Journey to FI - September Status

Building on my last post regarding my personal/Family journey to Financial Independence, I will jump back a couple of months to give a snapshot of our monthly progress.

This first status will be from September when I created a chart that I update monthly.  I will soon post the October and November updates as well.  After that, it will likely be updated around mid month as I try to do my update after I am paid on the 15th of each month.

Income:  We have a pretty consistent income from both myself and my wife.  Our income does fluctuate due to my wife being in sales.  For budgeting purposes I use a conservative amount for her income.  Within our budget, we generally try to use my income for bills and living, and my wife's for saving/investing.  In addition to our personal income, we had $4,100 of income from our 5 rental homes.

Expenses:  Expenses are an area that we really need to work on.  We have some pretty set expenses in terms of our mortgage and child care.  However, we do overspend in other areas, which we are trying to focus more on sticking to our budget.  Our rental expenses for the month were $2,531 for 4 mortgages and our monthly repair reserves that we set aside.

Remaining Money:  We had a remaining "profit" for the month of $5,425.  This money was already allotted as payment for the money we were incurring on renovating the rental property we were working on throughout the summer.

Debt:  In September we had a total of $287,448 in overall debt which includes a mortgage for our personal home and 3 rentals, about $18k of credit card debt, and $3,900 on my wife's car.  As of the creation of my monthly status for September, my goal at that time was to eliminate all of the non mortgage debt by January 1, 2017.  An important point to note is that all of the credit card debt was either just the accrual of our monthly personal expenses or costs associated with rental renovation, all of which are paid in full each month. Any other credit card debt were previous costs of a rental remodel that were on a 0% credit card.  No interest was being paid.

Summary:  This was the first month that I put together this tracking document to give myself a 1 page summary of our financial snapshot.  I do include on my sheet our cash and other assets, but I do not plan to share that.  We are relatively low on cash due to the purchase and renovation of 2 properties since March 2016.

Goals for the Coming Months:  My top priority in the next couple monthly updates will be to eliminate all of our non mortgage debt.  As I alluded to in the debt section, we have a significant amount of credit card debt that is on 0% interest cards.  These 2 card offers expire in October and November so all extra income, and perhaps some savings will be thrown at that in order to avoid any interest.

All of these efforts are to build toward my long term goal of Early Retirement.  My absolute end date is my 40th birthday, but I believe we can achieve that much sooner.  I hope.  I will be 33 in 2 months from today.

I hope any readers enjoy this little snapshot into our lives.  I also hope this may inspire you to begin looking at your own finances and get you on track to achieve your goals.

Good luck.

My Personal Journey to Financial Independence - The Genesis

For much of my life I had the mentality of a person who's life journey outlook entailed the standard goal of getting a comfortable career, working my way up over time, then hopefully being able to retire in good enough health to enjoy it.  My plan included having a wife and kids, living in a comfortable home and enjoying vacations and spending time with loved ones.  I did not necessarily work overly hard in school, but did well enough to go to a good college.  While in college I began a co-op program, which later turned into a full time job.  Once I graduated, I swore that I was done with school forever as it had taken my 7+ years to get my bachelors due to doing school part time while working full time.  However, I soon realized that to get the high paying career I wanted, a Masters degree would be extremely helpful.  So, I was enrolled a short time after that.  I did actually work hard for the Masters and completed the degree in a year and a half.  This immediately paid dividends as I was promoted to a better position and given a roughly 15% raise as soon as I completed the degree.  Fast forward another year, and I was offered a job with another company for a 30% pay increase and better opportunity.  That was too much of an increase to pass up at that point in my career so I took it.  Jump ahead another 2+ years and here we are today.  In the last 3 years I have gotten married, moved to a different city not far from my hometown, have a daughter, and accumulated 5 rental properties.

The strange thing is that in the past few years I have become increasingly aware of the opportunities to not continue with the "standard" life journey of work till your sixties and retire.  I do not mean to just retire a couple years early in my mid fifties.  I am talking about drastically different lifestyles that lead you to being able to retire in your Thirties or younger.

I believe this came about when a friend referred me to a couple of sites where the blogger talks mainly about Financial Independence and Early Retirement.  My first exposure to such concepts came from reading Financial Samurai.  Initially I was just amazed by some of the stories and concepts that he discussed.  Eventually I began to look at my own situation in his posts.  He would look at things such as target net worth based on your age and alternative sources of income, normally referred to as your Side Hustle.  

Sam's articles inspired me to realize that there is MUCH more to life than grinding away in a cubicle to provide greater gains for someone beside myself.  I certainly was not in a place to quit my job to focus my efforts elsewhere, but I needed to figure out what my side hustle would be.  

If you have ever or decide to read Financial Samurai, you will see that Sam is a big fan of rental properties as a source of Passive Income.  The goal of Passive Income is just as it sounds.  Income that is generated by minimal effort.  Basically, making your financial investment work for you.

Being that I 1. Already owned a house and my then Fiance also owned one, and 2. Lived in one of the most depressed Real Estate markets in the country Metro Detroit, I thought this was an opportunity I should take advantage of.  On the other hand, I was also going to try it out of necessity as my house was severely underwater at the time due to a 2007 purchase and the real estate collapse that followed.  I would not have been able to sell and was considering speaking to an attorney about my short sale or foreclosure options.  But I decided to go for it.  I am reasonably handy and can fix just about anything, so I did some renovations and rented my house for about a $200/month profit.

And that was the first real step in my journey toward my future goal of Financial Independence and Early Retirement.  In the 2+ years since, my wife and I have accumulated 4 more homes which provide us a monthly profit of $2400/month as of this post.  I plan to get into more details on the properties in another future post.

All of this leads me to state my goal.  Ultimately Financial Independence and Early Retirement for myself and my wife.  I have built out some other shorter term goals that will lead us to that point, hopefully sooner than my expectations.

Here is my timeline of goals:

7 Years(Age 40) - Financial Independence and Early Retirement for my wife and I. This will be achieved when our passive income gets to approximately $10,000/month.  I believe this metric will change over time as we improve our budgeting and spending habits, but as of today, this is what I feel comfortable with.

2+ Years(Age 35) - Net worth of $1,000,000 combined.  This goal should be easily attainable due to our household combined income being roughly $250k/year including our rental income.  Most of this is attributed to my wife's high salary and great stock option and 401k that she has taken advantage of over the last 8 years with her company.  Her income allows us to invest in our rental properties.  A large part of this plan is dependent upon her continuing to work.  We may have another child within the next 2 years so that may alter things.

1 year - I have a goal of adding at least 1 more rental property per year as a way to increase passive income.  This will be dependent upon the real estate market though.  If the market is still up, I may look into alternative investment options.

This is a very rough outline of my plan. A plan that is always being tweaked and modified due to the new things I learn and other ideas I come up with.

I plan to begin a new series of posts to update the status of my goals and a snapshot of where we are in our progress.

Stay Tuned.

And as always, I appreciate any feedback.

Living With a Spending Problem

Today as I was reading through some of the financial articles that I like to browse, I came across one that I think summarizes most peoples financial issues.  I should clarify that a bit.  The article doesn't really summarize that, the article explains a phrase that I feel summarizes most people's financial woes.  Here is the article.

"They don't have an income problem, they have a spending problem."

I assume I got this from one of the financial writers that I enjoy reading, but I recall a conversation I was having a few years ago and that was my comment on the topic.  If you consider your own finances or just about anyone else, most would have out of control spending in some form or fashion.

Most people simply live their life and spend what they make.  Saving is not the priority it should be. Spending is what its all about.  We have a problem with instant gratification and cannot put off having things for a later time.

The interesting part of the article is that its focus is on high income individuals who still live paycheck to paycheck.  The assumption should be that the more you make, the more stability you should have, but that does not seem to be the case.  Many people in that category probably assume that their high income will have them set for life.  That is the thing about emergencies.  No one ever sees them coming.

These issues can all be addressed simply by following the simple budgeting process I laid out in my previous post. Check it out Here!

It all comes down for having a plan for your money and being disciplined in sticking to your budget.  Once you get some momentum, it can be very exciting to see your balances grow and your debt disappear.

Good Luck.

Budgeting - The first step to financial success

If you are anything like me or most Americans, it is highly likely that you have some hopes and dreams of striking it rich and not getting up to go to the office the next day.  I think we all would love the opportunity to spend our time doing anything besides our normal day job.  We all have passions, hobbies, and obligations that we would rather be doing.

In reality, many people are able to spend their days doing all those other activities that they would rather be doing.  The difference is that they got there through hard work and discipline rather than having some large inheritance or winnings.  It was with a goal and a plan that they were able to live the life that they really wanted.  The life of Financial Independence.  The plan that they used to get there is called their BUDGET.

Anyone who has ever read any personal finance book, blog, website, or article knows that there are a million different "experts" on the subject of personal finance and budgeting.With each of those experts comes their own version of the simple method of understanding and planning your income and spending.  Most follow the same rough path to get to the same place with your money.  That place is to spend less than you earn each week, month, and year.

You may think that I will try to provide some new ideas on how to budget and get you where you need to be, which is to have a surplus of cash.  I am not going to do that.  I want to try to simplify the principles of budgeting to make it a less daunting task.  I will also share some of the difficulties that I run into that I am sure others can relate to.

Step 1:  Understand The Income Flow
The first step in planning how you will spend your money for a set period of time is to fully understand how much and how often you will have money coming in.  It is important to focus on the Net Income for the purposes of budgeting.  Net income is the amount you actually bring home to spend.  Gross income includes all the money taken out for taxes, insurance, 401k deductions, etc.  If you work a regular number hours per week you should be able to expect to receive almost exactly the same pay every pay period.  This allows us to understand how much money is available to live on.
Personal Application: 
For me this is the easiest aspect.  While there are two incomes in our household, we primarily live off my income and my wife's is saved and invested.  If that was not the case and we used her money for monthly expenses, being able to understand our income could be very difficult.  That is because my wife is in sales and her income can vary by several thousand dollars per month, depending on her success.

Step 2: Understanding Spending Habits
Once we know how much money we have available to live on, we need to study where we normally spend it.  There are several online tools available that allow you to see where you have been spending your money.  This can also be done by reviewing your bank statements.

The most important part of this is to identify the unavoidable expenses, that typically are pretty consistent.  Items such as mortgage, car payment, gas, groceries, child care are all categories we should know what we spend each month.  Other categories such as vacations, dining out, and entertainment are things that if not planned, can fluctuate drastically.
Personal Application:
In our house this is probably one of the more difficult tasks.  We fully understand our regular monthly expenses such as mortgage and car payments, etc.  The confusion for us comes with our real estate investing business.  Occasionally we will need to put some of our personal money towards a project for our business, and this can skew our spending.

Step 3: Plan your spending for each category
Once you fully understand where your money is going, you need to allot that portion of your income to each category.  One category that most people forget, but is probably the most important, would be savings.  Most personal finance experts follow the rule that you need 3-6 months of expenses in savings and readily available.  I think the higher end would be perfect to avoid any big emergencies.

There are many methods of generating your savings but the best ideas in my opinion are the idea to pay yourself first and make it automated.  If you make yourself and your savings the top priority when it comes to allocating your cash, you will be in good shape.  The ability to automate savings also makes it so much easier simply because of the fact that if you do not see it, then you will forget you even have it until the day comes that you need it.  This really allows you to build your account quickly.

Once you have your 3-6 months of savings accumulated, I would suggest making an automated investment account to help realize the positive effect of investing in mutual funds.  That is a topic for a later date.
Personal Application:
For our family we allocate our spending in a pretty simple fashion.  All monthly payments come out of a joint account.  All personal spending comes from our own separate accounts.  We pay our utilities and insurance bills each monthly automatically using 1 credit card which gets paid in full automatically.  We also have a credit card used for our groceries and other household expenses.  These are all paid from the joint account.

Step 4: Stick to the Plan
At this point you should be living by your written budget.  Over the first few months you will probably have to tweak and adjust your budget as you learn more about your spending.  That is just fine tuning.  Unless you have an increase in income or a change in your expenses, there should not be any large changes.

Part of sticking to the plan is being disciplined to not blow the budget.  Do not splurge if you do not have the money.  Learn to say NO.  It is the best way to stick to your budget.  A couple other methods I like to apply to spending would be to evaluate if the purchase is a want vs. a need.  I also like to analyze a purchase by thinking of how many hours I spend working to make that purchase.
Personal Application:
Our plan seems to constantly be evolving and changing due to new ideas and opportunities that we decide to take advantage of.  The budget should be looked at as a living document that is always tweaking.

Step 5:  Enjoy Life
If you can follow these steps to create and follow a monthly budget, I think you will 100% enjoy life more.  Knowing where your money goes and how much is available to you will absolutely simplify your life and decrease your stress.  You should no longer have to worry about money.

In addition to enjoying life, you should be able to accumulate wealth pretty quickly which will allow you added benefits later in life.
Personal Application:
We definitely enjoy our life, but its always work before play.  The plan is to work hard now so we can both retire around 40.

A few added topics that can be considered in a budgeting discussion are:
Cash vs. Credit Card spending:  This is a highly debatable topic that everyone seems to see differently.  I think the most important thing is that if you use credit, pay it all off every month.  I believe that the answer to this topic is based on each individuals income and maturity level.  If you can successfully manage your budget using cash for 6 months or longer, then I would say you should incorporate a rewards credit card that is used to auto pay regular utilities and gas bills.  As long as its all paid off each month.  Do not use credit as your emergency fund.
Reducing Expenses: I personally feel that once you have your budget in place and are working hard to stick to it, it is a good idea to look for areas we can reduce spending.  This is a good chance to find things that we can analyze as a want vs. need.  I personally have set a goal for 2016 to reduce our household monthly spending by 20%.  To this point I have gotten rid of a storage unit and changed my cell phone service and have saved $150 per month.  This is roughly 8% reduction, but I still have time this year to find more savings.

That will be all for now.  I hope any readers will enjoy this quick article on budgeting and hopefully it will help you get where you want to go financially.

Book Review - Bigger Leaner Stronger by Michael Matthews

If you could not tell by the title, this book is all about fitness.  In the introduction the author Michael Matthews gives a good bit of background into is journey to becoming a successful fitness trainer, writer, and blogger.  In many ways I feel like I had a very similar journey, though the fitness journey is never complete.  In the book he details his many years of working out moving from the new popular program or new fad diet, only to see minimal results.  After years on that path he decided to ditch what was popular and find out the science behind fitness.

Exercise

Most people believe that exercising is the way to get fit.  After reading the book I have learned that it is merely a part of getting fit, and possibly a smaller part than we may think.  The plan that is laid out in this book is to teach you how to burn fat and build lean muscle.  This is the key to achieving the "Spartan Warrior" physique that most men strive for.  In terms of exercising to achieve that goal, Mr. Matthews presents a plan that is rather simplistic yet effective.  The main goal of the program is to progressively overload your muscles by lifting at a lower rep count while using roughly 85% of your max for each particular lift, after you have properly warmed up.  In terms of what lifts to be done the focus should be on 4 compound lifts.  Squat, Bench Press, Deadlift, and Overhead Press.  These should be done in the 4-6 rep range and if 6 reps are achieved, weight is added for the next set.

The book goes into detail on training frequency and rest periods as well.  It teaches you how to lay out a program for yourself that you feel may be most appropriate and also gives a few templates based on a 3, 4, or 5 day training schedule.  One aspect that I know I will be using is the rest periods that are explained.  When lifting at such a high ratio of your max, more rest is required.  In the book he explains that many studies have shown that rest periods of 3-4 minutes are optimal for weight lifting programs.

Diet

As I mentioned that exercise is a part of the fitness equation, diet is a much larger piece of the equation.  There is a great deal of detail on the science of how food effects your body and fitness levels included in the book.  The science behind weight loss breaks down to a simple equation of energy in - energy out.  If you bring in more energy(food) than you expend in a given period of time, you will gain weight.  To fully understand how to manipulate this equation you must understand how much energy you expend in a day, or your Basal Metabolic Rate.  He explains how to figure this out along with many other aspects of healthy eating to lose, gain, or maintain your weight.

A huge portion of the fitness calculation is the macro nutrients that you get through food and supplementation.  The macro nutrients are Fats, Carbohydrates, and Protein.  There is great info in the book on how you should plan your macro nutrient intake in order to achieve your goals.

Science

To me the thing that makes this book different from many other books and articles that I have written is that Mr. Matthews makes it a goal of the book to be sure that the reader understands exactly how anything you put into your body works and effects your body as it relates to eating for fitness.  The amount of detail is extremely helpful to change the way a reader may think about foods or supplements.  I think this is the most interesting aspect of the book.

Final Opinion

I think this book is an extremely informative guide to how to modify your life and fitness routine to achieve a healthier lifestyle or fitness goal.  I would highly recommend it to anyone who feels they have hit a wall in their training or are just beginning their journey.

I personally will be implementing the lifting methods and routines that were laid out in the book as that is how I worked out years ago when I was in my best shape.  In recent years I have gotten away from that and I do not feel or see any progress.  I think with using these methods and putting a big effort into increasing my protein intake to approximately 200g per day will help me to achieve my fitness goals of 300lb bench press, 350lb squat, and 400lb deadlift.

You can visit www.muscleforlife.com to learn more about the author and his writings.

I hope you enjoyed my feedback on the book.  I tried to keep it brief but detailed enough to provide some background.  I appreciate any feedback.

Thanks,

Travis

Life advice - Chapter 1- Goals

Id like to begin a series of posts that I would aim toward a target audience of young people.  I think most of these pieces of advice that I will write about are generated from my thoughts of things I wish I knew as a teen or young adult.  This info covers a wide variety of topics that I think would be helpful to most young people, or even people who are getting a late start on the path to success.  These will all apply to anyone, but my goal is for young people to learn from my experiences and get a bit of a jump start to their future dreams.

The first topic of advice I want to dive into is setting Goals.  In my opinion, goal setting is the beginning of all of our successes and failures.  If we do not have a target, then we are just wandering aimlessly through life.

The Goal
The goal can be anything.  Most people should and do have many goals.  Perhaps that is an inaccurate statement.  Most people have many Dreams.  A dream only becomes a goal when you put a plan in place to achieve it.  The goals can cover any variety of topics.  I personally have a significant list.  My list of goals cover financial goals, fitness goals, relationship goals and several other areas as well.

Goals can be big or small.  In most instances starting with a small goal is a good thing.  This allows you to feel the emotion of success and often will drive you to bigger and better goals.  I think a good goal is one that you view as challenging yet still attainable.

The goal should be quantifiable and have a timeline for achievement.  For example, saying you want to lose 15 lbs can be a goal.  But when you say I want to lose 15 lbs in 8 weeks you change the goal to have an expected result by a deadline.  You have a point in time that dictates your success or failure.  This also adds to the goal by making it more challenging.  It places pressure on you to focus on how to achieve the goal.

The Plan
As I said earlier, many people have dreams but it only becomes a goal when you have a plan.  Planning is the key to success in just about anything.  I believe the saying goes "If you fail to plan, you plan to fail."  That is very true.  If you have not put any effort into visualizing how you will reach your goal, then you will be wandering aimlessly.  Maybe not totally, because you have an idea of what you would like to achieve, but you may wander off the correct path at some point.

The plan can also help to make the goal more attainable by setting milestones along the way to the ultimate goal.  As I said before, a smaller goal is more attainable and can help you build momentum toward the final destination.

Adversity
Along the way you are bound to run into some sort of adversity.  The key to overcoming that is to realize and accept what adversity is.  In most cases, it is something that is beyond our control.  Sometimes that fact can make it even more difficult to accept because it feels like outside forces are working against us.  The truth is, they are.  Life is always throwing us curve balls.  We must learn to accept those difficulties and focus on a solution that will minimize the impact on your end goal.

Achievement
Achievement is when you finally reach the end of the plan with success.  If you followed the plan with discipline there is a high probability of success.  At this point you will have spent a good amount of time planning your goal out, tracking your progress, dealing with adversity, and enjoying the small victories along the way.  The process will often feel like a roller coaster in that there are many ups and downs on the path to success.  The progress and achievement of your milestone goals will help keep you committed and driven to reach the final result.

Keys to Success
1. Discipline.  You must be disciplined to follow your plan.  This means you will have to sacrifice some things in order to achieve your goal.  Often it is a good time, friends, family, or many other opportunities that we must forgo in order to achieve our goals.
2. Focus.  This goes right along with discipline.  You must maintain focus on your goal in order to reach it.  If you have too many other distractions going on, then you need to analyze what is important and realign your priorities.
3. Patience.  Too often people fail at goals because they aren't willing or able to be patient to get there.  I personally fall into this trap.  I often find myself altering a good plan in ways that I think will expedite my achievement of the goal.  Often, this will set you back in some form or fashion.  Part of this goes to trusting that your original plan is a good plan to reach success.  One thing to remember is that success is a marathon, not a sprint.

Additional tips to help reach goals
1. Write your goals down. Physically writing it will help it become more real to you.
2. Tell close friends and family what your goals are. They can help encourage you as well as the fact that you will be motivated by not wanting to be seen as a failure.
3. Set aside time each week or month to evaluate your progress.  Maintain a progress sheet to detail how you are as a "plan vs. actual" tracker.
4. Milestones.  Break the goal down into milestones to help make it more attainable.  As I said before these small victories will motivate you for the long haul.

Thanks for reading and I hope this can help you achieve success in all aspects of your life.

I appreciate feedback.

My return

          So it has been a long time since I have written anything here.  I really want to get back to it and make it a regular habit.  I think my idea when I originally started this blog of posting my thoughts on how individuals can improve their situation in life is a good one.  Sure there are plenty of others like this out there, but if someone reads what I have posted and it helps impact their life, then I have achieved my goal.

          Speaking of goals, that is one of the topics I plan to delve into in a later post.  While I have not been posting anything here for about 5 months, I have been keeping a list of ideas for topics to write about.  Goal Setting is high on my list.  I think it is a critical part of life and anyone successful would tell you the same.

          One of my goals that I have written down is related to this site.  As I said before I want posting here to become a regular habit.  So, my goal in relation to that would be to post at least 1 time per week.  I think that is frequently enough to keep me active, but also allows me a decent amount of time to develop some of my ideas and write them out.

          So if anyone actually reads this, welcome.  I hope you enjoy reading what I have to say and can apply it to some aspect of your life.