Hello everyone, it’ll be a shorter update today since not much has happened this month.
It’s amazing how much easier life gets when you get the weight of debt off your back. This has been the first month I’ve had without a school loan or personal loan payment in years and I can slowly feel the stress float away. I can go out and do fun things again without worrying I’m going to break my budget, and I don’t need to be paranoid anymore that I have enough money in the bank for the horde of lenders dipping into it. I had almost forgotten what this feeling of prosperity actually felt like.
Otherwise, it feels like I’m finally turning the corner financially. I managed to pay off my revolving credit card debt that I picked up after beginning the bathroom remodel in January, and I’m increasing the amount of free cash that I have in my checking account. My tenants have kept paying their rent, so everything is going well on that front. I’ll have to be much more careful with my money now, since I can’t blame a massive home remodel for my budget problems anymore! Once I pay my Dad back for his work on my basement bathroom that will be the last time I will take on any major debt that doesn’t put money in my pocket, Rich Dad Poor Dad-style.
All of that aside though, how much do I really need to become financially independent? (and from there to early retirement). If I used the money in my investment account to pay off half my house I would be able to survive on $14k a year ($23k for expenses – ($10,608 basement rent * 0.9 for vacancy rate)). This lifestyle would need no major sacrifice on my part other than fancy vacations elsewhere in the country or abroad, but would not cover health care or any home/car repair expenses. To hit this I would need $100k to pay off half the house, and another $150k for a major down-payment on a quadruplex (which I’m hoping would net another $15k/yr in revenue). This would take me about 4 years to accomplish…and ugh, that is a long time 🙁 If my stock trading game doesn’t improve I will definitely need to explore other ways to bring more money in.
In the meantime, updated figures are below. For the chart, the green assets and purple debts lines are plotted against the left axis, and the other bars against the right axis. The projected passive income is what I would get if I converted all of my assets to an index fund with a 3% return (the average 7% market gain – 4% inflation). I’m still playing around with this chart, so we’ll see if it stays in this format.
$2.6k in cash ($1.2k previously)
$35.3k in 401k/Roth IRA ($34.6k previously)
$99k in stocks (previously $101k) – in flux due to trading
$116k home equity (House value $300k – Home mortgage $184k) (previously$115k)
$1.6k employee stock contributions ($1.2k previously)
$184k at 4.125%, being paid off at $1400/mo, half from me, half from a mother-in-law unit I rent out) ($184.5k previously)
$7,000 owed to father for electrical work & contractor pay (previously $7,000)
$0 in credit card debt ($400 previously)
$884/mo in rent.