Health & Family I Have Enough

Anyone ever stepped back and realized that they have done enough financially to wind down a bit and concentrate on family and friends instead of work and investments?

I don't mean being financially independent or setup for good but by enough, i mean having a good amount of savings and a small mortgage and realizing that funneling that 5k or whatever it is of yearly savings into more family/friends time instead of on your investments or home loan will bring more value to ones life.

It's like mindset change i think where accepting that paying off that PPOR in 15 years instead of 10 while having a much more personally productive 15 years instead of hustling and bustling for 10 and missing out on all the family time or simply life experiences.

Interested in hearing how others feel about this.

 

Yes and many refer to it as balance... in a deliberate & conscious context.

We made the call over 10 yrs ago to do this but some would interpret our "ballance" as "settling".

The reality for us is that we have life experiences, memories & family moments for which money today is absolutely no substitute.

We invest to live & to make for a more comfortable lifestyle into the future however we have made many financial decisions based upon living today & having moments to cherish later in life.

 

Yes I have recently and enjoy the new lifestyle tremendously.

 

You should be doing that anyway. As long as you have your repayments under control that’s as good as it’s going to get for you. Saving an extra 5 or 10k a year is a drop in the ocean.

You can’t save your way to prosperity. You get to a point in life where you need to put systems in place to achieve what you want that are working in the background without extra effort and living on boiled rice.

 

Disagree. Adding 5 to 10k a year on your mortgage specifically in the first few years of will save you the most and hence will put you in the above situation that i'm talking about were you are ahead and can take it easy from there.

 

You are absolutely right about the compounding wealth effects of extra mortgage repayments. Accelerated repayments save you a lot of money on a 30 year P&I mortgage - that's obvious.... but they offer far more value than that - they also provide for improved borrowing capacity sooner, and accelerated access to equity sooner, which ( when combined) have further compounding benefits . The effects of removing non income producing, non deductible debt is where the real juice is on servicing calculators. And servicing calculators are (for all but the most cashed up) where the game is played if you wish to get beyond a modest portfolio.

One day the penny will drop on these forums that without debt reduction, most investors will reach a ceiling and that will be that. Accelerated debt reduction is the new black in the post APRA era

 

Again, good luck saving your way to financial freedom. It’s ok the first few years while you get the initial pot of gold together, after that you need more.

 

Nice. Maybe you are no longer "owned" by things.

 

We did something similar in a way around 18 months .

We’d set a target of how much we wanted , but with the changes in the property market , we came to the conclusion the what we were aiming for was achievable , but was going to take longer than we wanted .

Re visited approach , aimed a a lower target and moved forward .

Have had a frantic / frustrating and stressful year year which Is getting towards the end , but will have achieved its desired result .

Cliff

 

Disagree. Chicken or Beef is right you should be doing that anyway, 10k is a drop in the ocean. You cant save to prosperity. There is good debt and bad debt, Saving 10k might will only save you about $400/a year In interest but cost $1000's in lost opportunity. The mindset problem is that you think you need to spend unproductive money on a "PPOR" and thinking you need to work or spend 15 years paying it off. Having a small mortgage, saving and working give you more family time or life experience. A large mortgage and 3 times the value in assets can.

 

Well my wife and I have more than enough and currently funnel around 25% of our annual income to help out family members who genuinely need it far more than we do, so yes. I'd feel selfish to do otherwise.

 

@Fargo, i get the bad debt good debt thing but 10k is not a drop in the ocean specially at the beginning of the lifetime of the loan. Here's some rough numbers.


Say you have 500k loan @4.5% over 30 years with roughly monthly repayments 2,5433 $, in the first year you are paying 30396$ of which 22330$ interest and 8059$ principle. Around 74% of repayments are interest. Same goes for the second year were not much changes.

Now, say you double your principle payment hence you pay out a total of 38448$ (22330 interest + 8059 x 2 principle) instead of paying 60778$ (22330 x 2 interest + 8059 x 2 principle).

By paying double the principle, you pretty much avoided paying the whole second years worth of interest. So paying roughly 8000$ gets you a benefit of around $30,000, a benefit of almost 400% on any money you put in on top of your normal payments.

The effect gradually fades down after 4-5 years but i hope you get the point.

 

I understand your mindset. I have a similar one.
There is always going to be more money to be made, better finanical decisions to be considered. But its about balance. What is the point in always only ever chasing money, if you cannot enjoy any of it along the way? Who knows how long any of us have to live. I'd rather plan for tomorrow, but live for today.

We have many times made financial decisions for our family that are based on lifestyle choices and life oppertunity and experiences, even though financially we have known it would set us back. Selling an IP and using the profit for 'lifestyle' items (ie camper trailer, 4WD, etc); rather then reinvesting the money. Taking money from the offset to fund travel abroad. Etc.
We are currently debating upgrading our PPOR (something we actually 'need') in the very near future or delaying the upgrade by about 2 or 3 years and taking the kids on our first family trip overseas together (Family of 8, so this will likely set us back around 50k).

Its about balance. We are currently in a situation where we know we will be comfortable in retirement. We are still planning towards the future, and we hope to be in an even better position by then. But not at the expense of being able to enjoy the time we have together now.

Having attended quite a number of funerals in the last few years, I don't want to regret having lived now, for the sake of a few $$$ in the future.

 

Completely agree with the above post! Instead of always chasing money and investments... in the past 12months I invested in myself... bought that dream PPOR.... bought that dream car to go in the garage and sold a IP to fund it all.... NEVER BEEN HAPPIER! we can die any day... cherish you loved ones and live every day. regards.

 

Yes, I hear you. The Australian culture is so geared up towards owning assets and being cash and time poor that we forget to actually focus on making new experiences and enjoying life. There is way more to life than owning property and having a huge mortgage.

 

investing is only a raft to get to the otherside. Once you are there you no longer need the raft?

 

You then need a bigger, shinier, raft with prettier passengers.

 

I’m sorry but the formatting of your numbers is very distracting so I can’t follow what you are saying. Maybe with your attachment do a chart with a loan of 500k vs a loan of 490k as that’s what matters (it’s the 10k reduction at the beginning of the loan). And keep the numbers as monthly perhaps (easier for us common folk to follow).

 

Looks like a lot of people are stopping to smell the roses. Been there, done that, only it wasn't rosés I was sniffing lol.

Then I thought to myself, what's the point of going into neutral and just coasting along? Nah, keep the revs up high! Keep pushing to near red line.

Don't let opportunities pass! Keep focussed and listen to that engine scream! Can't wait for the next boom.

 

@Gockie , included chart already shows the monthly payments that are divided into Interest and Principle part. All i did was add the 12 month interest and the 12 month principal parts. Sorry, don't know how to explain it any better and couldn't find a calculator that could chart adding extra repayments for a specific time only