By Elizabeth Kerr
People decide to build their money machines for all sorts of different reasons.
There is no right or wrong reason.
I’ve personally never heard someone say they wanted to build a money machine so that could have a big ole house on the hill and drive around in luxury sports cars whilst blowing their loose change on the good looking and good cooking. Nope, never!
Typically people share more subtle reasons for wanting the financial independence that a money machine provides. Reasons that are more reflective of their inner values – such as:
- “I want to be able to take my kids to school each day”
- “I want to be able to coach my sons cricket team”
- “I work in an industry where job security is fickle”
- “I want to provide for my children and the generations that follow”
- “I don’t want to have to worry about how to afford healthcare costs when I’m older”
- “I want to go into Ministry for my local church”
- “I’ve want to travel home every year (and escape the NZ winter)”.
- “I’d like to do a PhD one day”
- “If I loose my job I don’t want it to affect my lifestyle”
- “I want to stay home for the kids”
- “I’d like to become a yoga instructor”
- “I’m passionate about giving my kids a private education”
- “I’m interested in volunteering overseas”
You get the idea ... There is no single or right reason to decide to build a money machine, but you must have a reason.
When times get tough and temptation starts nipping at your heels; or Harvey Norman has a half price sale, it’s your reason that will keep you accountable to saving and then investing your hard earned money.
So why did we start a money machine? Motherhood made us do it! Pull up a chair folks I’m about to get personal.
*cue classical story telling music*
Once upon a time our accountant sent through an email suggesting we attend a seminar doing the rounds about Property Investing. (Note: when your accountant emails you suggesting you need property education that’s a pretty strong red flag that you’re not doing it right!).
And in that seminar we realised we were certainly NOT doing it right. We had a few properties but two of were leaking like they were made of weetbix, a block of money-sucking land and our PPR. Not exactly the stuff early retirement dreams are made of. Oh and we only had one income and some small savings.
In our personal life at that time we had just been blessed by our first son. And quite honestly I thought it was a shitty time (no puns intended).
I did not evolve into the earth mother I had envisaged myself to be. Besides the fact I had the cutest child the world had ever seen, he didn’t feed or sleep and I was quite sure I was never going to physically survive the experience. Hubby and I spent a lot of time wondering how people managed to go on to have more than one. I was always generously swinging between pride and elation to boredom and depression.
But in amongst it all I had this GENIUS idea!!! With the few brain cells remaining, and the seminar fresh in my mind, I thought –
“What if we could build a Money Machine that could replace my husbands’ income?”
Obviously we can live off one income and if he didn’t have to go to work then he could stay home and we could do this parenting thing together. Genius!!! In my imagination we would spend the day pushing the most beautiful sleeping baby the worlds ever seen around trendy café’s drinking lattes and reading newspapers every-single-day! (The only realistic part of that is of course the money machine part). The baby latte experience wears off as soon as sleep depravation kicks in and you figure out coffee is medicinal and don’t give a flying hoot for trend.
Anyway, achieving this goal became my entire focus. The idea of having someone to tag-in to parent at any time was a pretty powerful motivator. I dedicated every spare moment to thinking about it, I scoured the internet for blogs from others who had pulled it off and bored the pants off anyone who would listen. Every financial decision we made was in light of this goal. Every single spend was questioned. Our lifestyle design suddenly became very intentional.
Bye-bye went the BMW X5 and random block of beautiful but money-sucking land, hello leaky building remediation, excel spreadsheets and saving 30-50% of our take home pay. Added to that was a selection of the smartest property investors I’ve ever met whom had access to up to date market knowledge and ta-da…. one self sustaining property portfolio and the bones of our money machine was born.
My reason for building a money machine was so powerful for me that I was going to let nothing distract me from achieving it. Those that succeed with their own money machines have powerful reasons.
You need a reason!
Comment below, find me on facebook or email me at Elizabeth.Kerr@interest.co.nz.
(I’m very pleased to report that I eventually got the hang of parenting and did go in and do it all over again a few years later. But I cannot stress enough how empowering it is to know that whatever happened we can flick on the machine and I can tag him in at any time).
16 Comments
Exactly! No idea why people keep grumbling about houses being unaffordable for young people. Most young people elect to either buy a house shortly after graduation or go on an OE. I suspect that it is the middle aged who elected other stuff over home ownership when they were younger that now complain!
Of course its coming. Just not anytime soon. You had to wait 70 years between the Great Depression and the GFC. It will be a similar time until we see something similar. Of course we will see recessions and slightly bigger drama along the way but nothing that big is coming anytime soon.
The Lehman collapse started the GFC. Do you honestly think there would be no bailout if JPM were even looking like being close to the same situation? At any rate JPM is well capped, solid and subject to the tougher regulations bought in after the GFC so its not going to happen.
Of course money machines can come in many different sizes and shapes. I personally have not referred to any experts. Examples: water tank connected to the washing machine. Installed by myself to keep the cost down. No smart phone: no future health costs are anticipated for my neck due to my posture still being good. Own car mtce. The list is long and varied....
A long time ago, my old boss explained that there were two revenue streams. The one that money flowed in, and the one where you could keep costs down. If your household is a business, and servicing your car used to cost $400 and it now costs $50, your income is $350 higher. He was very adamant you had to work on both. I agree with him and think it is very important to look at both sides as being your revenue. It used to be explained better, in fact Home-Economics used to be a subject at school, and its topic was exactly doing stuff like cooking and sewing to keep costs down.
Maybe it's not part of a money machine, but I struggle to see how a money machine can function if you treat them as sepearate things.
I don't disagree. But if you became incapacitated only a true money machine is going to keep paying you. That is my measure for a money machine... what will keep punching out money even if I don't personally exist. Home Economics was my favorite day of the week at school. I made a wooden spoon and a elephant cushion.
Agreed, a reduction in day to day costs allows your income earning money machine to run further and longer. Its like having a more efficient car - it runs further on the same gas.
Also worth noting that a reduction in costs is an "income" that is after tax. At a 30% marginal tax rate saving $2K a year is equivalent to a $2.86K increase in Gross income.
Of course you do need to balance this out against the value of your personal time.
So this Money machine is nothing more than a property portfolio that was produced before 2008 or after?
You know, when everyone was doing it from 2001-2007 while the bubble was in full inflation speed. Then the GFC came (a dose of reality) and many lost but not so many in NZ......yet. Now as we inflate a new bubble well beyond the 2008 one...your advice is to? What? Because all I read was someone again indirectly in a very insidious manner advocating hoarding properties and thinking they can't lose. Your gains are society's loss but I kind of get the feeling that's not your problem. You're alright jack and that's what matters most of all.
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