A couple of months ago I wrote about how getting mortgages that are too large can keep people in the vicious cycle of the rat race. Yes, it is true that a mortgage can be a burden but there is also a degree of safety in owning your own home.

If you plan wisely your mortgage will eventually be fully repaid and your cost of living reduced to very little. I believe that whatever your life plans are, you should invest in at least one property as a safety net.

Even if you plan to travel throughout your old age investing in a home ensures that if for any reason you either change your mind or health requires you to stay put you have somewhere safe to live.

Let me give you two life examples of people that I know. Their names are disguised for privacy:

Maud

Maud is 60 years old. She rents a 2-bedroom house in London at a relatively cheap rate of £600/month because she is locked into a very good contract that was agreed about 30 years ago. If Maud decided to move any similar property elsewhere in London, even within her own neighbourhood, that property would cost her £1,200 to £1,400 per month.

Moving home is therefore not an option for Maud; she couldn’t afford the rent at the higher rate.

The house she lives in has a resale value of £400,000 but it’s not hers to sell so that value is neither here nor there for her.

If Maud had bought the house 30 years ago, she would have paid just £100,000 for it and would now have owned it outright for 5 years saving £36,000 in rent (£600/month x 5 years).

She could now have either given those savings to her son who is 35 to help him get on the property ladder or done up the house which is now getting very tired. 

She is tired of the décor in her house. Her landlord did it up 20 years ago and because everything still works well there is no reason for the landlord to update it. Landlords aren’t in the business of decorating simply to please their tenants’ tastes, they fix work that needs to be done to make a place liveable. Maud doesn’t want to decorate herself because she doesn’t own the house and could potentially be evicted for any reason, e.g. if the landlord decided to sell up.

Anyhow, Maud made her decision not to buy 30 years ago and now she has to live with it. If she lives until 80 (which is more than likely nowadays) and if her rent stays at £600 (which would be VERY lucky) she has another £144,000 of rental payments in her future.

Flowela

Flowela is 26 years old. About 3 years ago, her and her soon-to-be husband decided to buy a property. They were lucky. They secured a 4-bed house for £240,000 in a small town and used money they had saved by living at home during their university years as a deposit.

They have now been married two years and have slowly been decorating the house. It’s amazing what a lick of paint, some wallpaper and a new bathroom can do to a place. They love their home and are now settled into their jobs.

Their mortgage payments are now £800 as they just re-mortgaged into a lower rate saving them £200 per month. Unlike with rent, mortgage payments can and do tend to fall.

If they simply keep living as they do now, in another 22 years, just before Flowela and her husband turn 50 they will own their house outright.

At that point their costs will just be bills and fun. They planned well and because they currently don’t have kids they are setting money aside to invest in another property that they can use to fund their retirement.

They figure that if by the age of 30 they invest in a smaller place worth say, £120,000 or so and get tenants in there, those tenants can pay the mortgage down for them leading to a tidy little lump sum when they retire (if they decided to sell that place) or a monthly cash inflow of £600 to £1,000 which will fully fund retirement. 

Conclusion

These are two real life situations. Which life would you rather live? Getting onto the property ladder may seem scary at first and like a big commitment but in the long run it offers an immense amount of security and peace of mind.

I’m just going to come out and say it: I think too many men prioritize cars over so many other things that are needed. And, because men generally have a bigger say in how the household budget is divided between different priorities, money goes towards nice cars over other things like private education or that pretty new kitchen or bathroom that the wife wants or even before buying a house.

I have had the discussion on cars, houses and spending with so many friends, so many times.

I don’t know why I am obsessed with property but I love to know prices in different areas even when I’m not buying.You will often find me pulling out my phone as I pass down a random street to see what prices are like in that area.

So, as you do, we went down to visit a friend and I pulled out my phone to check prices in their area. I wasn’t secretive about it. I started asking if they were planning on buying in the area; if they had started saving for the deposit, etc. etc. It was one of my close friends so I’m interested in her family’s financial success.

They said they did want to buy but hadn’t saved for the deposit yet or set a plan for saving that deposit. That’s all well and good but a few weeks later the husband was debating which upmarket car to drive. Go figure.

Yes, we all like nice things but if we plan and have a proper vision we can build a significant wealth base without having to forego all nice things. Unfortunately this means you might have to live with more standard things in the short term.

What’s the point in leasing a luxury car – BMW, Mercedes, Audi, etc. – if you don’t own your home? In many parts of the world buying now is better than buying later because house prices tend to rise faster than wages.

I have another friend who spent his first bonus from work on a brand spanking new Mercedes Benz only to tire of it a year later.

Cars go down in value the moment you buy them. They are not a real investment.

Yes, I will admit I once bought a new car myself and although I don’t regret it, I doubt I’ll do that again any time soon. I bought it outright (no ongoing payments) and I had my property portfolio already going so I convinced myself I deserved a reward. Would I make the same decision again? In hindsight, probably not but I’m glad I don’t have an outstanding debt to remind me of my not-so-great decision. I could have paid a deposit on another house with that money! Uuuurrrgh

Anyhow, the point I am trying to make here is that, if you or your partner are obsessed with cars, this love could keep you in the rat race a whole lot longer than you need to be.

If you invest wisely you can have your fast car and an investment portfolio that generates all the money you need to pay for your lifestyle. Plan now. Invest now. Have more options later.

Okay, so I’m sat on a train trying to mind my own business. I’m sat with other people that all know each other: a mum, a daughter and what appears to be a family friend. Now, anyone who knows me knows that minding my own business is not exactly a forte, I love to take part in conversation but I was feeling a little tired.

Well, that was until the daughter tells her mum that her sister and brother-in-law still do things like remind each other: oh, you still owe me for that burger two nights ago or that meal last weekend.

I was aghast!

“Are they married?” I suddenly butted in and the daughter laughed, “Yes, and they still operate all their finances completely independently”.

The train was coming to a stop so I didn’t get to dig in deeper except for the fact that they didn’t even own a joint bank account for household expenses.

As I walked off the train I started thinking about what my mum told me: avoid stingy men – they’re not only stingy with their money but they try to control how you spend yours or make such strong value judgments about the way you spend that it causes a lot of bickering. My mum is a smart gal.

If you’re trying to start or grow a business having a stingy husband will hold you back for the following reasons: 

• Firstly, the first days in business will be hard and if your husband is tight he won’t be keen on supporting you when you have a bad month. Even imagining the type of harsh things he’ll say can give you cold feet over starting a business.
  
• Secondly, your business decisions are likely to be driven by his opinions rather than good business sense. For instance he may see marketing as a waste of money when it’s absolutely necessary to capture sales.
  

Overall, a stingy man will just make running a business less enjoyable. The risks involved are already nerve wracking – anything worth doing will make you nervous – and having a constant force around you that is not supportive will make you feel like pursuing your dream of a business is not worth it. 

If you think you’ve got the entrepreneurial streak and identify that your man is stingy before you marry him, then this is one of those instances when I’d agree with my mum and say: run girl run. You deserve better! That man will kill your business before it even starts. 

Without the moral support of my husband I would be nowhere. Yes, you can build a booming business despite negativity around you but why should you have to?