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Passive income vs Income from employment

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  • Passive income vs Income from employment

    A question I’ve never really thought about and need answers on.

    if your goal is passive income from your investing, at the point where your passive income or income you no longer trade your time for money becomes greater than your job, when are you ok to leave your job? If you still have debt but are paying all loans how does the bank see you leaving your job?
    "DEBT BECOMES IRRELEVANT WITH INFLATION".

  • #2
    There are banks and there are non-banks. Different approaches to borrowers.

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    • #3
      Generally the banks won't question anything until you have a credit event. If you want to continue to borrow you need the financials of your property business to stack up. It may take a change in bank as we found the people we dealt with at the bank couldn't see us as business owners/operators vs. our historic situation being wage earners.

      5 year on from our retirement date and no one even bank now asks about our old salaried employment

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      • #4
        My experience is that rank and file, front line staff at most banks don't have many clues. I was once asked to verify something as part of some application or other. Might've been a credit card. I duly returned with the (very, very, one-page-simple) financial statements and handed them to the person across the desk in one of those little cubicle offices that banks have. (Or had.) It was not re-assuring to be told she did not know how to read them, as she reached for the phone. It was a one-page income and expenses style financial report and even a 12 year old would've been able to see if there was a profit or loss. And maybe even a trend, if any attention was paid to the previous year's column figures.

        But there's worse.

        Some years back, I wanted to borrow about $55k for about three months. The manager wrung his hands, telling me that he knew my record, because he and I had organised such things in the past. He also knew I was 'good for the money,' but couldn't lend it to me because of lending criteria set by someone else, somewhere else. He ended our discussion with, "gawd I hate this business, now."
        Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

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        • #5
          Originally posted by Perry View Post
          My experience is that rank and file, front line staff at most banks don't have many clues. I was once asked to verify something as part of some application or other. Might've been a credit card. I duly returned with the (very, very, one-page-simple) financial statements and handed them to the person across the desk in one of those little cubicle offices that banks have. (Or had.) It was not re-assuring to be told she did not know how to read them, as she reached for the phone. It was a one-page income and expenses style financial report and even a 12 year old would've been able to see if there was a profit or loss. And maybe even a trend, if any attention was paid to the previous year's column figures.

          But there's worse.

          Some years back, I wanted to borrow about $55k for about three months. The manager wrung his hands, telling me that he knew my record, because he and I had organised such things in the past. He also knew I was 'good for the money,' but couldn't lend it to me because of lending criteria set by someone else, somewhere else. He ended our discussion with, "gawd I hate this business, now."
          I think at also gets to the point where you own SO much assets that the banks cannot ignore your position, yes its always about cashflow and the ability to pay, but if you have a habit of buying good income producing assets I feel the banks are always willing to lend against this.

          I am sitting down with a broker tomorrow as it happens and will find out if I can squeeze more capital out to buy again.
          "DEBT BECOMES IRRELEVANT WITH INFLATION".

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