Dec 082014
 

Assets are there for one purpose and one purpose only – utility. They are there to provide income, to provide shelter, to provide for life. An asset un-maintained is an opportunity wasted.

An often overlooked asset is earnings ability. Stepping off the corporate treadmill is a choice that could drastically affect this asset, a conscious choice to trade the income for a better quality of life?

The real question at the moment is how best to utilise the “salary” asset. A second rental house? There is risk – risk of debt but more so, risk of not feeling the ability to step out. But maybe, if managed correctly, if purchased well below resale value, if “guaranteed” rental income covers the bond, then just maybe it’s a risk worth taking at this stage?

Lets see if they accept a ridiculously low offer….!? Is this a con?

Our strategy of dealing with this has evolved over the years into 2 basic areas: i) limiting Our spend & ii) developing self-sufficiency. We’re not in the same league as extreme preppers but can certainly see value in some of their philosophies.

The big question for me is how to still further decrease our dependancy on the system? There are risks everywhere but I feel the risk of economic bank failure greater than corrupt politics. To have all ones eggs in the markets is perhaps too risky at this point in world history?

To be honest, we have achieved some measure of success in isolating ourselves. The bike is a good example, a tool that buys me time in this horrendous traffic. As with all things though, it isn’t without risk. It’s just simply that, for me, the risk is worth taking for the added time freedom it brings me. and by careful riding I’m feeling the risk reduced and manageable.

On the financial front I currently have the luxury of the “earnings asset”. I’m wary of using it to it’s full extent by going into more debt for another rental. The top three perceived risks being i] more debt will restrict my freedom; ii] don’t have the heart for tenant hassles & iii] dont want to continue my coupling to the Shitty of Joburg. But, as with the bike risk there are ways of mitigating, reducing to acceptable levels, the risk.

Not all debt is bad, especially for a rental. If we stick to the plan, buy low, keep the rnovation costs low, we’ll have an asset we can either sell if life turns too hard or that will give us an inflation linked income, decoupled from the financial markets and the banking world. In addition, if S gets her way, our anchor tenant will be quite reliable because she controls it. Plus, B’s future digs are sorted. There are some negatives but the longer-term advantagae seem to far outweigh all else.

Maybe another rental house is not such a bad proposition? It’s just a pity that it seems so contrary to the plan to ditch Jhb and head for the ocean !? It does however provide some positive options, that of keeping the current earnings potential [both S and myself] and providing B some sort of ongoing step into life.

By all means, plan, but don’t behave as if the plan is set in stone. Agility is key.

Jul 142014
 

It’s hard sometimes to not fall for the “compare yourself to the world” yardstick. It’s hard to ride through the kind of sustained universal wobbly that we’ve had the last 2 weeks.

When I look at a peer, someone who basically started out same time as myself, who has amassed a rental portfolio of 10 properties already, its hard to think that I haven’t but one and even that is on the verge of closure.

I mean, how can he be so “successful” in that arena while I struggle so much?

I’m reminded of the need to not compare oneself to another, especially when there is no real understanding of all the factors that make up the person’s life. The rental portfolio is but one aspect of life, an isolated feature that doesn’t make any sense out of context with the rest of that person’s stuff. In addition, how much freedom has this person given up? How much debt is there lurking in the background?

The expensive life-style, private schools etc. The bigger the burn, the more income is necessary. The corporate politicking, the daily grind, travel away from home etc etc. Do I want that in my life?

Right here, right now – A well lit, cosy home. Food in my belly. Enough financial buffer to know I’m OK even if we should choose not to chase more.

That’s key. How much is enough? Time to branch out and live life differently. Time to live, rather than work. Time to throw caution to the wind and take a calculated step toward a future we both keenly desire.

You can never tell anything from the man’s car, his outward visible-to-the-world lifestyle. The only thing you can tell from these is how much he spends. And even then you cannot tell whether he’s spending his own money or is up to his eyeballs in life-sucking debt.

No matter what our status in life, no matter what our financial worth, we all have been allocated a finite amount of time on this planet. Time that once gone we never get back, no matter how much cash we have in the bank. So when he’s at the office every day until 7pm, in Europe on business for 2 weeks at a time, I’ll still prefer being home to watch the sun set, spending my weekends on the yacht, working toward the plan, even if my plan is much more modest than his.

Is he happier than I? Don’t know. Don’t actually care.

What has he achieved? Nothing that grabs my heartstrings. What does he do and experience in the world that doesn’t take wealth and spending? Nothing that I can see.

So besides that, maybe his rental investment strategy bears study. Not because he is the best, but certainly because he seems to be functioning better in this specific arena than I am (and because I feel the need to diversify our income streams for ER)

I’ll be keeping the current cars, even if they require time and money. Until the spreadsheet proves otherwise it’s cheaper to repair and maintain than buy again (and it’s really greener as well)

Nov 092013
 

“I sometimes wonder about the definition of ‘success’. I have an 18yr old son who still pops his head around the corner and says ‘nite dad’. That’ll do for me!”

It’s not that the relationship doesn’t have it’s ups and downs – they all do – but that even after a lifetime we’re still on pretty good terms. I’ve worked with those who’ve sacrificed family on the career ladder. Are they more or less happy? Don’t know. Don’t care. All I know is I’m pretty happy with the way my life has turned out with respect to the balance between ‘career’, earnings, leisure and family.

But life is entering a new phase now. The Jhb-Grindstone is slowly wearing away at us. With the kids finishing up school in the next couple of years, the time is right for a major change – city, job, leisure.

I’m tired of waking up each morning with project challenges buzzing my brain, every day. Tired of manipulative, unhappy customers who act like spoiled toddlers trying to get their way.

“How will we fund life?” remains a huge unanswered question. We could [and probably will] end up selling Highland, leaving a little chunk of cash to earn interest each month. But even a million in the bank these day’s doesn’t get you much more than R5-6k a month. So work it will need to be. But what? I suppose it will end up being another engineering PM job but my dreamy, idealistic side hopes that I’ll supplement interest earned with a little DIY business servicing yachts, homes and friendly people leaving plenty of time for sea, sun and sailing [we all have to dream].

Anyway, the die is cast, we have a street address. Ocean Blue will be heading home soon and how things will work out from there …. we’ll just have to see.

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Apr 222013
 

The theory goes that having only a job, providing a single income, is a risky strategy. It’s fine if you are a run-of-the-mill wage-slave with no desire the break free of the cubicle, but if you’re serious about breaking free, then there are many people who would have you know – multiple, passive income streams are the way to do it.

The theory is simple really and amounts to not keeping all your eggs in a single basket. It seems to make a lot of sense. But here’s the problem that I have been struggling with over the last couple of years.

I earn a decent salary in my corporate project management gig. Maybe not good enough to have it all, but certainly good enough to live a very good life by focusing on the universal 1st commandment of wealth creation: “Thou shalt spend less than you earn“.  The problem is, the corporate gig takes a fair amount of time and energy. No! I don’t generally work more than a 40-hr week and haven’t for many years now. But the day’s are still very full and at the end, how much energy and free time is left to focus on building other viable income streams?

I’ve ventured online. I’ve tried sourcing and re-selling product. [And, yes, I’ve managed to make a few Rands]. I’ve listened to friends who’ve spent many draining hours outside normal work hours trying MLM and side-line retail businesses. It’s not that it’s impossible, it’s just very, very hard it seems. At least that’s what I’ve been telling myself.

Sort of feeling a little like a failure but determined not to give up on what seems to have become my ‘holy grail’, I’ve taken a bit of a break in pursuit of this goal over the last couple of months; but never letting the concept slip far from my thoughts. Today, the first time in a while, I hammered “multiple income streams” into the searchbox again ……

Third site in – www.financialmentor.com – and I’m liking what I’m reading. Why? Because this guy seems to think very much like me. The article which caught my attention is titled “MULTIPLE STREAMS OF INCOME – TRUTH REVEALED” which has some startling and thought provoking ideas that I had never before considered.

the clear benefit of multiple streams of income is classic risk diversification. Build a portfolio of non-correlated streams of income and your risk is reduced making your wealth more stable and secure.

The key problem is implementation – not theory. Few people ever succeed in building just one stream of income sufficient to achieve financial freedom … let alone several.

Reality One: We live in a competitive and fast changing world. Business has become highly specialized and niched because knowledge is growing exponentially requiring specialized skills to employ it properly. Successfully competing in many widely varying fields is contradictory to the specialization and complexity required by our current business climate.

Reality Two: You have a limited amount of time on this planet to implement your business plans and strategies while also trying to balance the needs of family, health, spirituality, recreation, relationships, and much more. Do you really want to spend your limited time nursing more than one stream of income? Happiness has more to do with balancing life than making tons of money.

The bottom line is you could easily skip the whole multiple streams of income thing if your goal is time freedom and personal freedom. After all, what do you gain from all the complication created?

 There’s a lot more food for thought in this article and there’s not enough space or time to list it all here. It’s worth the read though, so follow the links over to “MULTIPLE STREAMS OF INCOME – TRUTH REVEALED” and see for yourself.

Bottom line is, this guy seems to have a holistic view of wealth creation and life, happiness and freedom that I identify with. There’s a lot here that seems to align with my own personal world view and approach, so I’ll be spending a bit time with my new Financial Mentor, all the while keeping an open mind and remembering, always remembering;

NO WOOLLY MASSES !