Net Worth

I have been getting real friendly with Excel lately trying to figure out how reasonable this retirement goal is going to be and what areas I need to focus on the most. I have actually calculated out my estimated assets and debts for the next 20 years. The best part I found is that my money invested and amount I owe on the mortgage will be the same in 7 years. So, if paying off my mortgage was my only goal that would be great! The down side is it looks like I will only have about $290k in cash in 10 years and still owe 155k on the house. Right now at 20 years I have about 952k in investments.

The one thing that I didn't actually calculate is passive income. This is a little hard to undersand how much passive income I'm going to have when I have none now and I'm not sure what my first investment is going to be. But, this is the most important thing for me to track since that is what I’m basing the retirement one. I'm currently thinking about picking up a rental house, it will give me a good place to stick some money, it should be somewhat reasonable managing one house and will help me start on the path to positive pasive income. The housing market in many areas is great forbuyers right now, unfortunetly Abq is weird and hasn’t really gotten hit like most places. But, I’ll still be looking out for a good deal out there.

Finished step 1 and 2

After almost two months of ignoring my Xbox and straying away from my favorite beverage I have passed my Real Estate Exam. Now I can go get my license and become part of Albuquerque’s quickest growing profession. I made that up, but not really, there are a ton of Real Estate Agents here. I don’t know how these people actually make a living, you pretty much aren’t going to make a pay check for your first 3-6 months and all of the fees that are imposed on you by your broker can get ridiculous. Not to mention you end up putting in outrageous hours to keep your clients happy. I’m glad I don’t have to rely on it for income.

I also have paid off my big credit card whose balance at the beginning of the year was about $13000. Wow! Not really I just threw a sale of a motorcycle and a tax return at it, which makes it a lot easier.

Now I need to find a good 0% balance transfer for my landscaping Credit card, I actually found this interesting site that tells you how to make a profit on 0% interest offers http://www.fivecentnickel.com/2007/02/27/how-to-profit-from-0-balance-transfer-credit-card-offers/ and this may be a good time with all of the great rates on savings accounts. If I can focus on this guy I should be able to pay him off by the end of the year. Then I can pick up my first piece of income property if not sooner…

How to invest a million dollars?

I was doing the math today to figure out exactly how far away from retirement I really am, so I added a new element to the site so everyone could follow my progress. Unfortunately, I came to an unfortunate conclusion, I don't know if a million is enough?! So, with traditional safe investments I may make an APY of 5%, which would be about 50,000 a year. This should be enough to cover my estimated expenses, even with a kid (remember this would also include no mortgage). OOPS! What about taxes?

I figure now I need to make about $80000 a year pretax to cover my budget. Does this mean I need to save more money, or dip into the principal? I hope not, so my new task is find a way to make about 8% APY on my investment or have a passive income of about $6700 a month.

Since the way this plan has been evolving, commercial real estate has become a primary focus of my investment strategy. I think this passive income may be possible, but what that looks like in terms of real property value money wise is hard to say. If I had one good commercial investment and managed to pay it off I might make this on a property valued at less than a million.

The key to really making my strategy work is finding a good property management company to help me succeed. Managing one or two commercial properties or four or five residential units might be possible for one person. I think anything more would be ridiculous for a person with a full time job. So the trick will be finding a worthwhile property manager that won't cut in too much to the profit.

If you guys have any ideas on better ways to invest a million bucks once I have it let me know!

p.s. I'm going to take my real estate exam on the 18th, wish me luck!

The Retired Life

Alright so some people have wondered what I'm going to do when I retire at 40. Well, I see so many retirees out there that can't really enjoy their retirement because life has finally caught up with them. That was really one of my big drivers for wanting to retire when I was young. Of course retiring at 29 would be better than 39 in this respect, but I slacked too long.

My retirement days will probably look much like my weekends do now, but I definitely want to travel more. I'm pretty active, I like to hike, play sports and do yoga, so there will be more time for that. The one limitation in my life right now is having the time to get away and visit family and see the world. Last year we (my brother, my girlfriend and I) were able to get away for 10 days to Spain. But, that really isn't enough time to take everything in I figure another week or two would have been perfect to at least get the basic driving tour of all of the main cities and sites. As it is now, I feel like I going back not only because I really enjoyed it but I also feel like there are more sights I need to take in.

So how do you get to see all the great cities of the world on a fixed income? Well I just found this site yesterday and I think this guy is really on to something... http://www.happyflier.com basically this guy takes random trips around the country at cheap fairs, stacking up airline miles so he can afford the international trips he wants to go on. The more you travel the more miles you get (Silver, Gold, Platinum status). I think a mixture of this and miles credit cards could actually make these great trips more reasonable and realistic.

I have never been a person that had a problem keeping busy with something so I think, if that is my worst problem in 10 years I will be pretty well off!

The Blog Begins

This blog will document my journey towards retiring at 40. Why 40? Well since forever I had always had a goal for myself to retire at 29. I never was a big fan of working and I'm not one of those people that needs work to occupy their time, so this seemed like a great age to jump out of the Rat Race. Unfortunately, two months ago I realized that 29 was coming way too quickly (Aug '08) and there was little chance I would accomplish this goal, since I don't buy lottery tickets.

So I started a new goal and decided I would actually develop a plan to accomplish this goal. The new aspiration is to Retire at 39, for the blog we'll call it 40 to make it a nice round number. I did a little math and figured that if I had a house paid off, car paid off credit cards paid off I could retire with $500k in investments. For cost of living increases I would rely on my traditional retirement accounts (ROTH and 401ks) that I could tap at 59 or so. Then someone mentioned the cost of having kids, which I definitely hadn't considered. So I threw out the 500k idea and decided it would have to be closer to 1 million...

To make this goal I figured out the only way to do this in 10 years was to become a real estate tycoon. I'm not a particularly savvy investor so I decide I needed to get a good background in real estate, investing and tax law. So, where to start? Well first was pay off my credit cards and get rid of extra overhead in my life. With the help of a tax refund and the sale of my motorcycle, my credit card will be paid off in two months and then I will have to pay off my landscaping. From there I can move on to my mortgage and car.

The next step is the real estate background, so I'm currently working on my NM real estate license. I figured this would give me a great start on understanding real estate and would help save me commission on my future deals. In the next couple of weeks I plan on finishing my license and my realtor was kind enough to let me become my Qualified Broker. So with this the journey begins.