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#21 User is offline   Jax 

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Posted 19 September 2005 - 02:05 PM

intotheblackhole, on Sep 19 2005, 02:00 PM, said:

I heard that exact same thing when I was a kid. Never listened till I hit 40. Then I had to work my a$$ off to get where I am today. I took a lot of risk and I admit to some luck. But it was still hard work and a massive reworking of my finances.

There were times when my wife was not happy. But we stuck it out and now it is paying off. It was a hard 10 years but the last 6 have been getting easier and easier.

My daughter agrees. We loaned them 12k for their first house.

Unfortunatly my son doesn't share in any of this. He has schizophrenia and lives on the street. He denies we are his parents. But he is in the trust fund if he ever comes around for which we hope and pray.
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itbh: I'm sorry to hear about your son. I'll say a prayer for him and your family. And thank you again for the tips!
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#22 User is offline   Willie Tubbs 

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Posted 19 September 2005 - 02:05 PM

Quote

If folks start thinking this way, like your friend, when they are 25, instead of 40, they will be able to retire earlier, more comfortably, and by saving less.


True, if your goal is to retire earlier. I could have done things in my life to retire earlier, but would it have been worth it? Not for me personally.

But I'd agree with the general message that the sooner you start the better.
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#23 User is offline   Siren 

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Posted 19 September 2005 - 02:07 PM

Iriemon, on Sep 19 2005, 02:49 PM, said:

If folks start thinking this way, like your friend, when they are 25, instead of 40, they will be able to retire earlier, more comfortably, and by saving less.  At 10%, your money doubles every 7 years.  By waiting 15 years, you lose at least 2 double, or 4 x your potential savings.  I too tell kids coming out of school to put a little aside now, if you wait till you are 40, you will be behind the curve.  But better later than never.
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I have a few employees who are fresh out of college. As soon as they become eligible for 401K (after 6 mo of employ), I pester them to sign up. Even if they start small and gradually increase the percentage they put away, at least they are starting their retirement savings earlier rather than having to catch up later in life.
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#24 User is offline   intotheblackhole 

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Posted 19 September 2005 - 02:07 PM

Jax, on Sep 19 2005, 10:22 AM, said:

I'm maxed in my 401(k), but due to recent changes in living circumstances, relied on the old cc's to help me get by.  My car is paid off right now.  My goal is to have the cc's paid off in the next 18 months.  *Tightening Belt*
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We had some tough times also. It was not always onward and upward. But if you keep focued on the long range goal it will happen most of the time.

I have a co-worker who worked hard and saved and now at 50 he has terminal cancer.

There are no guarantees in life.

But planning does pay off in the long run for most people.

And it's a whole lot better than reaching retirement and having to depend on SS ot live on.
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#25 User is offline   intotheblackhole 

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Posted 19 September 2005 - 02:14 PM

Willie Tubbs, on Sep 19 2005, 11:05 AM, said:

True, if your goal is to retire earlier.  I could have done things in my life to retire earlier, but would it have been worth it?  Not for me personally.

But I'd agree with the general message that the sooner you start the better.
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To get 1 million at retirement a

40 year old will have to put in $525 a month to get there.

a 25 year old will have to put in $85 a month to get there.

This is based on no initial investment and the stock market average of 12%.

The earlier the better.

My grandkids are already putting in and one is 20 and the other is 17. As long as you have a job you can put into an IRA if there isn't a 401k available to you.

The key is time is on your side if you are young and against you if you are old.
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#26 User is offline   intotheblackhole 

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Posted 19 September 2005 - 02:17 PM

Jax, on Sep 19 2005, 11:05 AM, said:

itbh:  I'm sorry to hear about your son.  I'll say a prayer for him and your family.  And thank you again for the tips!
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Now you made me cry. I miss him so much and don't even know if he is alive or dead. Every now and then we hear from one of his cousins who sees him. That's our only contact.
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Posted 19 September 2005 - 02:17 PM

intotheblackhole, on Sep 19 2005, 02:35 PM, said:


This is so strange, the accounting firm I work for audits three of the funds you listed (Blackrock, RS Partners, Neuberger/Berman). :thumbsup:
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#28 User is offline   intotheblackhole 

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Posted 19 September 2005 - 02:39 PM

BookGirl, on Sep 19 2005, 11:17 AM, said:

This is so strange, the accounting firm I work for audits three of the funds you listed (Blackrock, RS Partners, Neuberger/Berman).  :thumbsup:
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You should be heads up on those unless you can't invest due to conflict.

I have been in the Neuberger longer than all the rest as it is a very steady performer.

The others have been within the last 5-7 years and are doing very well as you already know.
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#29 User is offline   Jax 

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Posted 19 September 2005 - 02:39 PM

intotheblackhole, on Sep 19 2005, 02:17 PM, said:

Now you made me cry. I miss him so much and don't even know if he is alive or dead. Every now and then we hear from one of his cousins who sees him. That's our only contact.
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:thumbsup: I can't imagine how hard that must be for you and your family. For some reason, it reminded me of that old song:

Quote

May the good Lord bless and keep you whether near or far away
May you find that long awaited golden day today
May your troubles all be small ones and your fortune ten times ten
May the good Lord bless and keep you till we meet again
May you walk with sunlight shining and a bluebird in every tree
May there be a silver lining back of every cloud you see
Fill your dreams with sweet tomorrows never mind what might have been
May the good Lord bless and keep you till we meet again
May you walk with sunlight...
Till we meet again


All I can add to that is: Amen.
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Posted 19 September 2005 - 02:44 PM

intotheblackhole, on Sep 19 2005, 03:39 PM, said:

You should be heads up on those unless you can't invest due to conflict.

I have been in the Neuberger longer than all the rest as it is a very steady performer.

The others have been within the last 5-7 years and are doing very well as you already know.
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Can't invest due to conflict. :thumbsup:
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#31 User is offline   Martin 

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Posted 19 September 2005 - 05:32 PM

Into the Black Hole, of the four mutual funds you cited, only three have a performance history going back as far as ten years. Of these, Black Rock Global Resources averaged 13.27% over 15 years; RS Partners averaged 17.15 over ten years; Neuberger Berman averaged 15.44% over 15 years. The average of these is 15.29%. The fourth one, US Global Accolade, averaged 30.82% a year over the past 5 years, so it is quite possible that you really did achieve a 18% annual return for 12 years. How did you compute that figure?
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#32 User is offline   MADGestic 

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Posted 19 September 2005 - 07:42 PM

intotheblackhole, on Sep 19 2005, 01:51 PM, said:

I am wirting this as a request from some fellow RN'ers that came as a result of another post. I hope that my experience can be of some value to someone. It is not a heroic story by any means and not all people can live this type of life. But maybe there is someone that will see the wisdom in this and will make some life adjustments to make it all happen.  (snip for brevity)

ITBH, I think it’s great that you posted this, sharing those life lessons that led to your own success, and thereby giving hope (and advice) to others that they too can reach for and attain financial security and independence. You (and others who have contributed to this thread) are correct that this takes effort, diligence, knowledge; and very often, significant lifestyle changes. However, once you get into the “habit” of thinking differently, scrimping a bit, and making wise investment decisions, it presumably becomes easier as time goes on.

Folks often like easy-to-remember “bullet points,” so I’m going to add what I think are two of the most important rules of thumb for personal financial success:
  • Accumulate wealth, not things.
  • Live beneath your means.
In your example, you gave up some of the “things”: I sold everything that I owed money on that wasn't needed. My ATV's, PWC's, travel trailer, and so on; and began to accumulate “wealth” (portfolios and rental properties). This is where I think many folks need to think differently… to distinguish between “wealth” and “things.”


Most folks who bought a house 10 years ago are now significantly wealthier** than they were back then, even if they still owe money on the mortgage. That’s because the interest rates on mortgages have been reasonable and the real estate market has trended upward. So they not only increased their equity in their home by paying down the mortgage principal, but the intrinsic value of the house itself has increased.

And most folks who bought a new car 10 years ago now have… well… a 10 year old car.

Lesson number one: Your own home is wealth, a car is a thing.

A coin collection is wealth, a collection of video games is a thing. Quality artworks are wealth, a plasma TV is a thing. A stock portfolio is wealth, a closet full of clothes is a thing.

Make it your goal to accumulate wealth, not things.

**- By “wealthier” I mean a greater personal net worth, not necessarily more cash in the bank. Much wealth will be of the “unrealized” variety. Say you bought a house for $100,000 and in 10 years, paid down $20,000 in principal on your mortgage. All else being equal, you’ve got $20,000 of equity in the house. You could sell it for $100,000, pay off the remaining $80,000 left on the mortgage, and still have roughly $20,000 to put in your pocket. (That’s $20,000 “unrealized” until you sell.) But if the value of the house has gone up to $150,000, and you only owe $80,000, your equity is $70,000. That gain is “unrealized” (or “on paper”) until you sell, but it still counts as WEALTH.

(And I’m not talking about “personal worth” in the spiritual sense.) :thumbsup:


So how can the average person accumulate wealth? It starts with living BENEATH your means. In other words, make it your goal to SAVE money… to EARN more than you SPEND. And the two primary ways of doing this are: Earn more and spend less.

It’s virtually impossible to simplify this enough so that we can discuss it in a thread like this, but I would say that for most folks this means watching their “credit.”

I put “credit” in quotes like that because “credit” cards are probably the worst “wealth-killers” for most folks. Credit cards are one the worst ways to borrow money… which is all they are… they are high-interest lending vehicles for the institutions with YOU as the borrower. If you are carrying credit card debt then you are hemorrhaging wealth. It’s that simple.


ITBH, this is where you and I part ways a bit. Personally, I think it’s very important to maintain a good credit rating. True, “if you can’t afford to pay for it in cash then don’t buy it” is GENERALLY good advice… but even you had to take mortgages to purchase your rental properties, and if your credit rating really sucked, nobody would lend you the money to do that… (or at least not at reasonable rates).

I understand where you’re coming from… credit cards are often the Achilles’ heel for many folks. They seem to think: “I won’t have to worry about this for a while, and can pay it off in increments.” But by doing it that way, that TV which was a “great deal” at $200 ends up costing $300 or more. Using credit cards that way (almost always to purchase “things”) means you actually pay a huge premium… not such a “good deal” after all.

And… a lot of folks don’t know this… but a bad credit rating can also keep you out of certain jobs… including (surprise) the US military. I know someone who signed up and was then told that he had to “clean up his credit problems” else he couldn’t enlist.

The simple answer… (not easy, but simple)… is to pay off your credit card balances every month… which essentially means not buying anything that you cannot afford. The credit card companies might not like that… (they prefer that you pay them outlandish interest rates)… but at least you get to maintain your credit rating and still live within your means.

Credit rating is largely based upon unused credit. In other words, if the credit card company is willing to advance you (say) $3,000… but your outstanding balance is ZERO… other lenders LOVE to see that. They like to see that you are financially RESPONSIBLE… (which also includes paying all your debts and doing so on time). For example (you college kids), don’t ever think that you can “stiff” the phone company just because your roommate was calling Slovakia on your phone. It’s YOUR phone, it’s YOUR responsibility, and not paying them will come back to bite YOUR ass… (which is why your roommate did that in the first place).

I think it’s very important to maintain a good credit rating… not only is it part of being an adult… it’s also an excellent indication of whether or not someone has stolen your identity.


One final note, my friend. Like I said, I think it’s fantastic how you demonstrate that regular folks can attain the “American Dream” of financial independence and security. However, I must admit that I cringed when you began to speak of specific mutual funds as investment vehicles. That’s where you crossed the line from general lifestyle advice to specific investment advice… and that makes me uneasy. Just because these funds worked (and are working) for you doesn’t mean that they are appropriate for everyone.

I’ve spent more than half my life in the Investment Industry… it is my ongoing career… which is why I have to say things like this:

MADG’s Somewhat-Standard Disclaimer: I am not a qualified investment advisor and nothing I say here or elsewhere should be considered as investment advice. These are my personal opinions only and do not reflect professional advisement. Everyone should do their own research and/or consult a trained and qualified financial advisor so as to make the best financial and investment decisions for their own individual and unique situation.

See, that’s why I usually don’t participate in threads such as this… I’m put in the unusual position of saying: “I may have something of value to add but you shouldn’t pay attention to me.”

(Hmmm… I guess that can be said of ANYTHING I post in these forums… but it’s only in threads like this that I am required to add the disclaimer ) :lol:


So, speaking both generally and briefly, those funds which worked for you may not… (almost certainly ARE not)… appropriate for everyone. The 4 you noted are all midcap funds (somewhat risky), and 3 of the 4 are growth funds (very risky). Plus you’ve got that Eastern European fund, which is very likely amongst the riskiest of the risky. Again, it’s wonderful that these are working for you… but by no means does that mean that they will work for everyone.

A couple of those funds have relatively high-fee structures… (2% is certainly not the highest, but there are so many 1%-fee funds available, and fees come right out of your alpha). Also, a couple have 13b1 fees taken out… which are advertising fees… and they can charge those even if they are NOT doing any active advertising. It’s a loophole, and an unethical one at that. I’m not saying that these funds in particular are charging you for something they aren’t doing (advertising)… but it’s worth your time to investigate. (0.75% off the top is money you are not earning.)

Furthermore, are these a general investment or an IRA? Money in an IRA is essentially “out of the tax-man’s hands” (at least until you retire); but if these are NON-IRA investments, there may be tax liability implications. (Again, I’m pointing out how your situation may not be everyone’s situation.) Finally, I can’t help but mention that past performance is never an indicator of future performance. In my opinion, all of this highlights the fact that what works for one does not necessarily work for all.

A hyperlink to a primer on mutual fund investing would be appropriate, I think.

Vanguard

Full Disclosure: The overwhelming majority of my IRA funds are custodied at Vanguard, although I gain nothing by referencing them. This is simply one place to begin your research into IRAs and mutual funds.


All I’m suggesting is that everyone take the time to LEARN about things like investments. Don’t take my advice, don’t take your advice, don’t take that other guy’s advice… and certainly be suspicious of the “advice” of anyone trying to SELL you something… this is where the EFFORT and DILIGENCE come into play. Essentially, if you want to succeed, you have school yourself. Errors are some of the best learning experiences; but when it comes to your hard-earned cash, and when it interferes with your intended goal of increasing personal wealth, mistakes can be quite costly. You have GOT to do your research.


On a more personal note, ITBH, you said your wife is a wiz at real estate, and that is a subject where I need more knowledge. I am (let’s say) “poised for growth” in this area. Even if I do not intend a career in real estate… how can I quickly “learn the game” without getting burned?
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#33 User is offline   intotheblackhole 

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Posted 19 September 2005 - 07:50 PM

Martin, on Sep 19 2005, 02:32 PM, said:

Into the Black Hole, of the four mutual funds you cited, only three have a performance history going back as far as ten years.  Of these, Black Rock Global Resources averaged 13.27% over 15 years; RS Partners averaged 17.15 over ten years; Neuberger Berman averaged 15.44% over 15 years.  The average of these is 15.29%.  The fourth one, US Global Accolade, averaged 30.82% a year over the past 5 years, so it is quite possible that you really did achieve a 18% annual return for 12 years.  How did you compute that figure?
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My accountant said I was making around 18% and that figure just stuck with me. I assume it is an estimate. That seems about right to me as I have been very agressive in my portfolio. I had almost nothing when I hit 40 and needed to do some serious catchup.

I also have some stocks like UHN, ZQK, SRCL, SGDE, LOW, KBH, CTX, PNRA, FAST, ZQK and others. These have done very well. I have had some loosers also but I dump them with stop loss orders. I try to hang in there most of the time as I hate all the taxes I have to pay.

Some of the winners in the past was IDTI and TQNT. Both did very well and they sold in a stop loss in 2000. I kept moving them up as the price went up.

My wife had FSELX and that was a screamer for many years till the 2000 implosion. She has actually made more money than I have with that one stock. Till the crash it was the one of the hottest funds ever.

I had to pull out of it in 1999 and sat in bond funds for a few years then got back into it.
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#34 User is offline   Tikk 

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Posted 19 September 2005 - 07:58 PM

Well I suppose I'm the opposite.

I've always been frugal. At 35 I was debt free, had my annual salary in savings (invested broadly, mostly in stocks / mutual funds), no credit cards, my truck was paid off, etc.

Then 2001 happened. That year I lost my job (and some other personal stuff). I worked in accounting / management / IS, but the dot com bubble burst, the job market became saturated. Seeing as I had so much saved up, I decided to take some time off.

Since then I've decided to go back to college and I'm working part time (same company I used to work for, although I've taken a substantial pay cut). So right now I'm using student loans to fund my tuition. And with the mortgage interest rates the way they are, I sunk a huge chunk of my savings into my house. And I'm remodeling as well, I'm doing all the work myself so that saves money...but Home Depot is getting their share.

My savings is such that I can pay off all my debt with the exception of student loans. Unfortunately, my retirement savings is virtually nil, but I'm hoping to rectify that when I get my degree.
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#35 User is offline   MADGestic 

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Posted 19 September 2005 - 08:03 PM

intotheblackhole, on Sep 19 2005, 08:50 PM, said:

[...] I also have some stocks like UHN, ZQK, SRCL, SGDE, LOW, KBH, CTX, PNRA, FAST, ZQK and others. These have done very well. I have had some loosers also but I dump them with stop loss orders. I try to hang in there most of the time as I hate all the taxes I have to pay. [...]View Post

Make your losses short-term losses, and make your gains long-term gains?

:thumbsup:
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#36 User is offline   FerretFriend 

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Posted 19 September 2005 - 08:27 PM

Intotheblackhole, what fantastic advice!  I love talking about money, and wish we had a forum for it here on RN. 

One EXCELLENT book on making money is "Rich Dad, Poor Dad" by Robert Kiyosaki.  It's a little bit Oprah-esque to refer to a book as "life-changing", but this book really forced me take a hard look at my financial habits and make some huge, beneficial changes.  Anyone who  is interested in changing their financial situation for the better should read this book...it's written in a positive,  light-hearted tone, and is easy to read. 

I just finished making a huge financial turnaround...it was like trying to stop the Titanic from hitting the iceberg, but I did it (all by myself, too).  I graduated from art school at the age of 21 with $15,000 worth of high-interest credit card debt, as well as $30,000 worth of student loans.  My first job out of school paid $12/hour, and I was paying Massachusetts rent with that money. To say it was a bad scene would be the understatement of the year.

I did not receive a penny from my parents, who are horrifyingly bad with money - they've saved absolutely nothing for their childrens' college educations, or their own retirement years.  Long story short: I am now poised to begin saving about $20,000 per year on a not-huge (but MUCH improved) salary.  I have a fat 401k, and just got my first mortgage today.  I have $500 worth of interest free credit card debt left over from when my car needed some major, emergency repairs.  I justified it by saying, "No car, no job, no money!" It'll be paid off by the end of the month.

I've busted my butt, sacrificed & suffered a lot of humiliation for everything I have, so I feel entitled to brag. :thumbsup:  I'm not wealthy yet, but I believe I will be now that I've developed an interest in making my money work for me.

This post has been edited by ferretfriend: 19 September 2005 - 08:30 PM

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#37 User is offline   intotheblackhole 

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Posted 19 September 2005 - 08:30 PM

madg, on Sep 19 2005, 04:42 PM, said:

ITBH, I think it’s great that you posted this, sharing those life lessons that led to your own success, and thereby giving hope (and advice) to others that they too can reach for and attain financial security and independence.  You (and others who have contributed to this thread) are correct that this takes effort, diligence, knowledge; and very often, significant lifestyle changes.  However, once you get into the “habit” of thinking differently, scrimping a bit, and making wise investment decisions, it presumably becomes easier as time goes on.

Folks often like easy-to-remember “bullet points,” so I’m going to add what I think are two of the most important rules of thumb for personal financial success:
  • Accumulate wealth, not things.

  • Live beneath your means.
In your example, you gave up some of the “things”: I sold everything that I owed money on that wasn't needed. My ATV's, PWC's, travel trailer, and so on; and began to accumulate “wealth” (portfolios and rental properties).  This is where I think many folks need to think differently… to distinguish between “wealth” and “things.”


Most folks who bought a house 10 years ago are now significantly wealthier** than they were back then, even if they still owe money on the mortgage.  That’s because the interest rates on mortgages have been reasonable and the real estate market has trended upward.  So they not only increased their equity in their home by paying down the mortgage principal, but the intrinsic value of the house itself has increased.

And most folks who bought a new car 10 years ago now have… well… a 10 year old car.

Lesson number one: Your own home is wealth, a car is a thing.

A coin collection is wealth, a collection of video games is a thing.  Quality artworks are wealth, a plasma TV is a thing.  A stock portfolio is wealth, a closet full of clothes is a thing.

Make it your goal to accumulate wealth, not things.

**- By “wealthier” I mean a greater personal net worth, not necessarily more cash in the bank. Much wealth will be of the “unrealized” variety.  Say you bought a house for $100,000 and in 10 years, paid down $20,000 in principal on your mortgage.  All else being equal, you’ve got $20,000 of equity in the house.  You could sell it for $100,000, pay off the remaining $80,000 left on the mortgage, and still have roughly $20,000 to put in your pocket.  (That’s $20,000 “unrealized” until you sell.)  But if the value of the house has gone up to $150,000, and you only owe $80,000, your equity is $70,000.  That gain is “unrealized” (or “on paper”) until you sell, but it still counts as WEALTH.

(And I’m not talking about “personal worth” in the spiritual sense.)  :thumbsup:


So how can the average person accumulate wealth?  It starts with living BENEATH your means.  In other words, make it your goal to SAVE money… to EARN more than you SPEND.  And the two primary ways of doing this are: Earn more and spend less.

It’s virtually impossible to simplify this enough so that we can discuss it in a thread like this, but I would say that for most folks this means watching their “credit.” 

I put “credit” in quotes like that because “credit” cards are probably the worst “wealth-killers” for most folks.  Credit cards are one the worst ways to borrow money… which is all they are… they are high-interest lending vehicles for the institutions with YOU as the borrower.  If you are carrying credit card debt then you are hemorrhaging wealth.  It’s that simple.


ITBH, this is where you and I part ways a bit.  Personally, I think it’s very important to maintain a good credit rating.  True, “if you can’t afford to pay for it in cash then don’t buy it” is GENERALLY good advice… but even you had to take mortgages to purchase your rental properties, and if your credit rating really sucked, nobody would lend you the money to do that… (or at least not at reasonable rates).

I understand where you’re coming from… credit cards are often the Achilles’ heel for many folks.  They seem to think: “I won’t have to worry about this for a while, and can pay it off in increments.”  But by doing it that way, that TV which was a “great deal” at $200 ends up costing $300 or more.  Using credit cards that way (almost always to purchase “things”) means you actually pay a huge premium… not such a “good deal” after all.

And… a lot of folks don’t know this… but a bad credit rating can also keep you out of certain jobs… including (surprise) the US military.  I know someone who signed up and was then told that he had to “clean up his credit problems” else he couldn’t enlist.

The simple answer… (not easy, but simple)… is to pay off your credit card balances every month… which essentially means not buying anything that you cannot afford.  The credit card companies might not like that… (they prefer that you pay them outlandish interest rates)… but at least you get to maintain your credit rating and still live within your means.

Credit rating is largely based upon unused credit.  In other words, if the credit card company is willing to advance you (say) $3,000… but your outstanding balance is ZERO… other lenders LOVE to see that.  They like to see that you are financially RESPONSIBLE… (which also includes paying all your debts and doing so on time).  For example (you college kids), don’t ever think that you can “stiff” the phone company just because your roommate was calling Slovakia on your phone.  It’s YOUR phone, it’s YOUR responsibility, and not paying them will come back to bite YOUR ass… (which is why your roommate did that in the first place).

I think it’s very important to maintain a good credit rating… not only is it part of being an adult… it’s also an excellent indication of whether or not someone has stolen your identity.


One final note, my friend.  Like I said, I think it’s fantastic how you demonstrate that regular folks can attain the “American Dream” of financial independence and security.  However, I must admit that I cringed when you began to speak of specific mutual funds as investment vehicles.  That’s where you crossed the line from general lifestyle advice to specific investment advice… and that makes me uneasy.  Just because these funds worked (and are working) for you doesn’t mean that they are appropriate for everyone.

I’ve spent more than half my life in the Investment Industry… it is my ongoing career… which is why I have to say things like this:

MADG’s Somewhat-Standard Disclaimer: I am not a qualified investment advisor and nothing I say here or elsewhere should be considered as investment advice.  These are my personal opinions only and do not reflect professional advisement.  Everyone should do their own research and/or consult a trained and qualified financial advisor so as to make the best financial and investment decisions for their own individual and unique situation.

See, that’s why I usually don’t participate in threads such as this… I’m put in the unusual position of saying: “I may have something of value to add but you shouldn’t pay attention to me.”

(Hmmm… I guess that can be said of ANYTHING I post in these forums… but it’s only in threads like this that I am required to add the disclaimer ) :lol:


So, speaking both generally and briefly, those funds which worked for you may not… (almost certainly ARE not)… appropriate for everyone.  The 4 you noted are all midcap funds (somewhat risky), and 3 of the 4 are growth funds (very risky).  Plus you’ve got that Eastern European fund, which is very likely amongst the riskiest of the risky.  Again, it’s wonderful that these are working for you… but by no means does that mean that they will work for everyone.

A couple of those funds have relatively high-fee structures… (2% is certainly not the highest, but there are so many 1%-fee funds available, and fees come right out of your alpha).  Also, a couple have 13b1 fees taken out… which are advertising fees… and they can charge those even if they are NOT doing any active advertising.  It’s a loophole, and an unethical one at that.  I’m not saying that these funds in particular are charging you for something they aren’t doing (advertising)… but it’s worth your time to investigate.  (0.75% off the top is money you are not earning.) 

Furthermore, are these a general investment or an IRA?  Money in an IRA is essentially “out of the tax-man’s hands” (at least until you retire); but if these are NON-IRA investments, there may be tax liability implications.  (Again, I’m pointing out how your situation may not be everyone’s situation.)  Finally, I can’t help but mention that past performance is never an indicator of future performance.  In my opinion, all of this highlights the fact that what works for one does not necessarily work for all.

A hyperlink to a primer on mutual fund investing would be appropriate, I think.

Vanguard

Full Disclosure: The overwhelming majority of my IRA funds are custodied at Vanguard, although I gain nothing by referencing them.  This is simply one place to begin your research into IRAs and mutual funds.


All I’m suggesting is that everyone take the time to LEARN about things like investments.  Don’t take my advice, don’t take your advice, don’t take that other guy’s advice… and certainly be suspicious of the “advice” of anyone trying to SELL you something… this is where the EFFORT and DILIGENCE come into play.  Essentially, if you want to succeed, you have school yourself.  Errors are some of the best learning experiences; but when it comes to your hard-earned cash, and when it interferes with your intended goal of increasing personal wealth, mistakes can be quite costly.  You have GOT to do your research.


On a more personal note, ITBH, you said your wife is a wiz at real estate, and that is a subject where I need more knowledge.  I am (let’s say) “poised for growth” in this area.  Even if I do not intend a career in real estate… how can I quickly “learn the game” without getting burned?
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All very good points. And I am always very careful as to what and how I say things when it comes to money.

I was very agressive and I had little choice as I had almost nothing when I was 40. After cutting my expenses I found that I can live off SS since I will own my home and I already own my rentals and vacation home. So my risk tolerance is higher than most my age.

As for the real estate thing she is good at finding out good deals. She is not afraid to do the research and make low ball offers. She just seems to have a knack at it.

I will tell you our secret that has proven to be a very good plan since the secret seems to be getting out.

We buy distressed homes in rural area's that can be picked up for very low prices.

The key is that there is one constant in the US. That is minimum wage. In the city an average house costs 150,000 depending on where one lives. To make any reasonable investment justification the rest would have to be around $1000 per month. This requires 2 minimum wage earners to make the rent.

My wife found her first house in a rural area on 1.5 acres, 1000 sq ft stick house, new roof, new siding, double car garage, and new floor to ceiling windows. It was going for 49,000. My wife offered 28,000 and the lady took it. We closed in 30 days and it has been rented ever since for $400 a month.

Her next one was on 5 acres and the guy who owned it had bought it a few year ago and then lost his job. It was going to be a vacation home for him and he needed to get out of it real fast. It was a 1000 sq ft stick home on 5 acres with a new septic and a very good well. My wife offered $23,000 cash which was the balance on his loan. He had other offers but financing fell through due to the conditions of the home. He accepted the offer but wanted a certified bank check in 5 days. We had to scramble but we did it and closed in 2 weeks. It is rented for $400 a month.

Her last one was a big one and we have since sold it. It was a big city home and it was more problems than it was worth. It needed lots of work and being a tinkerer with construction I did it all. It was nice but we had too many bad renters and finally bailed. We carry the contract on it and get $900 a month for that.

I don't like real estate. It is too time consuming. We spent a week rehabing the first rental a month ago with new flooring in the kitchen, new door, and a new coating of paint.

All in all we have made money on it and the value has gone up. The area has now been discovered and prices are climbing. I estimate that the value has increased 40%. Both are loan free and we have had them for over 7 years. We have been fortunate to have very good renters and have in turn treated them very well.

One of out renters had a daughter driving the van in Colorado that flipped and 4 firefighters were killed. She was charged with manslaughter and our renter got behind in the rent. We told him to forget catching up and pay for a lawyer for his daughter. He paid is back anyhow even after we told him it was forgiven.

Rentals are a mixed blessing if you don't mind getting a call telling you the sewer had backed up or the window leaks when it rains.
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#38 User is offline   intotheblackhole 

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Posted 19 September 2005 - 08:46 PM

ferretfriend, on Sep 19 2005, 05:27 PM, said:

Intotheblackhole, what fantastic advice!  I love talking about money, and wish we had a forum for it here on RN.

One EXCELLENT book on making money is "Rich Dad, Poor Dad" by Robert Kiyosaki.  It's a little bit Oprah-esque to refer to a book as "life-changing", but this book really forced me take a hard look at my financial habits and make some huge, beneficial changes.  Anyone who  is interested in changing their financial situation for the better should read this book...it's written in a positive,  light-hearted tone, and is easy to read.


Excellent book. I have read it and model my life after it.

One thing I disagree on is the house issue. He says that a house is not an investment. I believe it is. You have to live somewhere and rent does not lead to owning. Plus with the tax breaks on property taxes and interest it makes it worthwhile.

Quote

I just finished making a huge financial turnaround...it was like trying to stop the Titanic from hitting the iceberg, but I did it (all by myself, too).  I graduated from art school at the age of 21 with $15,000 worth of high-interest credit card debt, as well as $30,000 worth of student loans.  My first job out of school paid $12/hour, and I was paying Massachusetts rent with that money.  To say it was a bad scene would be the understatement of the year.

I did not receive a penny from my parents, who are horrifyingly bad with money - they've saved absolutely nothing for their childrens' college educations, or their own retirement years.  Long story short: I am now poised to begin saving about $20,000 per year on a not-huge (but MUCH improved) salary.  I have a fat 401k, and just got my first mortgage today.  I have $500 worth of interest free credit card debt left over from when my car needed some major, emergency repairs.  I justified it by saying, "No car, no job, no money!"  It'll be paid off by the end of the month.

I've busted my butt, sacrificed & suffered a lot of humiliation for everything I have, so I feel entitled to brag. :thumbsup:  I'm not wealthy yet, but I believe I will be now that I've developed an interest in making my money work for me.
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I look at education as a good thing. Worth going into debt for if there is a reasonable possibility that the job will produce a good income.

And congratulations in graduation and the fact that you can see your need to get finances in order.

There's no humiliation in living within your means. This is the trap that Americans fall into and Wall Street loves to see. It is promoted by Madison Avenue. They design ads that make people want to buy and Wall Street reaps the profits.

I am on www.craigslist.org looking for used stuff to finish some remodeling on our vacation home. Almost all the stuff I get for my rentals is used and I can save about 70%. We just got a door from a liquidator that is all wood with a full length sealed double paned argon filled window. Got it for $50. I had to do some sanding to get out a few nicks but hey, it's a $300 door.
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#39 User is offline   MADGestic 

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Posted 19 September 2005 - 09:53 PM

intotheblackhole, on Sep 19 2005, 09:30 PM, said:

[...] We buy distressed homes in rural area's that can be picked up for very low prices. [...]View Post

(It's kinda late and I'm heading for bed... but believe it or not, I was just thinking about the New Orleans area as an opportunity. Lenders and insurance companies will surely be taking possession of properties and will be looking to "turn them around"... likely selling at a discount to speculators... something like that?)
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#40 User is offline   Willie Tubbs 

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Posted 19 September 2005 - 10:27 PM

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but believe it or not, I was just thinking about the New Orleans area as an opportunity.


You're a bit late. Real estate speculators have already descended on New Orleans.
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