New Year’s Eve approaches and I’m feeling reflective—on the year that was and the year to come. Specifically, I’m thinking a great deal about what it means to be happy, free, and self-sustaining. I look to my family for these things as they make me happy and help me (us) to be free and, eventually, self-sustaining.
As a stay-at-home dad, I made a conscious decision to put aside, if not discard, my career in IT and take on a role unfamiliar to many men. I handed financial control—at least the income generating aspects—to my wife. Rather than being the member of our family with the highest income, my raw financial contribution in dollars and cents become zero and I spend my days wiping bums and playing house. In short, as Robert Kiyosaki might say, I stopped doing what I can do best: making money as an employee.
Has this hurt us, financially? Not really. Not yet. Not in the short term. Fortunately my wife makes a decent income on her own and this year has been financially productive with her working rurally for six months. I’m not contributing to my superannuation, of course. Had I been working, most of my income would have been put towards paying down the mortgage on our family home. These are important things to think about, particularly in regards to our future financial position and our ability to retire comfortably. My time as a productive employee is limited, after all.
Do we live any less well than than we did when we both worked? No. We’ve always lived frugally. Realistically we’ve been a single family income for a while now as my wife had twelve months off when our first child was born (only a fourth months of which, roughly, was paid). We’ve become accustomed to tightly managing our available funds and resources and while we don’t scrimp and pinch pennies as much as we once did, we by no means lead a lavish lifestyle today.
We’ve essentially chosen to live well.
Our daughter would have had to go to day care, full-time, from the age of one, if I had opted to continue working. Or my wife would have had to put on hold many, many years of education and training in the medical field to stay at home (part-time work is not a real option for her today). Sure, we could have bought some more furniture and some overhead cabinets for the kitchen and maybe another big machine for my woodworking shop but all of those things can wait. In general our long-term lifestyle goals are not much different than our reality today: no flashy cars, no big house, no designer clothes; we appreciate the simple things in life.
A second income would also make us more appealing to the banks in terms of investment loans but I know what we can and cannot afford in terms of debt service so I’ll take my business to the lender who best understands that. Notably, securing funding for this first investment property has not been a problem, primarily because of the equity in our PPOR.
I’m also somewhat fatalistic and I know I won’t live forever. I’m not living it up today, in my thirties, to counterbalance that eventuality, but I despise the idea of working myself to the bone, slumped over a desk day in and day out while life and reality pass me by. My wife would like to work part-time one day in the future (when it will be easier for her to do so) and I genuinely hope she can. She does have a significant contribution to offer society as a doctor but there’s no denying the past ten years of training has been gruesome and taken a toll on our family life.
This is the reason why I’ve opted to invest in residential property. It’s the hope of achieving financial freedom, at relatively low risk, and the promise—however distant—of making a passive income legitimately. An empire of appreciating land, buttressed by the houses on that land generating income so I don’t have to, is, for me, the pinnacle of financial success and personal financial security. There are complexities. There will be hard times ahead. There are also simplicities and there will be good times ahead too.
I spent a significant amount of time this year preparing mentally, through knowledge-building, to start executing a multi-year (multi-decade) investment strategy focused exclusively on residential property. I have minimal experience in this area. There is no doubt I will make mistakes but in pushing forward I gain experience and ultimately reduce and remove risk. As a stay-at-home dad I had a bit of spare time (not much though!) to fast-track my property investment education and I’m reliant on a number of companies to help me stay on track. I like to think I’m not idle at home (beyond the twelve-hour days running the house, that is) and that I’m contributing—financially—to my family’s long-term success and our future ability to live well.
I suppose a disclaimer is also worth posting: I'm just a guy, I'm not an accountant, lawyer, solicitor, tax agent, mortgage broker, banker, financial adviser, insurance agent, land developer, builder, government agent, or anything else so I disclaim your application of anything I write here is to be applied at your own risk. What I write may be incorrect and you are best to seek your own professional advice (tax, legal, financial, and otherwise) before entering into contracts or spending your money. Your situation is unique to you and what I write here reflects my experience only. I'm learning too and expect to make many, many mistakes along the way.
Happy new year,
Michael
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