My First Property

Flash back to the spring of 2014. I just turned 24, was less than a year out of college, working a great ‘entry-level’ job, and about to close on my first home. This home was very much a ‘starter home’ and probably more house than I should have bought (more details to follow).

You Bought a House at 24?!?

Common question. “How the heck did you buy a house less than a year after graduating?”

Answer: 3 reasons. First, my parents allowed me to live rent free for a few months in the basement to save. Believe me. I did EVERYTHING I could to stock money away for a rainy day (please save your breath – I do not want to hear your bull shit complaints of how I had it easy).

Second, I had some serious side hustles. Most notably, I woke up every morning at 3:45AM…. Yes, I know I am crazy…. to drive this awesome high school guy to swim practice. He was not old enough to drive and his mother paid me ($200/week) to take him to and from practice.  I lived off this income and saved my ‘9-5 paycheck’. As a side note, I used this time to work out or fire off work emails. Its amazing how productive you can be when no one is awake to distract you.

Third, and lastly, I had a respectable starting salary coupled with a low downpayment. How low? I used an FHA 3.5% down loan (we will get more into numbers later).

But…What were you thinking?!

l did not fully understand what I was doing but knew real estate belonged in my life. Oh, and who does know what they are doing on the first attempt? I viewed this as a trial run. Also, this property taught me a lot of what ‘to do’ and ‘not to do’. My investment thesis was based on the following:

  • I do not want to waste money paying rent to someone.
  • This provides a way to keep my cost of living affordable.
  • I want to build equity.
  • Real Estate is the best way to generate wealth creation PERIOD.

Diving a bit more into each of these points. Just like saving for FIRE (or retirement), I rather pay myself (first) than pay some landlord. You will never see your rent money again. A portion of your mortgage payment goes towards paying down the loan and the interest payments provide a bit of a tax benefit.

My monthly payment was fairly hefty (keep reading for the numbers) but I planned to house hack (see an example here) by renting out the extra rooms. The house had 3 bedrooms and 2 bathrooms and I planned to rent the extra two rooms to friends at below market rents (hint: this was one of the lessons I learned). Their rents would not cover my entire mortgage, however, I was ok with this. Why? The average 1 bedroom apartment in the DC area is well over $1,500. My logic was – Hey! I can own a home for a few hounded bucks a month? SIGN ME UP!!!

Owning a house is like having a piggy bank. Every month you stash a bit more equity into the property by paying down your mortgage.  Think of this as putting loose change into the piggy bank. Also, if you are lucky, the property value stays the same… Or even better increases. This further increases the equity built up in the property. Double win.

As we all have (hopefully) learned, real estate prices do not always go up. Property values may actually GO DOWN! People get into trouble when they rob their piggy bank. This would be known as taking equity out of their house or using their house like a credit card. DO NOT DO THIS. Thankfully, I picked an area that was a bit undervalued and has some long term potential. According to Redfin, my property value has increased about 10.0% since I bought the home.

Lastly, wealth creation. I started my career underwriting commercial real estate loans (yawn!). This experience allowed me to see first hand how wealth was created and how some of the best names in real estate structured themselves. I was junior and did not understand everything. BUT! I knew these guys were doing something right and they had something that I wanted.

The Numbers

Finally, the part you have all been waiting for. I bought the house for $358,800.00 using an FHA loan with a 3.5% down payment ($12,558.00 downpayment for those of you are either bad with math or lazy).

Thankfully, my interest rate was only 3.75% (hope I see that again). My original monthly payment or PITI (principal, interest, tax & insurance) was $2,307.16. I refinanced out of this loan as quickly as possible; more on this later

This mortgage payment number may seem pretty high….. well, because it was. Part of that was because of the $386.26/month for PMI (Private Mortgage Insurance), which is one of the down sides of FHA. Additionally, I only put down 3.5% which means I had a large loan…. $346,242.00 to be exact.

The Refinance

My goal was to lower my monthly payment by getting rid of PMI. Guess what? I did and it significantly lowered my monthly mortgage payment (figure below… keep reading).

I refinanced my house after about six months. But….How did I do this after only six months?!?

Typically you need to have 20% equity or an 80% loan to value (LTV) to avoid PMI. However, my mortgage broker was very creative AND good at his job. I also benefited a bit from rising property values.

Start with the property values first – a few houses on my street sold after I bought my home. Each house sold for more than the previous (aka more demand for my neighborhood). As a side note, all the houses are cookie-cutter and nearly identical. What do these sales mean for me? This meant the appraiser had better sales comps to justify my property being worth more. It also meant someone would likely pay me more for my house if I wanted to sell it ( I don’t).

Now for the loan part. Over six months, I paid my loan down a bit and benefitted from a rising property value. However, I was still not at 80% LTV and I was stuck with PMI payments. BUT….. My mortgage broker recommends a 80/10/10 loan. This means that I have one loan at 80% LTV with no PMI (this is a conventional loan), a second loan at 10% LTV and 10% equity in the property. WINNING!

Let’s look at how this new loan structure lowered my monthly payment. I now had two loans which were $1,682.28/month and $203.17/month, respectively. My total PITI was now $1,885.45. Conclusion, I lowered my mortgage payment by $421.71!!!! This lower payment also meant I could rent the entire house and earn a profit every month (more on that later).

Current Use

I moved out of my ‘starter home’ in late 2015. I came to the realization that I wanted to own more real estate… But more importantly, I wanted to own real estate that was CASH FLOW POSITIVE. I bought an old row home in DC and began renovating the building (I will talk on this more in another article).

I rented out my room while keeping my two other tenants. The entire house rented for $2,350.00 and my monthly PITI was $1,885.45. This meant I had $464.55/month ($5,574.60/year) in cash flow after paying my bills. Not bad for a property I never intended to have positive cash flow. This was a great trial run and gave me a ton of insight.

The house has been rented almost 100% of the time since I moved out. The rents have fluctuated a bit but nothing noteworthy.

Future Plan

I will continue renting this home for the foreseeable future. The returns are not amazing but I still have tenants paying down my mortgage.

I love this location, how walkable the neighborhood is, and the close proximity to biking/running trails. I might make this my FIRE home and moving back in once I ‘retire’. This house could serve as a great home base in between trips. Before moving back in, I want the house to be debt free. This will mean aggressively paying off my mortgage for a few years.  I will not do this for other properties since I plan to retire with over $1 million of Debt.

Blog Update: Future Direction

Hi y’all – I started this blog last June without much direction. I wanted to document and share my journey to achieving FIRE (Financial Independence; Retire Early)…. and so far I have…

Along the way, I have made a lot of friends blogging and had a few decent posts like The $30,000 Car That Cost My Friend over $240,000 and Passive Income: The Holy Grail of Financial Independence and Retiring Early. However, my blog has lacked a bit of a niche or direction.

I am not one to seriously budget, though I loosely follow one. Some consider me frugal but I am not one to be overly frugal. I keep my spending in check but splurge occasionally on travel.

Guy on FIRE’s New Direction

After much debate, and several conversations, my blog has finally found a bit of a niche. I will still post about my path to financial independence…. BUT! Future posts will focus more on real estate investing (and passive income), like my newest investment property. I firmly believe that real estate is (one of) the best way to obtain financial freedom and a great form of (mostly) passive income.

Moving forward, I will share monthly updates on ALL of my properties. I will let you, my readers, know ALL the details.

I will share information like collecting rents, mortgage payments, dealing with tenants, the random repairs and any other items that may pop up…. Believe me, I have seen some pretty crazy stuff as a landlord/property manager. I have also successfully house hacked my living situation so that I get PAID to live somewhere… Why pay for something if you don’t have to?

I am not going to sugar coat anything, but owning cash flowing real estate is pretty sweet (don’t judge my corny puns). You will get a full look into the good, the bad and the ugly of being a landlord (slumlord?). I hope my future posts will encourage readers to think about real estate and how it may help them achieve their financial goals.

Other Posts

I will still post about dividends since I believe they are a great…. no, AMAZING source of PASSIVE income. Such post will still be documented at The Dividend Report.

I still plan to have a few random posts related to FIRE, personal finance, and future travel plans. However, moving forward, expect a lot more about real estate investing and other forms of passive income.

Yours truly,


New Investment Property…. FINALLY!

I FINALLY HAVE A NEW INVESTMENT PROPERTY UNDER CONTRACT!!!! If you have been reading my blog for a while, you know that I LOVE REAL ESTATE…. AND… That I’ve been looking for MONTHS. Yes, MONTHS. I have lost several bidding wars…. BUT! Finally, I have won. We will be closing on the property in less than a week. More importantly, this property will bring me one step closer to FIRE. Wahooooo!

Selecting a Property

Many real estate investors preach about the 1.0% rule when looking for a rental property. The 1.0% rule provides a simple way to screen properties. For example, if a property is listed at $100,000 you would want the monthly rent to be at least 1.0% of the purchase price, or $1,000. The midwest region of the United States is great for the 1.0% rule. Heck! There are even 2.0% properties out there.

Read more about the 1.0% rule here:

Paula Pant @affordanything: Why the One Percent Rule Matters


Coach Carson @CoachCarson: The 50% rule

However, for us investors that live on the coast, we generally do not have that luxury. I have adopted a different approach to screening properties for areas with high property values. Over the years I have developed a simple “back of the envelope” method to screening deals.

First, I never want a ‘thin’ deal with small returns or little room for error. There will always be unknowns and unforeseen costs/events with real estate I aim for a 20.0% return on investment (ROI). This means I am getting all my money back in 5 years or less. Also, compounding at 20.0% means I am growing my net worth much faster than the average investor can expect from simply owning stocks.

My ROI calculation is fairly simple:

ROI: Annual Cash Flow / Total Capital Invested

Annual Cash Flow: (Monthly Rental Rate – PITI) * 12

Total Capital Invested: Down Payment + any renovation or improvement cost prior to renting

PITI: Principal, Interest, Tax and Insurance (aka your monthly mortgage payment)

This may seem a bit confusing, but I will provide an example later in this post. The example will use REAL NUMBERS from my new property.

About the Property

The property is a duplex with one unit upstairs and the other down stairs. Both units have two bedrooms and one bathroom. The brick building was built in 1939, has been well maintained and was modestly renovated about 10 years ago. The neighborhood is experiencing gentrification but still has a long way to go. The area is safe but not a premier location. Renting the property will not be an issue. The units show well and are at an attractive price point.

Home Inspection

We conducted the home inspection a few weekends ago. The inspection took damn near three hours. Two units means twice the systems, twice the time and twice the headaches. I anticipated $10,000.00 of work/improvements might be needed prior to the inspection. Generally, I am conservative with my assumptions. And guess what… I was! The property does require some TLC… BUT with me doing some of the work and farming other tasks out to my crew, I will only need to spend $6,000-$7,000 (still a conservative estimate) and a few hours of my time. Big Win!

Also, my first mortgage payment won’t be until May 1st. This means I have over 50 days to fix the property up and find tenants. I might even have a full month of rents before ever my first mortgage payment. Can you say winning? I have already lined up most of my contractors to start work the day after closing. Time is money and I am racing against the clock to get the property turned around. I do not want to come out of pocket to pay the bills. That’s what tenants are for.


So… What needs to be done? There is nothing overly scary on the list and there will be several $5-10 trips to Home Depot (why do I not own their stock yet?).

Unit 1:

  • Adjust plumbing underneath bathroom sink (poorly installed)
  • Furnace tune-up and install triple wall
  • Replace water shutoff for kitchen sink (old)
  • Replace water shutoff for bathroom sink (old)
  • Electrical tune-up in the fuse box
  • Installing new plugs for the stove & refrigerator
  • Adjusting front left stove stop burner so the flame is not a mile high
  • Apply weather strip to front door
  • Change the locks (who knows who has keys to the current locks)
  • Water heater (Still functions but past its useful life. not necessary but will delay headaches for 7-10 years)
  • Replace outlets that were painted over
  • Replace kitchen GFI
  • Smoke/carbon monoxide detectors
  • Fire extinguisher

Unit 2:

  • Refrigerator (this unit does not have a refrigerator)
  • Furnace tune-up and triple wall
  • Replace the toilet’s wax ring and tighten bolts
  • Tighten shower knobs to stop leak
  • Electrical tune-up in the fuse box
  • Installing new plugs for the stove & refrigerator
  • Filing down two doors to shut properly
  • broiler plan for the oven
  • Apply weather strip to front door
  • Change the locks (who knows who has keys to the current locks)
  • Water heater (Still functions but past its useful life. not necessary but will delay headaches for 7-10 years)
  • Replace outlets that were painted over
  • Replace bathroom GFI
  • Smoke/carbon monoxide detectors
  • Fire extinguisher
  • Replace internal window frame that has water damage


  • The building has flat roof and roof needs a fresh coat. This project will require two 5-gallon containers and a few hours of my time on a nice spring day. I will never be the gentleman Andy Dufrense (From The Shawshank Redemption) but I am capable of tarring a roof and drinking a cold beer or two. Doing this work myself will save $2,000-$3,000.
  • Paint wall caps and roof hatch to prevent rust
  • Secure roof hatch to prevent unwanted entry (doubtful occurrence but better safe than liable)
  • Reinforcing the back stairs case
  • Pointing/ touch up to the brick exterior
  • Repair a section of the walk way leading up to the house
  • Touching up the trim
  • Install new window trim
  • Install extended downspout to keep water from foundation walls
  • Replace gutters and down spouts
  • Removed old shed
  • Add fence to prevent people from cutting through front/back yard

What Do the Numbers Say?

Purchase price: $359,000

Down Payment: $71,800

Renovation Costs: $7,000

Total Capital Invested: $78,800

Monthly Rent/Unit: $1,600

My total investment costs will be $78,800.00. Each unit will rent for $1,600/month ($3,200 in total) and my carrying costs will be $1,650/month. This means I will have $1,550/month ($18,600 annually) in cash flow after paying for principal, interest, taxes and insurance (PITI).

A basic return on investment (ROI) calculation:

$18,600 / $78,800 = 23.60% Return on Investment

This means I will recoup my cash invested in 4.24 years ($78,800 / $18,600)

This analysis is overly simplistic. I self manage and do not have to pay a property manager (maybe one day once I hit FIRE). There were will be minor repairs and expenses overtime. Over the next 30 years I will have larger expenses as well. All repairs and maintenance items will be supported by the property’s cash flow.

My calculation also does not account for potential vacancies. For many, this is an unreasonable assumption. However, I manage over 50 properties and we only had a half month vacancy on a single unit last year. This vacancy was by choice. We had several people willing to move in on time. However, the ideal tenant and the tenant we went with could not move in until the 15th of the month. We were willing to sacrifice half of a month’s rent to obtain the “perfect tenant”.  Also, we are very efficient and capable when it comes to finding and screening tenants.


The new duplex will provide me with great a passive income stream and meets my return requirements. The repairs are minor and will take a week or two at the most to complete. The property supports itself 50% occupancy which provides room for error (though I plan to manage the property much more efficiently). Real estate investors should never invest in a ‘thin deal’ with little room for error. There will also be unexpected expenses and unknowns along the way. I will recoup all of my expenses in less than five years and might enjoy appreciation as the neighborhood improves. What do you think of my approach and analysis?

The Frugal Weirdos Who Have No Fun

And live a life of deprivation.

I am sick of this stereotype about the Financial Independence; Retire Early (FIRE) community. Recently, a friend shared an article with me from AOL that called early retirement a fantasy. Boy….. Are they wrong!

Last month, Steve from ThinkSaveRetire retired at age 35. There are countless others who have done the same. Early retirement is not a fantasy but a goal anyone can accomplish with a bit of planning; a goal I will accomplish.

Early Retirement Ahead
The Argument

The awful AOL article says the path to early retirement is not sustainable. The author claims her husband and her were burnt out from extreme budgeting. Furthermore, she complains about having only one short and inexpensive vacation a year. She groans about the lack of material gift giving for Christmas, birthdays, anniversaries and other occasions. All of this is hog wash!

Additionally, the author argues that the early retirement crowd does not live in the present. Her article recommends finding a job or career that is enjoyable instead of extreme savings for 15 years (typically FI is achieved in 7-10 years). The author also thinks those who ‘retired early’ retired are frauds since many still work or have some form of income.

The Rebuttal

It’s decisions not deprivation…. stupid! Working towards early retirement or financial independence is not about extreme budgeting or depriving yourself of enjoyment. Rather, it’s about decisions and allocating resources to maximize your happiness and financial well-being. The Latin word for ‘decision’ literally means “to cut off”. Every time we make a decision we are saying ‘no’ to every other option by cutting off all other choices.

Ultimately, we all are responsible for our own decisions. I am debunking the frugal stereotype of the FIRE community with my upcoming travel plans. As a DC local, the inauguration is miserable time to be around the city. (*DISCLAIMER* Regardless of which party won. NOT a political statement. Read the city is flooded by tourist, prices are jacked up and roads shut down).

So… I am flying to Colorado. A long weekend filled with skiing sounds like the perfect getaway. Skiing is something that I enjoy LOVE and will do more of when I reach FI. My travel plans show that I am living in the PRESENT and enjoying life.  I made the DECISION to live in the PRESENT. This is at the risk of pushing back my early retirement a few months (years?). Saving money is still a big priority this year. I believe many of the FIRE community share the same view.

More Counter Arguments

While we are still talking about the present…  I am a forward thinker and will always look for ways to improve my future. I live in the present but I will never reach my goals without thinking about tomorrow. (Cue Fleetwood Mac’s Don’t Stop Thinking About Tomorrow).

The author came across very materialistic complaining about the lack of gifts. Perhaps she could try not being a materialistic person or try making her gifts like Gwen at Fiery Millennials.

The author of the AOL article also believes that life after retirement does not get any better. This statement blows my mind! Mr. Money Mustache and Go Curry Cracker seem WAY MORE happy than before they retired. Neither of them are dying to go back to a day job. Why would anyone want to waste 40+ hours a week to do something that is not necessary? Goodbye alarm clock and goodbye useless conference calls. Hello waking up when you want and traveling whenever you feel like it. Who would not want more time to spend with family or volunteering? FIRE provides freedom.

Lastly, according to AOL’s retirement calculator, I will need over $21 million to retire. This is just flat out laughable. Their calculator’s maximum savings rate is capped at 40% which is a shame. For a more accurate retirement calculator, visit the Mad Fientist’s Time to FI Calculator. What are your thoughts? Do you think early retirement (or financial independence) is a fairy tale? Maybe, FI is a a bedtime story we tell our kids. Or do you believe it’s a goal that can be achieved?

Q4-2016 Dividends – The Dividend Report

As many of my readers may know, I love dividend stocks and believe dividends provide a great source of passive income. Moving forward, I will be providing quarterly updates regarding my dividend income. Utilizing ‘The Dividend Report’ section of my blog, I will share my progress towards my dividend goals. I will also share dividend growth stock ideas and thoughts. Additionally, I will share the rational behind any future purchases or sales. Dividends are truly a wonderful thing.

The current goal is to average $1,500/month in dividend checks. I would like dividends to provide between 25-33% of my monthly retirement income. However, this goal may be revised upwards over time.

My Q4-2016 dividend income was $1395.26. Last quarter (Q3-2016), my dividend income was $521.31. This equates to a $873.95 or 167.64% increase from the previous quarter. The increase was solely due to 401k contributions that provided more dividends via index funds. Additionally, the funds in my 401k provide larger distributions at the end of the year. I anticipate a step back  in dividend income for Q1-2017.

Last year’s fourth quarter dividend income was $363.75. This equates to a $1,031.51 or 283.6% increase from the same quarter last year.

In 2015, my total dividend income was $1,164.03. I am proud to report that my 2016 dividend income was $2,715.01, which is $1,550.98 or 133.2% increase.

My average monthly dividend income is now $226.25 ($2,715.01 / 12 months = $226.25), which is 15.08% of my current goal of $1,500/month. I am now 3.50% closer to my goal; Previously I was at 11.58% of my goal.

The graph below outlines my quarterly dividend income dating back to Q1-2013:

The table below outlines my quarterly dividend income dating back to Q1-2013:

New Purchases

No individual stock purchases in Q4-2016. During 2016, I purchased $DIS, $KHC, and $SBUX. Additionally, I added to my previously existing positions of $C and $WFC.

It’s the Most Wonderful Time of the Year… For Goal Planning

The last two weeks of every December, I take time to reflect on the the year that just past and the year that is ahead. I use this time to evaluate how I did in meeting this year’s goals, where things went wrong, and what I did right. I also use this time to set my sights on what I want to achieve over the next twelve months. You cannot expect to get to where you want to be with out a plan and a defined goal.

Knowing your ‘Why’?

It’s not enough to just have a goal. You should have a ‘why’ or reason for wanting to achieve your goals. Everyone would say saving $ 1 million would be great, but why? Just because it sounds like a cool number? Or because you think it will be enough to retire on? Depending on your spending habits it might or might not be enough.

Or do you have a clear vision for wanting to save $1 million? Some sort of logic like, using the 4% rule I can safely drawn down $40,000 from my portfolio every year which is more than enough to cover all of my family’s expenses.

Knowing your ‘why’ will give you a clear vision on if a goal is important to you or not. Your ‘why’ will also provide insight on if you need to adjust your goal(s) upwards or downwards. Not all goals are monetary. Goals can be relationship or lifestyle oriented. Goals can focus on personal development or be career oriented. Fitness, travel and reading are other great areas to focus on in goal setting.

Planning Your Goals

I encourage you to take an hour to sit down and write a handful of goals you would like to achieve next year. Next to each goal you should also right the reasons you want to achieve this goal. For example, your goal could be to volunteer at a local non-profit twice a month. Your reasons could be you want to help people, give back to your community and meet like minded individuals (networking).

You should keep your goals somewhere where you will see them often. Make sure to check in periodically and see if you are on pace or need to pick up the slack. You should share your goals with someone. Informing a person(s) about your goal will act as a form of accountability.

Reviewing My 2016 Goals

Buy another investment property: Unfortunately, I did not accomplish this goal. I submitted offers on 9 homes and lost on each bidding war. Though discouraging, I will not give up on my efforts to acquire more income producing properties. This will be a goal for 2017.

Max out my 401K: VICTORY! For the first time in my life, I max out my 401k. This was a great way to automate my savings and pick up on free money via my employers matching contributions.

Max out my Roth/IRA: VICTORY! This was a habit I established right after graduating college and will continue to do so. The Roth IRA is a great way for young people to establish an emergency fund while investing.

My goals for 2017

Or at least a few of them…

Read More: In 2015 I read over 30 books. Last year I did not place a priority on reading since I focused on growing my business. Next year I will read 12 books from various genres.

My why – Reading is a great way to decompress, learn and grow. This is an activity I enjoy and its great escaping to another world or borrowing someone else’s mind.

Run More: I was a runner/triathlete in college and my early adult life. Over the past few years, I have lost the ability to run any meaningful distance and gained several pounds. Towards the end of 2016, I started working out again and lost modest weight. In 2017, I would like to regain the ability to run 5 miles+ without hating my life.

My why – The human metabolism typically slows down the older we get and I would like to control my weight. I would also like to improve my overall health and activity level; I have yet to meet a doctor that recommends sitting at a desk all day. Running/exercise helps me cope with stress and clears my mind. Some of my most creative thoughts and ideas have come during a long run. Additionally, I would like to improve my overall fitness to pursue some of my future goals like climbing more complex mountains and completing an Iron Man.

Investment Property: This will be an annual goal for the next 4 or 5 years.

My why – Rental properties provide a great source of (mostly) passive income. The increased cash flow will allow me to quit my day job once I have a few more properties. The extra income will give me the flexibility to travel, spend time family and volunteer more.

Travel More: I want to take one international trip and a couple trips around the U.S. Travel is a wonderful thing. The world is to big to stay in one place.

My why – Traveling allows me to relax and opens my eyes to the world around me. I feel refreshed after a long trip. There are many places I would like to see and cultures I would like to experience.

Volunteer More: As previously stated above

Max 401k/IRA: This is a FIRE blog and I hope this item does not need an explanation.

Merry Christmas and Happy New Year!

What are your goals for 2017? Do you know your ‘why’ or plan to write out your goals? Written goals are more likely to be achieved than unwritten goals. Having a plan will help you achieve your goals in life.

How do you approach goal setting? Merry Christmas and Happy New Years! May 2017 be better than the year before.


I Plan to Retire with Over $1 Million of Debt


From financial advisors to personal finance bloggers, there are countless views on debt in retirement. Many in the FIRE community view eliminating debt as an important step of achieving financial independence. There are many benefits of living debt free. However, I am planning on achieving financial independence and retiring early with over $1 million in debt.

You see, I view debt as a wonderful tool when utilized properly. No, I am not talking about getting a loan to buy a new car; that cost my friend over $240,000.   Rather, my mountain of debt will consist of various fixed-rate mortgages for rental properties. Fixed-rate mortgages or debt means the interest rate stays the same and does not fluctuate. On a side note, my primary residence will be paid off or I will elect to rent (TBD).

So, why am I comfortable with so much debt?

First, I will not personally pay my monthly mortgage payments. My tenants will pay the mortgage via their rent payments. The properties rent for substantially more than my monthly caring costs which is commonly referred to as PITI (principal, interest, tax, and insurance). The difference between the rents and carrying costs allows for the property to support itself, pay for repairs, AND provide me with monthly cash flow.

Second, the cushion between the monthly rental rate and carrying cost will allow me to build up a reserve for repairs and/or vacancies (read emergency fund for the property). I self-manage my properties and my only vacancy to report was a half of a month on one property. For those new to real estate investing, I would recommend assuming at least 5-10% vacancy rate when analyzing a property. Additionally, the cushion allows me to drop the rent if the area becomes less desirable or if rents decline while still paying myself every month. Please note, rental rates typically do not decline. Rather, rental rates typically increase with or faster than inflation. (Obviously, this depends on the market).

Furthermore, I have fixed-rate debt which means my monthly payment will not increase for the next 30 years. Naturally, over the next 30 years, inflation will be my best friend. My rental rates should continue to increase gradually over time which will increase my monthly cash flow. I will also be paying back my debt with less valuable money since $1,000 twenty years from now will be worth less than $1,000 today.

Over time, my mortgages will be paid down and eventually be paid off. This is commonly referred to building equity. The properties will likely be worth more in 10, 20 or 30 years, however, I never assume the homes will appreciate in value. I recommend never buying a property because you think the price will appreciate; that is pure speculation. BUT!!!! There is a good probability the value will increase gradually over time but I am conservative in my underwriting/investing assumptions. As such, I care more about the cash flow and less about the property’s appreciation.

Once the properties are paid off, my monthly cash flow will increase greatly. The extra cash flow creates more financial freedom. I can use the new cash flow to buy more properties. I will have the freedom to travel to more places. Donating more to charitable causes that I am passionate about will be another great use of the extra cash flow. More cash flow = more options = more freedom.

Have you thought about how much debt you want in retirement? What are your plans? Will you be debt free or have debt like me? No one size fits all.

My Former Co-Worker’s Broke Man Habits

We all have that one colleague with horrible spending habits. You know the one I am talking about. The guy or girl who constantly eats out and buys useless crap. Well, after reading a financial success article of a well to do individual, my former coworker made a very interesting statement to our whole team. He said something like, “Wow, it must be nice to be rich. I wish I knew how to do that.”

Being the nerdy financial blogger that I am, his comment caught my attention. I quickly chimed in and told him, “It’s rather simple really. All you need to do is live below your means, save and invest the difference and repeat.”

This statement was scoffed at and quickly dismissed by my co-worker. He is about a decade older than me and has typically discriminated against me because of my age (but thats not a story we are going to get into).

Later that day, another colleague of mine brought up this conversation. She agreed with my statement and we began discussing spending and saving habits. The guy who dismissed my philosophy on creating wealth  plays horrible defense and spends money like its going out of style.

He buys breakfast AND lunch every day from the various eateries around the office. Additionally, he takes at least two trips a day to Starbucks for coffee. Mind you, there is free coffee in the office. However, according to him, if it’s not Starbucks its not coffee….. *Face Palm*

Bag lunch with a banana and an apple.


Furthermore, this guy and his wife recently bought a house. The couple struggled to muster up the cash for a 3% downpayment and elected for a five year adjustable rate mortgage. Their investment theory is that they can refinance into a lower rate in a couple years once their house builds equity. Apparently, property values will always go up….. NOT!

Let’s preface the following analysis of my coworker’s spending with the fact that he makes between $120,000 to $130,000 a year; this is more than double the average household income in the United States.

The table below outlines my coworkers basic spending habits:


Assuming Johnny (not his real name) spends $5/breakfast, $10/lunch and $5/coffee, he would spend $125/week.  This habit costs him $6,500/year, which is more expensive than buying a new car. Over a decade, Johnny’s poor spending habits will cost him over $65,000 (see table below).


Obviously, eating is a necessity. However, there are more cost effective and healthier options than eating every meal out. Below are just a few affordable and healthy alternatives to eating out every meal.

Low cost meal alternatives


  • Two servings of oatmeal & blueberries: <$1.00
  • Two servings of hot quinoa, cinnamon & blueberries (my favorite): <$1.00
  • Two eggs, toast with peanut butter or jam, and a piece of fruit: ~$1.00-$1.50
  • Two eggs, two diced potatoes for homemade home fries or grits: ~$1.00
  • Yogurt w/ fruit or granola: $1.00-$1.50
  • Homemade breakfast casserole. This is a great dish that takes about 10 minutes of prep and provides great hearty breakfast for the entire week. 1 dozen eggs, pre sliced hash browns, 1lb of ground (turkey) sausage, cheese and spinach: ~$10.00 (~$1.67/serving)


  • Peanut butter and jelly sandwich with a piece of fruit: <$1.00. Average PB&J costs about $0.30
  • Pasta and sauce: <$1.00
  • Grilled boneless skinless chicken breast & quinoa: $1.50-$2.00,
  • Italian sausage, on a sub roll with sauteed peppers and onions: ~$2.00

According to Commerce Department, for the first time ever, Americans are now spending more dining out than at the grocery store. A 2015 study conducted by Visa shows the average American spends approximately $3,000 on lunch dining annually. This expense is a luxury and not necessity. Anyone struggling to pay off debt or save could easily reduce their dining habits to improve there financial health. What are your dining habits like? Do you have any low-cost meals that you enjoy?


Q3-2016 Dividend Report

As many of my readers may know, I love dividend stocks and believe dividends provide a great source of passive income. Moving forward, I will be providing quarterly updates regarding my dividend income. Utilizing ‘The Dividend Report’ section of my blog, I will share my progress towards my dividend goals. I will also share dividend growth stock ideas and thoughts. Additionally, I will share the rational behind any future purchases or sales. Dividends are truly a wonderful thing.

The current goal is to average $1,500/month in dividend checks. I would like dividends to provide between 25-33% of my monthly retirement income. However, this goal may be revised upwards over time.

My Q3-2016 dividend income was $521.31. Last quarter (Q2-2016), my dividend income was $453.51. This equates to a $67.80 or 14.95% increase from the previous quarter. The increase was solely due to 401k contributions that provided more dividends via index funds.

Last year’s third quarter dividend income was $311.52. This equates to a $209.79 or 67.3% increase from the same quarter last year.

My average monthly dividend income is now $173.77 ($521.31 / 3 months = $173.77), which is 11.58% of my current goal of $1,500/month. I am now 1.51% closer to my goal; Previously I was at 10.07% of my goal.

The graph below outlines my quarterly dividend income dating back to Q1-2013:


The table below outlines my quarterly dividend income dating back to Q1-2013:


New Purchases

I established a partial position in Starbucks ($SBUX) in mid-September when the stock pulled back close to it’s 52 week lows. I will continue to buy shares if the stock prices moves lower. This is a company I want to own for the next 5, 10 or maybe even 20 years.

The company enjoys a strong cult following from its customers, exceptional returns on the capital invested, a healthy balance sheet, and a low dividend payout ratio. I believe that Starbucks will continue to increase their dividend by 10%+ annually for the foreseeable future. The company has great growth prospects due to their expanding business operations in China and India.

Q2-2016 Dividends – The Dividend Report

As many of my readers may know, I love dividend stocks and believe dividends provide a great source of passive income. Moving forward, I will be providing quarterly updates regarding my dividend income. Utilizing ‘The Dividend Report’ section of my blog, I will share my progress towards my dividend goals. I will also share dividend growth stock ideas and thoughts. Additionally, I will share the rational behind any future purchases or sales. Dividends are truly a wonderful thing.

The current goal is to average $1,500/month in dividend checks. I would like dividends to provide between 25-33% of my monthly retirement income. However, this goal may be revised upwards over time.

Going through old statements from the last three years took a great deal of effort. However, the end result was well worth the time since all of my dividend data is compiled (see graph & table below). On a go forward, it will be much easier to track my dividend progress.  The great news is that my dividend income has increase modestly over the past three years but is still far from my goal.

My Q2-2016 dividend income was $453.51. Last quarter (Q1-2016), my dividend income was $344.93. This equates to a $108.58 or 31.5% increase from the previous quarter. The increase was largely due to the additions of dividends from Disney and Kraft Heinz; both stocks were purchased in February. Additionally, I also acquired more shares of Wells Fargo to during the market pull-back. Lastly, continued 401k contributions also provided a source of more dividends via index funds.

Last year’s second quarter dividend income was $256.42. This equates to a $197.09 or 76.8% increase from the same quarter last year.

My average monthly dividend income is $153.17 ($453.51 / 3 months = $153.17), which is 10.07% of my current goal of $1,500/month.

The graph below outlines my quarterly dividend income dating back to Q1-2013:

Q2-2016 Quarterly Dividend Income

The table below outlines my quarterly dividend income dating back to Q1-2013:

Q2-2016 Dividend Income Chart