So I figure a good way to kick off this blog is to talk about the situation we expect/hope to be in come age 37 (seven years away). I put retirement in quotation marks as there are possible outcomes where we end up not actually being retired in the binary sense people usually mean. More on those later.
The key pillar of our plan is geoarbitrage, i.e. spending our money somewhere it will go a lot further than the location in which we earned it. Essentially, we plan to move to the Philippines at the point at which we “retire”. This pillar rests on a foundation of property ownership.
We own two properties. One in the Philippines which is mortgage-free. We financed it by extending the mortgage on our house here in NZ. Yep, that’s how cheap property in the Philippines is! Or at least this particular one. The catch? Foreigners can’t own property in the Philippines. At least not 100% of one. The property is held in my wife’s name as the Philippines is her home country.
The other property we own is our house here in NZ. We don’t live in a major city so it’s not worth a fortune but selling it will release enough money to go a long way towards our financial independence.
So we’ll pay off the mortgage on our house here in NZ. There’s currently seven years left on it, but we’re constantly shortening the term so we may pay it off sooner. After that, the plan is to sell this house and move to the Philippines for a period of at least a year. When that year is up, there are a number of tracks we could go down:
We decide to stay in the Philippines. In this case we should have enough money to stay out of work indefinitely. This will be mostly due to the equity released from selling our NZ home (which would then need to be invested), but will also partly be from the fact that because we would be permanently leaving NZ and therefore would be eligible to access our KiwiSaver accounts, which would otherwise be locked up until we turn 65.
Is the same as Track 1 but after being in the Philippines for a year we may decide to get involved in some work or business ventures to supplement our investment income and allow us a more luxurious lifestyle with regular travel.
After a year-long trial we may decide living in the Philippines is not for us and that we want to move back to NZ, purchase another property mortgage-free (selling our Philippines home if necessary) and then work part-time to cover our remaining expenses while we decide our next FI move. NZ offers a number of advantages in areas such as health care, safety and political stability that we would have to take into consideration, especially given that we have young children. Not everything in life is financial.
Given that staying in the Philippines is not a guarantee, why not keep our NZ house until we’re sure we aren’t coming back? Well, it’s not completely off the cards, but having been a property manager for a stint at one point during my career the idea of being a landlord holds very little appeal for me. And to avoid launching into a rant right now, I’ll revisit that topic in a future post 😉
So that’s our plan as it stands. There’s a lot of water to go under the bridge and as we mull on it over the years we may make tweaks or change it up completely. But for the time being we believe it’s workable.
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