Achieving Financial Freedom Through Real Estate

It’s easy to stay within a comfort zone. People tend to like structure and doing things that go against the grain of our norm makes us uncomfortable. So we settle. We settle in our relationships. We settle into that cube at 9am a-type-type-typing until the end of the business day and on Fridays, those of us who manage to squirrel away our little monetary nuts are hopeful that we can secure a nice little “nest egg” to cushion us in our retirement. At age 65.

Per SSA.Gov:

  • A man reaching age 65 today can expect to live, on average, until age 84.3.

  • A woman turning age 65 today can expect to live, on average, until age 86.6.

And those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.

That means at 65, you will have to have saved at least 20 years worth of money to carry you to the end of your life expectancy (IF you don’t plan to work). Those are the figures as of today. As medical technology is enhanced, that number is going to increase (this is barring any pending zombie apocalypse or ISIS disaster – the latter of which being more probable).

How bleak!

I don’t want to be the average of my associations. I have recently set a B.H.A.G (Big Hairy Audacious Goal) of retiring at age 45 with enough passive income to pay my bills and live comfortably. The vehicle to support this will be through ::drumroll:: real estate investing! I’ve already selected a niche – buy and hold multifamily. Initially, I was thinking of “getting my feet wet” by purchasing a duplex or triplex. But as I get more pumped up listening to podcasts and observing men and women who have already gone balls to the wall, I figured why not just jump in and buy a small complex?

As I say frequently on other things that is applicable to real estate as well, there are so many incompetent people that are achieving success in their ventures. Why let insecurity get in the way of at least making an effort? And if I wind up belly up in a cardboard box waterproofed with saran wrap, I will divvy it into segments and rent out the corners. Then I will monetize the experience by turning it into a book – no one’s written about that before, BOOM!

Cardboard House
3 unit Cardboard Box for sale. Basic amenities, located near historic downtown . Excellent cashflow opportunity for new investors!

Do you have any investments or royalties from products that are pumping out passive income for you? Did you get an early bid into the compounding interest game and already feel secure with what you will have amassed by your intended age of retirement? Are you biting your teeth in anxiety? Let me know in the comments below.

Websites:

Bigger Pockets (blogs, webinars, forums – oh my!)

Jake and Gino (blogs and podcasts – two normal guys who have escaped Kiyosaki’s “rat race” in the course of a few years by going balls to the wall)

Books:

Rich Dad Poor Dad by Robert T. Kiyosaki

Automatic Millionaire Homeowner by David Bach

~Melissa

Investing in Yourself: How to Avoid Health Debt

An apple a day...
An apple a day…

I think probably most money saving articles out there do a bang up job of telling you the best methods for squaring away your savings and how to invest. But have you considered your health? Have you thought about the impact your lifestyle choices today will affect your pockets tomorrow?

Granted, I don’t walk around daily, actively thinking about health and money investing. But I had a dentist appointment last week that made me think. As the hygienist thwacked away at my plaque-y accumulations from the past 6 months, I thought how grateful I was to be able to have my dental woes addressed before they evolved into warranting extraction$ or root canal$ – that, and I definitely need to stop skimping on flossing 🙁

What services available to you are you not taking advantage of? When’s the last time you went for your annual physical exam or had your bi-annual dental checkup? Do you know your baseline blood pressure? Have you had any blood screening done? I didn’t have my blood work evaluated until I was about 25. And this is AFTER my healthcare provider made notations of my family history which includes high cholesterol and diabetes. Had I not switched providers, I might still be traipsing along not realizing that despite a healthy diet, I have an elevated A1C. In other words, my family history of diabetes is rearing its head and very much to my surprise.

Hope for the best, prepare for the worst. I don’t mean to sound like the doomsayer, but don’t expect your doctor, or physician’s assistant, or nurse practitioner to advocate for you. Know what you’re at risk for based on your genes and heredity. You have to ensure you’re advocating for yourself. If your health care provider is one of those hand on the doorknob types that makes you feel like you’re coming off as unintelligible – please find someone who will listen.

Some circumstances of life are an unfortunate spin of the roulette wheel. But for the ailments that we can control, it’s best to catch it early and reverse what we can. I’m hoping to use my Health Savings Account as another retirement vehicle – NOT to pay my Medicare deductibles and copays! Here’s to quality living, delayed death and less taxes! (Have you elected for your high deductible plan to reduce your tax liability by enrolling in a tax deductible HSA?) :-p

skelly with weights

 

~Melissa

Raise Em’ Up!

Raise a glass to increased income *clink*

I went to a bonfire and wine benefit a couple of weeks ago and ran into an acquaintance. She was dressed in a cowgirl hat and cowgirl boots and was aglow from more than just the blaze in the center pit. I was dressed in a fitted sweater dress with stockings and these cute little gray ankle boots – totally off for the occasion and particularly the weather, despite the fire. When she spotted our group, she danced her way over to my huddled self and easily stoked up a conversation. Fortunately, after a generous wine sample (that’s all it takes for this lightweight), this introvert was equally ablaze and ready to chat away!

Naturally, work found its way into the conversation as we exchanged details of our professional lives and she mentioned that she had a review coming up where she was hoping her employer would give her a raise. I perked up immediately, half pouncing out of my folding chair, ready to seize this opportunity to put some money in this woman’s pocket!

Fueled with wine and pumped on by the towering fire, I went on a spiel about how there really was no incentive for employers to offer their employees a raise. While she liked her job, she was frustrated because she was functioning in a capacity that went above and beyond the responsibilities of her paid role – sound familiar? When you provide services for a certain wage, you’re essentially saying that you’re willing to work for that wage. Aside from general company incentive/cost of living annual bumps, well, who’s going to entertain offering to put more money on the table?

I told her to ask for one. Now, I’m not saying to tell your employer that you are not willing to work for $X. In that case, I’m sure someone would be more than willing to do your job. Unpaid internships anyone? (I despise these programs! That’s another blog for another time.) Anyway, we both concurred that it’s tough approaching your employer, sales pitching your worth while supplying data to back it up, and following up by asking to be reimbursed accordingly – apparently more so for women, Money Tree Podcast reveals. But what I have done in my career when faced with this is to write it down so I don’t freeze up during my sales pitch. Write down your contributions. Or better stated by Jason Hull CFP via Money Tree, document how you deliver value so that you can justify your position for earning more. How much are you contributing to the profitability of the company? Let them know why you’re more valuable than that fresh faced intern. In your face, intern!

For my personal story, the first time I inquired on a raise, while it was delayed, it was eventually enforced and made retro effective back several months. The next time, I didn’t ask for a raise per say but rather a more senior level position. I didn’t get it – BUT, a new interim position was actually created for me that ultimately gave me the experience necessary to get the job that I wanted.

After my “you can do it!” sermon on the chair she smiled, seemingly encouraged by my wine zest. She danced off and I heard her say to a mutual friend, over the music of the live band, “Melissa gave me a really great idea…”

🙂

No interns were seriously harmed during the drafting, editing, or posting of this blog.

~Melissa

The Culture of Poverty and the PAWs – 5 Easy Ways to KEEP Your Hard Earned Money!

The culture of poverty and the WHAT? Just bear with me here. So, I recently read The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by [Thomas J. Stanley, William D. Danko] and observed some interesting similarities between some of America’s wealthy and some of America’s poor. The PAWs or Prodigious Accumulators of Wealth are a group of different thinkers from the book’s UAWs (Under Accumulators of Wealth), or for the point of my blog, the population of people adhering to the culture of poverty. In short, the UAWs are the millionaires who don’t live next door. They’re the people of the hills who drive amazing cars and have the luxurious houses. They’re the ones with branding from head to toe and tote expensive purses (I swear, every woman I see has that new LV checkered purse – especially if they’re in Starbucks…but I digress). Just like a lot of people in underprivileged areas who perhaps don’t show so well, if these UAWs lose their primary income source, they’ve got no savings established to cover their outrageous bills and they’d be paddling up the creek in the same boat with the overt poor. Meanwhile, the PAW is probably the woman holding up your grocery line fishing for that one last coupon in her bottomless pit purse.

Don’t earn to become a UAW – Here are 5 easy Ways to KEEP Your Hard Earned Money!

  1. Got money? Good, keep it to yourself.
    One of the easiest ways to blow through your earnings is to let other people know that you’ve got some in the first place. Between the borrowers who never pay back (this includes children – and I mean adult children too here), peer pressure from other family members and friends (i.e. “Let’s go out!”, or “You can afford to do *insert activity*”), sometimes it’s tough to hold on to your spare coin. Learn to say NO. It’s a little uncomfortable initially, but once you get into the swing of it, boy is it liberating! Don’t worry, the people that matter will still love you <3.
  2. Pay yourself first.
    Stash away a portion of your paycheck from the get go. Set up an automatic transfer if you’re inclined to be a rebel and know you won’t follow through of your own accord. You should build an emergency cash reserve and contribute yo your company’s 401K – at least up until the match – it’s essentially FREE money. If your company doesn’t offer a 401K, or if you’re so baller you maxed that bad boy – great! Now open an IRA if you don’t have one. Nothing quite like the smell of tax advantaged savings *inhales deeply*.
  3. Stash your emergency savings in an online only high yield savings account.
    Again, in keeping with the above point, you won’t be able to spend money that’s not available to be insta-debited. I personally keep two emergency savings accounts. One in case the water heater dies and I need the money sooner than an up-to-48hr turnaround time because it’s not currently a business day, and one in the event that I get the boot from my job and need to live in an insulated cardboard box – for like the next two years. You can see who’s got the best rates on www.bankrate.com or push up your glasses and head on over to www.nerdwallet.com (I have no affiliation with either of these sites.)
  4. Sleep on that purchase…especially before you whip out that credit card!
    My thought process as far as credit cards go, is that if I can’t pay it off in the next billing period, I ain’t buyin’ it. The APRs on credit cards is more than you’re ever going to get back through investing, which means that if you don’t pay off the item outright and immediately, you’re losing money. Barring non emergent circumstances, why buy things you can’t afford? Now, if you ARE consistently getting 19%+ returns on your investments, PM me and I’ll give you my number. We definitely need to chat.
  5. Keep an eye on your account – set up low balance alerts.
    Many banks have this option available now. They will email or text you (your preference) when your account balance is getting low and also alert you to when you have a payment due. Your very own personal nagging *insert family member title here*! I’ve come to terms with the fact that I am far too scatterbrained to budget by hand or electronically. My tactic is to pay all my expenses through the month when I get paid, but only AFTER I pay myself (that’s three times I’ve suggested this now :-p). Then I know that the left overs are fair game for play time. Choose what works best for you. But there’s no reason to be playing B-ball with checks or over drafting. If you are, we may need to rinse and re-lather with point 1.

~Melissa


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