Our Story So Far

[SDY888]

Hi,

As I promised in my introduction on the 'Hi I am ' Board, here is our little story so far.

First of all, thanks to all you guys for your posts and for the informed, intelligent and supportive nature of this site. Cheers!

Here we go: Feedback, input, thoughts and advice requested from the 'been there, done that' crew and support from those on the same path as us All are very welcome.

OK. First the facts:

Residence: 770,000, with 345,000 outstanding on the mortgage (Currently at 2.25% with 14 years remaining)

Rental Property (actually our first house together): 415,000, with 123,000 outsanding on the mortgage (Currently at 3% with 15 years remaining)

Thus, net equity in properties: 717,000

Stock Portfolio: 230,000
Emergency Cash Fund: 75,000 (equals approx 1 year expenses in case of job losses)
Other Saving Funds: 65,000
Child Education Fund: 47,000

Total so far: 1,134,000, so not doing too bad I suppose.

Using the 'moneycentral' ratio calculation I saw in another post, it works out at around 75% of our lifetime earnings to date.

We have no personal loans and no credit card debt (all balances paid in full EVERY month). We have no car loans as we have no cars.

Our gross income is around 125,000 per year from salaries. 16,000 comes from the rental property which basically covers the mortgage payments, property taxes, insurance and minor maintenance.

We are continuing to build up our wealth by adding to the portfolio from monthly savings. We are also considering buying a further rental property by using some of the 65,000 in the 'Other Savings Fund' as a sizeable deposit resulting in only around 50% mortgage

On the lifestyle side, we are by nature 'LBOM' types. We live very nicely, enjoying regular meals out and trips at least 3 times per year.

To achieve this though, we do not indulge in wasteful spending, luxury (in our view) spending or impulse purchases. We are generally frugal, without being miserly; we buy the best quality goods we can afford that will last a long time rather than simply the cheapest; we clip coupons, wait for sales and bargain mercilessly for the best deals. We pack lunches to work and ride public transport.

We both enjoy work and could not quit working completely just yet. We would, however, love to be able to dictate our own terms a little more, take a slower pace, working part-time or on a consultancy basis as and when interesting opportunities came along, all with the knowledge that we were financially secure regardless of our actual earnings. That is what we are aiming for in the medium term at any rate (say within 10 years).

Before I go on too long a ramble, I will stop here and look forward to you comments and feedback.

Hope I have not forgotten anything, but please do ask any questions you feel are necessary

Speak to you soon!!!

Cheers,



Simon888

[azanon]

I dont really visit the "hi i am" board, so could you tell me you and your spouse's age (sorry, i'm lazy; a problem i share with a lot here, hehe). *I really couldnt offer any meaningful comments without that variable.

[SDY888]

I forgot to post that minor detail!

We are 34 and have a young child of 5 months.

[Tommy_Dolitte]

Wow!! Those are astonishing results. I admire the accomplishments.

What was your strategy in your home and rental property purchases?

I want to do something similar, but have been paralyzed by fear! : )

Thanks!

[SDY888]

Hi Tommy,

Thanks for the kind words! Praise indeed.

To answer your question though, to be quite honest we did not have a strategy per se. My wife bought the first apartment when she entered the workforce some 12 years ago (before we met, BTW). I on the other hand had bought and sold my house and then rented as I was then working in quite a nomadic job, so had no need for a permanent base. I diligently saved and invested my surplus funds. Once we married we lived in her apartment and again saved our surpluses. As mentioned above, over the past 10 years, we have had rising incomes but were satisfied with a very pleasant but not extravagant lifestyle. So we stayed in the nice and convenient but small 2 bedroom apartment until our needs changed. When we decided to start our family (last year) our needs changed and so we moved up to a bigger place and rented out the first one.

If there is any strategy in the property purchases at all, it is probably only that we were housed to our needs not our income level and saved/invested such that when the need to trade up arose we had saved enough to pay 50% cash for our new place.

Looking forward though, we have a good cash base built up again along with a good reliable tenant in the first apartment, so I feel comfortable thinking about taking on another purely investment property. I am drawn to the permanent and physical nature of property as an asset, but that is just me.

It may be the thought of additional debt that makes people wary of second or third properties, particularly if one relies on the rent to pay the mortgage. We are fortunate in that we can manage the payments without any rental income for a reasonable time (at least long enough to sell the place) and we have sufficient equity to walk out ahead. I confess that I too would also be nervous if I had a large second loan and needed consistent rent to make the payments.

They are just my thoughts.

Cheers,

Simon888

PS: One correction I need to make from my first post above. The mortgage on the first apartment is paid off in 8 years, not 14 as noted. Should not copy and paste so much!

[cute fuzzy bunny]

I dont really visit the "hi i am" board, so could you tell me you and your spouse's age (sorry, i'm lazy; a problem i share with a lot here, hehe). I really couldnt offer any meaningful comments without that variable.

Azanon...can you call me and read me these posts?

[Tommy_Dolitte]

Simon --

Thanks for taking the time to respond. I think your strategy fits my way of thinking.

I tell my fiance all the time that this world is one big commercial---and ignorance and convenience exploit people's otherwise good intentions. e.g. when it comes to making purchases, saving, etc there is a "marketed" package with boundaries.

By using your earning capacity (assuming to be > $100 K/yr) and eliminating the residual debt on a larger purchase, you in essence reversed the game (not marketed much hehe)---by catapulting your equity and net worth----wealth language. Nice job!

Your story has underscored a paradigm I think I've officially accepted.

Continued blessings for you and family!!!

Regards,
TD

[sgeeeee]

Azanon...can you call me and read me these posts? *

I'm waiting for the movie.

[SDY888]

Thanks for the idea, SG. Once I get to ER, making the movie might be one of my projects!!

I'll invite you all to the Premier.

S888

[bow-tie]

I'll volunteer as an usher so I can get in for free...

[sgeeeee]

Thanks for the idea, SG. Once I get to ER, making the movie might be one of my projects!!

I'll invite you all to the Premier.

S888

I can hardly wait. Is this going to be a documentary or a work of fiction? If you need help writing scenes involving dryer sheets or nasal milk, this board can probably help you a lot.