Financial advice 101

In the latest development to the story that is my mother-in-laws hunt for a $20,000 house I have had a rather interesting 24 hours. On Friday night we got the news that mum has actually put a deposit down on a row-house in a Boray near Chris and Aya’s house over in Chpar Ampov.

Hmmmm….so much for waiting and looking at a few places ! Leakhana and I are both a bit perplexed so before heading to the beer garden yesterday we went out and had a look at the Boray and actually it wasn’t so bad . A good sized living area downstairs and a kitchen flowing through to a 1.5m courtyard at the back.Two bedrooms upstairs with an expandable rooftop. All this for $26,000 drive away no more to pay ! Excellent……

Except….

Mum only has $20,000 ???

Dingalingalingaling

Once we are settled at the beer garden,I ask Leakhana to ask Mum how she intends on paying for this as it is $6,000 more than she has and she tells us that the Boray has a finance plan that goes like this:

Mum will put down $16,000 on a purchase price of $26,000

She will then owe the Boray Developer  $10,000 which she says she can pay off at $100 a month “until she pays it back…..”. I automatically go into calculation  mode and figure it will take at least 8 years+ at that rate and I also ask straight away “what’s the interest rate  and who holds the title ?”. I am told there is no interest rate and mum holds the title and I suggest to them that “Sorry….nobody lends you $10,000 over 8 years for no return…and no-one will let you hold your title while you do it !”.

Some phone calls are made to Phalla and Tra ( who were with mum when the deposit was paid and it turns out that Mum would actually have to pay a 10 year contract (120 months) at $150 per month  = $18,000 .

We have an initial conversation about the ramifications of this which I can see stresses mum out so I leave it for later and when we get home mum,Phalla,Srey Neung, Leakhana and I sit down with a glass of red wine for a family pow wow. Over the years I have witnessed these and usually I take a back seat as they are over issues I cannot really help with or do not really concern me but this time I decided I had a right to speak as the major financial benefactor to mum over the last 5 years and also….at the end of the day…..I have some experience !

I explain to mum that the actual final cost of that house is  $34,000.   ( if I got all the information correct from mum etc….)  not $26,000.

I point out that Mum only has $20,000 and has no source of income other than Leakhana and I, Tra and Phalla and Srey Neung. Whoever lives in the house that mum buys needs to eat, there will be utility bills etc etc and all this would need to be paid for AFTER the $150 that goes to pay the Boray  for the house each month. I then ask point blank where all the money is coming from and has everyone done their sums ? There is some mumbling about Srey Neung’s wage will cover some of it and this and that and I eventually say of course Leakhana and I are happy to continue our financial support each month but NOT for interest payments to the Boray. I suggest that I really think we should aim for a situation where any money we all give mum is to be used for food and the necessities of life.

I point out that I had thought the whole idea of mum selling land in Kampot was to get rid of the stress associated with it and I calmly advise that I feel if she buys this house she will be right back where she started from. With more stress ! I know $20,000 is not a huge budget to buy in Phnom Penh but there are many many options if she is patient. My strongest advice to mum last night was to not go through with this purchase…. WAIT WAIT WAIT WAIT and RELAX and look at many many different houses over the next few months and other options like maybe joining Leakhana and I when we sell Australia to buy a larger house and land or maybe buying land and helping us build a house suitable for the whole family  etc .

The more I think about my extended family and their situation and the kids that need a roof over their head and the amount of love and support they have always given me through thick and thin, the more a communal set up makes sense. I think most people in life crave that sense of security and safety that going “home” creates and this city can be tough enough without having to worry about where home is all the  time. I’ll be perfectly honest with you…..I now feel quite guilty about renting an expensive house while the rest of the family stresses out. It is a lovely house and it does provide a safe haven for my immediate family and others when they want ( Srey Neung is now staying for a few weeks /months ) but I feel we could get smarter with wealth distribution. I await the inevitable smart arsed comments about living with the family BUT…I have said it before and Ill say it again and again….I got lucky with my wife and her family. They are the next best thing to my own Australian family and I love them all to bits and I have this idea of a family utopia where we all come and go through the same front gates and everyone is safe and happy. Of course I need my own space with 75″ flat screen and AC but let’s cross that bridge one step at a time…

The upshot of the conversation last night was quite amazing. I believe I was as diplomatic and impartial as I could be and assured them I only wanted the best for mum and I really just tried to get them all to stop and think about what this decision could mean and there were lights going on over heads all night. Phalla and Mum could not thank me enough for not only the financial support I have given over the years ” you have been amazing with your help” but also the fact that they know I really care about my family and waded into this situation at just the right time. I think they were just so relieved that they could now make a better decision than one I think they were all unsure about.

Either that or Mum will sign the contract tomorrow !! Stay tuned.

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4 Responses to Financial advice 101

  1. catherine says:

    i agree with you. life is shitty enough out there for the locals, no need to add stress and worry about the “home”. i also agree with you that no matter what it means to live with the extended family, it pays back a lot when you have in return the safety and security of a “home” that is always busy and looked after. keep your own private quarters where no one is allowed when you’re watching the race or whatever you do in your own private time and place, and you’ll be happy, feeling safe and secure! make it big enough that you can have a second dog and get a companion for your beautiful dog 🙂

  2. LaudJohn says:

    Good advice on the Boray House front. It never ceases to amaze me how the details, like the repayments here, get overlooked or confused and the the lack of thinking ahead as to what will happen or how something may well work out.

    Do not feel guilty about the money you spend on creating an environment in which you want to live. YOU earn the money and your down time environment allows you to continue to do it. Working just to give money to the family is little different than working just to pay the tax man.

    Yes give, but remember the welfare mentality of reciepients. If you had not pointed all this out about he payments on the house and Mum fell behind in repayments, to whom do you think they would turn to bail them out?

    I think a compound situation for the extended family is a great idea, but keep the man cave. If I build in Camaodia it will be a house for use and an attached flat at the rear with separate access for the family.

    • john,
      luckily i escape the welfare mentality. If anything…it reversed. My mum actually offered us her $20k months ago.” Do what you can with it…..”. My man cave is going to be above the double garage :-). Fortified, air-conditioned and pimped…..

      jg

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