By Al Lewison and Cam McLellan
We met up with a mate of ours, for the sake of this article let’s call him Jimmy. A while ago he wanted us to sit down and go through a personal financial plan, with the view to buying a few investment properties. So we started by discussing what his 10 year goals would be and worked back from there.
When we looked at how he could achieve those goals we were shocked to discover the amount Jimmy pays to smoke each month. His smoking was the equivalent of what he would be spending on two investment properties each month, which was $450 worth.
So whilst that may not seem like a big deal today, look at it long term, over the course of 10 years if he had invested that money in two $500,000 properties, with rent coming in and tax deductions and his $450 going to a good cause, guess what? He’s made a million dollars in ten years’ time just from quitting smoking.
Cam’s PA Charlotte is an awesome example of someone who is stringent on budgeting. When talking to her about some of the sacrifices people could make to buy an investment property, thinking that an investment property will cost something between $20 – $80 a week to hold, she mentioned buying lunch. If you buy your lunch every day, instead of taking it with you – that’s one investment property. So your debt to service ratio on holding a property is fairly easy, especially if you make some small sacrifices.
So do your homework, if you’re thinking about investing and something is holding you back, go and look at what you do in a week or a month and see what you can change. Be it drinking coffee every second day instead of every day, taking your lunch to work, can you change your outgoing bills, can you drive a cheaper car – whatever it might be within your own situation find ways to save more money.
Needless to say Jimmy has given up smoking!