January 22, 2013
The currency in the country in which I live has appreciated gradually for the last 12 months. Because so much of my net worth is tied up in assets that are denominated in this currency, and because I count my net worth in dollars, I have seen a $30K increase in my net worth just based on appreciation (assuming I can sell when and if necessary at my very conservative valuations – which shouldn’t be a problem). Also, from what I can understand, the government here recently changed a law on sales tax on second homes (I have two here), cutting the tax by half. All of this is good stuff. They also changed the LTV rate at which banks can make mortgages. These rates are still much higher than those in the USA (I think they require 30% down here) but all of these moves should have positive effects on property values here. In 2007, when I bought my first place here, I bought just as the bubble was bursting, but I bought a place so unloved that it wasn’t really affected by the bubble anyway. I got lucky because the government planned a subway line that goes right by that place, which immediately put a floor on the price right after I bought it. The second place (where I am living) will be affected by the new law. Future tax payments (you pay sales tax in phases here) will reflect the new law.
I bought my second place during the prolonged housing slump in this country. I really didn’t plan it that way, but I did see quite a spate of news stories about people who are “house poor,” meaning in this context that they cannot sell their places for what they originally paid. I don’t want to paint the people of my host country with a broad brush, but during the housing boom proper, there was a strong “herd mentality” on display, with the TV showing images of people lined up around the block to buy into some new apartment village going up – at rates that would climb even while they were standing in line. Even then, I thought, “Why don’t they recognize a frenzy when they see one?” Most were buying with the hopes that they could immediately list it and get a “premium” of about $30K, sometimes even before it was necessary to pay all of the taxes on it. I ran into plenty of bag-holders while shopping for my second place, but none were really interested in selling at a loss, even though I stood ready to buy and was prepared to walk away, which I did more than a few times before an offer finally got accepted. The thing is, there are few people here who are so overstretched that they can’t make the payments if necessary. They’re willing to wait.
That isn’t to say that some people’s finances here aren’t a mess due to their speculative home-buying. There are cases of people only employed part time juggling the payments for two or three properties (which are sold years before they are built here). They can brag to their friends and to anyone else who will listen for about six months how they “own” these properties here and there, after which it comes time to start making the payments, which, if the place is new, is often $25K every three to six months, with a balloon payment (30%) due when the unit is finished. This allows them time to bail or dump the place but many fail to do so, and should a real slump in the economy come along, they’re stuck and the place goes to auction, which really isn’t well known here. I looked into buying at auctions but from what I could understand, 1) the banks want just as much as you could get from any real estate agent, and 2) you were dealing with sharks (and snakes) when it came to where the real easy money could be made. I met a few women who worked in real estate offices who had gotten in over their heads and were using their offices to cart anyone who walked in looking for anything over to look at their obviously overpriced apartment (typically housing various family members). I also know that it is the politicians’ wives who make the big bucks here, as their husbands come home and tip them off about where the next apartment village will go up, with the wives then scrambling to buy farmland from farmers with no more than an elementary-school education; they get a few million dollars waved in their faces, sell immediately, and then the politicians’ wives sell to the government housing authority for as much as a 10x profit. This is a regular feature of real estate in the third world, and is a well-known phenomenon here.
My next step is my USA place, which will likely be in the desert southwest. I am going to the USA in April and will make reasonable offers should I find anything. It is also helpful that Zillow now shows foreclosures. Work has slowed from the crazy Oct/Nov/Dec period, but it is steady and I am busy. I am of course getting closer to paring it down greatly to just a few good customers and moving back to the first world. Like I noted in an earlier post, younger people have plenty of energy and can deal with the hassles of living in a country like this, but once you’re looking at 50, those hassles really are hassles, no longer quaint or one of the wonders of travel, and you know that every day you are not living in one of the world’s most convenient and developed countries is one less day that you will ever do so – giving up your birthright in a sense. I hope to be gone from here by 2014, with both places rented to stable tenants whose employers pay the rent straight into my bank account here, from where I can transfer it, all in one shot, to an American bank already converted into dollars. There will be bumps on that road, but by then I’ll have one million little shock absorbers.
December 30, 2012
Every minute I do something other than my normal work means one extra minute must be spent later. It is the busy season for what I do and I have non-stop work. In Oct/Nov/Dec I banked enough to buy a nice German car, not even including investment income or rental income. I am that much closer. I am also starting to ignore other things that used to catch my attention: gas prices, energy prices, food prices. I just don’t care because those things are such a small percentage of my income. Fewer things to worry about. All good. Short entry this time because work continues for me here. Happy New Year. I’ll be right here typing as 2012 ticks over to 2013. I’ll reach my goal in 2013 and by the end of that year I’ll be in my new place in the USA and this present one, hopefully, will be rented to some researcher with a large expense account.
November 6, 2012
59 is just one less than 60 so not much of a drop. Remember also that it doesn’t mean that I am 1% closer to a million… that number is more qualitative than quantitative, until of course it reaches zero. I have had a few good months after returning from the USA during May and June but also have been depreciating things (basically removing them from my financial software despite the fact that I still own them, one example being my physical gold (which exceeds $10K). Also, the price at which I carry condo number 2 is somewhat inflated but given the recent slide in the US dollar, that number isn’t as big as it once was.
In terms of work, I had my second-best month (overall) ever in October – everyone paid right on time and the right amounts too. All good. I have decided to go to Germany and Austria on vacation (as much as I get one) sometime this spring, and from there to the USA and then back to Asia. Fewer stops this time — so about 6 weeks overall.
The new condo is being furnished and the tenant in the old one is paying on time. Thus, I am coasting towards winter. The work comes in, and the work goes out. My new desk, office, and chair are posh compared to condo number 1, as everything is new and was purchased at a time of plenty vs. 2007, when I furnished my other place with far fewer resources.
I went from nearly broke, owning no property in 2007, to this position, where I own two valuable properties free and clear and can see clearly see the goal of 1m dollars. I did it in just over 5 years, during which there was a worldwide stock market crash and ongoing depression. I have been reflecting on the fact that I have been very lucky and was unaffected by the global turmoil, being tucked away in a hardworking but relatively less visited part of Asia running a service very much in demand with a very uncommon and, as it turns out, valuable skill set when applied just so. However, I also think there are other people out there in the world quietly saving their way to a million or more and looking forward in a few years to being free and living a good life in a safe and wealthy part of a developed country like the USA.
I noted in a previous post that I said I’d have the money ($420K or so) for a new condo in the USA by 2014 — I meant 2013. Although I don’t anticipate buying in April of 2013 I should have the funds by then, all in cash, after which I can start looking for a condo somewhere warm, safe, and affluent where someone like me can just blend in – an average Joe – and enjoy my freedom.
September 24, 2012
I am closing in on it.
There have been major changes. First, I bought another condo – a much larger place than my first one. I paid cash for it and paid cash to furnish it from the ground up. I also re-did the kitchen with fully modern conveniences and even imported an American dryer (a Whirlpool) and had some fellow with a large drill create a hole in the cement wall of my building to vent it. I put in a wood floor, removed some unnecessary walls, and am busy buying all new electronics.
I got a fair deal on the place and am including all the money I spend on it as part of the accounted-for value of the place, though this inflates it some. However, before I reach my goal, I will depreciate everything that doesn’t equal its true value as measured in dollars. For instance, I have this new place valued at close to $300K, but I probably could only sell it for about $260K, which means I will have to depreciate it as an asset down to its true value before my number reaches zero.
And speaking of my number, my income is rolling along. No wavering and no moments of thinking that the whole shebang is coming to a halt (though where I live anything is possible). I will clearly make it. Moreover, I have rented out my old place and have good income from that place.
Next stop is my retirement condo in the USA. I figure I will have the funds for that (plus about $60 – 70K for a new car) by May of 2013 at the latest. I plan to spend about $420K on my condo. I will actually have that much long before May of 2014 but much is tied up in my IRA, which I cannot touch, and other funds that I’ll need for savings.
July 12, 2012
I am still here!
Remember the next time that someone tells you that saving a million dollars is easy… it’s not!
I am busier than ever. Went to the USA too for nearly 2 months to look for a house.
The number dropped. I am getting there!
April 2, 2012
I have checked out buying an apartment here and furnishing it and then renting it by the month to international students (or anyone really who will sign a contract). It seems no one has thought of this yet here. Most international students come here — and there are more and more of them – and they don’t want the hassle of going out to find furniture – especially because 1) most of what’s available here is absolute junk unless you go to Costco – that’s what protected markets get you: high-priced garbage for the domestic market, and 2) the furniture sellers don’t speak English or any other language except their own.
The return appears to be about 8% – not high but not low. Still looking into this.
Another interesting diversion has been social lending (there are two well-known sites for this). I have been ramping up my amounts there and am getting just more than 1% a month on some very conservative choices. Of the more than 150 “loans” I have, only two have defaulted. I am going to continue to make regular deposits into this experiment and reinvest the proceeds too. We’ll see how that goes.
March was very busy – no new records but in the top 10 months overall. No change in my number as I am depreciating assets (see earlier post). It seems my averages are rising. Traveling in May and June.
March 23, 2012
Yeah I know. Dumb title.
Ok. I am over it.
Here’s the motivation: my work just keeps getting busier and busier. I like to be successful but every month that goes by, at the end of the month I add things up and, recently, I have been looking at that number and thinking: Well, that’s an aberration. It won’t happen again next month…
And it does. Five straight months of a significantly higher bottom line.
I am looking at more property lately – mainly for income but also as a place to store cash. I view income producing property as simply another form of bank account. I actually feel better with assets tied up in property then I would if the entire amount was sitting in a few banks all in currency. Keep up with this blog and I’ll put the info here on anything I buy — as long as I keep making entries. I am anticipating reaching my goals (visualization?) and wondering practically what I will do with it.
My number doesn’t change. I am depreciating things I don’t want to sell, like all my gold and a few other valuable things that were part of that number but don’t have to be. Soon enough that number will have to change though.