Why do high income earners rent?

[see_change]

I am a high income earner, I own a BMW convertible and my own home (not debt free). I've also rented in my life, in suburbs where I couldn't afford to buy at the time. I've spent loads and loads of money, and had a damn good time doing so, yet I have also saved (and continue to save) when I have a goal. So I don't own investment property yet, but I will, and if I don't...well my life will go on and I'll still enjoy it thanks very much. Not everyone wants to stop working. Some of us enjoy our jobs strangely enough!

Everyone is entitled to their opinion and the way they want to run their life but there is no right or wrong way to do things. It depends on your goals and your dreams. I very much enjoy my own home and would personally now hate to rent, and I have never regretted a minute of hooning around in my car with the roof down. I could get hit by a bus tomorrow or even worse become ill (god forbid) and so I live for today whilst I try to sensibly plan for tomorrow in case I get to that ripe old age of 100.

As Kenneth said, lets respect everyones choices. These forums are to help each other where we can, but also to respect that we all want different things out of life and we all live in different ways. As a newcomer to the forums, I have found that responses can sometimes be critical of others choices or suggestions.

Not all of us want to put every cent into investments and live on the smell of an oil rag in order to give up working for someone else. Some of us have busted our butts to earn that big salary and we have the right to enjoy it. Do we not also have the right to become investors as well? And if we don't want to become investors for some reason, does that make us idiots because we don't have a large net worth but we have a BMW??

Am I sensitive...hell yes! Sorry, but my whole life just got shot down in flames in this one forum.

GoddessK

It is your life and you can live it the way you want to , and many of the people of this forum have a focus ( IMHO ) that is toooo extreme the other way.

There's a book around called Ordinary Millionaires which makes interesting reading, first of all because it describes some effective ways to make money , but secondly becuase of the exteme focus that all the people described in the book have to making money.

One guy has no family at all because the only thing he's worried about is making money . He's going to donate his wealth to the government because " Australia's been good to him ...."

There are people on this forum who put down and undermine others (sometimes subtly , sometimes not so ) who don't have the same underlying values that they think are necessary to create wealth.

Learn what you need from the forum and incorporate what you want to into your life and lead your life the way you want to.

Once you've decided what course you want to take in wealth creation, you will out perform the majority of those who are critisising you .

See Change

( personally I'll stick to my Volvo because it's safer , but that's my Priority )

 

[Chilli]

salsa 's dilema as Ken asked

Hi Kenneth,
Thank you for asking.
I am seeking people’s views re the pros and cons of the 2 options (sell or keep) . I understand that the decision would be for me to make at the end of the day..

Here is more info:
I have been a “good person” , I understand the bit about “debt on PPOR is not tax effective etc” hence went small at first, kept increasing value of PPOR with time (sell then buy). May not be the best way but was my best with what I knew at the time.....I now have a PPOR with large equity , but little cashflow.
Have been working all my life and wish to quit very soon if I could make use of the equity to fund for my living expense ( which is not at all extravagant).

I wish to increase/create some cashflow to be able to step into retirement . I also wish to be able to stay living where I am (i.e, not selling the PPOR) because I love it and also because of its tax free CG … SO Guess the dilema is I want to have my cake and eat it too…. Is it possible ??
My PPOR is at a very good location and I believe I can count on its CG in general. It is earning more money for me every year than my day job does, and is CG tax free too …BUT. .all is on paper …here I am still with little cash flow. ….

I could sell my PPOR and invest in something (shares of some sort I don't know much about shares??) to get cash flow but is it a good way as what's earned would be taxed, less (and taxable) CG, …compared to the great tax free CG on PPOR…. Doing it this way I am worried that there is not enough CG to see me through my longevity 100 years of life …. I don’t want to enter into high risk stuff either giving I am planning to retire….

I heard about Steve’s LOE particularly the 1/3 splits very recently…. It sounds like I could stay where I am, use the equity to create the income I need for my soon coming retirement. It means I won’t just sit there consuming all my equity but also getting it working for me… till my 100 +

Steve’s LOE is new to me and I wish to hear from people who have done it successfully…...

I am trying to do my research and home work part of it is by asking views from the great source of knowledge of this forum…. so please do not send me to …a Fin Advisor… (I have already made a time to see one soon ).

Any thoughts would be greatly appreciated.

Regards

 

[willair]

Am I sensitive...hell yes! Sorry, but my whole life just got shot down in flames in this one forum.


all of us are poor in one way or another,but what is the ture definition
of a poor person these days, the auctions are full of repo bmws
they mean nothing,so many people get lost among the details
of secondary concerns and miss the boat.
willair.

 

[ani]

GoddessK

It is your life and you can live it the way you want to , and many of the people of this forum have a focus ( IMHO ) that is toooo extreme the other way.

There's a book around called Ordinary Millionaires which makes interesting reading, first of all because it describes some effective ways to make money , but secondly becuase of the exteme focus that all the people described in the book have to making money.

One guy has no family at all because the only thing he's worried about is making money . He's going to donate his wealth to the government because " Australia's been good to him ...."

There are people on this forum who put down and undermine others (sometimes subtly , sometimes not so ) who don't have the same underlying values that they think are necessary to create wealth.

Learn what you need from the forum and incorporate what you want to into your life and lead your life the way you want to.

Once you've decided what course you want to take in wealth creation, you will out perform the majority of those who are critisising you .

See Change

( personally I'll stick to my Volvo because it's safer , but that's my Priority )

Great post sc.......I agree entirely
except I'll stick to my Honda

As sc says goddess, do it your way

 

[Mikhaila]

Not all of us want to put every cent into investments and live on the smell of an oil rag in order to give up working for someone else. Some of us have busted our butts to earn that big salary and we have the right to enjoy it. Do we not also have the right to become investors as well? And if we don't want to become investors for some reason, does that make us idiots because we don't have a large net worth but we have a BMW??

Am I sensitive...hell yes! Sorry, but my whole life just got shot down in flames in this one forum.

No, it most certainly doesn’t make anybody an idiot. My mentioning of BMW didn’t mean to offend BMW owners. This is a beautiful brand and probably wonderful car to drive (must confess I’ve never driven one). Also, mentioning of MBA didn’t mean to offend MBA holders. It is an honor to have this title. It is all about choices. I am happy with my Master degree and X-Trial as a company car, and I enjoy spending money too…

 

[Kennethkohsg]

Hi Kenneth,
Here is more info:
I have been a “good person” , I understand the bit about “debt on PPOR is not tax effective etc” hence went small at first, kept increasing value of PPOR with time (sell then buy). May not be the best way but was my best with what I knew at the time.....I now have a PPOR with large equity , but little cashflow.
Have been working all my life and wish to quit very soon if I could make use of the equity to fund for my living expense ( which is not at all extravagant).

I wish to increase/create some cashflow to be able to step into retirement . I also wish to be able to stay living where I am (i.e, not selling the PPOR) because I love it and also because of its tax free CG … SO Guess the dilema is I want to have my cake and eat it too…. Is it possible ??
My PPOR is at a very good location and I believe I can count on its CG in general. It is earning more money for me every year than my day job does, and is CG tax free too …BUT. .all is on paper …here I am still with little cash flow. ….

I could sell my PPOR and invest in something (shares of some sort I don't know much about shares??) to get cash flow but is it a good way as what's earned would be taxed, less (and taxable) CG, …compared to the great tax free CG on PPOR…. Doing it this way I am worried that there is not enough CG to see me through my longevity 100 years of life …. I don’t want to enter into high risk stuff either giving I am planning to retire….

I heard about Steve’s LOE particularly the 1/3 splits very recently…. It sounds like I could stay where I am, use the equity to create the income I need for my soon coming retirement. It means I won’t just sit there consuming all my equity but also getting it working for me… till my 100 +

Steve’s LOE is new to me and I wish to hear from people who have done it successfully…...

I am trying to do my research and home work part of it is by asking views from the great source of knowledge of this forum…. so please do not send me to …a Fin Advisor… (I have already made a time to see one soon ).

Any thoughts would be greatly appreciated.

Regards

++++++++++++++++++++++++++++++++++++++++++++++++++
Dear Salsa,

1. Presently, I am already LOE as a full time property investor though I have still not reached my financially free status as yet.

2. You said, "SO Guess the dilema is I want to have my cake and eat it too….[/B] Is it possible ??". I think it is entirely possible ;- the real issue is what does it take to get you into action?...Help you remove your own FEARS(False Expectation Appearing REAL!) of losing all you have now if you take the risks of investing?

3. Technically speaking, drawing part of your house equity to invest in Steve's Cashbond or property investing can be the way to go depending of which you are more comfortable with, the level of risks which you are prepared to take, and how fast/soon and much cashflow you wish to generate in order to fund your desired retiremment/LOE lifestyle choices.

4. For your kind considerations, please.

5. Thank you.

regards,
Kenneth KOH

 

[alwayscurious]

Buying vs renting.

Perhaps I'm old fashioned, but one of my wife & I goals was to buy a house.

We had no clue about the power of investing in property at the time.

It was not so much a well thought out financial decision as a an EMOTIONAL stability decision.

For several years (4+) we had been travelling, like Glebe's post, for a "big 5" company - living a great life, etc etc earning nice income. But we longed for something more stable.

That's why we bought a house. We twigged to investing later. It just happened to be a great decision, we bought at the right time - smiled on by God I reckon .

But before that, we rented. We rented everywhere we went. We loved it.

So, it's up to the individual I reckon.

Part 2)
My own self discovery shows that if I rented for investment purposes -
I would probably spend the difference on stuff!! - I still love stuff
... so having a home for me is a kind of forced saving. (Don't tell Robert Kiyosaki..)

Having learned more - We have added to the home, several other investments & savings plans.

Being in the child rearing years means that it would be inconvenient for us to rent long term & run the risk of moving house frequently, as so many of my friends complain about - their rented home gets sold or whatever and they have to move.

So it's still not a financial choice - it's an Emotional and Stability choice from my point of view. It's a choice that may well hurt me financially in terms of lost profit from trading the sharemarket etc, But I feel it is a decision I make for my young family.

So there's my viewpoint.

 

[see_change]

My own self discovery shows that if I rented for investment purposes -
I would probably spend the difference on stuff!! - I still love stuff
... so having a home for me is a kind of forced saving. (Don't tell Robert Kiyosaki..)

So it's still not a financial choice - it's an Emotional and Stability choice from my point of view. It's a choice that may well hurt me financially in terms of lost profit from trading the sharemarket etc, But I feel it is a decision I make for my young family.

So there's my viewpoint.

AC

Given that stats show 90 % of people loose money on the share market it's not such a bad reason.

Emotional and stability is important for us.

The enforced savings has been a big help , so from our pre investment days we had considerable equity that we had " saved " by paying down out P&I loan so when we discovered the joys of investing we had considerable equity to play with .

We have also made a considerable amount of CGT free capital growth on PPOR's ( well not the one that we bought at the peak of the previous cycle , but that explains why I think timing is so important ).

With our last two PPOR's we've also been able to combine investing with PPOR ( the first one accidently , but the current one deliberately ) by buying places on large blocks which we were subsequently able to redevelop.

See Change

 

[qaz]

( personally I'll stick to my Volvo because it's safer , but that's my Priority )

GOD, bloody Volvo drivers!

 

[geoffw]

GOD, bloody Volvo drivers!

Bloody Volvo drivers to lose bad driving excuse

 

[see_change]

GOD, bloody Volvo drivers!

If you've ever " driven " a Volvo that was pre 850 series ( ie one of the old style Volvo's ) you'll understand why they had a reputaion. They drive like a beached whale .

Fortunately they built the 850 ( and subsequent ) so they could go rally driving and it handles very nicely . OK , it won't drag a 5 Litre commodore or ford off at the lights, but I have no problems with getting where I want in the busy Sydney traffic ( though I sometimes wonder if that's because people give me a wide berth... )

See Change

 

[markp]

Get on the tools.

Mark,

I don't agree with you either.

Horses for courses. For certain strategies and lifestyles owning your own home directly is not a sound approach.

And if your focus is on playing tradesman and collecting doodads you're not likely to achieve the success you could via investing.

Cheers,

Aceyducey

Aceyducey

I am really surprised, I thought for sure you would be one for the tools.
And as for the doodads, they are fine down on the ranch they all add to the atmosphere.


Cheers

 

[markp]

Can't agree with you Mark

I rent because I choose too. It is a lifestyle choice.Where I live would cost me close to a million to buy plus monstrous body corp fees. I have an indoor and outdoor pool and extensive grounds that someone else pays for. I have nice views, security car parking and a space I enjoy living in.

I rent out my Sydney unit that was my PPOR for more than I pay in rent here

Ani

If the things we do, are different than the things we believe in, there can never be true happiness.

Cheers.

 

[lizzie]

GOD, bloody Volvo drivers!

volvo do have a very nice 5-seater convertible. can't remember the name but the red one i passed would do great for a family gal who still likes her top off

although - a red jeep wranger is more my style ... pity i'm stuck with a white corolla

lizzie

 

[crest133]

Ani gets my vote for a simple explanation to the original question that was the thread. Thank you, you have given me much food for thought in a new direction.
cheers
crest133