The importance of having a buffer - SS Sticky

Discussion in 'Investor Psychology' started by Lil Skater, 30th Jun, 2015.

Join Australia's most dynamic and respected property investment community
  1. Lil Skater

    Lil Skater Well-Known Member Business Member

    18th Jun, 2015
    Since SS will be closing it's doors shortly, I've gathered a couple of the old sticky threads on SS that I thought would be useful for those who ever wish to refer back or some of our new members. Here goes!

    Original post by SS member Skater

    This is a long post, so be warned.

    I have kept a bit of a journal of the events of the past few months, detailing how important it is to be prepared for the unexpected. This was a very trying time for us & we have now come out the other side (I hope) unscathed, but it would have been easy to go under too.

    In reading this post, I hope you will all look at your own situation & see if you could survive financially what we have just been through. I am in no way trying to brag about my abilities to keep things together, but merely trying to warn people that no matter how well prepared you think you are, you just don't know when bad things may happen.

    January 2005. Hubby very dissatisfied with job. He decides to look for new employment as promotion within current company not going to happen. The old saying about making yourself irreplaceable.

    April 2005. After looking at many jobs realise that he is quite well paid for the position he is in. Having some difficulty getting the desired $. Have knocked back a few that just didn't seem right. Get accepted for a job that requires 3 months training in South Africa. Declines. Gets told by prospective employer that they have something else he would be well suited for in Australia. Declines again.

    June 2005. Same employer calls him out of the blue. She has interviewed quite a few people & none of them seem to fit. Will he please re-consider. After much to-ing & fro-ing he accepts.

    July 2005. At last the contracts are signed & he can give his notice. He will be working on contract, through a third party umbrella company. He must give a months notice & does that on the last day of the month

    August 2005. He is paid monthly & receives his last pay on the 15th of the month, same as always. His new job will be paying at the end of the month so this pay needs to stretch a little longer than normal. We are also booked for 2 weeks holiday (unpaid) late September early October and that has been cleared with new employer too.

    September 2005. He is due to start his new job on the 5th, but they ring up & say that the office is not ready for him. His new start date is 8th September. All is going well. He has to go to Dubbo for a day on Business just before we leave for Holidays & he pays for a few work related items on our Credit Card. She will re-imburse him later.

    October 2005. We expect his first pay to go into the bank account while we are away. It doesn't & his boss makes plausible excuses as to why not. His reimbursement doesn't show up either. He is due back at work on the 10th so decide to sort it all out then. This is an inconvenience but we have a buffer so all will be alright. Sort out the problems. Not all the paperwork was submitted to the agency. His boss is a bit disorganised. He gets a cheque for the amount owing on the Credit Card but I am annoyed at how long it took.

    She gets the invoice on the 13th & she then tells Hubby she has 7 days to pay the invoice. OK that was in the contract, but if you have stuffed someones pay up I would think you would pay it straight away. 7 days later on the 20th Hubby reminds her that she has to pay the invoice, she says that's fine. 21st ring umbrella company to see if payment has gone through. No! Hubby takes her to task & she says that she posted a cheque. He tells her that she was supposed to use EFTPOS so it could go straight through to our account & we really can't wait for the cheque to clear. We need funds now. She tells him she will work something out. Can I email a copy of the invoice to her? I do with a note to Hubby saying that we were only copied onto this invoice, it has her name & email on it, so she must already have a copy. She sends in one weeks pay straight to our account.

    In the mean time, since returning from Holidays, all is not good at the office. There is a cashflow problem & things are not getting paid. On more than one occasion Hubby can't get into the building as the rent hasn't been paid. There are also times that various other services have been withdrawn due to non payment. I am getting extremely nervous. Each day that passes I ask "When is the money coming?"

    Turns up for work on Monday 24th & there is a note on his desk saying that he is not going to get paid for last Monday as he had to go to a seminar that was not applicable to this job. He did go to a seminar that had been arranged by his previous employer, but he had told her all about it & said that he wouldn't be going unless it was something that would be useful to her. She had said to him "Yes please, go". The note also said that nobody would get paid for next Tuesday as it was Cup Day & nobody does any work on Cup Day. He rings her up & tells her that she gave him permission for the seminar & he expects payment. She gets nasty & tells him that he certainly will not & please to tell your wife to keep her nose out of her business. Turns out that she reads all the office emails. He tells her that she was the one that involved me due to the fact that we haven't received our first month's wages as yet. She then tells him that she had to get someone else to check it before it was paid. This means that she didn't send a cheque in at all. Oh, & since she did pay one week that invoice is now wrong, so she will need another one.

    Hubby rings me at home & tells me what is going on & it is obvious that she will do anything to NOT pay for things. We are concerned that nearly another month has gone past without payment & will we ever get any more out of her. He doesn't know whether to stay or go. We check his contract & it says he must give one month's notice. He decides to stay till the end of the week but follow up as many contacts as possible to get a new job. Luckily he was so well regarded in his last job. The umbrella company in the meantime are following up all the time to try & extract payment for last month.

    Tuesday 25th Hubby rings up & mentions that someone he used to work with has mentioned that they need staff. Is he interested? You bet. This is a nice corporate company that pay good wages to good staff. Only problem is they usually take 12 weeks to employ anyone. He will check it out & see if he can work on contract for the time being. It is not a sure thing, he has to have an interview with someone else first, but the fact that his contact will vouch for his abilities & work ethic will be well regarded. Same day another of his contacts comes good & mentions that there is a good position going soon. It certainly seems to be a case of its not what you know, it's who you know. Thank goodness he knows a lot of people.

    Wednesday 26th We still have not had any further funds & Hubby decides he cannot take it anymore. He gets all his timesheets signed off & asks the boss how much notice she wants. She tells him what the contract says & he says "Do you really want me to stay on for that long?" They decide to part company. He then sends in time sheets to agency to send her the end of month invoice.

    To date we have only had one week's pay since the 15th August.

    November 2005. Hubby is now unemployed. What a joy that is! We had what I thought was a nice buffer, but it is going fast. Hubby has applied for a lot of jobs, but none have come good as yet. We have started legal procedings to try to re-coup what his boss owes us, but don't hold out any great hope of anything coming from it.

    Wednesday 10th. Hubby decides enough is enough! Rings up an old boss & tells him of the current situation. (He was an electrician some years ago & very well regarded for his work ethic) He needs some income now, but it is only temporary as he will be looking for a management roll again. They say "Great, you can start Monday". This is a bandaid solution, but puts our minds at ease for the time being. They have a job on at the moment that is urgent & put him on that one. Ten hours a day, seven days a week. YUCK!!! The money is good (for a electrician) & it is only for 2 weeks, then reasonably normal hours. This means I can pay some of the mounting bills without drawing down more equity.

    December 2005. Hubby is sick of being an electrician again. Applying for jobs while working is becoming a pain in the backside as he has to take a suit to work with him on the train as he is working in the CBD & shower & change at work. He gets a call from one of the recruitment places & goes for an interview on the 8th. The following week they want to see him again on the 12th. They need someone ASAP. Hubby then rings me at 1pm on Wednesday 14th "Get on the next train & bring a suit, tie, shoes toiletries etc & meet me in town". They rang him to see him again that day. This is looking good.

    On Friday he gets told the good news. Can he please start this Monday the 19th. What a great Christmas present.!!! He has to ring his boss & let them know he won't be back, but they are fine with that. They knew from the start that he was looking for something else & wish him well. He is back to earning a decent pay packet, although it is again monthly wages & the first pay is to fall on the 15th January, so we have a few weeks more of being very careful of where the money goes.

    When he gets his first pay from his new employer on the 15th of January, it will have been 5 months since he left his original employment. In that time he was paid only 1 week from the new job & 5 weeks as an electrician. A grand total of 6 weeks pay in 5 months. The wages as an electrician were considerably lower than what he was originally earning & what he is getting now. As an investor, with a reasonable size portfolio, we were not entitled to any financial help from Centrelink. How would you survive if you were put in a similar position?

    Full thread here.

What’s the one thing holding you back from having more time, money and freedom? Passive Income. And you’re just one smart Positive Cashflow investment away. Quantum Space commercial units return a huge 8% net AND we guarantee it for 12 months