7 year plan

[tonyf7]

Our youngest child should be graduating high school in 2027. If we send an extra $1350 a month to our mortgage we'll be debt free by 2027.

We'd shave off a total of 21 years and 9 months from our mortgage and save $95,600 in interest.

The only other debt we have is a car note that should be done in about 5 years. Even with the car payment, we can still save $1600 a month up until graduation. That's assuming my business income doesn't increase (which it is). The pandemic has really given my business a boost. (Appliance repair business - pretty recession proof)

In 7 years we'll be debt free and have a disposable income of around $5,000 a month. Our expenses will also be lower because one of our kids should be out on their own and the other on their way out.

We'll have saved around $98,000 in interest payments between the house and the car and at $1,600 a month in savings, we should have around $130k saved. If prices continue appreciating in our area at around 3.8% as they have been, we should gain around 30k-50k in home equity as well.

We can also sell the home and pay cash for something smaller for just me and my wife. Hopefully by then I'll be in a position to sell my business and we can travel more often.

That's the dream.

I know it sounds very slow lane, but I don't know much about investing so this is the only plan I can come up with at this moment that makes sense to me and that I can understand. At least until I educate myself better on how to properly invest our money. I figure paying off debt is better than letting our money sit in a bank account getting eaten up by inflation.

Thoughts?

 

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[Envision]

Not a bad plan

But at the rate the fed is printing money and the direction interest rates are going I would put the money into your business and get your note refinanced to the lowest interest rate possible and let it get paid off over time.

Use your business to finance your investments, use your investments to retire yourselves.

 

[tonyf7]

Use your business to finance your investments, use your investments to retire yourselves.

Problem I'm having is I have no real investments other than some old 401ks and and an IRA. I have some learning to do about investing.

 

[The Abundant Man]

Use your business to finance your investments, use your investments to retire yourselves.

This is the last two chapters of Unscripted lol

 

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[The Abundant Man]

Problem I'm having is I have no real investments other than some old 401ks and and an IRA. I have some learning to do about investing.

 

[WJK]

Our youngest child should be graduating high school in 2027. If we send an extra $1350 a month to our mortgage we'll be debt free by 2027.

We'd shave off a total of 21 years and 9 months from our mortgage and save $95,600 in interest.

The only other debt we have is a car note that should be done in about 5 years. Even with the car payment, we can still save $1600 a month up until graduation. That's assuming my business income doesn't increase (which it is). The pandemic has really given my business a boost. (Appliance repair business - pretty recession proof)

In 7 years we'll be debt free and have a disposable income of around $5,000 a month. Our expenses will also be lower because one of our kids should be out on their own and the other on their way out.

We'll have saved around $98,000 in interest payments between the house and the car and at $1,600 a month in savings, we should have around $130k saved. If prices continue appreciating in our area at around 3.8% as they have been, we should gain around 30k-50k in home equity as well.

We can also sell the home and pay cash for something smaller for just me and my wife. Hopefully by then I'll be in a position to sell my business and we can travel more often.

That's the dream.

I know it sounds very slow lane, but I don't know much about investing so this is the only plan I can come up with at this moment that makes sense to me and that I can understand. At least until I educate myself better on how to properly invest our money. I figure paying off debt is better than letting our money sit in a bank account getting eaten up by inflation.

Thoughts?

I worked for years and years on debt reduction. That's mountain is worth climbing. I'd go ahead and pay off your car as fast as possible. That's after you make sure that you have an adequate emergency fund. Then put that car payment amount and the extra you've been paying on it toward the mortgage -- to get it paid off too. You could get everything paid off much faster if you chose to make that your #1 goal. It's all about how you feel about yourself. Being debt-free is a very powerful personal position. You'll enjoy the freedom. Then you'll be a place where you can really save for anything else. It's not slow lane at all.

 

[tonyf7]

Being debt-free is a very powerful personal position. You'll enjoy the freedom. Then you'll be a place where you can really save for anything else. It's not slow lane at all.

I think that's what I'm really going for here. That sense of freedom that comes with not owing anyone a damn thing! I feel it'll clear up a lot of head space to focus on other more important things.

 

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[tonyf7]

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Thank you for that! Just downloaded The Intelligent Investor and will start tonight!

 

[WJK]

I think that's what I'm really going for here. That sense of freedom that comes with not owing anyone a damn thing! I feel it'll clear up a lot of head space to focus on other more important things.

Good plan. It's worth the pain and you'll never be the same person again. Your world will expand.

 

[Martzee]

I worked for years and years on debt reduction. That's mountain is worth climbing. I'd go ahead and pay off your car as fast as possible. That's after you make sure that you have an adequate emergency fund. Then put that car payment amount and the extra you've been paying on it toward the mortgage -- to get it paid off too. You could get everything paid off much faster if you chose to make that your #1 goal. It's all about how you feel about yourself. Being debt-free is a very powerful personal position. You'll enjoy the freedom. Then you'll be a place where you can really save for anything else. It's not slow lane at all.

I did the same. At some point, I got into $83,000+ credit card debt. Some were medical bills I paid using the cards but most of it was just plain stupidity saying to myself that with my income I could always pay it off until I found myself in a situation of not being able to pay even minimum payments. That was the eye-opener... all my income went to paying the minimum on the stupid credit cards. So, I decided to do something about it. In three and a half years I paid off over $45,000 and now have only car loans and one personal loan (I originally used to consolidate the debt at a lower interest rate so I could afford larger payments than the minimum towards the cards). I have 29 months to be debt-free (besides a mortgage which at the current rate of 3.5% I am not planning to put any extra money towards it but rather invest). That relief of having suddenly over $2,000 free cash monthly for whatever you want (in my case invest in growing my business) is priceless. And the credit cards? F*ck them!

 

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[BizyDad]

It's a good plan.

But an investment gets you what? 8%? 12%. Let's shoot the moon and say you do an impossible 20%. Per year. Every year. For 7 years.

I just want to keep this example simple. If you're able to hit these numbers, $500 that you invest today will grow to $1791 in 7 years

What if instead of learning how to be an intelligent investor, you become a better marketer and business owner?

You invest that same $500 into a marketing campaign that nets you, what? 1 client? 5 clients? 10 clients?

A good small service based business owner can turn $500 into $1,791 profit in a week.

In the first example I used compound interest to calculate your total return from investments.

If a business owner can take $500 and turn it into $1791 in a week, how much can you grow $1791 the following week?

You won't get there overnight, but you'll increase your wealth much faster in the next 7 years if you focus on becoming a better marketer and business owner.

Sure, appliance repair isn't the sexiest way to fast lane your life. But you could be a millionaire in 7 years. Less even. I know a guy who did it in that exact field.

Just some food for thought.

 

[WJK]

Why not

It's a good plan.

But an investment gets you what? 8%? 12%. Let's shoot the moon and say you do an impossible 20%. Per year. Every year. For 7 years.

I just want to keep this example simple. If you're able to hit these numbers, $500 that you invest today will grow to $1791 in 7 years

What if instead of learning how to be an intelligent investor, you become a better marketer and business owner?

You invest that same $500 into a marketing campaign that nets you, what? 1 client? 5 clients? 10 clients?

A good small service based business owner can turn $500 into $1,791 profit in a week.

In the first example I used compound interest to calculate your total return from investments.

If a business owner can take $500 and turn it into $1791 in a week, how much can you grow $1791 the following week?

You won't get there overnight, but you'll increase your wealth much faster in the next 7 years if you focus on becoming a better marketer and business owner.

Sure, appliance repair isn't the sexiest way to fast lane your life. But you could be a millionaire in 7 years. Less even. I know a guy who did it in that exact field.eat

Just some food for thought.

Why not do both? Investing has one level of risk and running a business has another. They also take a different toll on your time and resources. Investing can be done automatically once it is set up. Your business can gobble up your whole life -- time, resources and mental powers. It can also make you go broke since most fail -- and fail fast. Yes, investments can fail too. But, the reason that they have a lower return is because they are not as risky as starting most businesses. Your job is weigh the risk with the reward to determine what your return should be. You must answer the age old question, "Is it worth it?" Just a thought...

 

[WJK]

I did the same. At some point, I got into $83,000+ credit card debt. Some were medical bills I paid using the cards but most of it was just plain stupidity saying to myself that with my income I could always pay it off until I found myself in a situation of not being able to pay even minimum payments. That was the eye-opener... all my income went to paying the minimum on the stupid credit cards. So, I decided to do something about it. In three and a half years I paid off over $45,000 and now have only car loans and one personal loan (I originally used to consolidate the debt at a lower interest rate so I could afford larger payments than the minimum towards the cards). I have 29 months to be debt-free (besides a mortgage which at the current rate of 3.5% I am not planning to put any extra money towards it but rather invest). That relief of having suddenly over $2,000 free cash monthly for whatever you want (in my case invest in growing my business) is priceless. And the credit cards? f*ck them!

I would look at your mortgage too. How long ago did you take out the loan and for how many years? For the first few years, almost nothing of your payments goes to the principal. Even small additional principal payments can make a BIG difference in the number of years it takes to pay off your loan. I would play with a mortgage calculator to look at some different plans. You might be able to a dent in it from something as simple as putting your daily pocket change toward extra payments against the principal. I had several sources when I was working on mine. For example -- When I cooked at home rather than us going out, I'd put the money that I saved into my savings jar. Added to my dribble incomes from my side gigs, it worked!

 

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[Martzee]

I would look at your mortgage too. How long ago did you take out the loan and for how many years? For the first few years, almost nothing of your payments goes to the principal. Even small additional principal payments can make a BIG difference in the number of years it takes to pay off your loan. I would play with a mortgage calculator to look at some different plans. You might be able to a dent in it from something as simple as putting your daily pocket change toward extra payments against the principal. I had several sources when I was working on mine. For example -- When I cooked at home rather than us going out, I'd put the money that I saved into my savings jar. Added to my dribble incomes from my side gigs, it worked!

Well, I refinanced my mortgage recently to a lower rate which saved me $400 monthly. But my investments make me between 20% - 45% annual income on invested capital, unfortunately, my invested capital is small to live off of it, so I would rather invest all the free money towards trading than paying off a 3.5% mortgage. Once my account grows large enough (and with adding $2,000 every month plus compounding every year at the rate (let's be conservative) of 20%, it should grow fairly fast. Once my income allows me to pay all the bills, reinvest, and live free, then I plan to attack the mortgage too. I am looking at it from the perspective of which is better - a 3.5% loan or 20% income? I think the income wins. This was not the case with the credit cards as many charged me 16% - 22% and that makes absolutely no sense to carry the balance...

 

[WJK]

Well, I refinanced my mortgage recently to a lower rate which saved me $400 monthly. But my investments make me between 20% - 45% annual income on invested capital, unfortunately, my invested capital is small to live off of it, so I would rather invest all the free money towards trading than paying off a 3.5% mortgage. Once my account grows large enough (and with adding $2,000 every month plus compounding every year at the rate (let's be conservative) of 20%, it should grow fairly fast. Once my income allows me to pay all the bills, reinvest, and live free, then I plan to attack the mortgage too. I am looking at it from the perspective of which is better - a 3.5% loan or 20% income? I think the income wins. This was not the case with the credit cards as many charged me 16% - 22% and that makes absolutely no sense to carry the balance...

Yes, that sounds like a good argument. I've had the same debate myself from time to time. The reason that I live in a free and clear home is that I have learned that life has many twists and turns. Stuff happens. Market fail. Investment go south. It's usually at the worst time and totally unexpected. I simply sleep better knowing that my home is all mine. I also keep extra food & supplies in my pantry for any lean days or disruptions in the normal supply chains. Who would think that the store would run out of toilet paper for months at a time?

After taking care of our basics, yes, I am a professional real estate investor. I only invest funds which I can afford to lose. I spend my time upping my odds of winning and spreading the risk in my investment program. Most of the time I win. But, sometimes I lose. Like my old friend keeps reminding me, "You must expect to have some pepper with your salt." You can never remove all the elements of risk. There's always a Black Swan flying around out there somewhere. I just try to encourage it to land on someone else's pond.

 

[BizyDad]

Why not do both?

Eventually, sure. But becoming a great business owner and becoming a great investor are not complentary skills. You will become great at one or the other sooner if you focus.

the reason that they have a lower return is because they are not as risky as starting most businesses

The reason the have a lower rate of return is because you are a fractional owner of an established company. You only have a tiny claim on profits. Large established companies find it harder to achieve higher rates of return. How much can Coca Cola possibly grow in a year? And how much of that growth will you see?

Generally speaking, your own small business has a much higher opportunity to grow than Coca Cola. And you own all the profits.

I think all the small business comparisons don't apply here. The OP has a 7 year plan and sounds very confident about the resilency of his business. I'm reading between the lines, this isn't some noob business owner who might quit in 2 years.

So grow your business at least until you are the biggest in your town. Then consider branching out, maybe franchising if you crack the right marketing formula. Worry about becoming the great investor after you've climbed the mountain staring you in the face.

You could triple your income in a year or two. But you probably are not going to do it by focusing how to pick the best stocks.

 

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[Martzee]

Yes, that sounds like a good argument. I've had the same debate myself from time to time. The reason that I live in a free and clear home is that I have learned that life has many twists and turns. Stuff happens. Market fail. Investment go south. It's usually at the worst time and totally unexpected. I simply sleep better knowing that my home is all mine. I also keep extra food & supplies in my pantry for any lean days or disruptions in the normal supply chains. Who would think that the store would run out of toilet paper for months at a time?

After taking care of our basics, yes, I am a professional real estate investor. I only invest funds which I can afford to lose. I spend my time upping my odds of winning and spreading the risk in my investment program. Most of the time I win. But, sometimes I lose. Like my old friend keeps reminding me, "You must expect to have some pepper with your salt." You can never remove all the elements of risk. There's always a Black Swan flying around out there somewhere. I just try to encourage it to land on someone else's pond.

I understand, but I generate money in any market, so if the market goes south, I still generate cash, so my thinking was, if I lose a job, my investments will pay for the mortgage. In fact, I had this issue now with COVID, even at an executive level, I was furloughed by the company owner (and many employees laid off), my investments and help from our local church helped me with the bills. If I could pay the mortgage in 30 months, yes, I would go for the mortgage first, but that is not the case, so I am prioritizing investments over the mortgage. I treat trading and investing as a business, I started an LLC and actively trade, actively manage my investments, and generate income. After years of studying strategies, learning, trials, and errors (unfortunately, investing and trading are not taught in any school) I finally found a strategy that suits me well, achieves my goal and preserves the initial capital. And I trust my strategy so I can put more money into it.

 

[WJK]

Eventually, sure. But becoming a great business owner and becoming a great investor are not complentary skills. You will become great at one or the other sooner if you focus.

The reason the have a lower rate of return is because you are a fractional owner of an established company. You only have a tiny claim on profits. Large established companies find it harder to achieve higher rates of return. How much can Coca Cola possibly grow in a year? And how much of that growth will you see?

Generally speaking, your own small business has a much higher opportunity to grow than Coca Cola. And you own all the profits.

I think all the small business comparisons don't apply here. The OP has a 7 year plan and sounds very confident about the resilency of his business. I'm reading between the lines, this isn't some noob business owner who might quit in 2 years.

So grow your business at least until you are the biggest in your town. Then consider branching out, maybe franchising if you crack the right marketing formula. Worry about becoming the great investor after you've climbed the mountain staring you in the face.

You could triple your income in a year or two. But you probably are not going to do it by focusing how to pick the best stocks.

Being an investor is not necessarily picking stocks. There are many types of investments. I dabble in a few different markets. My main investments are in real estate and real estate securities.

You talk about building a small business that you hope to grow. Good luck in your quest. Owning businesses can be a hard row to hoe. I have self-employed for 44+ years. Talking about that, my husband just came in. We must go close and clean our little self-service Laundromat for the day. It's just another "dribble income".

 

[WJK]

I understand, but I generate money in any market, so if the market goes south, I still generate cash, so my thinking was, if I lose a job, my investments will pay for the mortgage. In fact, I had this issue now with COVID, even at an executive level, I was furloughed by the company owner (and many employees laid off), my investments and help from our local church helped me with the bills. If I could pay the mortgage in 30 months, yes, I would go for the mortgage first, but that is not the case, so I am prioritizing investments over the mortgage. I treat trading and investing as a business, I started an LLC and actively trade, actively manage my investments, and generate income. After years of studying strategies, learning, trials, and errors (unfortunately, investing and trading are not taught in any school) I finally found a strategy that suits me well, achieves my goal and preserves the initial capital. And I trust my strategy so I can put more money into it.

Good luck!!!

 

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[BizyDad]

Being an investor is not necessarily picking stocks. There are many types of investments. I dabble in a few different markets. My main investments are in real estate and real estate securities.

You talk about building a small business that you hope to grow. Good luck in your quest. Owning businesses can be a hard row to hoe. I have self-employed for 44+ years. Talking about that, my husband just came in. We must go close and clean our little self-service Laundromat for the day. It's just another "dribble income".

Agreed. But the OP is reading the Intelligent Investor first, so I made an assumption. I mean, frankly, if he'd said he was going to do real estate and business, I probably wouldn't've commented. There's some synergy of skills there. Knowledge of the local market, he does appliance repair already, so he's pretty handy around electrical issues, etc...

It's just another "dribble income".

Living the dream. I'm serious, "when I grow up", I wanna be like that. Married with some businesses and some responsibilities and some investments and some work to do. Have a great night!

 

[WJK]

Agreed. But the OP is reading the Intelligent Investor first, so I made an assumption. I mean, frankly, if he'd said he was going to do real estate and business, I probably wouldn't've commented. There's some synergy of skills there. Knowledge of the local market, he does appliance repair already, so he's pretty handy around electrical issues, etc...


Living the dream. I'm serious, "when I grow up", I wanna be like that. Married with some businesses and some responsibilities and some investments and some work to do. Have a great night!

My path has been the route of the tortoise -- slow, thoughtful, and steady. Most of the time I tend to quietly blend into the wall paper. -- nothing flashy or show stopping. Thank you for noticing my journey.

 

[Andy Black]

My path has been the route of the tortoise -- slow, thoughtful, and steady.

I like that. Chipping away is my favourite speed.

 

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[Kevin88660]

Our youngest child should be graduating high school in 2027. If we send an extra $1350 a month to our mortgage we'll be debt free by 2027.

We'd shave off a total of 21 years and 9 months from our mortgage and save $95,600 in interest.

The only other debt we have is a car note that should be done in about 5 years. Even with the car payment, we can still save $1600 a month up until graduation. That's assuming my business income doesn't increase (which it is). The pandemic has really given my business a boost. (Appliance repair business - pretty recession proof)

In 7 years we'll be debt free and have a disposable income of around $5,000 a month. Our expenses will also be lower because one of our kids should be out on their own and the other on their way out.

We'll have saved around $98,000 in interest payments between the house and the car and at $1,600 a month in savings, we should have around $130k saved. If prices continue appreciating in our area at around 3.8% as they have been, we should gain around 30k-50k in home equity as well.

We can also sell the home and pay cash for something smaller for just me and my wife. Hopefully by then I'll be in a position to sell my business and we can travel more often.

That's the dream.

I know it sounds very slow lane, but I don't know much about investing so this is the only plan I can come up with at this moment that makes sense to me and that I can understand. At least until I educate myself better on how to properly invest our money. I figure paying off debt is better than letting our money sit in a bank account getting eaten up by inflation.

Thoughts?

Nobody who is savy in finance pays off mortgage debt in Singapore these days. Mortgage debt interest is below 1.5% and blue chip stocks in Asia have dividends and debt with yields 4-5 percent.

I recommend you reading a bit more on yield/income investing.