This report marks another month in the books on my new financial journey. That makes two months completed, all in my journey from massive debt to real estate mogul. The debt still feels massive and the mogul is still very far off, so not much has happened yet, but a lot has happened…if that makes sense.
The report format will change a bit in these early months as I find my groove. I’m trying to hone in on the important financial metrics that will show true financial health and give me a chance to show trends over time.
Here are the main categories I am tracking with the monthly report:
• Massive Debt – Steps taken this month on debt and finances.
• Financial Health – Showing the financial metrics and trends from my personal finances. Everything from net worth to a budget breakdown.
• Goals for Next Month – The financial goals for next month, self-explanatory.
• Real Estate – Quick view of my recent efforts to become a real estate mogul. You have to start somewhere.
There aren’t many trends to show with only two months of data. With that said, here is the November 2015 monthly report.
The debt is still massive. That word will hang around for a while longer, based on the numbers and my feelings on it. Here are the action steps taken in November:
- Became two income family. We became a two income family! In a surprise move, my wife landed a local job and our future financial outlook got a little less bleak.
- Tough being a two income family. We struggled with becoming a two income family! Wow, this new job was more difficult than we expected…the schedule struggle continues.
- Found passive income. 15 years later, I discovered some easy passive income that I forgot about.
- Bad case of Shiny Object Syndrome. I was all over the place in November, trying to do too much at once and not staying on any plan. Need to refocus.
These are the numbers. Eventually there will be trends for the numbers, but for now it is only two months worth of data. I defined the financial metrics I will be using, but they will evolve over time.
Here is a breakdown of my household budget for November and my current debt situation:
Quick analysis shows that my budget situation improved greatly by adding a second income to our house. All of the expenses became a smaller portion of the overall pie and our net income rose significantly each month. Our net income per month went from 5% to 17%, giving us more money to pay down debt each month!
BUT…the debt situation got worse. I financed a real estate course with credit (info below) and also uncovered more of our debt situation. I’ll write a post or two about the changing debt situation for next month.
On the good side…
• Liquidity (emergency cash available) went up
• Debt-to-Income ratio went down significantly, from 43% to 35%
On the bad side…
• Total debt went up about 11%
• Credit card debt went up about 13%
• Capacity (amount of cc debt available) went down
• Net Worth went down by about 3%
Current numbers for financial metrics look like this:
• Total debt = $109,051
• Credit card debt = $90,551
• Capacity = $28,949
• Credit used = 75.8%
• Liquidity = 1.2 months
• Debt-to-Income = 35.6%
• Net Worth = -$300,316
• FICO = 720*
Goals for Next Month
Here are a few steps that I’m hoping to take in December, to keep the positive momentum going for paying down debt:
1. Select a debt consolidation loan. I’ve done some preliminary research, now it’s time for some action. I can’t have any more shiny object syndrome here.
2. Define debt payment plan. I have more work to do on this. I’ve got spreadsheets with all kinds of formulas and ideas, now I need to define a plan that I can follow.
3. Clean up the financial clutter, along with the house clutter. When I’m surrounded by clutter, I can’t function well.
On the real estate moguldom front, I’m making great strides. Last month was all about education and finding my way. This month has been about action and doing something.
I went to a local real estate networking event with about 35 attendees. I also met with two other real estate investors at another meeting. Those meetings helped me to define the path I want to take for now.
I took some big action this month:
• Set up my own business. I used Legal Zoom to setup my own LLC for my real estate business. I wanted to officially separate my personal finances and business finances. I also wanted to protect my personal finances from the business side, which sounds weird to say given that my personal finances are such a mess right now.
• Found a mentor. I found a real estate mentor and signed up for a training course. This was a major expense and I funded it on credit cards (gasp!), but I felt that I needed it to get jolted out of the education phase and into the action phase for business. This course is all about action.
With business, there will be expenses before there is income. That is the realization I have come to accept. If I had a retail store, I couldn’t just start collecting income based on my time and effort alone. I would need capital expenditures along with hard work in order to achieve income.
My mindset has also shifted based on the books I’m reading. Here is my current reading list:
• Rich Dad’s Cashflow Quadrant by Robert Kiyosaki – This explains where your income comes from (Employee, Self-Employed, Business, Investor) and helps you find a path from E or S (Employee, Self-Employed) over to B and I (Business owner, Investor). The book is a bit elementary and repetitive in parts, but the larger concepts are great for shifting mindset towards being a business owner and investor, which is where I want to be.
• Money – Master the Game: 7 Simple Steps to Financial Freedom by Tony Robbins – I have always liked Tony Robbins, even though I’ve never really been a follower of his. I saw this book in the library and picked it up. Then I heard him on a podcast talking about the book and I’m hooked. It reads as I imagine he talks in a seminar, which makes for easy reading. He interviews many super-successful business owners and investors, seeking the thing that made them so successful. Then he (and they) shares the secret sauce. I’m only part way through this big book, but I’m excited for the rest. Ultimately, I want to get an investing process out of the book.
• David and Goliath by Malcolm Gladwell – I have enjoyed Gladwell’s previous books and picked this up when I saw it at the library. I didn’t get through it all before it was due back at the library, but I grabbed enough concepts to enjoy it and will take it out again. The premise is based on the old story of small, little David fighting against the massive, giant Goliath. The idea is that David really was not a massive underdog, as history would have you believe. Gladwell goes on to detail instances of underdogs and our perceptions. Very interesting read.
November 2015 saw a dip in my financial efforts, mostly because I opened up the financial can of worms and started diving into everything. There are only so many hours in the day and I need to focus my financial efforts.
I am still getting a firm grasp of my financial health by going through all of the numbers. I haven’t uncovered every nook and cranny yet, but I’ll get there in time.
Starting a side gig or business is exciting stuff. I made it official by creating my own LLC company. I also went big on a real estate course. Now the key will be to continue taking massive action to keep my momentum going.
Give me some feedback in the comments section below. Let me know what you think of my journey.