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On real estate games and my failure to understand them - Tactical Ninja

Sep. 23rd, 2010

09:25 am - On real estate games and my failure to understand them

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So yesterday we listed the house. I find the games involved with selling a house kind of puerile. You're apparently supposed to list it at a higher price than what you want for it, because you know that people will offer less for it than what you ask. Meanwhile, people know that you've listed it higher than your asking price, so they offer lower than that and with any luck their low offer is close to what you actually want, and everyone agrees.

This is stupid. We want X for the house - why the games about wanting more so that people can feel good about talking us down? NZ isn't a haggling culture, except when it comes to houses, and in my opinion this complicates things unnecessarily. Why not just be honest?

Anyway, it's listed. Hopefully it'll be quick and that'll be done and it'll be over.


Because, you see, I've never had money. Not really. I've had bits and bobs of it, yeah, but right now I think the $3000 I have in savings is the most money I've ever had in my life, that hasn't already been earmarked for something.

Chances are I'll come out of this house with about 35 times that. Which is all very nice. Of course I feel like I don't deserve it, but I'm busy trying to convince myself that that's bollocks and actually, yes I do and it's the culmination of the reason my folks moved here in the first place, to be able to give their kids a better life than they had, etc etc and blah blah.

There's a lot you can do with that much money. None of which someone like me, who's never had more than five grand ever, is equipped to process and deal with.

This is why I laugh when people pull the middle-class thing on me. I'm like, "Um.. whatthefuckever". If I were middle class and had come from a middle class background, I'd have grown up with certain expectations - and handling large quantities of money would be one of them. I possibly wouldn't even consider this to be a large quanitity of money, I'd already have investments and I wouldn't be frozen at the prospect of realising dreams. Other people get to realise their dreams. Not me.

You know the age-old question "What would you do if you won Lotto?" My answer is usually "Nothing, I think Lotto is stupid tax", but say a million dollars dropped on my head. My answer has always been to pay off all my family's mortgages and set my Mum up for the rest of her life, buy a house/farm, travel a lot and invest the rest in some safe place so I can live off the interest. Obviously that's changed a little but I'd like to think I'd be sensible with it.

Thing is, in reality most people from my financial background who actually do win Lotto, end up as poor a few years later as they were before they started, because they have no clue what to do with large amounts of money.

OK, this won't be Lotto styles, but to me it might as well be. And I don't want to be that person. Yes, I want to travel. I also want to buy a house. And I know that $100,000 more-or-less isn't really enough to do anything like have the adventures I want to have. Obviously it's not to be sneezed at either.

Add into the mix the possibility of moving to Hong Kong, the fact that the house I'm living in right now is close to being in my price range and an indication from the landpeople that they would be willing to sell, a chance of taking a sabbatical from work to go do Stuff for a while, and it adds up to one very confused Tats.

I have no idea what to do. For the first time in my life I will have the wherewithal to do any of the things I want to do, and I find myself frozen and unable to make any decisions. Partly this is because I know that if I choose one option, I'll be committed to that and backing out to go do something else won't be an option. And all of the choices involve sacrificing something else that I really want.

I've been thinking about this for a while, and am no closer to an answer. I suspect that what I'll actually do is bung the money somewhere where I can't get at it but it will earn interest, and sit on it for a bit while I sort my shit out.

Oh woe is me! I have so much money and I don't know what to do with it! *cough*


And because I've spent the entire post whinging about this, let's make this more interactive with a question: What would you do if a million dollars dropped on your head? Bonus points for imaginative answers.

In other news, my knitting is getting bigger - it's almost square now - and the loom arrived. I discovered that my spinning isn't good enough to weave with yet (at least, not to make warp threads), but I'm having fun anyway. The first thing I'll make is a bag to put my knitting in!

(yes i am an old lady, what's it to ya?)

Comments:

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From:pythia
Date:September 22nd, 2010 09:28 pm (UTC)
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I'd probably get checked for concussion.
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From:tatjna
Date:September 22nd, 2010 09:42 pm (UTC)
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Best answer so far!
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From:tatjna
Date:September 22nd, 2010 09:41 pm (UTC)
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Yeah, the real estate agent got a bit *gnng* when we insisted on X rather than taking her (rather considerably lower) suggestion, but she got over it. We are in no hurry.
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From:ferrouswheel
Date:September 22nd, 2010 10:10 pm (UTC)
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Pay off student loan. Travel for 6 months, probably go to weird and wonderful conferences and hacker events in Europe. Disappear into the wilderness for 6 more months and do a cheesy spiritual quest while wondering Asia. Come back to New Zealand, buy a house, and risk the rest by starting a small AI research group/business.

Although there'd probably be some sharing of the windfall too.
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From:tatjna
Date:September 22nd, 2010 10:11 pm (UTC)
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All of the best spiritual quests have cheese!
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From:crsg
Date:September 22nd, 2010 10:21 pm (UTC)
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I suspect that what I'll actually do is bung the money somewhere where I can't get at it but it will earn interest, and sit on it for a bit while I sort my shit out.

It's what I would do. Boring maybe, but no doubt the people who do win Lotto overnight and end up just as poor a small time later end up losing all that money because they likewise had no idea what to do with it. Unlike them though, you can actually plan ahead for it.
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From:vernacularity
Date:September 22nd, 2010 10:32 pm (UTC)
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i can imagine it might possibly be following the "immediately quit your job in a manner that ensures you'll never be hired again and live off the interest" dream without realising that it takes a little while for investments to start producing; people get bored and wonder what to do with themselves and go shopping; and then there's all the needy relatives....

but I digress: If a meeeeelion dollars dropped into my immediate vicinity, I would build giant mirrors to reflect sunlight into the dark corners of aro valley, with mine being highest priority, so that I can continue to enjoy my lovely proximity to town and the peace and quiet, without going through the hassle of moving to a sunnier house, and can spend my weekends in the sun training monkey butlers for my less-fortunate friends.

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From:rivet
Date:September 23rd, 2010 01:36 am (UTC)
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Where do I join the monkey-butler queue? That sounds awesome!
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From:richdrich
Date:September 22nd, 2010 10:43 pm (UTC)
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If I had a meeeleon dollars I'd bank it and live off the interest and capital. Simple.
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From:tatjna
Date:September 22nd, 2010 10:44 pm (UTC)
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Everyone in here is so damn SENSIBLE!

Mike and his monkey butlers are winning the imagination contest hands down.
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From:bekitty
Date:September 22nd, 2010 10:50 pm (UTC)
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Instead of doing the international travel thing myself, I'd get in contact with my friends in Knoxville and bring them over to NZ. And then hire a coach and do a road trip of the entire country. There are places in NZ I haven't seen yet (e.g. Northland and most of the South Island) and I can't imagine a better way of exploring it than to share it with my friends.

Then I'd buy a small cottage somewhere in Wellington -- Mt Cook or Mt Vic would be nice -- and plant a garden. And then I'd never move away. I hate making gardens then having to abandon them when I move.

And if I had anything left after that, I'd bank it and live off the interest.
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From:bekitty
Date:September 23rd, 2010 10:51 am (UTC)
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Or I'd buy enough EL-wire to weave mmyself a catsuit, and then wear it to SoS and Kiwiburn! Yeeeaaaahhhhh. With a pair of Orbital-style LED glasses, and an orange wooly hairdo from Wildilocks. That would be awesome.

That's the whole meeeeellion dollars right there I reckon.
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From:tatjna
Date:September 23rd, 2010 06:14 pm (UTC)
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Knitted EL wire would be more stretchy in a catsuit. Just saying.
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From:anna_en_route
Date:September 22nd, 2010 10:54 pm (UTC)
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With a million dollars I would:

take my partner (who has never had much money and could probably identify very much with your post) to Europe and Asia because I want to see his face when he sees the Eiffel Tower.

Walk Macchu Picchu and some of the great wall and a pilgrimage around an island in Japan

and buy a nice Wellington house and fill it with bookshelves, instruments and a greyhound (and our cat).

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From:caycos
Date:September 22nd, 2010 11:47 pm (UTC)
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I would make a library with all the best books and open it to those who are judged worthy. This would include kids who like me would spend all their childhood in a perfect library if they could.

And I would help my dad do all the renovations to his house that he wants to do but has never had the money to do. And buy them a dishwasher, dammit!

PS if I were you, I'd take the offered sabbatical, leave most of the $$ in the bank and go to HK for a month. Just to see.
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From:thirstygirl
Date:September 23rd, 2010 02:23 am (UTC)
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travel travel travel! [and pay off my student loan]
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From:tyellas
Date:September 23rd, 2010 02:37 am (UTC)

Mo' money, mo' problems...

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A million dollars, alas, doesn't go as far as we'd like when we look at Wellington real estate.

If I had a million dollars, I'd buy a cheap and cheerful place near central Wellington, invest, and get a Ph.D in the History of Science.

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From:Bill Parkin
Date:September 24th, 2010 04:37 am (UTC)
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I'm afraid I join the boring people in terms of what I suggest. There is an assumption that the money is not enough to just retire and live on the proceeds of investment, so you would still be earning in some manner.

The priority list is a sort of cascade of needs.
Cover any debts and near term charges.
Provide for expenses that may need to be met
for me this was a visit to a specialist with testing that saved a lot of delay in a diagnosis and treatment.
Usually called the contingency or emergency fund (3-6 months expenses).
Think about education costs coming.
Think about investing to reduce future costs
this is where buying a house fits in - the game is stacked in favour of owning rather than renting but interest on the mortgage is a loss.
Its been observed to me that currently landlords are not doing so well and renters are doing better - the pick has this continue for at least a couple of years.
it also covers buying food in economic quantities and other efficiencies.
Investing in interest paying securities (money in the 'bank') and longer term investments.
notice that this has been a remarkably risky activity recently.
The major risk management tactic is splitting the capital so that a single (or even two) failures is not a catastrophe.
The Kiwisaver has a remarkable rate of return from the subsidies but is still subject to investment risk.
Somewhere about here is where the 'frivolity' comes in. Yes, this is part of the plan (but not too much).

My friend contributed that $50,000 invested and nurtured now (in your life) could grow to a quite tidy sum. She observed that it helps if you like making it work; nurtured is the right word.
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From:tatjna
Date:September 27th, 2010 01:05 am (UTC)
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That point about investing $50,000 is a good one, and one that has been added to the churn. Thanks!
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From:maholic
Date:September 24th, 2010 07:46 am (UTC)
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a/ DO not buy a house, they are a debt plague, they are not an investment, they are a good way to have dead money, the only reason to buy a house is, the cost of home ownership is cheaper than renting (that does occur but not very often in bubblelicious stupid fiat currency housing market inflation rubbish market bolllucks), owning a house makes it HARDER to travel, and you sound like thats a priority for you, to pay other peoples debts off, and be a free spirit...

b/ buy other peoples debt (not yet mind you, but once the debt markets start to collapse next year, it will get to a point in 2012 where buying bonds will mean 15-20% returns per annum for 10 years or more...) that is living comfortable on your 100k, thats 15k- 20k a year... and then you get your 100k back at the end of it, though picking the right debt to own i don't know yet, just know that not everyone will default, and those who dont with the best coupon, is your ticket to travel every year for a decade...

c/ in the meantime sit on cash on term deposit, 5% on 100k is 5k per year, thats more money to travel with (2 hong kong trip return tickets per year?)

thats my advice, but its your money

and btw, middle class people are poor, they are as poor as poor people, except they get more stuff (stuff is a hollow life) since they have a higher ability to get more debt, to maintain a higher standard of living, till they can't afford the debt anymore, and then end up poorer than poor... ps doctors and lawyers are middle class and POOR, they have debt out the eyeballs, only those that own their own practise are 'rich' the ones who work for someone else are as poor as common folk, they just have fancier sh`t to show off to other people with, but at the end of the day the take home pay goes to paying debt , mortgages, cars, lifestyle upkeep, education whatever (yes still better than poor in the quality of life ways, but its no escape from debt and working for someone else...)





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From:wildilocks
Date:September 30th, 2010 01:31 pm (UTC)
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If I had a million dollars?

I would hire a business manager and pay all my managers a higher wage for the next ___ months to let me just disappear off for a proper year or something, with NO contact whatsover. I'd just run away to Asia and hide in the mountains or on the beach and write and eat great amounts of tropical fruit and read books and exercise and bathe and be healthy and unplug myself from the net and just BE for a while, with no demands.

Then, after I got bored of that, I'd come back to the what, 900,000 or so that would probably still be there, and spend about a third of it in building Wildilocks up further, buy a few investment properties and live off the income (leveraging some debt, but not a lot of debt), leaving at least $200,000 in liquid assets to play with.

Something like that. Maybe not very inventive, but that's my wishful thinking these days... some freedom and "me" time. Not just a week or two but a great huuuuuuuge chunk of it.
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