• 02:20:56 am on December 18, 2008 | 6
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    Photo credit: massdistraction

    Mark is income ‘rich’ compared to what he needs to spend; now, imagine adding: wife, children, dog, college fund, bigger house (hence, bigger mortgage, bigger land tax), more food, clothes, it’s enough to make you want to stay single …. is that a dream or a financial nightmare? ๐Ÿ™‚

    Looks like we’ll have plenty of RE and finance=type issues to chew over in the coming weeks and months

    _________________________

    In my last post, I discussed about creating 3 year programs in lieu of a formal MBA program. I’m now ready to venture more into real estate investing, be it in tax lien or investment properties. I did acquire a tax lien a while ago on a small condo and it is now due for redemption. It is time for me to investigate more into this particular property. I will definitely need seek legal advice on this.

    I have been thinking about buying another house and convert my current townhouse into a rental. I was looking last year and did put up a few offers but none of them came through. It is a good thing since the real estate market has been declining. Looks like I might be able find better deals in the next few months. However, the area I’m in did not decline as much. It’s time to go hunting!

    As you can see, I’m going to start with real estate investing first. How am I able to fund these investments?

    Let’s take a look at my current financial health at NetworthIQ.

    I’m fortunate enough not to have any consumer debt. I did have a car loan earlier this year but I paid it off using a HELOC which is at a lower rate. The interest is tax deductible too. HELOCs are great now since I did get a very good deal at prime minus 1. This is a very low 3.0% at the moment. Looks like I’m not likely to pay this off very soon. There is still some equity to be tapped to invest but for now, it is better not to incur more debt.

    Given my current income, I do live below my means. However, all my income is tied to my current occupation. I would like to add some passive income through rentals or other ventures.

    My living expenses are low relative to my income. This does not mean that I live frugally. I spend quite a lot on traveling, going out, parties and on toys. I’m looking forward for a trip to Asia next month! There is definitely a lot of cost cutting opportunities. But I should think about generating more income instead. Right now, I’m thinking about selling a lot of unused toys and items around the house on ebay.

    Currently, I’m saving quite a bit. I see only less than 50% of my paycheck after taxes, deductions and retirement contribution. I think this made me spend less than what I earn since I don’t see the money to begin with. I put in 10% into my 401K, ermm 201K and 15% into the ESPP program. The 401K is not very healthy due to the current market conditions. The proceeds from the ESPP program are usually reinvested in stock investments and Roth IRA. Sometimes, I send money home (overseas) and build up my travel allowance.

     

Comments

  • Diane 7:03 pm on December 18, 2008 | #

    You are definitely on sound financial ground, Mark, and reflect a good understanding of both the need for speed and caution. I look forward to following your journey.

  • Josh 11:31 pm on December 18, 2008 | #

    Mark, you and I are in the same boat as far as the need for cutting out the travel expenses. Just got back from my second trip to Vegas this year.
    Although the trip did give me the opportunity to tell my friends that I’ll be pulling in the excess for a while. Now I just have to actually do it.

  • Adrian 12:09 am on December 19, 2008 | #

    @ Josh – Vegas? Now THAT’S an investment ๐Ÿ˜›

  • Mark 8:37 am on December 19, 2008 | #

    @Diane – It is probably part of my upbringing. I’m not from a wealthy family and the culture I’m from emphasize on saving for the rainy day quite a bit. The older generation been through some tough times. Like my grandfather, being forced to leave China with nothing at the age of 16 and then both generations, grandparents and parents experienced world war II. I still recall some stories and they are definitely a lot stronger than I am. My generation is definitely very lucky – just seen a few recessions, currency crisis and the current financial crisis.

    @Josh – I used to visit Vegas quite a bit too ๐Ÿ™‚ It is a lot of fun but it will get old after a while. There are a lot of other places to go to. You probably have read 4 Hour Work Week where Tim Ferriss mentioned that traveling to some places can be a lot cheaper. Now we just need to implement his business model.

  • Diane 10:48 am on December 19, 2008 | #

    Here, here! I’m all for implementing his business model ๐Ÿ™‚

  • Mark 10:57 pm on January 5, 2009 | #

    @Josh – I’m actually going to Vegas in February! There are definitely pulling in tourists. Cheap airfares and hotels.


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