COMMENT:

Q: I just read your recent column, when you stated: "There's got to be more to life than life insurance, mortgages and tax. Please." My husband and I are considering buying a dream holiday and future semi-retirement property in Italy. The property will cost about $130,000. We are not viewing the purchase as an investment, as rural properties can take decades to increase in value and can take years to sell.

So the money, once paid, will be gone. We haven't told many people of our plan, but those we have think we're crazy!

We have a mortgage on our family home of $170,000, equity of about $700,000, plus $30,000 savings. We also have a rental property with a mortgage of $340,000 and equity of about $400,000, and another with a mortgage of $230,000 and equity of about $300,000. We'd be bumping up our mortgage by $100,000 to fund the purchase, but with interest rates as low as they currently are, I don't see this as a problem.

We are sensible with our money and potentially have many years left of working life before us. I'm 40 and my husband is 47. Is it reckless at this stage of our lives to spend on a dream? Should we wait until we have paid off the mortgage on our family home before considering a second home abroad? We have ordinary jobs with a combined income of just over $200,000 before tax.

A: Personal finance writers tend to err on the careful side. We don't want someone to come back later and say, "I did what you suggested, and now I'm in big trouble".

With that in mind, I normally say it's better to get rid of debt, unless you are borrowing to buy something — such as rental property — that's likely to boost your wealth in the long run.

Wisely, you're not planning on that for the Italian property. It's hard enough trying to predict the New Zealand property market, let alone a foreign one. Anything could happen over

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Early retirement

How much to spend

20-year plan