My story with Matthew
Hello everyone, today I would like to share a story about myself and my Australian friend, Matthew.
I first came to Australia in 1993 and worked as a labourer at a Chinese garment factory in Surry Hills. My wage was $5 per hour, I worked 50 hours a week, and earned $250 each week. One day I read an advertisement on the ‘Australian Chinese Daily’ Newspaper. An Australian young man, Matthew, wanted to find a Chinese language exchange partner, to whom he would teach English, and learn Chinese in return.
I was a Chinese teacher back in China, and I really wanted to improve my English. From then, Matthew became an Australian friend of mine.
Matthew was a handsome gentleman with blond curly hair. We were born in the same year, back then we were both under 30 years old. He was a researcher in a biological laboratory. His job had nothing to do with Chinese. Learning Chinese was just his personal hobby. We had a regular meet-up at my place at 1-3 pm every Saturday. At 1 pm -2 pm, we spoke Chinese, and at 2-3 pm we would speak English.
To make more money, I also worked on Saturday. At that time, I rented a 6-square-meter room in an old terrace house, which was located two streets away from the factory. The weekly rent was $50. My room was not a usual room, but a partition from the balcony. Every Saturday, after finishing my lunch at the factory and clocking off at 1 pm, I would rush home to meet Matthew. At 3 pm, I would return to the factory and continue working.
Knowing me working around the clock, Matthew was curious about my wage. I told him ‘I earn $5 per hour’.
Matthew took a deep breath and exclaimed, ‘This is too little. This is illegal exploitation. Why do you have to work 50 hours each week for this little?’
He said to me, ‘The reason you came to Australia should not be about making money, but living a better life, enjoying the sunshine, fresh air and the beach in Australia. Unlike in China, Australia is a wealthy country, you need to get rid of the poverty mentality.’ He said he liked Chinese people very much, but he held a different opinion on Chinese people being obsessed about making money. From him, it was the first time I heard the English phrase, ‘be happy, no worry’.
I replied Matthew, ‘As a new immigrant, I have nothing, so it’s hard for me to be happy, and it’s hard to have no worry.’
Matthew said he had nothing either, he had no savings in the bank, but tomorrow's money will be earned tomorrow, so, what is the point of worrying about tomorrow?
At that time, I did not know that Australians normally kept their income status as a secret. However, Matthew revealed that his annual salary was $38000, yet he always spent all his salary by the end of every week.
His words kind of make sense, but after all, I was a traditional Chinese man, so I could not live as free as he did. I always thought, ‘if one day I lose my job, where can I make money?’ At that time, Matthew’s annual salary of $38,000 was an unreachable dream to me. I was very envious of him.
Our language exchange sessions lasted until the beginning of 1994 when it had to end. As I could not make enough money from the garment factory, I started working in a Chinese supermarket in Chinatown during the day and then working at a teppanyaki restaurant as a cook in the evening. I sold small goods at Paddy’s Market over the weekend too.
Matthew said it was disappointing that we could no longer continue our language exchange, but he was more disappointed in my way of life and my attitude towards life.
Matthew rented a one-bedroom apartment by himself for $120 per week. He had a second hand Volkswagen. He would travel overseas at least once a year regardless of the distance, or even if he had to be a backpacker. He was living the time of his life.
In contrast, I worked more than 70 hours a week. To save money, I nested in a balcony. I did not own a car, so I walked to Chinatown for work every day. I would eat a bag of instant noodles for my breakfast. I got it for free because the package of those noodles was broken so the store gave them to the employees out of courtesy. I would have my lunch in the supermarket as well. I would pay $5 per week as my share to buy some meat, the rest of the food I ate was either the free foods with broken packages or the ones that just passed their expiry date/expired food. I would have my dinner at the restaurant I worked where offered free dinner. I avoided spending money at all costs. At that time, the call charge from Australia to China was $2.5 per minute, so I rarely called my family in order to save more money.
At that time, there was no mobile phone or email, so I barely contacted Matthew after the language exchange session was over.
Around 1997, Matthew called, he told me that he had quit his job and he was going to study Chinese in China for 6 months. So, he gave me his parent’s contact number in hope to stay in touch with me.
I asked Matthew if he wanted to engage in Chinese-related work in the future. He said no, his decision was made because he was bored from doing biological research. Learning Chinese was just a hobby. He would leave career planning to the future.
Whilst I was very puzzled about Matthew's plan, I was very envious of his way of life. Although we were both in Australia, we lived in two opposite worlds. At the time, I wished to be just like Matthew, who was proficient in English, had a professional career, and was free from job insecurity.
I was proud to tell Matthew about my latest changes. I told him I bought an old apartment in Campsie at a price of $100,000. I got my money for the property from bank mortgage and friends’ lending. I rented out my apartment and lived in another rental property in Ultimo. As Ultimo was close to where I worked in Chinatown, plus I started studying at the Sydney Institute of Technology in Ultimo in the hope of getting a better job after my study.
To my surprise, Matthew did not appraise me but expressed his concerns. Firstly, I did not even have a full-time job. How could I take on so many debts to buy a property? Secondly, Campsie was not a very good area, why would I buy a property there? Thirdly, why would I rent from others but not living in my own property?
I explained to him that I bought a property because I did not wish to spend all my savings during my study. Therefore, the property was my piggy bank. When I spent all my money on the property, I would have no money left to live, that way, I would be forced to make more money. The reason I bought an old apartment in Campsie was not that I liked it, but it was the only property I could afford at the time. I rented out my property in Campsie and chose to live in a rental property in Ultimo because I could save time on travel and fares.
Matthew still thought that was unbelievable. He said he really could not understand Chinese people.
It was then year 2003, I had already started working in real estate and I already had a few investment properties. The old apartment in Campsie I bought for $100,000 had doubled its value. I refinanced the property to buy several other investment properties, borrowing 90% of the total property value from the bank. I had tremendous cash flow pressure at the time. Despite all the pressure, I made some positive changes since I first came to Australia, so I felt proud of myself. On a whim, I thought of my friend, Matthew, so I rang Matthew’s father and caught up with Matthew at a café.
Though Matthew had some grey hair, he was still handsome, and he was more determined and confident. He could speak fluent Chinese, I guessed he must have spent enormous hours on Chinese studying over the last decade. We were almost forty at that time, but he was not married yet.
Matthew told me that he had switched his career to software development as it was easy to find a job in this realm, and the pays were high. Matthew was a smart person with a strong learning capability. It was easy for him to find a job.
When he saw me driving a base model BMW 3 series, he was a little surprised and awkward as his car was old.
Matthew said plainly, ‘You’re now driving a BMW? You must have moved up in the world.’ It seemed that Australians, just like Chinese, can be a little jealous when seeing their friends being well off.
I said I drove the BMW was not because I moved up in the world, but because I need it for work. Real estate agents often picked up and dropped off their clients, so there was a need to drive a better car. I explained to him that the BMW I bought had a car loan on it and I would pay $10,000 a year. I normally would have deposited the money into the bank, however, because my properties made me money, I had the financial liberty to service the loan for my BMW.
At that time, I had just started my career in the real estate industry, and I reaped some benefits out of my property investment, and also gained some understanding in the industry. I no longer had to worry about finding jobs or concerned about the salary. With excitement, I began to discuss property investment with Matthew.
I told Matthew that the $100,000 rundown apartment I bought had risen to $250,000 in its value. This increased my net asset by $150,000. I jokingly asked Matthew if he managed to save $150,000 over the past 10 years. He said he had not saved $150,000, he managed to save $15.00 instead.
I also told him how I purchased more properties using the $150,000 I refinanced.
Matthew's salary was high, I calculated his financial situation for him and introduced him to buy a 3-bedroom apartment in Strathfield as an investment. The price of this apartment at the time was $500,000. With the government tax incentives and cash subsidy, Matthew did not need to pay much out of his pocket to make this purchase.
Matthew was a little tempted to purchase this property, but he could not afford the initial deposit. Getting finance was very easy at the time, all he had to do was to pay $2000 for the mortgage insurance premiums, and he could then borrow 95% or even up to 97% of the property’s value. However, Matthew said he could not even get that 3% or 5% as a down payment. I asked him how long he needed to save up for the initial deposit. He said he didn't know, after paying taxes and rent, it was difficult for him to save up money for the down payment. I told Matthew that he could borrow the down payment from his parents. He refused and claimed he could save up the down payment by himself. He didn’t want to borrow too much money but hoped to save more before buying the property.
I told Matthew that the total value of my properties was over $2 million, however, most of them had mortgages on them. So, my net worth was not much either. In other words, there was not much gap in wealth between me and Matthew. His life was even more comfortable than mine. However, if all my properties increase in value like my Campsie property, my net worth would grow by $2 million in the next 10 years. I would literally become a millionaire. Then, the wealth gap between us would be greatly widened. I drew two unparalleled lines on a napkin. Then I told Matthew an old Chinese saying which is ‘a slight difference may make significant changes in your life over the long run’. He agreed with what I said, but he did not like this way of life.
Not to my surprise, Matthew didn't get back to me regarding property purchase. At the end of that year, the Sydney housing market entered into a period of adjustment, and the market was weak for several years. I established PIA in 2005 and I was busy running my business. So, I never had the time to contact Matthew. In my investment seminars, however, I often mentioned Matthew’s story from time to time.
About two weeks ago, surprisingly Matthew contacted me via LinkedIn. I met up with Matthew again in my office at PIA last week.
We had not met each other for so many years, and we were now both over 50 years old. Matthew was still single, but his hairs already turned grey and his face looked pale, he was no longer the man he used to be.
He told me that he lost his job and he may never be able to find a job again. His work performance stagnated in the past few years as he was unable to compete with the youngsters. He had $20,000 credit card debt and he had been behind with his rent for a few weeks.
He asked me if PIA had affordable properties for him to rent. As he had no savings and solely relied on unemployment welfare payments, he could no longer afford to rent a property near the CBD where he had lived for all his life. He must think about moving away from that area. His facial expression was very lonely and sad.
The meeting was very awkward, and we said goodbye to each other just after half an hour. Matthew did not ask me how I have been, and I did not ask about his life either. We almost had difficulty communicating with each other because our difference was already too much.
After he left, I thought a lot about Matthew.
He should be a very smart and talented individual who had a good job with a decent income. How could his life be so miserable in the end? Because of my occupational habits, I naturally connected him to the up and downs of the property markets.
The price of the terrace house I lived in Surry Hills back in 1993 was only $250,000. If Matthew bought a similar property in that year, the property would now worth more than $2 million, its rent is more than $60,000 a year.
If he bought the rundown apartment for $100,000 in Campsie back in 1997 as I did, the apartment would now worth $580,000. Its rent also reached $25,000 a year.
If he bought the 3-bedroom apartment in Strathfield I introduced to him in 2003 for $500,000, the value for that property now would exceed $1 million and the rent is around $35,000 a year.
However, there is no ‘What if ‘in life. Using a popular term these days ‘Matthew had a good set of cards to play, but he managed to get all the odds stack against him’.
This has nothing to do with luck, intelligence, diligence, or background. His fundamental problem is that he did not have a precautionary crisis awareness like the Chinese.
This meeting with Matthew moved me. Here I share this story with you as a friend. I hope that everyone can learn a lesson from him. Maybe you are still young, but time will pass quickly. Maybe you have already missed an opportunity, so you cannot afford to let it slip again. Time is a double-edged sword, it can make you richer and richer, but it can also make you poorer and poorer. I hope you start taking actions after reading this story and do not follow Matthew's footsteps.
Article was written in May 2020 during COVID-19
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