Friday, November 15, 2013

Important Milestones in May 2014!

I have 6 more months to go on the bank debt for my rental property. In May 2014, I will be the proud owner of two apartments one being my primary residence free and clear. Both apartments are humble, small residences with 2 bedrooms. Right now I am paying more to the bank than I can collect as rent on the second property. However, finishing off the payments in 3 years was important to me.

I am so looking forward to May. I will have a significant breathing room in my budget and will start saving for more home renovation, a vacation in the US and a new car in 2018.

The best part is; after May 2014, my passive income will be just enough to cover all my living expenses. What I bring in due to the part-time consulting job will be icing on the cake.

In my country, we did not have retirement accounts like the 401Ks or the IRAs up until 2003. The Social Security system was sufficient up until the l1990s but, due to poor political decisions, people could retire early and the social security system started showing signs of insufficiency. The Government raised the retirement age gradually but it is still low when compared to developed nations. In 2003, a private system was introduced as a voluntary supplement to the social security which is similar to the Roth IRA in the US. I joined the system in May 2004. The system requires a minimum of 10 years of active payment and a minimum of 56 years of age to take advantage of the full tax benefits.

The Government is matching our payments by 25% to encourage participation to this system. Of course it does have a cap. They contribute a maximum of USD 127 per month. To me, that is free money to be snatched up. My mandatory 10 years will also be up in May 2014 but, I shall continue contributing to the system as long as the Government support continues. I am 9 years away from 56.

Many people were skeptical about the system and so was I but, it turned out to be a good deal. However, it is not something I would solely depend on. I read a lot of US blogs and select the funds in my retirement account based on what I learn from them.

Hope, I will reach financial freedom in May 2014, in good health too...


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