What Can you do with $1,400 a Month?


I don’t know about you, but for me, not much. But according to the Social Security Administration, that is approximately the average monthly benefits that retired seniors were receiving as of December of 2016. This highlights the importance of having limited reliance on Social Security income later in life. It is no longer enough to have something to supplement Social Security, but it is looking more and more like Social Security itself is the supplement rather than the main source of income. Currently, we spend a third of that amount in my household for food per month. It is imperative that we plan appropriately if we want to maintain a decent standard of living. We do not have to live lavish lifestyles, while that would be nice, but it would also be rather unfortunate if we worked for 40+ years and ended up living in squalor in our old age.

Although I am relatively young, I place great value in planning for retirement. After all, due to the effects of compounding, time is not only of the essence, time is our friend, so we must start early. The more time we have, the more opportunities there are both for growth and for recovery in the event of a downturn. The time is now to build that solid nest egg. Barring an accident or illness, I have at least another 30 years of work left in me, 31 to be exact. I have been actively saving for retirement since June 2007. That is 41 years of full time work where wise lifestyle choices and prudent investments will come together to ensure that I live the life that I earned throughout my working career. Note that I didn’t say the life that I wanted. Because when it comes to being retired, you don’t get the life you want, you get the life you deserve. As harsh as it sounds, it is our reality.

Different practices both as a result of changes in our political landscape and employers’ decreased willingness to contribute to their employees lifestyle, has drastically modified retirement outcomes. There are fewer and fewer pension options for people who dedicate their lives to serving the public or helping advance companies. Most of our futures now depend on market volatility. Even those with pensions are now beginning to supplement their defined benefits with additional investments in 401ks or 403bs.

I know there is an older segment of our population that reasonably had expectations for a pension since that was the practice at the time. Unfortunately, things started changing later in their careers and they did not have the time to save enough to bridge the unanticipated gap. There are also changing factors like longer life expectancy that plays a significant role in the “nasty surprise” our seniors face when they began to outlive their funds. For example my former roommate actually told me that her grandmother outlived her retirement funds by 14 years. While she may have planned, she didn’t necessary plan to live to be 90 because back when she was in the working world, that was unheard of.

So we’ve identified the problem, but what steps are we taking to make sure we don’t fall victim to a lack of planning? Here’s what I’m doing:

Traditional IRA: I rolled over my 401k into a traditional IRA from a previous job approximately 3 years ago and today I contribute to it monthly.

401k: Unfortunately, this new job no longer offers a match but I can still save pre-tax so I started out by contributing $25 a pay period and increased it gradually until it reached 10% of my income.

Pension: I am eligible for a pension at age 55 if I work at least 10 years and the amount I am eligible to receive increases every year I work past the 10 years. I will most likely work at least the 10 years to ensure that I become eligible.

Real Estate Sales (Today): Selling real estate is a way of boosting my Social Security Income because the Self-Employment Tax that I pay out of my real estate income contributes to my social security payments.

Real Estate Sales (Later): I also plan to continue doing part time real estate sales a few years after I retire from my regular job. This will supplement my retirement income for the first 5-7 years delaying any distributions I will have to take to allow my investments to grow further.

Rental Properties: They are the gift that keep on giving. They don’t require much effort. As I get older, I will probably spend more money to outsource some of the services so I will no longer have to deal with tenants, but by then, my mortgage will be gone and my rents will likely increase so I don’t anticipate a significant drop in my margins.

Reduce Expenses: I will be doing my best to avoid debt, I will consider downsizing to one car, and my living expenses should decrease significantly as the mortgage on our primary residence will be gone.

What are you doing?


Lil’ Ugly: Driving my Way to Financial Freedom


Actual car, not pictured

That’s my mom’s nickname for my car: Lil’ Ugly. She came up with that a few weeks ago. I don’t know if she’s just sick of the multiple dents and scrapes peppering the body of my beloved 2008 Honda Accord, but she has been on a pretty aggressive campaign to sow discord between me and my road buddy.

I am what you call a road warrior. I easily put 20,000 miles a year on my car. In my day job as well as my work with real estate, I do a lot of driving. While Massachusetts isn’t a very big state, it’s not that hard to hit the 20k club both a a real estate agent and a landlord running to and from properties. In all of these years and miles, my faithful commuting partner has remained loyal, offering great gas mileage and reliability.

I haven’t had a car note in 10 years and that has allowed me to save a tremendous amount of money. My husband’s car which is more recent (and in much better shape than mine) was paid off a year and a half early. So I am in no rush to jump into another car note situation, even though my car is becoming a topic of conversation every time I pull up. Instead of allowing it to stress me out, I revel in telling the stories of how I got each dent, scrape, chip and rust:

“This one is from when I was pulling out of the garage while steering with one hand and holding a water bottle in the other.”

“Picture it, Museum of Fine Arts, 2011. Hit and run.”

“I came out of the mall one day and I had this dent. Someone must have opened their door a little too hard.”

But how do I manage to not let the gentle teasing get to me? Well, it does get to me. I just dry my tears with the stack of thousands I save every year from having a reliable paid off car. I sob in my stock portfolio and wipe snot bubbles with my early retirement fund. Devastating…

Here’s what my car has cost me (besides gas) since I’ve owned it:

New tail lights: $15

New wipers: $30

New Tires: $500 x 2 = $1,000

Quarterly oil change (includes filter change, fluid top off and tire rotation): $40 x 4 = $160 annually

New brakes: $300 x 3 = $900

Service every 35k miles (currently at 137k so approximately 4x) averaging $500 each: $500 x 4 =  $2,000

That’s a total of just over $5,000, which means my car has cost me less than $75/month to maintain it. Meanwhile, others continue to pay $300-600/month on a car note, plus higher insurance premiums and excise taxes for those who lives in states with personal property tax (nearly 10 times my maintenance costs) just to be seen in a nice car. Now, in all honesty my husband’s car is much nicer and we do have that as a back up in the event that we need to go somewhere that my car is not respectable enough, so maybe that’s where my complacency comes from. If you are single or are in a one-vehicle household, you might want to have something nice in case there is an important affair to attend. But that’s still not a good enough reason to buy the most expensive car you will get approved for.

Just because the dealer says you can, doesn’t mean you should. If the key to success is living well below your means, it doesn’t make any sense to live at, or even above your means. Sure, I could afford a $500/month payment, but by refurbishing my old girl at the cost of $75/month, I’m saving close to $5,000 a year which I can put towards other ventures.

I do have to acknowledge though that I made a good decision early on that continues to pay dividends years later. Honda vehicles are known to be reliable and for that reason tend to have low cost of ownership as well as maintaining their values better than other cars. Although I can’t escape a new car for ever, I think there are enough Accords on the road with 200k+ miles to give me hope that my homie and I might be together at least another year if not longer.

Prey to Play: Exploiting Black Misinformation


In a country built on a legacy of race-based abuse and marginalization, it should be a surprise to no one that segregation was the norm until HUD decided to outlaw discriminatory norms that after several decades (excluding centuries of slavery since “property” cannot own property) of people of color, mainly blacks, being locked out of financial markets. Then redlining moved from exclusionary practices to predation. As recently as the early 2000s, communities of color were still targets for predatory lending practices, which do nothing to alleviate the inequalities we continue to witness between different demographics regarding generational wealth. However, I am becoming just as alarmed by the defeatist attitude and victim mentality of some black people as I am outraged by the systematic and oppressive treatment perpetuated by powerful institutions.

Thanks to the internet, everyone, including myself, has a soap box. High speed internet and free platforms has given rise to a multitude of different social justice movements, of which, many are catalysts for change, some are questionable and some others I find without merit. Among those that I find to be without merit, are those that really call for what seems to be throwing in the towel and making no efforts toward self-improvement because after all, the boot is on our neck, so why should we even bother breathing? Let’s just hold our breath and die right here. While this might be a simplistic summarization of it all, I struggle to extract any other point from the message when the systemic oppression is continuously highlighted with any educational effort made to provide solutions to the problem.

“We are kept out of financial markets! We don’t own homes! We don’t have infrastructure in our neighborhood! We don’t have retirement accounts!”

But, there is no effort to save, to attend a home buyer class, to build a business to request a pamphlet from the employer about what 401k plans are available. Meanwhile, anyone who makes an attempt at providing the information is quickly labeled “classist”, tool of white supremacy and is bombarded with an overwhelming list of excuses reasons why they can’t get a job, save money, have decent credit, own a home, travel, etc.

Everyone is complaining about what are real problems, but do so without seeking real answers. Identifying the concerns are a first step but not even half of the battle. Education followed by action are still necessary to reverse course. Although, sometimes I can’t help but wonder if the e-SJWs actually want to see changes.

They might very well be afraid because struggle, while uncomfortable, is not unknown so there might be a sense of safety there. Struggle can be used as a crutch to escape accountability. At the same time, there is also the possibility that they might  run out of discussion topics that will generate adequate traffic to their pages and build their following. That pool of fans is actually a critical source of donation money for those who chose to crowdfund their lives rather than work. If their entire platform is built on enumerating the ills of the community, what will they talk about when most people have taken definitive steps towards self-improvement? To me, that in itself is a form of exploitation. That is the equivalent of not teaching a man to fish, not even giving him a fish, but instead, complaining about how hungry you both are just because you want company. It is unfair and self-serving to keep people ignorant in order to build a platform off their misinformation. With the accessibility of the internet and the amount of people willing to provide the right information for next to nothing, it would probably be less work-intensive, and definitely be less abusive, to get a job than to keep our peers misinformed.

We shouldn’t encourage mediocrity just because the playing field is not leveled. Just because we can’t close the gap, doesn’t mean we shouldn’t try and bridge it. After all, the world doesn’t end with us after we are gone. There are still future generations for whom we can make the world a little better. Our forefathers who fought for freedom did not get to live to see integration, but they laid the ground work for the civil rights movement. Doing anything less than putting up a good fight is regression. We have to do better. Black exploitation isn’t suddenly fashionable because the perpetrator is not white.

Your 7-Day Guide to Financial Discipline


While you can’t strike it rich in 7 days, you certainly can organize your life enough in 7 easy steps (1 per day) to improve your financial management skills.

Monday: Maximize your retirement contributions, either to the maximum amount you can afford or to the IRS limit. If you have not yet started contributing, do at least the minimum that will get you a company match.

Tuesday: Create a budget. Budgeting is the building block of financial freedom. Start based on the new amount you will have left over in your paycheck after you’ve changed your retirement contributions.

Wednesday: From your budget, you will of course categorize a portion of your income as savings. Set up an automatic transfer that will happen around the same time every month. Saving in autopilot mode is the least painful way to set money aside because you don’t have to think about it.

Thursday: Set calendar alerts of all your upcoming bills. Nothing is more damaging to your finances like late or missed payments. They negatively affect your credit score reducing your chances of getting the most favorable rates and you face the potential of late fees that will chip away at money that you need to hold on to. Having your alerts pop up a day or 2 in advance if you’re paying electronically or a week in advance if you’re paying by check, will make sure you stay on top of everything you owe.

Friday: Clip coupons and know your cash back opportunities. I am not a fan of processed foods so I cannot always escape a high grocery bill. However, even fruits, vegetables and certain grains go on sale, particularly if they are in season. Familiarize yourself with the circulars throughout the week and clip some coupons. It will help you stay organized and maximize your savings.

Saturday: Set some goals for the upcoming week. Having specific goals gives us something to strive for and motivates us to improve on our previous efforts. Whether you want to start small by saying you will make coffee at home every day for the upcoming week to save money, or you decide on something more long term like paying off your credit card debt, setting goals will keep you motivated.

Sunday: Meal prep for the week. The markup on prepared foods is brutal. If you eat out regularly, you will hate yourself when you see how much it costs you monthly or even annually. The easiest way to avoid temptation so you can resist the convenience of prepared foods is through advance preparation. While you may either run out of food or get sick of eating the same thing, bringing lunch 3-4 days a week will still yield a better outcome than buying lunch 5 days in a row.

Persistence, Patience, Purpose


We grew up in the age of microwaves, airplanes and high speed internet, which means we want everything yesterday. The same is true for our financial security. However, no matter how quickly we can download movies or get from one coast to the next, we have to accept that short of an inheritance or the Mega Millions, we have to build our success one block at a time.

Having the level of comfort that we want, does not happen overnight. We must first set goals to have something to strive for (Purpose). But we will surely face obstacles, and worse yet, failure. We must continue to push forward in the face of adversity (Persistence). Falling short of our goals is not a condemnation of  our plan itself but an indication that our approach was not the correct one. But most importantly, we have to be able to wait to reap the fruits of our labor (Patience). Rome was not built in a day, neither will your first million. Few great successful self-made millionaires saw overnight success. While it does get easier over time, and the second million may be earned overnight (because it takes money to make money), your first break won’t happen that quickly.

These are the 3 Ps of success that will help you keep a fourth one in mind: Perspective.

Financial Insecurity is Back in Style


If you were reading this blog last year, you should remember this story.  Since this is an old story, you probably figured that, better late than never, but she has finally turned her life around. After all, she is (even) older and wiser and has faced enough challenges in her life to have learned her lesson. If that’s what you thought, you thought wrong. The money nightmares are back.

Back in March she bought herself a brand new SUV. Hot off the lot with all the bells and whistles: leather seats, GPS, sunroof, etc. Given her poor credit and the high cost of the car, she’s looking at a $480 monthly payment not including insurance which is another $250. Two weeks ago, she slipped down a flight of stairs and she is now collecting disability payment in the amount of $300/week until she completes rehab. Excluding all utilities, her share of the rent is $600. I’ll save you the trouble of doing the math: she has once again placed herself in a situation where is back on the brink of financial instability.

It is critical that people start making calculated and responsible financial decisions. It would be an understatement to say that I am disappointed in the constant self-sabotaging practices that we engage in. It is as if we are not just satisfied with being mediocre. We are behaving as though we find excitement in the struggle and we chase it endlessly for the thrill of living on the edge. There is no other explanation for why someone making $15/hour would buy a $40k SUV after losing 3 other vehicles to repossession.

How I Became an Accidental Landlord


We wanted to become many things when we were young. But unless we were Donald Trump, most of us didn’t dream of becoming landlords. Maybe a doctor, or a Princess-Astronaut. If we knew enough about housing, we might have wanted to be engineers, architects or even interior designers. But not landlords. I know I certainly didn’t think I’d be interested. Landlords are not always portrayed in the most favorable light. It’s either a faceless management company or a chain smoking slumlord who provides few services and is always waiting outside your door to collect rent. As a result, acquiring my first tenant was more of an emotional decision than a rational business one.

After many years of saving and sacrificing, I was able to purchase my first home. That property meant a lot to me. It was a nice spacious townhouse with great amenities conveniently located near a major city with great access to public transportation. Initially, that property was my second choice. The house that I really wanted, a small single family in a different town did not pass inspection. As a result, I “settled” for this one. That back up choice turned out to be a great option. After we got married, I struggled with the idea of giving up my first home. It was a symbol of what I was able to accomplished for myself as a single woman of modest background. I was not comfortable giving it up. However, I guess I was meant to go into real estate investment.

When it came time to get pre-approved for a mortgage. To both mine and my husband’s surprise, the bank approved us to purchase in the price range we desired even though I had the mortgage on my record. However, they approved us with the expectation that we would be able to rent the property since we certainly could not afford to carry both mortgages. We went ahead with an offer on a property my husband fell in love with, and as soon as we were under agreement, I began aggressively advertising the property for rent. A few things about the unit made it an ideal rental. It was small enough for the average tenant demographic (young families/couples, roommates, YUPPIE who earns enough to not need a roommate) but spacious enough to be comfortable. Also, living in snowy New England, having a dedicated parking spot with an attached garage and included snow removal are extremely valuable. Having a desirable property gave me the opportunity to be selective and move in a qualified tenant who I assessed as someone who would not be too problematic and have the means of paying the rent. When I set the rental price, I took a shot in the dark, but it worked. I ended up with rental income that was several hundred dollars above all of my expenses.

Not long after the tenant moved in, I saw how effortless it was to collect rent. It’s not that being a landlord involves zero work. It was that I had to sprint in the beginning but once I had a signed lease with a quality tenant, I was in cruise control. All the bills for the property are paid online, some are automatic. I send quarterly bank statements for the escrow deposit along with rent receipts by mail, I answer occasional emails about the property (sending out the plumber, reminding them to clear out the AC condensation hose every summer, etc.) and I do an annual inspection to make sure everything is in good working order before I draft up a new lease. While I am always available, I managed to select a tenant who just would not need me. So most of my work as a landlord involves collecting the rent, paying the bills, and sending out invoices. All of this work is primarily concentrated in the first few days of the month. For all that heavy lifting, I’m rewarded with thousands of dollars monthly and even more money annually in the form tax deductible depreciation. I saw the light that brightened the path of financial freedom: real estate.

A few months into doing that, I was bit by the real estate bug as I saw the true potential of for financial freedom in being a good property manager. I nagged my husband relentlessly about getting a 3rd property which would be the first one we would buy with the intent of not residing in it. We got lucky and snapped up a beat up foreclosure that we spent a pretty penny restoring. Now, we have 2 tenants, each bringing us healthy margins of profit. As soon as we catch our breath and create some room on our credit report, we will be ready to buy property #3. Although there is a point where we will have to chose between managing our properties and keeping our full-time jobs, we aren’t there yet. In the mean time, we are saving as much as we can, paying down our debts and enjoying the fruits of our labor.