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Introduction

Discussion in 'Forum Introductions (Who are you!?)' started by PieThief, Oct 15, 2007.

  1. PieThief
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    PieThief PARKED

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    Hi all,

    Just wanted to get my first post in. I found this forum through a signature link in the RDPD forums. I've been on those forums, mostly lurking, for several years under a different name. This group of individuals seems a lot more driven and that's the kind of community I am looking for.

    I'm typing up my "long" introduction and will post it shortly, but for now, hello! :thumbsup:

    PieThief
     
  2. PieThief
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    PieThief PARKED

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    I'm going to tell my story. I understand the rules on victim mentality here and while my story has some sorry aspects to it, I hope I'm not violating any rules! :) If it helps, I'm optimistic for the future!!

    So my background is thus... I was saved from a mediocre existance of middle class toil from a blessing in disguise... but I am still on my journey. I'm not out of the toil yet, but I am so close... I think. In my gut I feel I'm close to something, I'm just trying to find out what it is and how to finish the journey.

    Graduated from college 7 years ago and married 5 years ago. My family growing up was extremely conservative financially (and not well off) my wife's was the opposite. They had lots of money but spent more than they had. Mother in law has no concept of money as she has never worked a day in her life. You'd think that would be a huge barrier between us being married but it isn't. We're both thrifty and bargain hunters by nature. Luckily the #1 issue the breaks marriages apart (money) has not brought ours apart.

    After getting married, we received a gift of some money and used it to boost our own savings and buy our first house. It ended up being an expensive gift and a valuable lesson(s). We bought too expensive of a house for our stage of life, or at least, we didn't buy it right. We were soon to learn some harsh lessons. Not two months after we bought our house, I found out I was going to be losing my job becuase the company where I worked was closing down. I got a very good job across the country and moved a few months later. I remember pretty vividly celebrating our 1 year wedding anniversary and then leaving my crying wife for the new town 3 days later. My wife stayed behind for 3 months trying to sell our house. In hindsight, I would never do anything like that again, nothing is more important than your family. I still occasionally look back and think if we just hadn't received that gift. We wouldn't have been able to buy a house in the two months before I found out we were going to have to move. But in the end, we wouldn't have learned the lessons we did and we just would have learned them later on... I'm glad it happened now, but I don't want to remember it.

    I learned a few things with that house. First of all, get a realtor if you are a newbie at house buying. We got suckered by the sales rep and paid "retail". Secondly, it is very hard to sell a house when your neighborhood is new construction and won't be finished for at least another year. Thirdly, having paid "retail" makes it worse. Fourth, the thing they say about your early offers are usually your best are true. :) We flatly rejected some 'lowball' offers very early on, and ended up selling for about that much 15 months later. Of course, that's 15 months worth of mortgage/insurance/utility/tax payments.

    The last quarter of 2003 and all of 2004 was the worst 16 months of our married lives. We moved to a small 1 bedroom apartment two days drive from our brand new house, with all our furniture and stuff in it, and lived like college students all over again. We had a futon, a $20 wal-mart card table and like 'furniture' for over a year, while we had a nearly $300,000 home out of state we were paying payments on. Believe me, that was the worst, and in a strange way, most important year of our lives.

    We lived through unbelievable stress, trying to make the payments on the house, and the apartment, and insurance/utilities/etc. on both. Our insurance company found out we were not living there anymore (not sure how exactly, but I never asked) and tried cancelling our policy multiple times. Luckily I got a sympathetic ear on the line and got an exception extended to us but we rode that for almost 7 months. I thank that lady whoever she was, because we were truly stretched thin at that point in our lives.

    We got really good at budgeting out of necessity. We dropped the price on our house gradually over the months, but it was on the market so long it probably didn't matter. When the neighborhood finally was built out and sold, it was over the holidays. We decided to just drop the price drastically and we had a full price (on our lowered price) offer within a few days. We took it. In hindsight, we had been offered "lowball" offers early in our little adventure over a year earlier, and laughed them off. Hindsight is 20/20. Knowing what I know now, I would take it in a heartbeat because I can make the money back, but I can't get the year back. In the end, selling our house cost us over a years worth of my gross salary. Ouch!

    We bought a nice house in our new town, it cost less but was nicer than our previous house because we moved to an area with a lower cost of living. We "bought right" this time by finding a new construction builder with extra spec homes we were able to negotiate a pretty good discount on. We bought in a very nice neighborhood but where our house was at the extreme afforable end. We are the second smallest house on the street I believe, so I think we are well positioned if we should ever have to sell again. We also spend the next year or so getting our finances in order. We paid off all credit card debt (we didn't have much). We also paid off both cars. We have a 5 and 3 year old vehicles that are totally paid off. We also started paying quadruple (lol) payments on our second mortgage. Another year from now and we'll be paid off... Then, there's our savings.

    Saving up from zero was difficult. We were making progress, but not much, until I started taking the advice of my mom and the book 'The Automatic Millionaire'. I basically decided to automate everything. I made a detailed list of everything we had as expenses and the maximum I thought we could save per month, then I increased it by 50%. I had that withdrawn from our paychecks. Amazingly, after the first month of 'shock', we were able to come up with the money. We have even inreased the amount since then. Now our rate of savings is substantially than my wife's gross income per year. I think it's actually more than 40% of our combined gross earnings per year. Considering we are paying extra on our mortgage to pay it down, it is probably almost 50% in actuality if we put everything into savings. We definitely are in a good situation to grow some wealth.

    Last year we purchased our first investment. We bought a mobile home for cash. It has been a mixed experience. It has earned some money. We have earned about 40% of our initial investment back. We should get all our investment back in another year and then the next couple of years will be pure profit. I have learned a few things about myself though. I learned that my personality is not extremely compatible with out of town investments! At least with a crappy property manager. I am somewhat of a control freak now when it comes to money, and bad experiences with the first property manager have kept us from investing in more properties. I recently fired him and hired a "full time" property manager not a part timer, and indications are good but it's still too early to tell. I will say that we have hesitated to invest in more properties because of our experience with this one.

    But we are looking. I spend my weekends and evenings scanning the MLS or public records. It's a lot of fun and it's educational. I'm just so confused because my instinct (plus my experiences plus my upbringing) says "no debt! no debt! no debt!" But I've looked at the numbers and I know I'll never hit where I want to hit with that mentality. But that is my current road block.

    Our short term goals are that we would like to start a family in the next two years. My wife wants to be a stay at home mom and I support that. I know our income will take a 25-33% dip when she stops working so I want to be as prepared as possible. Our rate of savings is one step, but we need to increase our income as well. We have been looking at rent-houses but I'm also concerned that I don't want to deal with individual properties scattered all over the place. I began to think that I would prefer to buy multi-family housing (4-plex or duplex) to make things more concentrated. I believe I have about 2 years maximum before I'll have the concerns that come with providing for children.

    My current biggest roadblock is the debt that I need to take on to invest in my future. Having lived through a horrible experience, I can't help but think of the worst case, even though it is extremely unlikely statistically. I have overcome several obstacles and mental roadblocks in the last few years and this is the current one, that has proved a little more challenging than the others but I'm working on it. The inspiration I'm getting from reading about the experiences of individuals on this board is helping me to get there.

    I am currently looking at some 4-plexes for sale in the area as well as some rent houses, but honestly the 4-plexes are probably a better deal overall when it comes to price per unit, profit per unit, ROI, etc. I'm continuing to make strives forward and hope to join the millionaire club in a few years. (Mathematically speaking it's a virtual certainty we'll join the millionaire club on a purely E basis due to our rate of savings within a decade... but that's not what we're looking for. We wan't to shoot for the moon!)

    I really appreciate everyone who is contributing here and I've already been impressed and motivated by the stories I've read. It's a lot to take in and overwhelming, but I believe in my heart I'm destined for something greater than what I have now. I look forward to taking those steps and learning from those who have gone before me! :) Rock on! :icon_super:

    -PieThief
     
  3. yveskleinsky
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    yveskleinsky Bronze Contributor Speedway Pass

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    Welcome Pie Thief! You've been down quite a road- I can't wait to see what this next chapter has in store for you!
     
  4. JesseO
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    JesseO Contributor

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    Wow, welcome to the forums =)
     
  5. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Admin Post
    Welcome and thanks for the story!
     
  6. Yankees338
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    Yankees338 Bronze Contributor

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    Thanks for the story! It was a great one! I wish you all the best, and it seems you know where you're going; I'm sure you'll end up juuuust fine. :)

    I'd definitely advise looking into a 4-plex. It seems to be a great way to get started. Make sure you know the area well and talk to some local investors first. Real estate agents can be very helpful as well. Good luck and I wish you all the best.
     
  7. kidgas
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    kidgas Contributor

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    Welcome. With such a savings rate, have you considered learning about and investing in anything else besides real estate?
     
  8. PieThief
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    PieThief PARKED

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    I definitely see us having a variety of investments. However, in the short term (short term being in the next 1-3 years) I am trying to focus on real estate because I believe it has the best chance of providing consistent cash flow. Plus I've always been the most interested in RE. My wife would like to be a stay-at-home mom and when that happens if we can relpace some or all of her income through passive cashflow, that would be ideal. Also, I'm trying to focus on one thing at a time at least until I have a few under my belt.

    My methods of investment are currently:

    - A money market savings for our liquid savings giving us about 5% on that money.

    - We both contribute to our 401K to the limit of our company match.

    - I contribute 15% (the max) of my salary to the ESPP and cash it out every quarter and take the 10% boost in income.

    - We have the mobile home which gives us about $150 per month net profit after expenses.

    As I mentioned we are looking at picking up another income producing property at this time. We actually did make an offer on one but backed out after a lot of unexpected (expensive) items showed up on the inspection. We also had another one that looked good but the preliminary estimate on foundation repairs put it out of our comfort zone.

    PieThief
     
  9. S928
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    S928 Contributor

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    Bonjour PieThief! Welcome and thanks for the uber intro.
     
  10. lucas
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    lucas New Contributor

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    Welcome to the forums! I came from the richdad board also. A shame it deteriorated so badly there, ya know? =(
     

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