Why don't normal people think like us?

So the old couple came into my office wanting me to sign a solicitor's certification on a reverse mortgage- the bank's way of calling on my insurance (10k/yr and I haven't had a negligence claim yet *touches wood*). In their 70's and want to borrow against their PPOR which will eventually get eaten up by the compounding interest and leave them with nil. Ex religious missionary types- decent people who had put others 1st for much of their life. I asked a few different scenarios- why not downsize & free up equity? Why not borrow from kids and put it in your will to repay etc etc. What do you need the money for anyway ? I ask. Handicapped grown adult kid- living independently but in need in financial assistance to continue to do so. "We will be dead soon but he needs to learn to live independently for when we are gone".
These people will die renters and poor but I respect them .
Didn't charge them the full rate.
Life is great when you have money- but sometimes it isn't all about the money.

 

Well said. There will always be a natural balance of investors and "normal people", and any effort to forcibly upset that balance is probably futile.

However, I think the majority of "normal people" that have been discussed in this thread are those who expressed a desire to become an investor, but for seemingly no reason, have chickened out

The most common excuse I have heard amongst friends and family is "I don't want any more debt." No matter how simply you try to explain what "good debt" is, they simply turn tail and go back to paying down their principal and "think about investing later." A relative of mine (who recently acquired his financial planning licence) tried to convince me that a $300k asset with no debt is always better than a $1m asset with $500k debt

For us, the "reality" of an IP is a big picture taking into account value, debt, cashflow, structure, etc. For many normal people, their "reality" is debt, debt, debt and more debt.

 

Wow. Will be a terrible financial planner...

 

Depends on circumstance doesn't it?

GFC v 2.0 hits and you lose your job then which situation is better? No debt in a paid-off house! Especially given that $1 million property is probably not $1 million at that point.

Ireland lost 50% over four years... so those properties become:

$150K asset with no debt,

$500K asset with $500K debt (and possibly no job).

 

Yeah but Australia and Ireland fundamentals are very different. That's not comparing apples with apples.

I don't see well located, strong demand properties in major cities in Australia losing 50% value over a 4 year period. Possible? Of course. But so is winning the lotto.

 

Australia is different?

 

Imo they are very different.

 

Not sure about Ireland but the property market of some countries is more volatile than Australia. In Hong Kong properties dropped 65% from the peak between 1997 - 2003 and sometimes the property prices can easily increase / decrease 10% in a month.

I believe it all comes down to risk management. I am happy to have maximum of LVR 70-80% in Australia but only 40-50% in Hong Kong.

 

On those quiz shows usually just B4 the 6 p.m news ,usually the contestants seem to come from the "battler" class. I never fail to be astounded by the fact that when they win no matter whether a large or small amount they all invariable say their first priority will be to blow most of it on a HolidayTrip-
I am now too old to keep bashing my head against this particular brick wall- relatives who are just too inert to even change their bank deposits over to one giving a better return never mind looking to grow their wealth & acquire capital etc I am so old now my problem is to ensure my wealth( which my late husband sacrificed himself to acquire so as to give his family a lovely life) is not squandered in this same way by my inheriters. Note my other post "sandshoes to sandshoes" aphorism

 

"inert" is a great word

A lot of my "battler" friends enjoy watching TV shows depicting people battling harder than them. I suspect it makes them feel good about themselves and how much better off they are. It's all relative I guess....

 

They need to put fuel in the car first before it can move. They simply don't have the fuel or correct mindset to make the car move. It aint ever gonna move without the fuel.

 

I was invited to dinner by the family that worked on painting my house in Brisbane. So far, so good. The wife cooks a good dinner.

I learn quite a bit about them from that dinner....
The husband only works part time hours, about 3 days a week. He is too scared of liability issues if something goes wrong if he paints to go it alone (he was the better painter of the 2 guys imo), so he only works as the assistant painter.

His wife is on a pension. Their daughter, 28 years old, also on a pension (shes a bit overweight, had gall stones removed, not sure if thats qualifies her to be on a pension?) Anyway....

The daughter was telling me about getting her hair done... costs $200+ per pop each time... (part coloured). She also has the latest iPhone 6 with the huge screen, she bought a waterproof case for it too, an extra $120. If she didn't have so much time on her hands she'd probably spend less money.

So the family has lived in their rental for 11 years. They would like to move (landlord wont change the carpets or let them paint the interiors... to me the walls are ok, carpets are borderline) but with minimal income, they are a bit stuck. Apparently all other 4 bedroom places advertised are about $100 more per week to rent. Btw they also have 2 dogs and 2 cats, 1 cat is blind and wees anywhere so carpeted areas must be fenced off....

The wife looks up on realestate.com and finds nice houses in the suburb selling $700k. The wife is really keen on it. Ok. I ask about a deposit. They don't have one.... I said you really need to start saving otherwise it's just a dream...

They also have an adult tattooed covered son living with them - he scored a job but paid on commission basis only. (His last job he was let go - sounded like a dodgy company anyway).

Anyway, I said the wife is good with hospitality and should consider airbnbing a room. They just need more income (and daughter shouldn't be so spendy but I didn't say that).The wife could do something cooking related for work. They kinda do the odd birthday cake as a side job - its a start. The daughter should simply get a job.

I suggested to the husband he's got good painting skills - if not painting houses maybe he should consider doing car spray painting, customers pay good money for that. He goes and shows me one of their cars he touched up.... it looked good.

If they want to change their lives they could do it but they really need to take stock first...

 

And that's the problem. It's not just with investing. Like how many people want to lose weight, get a better job but don't anything about it. They want change but are too complacent to do much else apart from wishing and whinging, or they put in a half-arsed effort and give up too soon because it actually requires effort and commitment. Then they blame other people for holding them back.

Plus many people want instant gratification - they're ok with using credit to spend thousands on silly things, but don't think about how they could be using that money to invest instead.

I think many people have that attitude because they had poor role models as kids and because it's easier to whinge. Why work hard when it's easier to blame others?

 

But many do change too. Poor role models is not a good excuse. You just have to make a decision.

 

Why not? If people have the means to invest their money, (doesn't have to be in property - but just do something smart with it) but don't because they are too lazy to look into it further, you're dam right I'm going to look down on them.

 

I hope that was rhetorical or the ? was a typo. Look at Ireland's unemployment rate... It's also on the other side of the world. It's different.

 

I know its so frustrating that people don't see the big picture. I have this customer that comes into work. Same age as me. Whinges about his life without fail every day. Gets $480 a week from Centrelink, half his rent is paid for by them as well. I work seven days a week he sleeps in to 3pm everyday. Applies for jobs he isn't qualified for so he wont get them. He gets fast food for every meal and complains centrelink doesn't give him enough money to live on.

 

@The Dark Knight there are a lot of losers in society and unfortunately we are paying for them via our taxes. Would be even worse under labour. Ultimately they are paying a massive, massive price, whether they realise it or not imo.

@miked I understand what your saying mate. For me, I don't know if I so much 'look down' on them as just see them as very ordinary, mediocre people. Nothing wrong with being mediocre in life if they want to. But I don't buy it for a second when some will say, 'we are the same', when clearly we are not for a myriad of reasons.

 

Oh he does see the big picture, it's just that his "big picture" is getting through to the next day of fast food, hopeless job applications and whinging. It's a rhythm that works for him, so why change?

That said I've noticed that a lot of the 'inert' mentality comes from people who I'm sure earn a higher salary than me. Because I'm slightly less inert, I spoil myself along the way with a few toys when my investments do well.

I'm starting to suspect that they see these toys as proof that I'm in a higher class with exclusive investment opportunities... whenever I try to share some tips/strategies their eyes just glaze over and they say "yeah I'd do that if I earned as much as you!" *facepalm*

 

One word:

VICTIM

How good would it be if we could eradicate this element of our society and replace them with grateful, ambitious and useful immigrants - the very folks that this sort of useless scum always complain about...taking their jobs.