Monday Money – WHAT AM I WORTH AND HOW DID I GET HERE

This is a little personal history about where I am coming from when I am writing about the financial achievements which have occurred during my life. Hopefully this will give some insight into where I am coming from and that there is some real experience that I am basing my comments and information on. There are many experts in the field that are worth listening to, Paul Clitherow and Robert Kiyosaki are two authors that I would recommend reading and listening to the suggestions they make, following their advice is an even better choice.

I left school as soon as I could, not one for the classroom from a very early stage. I am left handed, so what you might say, but a year 2 teacher decided that I should use my right hand and broke several rulers across the back of my knuckles. Not character building or anything like that, just put me off school for a very long time. My first job lasted for a couple of years, full time employment, working for a children’s organisation on the grand sum of $85 a week after tax, heaps of money to a young man who didn’t have many over heads still living at home. I had some savings, not much and to my shock, was fired along with a couple of others, down turn in funding and we cost too much, replaced by a couple of 17 year olds.

My savings depleted I decided to look for a job, that very morning a call from my mother asking me to help her out and cover a job due to a bus accident. Not a big issue as I didn’t have anything else to do, and I knew it would be paid or at least I was able to stay at home and not feel guilty about not working. Without dragging out the love book and all the soppy stuff, I moved out of home at the age of 19, and for the first time had the experience of having to fend for myself. No one taught me how to manage the situation; hey I thought it would be a piece of cake. Wrong! After a few weeks I was in a total financial crisis, more money going out than coming in. The results of which I moved into a shared house with 3 others, and boy did that make a difference. Things started to change, financially as well as long term as one of the house mates later became my wife, we lived together for 4 years, gradually not replacing flat mates until we were on our own.

If this isn’t interesting, then skip a paragraph or two and pick it up later. I am sure that it will or won’t make more sense later; it is parts of what has helped shape the decisions that I make today, ones that I hope you can look at and perhaps think about how these might change things for you. I bought my first house after having a lease on a rental come to an end and looking at what we paid in rent and what we could afford to pay on a mortgage, 2 incomes and no children sounded good at the time.

Oh how quickly things change, and I am sure that some of you will be reading this and gasping, saying that is what happened to us! In my case, it was the most fortunate things that could have happened we moved into the house in May, found out that we were expecting our first child in February, got married in September, and experienced the eighties increases in interest rates, up to 17.5% in 1987. I learnt a lot about managing the financial running of the house.

We struggled from pay to pay for a number of years, the credit card became maxed out very early on and meeting the minimum monthly payments was usually all that I could manage. The insurance on the car didn’t get paid more and more often, more good fortune than management that we didn’t have an accident because that would have really stretched things further. As I have said before, there was a limit to making ends meet, and having a 2nd or 3rd and even a 4th job became the only way to keep things going. I could ramble on about the next umpteen years but that would be rather dreary, but suffice to say things slowly improved, especially when the interest rates went down. We didn’t change our lifestyles; rather I was able to cut back on the hours that I worked.

So jumping further forward, I divorced a number of years ago, with 1 child to support, as well as leaving most of the contents of the house and a significant part of the savings. We had a year before sold the family home so only had cash and possessions to sort. The credit card debt and loan on the car became mine, some $50,000 all up. There are no winners from this; both parties are going to come away with their own perceptions of who got what and what it was all worth. At the end of the day, I believe that I was left with what was reasonable.

I had a new lady in my life and we settled in together. It took me a couple of years to sort things financially. We took a punt on buying an investment property, something we talked about and researched for a few months before going ahead with. We looked at areas of growth, costs of housing in the area and what the rental returns could be. Fully armed with all the information we thought we needed we looked at 2 bedroom units, we set our price at under $100,000, armed with a newspaper and street directory, drove around looking. We had our finances organised, knew from our discussions what we wanted to buy and set about doing exactly that. Within a short period we had bought 4 units staying within our budget and the rules we had laid down.

We purchased our house over the Internet, using the photos online and asking the agent to take and email others to us. We found several houses and set about researching each of these, the purpose for the house was to get into the market, not as a life long commitment to the place. We found a place and put an offer in what we were prepared to pay, if the vendor was unhappy with this then we would move on, I made this very clear to the agent. So when he phoned back saying the vendor wanted $5,000 more than we offered, we thanked him for his time and hung up. A day later the offer we had put in was accepted. Sounds hard nosed, it was but we wanted into the market at the lowest price we could get and were prepared to work to get what we wanted.

So where has this put me now. We sold 3 of the units as they had increased in value by about 200% in four years, paid off the house, and have now bought another 2 properties. Our property portfolio is worth about $900,000 with less than $150,000 in loans. The $24,000 limit on the credit card is gone! We have no other debts.

This isn’t bragging, I want to show you what can be achieved. It does require work to get things in the right place, yes there has been an element of luck in what we have done. This sort of thing can be done anywhere with the courage to get in and have a go, not just hope that things will work. And yes there are risks involved, hopefully managed so they are minimal.

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