Partner is slowing me down!

Thanks Esh. Yep definitely been looking into this already. Found one in Sydney for next week

 

Yeah we do go on holidays yearly, we have nice things for the most part. I mean, we live a pretty good life but we don't splurge on things like expensive cars although she does have quite the shoe collection. It's really the debt thing that scares her. Although having said that, she doesn't mind racking up the old credit card debt!

 

Aha. This explains a lot. Often find teachers to be magnificent people but many are totally institutionalised from an early age. Some are just not equipped to process rational financial behaviour in the outside world. Combine this with a childhood immersed in ‘poor dad’ influences and that explains the way your wife has been hard-wired. You will have the devil’s own job trying to adapt her mindset.
I relate to your circumstances – my wife is exactly the same. Becomes extremely aggressive at the merest suggestion of buying a passive investment, which used to happen often. Hates debt and can’t think past building her own nest. One of the best ways I have dealt with this is to make our PPOR the project. Ie Move in, renovate/landscape to add equity, trade up to better, under-developed PPOR, rinse and repeat. Its my own little rope-a-dope technique I’ve used a few times now. Surprisingly there is never any angst suggesting we totally upgrade the kitchen in the home we live in!
Also I had a decent little debt-laden portfolio intact before we met 12 years ago which has kept me sane. Redevelopment of an already-owned property seems to be okay, just shrieks at the thought of buying a fresh reno project. Go figure. Despite all this we have a great relationship that I wouldn’t swap for all the world. Just have to play the hand you’re dealt I guess, and manage any perceived ‘barriers’.

 

Now that I've got this focus, I rarely spend money on consumer stuff like clothes and shoes.... I've got enough. 2 weeks up in Brissie and I bought a pair of jeans cause 2 of mine carked it... (Yes, I posted a pic in a previous thread)... But the replacement pair was a new buy (with original tags) at an op shop for $10! The new house was the focus.

I'd rather be buying big assets...
She might just need a little more time to see it...

 

Yep totally wired that way. However I like your idea of living in a house that we renovate, that could keep me going. And wifey wouldn't have any problems spending cash on a new kitchen like you say. Thanks for the comment

 

What may make a person feel better, is to have the family home unencumbered, and have all investment at a level that if sold quickly in a very bad market would easily recover all outstanding costs.

May slow you down, but would be a cracking position to be in if your starting out "ok" already.

 

I do not agree with doing anything like that, but for anyone not sure......

If it is your idea, and it works well, all will be rosey

if it is your idea, and something goes wrong, you will need to face this as you are reminded, on many occasions, for the rest of your life

 

Good on you on being upfront

 

You aren't in a bad position here...let's not get fixated on the number of properties, it's financial freedom that's the goal. Her fear is debt, you already have 4 IPs and a PPOR (?). Some ideas that could be executed in concert to diversify risk and make for a happy home life while still meeting investing goals.

- Foxy Morons suggestion is a good one...Reno and upgrade to ever better PPORs. A win-win. CGT free. Pay it down as much as possible.

- agree on a set LVR for the IP portfolio, as IPs appreciate, get revalued and access equity while keeping to agreed portfolio LVR - it will give her comfort around a plan and agreed debt levels.

- set up SMSF and both of you max salary sacrifice (60k total pa). Watch the power of franking credits in a low tax environment ( works best for high income earners)

- once PPOR debt extinguished and tired of upgrading (!) pay down IP debt with agreed LVR in mind to increase portfolio size, OR establish discretionary trust for long term ETF / LIC investment at which point you would have the 4 pillars ;

- PPOR (a good one!) owned outright
- CF+ IP portfolio
- Monster SMSF
- Discretionary trust stock portfolio

I'd tend to think something like this would be more palatable to the other half.

Just an idea

 

Another thought is, that if you have 4 IP's and she's happy with the current debt level, but unwilling to go higher, that you could sell one, and reinvest into a growing market. Say you've got a heap of equity in a Sydney IP, sell it & with the proceeds buy two or three or four in QLD. When they appreciate sell again & re-invest back into Sydney, maybe being able to keep one or two along the way.

I know, there's more costs but the upside is that you should be able to move ahead, even if it's at a slower pace.

 

I have thought of doing exactly that in regards to selling a Sydney property to buy more in Brisbane. I do have a property in Brissie already, although I am not totally convinced that Brisbane is going to boom in the way that everyone is hoping. Although in saying that, if I was to buy another property right now it would definitely be in Brisbane- just don't think I would let my Sydney property go in order to go Brissie.

 

From my armchair expert position id say that some of your issue is communication. If these discussions end in arguments then she's not likely to want to have them.

Investing is about goals and the strategy and risk management to get there.

I'd start with both of you separately writing down some quite specific goals that you think will like, eg
- reducing work hours to part-time
- another child
- annual holiday
- retire at 50

Then both brainstorm them into priorities.
Then both brainstorm how much it would cost to do that
Then both brainstorm how to get there with looking at annual growth forecasts
Then both brainstorm risk management - offsets, life insurance, rainy day accounts, conservative values

Note how I use BOTH. I suspect you've been talking a lot AT her but not WITH her. Having grown up discussions means you need time, a child in bed, and emotions calm. It is not a who's right exercise but a working together exercise.

If she is more creative then harness those skills and ask if there is a type of project that would appeal more - ie a local reno value add.

Lots of good advice from everyone above. It took me 7 years to help convince my husband that using other people's money was good.

 

BTW don't ever let her on property chat to see the title of this thread

 

Or better still, how about your partner putting forward her side

 

Oh god no!! Thanks for your comment- I do talk at her come to think of it.....

 

This is the big half of your problem.

 

When I sat down and had the 'investment discussion' I was prepared for a lot of compromise during what is effectively a negotiation to find that middle ground we were both comfortable with. I started off with small steps, a cheap project to let her sink her teeth into and then once she became more confident with the purchasing, reno and finance aspect of things I pushed her into another project slightly bigger when the timing was right. Slowly built up from there. By compromising more in her favour at the beginning it gave her security and peace of mind and the goal posts have gradually shifted as she has learnt a lot during this journey together.

 

I was thinking this:

And then you said this:

It makes sense, with you from a sales background, to try to 'sell' her on the idea.

Look, I do talk AT my partner too sometimes. It does not work. I get a lot of push back. I think some people instictively push back or shut down when being talked AT or being 'sold' to.

I can't give you any advice on how to talk WITH someone, because I am not that good at it myself. I remember when I met my partner, they were very negative towards debt. That was 20 years ago, so I don't remember how I talked them round but now we have substantial debt and I am being nagged to take on more!

 

I think deep down that if this stuff does not come naturally, once exposed to enough evidence and information, it's going to be a constant battle getting the other half to cooperate with you to the level you want.
At least you're doing very well at the moment, it could be a lot worse.
Not everybody is financially compatible and many relationships would have been destroyed because of this.
Hope you find a healthy balance that is acceptable by both of you.

 

Thanks, very true.