• 03:34:55 am on December 12, 2008 | 14
    Tags: , , , , , , , ,

    Once You’re a Pickle

    Diane is embarking on some Making Money 201 activities (part-time teaching; real-estate investment ) and so on … full points for trying! We had quite a few discussions off-line (actually by e-mail, so I guess that’s really ‘on-line’) about RE attorneys, accountants, structures and the like … maybe, we can ask Diane to write a post about her experiences in ‘converting’ her old home into a rental (e.g. why, how do the numbers stack up, how did she go about finding agents/accountants/attorneys/etc.)?

    ____________________________________

    I quit my J.O.B. in October to move to NC to be with my fiance.

    A lot of what we’ve been going thru (and are still going thru) can be seen on “Clean House” shown on Style TV (discovered by accident, but well worth the lessons these guys give)  – trying to let go of things I don’t need anymore in my future – selling or donating them – and reevaluating how much every thing is worth to me.   There is still a lot we could all live without, but for now, we are still moving “down” to one 4-bedroom house (although I have kept my house as an investment).

    Is my debt too much still? Yes, coming down some, but I am moving assets around to do that rather than relying on an income.

    By July, cash flow will need to increase by at least $2500 per month, plus enough for taxes.   In theory I can get another J.O.B., but I want to invest my time in me for this, because I need to do more than that.

    July gives me a short-term goal.  July is when two of my credit card rates’ low rates go way-up-high.  I have choices.  One should be paid off two months before then (that’s the plan).  I may also be able to move the second debt to another card (for a fee and a rate) and then have enough available cash to extend July out and use the cash for another investment.

    Sitting at the beginning of December,

    Expenses:  What are they?  I’ve pared them down a lot, but living with my fiance is giving me a lot of amenities that I am not having to pay for (and had stopped paying for), but we are both trying to watch all the things I’d been watching (lights, water running, spending).  We are looking at which vehicle to sell;  I may drop my cell phone later this month (it’s no longer on contract, so no fee there).

    Here’s what is left:  I am paying for:  mortgage, student loan, credit card loans, expenses for lines of income I’m working to create (RE, writing, Zumba Instructor Network (ZIN)), my own health requirements, and then there are medical bills for the boys, child support payments for the boys, and now orthodontics for one son and soon the other).

    What can I do about them?  I’ve challenged my sons needing a nanny at their ages (old enough to babysit), but agree to support their need for orthodontics.  I could argue the point, but these are my sons and I won’t.  I could drop out of ZIN, but taking Zumba classes in NC would cost more than continuing the membership, so if I only do classes for myself, I’m better off, and if I create classes, I may recoup more than that while basically still doing my own workout (different focus if teaching, but no doubt that I’ll get a workout as well).  ZIN stays in for both practical and health reasons.

    Insurance costs more in NC.  I also am told I’ll be charged tax for the value of my vehicle when I register it here, so good chance that mine will be the one sold.  I’ll miss it a lot.  The money is also already ear-marked (as the minivan was) for my boys’ eventual need for their own cheap wheels, so I will set aside a certain amount for them, and the rest I can use to invest or pay down debt

    Looking ahead to Making Money 201, I am evaluating properties, having enlisted the help of a realtor, and considering the other options I have to have in place. I believe I can find angels, but am looking to find properties that will justify the traditional/conventional lenders who will probably lend the bulk of the money for the property, yet I am open to more creative ways and am looking for those as well.

    Savings? I have some, but I am moving it from tax-deferred accounts to paying bills now, so they are going down. A 401k, a traditional IRA with some money in McDonald’s stock, but everything else is in cash, and the 401k will rollover into the IRA soon.

    Other considerations – looking at creating other avenues of income. I have a goal of having $3600 more income per month by July. Not a lot with a J.O.B., but doing it all by and for myself (as a foundation to bigger things) is where I want to be doing it. I feel going back to a full-time J.O.B. would be a cop-out.

    In the meantime, I may substitute teach. This fulfills me in two ways: I feel like I am giving back to the community – to the students and the teachers as well as to the parents whose kids are going to whichever school district I am helping. I think many business folks should try to put in time substituting at a school because there is a lot of knowledge that can be handed down from someone who’s been there doing that kind of work (or some kind of work other than teaching because most of the students will not become teachers). I don’t expect or want this to be full-time 5-days a week, so I am not thinking it will provide the bulk of my financial needs, only a small part.

    I am also going to pursue writing as a career during this time – a full-time job with pay – using and thereby learning internet and marketing online strategies (that’s what the eHow article about “How to Justify Buying a Buggati Veyron” was about – testing an internet marketing theory someone else on eHow had espoused.) There are different ways to go with that, and I need to choose one.

    Although writers faced with a blank sheet of paper may be overcome with writer’s block, there is also something to be said about a blank sheet of paper.

    Like a young child, a blank sheet of paper still has a myriad of possibilities for what it may become. Once ink is set, the paper has changed. A bolt of fabric is the same way for a quilter. Once cut, it cannot be put back into the form it once had and the myriad choices are reduced. Once you’re a pickle, you can’t go back to being a cucumber.

    Now is the time for me to reduce the pathways available to me and begin concentrating on those for which there is time, interest, and ability and which will move me along toward meeting my Life’s Purpose.

     

Comments

  • Debbie 9:46 pm on December 12, 2008 | #

    Diane I think you will find earning money writing online is not overly difficult – although you don’t necessarily have to do it in the form of a full time job (unless you just meant full time hours). You can freelance and work on contract, which allows you to pick and choose your hours and projects and clients rather than join up with one employer and given the rest of your plans, think you would prefer contracting and selecting your own clients over writing for one employer.

  • Adrian 11:32 pm on December 12, 2008 | #

    @ Diane – here are a couple of useful resources for you:

    http://www.makemoneyfromwriting.com

    http://writeandpromote.com/

    … they come from a highly credible source 😉

  • Lee 12:24 pm on December 13, 2008 | #

    Diane I’m doing some writing for http://www.igomogul.com you start out pretty slow but at least it gives you some encouragement along the way. And I agree with Adrian about http://www.makemoneyfromwriting.com I was with them for a very short time but learned a lot.

  • Diane 3:30 pm on December 13, 2008 | #

    Thanks everyone for the suggestions!

    @Debbie – you’re right; I’m not looking to work for an employer. I did project work at my last job and really enjoyed it (and even wanted more flexibility, like telecommuting from NC, which I did during the summer a lot – being in NC or Kansas City or wherever I went for awhile that was longer than I could make-up in time in the office). So, I decided to devote these next six (or so) months to doing things just for me, which would mean dividing time between the things I want to do as well as things that can help this time period last longer 🙂

    @Lee – Why did you stop working with that site? What did you find you learned from it? Did it take more of your time right now than you have? That is what I was seeing with many of the other things I wanted to learn and be better at – my “J.O.B” was interfering with my time to do that. Now, let’s say there are other considerations, but we are still working things out here. Neither of us have lived with someone else for about the same number of years, and we have too much stuff and different decorating ideas and different working space layouts and different ideas of what “clean” is (I can live with comfortable; he likes immaculate; I’m allergic to cleaning products; he’s allergic to dog hair…. I feel a song coming on…) 🙂
    I’ll be gone for the beginning of the week; may be able to access (new wireless set-up in Ohio that I’ll have to get hooked into yet) but may not. Will know when I get there.

  • Jeff 8:21 pm on December 13, 2008 | #

    Di,

    I hope I don’t come across as being critical, but I don’t fully understand the circumstances that are driving you to draw down your tax deferred investments (IRA, 401K etc.)

    I’m not a legal or tax expert, but if memory serves me correctly, taking early withdrawals (before age 59.5) requires taxes to be paid at your current tax rate and comes with a 10% penalty.

    It would have to be pretty dire straits for me to go after my 410K and IRA accounts before that age. Have you considered a 401K loan? Many programs allow you to borrow a significant amount of money from your account. The best part here is that you payback yourself (with interest) and I believe w/o the penalty mentioned above.

    Just my two cents. Good Luck,
    Jeff

  • Lee 9:40 pm on December 13, 2008 | #

    @Diane – the http://www.makemoneyfromwriting.com issue to be honest was related to some difficulty with my local bank and the pay pal acount. Rather than try and work it out I just “gave up” and decided that perhaps the time wasn’t right to work with them. Hard to believe I went from there to being a part of 7m7y.
    Even though I was only involved for a few short months, I did learn some very basics that I needed to know, everything from how to set up my home office, to a better understanding of what it would take to actually become a writer. I was also pointed toward several web sites that paid and I was constantly reminded that even though I wouldn’t make a lot of money right off it is possible to break into the writing field. Basically I was given great confidence.

    http://www.igomogul.com provides for me the kind of relationship that encourages me and fits my style and interests.
    Finally it was through Make Money From Writing that I was introduced to the 7m7y community. Once you check out the website for yourself, I think you’ll understand what I mean:)

  • Adrian 5:05 pm on December 14, 2008 | #

    @ Jeff – Nice idea; you just stack the options against each other by cost: credit card loans w%; car loans x%; ‘borrow’ against 401k y%; cost of withdrawing 401k z% (= taxes + penalties).

    Of course, the 401k cash-out is a ‘one off’ cost, so you will need to divide it into the number if years required to ‘pay it back’: a simple way to think about this: it will take me 4 years (say) to pay of my c/card loan at (say) 19% p.a. … total interest = [use an online calculator] and compare that to the cost of withdrawing sufficient cash from the 401k to cover. Not totally accurate (time value of money, and all that) … but, close enough.

    Borrowing against your 401k is easier as it comes with an interest rate (I’m not sure what the governing rules are around this?), so you should just be able to compare interest rates and fit it into your Cash Cascade:

    http://7million7years.com/2008/12/09/the-cash-cascade-tm/

    @ Lee – I found out something interesting: http://www.makemoneyfromwriting.com is actually Debbie’s site … I was trying to break my own rules and give her a subtle ‘plug’ (since she’s no longer one of the 7MITs it was the least I could do); the thing that I just found out was that you (Lee) came to this ‘experiment’ as a referral from there! Karma and/or The Lord works in mysterious ways 😛

  • Lee 9:12 pm on December 14, 2008 | #

    @Adrian – Hmmmm you think?

  • Adrian 11:08 pm on December 14, 2008 | #

    @ Lee – “Hmmmm” means that I think I’m right about Debbie but wrong about you … I’ll just mind my own beeswax from now on and stick to ‘Millionaire Making’ 🙂

  • Lee 9:52 am on December 15, 2008 | #

    @ Adrian – I hope being wrong about me doesn’t cause trouble for the journey.

  • Adrian 10:51 am on December 15, 2008 | #

    @ Lee – You’re one of the millionaires that I hope to be ‘making’! 🙂

  • Mark 7:37 pm on December 15, 2008 | #

    @Jeff – I don’t think you can take a loan out of your 401K unless you are still employed with the employer that sponsors the plan. It is a good option depending on situation but it does come with a risk where you need to pay off the loan when you leave the employer – willingly or not.

  • Diane 10:00 pm on December 15, 2008 | #

    Thanks for all the concern, guys! Mark makes two good points, the second one being that you repay it. They both make the assumption (which Adrian’s math will prove/disprove or befuddle) that the money should be in the 401k anyway. As of now, my plans are to roll it over to an IRA, but it may be possible to take it in a different route. The cash is simply cash I saved and which I need now. Income is what would offset the need for that, but it is my money. The 10% penalty is less than other penalties that could be incurred (like losing 40% in the 401k versus 30% – didn’t I hear some folks lost 75%? – I locked in at cash earlier than most because I knew this was an option I was considering.)
    Adrian, I also wonder about that ‘breaking your own rules’ thing….hmmmmm

  • Diane 10:02 pm on December 15, 2008 | #

    Also, the tax rate will vary depending on which year I take it out — 2008 and 2009 — as I expect less income in 2009 and that will also give me other tax deductible entries (my student loan(s) for example, which have not been tax-free in the past few years).


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