10 Questions and a Pizza Place with Gen Y Finance Guy

Today is the 56th edition of our periodic guest post series called 10 Questions and a Pizza Place. (The 1500′s are pizza fanatics.) We have a list of 17 questions we pose to fellow financial bloggers, and they are free to pick and choose 10 or answer all of them. Let us know if you would like to be featured in a future edition of 10 Questions. Note: We just changed the questions, so feel free to submit again.

Gen Y Funance Guy has big dreams like retiring with $10,000,000. Go big or go home? He’s an ambitious fellow though, so I wouldn’t bet against him.

Geny

What is the worst financial mistake you made?
When I was 20 and very green and naïve to the whole finance thing, I agreed to buy a house going down as the “credit partner”. The deal was that I would get paid $1,000/month for letting this “investor” (that will remain unnamed) use my credit. Then after 3 months we would do a formal loan assumption and I would get an additional $5,000. To make a long story short the house was 100% financed and this guy was over- extended. At 20 years old and in college I was left holding the bag. I now had a $3,500/month mortgage to deal with. I was only able to rent it out for $2,500/month.

We bought the house in 2007, so you can guess what happened next. The financial crisis destroyed housing prices. So now this house that “I” bought for $447K was now only worth about $250K. After two years of renting it out at a negative $1,000/month I tried to do a short-sale. However, the bank denied the sale and ultimately I let the house go into foreclosure.

I was allured by the easy money. This was the last time this has or ever will happen. If it sounds too good to be true than it almost always is.

What would you do if you inherited $1,000,000 (after taxes) today?
The first thing I would do is accelerate my plan to pay off the mortgage in 7 years and wire about $350K to get rid of the mortgage on our primary residence. The next step I would take is to pay off the mortgage on my rental condo of about $165K.

After the mortgages were taken care of, I would transfer $85K over to my Prosper P2P lending account. Then $200K into my after-tax investment/trading account at TD Ameritrade. Then $100K for would be set aside for real estate investments through RealtyShares.com. And the final $100K into CD’s (30 months @ 2.25% with Navy Federal Credit Union)

What kind of car do you drive?
A 2011 Hyundai Sonata. I have had it 4 years now and I plan to be driving it for at least another 6 years if not longer.

Who inspires you?
The late Louis Zamperini and Jim Rohn. Others that inspire me include: Warren Buffet, Peter Theil, Tony Robbins, Tony Horton, John Lee Dumas, Carl Daikler, Darren Hardy, and Tim Ferris.

What is the best financial move you have made?
The best financial move that I have made to date actually involved physically moving to a different city. In 2011 my wife and I moved to Newport Beach to live by the beach and get rid of the commute. We owned a condo that we rented out once we moved. The plan was to rent for a year or two before looking to buy a house. Then in 2013 when we were ready buy a house, we realized that our money wouldn’t go that far.

Many of the houses we looked at were $550K to $650K for small 1,200 to 1,400 sqft and now backyard. And many of them needed work. Although we were approved for $750K, we didn’t want a mortgage anywhere near that amount. In actuality we didn’t even want a mortgage at $550K, especially not for what it would get you in the Orange County area.

So our search ended after about a month. We decided to rent for another year and re-evaluate our goals. We moved into a luxury apartment high rise while we contemplated our next step. During this time my wife went to go and work for her mom about an hour away and close to our condo. Then later in 2013 her dad had a heart attack.

This made the decision easy. We would move back closer to family where the cost of living is significantly lower. We ended up buying a 3,300 sqft house on a quarter acre for $370K. This saved us $200K to $300K just on the purchase price alone. And we got 4 times the house.

This was the best financial decision we have made yet. It not only saved us a bunch of money, but it allowed us to be closer to family. And our disposable income to put towards investments and debt pay down that will eventually lead to financial freedom has increased significantly.

What’s your favorite tip for saving money?
Track your income and expenses to see where all your money is going. You can’t optimize what you don’t measure. I personally use a combination of Mint and Excel. I do a deep dive on expenses once every 6-months to cut things out that are no longer bringing joy to our lives. Sometimes you sign up for monthly subscriptions to things, and after a few months you are over it, but still paying the monthly service. When you track your expenses you become much more sensitive to when and where you spend. It gives you more of a money consciousness.

What is your favorite pizza place (I am a pizza nut)?
The Temecula Pizza Company. They have this pizza called the “White Tiger” that is served with a creamy pesto sauce, jumbo shrimp, fresh diced tomato, and we like to add some asparagus.

What are your biggest goals in life?
Pay off my mortgage before I am 35. We just got the mortgage in 2014 and started our 7-year plan to pay it off with our first payment in January. The stretch goal is 5-years. I outlined the strategy here if you’re interested:

Become Financially Independent by 48 (20 years from today). For me that means building up a Net Worth of $10M that generates 6% annually in order to have monthly income of $5oK a month. I will admit that this number has gotten smaller over time as I have realized it doesn’t take as much money as you think to live the lifestyle of your dreams. I just started tracking and reporting this on my site here: http://wp.me/p56XGU-3d

Become a CFO. I am currently with a company that has asked me to be a part of their succession planning. My boss (the current CFO) has a 3-7 year exit plan based on a liquidity event. In the meantime he and the company have set certain milestones for me to hit in order to be prepared for this role. One of those is earning my MBA that I will start this August. This is really the top of the ladder in my Corporate Finance Career.

Create a successful blog and vibrant community. Starting a blog is probably going to be one of the single best decisions I have made in order to reach my goals. I know it is going to take a lot of time and effort, but I am playing the long game.

If you could go back in time and give yourself one piece of advice, what would it be (don’t say ‘buy Microsoft,’ everyone says that)?
I would tell my younger self and my wife that we don’t need to replace our 4-year old cars. Instead use the $60K (we both spent about $30K) to invest or put a down payment on a house. We didn’t buy our current house until 2014, but the same house was going almost $100K cheaper a few years earlier after prices collapsed during the financial crisis. This was true for many houses around the country. The decision to buy new cars delayed our ability to have enough in savings for a house. Let’s just say we won’t be making that mistake again. At least now we have intentions of keeping our cars for at least 10 years if not longer.

What advice would you give to a 24 year old, just out of college?
Pay Yourself First. Start maxing out your 401K early, preferably right out of college. I would wager that you will be making at least double if not triple what you made while in school. So the best thing to do is set it to max out before you ever see your first paycheck. The longer you wait the harder it is going to be to do. You get used to the extra money and will have a hard time parting with it. I always recommend you start doing it right out of college when you start your first job. At the very least start contributing at least enough to get the company match.

Mac or PC?
I love my iPad, but I have to say PC. But that is because I live in Excel, nwhich just doesn’t work the same on a Mac (nice try Windows). However, Apple has done a great job creating beautiful products that are fine for most people.

What are your favorite personal finance websites?
Financial Samurai, Mr. Money Mustache, ThinkSaveRetire, jlcollinsnh.com

What is the best piece of advice you have ever received?
To always remember that every overnight success was 20 years in the making. This reminds me to always be in it for the long game and avoid things that sound too good to be true.

Dogs or cats?
Dogs for sure. I am severely allergic to cats. Plus dogs are loyal animals that just want to please. I currently have two dogs, and everyone know that I have a favorite.

What is the worst personal finance mistake you see people making?
Taking on too much debt. Debt is not evil and is an awesome tool. But too much leverage can be very damaging. It usually starts with buying fancy cars that have to be financed and are usually 50% or more of a person’s annual income. Then it gets compounded by people buying a house for the max they are approved for. Personally, I don’t think you should buy a house that is more than 2-3X your gross pay.

What product or service epitomizes consumerism?
Consumer Debt! The fact that we can buy things we don’t need on credit just baffles me. Don’t get me wrong, I love and use my credit card for every purchase I make. However, I pay it off every month. I only use it to take advantage of the free money in the form of rewards and cash back. Oh and the extra protection it provides against fraudulent activity.

Big thanks to Gen Y Finance Guy! Keep up with him on his blog over at Gen Y Finance Guy.com

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15 Responses to 10 Questions and a Pizza Place with Gen Y Finance Guy

  1. Thanks Mr. 1500!

    It is an honor to be featured in your blog.

    Cheers!
    Gen Y Finance Guy recently posted…Thursday Rant #1: The Office Time KeeperMy Profile

  2. Josh Collar says:

    wow, that’s the first time I saw someone with a financial freedom goal of 10m ($50k per month). Interesting and very impressive indeed. A new blog added to my reading list.

    Cheers,
    Josh

  3. Whew, the double-whammy! Featured on both 1500days AND Financial Samurai. 🙂

    In all seriousness though, you’ve got some great answers here. I’m always happy to see others who are interested in P2P lending, and the love you have for Excel warms my heart. As for home buying, I couldn’t agree more on buying reasonably and well within your income limitations. There is no reason to stretch beyond that 2-3 times annual salary if at all possible. Use that excess money elsewhere!
    writing2reality recently posted…Milestones and Memories, Passion and DeterminationMy Profile

    • Hey W2R,

      I knew I was going to be featured here, the Financial Samurai feature was a surprise. Well at least on the timing, I thought it would be at least a couple weeks or months as Sam had mentioned he had a large back log of posts ahead of mine.

      I am very thankful to both Sam and Mr. 1500 for letting me share with their communities.

      Its actually pretty ridiculous how much I use excel between work and my personal life. Such is the life of a true Finance Nerd!

      Glad to see you active on so many blogs in the community. I am sure I will see you around.

      Cheers!
      Gen Y Finance Guy recently posted…Thursday Rant #1: The Office Time KeeperMy Profile

  4. I can’t escape you GYFG! I never pictured you for a Hyundai guy, with the previous Newport Beach lifestyle and all 🙂 Everyone makes mistakes along the way, it’s part of the course, but just have to make sure to live and learn. It’s scary how co-signing for a loan can ruin a person’s finances. I’ve read a story about a mother and father co-signing their daughter’s student loans, and now they have her kids and her debt that wasn’t forgiven. Scary stuff!
    Fervent Finance recently posted…From WWII Vet and Janitor to MillionaireMy Profile

    • That’s right FF, I am omnipresent. I am everywhere you go…LOL

      Just trying to connect with as many people in the community as possible. This journey could get lonely if you don’t surround yourself with a bunch of like minded individuals.

      At the time I thought I was making the responsible decision to buy a moderately priced car that I could pay cash for. Forgetting the fact that I had a car that was less than 4 years old at the time. The best financial decision would had been keeping my old car and delaying this purchase a lot longer. But hindsight is always 20/20.

      I will say though that Hyundai has come a long way in design, and they do have an awesome warranty.

      Mistakes are for sure part of the journey. And I have made plenty of them. You reminded me of a story I will share on the blog eventually. It was my disastrous experience co-signing for a car for my dad.

      Cheers!
      Gen Y Finance Guy recently posted…Thursday Rant #1: The Office Time KeeperMy Profile

  5. Just read your post on Financial Samurai too. Awesome story. Wow…$50,000 monthly income is big goal to shoot for but it’s good to be ambitious. Although it’s highly possible that that number will continue to drop if you find that you don’t need to spend a lot to live the life of your dreams. Will definitely be checking out your journey.
    Andrew@LivingRichCheaply recently posted…Stop Being Time PoorMy Profile

    • Looks like a few people got a double dose of me today. Glad you enjoyed my real life story. I really think that transparency is the best way to connect with people. And I think it helps put my goals into context just like anyone’s story would do for themselves.

      You are on to something for sure Andrew. I likely don’t need $50,000 to live the life of my dreams. I do realize there is a big difference between need and want. What I need to be happy is different than the goals I want to achieve.

      $10M in Net Worth is a big hairy audacious goal. I know I won’t get there with out a lot of hard work, focus, and discipline. Putting it out to the world makes me want to hit that goal even more now.

      Looking forward to hearing more from you.

      Cheers!
      Gen Y Finance Guy recently posted…Thursday Rant #1: The Office Time KeeperMy Profile

  6. Felix Money says:

    Great responses to great questions. And wow, a $50,000/month goal! Mine is about that a year lol! I couldn’t agree more with how vital it is to track income and expenses. It’s been an eye-opener for us. And yes, I also agree that you shouldn’t buy a house at the maximum you’re approved for, I know so many people who do just that, and then also lease expensive cars! Consumer debt can be great if used properly, but it’s mostly abused in our society to the point where it destroys people’s lives.
    Well, I must say, since I’ve started blogging about a month ago, I feel like I’m seeing the same people leaving comments and guest posts in the personal finance blogging world. It’s like I get to know all of you, it’s awesome 🙂
    Felix Money recently posted…It’s Random Rant Time!My Profile

  7. Fantastic post, as usual. And yes…he really is everywhere!
    Brian @ Debtless in Texas recently posted…Preparing for a Baby Without Breaking the BankMy Profile

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  10. $50,000 monthly income is big goal I would be happy with a $4000 a month goal

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