tag:blogger.com,1999:blog-8138459.post109733595767647685..comments2023-07-05T06:44:34.278-04:00Comments on Simplify My Life: The right strategy...Unknownnoreply@blogger.comBlogger3125tag:blogger.com,1999:blog-8138459.post-1100311674360630872004-11-12T21:07:00.000-05:002004-11-12T21:07:00.000-05:00I'm rooting for you buddy! Congratulations on all...I'm rooting for you buddy! Congratulations on all you've accomplished. If your system is working, stick with it.Darrenhttps://www.blogger.com/profile/02251407766640894724noreply@blogger.comtag:blogger.com,1999:blog-8138459.post-1097357974284090232004-10-09T17:39:00.000-04:002004-10-09T17:39:00.000-04:00I agree with Ron on his first statement that "[g]e...I agree with Ron on his first statement that "[g]etting out of debt is always smart but what is smarter is not getting into debt, in the first place." However, given your high interest rate (18% on car and 12% on credit card), you should try to pay off the loans first before considering any opportunity for "passive income." 12% and 18% return is a high order to fill no matter you want to be a landlord to start a new business.<br /><br />You do recognize you have a short term liquidity problem. I suggest you run the math and see at the current spending rate, whether/how much you and keep after the two month training period, and whether your current savings are enough (if not more). Anything leftover after two months is up for you to decide between emergency fund and loan repayment.<br /><br />Also, do you have a chance to get your credit score? Is there a possibility you can refinance your 18% car loan and get a cheaper rate?<br /><br />BTW, what's the $12,000 in TIAA-Cref? Any way to tap into the money?<br /><br />MM at PFBlogAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8138459.post-1097346005862226002004-10-09T14:20:00.000-04:002004-10-09T14:20:00.000-04:00Hi, my name is Ron. I was the one who posted abou...Hi, my name is Ron. I was the one who posted about paying the minimum on credit cards so you can fund a savings program.<br /><br />Getting out of debt is always smart but what is smarter is not getting into debt, in the first place. But here you are and what you do from now will determine your success towards your goals of no debt and getting by on part-time work.<br /><br />There are couple of ways to shorten the path to those goals: One is to reduce expenses and one is to produce passive income.<br /><br />Passive income is any income you don't trade for labor. Usually it is in the form of return on savings or investments. So, let's say that your bills and expenses come to $2000 a month. If all you have is earned income, you will need to gross about 125% of that or $2500 a month to have a net spendable income sufficient to meet your needs.<br /><br />That is $30,000 a year or about $15 an hour for a forty hour week.<br /><br />But if you have $100,000 in savings at 5% after tax income, you would earn $5,000 in passive income and could cut back on working by 15%.<br /><br />But, if you could reduce your income requirements by one-half, you could immediately get by by earning one-half as much, as well. It is a much torugher row to hoe to save $100,000 than it is to be able to live on $12,000 a year.<br /><br />Most people spend about 25% of their income on housing, 15% on transportation, and 15% on taxes. And we tend to waste about 10% and working costs about 10% of what we earn. That is 75%. The trick is to rein in those costs.<br /><br />Take a look at your own percentages and attack the low-hanging fruit. For you it looks to be transportation costs. Right now your housing costs are nil but eventually you will need to accommodate them in your budget.<br /><br />It all depends on where you live whether or not you will be able to buy a house right now but it makes sense to do so as soon as possible to fix those costs. Variable costs are what make it so hard to plan.<br /><br />If you buy, I recommend a two to four unit building, this way you have income that in time can cover your own housing costs and you have an appreciating asset. Also, you can put your savings into paying off the mortgage ASAP and have even more income--maybe enough to pay the bills.<br /><br />If you can do that, create a low cost lifestyle and turn your need for housing into an investment, you might achieve financial independence sooner than you ever dreamed possible.<br /><br />R/Anonymousnoreply@blogger.com