It has been quite the busy month of February as you can tell from my lack of posting. I have been trying to negotiate and restructure a deal with a partner in the commercial building that we own (or rather bank owns). He is the tenant and wanted to construct the building since he was tired of paying rent to someone else. It makes sense on paper, but when the economy struggles then having lower fixed costs make the most sense.
Taking Over the Building
Since I had quite a bit invested in the building, I determined it would be better to suck it up and just take it over entirely than to let things languish like they had for the past several months. I would have ultimately born some of the responsibility anyway so it is better to get it under control now, get in the bankers’ good graces and figure out some more solutions down the road if necessary.
But it will hamper the debt payoff plan. You can read more about that at my newest blog, Shredding Debt. Despite that, I still plan on being aggressive and will see what I can accomplish over the next 3 years. I will know more once the building payments are caught up and I can see what my budget and cash flow will look like the rest of the year.
At least the money that is spent will create some real estate losses and lower my tax bill so the ultimate impact may not be as bad as it could be. Plus I will have 100% control of the asset so that when it is paid off, I will be in great shape. It is just the journey that might be tricky.
Looking Forward to Learning
I do look forward to learning more about the commercial real estate business and making new contacts. I think it will be a great experience that can only help me as I continue to become more involved in real estate. Ultimately, I would like to own more property. It will probably be after the consumer debt is paid off and some more of the kids move out of the house. But having something to do with my time after I retire from my full-time employment will be very good.
I have heard that most New Year’s resolutions are long forgotten by mid-February so I thought I would take a look and see how I am doing on my 2 main goals for 2013.
Goal Number 1: Lose Weight
I thought I would start with the simplest and most straight forward of the 2 goals, losing weight. I want to lose 15 pounds by May to get me to about 215 in time for softball season. I want to still be able to make it down the line quickly and not hurt my knees so much so getting to 215 is a start.
On the day that I hit the heaviest I have ever been, I weighed in at 230.4 pounds. Since that day, I have managed to weigh in at even or down each week. Yesterday, I was 224.8 for a total 5.6 pound weight loss in a little over 6 weeks. A pound per week should be quite sustainable. Also, I have not lost any strength although my upper body workout has been less than stellar these past 2 weeks due to muscle spasms in my upper back. It should be better in the next week or two.
Goal Number 2: Lose Debt
This is a little more complicated as technically my liabilities have increased over the past month, but that is because the PLUS loans that are paid out for fall and spring semesters go into repayment starting in February. So that total has been added to the overall mix. But the debts that I have wanted to focus on (namely consumer debt) has been decreasing. In January, I managed to knock about $6000 off the total.
Now I started a new blog to more closely follow and share my progress. It is called Shredding Debt, which is exactly what I am looking forward to doing to all my credit cards when I get them paid off. Shred them for good! Be sure to stop by and check out the blog. The design and logo is the work of Andrea at Nuts and Bolts Media. I think she did a fabulous job for a reasonable cost. All I have to do is log in and start writing.
February will not end up as good. This is because I am hoarding cash for a possible business purchase or investment. I have been meeting with bankers and a consultant to see what can be worked out. I am keeping the cash in case I need to put up some equity into the deal to make it happen. Once the picture is clearer, I can resume my efforts.
Nevertheless, there will be some debt payoff simply from principal repayments. At least I am able to track my progress closely. I have been updating my spreadsheet monthly since October of 2012 working on getting debt paid off and freeing up some monthly cash flow.
Finally, here are the carnivals that featured my blogs in the past few weeks:
As life changes, so does all the different goals, including money. When you are young, you are usually much freer when it comes to money. And then comes the phase in life when you are starting a family. After that you are watching your kids grow up, approaching retirement, and then finally enjoying retirement. Along with all those lifestyle changes, so does money management and investing changes.
Net Worth TV with Terry Bradshaw reviews how different people look at money at different stages in their lives. This is important, because the money situations at each stage really are different, and you can’t just put a single template over someone’s entire financial life. Here are some key things to consider at each stage when it comes to investing.
Just Starting Out
When you are just starting out, you are basically in your accrual phase of life. The goal should be to bring in as much money possible and save as well. This second part is challenging, as many people in this phase also tend to spend.
In this phase, your investment strategy should match your growth strategy. It is a good idea to look into more risky investments, like stocks, so that you can get good compound growth over time. You should also look into maximizing your retirement accounts, like 401ks and IRAs, since you may be limited by income on these accounts in later life.
Starting a Family and Mid Management
As you start your family, your money priorities do change a little bit. You will probably be making a little more at this point in your life, but you will also probably be spending a bit more on family related expenses (kid’s aren’t cheap!). As you move into this phase of life, you should consider setting up a solid budget that includes setting aside money into savings.
For investments, Net Worth TV reviews how you still need to be aggressive, but also start balancing out your portfolio with some more conservative investments like bonds. While you still have time to save, your expenses will prohibit as much accumulation as you would have had earlier in life.
Upper Management and Approaching Retirement
Hopefully, at this phase in your life, you may be moving into upper management and starting to think about retirement. These are your peak earning years, and hopefully as your children move out, you will start to have fewer expenses as well. Really focus on saving during these years. You may have the ability, once you reach a certain age, to even contribute more to your 401k and IRA via catch-up contributions. These extra contributions can really give a boost to your portfolio’s value.
You should also be shifting into more capital-preservation type assets, because you don’t want to lose any money as you approach retirement. This will lower the growth of your portfolio, but it will allow you to have more capital preserved should their be turbulence in the markets.
Moving to Self-Employment
At this point in your life, Net Worth TV Show highlights that many individuals consider moving to self-employment or consulting type work. This can be a great transition before retirement – you still have some income coming in, and you have things to do, but it doesn’t have to be full time work.
Another great perk about self-employment is that there are a wide variety of savings and retirement tools available to you that can help you meet your needs. You should still maintain a conservative portfolio, but you should add to it as much as possible.
Net Worth TV on Retirement Planning
Finally, you are in retirement and will need to start using the money you’ve accrued your whole life to live off of. Many people try to do this by living off the interest of the money they’ve saved.
This can be the safest way to live, since you never touch the principal. Other people choose to roll their savings into an annuity, which pays you a set amount each month so you can live. This is an easier way to setup retirement, but annuities can have a lot of fees that should be researched appropriately.
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