So we are winding down the year and it has been an interesting one. Looking back it really has been great and I have so many things to be thankful for. I’m now 4 months into my 10 year plan and things are progressing kind of slowly. But, I have managed to avoid making any additional poor investments lately. The Bronco mentioned in the last blog had a rough time driving on the freeway in second gear (don’t ask), so I managed to throw a rod and pretty much ruin the only part of the bronco that was working. So I unloaded it for $500, and effectively saved myself about $20,000, I’m estimating. Currently, I’m pondering clever ways to achieve my goal, working out a lot and snowboarding as much as I can. So if nothing else, I’m very busy and content. I’m also getting ready for a little trip up North to Michigan to see the family and then shortly after I get back I will be headed up to Italy for two weeks. Don’t worry this is for work so I won’t be cutting into my retirement funds and even if it wasn’t, after all of the travel this year and stockpile of frequent traveler rewards I won’t have to pay for a vacation for quite some time. My latest get rich quick scheme has been looking at jobs in Afghanistan, at this point it looks like the most likely way I can achieve my goal, but it is really hard to justify the risk. Really, I will have to ponder that one for a while and feel out the family on their thoughts, but it definitely seems like an option. Let me know what you think and also let me know if there are any other clever schemes out there to help me reach my goal…
Happy Holidays to all my readers and I hope you set some great goals for next year, that you can achieve and I’ll work on mine too.
Friday, December 18, 2009
Tuesday, September 1, 2009
Speed Bumps
Since the last post I have had my birthday and turned 30. Well, I officially have less than 10 years to reach my goal now. I had a good birthday but I do officially feel like a grownup now which doesn’t make me happy, but thankfully this crazy summer is finally coming to an end. So I have ran into a couple of challenges on the retirement front lately, nothing insurmountable, but definitely speed bumps I need to avoid in the future.
The first challenge, my new clunker. With the property in the mountains I decided I needed to add a more versatile vehicle to the inventory for winter access. I happened upon a 1979 Ford Bronco at what I perceived was a value ($2800). It looked tough, definitely had some wear, but I was told it was in good mechanical shape. After a month or so of not finding the time to fix the brake lights and reverse lights I resigned to taking it to a mechanic. Of course, that day the truck wouldn’t start, so I had to tow it to the mechanic. Long story short, the truck is back at the mechanic again this week and we are at about $5k in repairs. This doesn’t include the shocks I need and probably tires, so let’s add another $2k for that. Moral of the story is to figure out how much you can afford to spend on a vehicle and buy the best you can for the money, so you don’t end up with a $10,000 30 year old rust bucket that can’t pass emissions. The painful part is that all of this money I throwing at this problem should be going towards my retirement goal.
Second challenge, I had to inactivate my real estate license. There was an issue with the MLS and my broker being a member and me not so unless I coughed up $600 (a pittance really compared to the Bronco) a year to join, my broker was going to have issues. So the easiest solution was just to let my license fall to inactive status. This doesn’t hurt me too much, since I wasn’t really practicing, but I did like picking up referral checks here and there. But, I wasn’t making enough to make the membership worthwhile.
Now the final challenge… the housing market. My original plan was to sell my house (back in April) and start construction on the mountain house. Unfortunately, home values in New Mexico are down and not going to get better anytime soon. According to an article in BusinessWeek they are predicting an 8.5% drop this year and 6% drop by 2012. I think they are saying it will be down 6% on top of the 8% we are currently sitting at. I haven’t applied these numbers to my house, but I have been evaluating listings in my area and it doesn’t look good. Currently, my house is worth about $40k less than I owe, which isn’t good, but it is actually worse than that because for me to break even (just loan wise) I have to charge about 110% what I owe. This mean I need about a 28% gain to get out of this house and if the market isn’t picking up until after 2012, I better get used to living in my current residence.
Even with these recent challenges I’m still pretty upbeat and just trying set the right path forward from here. It looks like I will have some time to save up for the new house, in the mean time I can pay off my car and hopefully get the Bronco in working condition. Only problem is I like to keep my momentum going, but right now looks like it is the time to pause and catch your breath before the next ascent. I can use a little pause right now, no complaints.
The first challenge, my new clunker. With the property in the mountains I decided I needed to add a more versatile vehicle to the inventory for winter access. I happened upon a 1979 Ford Bronco at what I perceived was a value ($2800). It looked tough, definitely had some wear, but I was told it was in good mechanical shape. After a month or so of not finding the time to fix the brake lights and reverse lights I resigned to taking it to a mechanic. Of course, that day the truck wouldn’t start, so I had to tow it to the mechanic. Long story short, the truck is back at the mechanic again this week and we are at about $5k in repairs. This doesn’t include the shocks I need and probably tires, so let’s add another $2k for that. Moral of the story is to figure out how much you can afford to spend on a vehicle and buy the best you can for the money, so you don’t end up with a $10,000 30 year old rust bucket that can’t pass emissions. The painful part is that all of this money I throwing at this problem should be going towards my retirement goal.
Second challenge, I had to inactivate my real estate license. There was an issue with the MLS and my broker being a member and me not so unless I coughed up $600 (a pittance really compared to the Bronco) a year to join, my broker was going to have issues. So the easiest solution was just to let my license fall to inactive status. This doesn’t hurt me too much, since I wasn’t really practicing, but I did like picking up referral checks here and there. But, I wasn’t making enough to make the membership worthwhile.
Now the final challenge… the housing market. My original plan was to sell my house (back in April) and start construction on the mountain house. Unfortunately, home values in New Mexico are down and not going to get better anytime soon. According to an article in BusinessWeek they are predicting an 8.5% drop this year and 6% drop by 2012. I think they are saying it will be down 6% on top of the 8% we are currently sitting at. I haven’t applied these numbers to my house, but I have been evaluating listings in my area and it doesn’t look good. Currently, my house is worth about $40k less than I owe, which isn’t good, but it is actually worse than that because for me to break even (just loan wise) I have to charge about 110% what I owe. This mean I need about a 28% gain to get out of this house and if the market isn’t picking up until after 2012, I better get used to living in my current residence.
Even with these recent challenges I’m still pretty upbeat and just trying set the right path forward from here. It looks like I will have some time to save up for the new house, in the mean time I can pay off my car and hopefully get the Bronco in working condition. Only problem is I like to keep my momentum going, but right now looks like it is the time to pause and catch your breath before the next ascent. I can use a little pause right now, no complaints.
Tuesday, July 7, 2009
The Journey Continues
So, it has been mentioned I have been very bad about updating my blog. That is true, but with good reason. I really am just on the long journey of paying of the land to begin the first phase of the plan. Travel has been ridiculous this year which hasn't helped, but there isn't much for me to do but keep making payments. But, I have been scheming about the design of the place in the mountains and there are so many options. The biggest thing I'm trying to keep in focus on is building house to maximize the value of its resale. Choosing comparable size and type to the neighborhood, finding appealing styles and features that will lend to a short time on the market (green, energy efficient and pretty fixtures) and something I won't mind living in for two years.
I think I can endure anything for two years so that is the easy part. I'm actually kind of excited to face the challenge of the other factors, but I'm not expecting to be perfect on the first time out. Current basic layout is 4 bedroom, about 3000 sq. ft, 2.5+ bathrooms and definitely needs a home theater. Well the home theater is a concession for me, but I think home buyers will appreciate it. I would like to add some alternative energy features into the plan also but it is hard to say what the most viable option (passive solar, wind, geothermal, who knows) will be when I am ready to build, but I hopeful there is something out there that really will be good for the environment and a good return on investment. Only time will tell.
I think I can endure anything for two years so that is the easy part. I'm actually kind of excited to face the challenge of the other factors, but I'm not expecting to be perfect on the first time out. Current basic layout is 4 bedroom, about 3000 sq. ft, 2.5+ bathrooms and definitely needs a home theater. Well the home theater is a concession for me, but I think home buyers will appreciate it. I would like to add some alternative energy features into the plan also but it is hard to say what the most viable option (passive solar, wind, geothermal, who knows) will be when I am ready to build, but I hopeful there is something out there that really will be good for the environment and a good return on investment. Only time will tell.
Sunday, April 19, 2009
Game Plan
So I finally laid down the ten year plan to paper. I ended up getting lost trying to take the “back way” from my land in the mountains. There isn’t much that is more inspirational than a long car ride by yourself through the desert southwest. So here is the basic plan…
Pay off land
Save 50k
Sell home for 50k
Check well for flow
Drill new well
Design Home
Build house
Flip mountain house
save 40k
Invest 200k
Buy new house
flip house
save 50 k
Invest 100k
Buy new house
flip house
save 50k
Invest total
It looks a little more formal in MS Project, but you get the gist. This will run me right through the next ten years or so. The only problem with the plan is that I will run about 700-800K short of my goal. I think the plan is a little optimistic in some respects and a little conservative in others, so I’ll just have to adapt as the plan progresses. I’m happy, I should have a big chunk of money if this works out about the way I figure, but I won’t really make my goal. So I’m starting to work on alternatives.
Plan B
Move to a small South American country with a very low cost of living and live well for a long time off the money I did make. Who knows I might even be able to contribute to the community in some way.
Plan C
Blow the cash on a couple of space flights and have a crazy weekend in Vegas, than go back to work until I’m old and grey.
I’m optimistic that over the next couple of years that I will come up with a couple more ways to make my goal a reality, but I think I had a productive scenic drive.
Pay off land
Save 50k
Sell home for 50k
Check well for flow
Drill new well
Design Home
Build house
Flip mountain house
save 40k
Invest 200k
Buy new house
flip house
save 50 k
Invest 100k
Buy new house
flip house
save 50k
Invest total
It looks a little more formal in MS Project, but you get the gist. This will run me right through the next ten years or so. The only problem with the plan is that I will run about 700-800K short of my goal. I think the plan is a little optimistic in some respects and a little conservative in others, so I’ll just have to adapt as the plan progresses. I’m happy, I should have a big chunk of money if this works out about the way I figure, but I won’t really make my goal. So I’m starting to work on alternatives.
Plan B
Move to a small South American country with a very low cost of living and live well for a long time off the money I did make. Who knows I might even be able to contribute to the community in some way.
Plan C
Blow the cash on a couple of space flights and have a crazy weekend in Vegas, than go back to work until I’m old and grey.
I’m optimistic that over the next couple of years that I will come up with a couple more ways to make my goal a reality, but I think I had a productive scenic drive.
Thursday, March 26, 2009
Lets buy a house!
Does it make since to buy a house in this market, with the questionable appreciation? That is what I have been wondering lately. I’m kind of stuck in a house whose value had dropped quite a bit. The main reason I purchased the house was for tax purposes and I’m wondering if it was a bad choice. I started the arduous process of creating an excel spreadsheet to calculate if it was really worth it. I started googling something to finish my spreadsheet and found exactly what I wanted at Dinky Town… Check it out http://www.dinkytown.net/java/MortgageRentvsBuy.html you have to love the internet. So after making up some numbers I will apparently break even from my house in 4.8 years. Does that mean since I have lived here 2 years I only have 2.8 years left? Well since I put a positive appreciation, probably not. I think I’m down 5-10% on my home so it will take a while to just break even… Well who knows what will happen to the real estate market? I’m sure in two years prices will be going back up. Right now investors are picking up some of the great deals out there. Now is the time to have cash on hand, picking up deals on houses, stocks, heck even electronics.
Do I regret the house purchase? Sure, I could have the same house right now for $20,000 less. The calculator doesn’t really take into account all of the work home ownership demands, of course there are also positive feelings you get from homeownership which can’t be calculated either. But, I’m still better off than a lot of people, I can afford my mortgage, I still have my job (which I love to complain about) and a great family. My biggest complaint right now is the amount of paperwork I have to do just to see if I can refinance my house, thanks to all the new bailout plans. I really feel bad for those people in much less favorable conditions right now, because of this market, but I’m very thankful for what I have.
For those debating the purchase of a home right now, I think this is a fantastic time and while we may not be at the bottom, we are close and with the extra tax benefits it would be hard to pass up this opportunity.
Do I regret the house purchase? Sure, I could have the same house right now for $20,000 less. The calculator doesn’t really take into account all of the work home ownership demands, of course there are also positive feelings you get from homeownership which can’t be calculated either. But, I’m still better off than a lot of people, I can afford my mortgage, I still have my job (which I love to complain about) and a great family. My biggest complaint right now is the amount of paperwork I have to do just to see if I can refinance my house, thanks to all the new bailout plans. I really feel bad for those people in much less favorable conditions right now, because of this market, but I’m very thankful for what I have.
For those debating the purchase of a home right now, I think this is a fantastic time and while we may not be at the bottom, we are close and with the extra tax benefits it would be hard to pass up this opportunity.
Thursday, February 12, 2009
On the Road Again
Alright it is a new year, tax time is here and so is the first payment on my first investment property. I actually have had the payment saved for a couple of months as this deal has kept sliding back. I’m happy it finally went through and can start paying it off. I actually haven’t been out to the place in a couple of months but plan to visit more when the weather gets a little warmer. I think there is actually a nice blanket of snow out there now.
This year is shaping up to be another busy travel year. At this point I have been out of town more than in town this year, but I really hope it breaks down to about half time on the road and half time home. Recently travels have taken me to some of the coldest and smallest cities around the states. On the flip side I can definitely say that I have seen places that I would never have imagined visiting in my free time. I can’t complain too much though, all the travel will help get the land paid off that much quicker.
Plans for the land are going to take a little longer than I had thought, the well on the place may not actually be usable, but there should be water there that I can find. For now, I will have to find a good viable well before I invest too much effort in construction. I’m thinking about little temporary buildings to help enjoy the place until construction begins. First I need to read the covenants for the neighborhood and see what I can actually put out there. There are a just a couple of rules, but they are mostly in place to prevent the block from turning into a trailer park, so I can’t complain too much.
Next steps: test the well for flow rate, dig another well and start rough plans for house so I can see how much that investment is going to hurt…
This year is shaping up to be another busy travel year. At this point I have been out of town more than in town this year, but I really hope it breaks down to about half time on the road and half time home. Recently travels have taken me to some of the coldest and smallest cities around the states. On the flip side I can definitely say that I have seen places that I would never have imagined visiting in my free time. I can’t complain too much though, all the travel will help get the land paid off that much quicker.
Plans for the land are going to take a little longer than I had thought, the well on the place may not actually be usable, but there should be water there that I can find. For now, I will have to find a good viable well before I invest too much effort in construction. I’m thinking about little temporary buildings to help enjoy the place until construction begins. First I need to read the covenants for the neighborhood and see what I can actually put out there. There are a just a couple of rules, but they are mostly in place to prevent the block from turning into a trailer park, so I can’t complain too much.
Next steps: test the well for flow rate, dig another well and start rough plans for house so I can see how much that investment is going to hurt…
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