301 | How to Lose Half a Million Dollars & The Secret to Lifestyle Design

Don’t want to lose half a million bucks? Well then, make sure you don’t do this… 

In today’s episode, we’re diving deep on The Secret To Lifestyle Design – that’s means What To Do & What NOT To Do when building out your Property Portfolio Plan. 

Like we always say… “Plan to become what you plan to become.” 

So, if you’re an aspiring or existing property investor, what does it mean to plan your property portfolio? And why go to the lengths to plan out your future anyway?  

Well, with “the end in mind”, your goal is a heck of a lot clearer! 

But there’s something wildly more important than this… 

 Listen now to get the secret to creating the life you want (“lifestyle design”)… and how to reverse-engineer your dream goal to suit your current lifestyle! 

Free Stuff 

• Free Report: How To Invest In Property Without Impacting The Family Budget 
• Free Book & Free Portal Access: MakeMoneySimpleAgain.com.au  
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• Episode 261 | How to Hack Your Habits to Make You a Better Money Manager – Chat with James Clear 
• Episode 300 | The Unfair Advantage: Master This New Framework To Get The Passive Income You Want – Chat with Jaemin Frazer 

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The Questions 

Question from Angus: 

Would love some commentary about The Barefoot Investor’s email yesterday: 

 Hi ,“Get out now.” That’s the advice the CEO of NAB has given to homeowners who are struggling to make their repayments. 

Yes, in his quarterly trading update last week, NAB’s new-ish chief, Ross McEwan, warned: 

“There will be some circumstances where people are better off selling out early and taking some equity out of their homes, or keeping some equity, before it disappears.” 

While most of the media didn’t give his words much attention, there are two good reasons that you and I should: 

First, because in all the years I’ve been doing this column I’ve never heard a bank boss speak so candidly. 

Bank bosses are basically politicians: they get parachuted into the top job, stay there for five years, and rocket out with $40 million. Their main job is to stick to the script: “keep lending”. (And we’ve all witnessed how bad things go when bank bosses go off script, like getting into wealth management.) 

So why is NAB’s CEO sticking his neck out? 

Well, that brings me to my second point: he obviously doesn’t like what he sees on the horizon. 

And know this: McEwan isn’t peering into a cloudy crystal ball. Over the years NAB has invested billions into tracking its customers’ every financial move. In fact, all the banks have incredibly detailed customer analytics that tell them what people are doing — or not doing — with their money, in real time. 

Now, according to the banking regulator, APRA, roughly 1 in 10 mortgages in Australia are paused. 

Which gets me thinking … 

On one side, how long can the banks cop 10% of their customers not paying? 

On the other, when will customers who are really struggling finally bite the bullet? 

It’s a grim situation. 

My hunch is that the banks are betting that the overwhelming majority of their customers will get through this. Yet they also know a small number of their customers won’t, and so they (well at least Ross McEwan) are turning up the heat on them. 

My advice? 

Please don’t misquote me: I am not saying you should sell your home. 

What I am saying is don’t be a frog … if you were in hot water before COVID hit, don’t just sit there bubbling away. 

We’re still early on in this crisis, and you have more options than you think. And if you want someone independent (and free!) to walk beside you and carefully lay out your options, call the National Debt Helpline on 1800 007 007 and speak to a financial counsellor (like me) immediately. 

The last word goes to McEwan: 

“We’ve seen in other crises around the world, when people try to hold on they end up walking away with nothing.” 

Don’t say you haven’t been warned 

Question about Vendor Finance from Simon: 

 How do you set up Vendor Finance? What is the process? Do you need the full amount in cash or can you use funding from elsewhere, like a venture capitalist maybe, or even a bank under certain circumstances? Does a third-party company look after everything for a fee or is it more of a hands-on personal approach that is needed? How do you evaluate the risk vs reward with the process? What happens when the buyer refinances down the track? I’m thinking for some people in certain industries to get approval for borrowing will be very difficult for some time, this may open up opportunities within the vendor finance area? Some people may see this as praying on others misfortune while others, like me, may see it as offering a lifeline to those who need it. 

Could fragmentation of properties and vendor finance offer an attractive way in for less money for anyone struggling to get into property? Is this also a way you could offer Vendor finance if you only had for example 50% equity?? 

Question about What Property To Buy from Scott: 

To buy established or a new investment property, Bryce. I am in Sydney and considering buying in Melbourne as I feel the market there is way undervalued compared to Sydney, given the expected population numbers expected to surpass Sydney’s over the next few years. Thanks mate. 

Question about Our Biggest Investment Mistakes from Quy: 

Love your work gents! What are your biggest investment mistakes which had delayed you from reaching your passive income goals quicker. 

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