Let Other People Pay for Your Retirement

[GordMay]

Greetings and welcome aboard the CF, dgrenwich.

[scgilligan]

Originally Posted by cruisersfarm

That didn't work because your presentation was wrong.

You needed to open a business that provides these services, not present yourself as a 1 man shop sending out your resume.

You were still presenting as an employee.


Try that.

Good point. Hard to "open a business" and present yourself as such when you ARE a 1 man shop. I guess I could have put together a business name, card, marketing plan, etc to look more professional..but, I certainly did not want to actually start a company with other employees..I wanted it to be just me..Hard to look like a business when you have had no real clients...but, I do see your point with the marketing part of the picture.

I have worked in this field for nearly 20 years and no firm that I have worked for has ever outsourced CAD work..so, I don't know that it is something the profession really wants/needs for the most part. Although it is a logical way to get work produced without the overhead..

Problem is, architects are notoriously cheap and control freaks. Lol.

[Kenomac]

Originally Posted by SoundWave

Dividends, dividends, dividends.

Reinvest a good, painful portion of the dividends, and don't touch that principle.

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”


― Albert Einstein

Excellent idea. Keep 'em coming.

[Siberianhusky]

I just did the math on this thinking about doing the rental thing.
By the time I pay property taxes, income tax on the money I bring in as rent, repairs, insurance etc. I make more money at the end of the year investing the money from selling the house and living on dividends.
Then there is capitol gains on the property when you go to sell it unless you make it you primary residence for 1 year before you sell it.
Just taxes and insurance would have sucked 4000$ off the top.
Then there are the risks which I was unwilling to take. In Canada the property owner has no rights, the legal process to get somebody out of your house can take a year even if they have never paid rent. Once they are in you're screwed! You have no say, rent out a non smoking house and they smoke - too bad. No pets and they start a ferret farm (true story) you're screwed. That house was condemned after the owners got the tenants out, happened just down the road from the house I sold!

[daletournier]

I think a lot focus on what they are, or are not worth, my thinking changed when I focused on cashflow rather than capital gain. Your worth is only as good as the cashflow it throws off . I believe one of the biggest problems in the last 15 or so years is there are alot of people who think they are investors because they purchased something and it went up. Speculating isn't investing , its gambling, fortunately for many the economic environment (fundamentally unsound) has allowed them to win through no real skill on their behalf. I believe what Ken is doing is investing, cashflow investors aren't to concerned about their net worth , its the money coming in that the investment throws off that's important. Capital gain is a bonus. A investment makes sense today, puts money in your pocket today.
In Australia we have a thing called negative gearing. I find it hilarious how so many believe making a loss to get a tax break is a good investment. People sell their time and then "invest" their money into something that takes money from their pocket each week! Few understand money and how to make it, education is the first step to financial freedom.....abit of luck is a good thing to.


Sent from my vivo Y35 using Cruisers Sailing Forum mobile app

[Kenomac]

Originally Posted by Siberianhusky

I just did the math on this thinking about doing the rental thing.
By the time I pay property taxes, income tax on the money I bring in as rent, repairs, insurance etc. I make more money at the end of the year investing the money from selling the house and living on dividends.
Then there is capitol gains on the property when you go to sell it unless you make it you primary residence for 1 year before you sell it.
Just taxes and insurance would have sucked 4000$ off the top.
Then there are the risks which I was unwilling to take. In Canada the property owner has no rights, the legal process to get somebody out of your house can take a year even if they have never paid rent. Once they are in you're screwed! You have no say, rent out a non smoking house and they smoke - too bad. No pets and they start a ferret farm (true story) you're screwed. That house was condemned after the owners got the tenants out, happened just down the road from the house I sold!

I agree with your points regarding residential real estate, but try looking at commercial business oriented real estate like we did. We fixed up a dilapidated old building that even had critters living up on the fourth floor, we bought the place for half the asking price and my wife thought my friend Ken and I were nuts for wanting it. Ken lived there for the first year, then I bought him out so that he could purchase a fishing boat. The laws are much different regarding commercial buildings and the tenants, the owner has more rights and evictions for non-payment of rent can happen in 30 days... Except when squatters move in, but we have that covered now.

I had the place re-zoned 10 years ago, and my wife and I changed five of the offices into an apartment for ourselves. Now we live on premises rent and mortgage free with our tenants taking care of all the bills.

Rome wasn't built in a day, in our case it took 12 years. And is still ongoing....

[Siberianhusky]

I did think about buying the building where my favorite cafe is. Owner did talk to me about it. Biggest problem was he wanted to sell the cafe business as well in the deal. I was only interested in the property.
Decided I'll just liquidate and invest. Once I leave this town I have no intentions of ever returning for anything other than a visit. Lk Ontario is nice but I miss the oceans.

[Kenomac]

Originally Posted by Siberianhusky

I did think about buying the building where my favorite cafe is. Owner did talk to me about it. Biggest problem was he wanted to sell the cafe business as well in the deal. I was only interested in the property.
Decided I'll just liquidate and invest. Once I leave this town I have no intentions of ever returning for anything other than a visit. Lk Ontario is nice but I miss the oceans.

Some good friends of ours liquidated their residential real estate and did a like exchange for a bank building that had a ten year triple net lease with seven years remaining. They simply cashed the rent checks for the next five years $13,000 per month. But then they got a little greedy, liquidated the bank building and put it all in the stock market when the DOW was at 18,000.

Now it's not so much fun. When they had the bank building they traveled, now they're back working full time because they're not receiving the monthly check.

Passive rental income can be very much like an annuity, because you receive a monthly check which allows you to travel.

[denverd0n]

Originally Posted by pjlambe

Another ill informed and cheap go at teachers!
Given the shallowness and simplicity of your key to early retirement..I could go on but it wouldn't be complimentary..OR do YOU think you have got the magic..fit all..solution to financial independence??

He very clearly has said that his way is absolutely NOT "the magic..fit all..solution." It is just one way. The way that worked for him. If you don't like it, fine, find your own way. I did.

[Kenomac]

Originally Posted by daletournier

I think a lot focus on what they are, or are not worth, my thinking changed when I focused on cashflow rather than capital gain. Your worth is only as good as the cashflow it throws off . I believe one of the biggest problems in the last 15 or so years is there are alot of people who think they are investors because they purchased something and it went up. Speculating isn't investing , its gambling, fortunately for many the economic environment (fundamentally unsound) has allowed them to win through no real skill on their behalf. I believe what Ken is doing is investing, cashflow investors aren't to concerned about their net worth , its the money coming in that the investment throws off that's important. Capital gain is a bonus. A investment makes sense today, puts money in your pocket today.
In Australia we have a thing called negative gearing. I find it hilarious how so many believe making a loss to get a tax break is a good investment. People sell their time and then "invest" their money into something that takes money from their pocket each week! Few understand money and how to make it, education is the first step to financial freedom.....abit of luck is a good thing to.


Sent from my vivo Y35 using Cruisers Sailing Forum mobile app

Agreed. My father always worried about having enough "tax deductions" and "write offs" or "tax breaks," I always argued with him calling his deductions, "deductions right off your profit" or write offs... "Write off your bottom line." In the end, he ended up with just a bunch of tax deductions and no money. My parents never invested in commercial or residential income property, claiming they either didn't want the hassles or didn't want to live so close to other people, so in the end all they had was social security and debts.

You're absolutely correct, what we do is all about cash flow. It doesn't matter if the building is worth 500k, 1 million or 2 million, or whether or not the value increases or decreases... Cash flow is all that matters.

Funny story:

When my wife and I first moved into our premises apartment unit within the office building, my wife commented/complained about hearing people walking upstairs. I told her.... "That's the sound of money." She never ever complained again, in fact now whenever she hears noise coming from the floors above, she smiles and says... "That's just the sound of money."

[rayjay]

Owning rental property does give you freedom and choices , and if you own property or run a business you have hassle and you have to be prepared for this. I have several domestic rental properties which are sometimes problematic, but you have to work through it. 25 years ago I had this plan to live comfortably off rental income , which I have achieved, and go sailing , no flash watches or flash cars, got a nice 40ft yacht though. One thing you must do is have a life along the way!! We had a third share in a Southern Cross in the B V I . Spent 6to 7 weeks sailing in the Winter until the others wanted to sell up. My yacht is on the south coast of U K and was on its way to the Med when I was stuck down with major illness which hopefully will recover from in a couple of years time, so the yacht is up for sale. Why am I writing this?? Don't take health for granted just do it . I love the philosophy of dgrenwich !! As for Teachers , l have three friends who have been and I was always very envious in my younger days of their long holidays !!!

[Kenomac]

Originally Posted by dgrenwich

I've been doing something similar to Kenomac's plan for 6 years now (I'm 46). Initially I took off cruising for 2 years straight and then started returning to Canada to work for 6 months and cruise for 6. I've rented my property out full time in that period, renting a room from friends while back home to save money and make things simple—keeping good stable long term tenants in the process. My tenants have all been very responsible good people. In Canada I drive an old reliable car, live fairly cheaply and save cash.

The benefits are:

• Cash flow without worrying about retirement. I put some money away for retirement still but also feel that, at the pace I'm going, I would enjoy working for much longer. It is, after all, semi-retirement already.

• You say goodbye to friends and countries you love all the time. You say hello to them too. It is a great way to appreciate everywhere you are. I miss Canada when I'm in the Caribbean and vice versa but also appreciate it immensely.

• I'm cruising at a relatively young age. My first foray was at 36 years of age but cash was a huge problem then. It still is, but not nearly as much now. I hope I'm as robust and healthy at 76 as I am at 46, but I'm not going to gamble on it. The time to go is now.

•My income is lower, but as pointed out, the lowering of income reduces the tax payable (as a percentage as I'm in a lower tax bracket) making the income actually made that much more efficient. Work is not just something you do until retirement but rather a purpose-filled yet temporary condition.

The disadvantages are

• I simply don't garner as much money as I would working/running my business full time. For example, to keep steady work coming in from clients who operate year round (all of them), I subcontract to some of my colleagues at a discounted rate. It is simply the price to pay for freedom.

• Having your wife/girlfriend/partner sign on to the lifestyle is not a given. I've met many a happy cruising couple but also many lonely old dudes. This goes for cruising in general of course, but flying back for 6 months (or whatever your time period) is not for everyone.

All accounted for I feel very lucky to get to do this, to live this life. Anyone who is contemplating it should simply do it. There is quite literally, over the course of time, an infinite amount of money to be made, but only a finite amount of time to do the things you want to do.

For a first post, I want to give you an A+ for awesomeness. We sound like two peas in a pod regarding our views towards cruising, finance, outlook and lifestyle.

Welcome aboard the Cruisers forum!

You should use your expression: "Over the course of time, there's a infinite amount of money to be made, but only a finite amount of time to do the things you want to do" as a signature for your posts.

Have you sailed over to the Med yet?

[Siberianhusky]

Originally Posted by Kenomac

Some good friends of ours liquidated their residential real estate and did a like exchange for a bank building that had a ten year triple net lease with seven years remaining. They simply cashed the rent checks for the next five years $13,000 per month. But then they got a little greedy, liquidated the bank building and put it all in the stock market when the DOW was at 18,000.

Now it's not so much fun. When they had the bank building they traveled, now they're back working full time because they're not receiving the monthly check.

Passive rental income can be very much like an annuity, because you receive a monthly check which allows you to travel.

I could see this happening to somebody quite easily, depends on what you are invested in, My stuff doesn't move too much, been in it for years. My mom got creamed with her mutual funds, I made it through alright.
I don't much care if the market goes up or down just as long as they don't cut the dividends. My net worth may move around a bit but my yearly take remains the same
I'm not one for making lots of trades, more of a buy and hold guy.
I currently am not using any of my dividends so they get rolled right back into new stock. When I cast off I will continue the plan, any excess is rolled back in.

[Kenomac]

Originally Posted by Siberianhusky

I could see this happening to somebody quite easily, depends on what you are invested in, My stuff doesn't move too much, been in it for years. My mom got creamed with her mutual funds, I made it through alright.
I don't much care if the market goes up or down just as long as they don't cut the dividends. My net worth may move around a bit but my yearly take remains the same
I'm not one for making lots of trades, more of a buy and hold guy.
I currently am not using any of my dividends so they get rolled right back into new stock. When I cast off I will continue the plan, any excess is rolled back in.

Excellent! "Good things come to those who wait."

[barnakiel]

It is better not to mix up things like dividends and compound interest.

Dividends are not interest, you must own the company to decide on its dividend policy. Even the preferreds can't be always seen as interest equivalent as reinvestment would call for the same company issuing more preferreds, which is hardly ever the case.

Compound interest is best seen in renewable deposits, coupon re-investments and other such instruments.

Unless one is somehow involved in the markets (a broker, a CFA, a company owner, a pro investor, etc.) it is best to keep dividends away from the main picture.

And while compound interest is fine, if you are compounding yours, you are not living off your investment, which practically cancels validity of your investment as a way of funding your sailing fancy.

b.