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Bolded point is SO important. Opportunity cost is everything.

FWIW - this is the path I've taken. I'm now 30, but I came to this decision at 25. My parents lost sleep over the fact that I chose to rent... they're still not comfortable with it, 5 years on.

I actually drew up a long term plan based on:
- my daily contracting rate at the time, using a 40 week work year (EDIT: this has been modified to include my wife's income)
- an estimated CAGR of that contract rate (I used 5% p.a.)
- a yearly return on assets invested (10% p.a. used)
- a cash/liquid asset buffer ($100k buffer)

I also have a good idea of my expenses, and add a buffer of 20% on that, and assume I'll bank the rest. So far I've exceeded this target by the buffer plus another 10%... I'm now moving toward 'paying for time' (e.g. cleaner, groceries delivered, etc.), but that's another discussion.

TBH, my mistake was over-estimating my expected return. I put 10% p.a. and although I've managed 17% in that time, it's still not prudent.
I probably also have too large a buffer, but I haven't changed that. It helps me sleep knowing I can fund a whole year's worth of expenses without worrying.

That said, I've reconsidered this option from time to time, especially because I'm starting a family and can likely buy the house I'm after without a mortgage. No decision made just yet.

Another metric worth measuring is the 'passive income to expenses' line.

(I would post it, but there's probably a such thing as TMI when it comes to forums like these)

If anyone does go down this path, expect huge social pressures from family and friends to buy a house. The social short-squeeze is intense, and it's multiplied if you have a partner who sides with them.

<blockquote data-quote="Klogg" data-source="post: 954726" data-attributes="member: 36777">Bolded point is SO important. Opportunity cost is everything.FWIW - this is the path I&#039;ve taken. I&#039;m now 30, but I came to this decision at 25. My parents lost sleep over the fact that I chose to rent... they&#039;re still not comfortable with it, 5 years on.I actually drew up a long term plan based on:&nbsp;- my daily contracting rate at the time, using a 40 week work year (EDIT: this has been modified to include my wife&#039;s income)&nbsp;- an estimated CAGR of that contract rate (I used 5% p.a.)&nbsp;- a yearly return on assets invested (10% p.a. used)&nbsp;- a cash/liquid asset buffer ($100k buffer)I also have a good idea of my expenses, and add a buffer of 20% on that, and assume I&#039;ll bank the rest. So far I&#039;ve exceeded this target by the buffer plus another 10%... I&#039;m now moving toward &#039;paying for time&#039; (e.g. cleaner, groceries delivered, etc.), but that&#039;s another discussion.TBH, my mistake was over-estimating my expected return. I put 10% p.a. and although I&#039;ve managed 17% in that time, it&#039;s still not prudent.I probably also have too large a buffer, but I haven&#039;t changed that. It helps me sleep knowing I can fund a whole year&#039;s worth of expenses without worrying.That said, I&#039;ve reconsidered this option from time to time, especially because I&#039;m starting a family and can likely buy the house I&#039;m after without a mortgage. No decision made just yet.Another metric worth measuring is the &#039;passive income to expenses&#039; line.(I would post it, but there&#039;s probably a such thing as TMI when it comes to forums like these)If anyone does go down this path, expect huge social pressures from family and friends to buy a house. The social short-squeeze is intense, and it&#039;s multiplied if you have a partner who sides with them.</blockquote>

[QUOTE="Klogg, post: 954726, member: 36777"] Bolded point is SO important. Opportunity cost is everything. FWIW - this is the path I've taken. I'm now 30, but I came to this decision at 25. My parents lost sleep over the fact that I chose to rent... they're still not comfortable with it, 5 years on. I actually drew up a long term plan based on: - my daily contracting rate at the time, using a 40 week work year (EDIT: this has been modified to include my wife's income) - an estimated CAGR of that contract rate (I used 5% p.a.) - a yearly return on assets invested (10% p.a. used) - a cash/liquid asset buffer ($100k buffer) I also have a good idea of my expenses, and add a buffer of 20% on that, and assume I'll bank the rest. So far I've exceeded this target by the buffer plus another 10%... I'm now moving toward 'paying for time' (e.g. cleaner, groceries delivered, etc.), but that's another discussion. TBH, my mistake was over-estimating my expected return. I put 10% p.a. and although I've managed 17% in that time, it's still not prudent. I probably also have too large a buffer, but I haven't changed that. It helps me sleep knowing I can fund a whole year's worth of expenses without worrying. That said, I've reconsidered this option from time to time, especially because I'm starting a family and can likely buy the house I'm after without a mortgage. No decision made just yet. Another metric worth measuring is the 'passive income to expenses' line. (I would post it, but there's probably a such thing as TMI when it comes to forums like these) If anyone does go down this path, expect huge social pressures from family and friends to buy a house. The social short-squeeze is intense, and it's multiplied if you have a partner who sides with them. [/QUOTE]

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