Plans change when it comes to money and it is best to remain flexible.

I have found the best way to remain flexible is to keep your options open as much as you can.

Some examples of creating options might include:

• Having a solid emergency fund

• Being well insured

• Having more than one source of income

• Expanding your knowledge

• Being well liked or connected

• Save some money for your future

• Creating a large gap between income and expenses

• Not taking on too much debt

• Not buying too much house

Such actions may be able to open up an ability to respond to more situations than you would otherwise. Such as:

• Coping with unemployment

• Ability to take a sabbatical or retire early

• Coping with sickness from a financial perspective

• Creating new and better job opportunities

• Doing more of the things you love without so much worry about money

• Visit your overseas based family member or friend on short notice

• Not being forced into selling assets at recessed prices
  

That last point is the one that brings me to todays article.

Our plan a couple of years ago was to build a house to live in and sell our current house. At the time, the new build was set to cost around $900,000 and the house we live in was selling for close to $800,000. A difference between new house and current house of $100,000.

Since then though, build cost has gone up to around $1.2 million and the cost of our house has dropped to around $600,000 if lucky. A difference between new house and current house of $600,000!

This situation has obviously made things more challenging. But not insurmountable thanks to the last ten years of saving 50% of income.

If we hadn’t been good savers we wouldn’t have the same options available to us today. I don’t say this at all to brag. I say this to show the benefit of saving instead of spending.

If we didn’t have savings, we would have had one choice. To continue with the build we would have had to sell our current house to fund the increase in prices. We probably would have been ok, but I would rather not sell a house that has gone down $200,000 in the last two years.

But instead, we can fund the difference ourselves and don’t have to sell the house.

We didn’t plan on it, but come next year we will become landlords.

Sticking to the plan would prove costly. The ability to remain flexible is a nice thing to have.

We feel much better about not having to sell the house than selling the house. Not our original preference, but still nice to be in this position and have that option.

Good discipline with money can open up these unforeseen back ups you never thought of.

When prices recover we will likely look to sell again. We would like there to be less of a difference between our build cost and house sale price.

Until then, we will continue to save money and prepare for what else life and the economy throws at us.

The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here