November 29, 2012

Financial Freedom Milestone: A Major Step in Making a Million from Nothing


It’s been quite a journey thus far. Starting small with “Making a Million Dollars from Nothing: part 1” and “Part 2.” We’ve been working our 9 to 5. Blogging our butts off. Side Hustling until coach calls for a water break. We’ve established a Mutual Fund, and like kids on Christmas Morning, we eagerly open our monthly earnings report when it arrives in the mail. For some of us, we have reached Financial Freedom with the help of financial gurus like Dave Ramsey or even your favorite internet shaman like frugaldad.com
Even if you haven’t, you still have a large chunk of change and maybe you want to celebrate (atleast do it Frugally!) or you are ready to take the next step and take a risk!
Now, more than ever before, is an amazing time to invest the stock market. While I was in New York for the QUINNEPIEC GAME Forum, one of the Wall Street workers gave an amazing speech but one tid bit I remember him saying was that market trend analysis shows that it is safer than ever to invest, yet companies and people are still scared because of the 2008 financial crisis. With the Eurozone crisis how it is, this fear is undoubtedly grounded in well-reasoned fear based logic. For others, the logic may not be there but the fear of the impending December 21, 2012 apocalypse might be just enough to keep your neighbor from taking the risk. I’d still go with the longer term option of selecting a few mutual funds for the long term and using whatever you deem as disposable income into a stock portfolio. (You are keeping atleast a simple excel spreadsheet, right?)

I’m thinking of something even more long term though, something that could be turned into a business if you so pleased to. But for now, should be a side-hustle, or atleast a very, very long-term investment.
I’m talking real estate.[url= http://money.cnn.com/2012/11/19/real_estate/existing-home-sales/index.html] Home prices are starting to rise [/url] and I know you keep hearing that real estate interest rates are “Lower than Ever!” atleast I did, on the radio ad the other day. But a quick google search shows that, as of November 29th, 2012, a 15-year fixed rate is 2.84% (Uh… yeah I’d love to have my house paid off in 15 years at under a 3% interest rate!)

So why not bust out the rusty old Texas Instruments business calculator you had to use for that college level economics course and run a few Payment equations [VGC1] to find out if you can afford it?
So what do you do if you can afford it? If you’re willing to take the risk, I’d say take the plunge, but of course, be frugal and do your research. This isn’t a get rich quick scheme.

Find a property that is either right for you and your family (or your future family) or one that could be easily fixed up in a few months and flipped for a profit, if you are banking on the real estate market to bounce back. Which it will, it will reach an equilibrium. You’ll turn quite a tidy-profit. This same strategy can be used in the future too. Higher education is on the same path as the Tech Bubble and Real Estate bubble took. The key is studying the past to capitalize on the future.
Or, for the Side Hustle fanatic, buying a small property near a college town or somewhere nearby your humble abode and turning it into a rental property is a wonderful way to stay busy on the weekends while earning a nice chunk of income each month.
Real Estate is never a bad investment, especially if you finance the correct loan and never exceed 25% of your take home pay for house payments.
Good luck and stay Frugal!

I would love to hear your feedback about renting properties and your experiences. Tell me about your good and bad tenants! Or have you ever owned more than one house? What were they used for? How did you balance the budget?






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