Tony’s proved it is never too late

Bruce Brammall, The Australian, 3 July, 2022

Determination. Like so many aspects of life, it’s the key to building wealth and creating a better lifestyle for Future You.

Those who want change bad enough will make it happen. They start channelling improvement and change comes.

Sometimes it comes from wanting something better. And sometimes it comes because you can see your future and that vision scares you.

That is, “fear and greed”. They say there are no two better motivating factors.

Let me tell you Tony’s story. Because it’s inspiring.

In 2010, after a couple of decades of having fun – I mean seriously having fun – Tony found himself approaching 50 and pretty much penniless, despite his healthy salary.

To his name, he had: $12,000 in savings, an $8000 motorbike, $30,000 in super and some home contents, worth … well, not very much. Let’s call it a sum total of $60,000.

Something he’d read had scared the crap out of him.

He shot me an email and we had a chat by Skype (yep, it was 2010, don’t forget). We caught up in person in the following weeks.

Tony is a down to earth guy, a fly-in, fly-out mines worker. He loves his rugby, did a bit of motorbike offroading and racing, but had recently given that up.

“Bruce, I’ve lived a bloody good life, mate. But I’m looking at things and … I’ve got nothing,” Tony said.

“Every time I get $25,000 in my bank account, I book a flight to Bali, have a blast for a couple of weeks, and come home with $10,000 in the bank.

Rinse and repeat

“And then I do it again. I’ve been to Bali a lot.

“Don’t get me wrong. I wouldn’t change a thing. But I’ve just realised … on this path, I’m going to have to work until I’m 75. I don’t want to work until I’m 75.

“Is it too late? What have I got to do?”

I could hear the fear.

We discussed the concept of “delayed gratification”. How a bit less fun now would start to build that nestegg for the future.

We went through why tax makes superannuation so powerful and about the benefits of investing in growth assets. We talked about the importance of proper insurance in case something went wrong. He had some insurances already, so he understood that.

Question of degree

He said it all made sense.

So, how far was he willing to go? How much was he prepared to sacrifice? Did he have an idea?

“No. You tell me what you think I should do and I’ll do it.”

So we did. Tony agreed to maximise his super contributions via salary sacrifice and to increase the investment risk in his super. He also started an aggressive investment portfolio with some of his savings and agreed to contribute $2000 a month to it.

Fast forward – 2012

We caught up by Skype again a little over a year later.

In that time, his super balance had grown from $30,000 to $75,000 and his investments were now sitting at around $70,000. With other assets including savings, he was now sitting at about $195,000.

There hadn’t been time for much growth yet – it was mainly his sacrifices to superannuation and his investment portfolio that had delivered increases. But he’d roughly tripled his net asset position in 18 months.

“Bruce, it feels like you’ve taken away a lot of money for super and investments. But honestly, I’m not missing it. I’m just not blowing it. I still went to Bali, just did it differently. This feels good.”

And then came something I wasn’t expecting, but probably should have been.

“What’s next? What else can we do?”

Whatever it takes

I’ve always referred to Tony as my “whatever it takes” client.

He wanted to talk about residential investment property. With that comes huge leverage and huge debt.

“Yeah, but nah. Can’t get my head around having that much debt. I know I have some investment debt for my shares now and I’m comfortable with that, but I don’t even have a credit card.”

So, given he was already maxing his super contributions, he agreed to up how much he was putting in monthly to his share portfolio.

We’d catch up every year. And every year we’d make tweaks, dealing with super contribution limit changes and adding more to the shares portfolio. Once, we had to wind things back a bit, because he needed some time to deal with a family health issue.

But a few months later, things had improved and the email came through: “Lift the contributions again.”

In 2013, his net assets had increased to $240,000. By 2015, they were $290,000.

At every catch-up, there were three things he would say. “What do we do next?” and “can we have another talk about property?”, followed by “nah, still not ready”.

And we’d make some other adjustments instead.

Then, in early 2016, he asked again. “Can we have one more chat about property?”

Turning point

So we did. But the conversation ended differently.

“I’m ready. C’mon. Let’s do it.”

With his usual enthusiasm, he ordered the partial sell down of his investment portfolio and, using strict rules, bought a property through a buyer’s advocate.

He stayed contributing hard with his super, but temporarily dropped further investment into the share portfolio, as he waited to see the impact of the property investment on his cash flow.

There was a different tone in his voice at our catchup in 2019.

His super was a touch shy of $300,000, his shares a net $160,000 after some sales and he’d already built a bit of equity in the property. Total net worth was now about $650,000.

But that wasn’t it. Even though he was now worth 10 times what he was worth less than nine years earlier, something important had dawned on him.

“I’m not going to have to work until I’m 75 anymore, am I? Definitely done by 70, maybe even 65?”

That will depend on how much you want to spend in retirement, Tony. We’ll come back to that.

The magical …

We caught up again in March this year. We went through all of the changes to his life and updated details. And we talked about doing a few things later in the year.

And then we noticed something. His net worth had topped $1 million, probably a few months earlier.

In just 12 years, he’d saved, invested and earned himself a million bucks. His sacrifices were now compounding and creating real growth on their own.

An earlier retirement is now possible. 63? 62? He’s not ready for it yet, but he’s got options.

A steely determination

From the day we met, Tony has inspired me.

He’d lived hard, realised he was behind the eight-ball, then made a conscious decision to change. And he had no intention of doing half a job.

But I wasn’t to know exactly how bad he wanted it, how determined he would be, until a few years into working with him. Everything was “yep, let’s do it”. (Well, except for property, which took some extra discussion.)

Can’t all be Tonys

Not everyone can imitate Tony to the same degree. Tony was well paid and single. He could make decisions quickly, act even faster and not have to consult other parties, like so many of us do.

Tony was also prepared to borrow to leverage investments. And investment gearing simply isn’t suitable for some.

He was prepared to take extra risks and sacrifice harder than almost anyone I’ve ever met. Even though he didn’t really see it as a sacrifice, it was. He could have continued living the high life, but chose to go “straight “.

Making big improvements to your own finances is a door anyone can open.

What’s your motivation? Fear, or greed? Whatever it is, how determined you are will set your focus. The rest will follow.

Bruce Brammall is both a financial adviser and mortgage broker and author of books including Debt Man Walking. E: bruce@brucebrammallfinancial.com.au.

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