Wednesday, April 4

My Frugal Miser - March Expenses: $10,598


I paid my 2017 income tax at the end of March.  I was supposed to make quarterly payments so there is also a penalty built into the tax.  I also spent a lot on food in March.  Much of that was at the grocery store, but we ate out more than we should have also.  Lastly, I bought $800 worth of gas gift cards to take advantage of my credit card's 5% cash back. 

The $200 spent on vacationing was to upgrade to Big Front Seats on Spirit airlines.  I redeemed points for two flights to Las Vegas in April.  Since the flights and hotels cost nothing out of pocket I decided to splurge on larger seats at the front of the plane.

March Expenses:  $10,598

$1,857 Auto ($980 for gas, $877 for service)
($73) Bank Fees
$0 Clothing
$0 Computer
$82 Entertainment (movies, gambling, alcohol) 
$507 Food
$0 Gifts Given
$75 Household/Housing/Home Repair
$0 Homeowner's Insurance (annual payment)
$28 Health and Dental Insurance (prepaid a portion of 2018 health insurance)
$0 Investment Expense
$16 Interest Expense*
$19 Medical/Dental
$27 Miscellaneous
$0 Personal Care
$35 Subscriptions
$7,447 Taxes
$77 Sharing Economy Expenses (tolls, car washes, etc.)
$0 Unreimbursed Employee Expenses
$301 Utilities
$200 Vacation

*Interest expense includes student loans and the loan on my car.  As both rates are below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off these loans.  

Monday, April 2

My Frugal Miser - March Income: $14,072


Income was excellent in March.  Rental income was strong.  A new tenant moved into the empty townhouse.  My most expensive property is still vacant but is now move-in ready.  Rideshare income was strong.  On St. Patrick's Day, between Uber, Lyft and Amazon deliveries, I grossed over $750!  Because I live in a tourist area, I benefited from the number of events taking place in Tampa Bay as well as spring breakers.  I did not do as many meetings last month; most of my job income came from rideshare and Amazon.

March Income: $14,072

$109 Mystery Shopping
$622 Meeting Jobs
$104 Reimbursed Job Expenses
$1,246 Uber
$1,296 Lyft
$0 Postmates
$2,632 Amazon Deliveries
$7,655 Rental Income
$30 Interest Income
$378 Other Sources

Investment Accounts Change in Value:  $11,253

My investments did great.  A put option for the company that owns MoviePass is currently up over 130% from my purchase price.  I also made over $1,000 on a short-term investment in a beat-up mall REIT. 

Notes:  
  • I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

Friday, March 9

How I will increase Passive Recurring Income by $2,300

This week I have established plans that will help me worry less about finances and enjoy life more.  By 2020 I want to increase passive recurring income by $2,300.  Here's how I will do this:

Real Estate

We're going to buy a new house.  I've started looking at new-home communities in the Tampa Bay area.  This will be our new house, not a rental.  Why?  I want to turn our current house into an AirBnB.  I'm intrigued by the potential income of short-term rentals and think it could be a good bit higher than renting out my house in a 12-month lease.  I also like the idea of being able to constantly maintain the house.  We've had some big surprises when tenants move out.  The house we worked on last month required close to $20,000 in repairs to make it rent-ready.  If my house is turning over on a weekly basis, I can keep it clean, fresh and maintained regularly.

Afterwards, I will decide what our next move should be.  If the AirBnB is a success, the next property I buy will be specifically for short-term rentals.  If it doesn't pan out, I would look at other options.

Investments

This is the truly-passive breed of investing.  The AirBnB will require a little effort, although most of that effort, such as keeping the place clean, could be hired out.  Investing in dividend-paying stocks requires almost no ongoing effort at all.  The plan is to regularly invest excess cash flow over the next two years into income-producing companies.


I'm really excited about the thought of moving into a new home.  It's always fun to look at houses and then start fresh.  I'll keep updating you guys on our home search.

Wednesday, March 7

Towards Prosperity

We're doing okay financially.  We have 10 rental properties, a six-figure stock portfolio, and we live in a mortgage-free home.  But we're not quite financially independent.  I couldn't stop working and just live off our assets.  It's time to change that.  I'm going to have fun doing so.

Having passive recurring income is the way I will reach financial independence.  I figure if I can consistently bring in $10,000 per month in passive recurring income, I will have enough to both live on and to add to the nest egg for future needs. 

Passive Recurring Income - Today

  • Dividends from stock:  $1,500/month
  • Fully occupied rental properties (including the ones held in my retirement LLC):  $8,200/month
At first it appears that I almost have the $10K/month I need.  The problem is, the rental properties are rarely fully occupied.  When they are, there is bound to be a tenant who is behind on rent.  Likewise, dividends can be cut, which is out of my control.  Therefore, I need a cushion above and beyond the stated $10,000 goal that guarantees I always make my monthly goal.

Passive Recurring Income - 2020

  • Dividends from stock:  $2,000/month
  • Rental properties:  $10,000/month
I'm giving myself less than two years to increase passive recurring income by $2,300/month.  Stay tuned.

Tuesday, March 6

Simple Finances

Why is it necessary to track every minute detail of my finances, down to the penny?  The big picture is this:  My net worth needs to grow so that my passive income covers my spending.

This year I will stop using Quicken.  Over the weekend I signed up for a site called Personal Finance.  It's a cloud-based tool that aggregates my finances.  I'll keep an eye on things using that site.  The plan is to build up my checking account balance so that there are always funds available to pay any bill.  As soon as I receive the bill, I pay it.  I've been using Quicken for so many years.  It's super robust, and I can find out just about anything I want to know.  But it's time to move on.  Here's the benefits:


  • I have a PC dedicated just to Quicken.  I can sell it, reducing clutter.
  • I'll save a little on upgrading the software every couple of years.
  • Having enough liquidity means not having to postpone paying bills, transferring funds from various accounts, and remembering to log transactions all the time.




What else am I doing?  Well, to make this work, my finances need to be super-simple.  I will eliminate Prosper (P2P loans) as an investment.  As money comes in, it will be withdrawn from Prosper.  I'm going to pay off my student loans and my car.  I won't be doing this to save interest (both charge less than 2%), but instead it's to eliminate recurring monthly expenses.   Next, I'm consolidating my spending to one or two credit cards.  Lastly, I will have a single financial goal:  increase passive recurring income.  I have a couple ideas already for doing this which I will share tomorrow.

Monday, March 5

Towards Happiness...

A few weeks ago, when Bitcoin was crashing, I read an article about Steve Wozniak, co-founder of Apple, and why he sold his bitcoin.  Bitcoin has been a volatile currency, trading between $1,200 and nearly $20,000 in the past year.  Wozniak sold because he didn't want to be obsessed with the insane price swings.

"I don't want that kind of care in my life. Part of my happiness is not to have worries"
My dad unexpectedly passed away at the age of 52.  I will be 52 in 11 years.  What if that's all the time I have left on this planet?  When I look at life like this, it makes me realize that there's a lot of stupid shit I shouldn't let bother me.  And since I have struggled with anxiety all my life, I'm starting to realize that most of what I worry about isn't all that important.  So, I'm changing.  I don't want to be bothered with the stress of things that don't matter.

Tomorrow I'm going to start outlining what this means to me...

Saturday, March 3

My Frugal Miser - February Expenses: $2,024


February was deceptively frugal.  Absent some large expenses, I only spent about $1,000 last month.   I bought a $250 gas gift card, and we drove to Birmingham to work on a vacant property, so gas was higher than normal.  I also paid the annual fee ($450) on my Chase Sapphire Reserve card.  $300 of that fee will be refunded after I charge some travel to that card.  Finally, I bought a new washing machine as well as tickets to the Smashing Pumpkins concert.  Besides these categories, everything was quite low.  When we do meeting jobs, our food cost is usually covered. 

February Expenses:  $2,024

$519 Auto ($240 for gas, $32 for service)
$450 Bank Fees
$0 Clothing
$0 Computer
$229 Entertainment (movies, gambling, alcohol) - gain this month
$149 Food
$0 Gifts Given
$461 Household/Housing/Home Repair
$0 Homeowner's Insurance (annual payment)
$28 Health and Dental Insurance (prepaid a portion of 2018 health insurance)
$0 Investment Expense
$15 Interest Expense*
$29 Medical/Dental (income)
$7 Miscellaneous
$0 Personal Care
($35) Subscriptions income from refund
$0 Taxes
$27 Sharing Economy Expenses (tolls, car washes, etc.)
$0 Unreimbursed Employee Expenses
$145 Utilities
$0 Vacation

*Interest expense includes student loans and the loan on my car.  As both rates are below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off these loans.  In December, I paid $38 to E*Trade for "hard to borrow" interest on a short sale of stock. 

Thursday, March 1

My Frugal Miser - February Income: $9,218


Income was decent in February.  Rental income remained lower due to vacancies, but a new tenant is moving into one unit in March and the other vacant property, my most valuable one, will be rent-ready in the middle of the month. 

I worked several meetings in February and did a fair amount of Amazon deliveries.  We spent a week in Birmingham working on a property, which was a week of no income.

February Income: $9,218

($35) Mystery Shopping negative due to expenses not yet reimbursed
$2,407 Meeting Jobs
$453 Reimbursed Job Expenses
$59 Uber
$5 Lyft
$0 Postmates
$945 Amazon Deliveries
$5,327 Rental Income
$29 Interest Income
$28 Other Sources

Investment Accounts Change in Value:  -$3,478

My investments were down again, but not nearly as bad as January.    

Notes:  
  • I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

Monday, February 5

My Frugal Miser - January Expenses: $1,621


January was a decently frugal month.  There were a few large expenses:  I bought a discounted gas gift card ($240) and prepaid for a year of satellite radio.  I also started tracking a new category that added to my expenses.  I also bought a new pair of work shoes.

New this year I added a category for unreimbursed employee expenses.  Last year, the primary company I worked for meeting jobs paid me as a 1099 contractor, and I could deduct expenses like hotels and meals.  Now I am a W-2 and if I choose to take a job that doesn't provide meals or hotel rooms, I am responsible for the expense.



January Expenses:  $1,621

$272 Auto ($240 for gas, $32 for service)
$0 Bank Fees
$159 Clothing
$0 Computer
$223 Entertainment (movies, gambling, alcohol) - gain this month
$272 Food
$0 Gifts Given
$50 Household/Housing/Home Repair
$0 Homeowner's Insurance (annual payment)
$28 Health and Dental Insurance (prepaid a portion of 2018 health insurance)
$0 Investment Expense
$14 Interest Expense*
$4 Medical/Dental (income)
$0 Miscellaneous
$0 Personal Care
$0 Subscriptions
$0 Taxes
$52 Sharing Economy Expenses (tolls, car washes, etc.)
$176 Unreimbursed Employee Expenses
$397 Utilities
$0 Vacation

*Interest expense includes student loans and the loan on my car.  As both rates are below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off these loans.  In December, I paid $38 to E*Trade for "hard to borrow" interest on a short sale of stock. 

Friday, February 2

My Frugal Miser - January Income: $8,707


It's 2018 and I am making some changes to how I report things.  I want to stop tracking every investment transaction in Quicken.  I don't use that information anywhere except this blog - capital gains, dividends and interest expenses are all tracked in spreadsheets for tax purposes.  This year I will report the increase or decrease in the value of my investment account, net of any withdrawals or deposits I make.

As for income, it was okay.  Rental income continues to suffer, but this is about to change.  My handyman finished the repairs at my townhouse, and the day it was listed for rent the management company approved an application.  I had to evict another tenant, and I believe she moved out at the end of the month.  A third tenant did not pay rent in January. 

I worked several meetings in January and drove a little for Uber and Lyft.  I also worked steadily at Amazon.  Income from these jobs was solid.

January Income: $8,707

$71 Mystery Shopping
$1,246 Meeting Jobs
$50 Reimbursed Job Expenses
$235 Uber
$163 Lyft
$0 Postmates
$2,236 Amazon Deliveries
$4,475 Rental Income
$29 Interest Income
$202 Other Sources

Investment Accounts Change in Value:  -$17,969

My investments performed horribly in January.  I shorted shares in the company that operates MoviePass (HMNY) and quickly lost a ton of money.  I covered that position, taking a steep loss.  The Hard to Borrow interest rate charged to short that stock is ridiculously high.  In its place, I have a put option that will become profitable if the company tanks.  I also lost a lot from Vereit.  REITS have been way down lately.   I'm not planning to sell anytime soon, so this doesn't worry me at all.  In fact, I bought more shares today.  The dividend on that REIT is close to 8%.

Notes:  
  • I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

Tuesday, January 23

How I am Avoiding Creeping Recurring Expenses

Just as passive recurring income contributes to a higher quality of life, monthly recurring expenses - usually subscriptions of some kind - can eat away at cash flow.  This is why I audit my expenses on a regular basis.

Satellite Radio

I practically live in my car.  While many people consider satellite radio subscriptions a luxury, I value the commercial-free stations, and the ability to listen to my stations wherever I go.  I was on a month-to-month plan with SiriusXM which included streaming in our home.  By agreeing to a 12 month contract, I was able to upgrade to the best plan available and keep the streaming option while almost halving the cost of the subscription.

Estimated Savings:  $200/year

Newspaper Subscriptions

A while back I redeemed airline miles to gift a subscription to Barron's to a friend.  After the first year, my credit card began being charged a monthly fee.  It was only $13.00, easy enough to ignore every month.  Today I canceled it.

Estimated Savings:  $156/year

Internet

I pay $45/month for home Internet.  This is something we have to have, and when you consider how much bandwidth we use, it's not that expensive.  But relative to our other bills, it is on the high side.  Put into perspective, the electric bill during winter months is around $60.  I power the entire house for a little more than I pay just for Internet.  I called my provider, Wow, to see if I could lock in a lower rate.  By agreeing to a 12 month contract I was able to reduce the monthly cost to $31/month.

Estimated Savings:  $168/year

Well, that was easy.  It took me less than 20 minutes to save $500 in 2018.  Companies are eager to retain their customers, and I don't mind agreeing to remain a customer if it means saving money.  I'll continue looking for ways to save money without sacrificing.  What tricks have you used to save money?

Sunday, January 21

Passive Income from Rental Properties

In 2006 I became a landlord, mostly by accident.  I was living in a 2 bedroom townhouse about 30-45 minutes away from my job.  I wanted to be closer to work, and I found a brand new subdivision merely a 10 minute drive from the office.  The market in the area where my townhouse was located was weak for sales, and my best friend and his wife were looking to move back to Birmingham.  I suggested he rent my townhouse, and the rest is history.

Passive income - income that requires relatively little effort on my part - is a huge part of my plans for financial independence.  I began buying up rental properties, mostly foreclosures.  In 2008 I moved from the house I bought in 2006 to another new house and rented that house out.  Fast forward to 2018.  I have 10 rental properties.  I've held all my properties except one, which I sold in 2015.

Today I'm going to take a look at how I'm doing.  Below I have included properties I own as well as the two held in my retirement account.



-->
2014201520162017
Income$95,076$93,305$83,874$91,728
Expenses$34,553$36,689$44,861$33,919
Cash Flow$60,523$54,616$39,012$57,809

Maximizing Income

Last year was a solid year for income.  Every year I will experience vacancies, but in 2017 most of the properties were occupied and rent was paid.  I haven't added any new houses to my portfolio since 2014.  I look at how much I am charging every year and, if warranted, I raise the rent.  I try not to be too aggressive because it is better to keep existing tenants than find new ones.

Minimizing Expenses

I have some control over my cash flow by deciding how much money I will spend on my properties.  The townhouses are in a declining area, and I am especially careful not to overspend.  My single family homes have more potential, so I try to make those very nice to attract the best tenants.  This strategy seems to work:  across the 3 nicer homes I own, one tenant has stayed 9 years, another 8 years, and the third is in her second year. 

What do I do to keep expenses low?  Over time I've simplified things.  I am currently working on a vacant property, and my handyman is repainting the entire house, walls and ceiling, white.  I have removed carpet and replaced it with vinyl peel and stick tiles.  I'm thinking about removing dishwashers from these properties, and I have already removed most of the garbage disposals.  The goal is to minimize service requests by using more durable products and eliminating anything that can break.  I'm also deferring some maintenance.  For example, the wooden fences around my townhouses have been in bad shape for years, but I have put off replacing them. 

One last note about expenses.  I don't include depreciation in my calculations because it is not an actual cash outflow.  If I included depreciation, which basically amortizes the cost of the property over its useful life, my income would be much lower.

Passive Income is Awesome!

Becoming a landlord is one of the best decisions I have made.  Everyone needs shelter, and the properties have dependable cash flow regardless of how the stock market performs.  Over time I'd like to not be an absentee landlord, because being so far away increases my costs.  Having a steady stream of income while I am doing other things is so important to my financial independence.

Friday, January 5

My Frugal Miser - December Expenses: $1,643


I was happily frugal in December.  We enjoyed a week vacation in Las Vegas and Phoenix, where my winnings at the blackjack table more than paid for the trip.  I bought new brakes and rotors for my car, purchased $200 in restaurant gift cards, and prepaid some of my 2018 health insurance premiums.



December Expenses:  $1,643

$337 Auto ($79 for gas, $258 for service)
$0 Bank Fees
$72 Clothing
$0 Computer
($1055) Entertainment (movies, gambling, alcohol) - gain this month
$620 Food
$0 Gifts Given
$0 Household/Housing/Home Repair
$0 Homeowner's Insurance (annual payment)
$1,027 Health and Dental Insurance (prepaid a portion of 2018 health insurance)
$0 Investment Expense
$54 Interest Expense*
$26 Medical/Dental (income)
$0 Miscellaneous
$0 Personal Care
$31 Subscriptions
$0 Taxes
$52 Sharing Economy Expenses (tolls, car washes, etc.)
$172 Utilities
$307 Vacation

*Interest expense includes student loans and the loan on my car.  As both rates are below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off these loans.  In December, I paid $38 to E*Trade for "hard to borrow" interest on a short sale of stock. 

Wednesday, January 3

My Frugal Miser - December Income: $11,529


My income was solid in December.  I received the bonus on the mystery shopping route I finished in November and worked a few meetings.  Most of the work I did though was driving for Amazon.  Two of my rental properties aren't producing income still.  I also realized some healthy stock gains.


December Income: $11,529

$1,583 Mystery Shopping and Hospitality Jobs
$16 Uber
$0 Lyft
$0 Postmates
$2,007 Amazon Deliveries
$5,720 Rental Income
$185 Dividends and Interest (Investment Accounts)
$1,987 Realized Gains (Losses) on Investments
$31 Other Sources

Notes:  
  • I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.
  • I include merchandising and hospitality work in the mystery shopping category since the companies that I shop for provide this extra side work. 

Monday, January 1

My Frugal Miser - 2018 Goals

It's time once again to set my goals for the year.  Publishing my goals will keep me accountable and on-track.  My 2018 goals will be similar to 2017.  Why change what works?

Here are my goals for 2018

  • Simplify:  consolidate financial accounts and do business with fewer companies.
I will likely start over with Quicken.  I've been using the same database for years, and it's junky.  This alone will clean things up tremendously.  Doing business with fewer companies is all about reaping the benefits of loyalty and reducing paralysis by over-analysis.  I'm going to cut back on Groupon deals.  In the past we've gone to a restaurant 10 or 15 miles away because I got a good deal on Groupon.  Sure, I may have saved $10 on the meal, but I also wasted time and gas in the process, and had to worry about when the deal was going to expire.  When we travel, we will focus on Choice Hotels and IHG properties.  I still have a Marriott and Hilton credit card, but we will probably only stay at those properties when someone else is footing the bill (for work) or when I redeem points.  Basically, I want to spend less time making decisions when it comes to trivial things.
  • Debt:  Reduce outstanding debt to less than $125,000.  Pay off car loan and both credit card balance transfers.
I'm ending 2017 with about $163,000 in debt.  I have two large credit card balances from when I used 0% checks to pay off a mortgage.  Those will be paid off ASAP.  I also want to pay off my car loan.  Although the rate on the car loan is only 1.99%, the mileage on my car (over 130,000) is getting pretty high and I will probably need to purchase another car in 2018.
  • Spending:  Spend less on vacations and entertainment.  Cut spending on alcohol in half.
We drink too much.  Alcohol is empty calories.  The best way to measure whether or not we are cutting back on alcohol is to look at how much I spend on it.  For vacations and gambling entertainment, I don't necessarily need to cut back a lot.  I just don't want to spend more than I did last year.  2017 was a happy medium in terms of our vacationing enjoyment.
  • Personal Improvement:  Lose weight and get stronger.
My body is letting me know it is getting older.  I often deal with sore feet and a painful lower back.  My weight is close to an all-time high.  I have to do something about this.