Agreed. But I still can’t believe that after the payoff I owe interest. I don’t care what kind of logic is used that is at its base wrong.
OK, I can scratch one off the list, credit score just jumped to 653 WOOOT!!!
Now I can have it set on automatic while I work on getting my revolving accounts to zero, and saving 100k. Man it feels REALLY good. 60 points in 3 months from actively trying to get my score up. NICE…
Any ideas on how to save up 100k in a year??? 
J
Ok…
I just thought I would ad in a few other things that have happened over the last few weeks.
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I set a goal for myself to have an envelope stuffed with 100 $20 bills. I told very few people about this, and had no idea how I would reach that goal. Well I will have that envelope by this thursday. I want to say that I know I was a poor manager of money, and I knew as long as I didn’t fix that skill I would never succeed in REI. So being able to stash away $2k is great for me. I don’t even know what I am going to do with it, but I do know that it will feel good to hold that cash in my hand when I complete this task. So the big question is how did I get the money? I sold of most of my hobby equipment. If you like golf, imagine selling your golf clubs and playing putt putt golf. It was extremely difficult to do… but easier than selling the tickets.
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I found a friend who is pretty successful in REI. He is the prototypical Millionaire next door type. Low key, lived in the same area, been married for a long time, etc… but when he told me he owned over 50 properties I was blown away. The take away after talking to him is how very ordinary simple things are to him. He keeps track of all his paper work. again something I am not good at (probably the next skill I will develop).
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Setting and meeting these ‘tiny’ goals is so invigorating. I have always dreamed big and acted bigger, sometimes getting there and other times not. The thing about big dreams/efforts is they are extremely taxing. Setting the big goal, and finding satisfaction in meeting the little ones lets me get the joy of meeting a goal, without the stress of the hurculean effort. Its the best of both worlds. AND I don’t feel like I have strayed from my original goals, which is to ultimately own rental property.
Jay
Actually, for most credit card accounts, the interest due is computed once a month – at the end of the statement cycle. The calculation adds up your daily balances during the statement cycle, then divides by the number of days in the statement cycle to determine your AVERAGE daily balance. Then the AVERAGE daily balance is multiplied buy the daily interest rate and then again by the number of days in the statement cycle.
This is how you can have a finance charge at the end of the month for a balance you paid in full during the month. For accounts where you carry a balance, it is better to make your payments as soon as possible after the cycle closes rather than waiting for the due date.
For most credit card accounts, interest is not compounded daily as you suggest.
I think you have set your standards too low. A 650 credit score is a “B” credit rating at best. You strive for a 720 score or better. An “A” credit rating will save you money in many other facets of your life than just borrowing power.
Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies, employers, and government departments employ the same techniques. Your home, life, and car insurance premiums may go down if you get your credit score up. If you want a job that requires a security clearance or any job that requires you to be bonded to handle money, a lower credit score works against you.
Saving money in an envelope is not a great idea. Sure it might make you feel good, but your money is not working for you. At least put it in a bank savings account, or better yet a bank CD, so your money is making more money for you. Get it out of your hands to make it harder for you to succumb to temptation to spend it.
The key to successful and efficient project management or problem solving is to break the big task (problem) into several smaller tasks, such that completing each small task eventually completes the big task. Remember the Chinese proverb, a journey of 1000 miles begins with a single step.
Congratulations on the progress you have made to date.
I have to ask why you want to have $100K in the bank? You don’t need that much money in the bank to invest in real estate. If you wait until you have that much saved before you begin investing, you may wait quite a few years. I think it was Mike (propertymanager) who said in one of his posts that it took him something like six years to accumulate his first $100K.
You could use that six years to accumulate several hundred thousand dollars of income property that will help you build that $100K bank account, if that is what you want. Remember the power of leverage – small amounts of capital can control much higher valued assets. A 20% downpayment lets you own 100% of the asset.
I would much rather spend $20K now to own a $100K property which generates a positive cash flow AND is appreciating 5% per year than have that same $20K in bank CDs earning 5%.
It is an admirable goal to eventually have a $100K capital fund, but I think you should make this priority secondary to acquiring income producing property.
If you want build a $100K cash investment fund, consider flipping property to start. Wholesale deals for $4K to $6K per property to build investment capital. When you have enough cash in your iinvestment fund, start doing rehab-flips for the $20K+ paydays. Use the profit from your flips to acquire the next one. With more money to invest, you can aim for larger (proejcts) paydays or more frequent paydays (do two or three smaller projects at a time). Every third or fourth payday, use some of your flip profits to acquire a rental property for your long term hold portfolio.
Just my two cents worth – keep the change.
Dave,
REALLY GOOD STUFF!!!
Keep in mind I have always taken money for granted, when I needed more I worked more. So it has always been easy to make and spend money. I need to learn how to get control of money, to value money. My old credit score of 593 speaks volumes of my attitude towards money.
So 653 is a step towards 720 (thanks for helping me set my new credit score goal).
Saving $2000 without having a goal to spend it is huge, and to resist the tempation to spend it is equally huge. There is something that happens when you HOLD the cash in your hands. You feel the weight of the money, the smell, the texture of the new versus old bills. It makes a connection and when I realize how long it took me to earn that money, I am less inclined to waste it on say an iphone, 50" plasma tv, or a new computer. All are things that I wanted really bad, but can’t see giving someone $400 for a cell phone.
Its that kind of mindset that I must develop before I can manage 100s of thousands of dollars. If I can’t manage hundreds or thousands how can I manage millions?
Its something I don’t see mentioned much and its why I am detailing it here.
Jay
Jay,
May I inquire which method you used to obtain your credit score? I just realized I was misled by one of the credit bureau’s monthly subscriptions. When my actual FICO was pulled from a potential lender, it was much lower than what I had thought. I emailed the company (Experian’s CreditExpert) about the discrepancy and they said they use a “similar” model and may not be exact. That’s an understatement.
I am using Equifax (which is more expensive I don’t know if that means more accurate). I also use the three in one credit report.
Here are my observations:
Equifax appears to be more stringent with its criteria. When I started this thread my score was 593 on equifax and 630 on the other. So I have been using the Equifax score.
The equifax score watch gave me more useful information on how to improve my score.
I found that both systems were similar in regards to my credit reporting, and both would update within an a month of one another, one sometimes being faster than the other.
Knowing what I know now, I would get the score watch from equifax for $9 a month, and the triple credit report $12 a month if I wanted to monitor my credit reports and scores.
I am going to drop both of them, and just pay to check them quarterly at the end of this year.
Jay
Did you compare the Equifax’s score to that of your actual FICO and found it to be comparable?
How do you find your REAL Fico?
Jay
Ok then, here is where I am today:
I paid off all my credit cards. I have 0 credit card debt. I all of a sudden have $20,000 worth of credit, and I have $2,000 in cash fun money, I have a credit score of 650. This was all done within about 4 months. And I have realized I really can do what ever I put my mind too. And the more I read about real estate the more I realize that I don’t want to provide housing for the average person. This is mainly due to the book from Mike (aka Propertymanager). I know a lot of people who do what he does, and to be honest, it doesn’t appeal to me. That makes the $50 I spent on his book well worth the money. It has probably saved me thousands which is the same as making thousands. Thanks Mike.
I do want to do real estate, but I have other talents that can make me more money in the mean while. I set a goal to make $100k by summer 08, I will not be able to do that via real estate, I can do it via my professional skills. So I am going to start a business. I will then save the money and invest in commecial property. I have learned a lot, on this forum, and I am not gone. I will continue to update this thread as I reach the goals, but this has been a real eye opener and I would not have gotten there without the help of the people of on this forum.
Jay
"I paid off all my credit cards. I have 0 credit card debt. "
AWESOME job Jay!! You did an amazing job paying off your debt in such a short time. :banana
I’ve really enjoyed reading your thread. Please keep posting to it. I’m interested to know what type of business you’re starting. I know you’re an I.T. person (so am I). I’m looking for other things to do as well that can bring more flexibility and control to my life as well as make more money. I hated the last job I had and it really burned me of IT for a while, though I’ve been doing it for 17 years. (yes, the last job was that bad!) Anyway, you’re an inspiration and I am glad you found this forum. Let us know about your continued journey.
Well I have spent the last few weeks focusing on my job. I am fortunate to work for a stable company and my probationary period is over. This allows me some security for my family, and now I can get back to my plans.
I have hired an administrative assistant to help me do the things I am not very good at doing. Things like responding to phone calls, filling out paper work, sending documents in a timely fashion. I KNOW I am not good at this so my assistant is helping me in these areas.
Next step is to get the company formed, open up a bank account, and get some lines of credit formed. I really can’t wait until next year, as there will be a lot of bargains, and I just want to be ‘lucky’.
(Luck being when opportunity meets up with prepardness ).
More later…
J
Just thought I would some thoughts to this thread. It finally dawned on me that real estate is a means to money/power. Let me explain…
I had an unexpected bill of $10k hit me a few months ago, I paid off my credit cards and just managed the large expense. Lots of penalties and interest with this new bill. I am forcing myself to pay it off by the summer.
So I called my CC company up to make sure everything was fine. Come to find out, I can borrow the remaining money interest free for the next 10 months!!! Now without this ‘free money’ I would spend at least another couple of hundred to thousands paying of this last bill. NOW??? It will be paid off interest free!! That’s more money in my pocket.
I think we all know this on a logical level, but when it hits you emotionally you understand that there really is a “poor” way of thinking and a “rich” way of thinking. I would have never borrowed that much money a year ago, because I would have been “scared” of the debt obligation. After finding a way to pay off the credit cards I am no longer worried about a large debt obligation.
It really is a powerful feeling…
j
More good news, my credit score is now up to 670. I hope this keeps up, I would like to have my score at 700 by this time next year.
Laziness: I have been thinking a lot bout this lately. And when I use laziness I don’t mean the inability to work hard, or that someone lacks the desire to work hard. I mean that once you get to a certain stage, you DON’T need to work hard.
Think about this for a moment, we spend a lot of our “hard working years” (school, college, early employment) learning how to work for someone else. When we reach the goal, high five or six figure income, we realize that we actually have it pretty good. I mean as I write this I can’t think of one thing that I NEED. I have a warm house, belly full of food, people who love me… So what’s the point in working hard, when all I need to do is maintain?
And that is where I currently defining laziness. Its the inability to find a reason, or the lack of desire, to move to another level. This is MUCH more difficult to do than I had ever thought. I know I am not lazy, in the traditional sense as I will work 24 hours straight if needed. But find it difficult to put together 24 minutes of time to increase my business life.
I mean look at what I have accomplished in 6 months, erasing that credit card debt was like increasing my networth by almost 20k. And I can feel the difference. All of my Bills are paid up and current as of the 15th of the month. A year ago, I would still be paying bills until the end of the month.
I know its different for a lot of people. But when we need or want something bad enough, the laziness disappears. That said, I ask, when do you know when you have enough? When do you know its time to add to your bounty?
Is there a max. credit score you can get? Like, is 700 is the best? Sorry to change the topic of this thread but just thought ide ask. :rolleyes
I believe the range is from 450 - 850.
I am STILL not ready to do the REI game. I still have some bad habits. Just to update everyone here is what’s happened in the last two months:
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The money I ‘borrowed’ interest free is almost gone, and I have NOT paid the tax bill. Stupid I know. Suffice it to say that I have plenty of excuses and NO excuses.
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We had a pretty good Christmas, got a 50" tv, lots of presents for everyone.
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We also had an accident, and lost our PAID for vehicle.
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On the plus side, I do save 15-20% of may income.
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I bought some computers at cheap price, and thought I could make a quick 20% on them. No dice. The price of the computers dropped so that I would only get calls from scammers, etc… Now I have a stack of unsold computers. (I do have a second plan for them)
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Because of the money I borrowed my credit score DROPPED to 649!!!
All told, I would guess I should be pissed off or miserable, but I am neither. I am learning how this crap works, and FINALLY the lesson of stick to your plan is sinking in to my head. I am seeing how the SLIGHTEST diversion can put you behind for YEARS!!! As it stands I am probably a few months behind, but I should have zero tax payments, be looking to getting a refund, and I should have had my original 12k loan down to 9k. Which is much better than the 21k total I owe.
Still I am not worried, just need to get back on track.
j
Sholingo,
I've read all your posts. You've come a long way. That being said, how did buying a 50" TV an lots of presents help you accomplish your goal? That is the question you need to ask yourself about every purchase. I recommend you read " The Millionare Next Door" and "The Richest Man in Babylon". They are good books that show how the rich look at money and what do to with it. Think of your spending habits as an addict. You CANNOT go back to that way of thinking. You've come so far. Don't mess it up! What did you do with the money you borrowed? Why did you borrow it? When you take on debt, make sure someone else pays for it! That's what "good debt" is! Remember "Rich Dad's" lesson? :shocked. Instead of spending your money, put it to work. You should know the fundamentals of REI by now. Maybe it's time to purchase a rental property and get started.
I remember all the lessons (and have read all those books), etc… Its weird and I hesitated writing my last post because it IS so far off my track. But then I thought, no one EVER mentions when they make a mistake, so I figured I would mention mine and the fact that I did learn a lesson from it. I should also mention that my savings account has gone up to nearly $6k and I have $2k worth of laptops, so I still have some of the money available.
I also paid my car and life insurance in full, and I pay my mortgage by the first of the month instead of the 14th of the month. So I can account for most of the money.
My point in posting is that if my goal is to save money for real estate, I need to stay focused on the goal. I didn’t want to get into my justifications for the spending, but I had set some goals for my purchases, and there were some killer deals on stuff I wanted (50" 1080p plasma for $1000, and I got one for $1100 and rebates and no payment/financing for a year), but it was the other “deals” that came out that made me spend more than I wanted.
And I must say watching football in HD filled the void left by selling the tickets. I don’t know what to say other than this little blip, felt right. I am back on course. I don’t know when you are supposed to spend your money, but I don’t feel bad, and I know I will have everyone paid off before the ‘FREE MONEY’ runs out.
I will keep everyone posted.