Investing in Lifetime Memories

This article may not be considered specifically business related, but I feel most business owners and employees have a desire to share lifetime experiences with family but consider the cost to be a major deterrent.

A month or so ago, someone said to me that they would love to take their family on an overseas holiday but didn’t have the cash to do it! They did however, have substantial equity in their home.

I asked this person did they consider the family overseas holiday an expense or an investment?

The answer. . . an expense!

When we consider it as expense, we are reluctant to borrow, however, if we were to consider it as an investment then would we be more likely to borrow?

If it was for an investment property we would borrow, wouldn’t we? Yes, I know we can touch and see an investment property, but what if we could give our family an experience that they would remember for the rest of their lives? Is that an investment you would make? Would you then be prepared to borrow?

Let’s look at the numbers! If we allowed $20,000 for the holiday, and current home loan rates are less than, but say 6% p.a. The interest or funding costs would be $1,200 p.a. or $100 per month. The question then is whether you can fund $100 per month, rather than the $20,000 initial outlay. Yes, the principal loan of $20,000 still needs to be repaid, but this can either be paid over time or at a future time period.

I guess the majority of my generation (Gen X) have grown with the belief system of paying off our home loan before we do any major overseas travel, or personal expenditure. It’s ironic that Generation Y has probably travelled more than their parents, and certainly more than their grandparents did.

tunisia-camel_1735477c.jpgI am not suggesting you rush out to the travel agent and book an overseas holiday, but what you may consider are those personal experiences you wish to have but have not pursued due to ‘cost’. Consider rather the funding costs and how you may manage your personal budget to fund those. Do not spend unnecessarily or beyond your means, but perhaps you can explore options that may be available to you to meet those desires.

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