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Hi! I'm 32 and my dream is financial indipendance
Old 09-18-2012, 07:20 PM   #1
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Hi! I'm 32 and my dream is financial indipendance

So, Hi all! So pleased to be here and look forward to reading lots.

A little about myself,

I'm 32 years old, am now married and have dreamed of 'early retirement' (or at least optional retirement) since I was 24. I started savig hard and three years later bought my first investment property. I then bought three more over the next 2 years and have been sitting ever since. (well not 100% true, we sold one of them 1 year ago and bought our 'dream' home in the country)

Neither my Wife or I have any qualifications but are quite lucky we are paid well for what we do. I'm a Store-man and shes a shop assistant who does lots of other roles within the busy company. It's very stressful on us and we work so hard to be free one day. Our wages are classed as 'low-middle' income

I've always wondered why it is most people are just happy to retire when the Government tells them to at age 67 for a (whats scary) giaranteed $217 per fortnight and don't have the drive some of us do to be able to quit the rat race and do the things we want earlier. My Wife and I are due to retire (or at least take a year off and won't have to worry about keeping a high paying job top pay all our bills) in 2016. How? We lived in one of our now investment homes for 2 years, did quite a large rennovation on it without ever knowing we'd be moving! We probably wouldn't have done that if we did but we all make mistakes, it's all a part of success because the only way not to make mistakes is to do nothing. I've learned you must be prepared to make mistakes if you want to succeed at anything, and mistakes are not to be feared.

So we move to acerage and have been redoing the gardens, it's coming along really nicely so happy about that. Anyhow, we're happy here for ow and realise that if we keep upgrading whenever we can barely afford to do so then we'll never make finanancial freedom and we'll always have to hold a steady paycheque. So I'm now paying as much as I can off the interest only mortgage and we plan to sell our old home around 2016 so we pay no capital gains tax on it and this 'should' pay our mortgage down to a very manageable sum.

So in 2016, at standard growth of 6%p/a we will have 2x investment properties left (plus our own home which we will never touch) at an LVR of 60% (Total LVR inc own home would sit around $40%. We then take a year or so off, do some travelling, or whatever really but thats the fun part. Then we plan on going back to a job but this time it will be something we really enjoy doing. Not something we kinda have to do. We pay off the mortgage and invest more and keep taking mini retirements from there on-in.


In 2016 the figures should be around $-7,000 for the mortgage and around $+5,000 coming in from the investments. Our expenses will drop by 2016 in the following ways. Only 1 car to run instead of two. Less travelling and fuel means less wear n tear, less fuel. No more buying lunch at work, except if we're at home more power and water bills will be higher.

How are we going to fund the mini retirements? With cash we save from our job possibly but the backup plan is to remove 4% total equity from the 2x investment properties which should leave around the same LVR and amount of available equity by the years end (assuming 5% growth)

What if this doesn't work? Our backup in times of slow, or perhaps even NO growth is to return to work. We have plenty of time left in terms of the traditional retirement age and plenty more assetts than most people our age (in fact, we have about as much as people who are actually aged 67) so we don't worry at all about this. What if lending practices change by that time? We consider selling one and purchasing another in it's place with minimal deposit, then use the proceeds left over to fund lifestyle costs. One thing we've learned from other over the years is that in order to retire early, you must be prepared to sacrifice still. Just one bad move can break you. Just one more new home purchase can have you working for many years longer, a new kitchen, especially a new car that depreciates.. You get the gist, we cannot afford to lash out if we so wish to execute this plan and we are 100% dedicated so we cannot fail. I've never once believed there is any chance my dedication could waver because I simply want it too much.

How do I know 2016 will be the year? Well, I don't.. If one things for sure the figures will be more, or be less, only time will tell. Worst case the economy turns to s--- and we are stuck waiting longer. Although our investments are in a boom town thats just starting, we have just received Australias largest ever gas plant go ahead and construction has just begun. It is worth around $40 Billion dollars over the next 30 years and property here is going gangbusters due to all the workers required to move here so thats a positive in this regard

My Father is welathy and owns outright lots of property from hard work, but we don;t factor in any of this later in life, although we do know it's there, we don't think about it. Also my Wifes side of the Family is a similar story, We are stingy too and don't waste money on anything. Most of my wage goes toward investments and living costs. Which I think is good. We occasionally treat ourselfes to a dinner out and go on vacation once a year, which is okay for us now until we reach 2016

I've run this scenario across our mortgage broker whos also an avid investor, the only ting he could see 'wrong' was that we might have more cash than we projected as wages increase over the years, which is good. I also ran it across an Aussie property forum where everyone is a negative A-hole and I haven't been back I refuse to go back until 2016 to post the outcome, the worst they could see is that only time will tell 100% but it looked ok

Cheers guys and I look forward to hearing from you!

Regards,
Jez
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Old 09-18-2012, 08:23 PM   #2
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Welcome, Jez.

The keys to retiring early are LBYM (Living Beneath Your Means) and saving/investing.

Sounds like you're on your way.

omni
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Old 09-20-2012, 11:22 PM   #3
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Welcome to the board, Jez.
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Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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