Tuesday, September 30, 2008

lifestyle check

Images from Handpsan Luxury Cruises, from where we booked a part of our trip

MSP and I will be leaving for two countries in about three weeks. It will be a semi-working holiday, as going there is actually part of (and funded by) a new business project we have in the works.

He is no good at planning, so I had to take care of the itinerary - booking the multiple flights, the hotels, the cruises, etc. I also planned the budget for each activity.

As I was doing the numbers, I quickly realized that traveling is not cheap. If we want to (a) travel at least two times a year for the rest of our lives AND (b) have the freedom to just pack up and live in other countries for a few months, we have to reassess our lifestyle plan.

Not the time for a luxury home

We initially wanted to buy luxury home in the next two years. This doesn't make sense anymore.

The subprime mortgage in the US showed me this: A residence is not an investment. It is not an asset that can give you real future returns in excess of your invested capital. If you don't believe me, read this.

The house where you reside does not earn money for you, so the money you put into mortgage can be classified as a living expense (like money spent on food, clothes, etc). MSP and I initially wanted to throw all our money on a luxury unit, but now, we're beginning to rethink that plan.

Algebra is useful, despite what I said in college

Last night when I was unable to sleep, I called MSP and demanded that we re-discuss THE PLAN.

What do we really want? Our answers were synchronized:

(a) Luxury travel
(b) Regularly eating in a good restaurant, whether it be in Luxembourg or Taiwan
(c) Having the freedom to move when we feel like it

What do we NOT want?
Our answers were also the same:

(a) Kids
(b) Properties that will weigh us down / Exorbitant property taxes and insurance
(c) A leaking roof

In order to live the life we want, we therefore only really need:

(a) A big, liquid pool of funds
(b) A small condominium unit we never have to worry about maintaining

The solution

After thinking up the numbers, we agreed:
Instead of buying a luxury home, we would be better off holding on to our money and saving whatever else we will make, at least in the next 5 years. It would be the prudent thing to do. We shouldn't spend more than 1/5 of our net worth on a house.

If we decide to get married, maybe we can renovate the condo to give it one bedroom, install a gourmet kitchen, and hire a pro to make it look like a boutique hotel suite ala Philippe Starck

THE DREAM DESIGN. Photos of JIA Boutique Hotel, which Stark designed. I fell in love with his aesthetic when MSP and I dined in Felix at the Peninsula Hong Kong, which he also designed.

This is what the suite looks like in real life, without the 'brochure' lighting: click this and this.

We would spend a few hundreds of thousands on the renovation - that's millions less than what we would spend on a luxury unit. The current condo is a good space, anyway.
We just need to compartmentalize the pad cleverly (like Starck does) so that we don't have to be in each other's faces. It already has a nice semi-high ceiling, good structure, clean look. It is cleverly hidden in the middle of the city. There's a pool, and a store selling pancakes just opened in the compound. The only thing I hate about it is the shower, which is just bah. It will need to be retiled.

But what's really great about the condo? It is already ours. MSP and I bought it as an investment two years ago, at pre-selling rate. We were supposed to rent it out, but now I live in this open space, alone and happy.

High net worth

If we decide to stick to this plan of scaling down and just living in a modest space that we already own, we would reach our goal of having high amounts of investible assets much faster. To every person who ever dreamt of making the world her neighborhood, this is the BEST THING EVER. Having liquidity means being free. We can pack up and live in Switzerland for a year and not be worried about money. We can literally STOP WORKING and hop from New York to Istanbul just because.

Will I be able to do it?

Downscaling our housing plan means less worries, more money in the bank, less carbon footprint, lower monthly living expenses, and many other wonderful things. Of course, it also means smaller closets. That could be a problem. I have designer things that do not belong in boxes, and MSP has (ugly) collectibles that (geeky) guys just love to amass. A clever closet needs to designed.

And then there's 'other people's perceptions.' In this sad world, appearances count. You are often judged by the house you live in or car you drive.

Eh, so what?

Honestly, though, I'm over the whole image thing. I used to be conscious about it before I hit 25. But now, I don't care anymore. I have nothing to prove. At 27, I've already acquired things that it takes some people a whole lifetime to buy. Besides, no one is watching. My friends will still like me even if I lived in a box (I think). And my relatives are too self-absorbed to care.

In the business I am in, I see low-profile, 20- to 30-something self-made millionaires who live in modest houses and don't mind backpacking their way around the world. These are people with millions of dollar in the bank, run their own companies, and can afford to buy small islands - but they don't. They prefer to be light and easy. I aspire to be like them.

So hey, maybe I can do it - You know, scale down. De-stress. Stop running after unnecessary
things. These low-profile millionaires pulled it off. "They live in modest homes, drive older cars, brown-bag their lunches. They don't look like millionaires. And yet they're worth seven figures."

Surely, I can be like them.


Blogger Erica is Rich said...

I will still buy a house soon though. Just because I want to, hehe. :)

Actually, that whole "low key millionaire lifestyle" is what I learned in Finland. People here are really humble. Maybe it is because they have had money all their lives, they do not need to show it off anymore. :)

Here is to amassing the wealth. :)

3:44 AM  
Blogger bismuth said...

i will love you even if you decide to live in your backpack.

so maybe someday, we'll bump into each other in some Prague metrorail, both on our way to other destinations- tokyo, hanover, sydney, micronesia, winnipeg, around the world.

we will do that. i've no doubt. i like this philosophy of yours. this way of life. the perfect thesis to wanting to be alone. alone to be with the rest of the world.

1:06 PM  
Blogger {illyria} said...

your box will still look like a hotel suite, the backpack (that bismuth swears by) will still be a prada, you will always have good taste, your friends will always have good taste. there's no need to worry about you losing friends, really. :)

4:07 PM  
Blogger mussolini said...

ekay > i'm over the house thing. bought one about 6 years ago, and now i'm preparing to sell it. it's just too much work maintaining a house. of course, i'm kuripot like that, so there. and yeah, i agree with your about millionaires from other countries. they just seem more at peace with their money, never needing to show it off, and sometimes even feeling guilty for having too much.

bismuth > let's trek to machu picchu. seriously. how about late next year, say october? the weather will be perfect. flights cost a lot these days, but i am hoping they would go down again next year when all this bluff about oil is finally ironed out.

illy> i'll be the hobo with the best hobo bag; the globe trekker with the best shoes. you should write about it.

4:27 PM  
Anonymous acey said...

oh my god. are you like my long lost sister or something? i want the same thing you and your man wants... in the future, that is. hehe. i love your honesty and wise-ness! (sorry, i am soundling like a scary fan girl, noh?)

by the way, i hope you enjoy your working holiday! i hope there will be less work and more play! :D

9:11 AM  
Anonymous acey said...

oops, sorry: want the same thing you and your man want... without the s.

9:12 AM  
Blogger mussolini said...

acey> maybe theresians think alike?:) you know, let your light shine and be a blessing :) hehe

11:01 AM  
Anonymous Anonymous said...

yes, grid, no need to show off; no need to prove anything, not to us, not to the world. Not even to Mao.

and no need to worry about losing us, your great friends because we will sail on together, rich or richer; not even when you lose all your hair. we're a groupie like that. LOL. :)

6:53 PM  
Blogger Retro Manila said...

I love this post.

2:18 PM  
Blogger mussolini said...

barry> not the hair, pare. not the hair. hahahahaha

retro> i realized lately that overbuilding a life here may hamper me from being a citizen of the world. so i'm taking a step back to see how i can make myself cash-rich (instead of just asset-rich); how i can build a nest egg that will be valid anywhere in the world. you might be right - slow may be the new cool :)

3:23 PM  

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