Let me be really frank with you by sharing that I was not always a successful property investor.
In fact, I was quite the opposite.
You see, in my 20s, I was a pretty happy go lucky person, that didn’t really think about my financial future too much. I was working a busy and stressful corporate job, and my stress release came in the form of retail therapy.
My credit cards were like my own magic wand– one wave and I would have something bright and new which was all mine!
The thrill of that something new was temporary, and so I was out shopping quite a lot.
The irony of it was that I would go shopping to unwind and deal with the stress of my job, but I also needed to pay off my credit card debt, so I was compelled to return to my stressful job. The job and my shopaholic tendencies had a parasitic relationship – they fed off each other but I was left with the fall out – a huge pile of credit card debt!
This kept going until one day my husband Ed and I were having a conversation and we were calculating our superannuation and looking at how much we had to fund our retirement.
The figures were not good. After checking a few times that no mistakes had been made we were faced with a shocking fact: we were going to be living on less than $30,000 per year!
Now the average cost of living for a couple in Australia is about $100,000 a year. Given that I like to go out, go shopping, go to restaurants, and travel – our expenses would be closer to $200,000 a year!
This was a huge slap around the face! I was headed for life on the poverty line!
Right then and there I knew I did not want to be in this position. Things needed to change, you could say it was the “line in the sand” moment I needed and so I made the decision to do something about it – here are the steps I followed:
Step 1 was to eliminate all bad debts.
As a shopaholic, I had quite a mountain of debt in the form of credit cards and personal loans. These debts were costing more money than what I planned for.
With careful planning and iron discipline, we paid off our debts in approximately a year. To achieve this, I need to get honest with myself, cut up the credit cards and monitor my spending.
Step 2 was to cut back on unnecessary expenses.
When I went through and reviewed what I was spending my money on, I started cutting back on what was unnecessary or no longer required. That money would then be more money that I could use to pay off our debts quicker.
Step 3 was to save up a deposit.
Using the same discipline to pay off the debts, we saved for a deposit. It is much easier to save once you’ve paid off the debts, and so it wasn’t long until we had enough money to buy our first property.
Step 4 was to learn, learn, learn!
Hubby and I also decided that if we were going to spend hundreds of thousands of dollars on property that we need to learn as much as we could to avoid making mistakes that could potentially cost us big time.
Reading, talking to people who had investment properties, going to seminars and buying the property magazines all helped with our first purchase.
Once we had our deposit we were clear that we wanted to purchase our own home, and we were very excited to do so.
This was the first property I had bought, and while it wasn’t an investment property, it set things up so that I could purchase my first investment property not long after.
Time to Take Action
So, whether you are a new or experienced investor, it’s worth going back to basics and reviewing my first 3 steps periodically, in fact why don’t you spend some time now and do that for yourself.
- Step 1: Eliminate bad debt – if you have no bad debt, then congrats, this is really massive and will be extremely helpful! However if you have debt, then start being a little more active in paying it off.
- Step 2: Cut back on unnecessary expenses – this is great to review every few months, and look at cancelling memberships or programs that you no longer require, and looking at any other unnecessary expenses that no longer serve you.
- Step 3: Save up a deposit – for experienced investors, look at how you can save up or access funds for your next property, and for new investors, it is always exciting to save up for your first home.
- Step 4: Learn, learn, learn! – continue to grow you knowledge by spending 1 hour per week researching and expanding your thinking.
So take action and I will have some more for you shortly.