important if you plan properly
- as long as it takes

 

[Godzilla]

Why am I doing this; I sometimes wonder!

The call to action moment occurred 10 years ago, I had started a new job and the representative fom a large superannuation outfit came to the workplace and was addressing the members. In the middle of this spiel, the talking head said "...and then you retire with an annuity and the pension for about half your salary...". The chattering masses all seemed to be nodding in agreement, well you're the expert, I guess that's how it goes. I'm thinking to myself that I'm the only here that seems to believe this isn't a great outcome. A quick calculation on a 5% return on my lump (even though I had been putting in extra) wasn't looking real flash.

A few months later a relative came for a visit armed with the somersoft PIA package and showed me how it works. Eureka! Property investment was revealed as a way a guy on wages can make enough for a comfortable retirement.

One point of conflict that comes to mind is when the non investing friends want us to come along on an expensive holiday or a big night out. You don't want to be spoiler, but disposable cash is tight.

Our biggest sacrifice was being a one car family for 10 years, but there wasn't often a conflict and we are lucky to have a train near by. Eventually the one car thing did start to wear and I was feeling like I wasn't doing anything because Mrs G was taxiing kids here and there. So I bought myself a 2 seater with a fat tax return; a hiace van. Now me and the boy can throw the bikes in the back of the van and go mtn biking, or sleeping bags and fishing poles, it's great.

As we initially acquired more houses money did start getting tight. Mr and Mrs Godzilla were even starting to argue over money. Being on the wrong side of Mrs G's hot nuclear breath is a bad place to be, even when you are right! We were finally starting to get more savvy with finance and we took out a line of credit, used to pay for investment expenses only. which makes more of our wages available for own own enjoyment. Things are sweet in the Godzilla household again.

As HiEquity pointed out, there are so many fun things to do that are free. Go for walks, ride your bike. So I don't feel like we've sacrificed much at all. I think of it more as trade offs, freeing up a car lets us afford one more property. Does the remaining car have to be a big car?

I don't think a person needs a super agressive stategy to be successful. Successful investing is a reward to be savored, and buying a property is always a thrill.

 

[knightm]

Its a great question O T V.

In my opinion this effects everything. As the WHY is what drives you(or in my case, ME)

For me I started with wanting freedom from day job requirements, wanting time with family etc.

The dream has now morphed and enlarged a little. The original goals are there but there is more in the looking glass.

I now see philanthropic and community development opportunities that inspire me to become the kind of investor who can fund them. Being in the social work sectors for nearly 15 yrs I reckon I can now tell the diff between a 3rd gen welfare recipient with their hand out from a project that has legs to make a difference.

I have family living in and having a go supporting small business of locals in Uganda. I have friends doing some amazing youth work in Spain. I have relationships with people in smallish communities in regional Australia with some amazing grass roots work being done with Aboriginal communities and friends volunteering in Juvenile detention centres. I am meeting with a group of professional and other men in my community to see how we can tackle violence and non engaged fathers in our own town.

The work already being done is having impact on lives. The scope for expansion is EXPONENTIAL. I want to fuel that. That costs money. Its an investment I am prepared to make.

That is my why.

 

[The Y-man]

Hi, it was a long time ago but I did it out of FEAR.
A ka-chng moment was 'if money is so important, I must make sure that for the rest of my life, I do not want'

I was afraid that if I were old, I would not have enough money to pay for heating [I get cold in the Winter]

KY

Same reason as KY Lau.

Fear - absolute, dire fear of destitution and poverty. My wife lived it through her childhood and never wanted to be in that position again.

I believe that a motive to move "away from (things you don't like)" is far stronger than the motive to "move towards (things you want)".

I suspect things you move away from can be easily visualised even if they are "imagined" (clear and palpable threat). On the other hand, it can often be difficult for many to clearly picture themselves with (or in) their rewards ("hazy dream")

The Y-man

 

[Part II]

My (probably unrealistic) goal is to be out of the paid workforce within 5 years. I don't consider that to be a long time frame... but I can't help but get slightly uncomfortable at the suggestion I'm living for the future which may or may not eventuate. On the other hand, if I do nothing I know I will regret it so my resolve to get to my goal has not weakened.

What your goals are is dependent upon your chosen lifestyle.
Goals are merely the vehicle but the strategy is how you intend to drive that vehicle and if you want to get there quickly or slowly and live for the future or not. I hope this provides some food for thought.

 

[joeExpat]

Is it really that big of a sacrifice to buy a property ? Does it create that much negative cash flow for some people that you can't do other things ?

If you want to travel do it, you don't have to go overboard, you can travel for a long time cheaply. I traveled a lot when I was younger, sometimes for months, and still do to a lesser extent. I wouldn't trade those experiences for extra wealth in old age.

 

[BayView]

Is it really that big of a sacrifice to buy a property ? Does it create that much negative cash flow for some people that you can't do other things ?

Only when something happens in your life which causes a distinct cashflow change (in the wrong direction).