20-something + Retirement = What?

[davidI]

Originally posted by ercchry


.... You should read and not skim

He's right. Your math sucks. Plus your numbers are unrealistic.

Where are you going to find a 3 bed home for $200k in Calgary? Forgiving this ridiculousness, let's continue with the analysis....

Plug 25 year amortization, $190k mortgage, 7 years at 4% monthly into a mortgage calculator and you'll get:

Monthly payment $999.44
Amortization Period 25 years
Interest Cost for the Term $48,060.65
Balance at the end of term $154,107.69
Interest Cost at Amortization $109,848.05

So 7 years dealing with the hassles of 2 roomates or tenants for a net gain of $36k or just $5k/year on the mortgage.

But you're stashing the $800 under your mattress, right? Your costs are still $1000k per month (+property tax which we'll say equals $150 per month) putting you in the hole $350 on a monthly basis.

But you're $36k up on your mortgage, right!? Well, let's deduct $3k for buyer fees, $1k/year for maintenace and insurance, and we'll say $5k in fees if you were to sell. Suddenly you're only $21k, or $3k per year ahead. Oh, and don't forget you're shoveling sidewalks and mowing the lawn to avoid by-law penalties.

Let's not bother considering the risk of floods damaging your basement or a nasty storm forcing you to re-roof or re-side the place or your PB pipes leaking. I'm sure you're getting a gem of a house for $200k so let's not consider any of those risks!

I know you think the value of the place will go up 180% in 7 years, but that's simply retarded given the current market. It would be just as likely to lose $50k in value when mortgage rates jump.

My conclusion:
You couldn't plan your way out of a wet paper bag.

[davidI]

My last post sounded very negative and I tend to be a positive person, so my advice to everyone in this thread is to read the "4-Hour Work Week" by Timothy Ferris. A lot of his conclusions are unrealistic (the guy managed to become a millionaire in University), but there is still a lot of great advice in there.

[adamc]

David awesome posts, I'm right there with you on pretty much everything.

Last year I ran with the bulls in spain, cliff jumped in croatia, took down french girls in paris (harder and more terrifying than running with the bulls), saw famous DJs in berlin, witnessed a shooting and got hit with bullet shrapnel in Amsterdam and a million other experiences in 23+ countries that I won't bother to detail here.

My friend decided to go with a bigger house than he could afford, a new truck, and now he's stuck in the deep south with a house that's going to take many years to be worth as much as he paid for it... But some weekends he gets to play slow-pitch..

Travel when you're young, or regret it for the rest of your life.

[Dumbass17]

Originally posted by adamc
David awesome posts, I'm right there with you on pretty much everything.

Last year I ran with the bulls in spain, cliff jumped in croatia, took down french girls in paris (harder and more terrifying than running with the bulls), saw famous DJs in berlin, witnessed a shooting and got hit with bullet shrapnel in Amsterdam and a million other experiences in 23+ countries that I won't bother to detail here.

My friend decided to go with a bigger house than he could afford, a new truck, and now he's stuck in the deep south with a house that's going to take many years to be worth as much as he paid for it... But some weekends he gets to play slow-pitch..

Travel when you're young, or regret it for the rest of your life.

-slow respectful node-

[Feruk]

Originally posted by davidI
Alright, I've scrolled through all of the posts and feel the need to add my $.02. Sorry - going to be a long post.

My Background:
I just turned 28.
I bought a house at 25.
I have been to 50+ countries.
I've offered a lot of 'lifestyle' advice to friends in the past about these sorts of things - they often don't listen - and now I commonly hear how much they regret not listening.

My circumstances are a bit different from yours as I work overseas on 5 week on / 5 week off rotations which has made my accomplishments easier, but that doesn't mean I don't recognize how to make the same things happen under a normal Calgary job.

My plan is to take 2013 and 2014 off work. I'll likely sell my house, car and majority of my possessions and try to tick off more of my bucket list. I may rent out my house as an investment property, but that's just because I'm in a financial position to allow me to do so. I wouldn't hesitate to sell the house to pay for my 2 years of travel if it meant keeping me out of debt.

Retirement savings? Yea, I've socked away some money, and guess what? Over 7-years they've increased 1.1% (company DC plan - mutual funds). Interest rates are brutally low so 'saving' can potentially be a negative given inflation rates. Should interest rates rise, property prices will go down (granted mortgage rates will be higher) which I see as a wash.

My advice...

First - you can't have it all at once. Decide on your priorities and sacrifice those things which can wait.

Second - Pay off your debt and save money until you can afford to travel.

Third - Travel young and take time off work to do it. Take 6 months to 2 years off. Assuming 3 weeks of holiday a year, it would take almost 9 years to accomplish the same amount of travel as a 6 month break from work. Many companies will offer you a 6-12 month unpaid leave if you ask for it and work with them on it. If not, there is plenty of work out there so once you have the experience, quit and go for it.

Why do I recommend traveling when you're young?
1. It's cheaper (I know you said you don't like hostels but $30 hostel vs. $200 hotel makes a big difference on overall travel costs) so suck it up. There's not reason not to like hostels! They make travel more social and fun. Also, if you take that 6 months - 2 years off you can buy an around the world ticket which will cost a fraction of what multiple trips would cost. You'll also better be able to handle the red-eye flights, slow boats, bus rides and cheaper transportation.

2. It's more fun. The backpacker party scene is phenomenal. You'll also get laid, a lot. Who knows, you may meet your dream girl which will turn your life plans upside down.

3. You'll see more and enjoy it more. Would you prefer to hike up to Maccu Picchu and beat the crowds, experience the area for yourself, or show up with 500 60+ y.o.'s on the bus? Same goes for activities. Can you guarantee you'll be able to go cliff jumping, scuba diving, snorkelling, bungee jumping, whitewater rafting etc. when you're 60+? You may be able to, and lots of people do - but lots of people don't.

4. You'll learn a lot about yourself. This is especially true if you backpack solo. You may also discover your true interests and passions in life, which will make your remaining years that much more enjoyable.

5. You'll be a smarter worker when you return. You'll better understand work / life balance, and probably be seen as more 'experienced' just for being older and wiser.

Fourth - Get a job and be so happy that you had that awesome mini-retirement at a young age. Don't stress about the fact that it may mean working one more year when you're 55. Who knows if you'll even make 55? Do you think the fun you'd have traveling at 55 is greater than the fun you'd have traveling in your 20's? Hopefully your travels will give you perspective on the rest of your life and allow you to make the most of your time on this great planet.

Fifth - I still see marriage as a questionable choice (lots of divorced friends), but if you do find that dream girl, you're going to want a different place to live than what you'd buy now anyways. Save on the costs of realtor fees, moving, lawyers etc. and wait until you're ready for your first home. Live in a crappy rental or with roomies or whatever it takes to bank some coin when you return from your travels. Your amazing memories from the road should make it bearable. This is especially true given the uncertainty in Real Estate these days. Condo supplies will probably keep increasing and therefore prices may easily correct (my bro just lost $40k on his condo sale purchased 4 years ago as he moves to a house). If you buy a house, as I did, it means a lot of time and money spent on maintenance and makes it difficult to pick up and leave. You'll also be further away from the 'action' making it harder and more expensive to have fun as a single 20-something. Same with posessions. You'll kit out your place, which just means you'll have a lot of stuff that makes it harder to pick up and leave. That's why traveling before you have 'stuff' makes more sense, and why buying a place with a girl if you plan to get married one day means less money wasted on duplicate possessions.

This is the best advice I've seen in the thread thus far.

Don't listen to those on here telling you that taking some time off will be detrimental to your career. Nonsense. When I graduated, a lot of my peers already had jobs lined up that started a week after school was out. They had panicked all of 4th year about having a job. I partied through 4th year, applied for practically no jobs afterwards, and knew I was going travelling. I got back a while later, and had a job within 2 months. Those peers to this day regret not travelling. You've got your whole life to be a corporate 9-5 bitch, so have some fun before you settle into a mondaine routine. The biggest problem I see with older people is that they're miserable. They haven't taken the time to get to know themselves. Tied down with jobs, mortgages, kids, needy wives/girlfriends, ect. Maybe if you take the time to know yourself, it'll make you happier for the rest of your life.

[ercchry]

Originally posted by davidI



I know you think the value of the place will go up 180% in 7 years, but that's simply retarded given the current market. It would be just as likely to lose $50k in value when mortgage rates jump.

My conclusion:
You couldn't plan your way out of a wet paper bag.

see, this is what happens when people DONT READ, i dont even know why i try.

remember at the beginning when i said hindsight is 50/50? remember when we went back 7 years to see HOW his life would have been different? yeah... missed that small detail didnt we

[davidI]

Originally posted by ercchry


see, this is what happens when people DONT READ, i dont even know why i try.

remember at the beginning when i said hindsight is 50/50? remember when we went back 7 years to see HOW his life would have been different? yeah... missed that small detail didnt we

You're right, I did mis-read.

I would have never expected your post to be even more more retarded than how I read it.

"Let's plan your life using hindsight and buy a penny stock that is now worth $20 so that you are now a billionaire"

[davidI]

Oh, and your math is still completely fucked.

[ercchry]

not really the same thing since we are talking about buying home while young and he is no longer young there for... he would have bought a house... 7 years ago!

it all boils down to risk/reward and roi... if you dont like to use real estate as your investment vehicle then thats your choice. more than a few people have lived pretty comfortable lives thanks to real estate and just because you bought at the height of the boom and want to exit your investment before it matures doesnt mean that others will have the same experience

[davidI]

Originally posted by ercchry
not really the same thing since we are talking about buying home while young and he is no longer young there for... he would have bought a house... 7 years ago!

and still owed $155k on it.

[ercchry]

Originally posted by davidI


and still owed $155k on it.

vs buying the same house today where he takes 2 years to save the minimum down payment and owing $360k on it since after paying CMHC he basically hasnt put anything down.

[davidI]

I'm not sure what point you're trying to make so I will not bother debating it further. My $155k point was just to point out that you should go back to Math 14.

Woulda. Shoulda. Coulda vs. Dream It. Plan It. Do It. No Regrets.

[ercchry]

Originally posted by davidI


Woulda. Shoulda. Coulda vs. Dream It. Plan It. Do It. No Regrets.

you think im just dreaming about my personal life? cause... im not. i have a couple properties actually, pretty solid long and short term plans and feel great about it

and there is nothing wrong with my math, just your comprehension of where the numbers are coming from. i left it vague because i didnt want to over complicate the post since i was making a simple point. life with a house vs life traveling around for 7 years

[flipstah]

House plans are on hold; trip to NYC this Aug/Sept is not.

It begins

Now that I think about it, traveling is a favorite of mine. I have been traveling since I was kid with my family and always loved the memories. From seeing Hong Kong during the British rule to jumping off a waterfall/cavern in Mexico, I did stuff that I never thought I'd do. I may actually go to Australia this Christmas before SE Asia to see cousins I haven't met before!

I made a bucket list right after graduation and I scratched off 7/100 so far!

Thanks for the insight, errbody. Here's to a right decision not buying a place early

[Disoblige]

In flipstah's case, unless he found his one and only, probably best to not financially commit to a house anyways.

[ercchry]

Originally posted by Disoblige
In flipstah's case, unless he found his one and only, probably best to not financially commit to a house anyways.

i guess i left that part out... i am also engaged to the girl i have been dating since i was a teenager

[davidI]

Originally posted by ercchry

it all boils down to risk/reward and roi...

Allright, I will respond to this edit because I think it makes another good point to the actual topic at hand.

Risk / Reward of traveling Young / Old.

Risk of Traveling Young:

May come back and be behind your friends in buying a house or state of your career.

Caveats: That house may go up or down in value putting you in a bette or worse position. You may start your job at a time with better or worse stock options. You may or may not find a better job.

Risk of Traveling Old:

You're Dead.

You have health issues.

You have kids or a wife with health issues that can't leave.

You're at a point in your career where it's difficult to leave because you're being paid that much more or are due for that next raise or are nearing pension requirements.

You have a business you can't leave.

You're in prison for losing your shit and assaulting your boss.

Your investments don't work out and you're broke.

The countries you could have seen when you were younger are in a state of war.

The architectural ruins you wanted to see are destroyed.

The coral reefs you wanted to dive are destroyed.

Your body is no longer able to handle that whitewater rafting trip, cliff jumping

Fuel costs are so high that air travel becomes unaffordable again.

The Canadian dollar drops to the extent travel is no longer affordable.

etc. etc. etc.

[davidI]

Originally posted by ercchry

and there is nothing wrong with my math, just your comprehension of where the numbers are coming from.

This should be good. Explain to me how a $1k / month mortgage payment ($84k in payments over the last 7 years) pays off $113,200 of a theoretical $200k mortgage leaving you with a current mortgage of $86,800, as you suggest?

[davidI]

Originally posted by flipstah

I made a bucket list right after graduation and I scratched off 7/100 so far!

Wicked.

Mind sharing the list?

[ercchry]

i think you are still somewhat neglecting the fact that as a full time employee you still get vacation time. which voids some of your cons list.

if you have to work full time in the country you travel to you are only getting 105 full free days to "vacation" vs when you go on vacation for 3 weeks you have a full 21 consecutive days to see the country/countries