Hey everyone. I've been lurking here for about a month and I finally decided to join the forums. First of all, thank you Jacob for opening my eyes to this new mindset. I saw a link to your blog in Reddit's Frugal section and I got sucked in by your blog. Before now I was a consumer electronics junkie, specifically Apple products. I currently own an iPhone 3G, 2 iPod shuffles, an iPod nano, 2 MacBook Pros, an Airport Extreme router, and an older Apple TV. Not to mention my non-Apple products like the Kindle, Xbox 360, flatscreen TVs, etc. It really makes me sick looking at it all now. I haven't touched two of my iPods (I can't even find one of them) in about 6 months. One is still in its case. Luckily, Apple products have good resale value, so I should be able to get 70% of my money back on most items.
Currently, I am stationed in Afghanistan so I am taking this time to read through the entire blog and start on several personal finance books. I have since read Rich Dad, Poor Dad (on Jacob's recommendation in one of his posts), the 16% Solution (a book about Tax Lien Certificates, mentioned in RDPD), and I'm now burning through the Intelligent Investor. As I read these things, my eyes get wide wondering why the heck I bought some of the stocks I have in the past. I had no clue what I was doing other than speculating. Now I feel far more confident in my future investments.
Due to my deployment, my savings rate is pretty high. I make about $60K a year over here (income tax-free, but I still pay social security.) I'm also a resident of TX, so no state income tax. My bills are as follows:
$455/month for my 2009 Prius.
$100/month on car+renter's insurance
$195/month between two storage units
$700/month in child support
So, about $1450/month in bills vs $5k/month income = 71% save rate. When I get home next month everything will change drastically though.
1) I'll be selling my Prius and buying an older Honda or Toyota outright.
2) I'll be dropping car insurance down to liability only.
3) I'll be paying rent on a 2br apartment with my gf and a roommate. The apartment is 6 miles from work, so I'll be buying a bicycle to get to/from work each day.
4) The storage units will be cleared out.
5) Adoption paperwork should go through alleviating me of the child support.
6) I'll have to pay utilities (electric, water, internet) on the apartment.
7) My income will drop. I'll have to pay income taxes again and I lose 875/month in extra deployment pay.
8) I'll have to buy my own food.
My goal is to get to 85%. I will start a journal through these forums so I can help motivate myself and to reduce the length of this post (since it's already huge). My secondary goal is to save enough to purchase a house outright in Fayetteville, NC and rent it out. I can purchase one for 85k and rent it for 850/month. I think that's a good ratio.
Anyway, thanks for reading and thank you guys for opening my eyes to a life of freedom from consumer obsession.
I'm a US Soldier taking the first few steps toward FI
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happyhippo13
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- Joined: Wed Jun 22, 2011 12:03 am
I'd also like to add that while I haven't bought the ERE book and simply stick with the blog, I feel I make up for it. Whenever I'm going to buy anything from Amazon, be it books or dog food or whatever, I come back here and click on one of the links to Amazon through this site. I read in one of his posts that Jacob gets a few percent of the purchases whether they are what he linked to or not. It doesn't cost me anything, but it still allows me to show my appreciation.
Thanks again Jacob
Thanks again Jacob
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Monsternaka
- Posts: 29
- Joined: Thu Jun 09, 2011 4:01 am
@happyhippo13 It sounds like you're doing great so far on your journey to FI! I think you should buy the ERE book for your own personal growth - I am reading it for the third time right now and I still feel like I'm learning so much about how to live a better life. The blog is certainly great too, but the book is a whole new level!
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happyhippo13
- Posts: 8
- Joined: Wed Jun 22, 2011 12:03 am
Welcome.
A couple devil's-advocate questions:
Could you sell your Prius, and then go car-free?
Will you surely be in your next location for at least a year? I ask because my impression is that soldiers move often and it's hard to set up a conventional apartment for less than 12 months due to leases and internet contracts.
I don't like the idea of being a lessor and lessee at the same time; it seems overly complicated. I'd rather buy a multifamily home (duplex/triplex), live in one unit, and rent the others. Kill two birds with one stone and cut out the middleman.
A couple devil's-advocate questions:
Could you sell your Prius, and then go car-free?
Will you surely be in your next location for at least a year? I ask because my impression is that soldiers move often and it's hard to set up a conventional apartment for less than 12 months due to leases and internet contracts.
I don't like the idea of being a lessor and lessee at the same time; it seems overly complicated. I'd rather buy a multifamily home (duplex/triplex), live in one unit, and rent the others. Kill two birds with one stone and cut out the middleman.
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jacob
- Site Admin
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- Location: USA, Zone 5b, Koppen Dfa, Elev. 620ft, Walkscore 77
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@happyhippo13 - I would say that very little of the book's content is derived from the blog. It's not really fair to compare the two beyond the fact that the subjects are identical and that they were both written by the same person. The treatment is completely different. It's like comparing a subscription to Popular Mechanics with the curriculum for a small engineering degree
However, reading through the blog archives first is a good idea. If you do that, do read the comments as well. They comprise at least half of the good stuff.
Anyway ... I would be moderately careful about those tax liens. I looked into them once and it seems that the regulations vary from county to county + there's quite a bit of footwork involved. The effort is one reason the yield is so high.
A lot of your development as an investor is about figuring out who you are [as an investor]. For example, I make my investments on a qualitative basis by putting lots of "stories" together from many many different sources. This makes me good at spotting/calling macro trends and sector trends. It took me a few years to realize that that was were my strength is. I still do some basic balance sheet analysis but not beyond looking at ratios and knowing how to spot red flags. When you read all these investment books realize that you're typically reading the author's autobiography: What worked for him. It is a good idea to read tons of different books by successful investors, but it is even better to read fundamental stuff---essentially fundamental statement analysis coupled with PV and FV. Between the two you just need some simply ratios to compare and connect the two. Most investors differ in what kind of rations they find particularly important e.g. P/S vs P/E or P/B. Whether yield is important or EBITDA/EV. In general different valuation methods work for different types of companies. You'll find your favorite. Also, you might have heard that traders often read strategy books like Sun Tzu or much more relevant [in my opinion], The Book of Five Rings. There's a good reason for that. The personal development, that is, the psychology, in the two cases is quite similar even as the "weapons" and the time scales are as different as can be.
Hmmm ... maybe I should write that investment book after all...
However, reading through the blog archives first is a good idea. If you do that, do read the comments as well. They comprise at least half of the good stuff.
Anyway ... I would be moderately careful about those tax liens. I looked into them once and it seems that the regulations vary from county to county + there's quite a bit of footwork involved. The effort is one reason the yield is so high.
A lot of your development as an investor is about figuring out who you are [as an investor]. For example, I make my investments on a qualitative basis by putting lots of "stories" together from many many different sources. This makes me good at spotting/calling macro trends and sector trends. It took me a few years to realize that that was were my strength is. I still do some basic balance sheet analysis but not beyond looking at ratios and knowing how to spot red flags. When you read all these investment books realize that you're typically reading the author's autobiography: What worked for him. It is a good idea to read tons of different books by successful investors, but it is even better to read fundamental stuff---essentially fundamental statement analysis coupled with PV and FV. Between the two you just need some simply ratios to compare and connect the two. Most investors differ in what kind of rations they find particularly important e.g. P/S vs P/E or P/B. Whether yield is important or EBITDA/EV. In general different valuation methods work for different types of companies. You'll find your favorite. Also, you might have heard that traders often read strategy books like Sun Tzu or much more relevant [in my opinion], The Book of Five Rings. There's a good reason for that. The personal development, that is, the psychology, in the two cases is quite similar even as the "weapons" and the time scales are as different as can be.
Hmmm ... maybe I should write that investment book after all...
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happyhippo13
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- Joined: Wed Jun 22, 2011 12:03 am
It may be possible to go car-free, and since you mention it, I will put a little more thought into that. It would be tough, especially considering the weather in Fayetteville is rather temperate. I keep trying to write down a reason why I *NEED* a car, and most of it can be explained away with convenience. I will definitely consider this more.
As far as being somewhere for more than a year goes, my schedule is a little topsy turvy for the next few years. I go home to NC at the end of July. In January 2012, I go to Monterey, CA for language training (Chinese). May 2013 my language training is up, and I will have a little over a year left on my contract (Nov 2014 is the end of my current contract.) Where I go after Monterey will be unknown until January 2013 or so. I do however understand the real estate and rental market in Fayetteville very well. I know that 850/month rent on a 85k house is a very good return, especially in such a strong rental market. Fort Bragg is growing due to BRAC consolidating smaller bases into bigger bases. Soldiers are guaranteed to get paid (as long as politicians agree on the budget that is), and their chain of command can dock their pay if they don't pay their bills. Even if I pay a property manager 10%, I still come out with a good return. The duplex/triplexes in Fayetteville tend to be in bad neighborhoods and draw much less rent than a single family home. It really is a very unique and interesting market. I won't be able to actually generate enough cash to buy the property until I'm in CA, but I'm keeping my eyes fixed on Fayetteville for now.
Thank you for your thoughts, and I always appreciate a devil's advocate keeping me on my toes and providing new perspective.
As far as being somewhere for more than a year goes, my schedule is a little topsy turvy for the next few years. I go home to NC at the end of July. In January 2012, I go to Monterey, CA for language training (Chinese). May 2013 my language training is up, and I will have a little over a year left on my contract (Nov 2014 is the end of my current contract.) Where I go after Monterey will be unknown until January 2013 or so. I do however understand the real estate and rental market in Fayetteville very well. I know that 850/month rent on a 85k house is a very good return, especially in such a strong rental market. Fort Bragg is growing due to BRAC consolidating smaller bases into bigger bases. Soldiers are guaranteed to get paid (as long as politicians agree on the budget that is), and their chain of command can dock their pay if they don't pay their bills. Even if I pay a property manager 10%, I still come out with a good return. The duplex/triplexes in Fayetteville tend to be in bad neighborhoods and draw much less rent than a single family home. It really is a very unique and interesting market. I won't be able to actually generate enough cash to buy the property until I'm in CA, but I'm keeping my eyes fixed on Fayetteville for now.
Thank you for your thoughts, and I always appreciate a devil's advocate keeping me on my toes and providing new perspective.