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View Poll Results: What would you do with the extra income if your total expenses went down by 50% but your income rema
Increase your spending back upto where it was as a percentage of your income 2 3.92%
Save and invest your new found free cashflow 31 60.78%
A combination of option1 and 2 18 35.29%
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Good deflation
Old 02-09-2006, 01:37 PM   #1
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Good deflation

While in Panama we have realized that our expenses have been reduced by 50% overall. However, our current plans (build a nice house, travel, etc.) will increase our spending and put our expenses at about the same as it was in the US. If we go ahead with our plans we would not have reduced our spending, instead our quality of life would be increased. We were already living off of half our income anyway so this doesn't jeopordize our ER plans any.

The reason for the pole is that I'm just curious as to what other folks would do given the reduction in living expenses.

BTW- I am sure someone will think of other options for the pole.
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Re: Good deflation
Old 02-09-2006, 02:46 PM   #2
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Re: Good deflation

Life is busy enough, fulfilling enough, and chaotic enough without taking on the additional burden of spending more money!
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Re: Good deflation
Old 02-09-2006, 06:59 PM   #3
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Re: Good deflation

Quote:
Life is busy enough, fulfilling enough, and chaotic enough without taking on the additional burden of spending more money!
That's what makes it so fun
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Re: Good deflation
Old 02-09-2006, 08:18 PM   #4
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Re: Good deflation

Arif -

You are still relatively young if I remember correctly. Given that I would stash it away. I know you are living high on the hog now but it is just additional insurance that you may or may not need.

And with Arif every post I have to pepper you with a few questions. About how often do you come across a property that fits your criteria? And you mentioned that you buy in the not so hot areas, have you ever had problems selling after a rehab/investment in the not so hot areas?
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Re: Good deflation
Old 02-10-2006, 11:58 AM   #5
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Re: Good deflation

Extra money always seems to get saved (mostly). I'm working on spending a bit more of it... I'm in transition.
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Re: Good deflation
Old 02-10-2006, 01:11 PM   #6
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Re: Good deflation

Quote:
You are still relatively young if I remember correctly. Given that I would stash it away. I know you are living high on the hog now but it is just additional insurance that you may or may not need.
Yeah you're right. Seriously, I think it will be a combination of the two options. Believe it or not it's hard for me to spend money. If it was upto me I wouldn't have half the possessions I have. Alas, with a wife and kid comes additional stuff both necessary and not so necessary but enjoyable none the less. I am basing my retirement needs on how much it would cost me to live in the states. That way I can bounce back and worth between Panama and the US without financial hardship.

Quote:
And with Arif every post I have to pepper you with a few questions. About how often do you come across a property that fits your criteria? And you mentioned that you buy in the not so hot areas, have you ever had problems selling after a rehab/investment in the not so hot areas?
I found a bunch of properties that meet my criteria. It's getting to them first that's the hard part. So far this year I have 5 properties in my "missed it" folder and 1 in my "won" folder. The year is still young and I plan to do atleast 6-7. Last year we bought 3 homes to rehab and we sold 2 in addition to working at my JOB. The third one I held off on selling due to taxes. It's for sale this year and should have a contract on it soon.
Let me clarify on the "not so hot areas." What I mean by that is the city and neighborhood is average without 20-30% appreciation per year. You might get 5% if you're lucky. What I do is find properties that need $2k-5k worth of work selling for 70-80 of their value. Last year it took me about 6 months to sell each house. It is very expensive to rehab and sell homes. I spend about $15-20k on just transaction costs (realtor fees, 2 closings, mort. pmts, termite inspections, home warranties, etc.) which usually runs way more than the actual fix up costs.
We've never had a problem selling the properties as I try to buy homes in nice neighborhoods that I would live in. Some are nicer than my home. I spend a lot of time analyzing each property and am never 100% sure of how it will end. Usually 80-90% sure it will be a successful project. Then you factor in the guy who wants to buy the house with $500 down and you're praying the entire way to closing that the deal goes through.

My rentals on the other hand are a different story.

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