BAEVentures
Prosper Lender
Forum Expert
Posts: 218
|
 |
« Reply #12 on: November 03, 2009, 01:38:46 AM » |
|
Personally, I am 24 years old. I could have had my parents pay my way through college if I wanted when I graduated high school. I chose instead to work. I had one job that I loved that I worked about 25 hours a week at, and worked full time at home depot. I worked both of these jobs for 6 months after graduating high school. I then had an offer from a friend that I had worked with doing computer repair while in high school, to come work for the company he had just started with. I have been with them going on 6 years now and make just over $50,000 a year.
I am all about money management. By the age of 20 I had amassed over $25,000 in un-secured debt namely via credit cards. I was raised with good money management skills, realized the hole I had gotten myself into and was determined to get myself out of this hole. I began working part time on weekends when I was home (travel Monday-Friday for my full time employer). I worked 60-70 hours a week, plus another 20 on weekends for 2 and a half years until my debt was all but wiped out. I had managed to raise my credit score significantly because of all the open lines of credit I had with low or no balances.
Quit my part time job when I got married a little over two years ago, bought my first house shortly thereafter. Unfortunately, after we purchased our home, my wife was laid off from work for 6 months and we relied on credit once again to pull us through for awhile. I am working diligently to pay down my debt (less than $8,000 remaining and should have it paid off by 2011 leaving my car and home as my only other debt and car will be paid for by middle of 2012. Regardless of my debts, I set aside $400 a month as investment capital.
I started out playing low stakes hold'em as additional side income. I earned roughly $10 an hour playing poker online. Increased my $1000 starting bankroll to over $5000 and then started playing in casinos once or twice a week. Over the last two years, I have earned $350 a month on average, playing poker 3 nights a month on average. Just one of my sources of side income. As my bankroll grew larger, rather than increase my stakes to play with better players, I instead took some of the money I made and invested it into other avenues. First being Prosper. I liked the idea of being able to invest a small amount on a regular basis, see instant returns, and have a residual income source in case things were to change for me financially. Every dollar I put into a P2P lending site, I receive $1.08 back a year on. So if I have $2000 invested that's about $15 a month in profit. This brings me up to $365 a month in "passive income". I put passive in quotes because I do actually spend a significant amount of time earning this money, although I would not consider either of the above a "job".
I have been researching the stock markets day and night since late 2006 until I began trading in January of 2009. I have shown over a 300% gain YTD on my trades this year. If I can earn just a 20-30% annualized gain on my trades, for ease, let's call it $10,000 in capital, that is an additional $3,000 a year or $250 a month. This takes me up to $615 a month in "passive income. In order to earn these types of returns, you can't just dump money into a mutual fund, or buy something because your buddy told you to. I spend hours upon hours reviewing charts, fundamentals, and management capabilities of over 120 companies. I check each company on a weekly basis, I look for the right times to get my money in, always at a 3 to 1 reward to risk ratio (if I want to make 30% on the trade I won't risk more than 10%).
Once my car and remainder of unsecured debt is completely paid off, hopefully by June 2012, I plan to purchase my first rental property. I have been watching the properties in my home town for over 2 years (since before I bought my house) and will be looking to make a good move on a profitable property, that I can rent for break even for 2-3 years. This will enable me to build ~$10,000-$15,000 in equity in this rental. At that time I will take out a second mortgage on this equity earned, re-invest that into major improvements (namely: floors, bathroom and kitchen) and hopefully be able to double or triple my money on the work put into the property as I plan to do all of the labor myself. This should net me a healthy return of $15,000-$30,000 on my investment, plus my $10,000 in equity returned to me. When all is said and done, I should have earned a return of $35,000-$45,000 in 3 years for just a month or so worth of work re-modeling this rental.
So on and so forth. These are my plans anyways, coming from a young individual, who is aspiring to be debt free, and financially independent (capable of living off my investments) by the age of 37. I would love to be able to do this as well as being a financial adviser and personal money manager, teaching others to do as I have done, at the same time (assuming I don't go bankrupt 3 times over trying!!). /crosses fingers
OK, ignore all that rambling. In terms of money management, I would recommend as Investar has shown me, detail out EVERYTHING that you spend your money on every month. Figure out what you spend money on that you can do without, or perhaps less of. Break your spending down into the below budget (stolen from Investar). A lot of these items are annual items and should be broken down into monthly averages. For the first year or so, you will likely need to make adjustments.
Monthly Budget
Self Gross Income
Spouse Gross Income
Total Gross Income
Total Net Income
1.) Fixed Expenses
a.) Housing
b.) Utilities
c.) Food/Sundries
d.) Clothing/Work Clothing
e.) Communication, phone, computer
f.) Transportation, Gas, Repairs, Registration
g.) Insurance, Homeowners, Renters, Auto, Life
h.) Fees, legal, bank, license, taxes
i.) Medical/Dental Co-Pay or Totals if not insured
i.) Contingency for expense fluctuation (10% of total of A-I)
2.) Elective Expenses
a.) Entertainment, Dining, All Snacks
b.) Hobbies and Habits
c.) Savings and Investment
d.) Charity and Gifting
e.) Home Improvement Fund (IE paint, upgrades etc, not household supplies/decorating)
f.) Household supplies, decorating, extras (worthless crap my wife buys?)
3.) Debt Service
a.) Car Payment
b.) Credit Card
c.) Personal Loans
d.) Student Loans
Un-allocated free cash flow
This is something I make all of my group candidates submit to me as well. An organized budget shows someone that is careful with their money, understands their finances, where their money goes, and why. If you are looking for guidance, start here. =)
Do we need a topic split here?
BAEVentures
|
