I am currently feeling like a financial genius. For many years P & I resisted all advice that we should “leverage the equity in our house” into investments in shares and other property. Instead, we were very retro, and continued to focus on paying off debt. The one debt I can never repay is the life-changing advice I read some years ago in the book “Your Money or Your Life” by Joe Dominguez & Vicki Robin. I highly recommend it.
Mainly, we were just lazy. I remember my brother once commenting that I would never be rich, as I just wasn’t interested enough in money. I thought this was a fairly acute observation, not just of me, but of patterns of wealth. However, times have changed my friends. I *am* interested in politics, and these days politics is, quite obviously, all about money. (I guess it always was, but now I can’t avoid it). Economics is my new pet subject. Just ask me about the economy’s automatic stabilisers, or, my current favourite, moral hazard. This seems to be the burning question of the times. Should people/companies who made poor decisions suffer the consequences of those decisions…… because if they don’t, then they are living every capitalists dream: privatised profits and socialised losses. But if we do let people who made poor decisions go down the gurgler, then they’ll take innocent bystanders with them. Neither of these propositions are vote winners, and this is why I *love* the sport of politics. Wrestle with that one you arseholes!
While I’m on the subject of those arseholes, let me say that they have sold us all down the river with their naive idea that we could all be “investors”, rather than Centrelink “customers”. First Paul Keating with compulsory superannuation…. did he not consider that some people might want to retire during a downturn? And then John Howard with his idea that we could all be shareholders (so everyone proceeded to lose money on Telstra… et al.) They were complicit in sending a message that investments always went up….. and if they didn’t you could ride through the downturn….. a la Warren Buffet.
But, I digress. On our road to living debt free P & I came to the inevitable conclusion that the easiest way to get rid of debt was to sell the house we had, and buy one we could actually afford. We jagged it and sold at the top of the market. (The sale went a bit pear shaped but that’s another story.) So now, based on feverish readings of all things financial, and Kevin Rudd’s ever more desperate-looking attempts to prop up Australian housing prices (global, Kevin, GLOBAL), we are grappling whether to take a punt and try to sell our house now, before we go, and then buy again when we get back. (It may already be too late.) This is based on four premises:
1) It is looking ever more likely that house prices are about to fall off the cliff;
2) Even if they don’t, they’re not going up in the next year or so;
3) Money in the bank is guaranteed by Kevin Rudd, unlike money tied up in housing;
4) If we get it completely wrong, we’ll still have the camper trailer and P is starting to really resent the on-going work of home ownership anyway.
So there you go folks. That’s financial planning, 2009 style. Selling the house to try and save your bacon.