Hope you are keeping safe during these different times!
Apologies yet again for a delayed post, it has been a trying time of late, and a lot has changed for us. Two major things have happened to us during the last 5 weeks. My wife was sadly made redundant, and I was relocated for work. Though this closes one chapter in our lives, it also opens another door of opportunity. The payout my wife received has accelerated our position, and I am confident she will find work in the near term.
It was a bitter sweet moment to pay out our remaining debt with her redundancy package. If she were still employed, we would have paid it off anyway, so it honestly was an empty feeling. We will need to be a bit more cautious with our money now we are on a single income.
If you recall from our previous update we had $2,030 owing to our creditors. This has been closed out and we are currently sitting on about $43,000 in cash. Here is the insane visual:
This puts us in an interesting dilemma. The rental market where we have relocated is very competitive, and it is cheaper to purchase equivalent properties. Many of the properties available for purchase are cash flow positive or neutral, which makes me lean towards purchasing and if we are relocated again in a few years, rent the property out to pay for itself. I have read extensively about the pains of investing in property, however I am attracted to this proposition for a few reasons. One, it provides an element of security and stability, which will be nice given the current climate. There are varied schools of thought surrounding the FIRE movement, and one of them includes owning your PPOR as well as a diversified portfolio. I am now leaning towards this proposition given the location we now reside. If we were still in Sydney – forget it!
Additionally, this will allow us to implement a debt recycling strategy, which has great appeal. The alternative is to put our cash reserves into index funds, and rent. From my calculations, renting is approximately $100 dearer each week in the areas we want to live, even when considering insurance and rates. It seems like a no brainer to me, but I would welcome any comments and considerations below.
As you can imagine, our net worth has increased dramatically as a result of my wife’s predicament. Our super balances have obviously taken a hit as world markets have tumbled, but this is great for us as we are still in accumulation phase. Give me those cheap parcels! Below is a visual of our current position of $147,874 excluding HECS debt:
I would welcome any thoughts on the rent vs purchase debate, and how it fits into a FIRE strategy.
Lets hope the economy opens up again soon, and we can return to some normality!