Peers don't think this will work - Who's right?

[ShyStar]

The background is I owner occupy my own apartment which I calculate I will have paid off by Christmas 2012. The place is fully furnished with new furnishings...oldest equipment wouldn't even be 4 years old yet and I have my own car owned outright. No other outstanding debt - No education fees, and no credit card.

In short I want to work as little as possible whilst sustaining my own lifestyle.

The way I see it is if approximately half my pay goes into the home loan now, that in theory once i own the place outright I would only need half of my pay for my other costs...so, again in theory, I could work half as many hours.

The way I see it is I could do a part time job, pay less income tax and have enough money to settle all my bills as well as have some money to save or spend on unexpected costs.

I have told people my idea and they generally don't have confidence in the plan working - But I can't tell why. Is it likely they are just so conditioned to having to pay rent/loan repayments that they don't know how easy it would be without these ongoing expenses?

The way I see it if my place could be rented at $200 a week for just the property and say $350 as a furnished house, I am essentially living a $350 a week lifestyle without having to put in the work others have to - I put in a lot of upfront work but I see it as going on cruise control once it's settled.

And because I can cook, I am handy around the place, and can do housework I'm also living a good life without paying to eat out/get takeaway often or have gardeners/cleaners come in - Again the way I see it people will pay someone to do these things when they are at work too much to do it themselves so I'm saving money whilst living somewhat of a high life and hopefully working minimal hours to maintain it.

The costs I have allowed for include home/contents insurance, rates/land tax, property management fees, electricity, water and mobile phone/internet.

Most costs have been budgeted artificially higher than they actually are just because I like that bit of buffer.

Am I forgetting any costs? I left out the car intentionally...I honestly rarely use it and when I do ironically it's for work - No work, little use for car.

[crazzyass]

I would triple check the math before taking any drastic action, but assuming your numbers are right there's no reason why it wouldn't work.

Besides, what's the worst that can happen? Get your debt paid off and see what kind of money you have, try to get some renters, and go from there. What kind of job are you working now? Can you work reduced hours or would you have to switch jobs? If you're able to ask for reduced hours then it's not much of a concern. Just ask for however many you need.

Also, I'd advise spending at least a while saving up your extra money for emergencies/retirement. Perhaps six months or so of collection your former loan money plus current income levels into savings, and then look at cutting back. it can't hurt to have a little extra padding in the bank.

[ayingerbrau]

Cars often have a lot of hidden costs. Maintenance, repair, insurance, tyres... all adds up. Then again, you don't use it much so it shouldn't be an issue.

I have calculated this myself in the past, I figure I can live very comfortably on much less than the minimum wage, if I didn't have to pay rent or a mortgage. All I really own is a laptop and a car. I just don't see the need for anything else.

[Metafire]

You're in a good position, if all of your payments are as on track as you say, but I think that once your place is payed off you probably shouldn't cut your income in half. I reckon it'd be better to save some money for the future.

If anything, it'll make for a nice retirement, and if any unexpected costs come up, you'll be set. I mean, you're comfortable now, but it's always good to be prepared, y'know?

[ShyStar]

Kipohippo I'm not looking to invest in the property/rental market - I want to deal with as less money as I need to. I already bought my place to owner occupy in 2007.

I work in a 'typical' office environment - I'm one of the younger yet experienced and trained people at work so there's a lot of expectations placed on me - hence why some days I just want out.

Anyhow, on my 'good' days I look towards working an extra say 6 months than I really 'need' to in order to establish a nest egg - But I could easily go off the rails and tell them to shove it. I like to be conservative with my numbers.

In saying that, as far as I can tell if I gave it all up and left work today they owe me enough leave pay that would cover my home loan in full as well as having 2-4k left over...but I would be jobless and broke.

I don't see that as a major issue as I believe I can get casual work easily, enough for those bills I stated above and more.

[LiquidIce]

Your peers may believe that having a mortgage, leases, and debt is normal. That's why they may not be able to understand your lifestyle.

I remember your previous threads and it's good to hear you're getting closer to your goal. I'd go with what crazyass said - crunch the numbers again and try and set aside an emergency fund. You never know when you crack a tooth or some crazy shit like that.

Apart from that, your plan sounds awesome . I wish you the best of luck, man.

[Euda]

It's not as if your skills and training will go out the window when you change your lifestyle. If it doesn't suit you, then you can always make further changes. I would work the extra six months, in case something prevents you from casual, or part-time, employment for a period of time.

I don't think "failure" is really a possibility when it comes to making this sort of choice. Good luck.

[xCloudx]

I would also save up a little bit.

Also, not sure how much you're making but maybe keep 6 months pay in a savings. Then I would suggest (and this is only a suggestion) getting $10k and maxing out an IRA for two years. If you're fairly young, that 10k can turn into 50-100k by the time you retire at 60 and that way (if you're still happy with your lifestyle), you can easily afford the rest of the bills til you die.

[ShyStar]

Thanks Euda - i do try to keep my position in perspective but I dunno a lot of people think I'm crazy or something.

Originally Posted by xCloudx

I would also save up a little bit.

Also, not sure how much you're making but maybe keep 6 months pay in a savings. Then I would suggest (and this is only a suggestion) getting $10k and maxing out an IRA for two years. If you're fairly young, that 10k can turn into 50-100k by the time you retire at 60 and that way (if you're still happy with your lifestyle), you can easily afford the rest of the bills til you die.

I appreciate the suggestion. I have, from memory, >$20,000 in a retirement scheme already although it's heavily regulated in that I can't do anything with it except add additional finances to it if I want to. It becomes available around retirement age or close to it where you can demonstrate it will sustain you financially. I am not big on these schemes as, as far as I am concerned, it's money that 'investors' get to have a good time playing around with and I have limited control - either low or high risk ventures :/ The low risk ones still got burned in the 2008/2009 "ZOMG GFC!!!" - A lot of people that contributed additional funds got royally fucked over, as did those who opted for the big risk/big gain strategy that went belly up - Robbing a lot of people of their retirement plans...

I also have about 5 months of paid leave owing me - So in short I could quit now and have ~half a years salary continue to come in (or get it paid as a lump sum). I really don't want to do this unless I can no longer face going to work, it's my safety net.

There are a few works I would like to do to my place but, again, as I see it they are all jobs I can do myself...but can't because I'm at work all the time. It's such a double edged sword - Can do the work myself but have no time, pay someone else to do it = reason why you are at work in the first place :/