Right track to Finanical Freedom? - thoughts and advices please!

[Envesty]

Your thoughts and advices on my financial track below, will be greatly appreciated:

Age: 30 years old male (no kids only a GF been with 1 year now)
Pay:
Job: stable (been working for the same company for 3 years now)
Goal: To be financially set and retire when I am 58 with a bit of passive income

Assets:

Shares = $14k
Savings = $0
Silver bullion = 20k
Car = valued at 20k
MISC = $2,000
House equity = $175k (House valued at $507k I still owe 335k on it)
Super annual fund = $16k (3% from my wage and employer contribute 3%)

Liabilities:
Home mortgage = $335k
Credit card debt = $4,000



The house I own has 3 bedrooms, I am renting out the 2 spare bedroom total monthly income $1,480.

Total monthly income (rent and salary) = $5,620

Total monthly expenses (Mortgage repayment,power,water,phone and internet,food,petrol,entertainment etc..) = APPROX $4,200

Monthly surplus of $ 1,420

Mortgage set out: Balance of $335k @ 5.79% (fixed for 1 more year) minimum monthly repayment $1,840, but I am paying a bit more than the minimum repayment so that I can pay it off faster saving myself 20 years and money on interest. I am currently paying $3,200 monthly.


My question is that should I keep going what I am doing? Or should I less my repayment and save the rest for another deposit on another house which I can rent out and that hopefully by the age of 55 both house will be paid off? Passive income plus my Super annual fund should be enough to live on?

My goal at the moment is to pay hard maybe increase the mortgage repayments it will cut another 2 years off. So by the age of 38-39 I should have a free hold house then I will have $4,620 of surplus cash monthly to save for another house or even use the equity of the house I paid off for another loan on a rental house.

[Cpt707]

....what great place to be in.....TIME is your Major Asset.....Go for it and take Every thing to the Limit....!!!

[Envesty]

....what great place to be in.....TIME is your Major Asset.....Go for it and take Every thing to the Limit....!!!

Yeah, i don't want to wait to 55 to retire, i know with 2 houses paid off (1 to live in and another one bringing passive income) plus my Kiwisaver will be just enough to enjoy a decent life in NZ.

[cube]

Remember that Kiwisaver won't come on stream until 65, so you'd need to make sure income from assets is enough between 55 and 65.

Life will get in the way; children are the most obvious change of focus, but something will more than likely pop up. That can be something good, like an opportunity to work overseas, or bad, like ill health or a divorce.

My advice is to plan for the future, but don't let it get too much in the way of having a good time now.

Oh, and don't count a car as an asset (unless you are a successful Uber driver!)

[Anthonyacat]

Oh, and don't count a car as an asset (unless you are a successful Uber driver!)

Agreed! Unless your car is on the market, and you are going to sell it without buying another, it is a liability, not an asset!

[PTILoveYou]

You are in a decent financial situation for your age, but I see you haven't started investing in assets that one day give you passive income to retire on, so that's something you need to work towards starting now.

[Damap]

You "should" start investing soon. At your age buy 1 rental property say every 2 to 3 years. Ignore cycles and the media just slowly buy houses and you will be set for life.
Never sell any and as you get older sell the worst performing ones off to freehold the best ones and you are done. At todays prices 4 houses in a main centre with no debt would give you 100K a year in passive income so you don't need to have a huge portfolio. A goal of 4 or 5 houses and no debt is a great long term goal.
I would buy another home before you worry about paying your own home off. Debt reduction is good but currently you have no investments and no leverage so you need to fix that.

[Eljay1]

I started investing around your age and now have a modest house to live in mortgage free and three ip's paid for (two of those are cheapies which equals good yield). We didn't go particularly hard over the last fifteen years so you should easily be able to reach your goal well before 58. We don't have kids, which I guess makes a difference as we'll sell all the properties and live off the proceeds in our life time (or that's the idea anyway). Key things I've picked up as important IMO during my journey- enjoy today as plenty of people don't live to taste retirement, get a strategy to achieve your goals and assess each investment property against your strategy, increase your earnings to an optimal level if you're able and it's practical for you, pay down non deductible debt, buy good investment property (as per your own particular strategy) and explore other income streams (sounds like you're doing that) such as business and shares etc.

You're in a great position. It amazes me how few people take real steps towards FF, or even consider it. Sounds like you're a go getter, so I'd say go for it. Write down your goal, find a strategy that suits your financial position, risk tolerance etc then look for steps to get you there (such as particular properties/shares etc).

[Lissica]

You "should" start investing soon.
Debt reduction is good but currently you have no investments and no leverage so you need to fix that.

I know this is a property site, but most people would consider shares to be an investment class.

[rocket]

Property has the power of compounding...plus a lot of people help you achieve your goals like- tenant, ird, capital gain, bank etc. So basically no other asset class can achieve this. You earn money from someone else's money.
Keep investing

[Lissica]

Property has the power of compounding...plus a lot of people help you achieve your goals like- tenant, ird, capital gain, bank etc. So basically no other asset class can achieve this. You earn money from someone else's money.
Keep investing

Even a bank account has the power of compounding. Shares have capital gain. Banks are there to make money, the reason they help you with your goal is because they need your business. How does IRD help? Property is the only business where you cannot depreciate the primary capital good (ie the building), only bits and pieces like furnishings.

Tenants buy a service (shelter), the same as customers in any business, which is what you are invested in as an equity shareholder.

[PC]

Do you have $4K owing on a credit card?!?

Now is a great time to pay off debt.
Sell the silver, shares and pay off your mortgage.

When the year is up - refix mortgage ~4.4% and keep repayments the same or better yet increase.
$4,200 a month seems extravagant for a single male.
You should be saving a lot more.
8-10yrs of sweat - and you could be well set up.

Have a look around here: http://www.mrmoneymustache.com/

[artemis]

I know this is a property site, but most people would consider shares to be an investment class.

I agree, though nowhere near so easy to leverage. Investing in shares has the advantage of contributing to financial education in a way property investment does not. Plus no tenant hassles! Might be an idea to determine if you are looking for capital gain or income, and then try dipping a toe in the water with one or two share investments. Once invested the companies become a lot more interesting. Check out sites like sharetrader.co.nz (but do your own research as well).

[Damap]

Shares is a gambling activity compared to investing.

[rocket]

Ok let me explain-
Property is tangible & a hard visible asset.
Property investment capital gains are tax free in nz hence IRD doesn't come catching u.
As u said that property is the only business that doesn't depreciate...isn't that what we want. ?
Tenants help you pay off your investment faster.
Inflation, population growth etc favor long term growth.
Resale is easy , if not then you can in emergency situation take a loan against your property.

In short no other asset class can compare PI.