Last year, my main money goal was to diversify into real estate. At the beginning of 2017, all but $145,000 of my investments were in the stock market. Here is how the $145,000 was invested in real estate:
- $95,000: private loan
- $50,000: Syndication deal #1
At the start of 2018, I have $660,000 in real estate investments (and another syndication deal in the works):
- $290,000: private loans
- $200,000: syndication deals (4 at $50,000 each)
- $170,000: trailer park
Mission accomplished! Although, my timing was bad. Really bad:
I’ll discuss my financial goals for this year and ask you about yours, but first, we must answer last week’s question.
Laundry Lunacy!
Last week, Mrs. 1500 asked you about how many loads of laundry you do every week. I feel like we do way too many, but most of you were on Mrs. 1500’s side. But wait, I need to address another important matter first!
I’ve been called all kinds of names since I started the blog. A$$hole is popular, but others include cheap-ass, jerk, and the always timeless, c*ckmaster. Just last week, longtime reader/hater Tim called me a special kind of idiot. Thanks for that!
Anyway, the laundry post took the hate to a fun, new level! NicoleAndMaggie drew a comparison to none other than Darth Vader (!):
It really isn’t funny reading about someone who does none of the chore criticizing how that chore gets done. That’s the kind of thing that shows up on Captain Awkward because it’s something Darth Vader boyfriends use as a means of control. Really not funny.
NicoleAndMaggie must have missed this part of the post:
…my lack of laundry help is a relic from the days of when I worked and Mrs. 1500 didn’t. Since the first draft of this post was written, I’ve seen the errors of my ways and started doing more of the laundry…
But that’s OK. One doesn’t get compared to a supervillain that often, so I need to relish this special moment!
Is there anyone worse than Darth Vader? Stalin and Hitler both murdered millions of people. However, Darth Vader blew up a whole planet (2,000,000,000 dead on Alderaan)!
I don’t think that I’m that evil, but then I watched Star Wars again and maybe NicoleAndMaggie are on to something. I had totally forgotten about this scene:
No one else compared me to Darth Vader, wife beaters or ethnic cleansers, so let’s move on.
Accidental Fire agrees with me, so they are correct:
I do one load a week, that’s it. And I follow the Japanese Subway Style guide and just stuff it all in. It’s always worked for me, things get clean.
Reader Peter is similarly awesome:
I’ve standardized my outfit. Wear the same look every day. Do laundry once a month. No dryer sheets, use felted wool balls.
I agree with The Vigilante. Why wash towels with any frequency when you’re just drying your clean body with them?
When I was single, I never washed my towels until they smelled and were obviously way overdue. #efficiency
However, most of you agreed with Mrs. 1500 including Reader Debbie:
Well, it is just me but I do 4 loads a week. Gotta separate whites, colors, darks and then there is the sheets/towels load. I use Charlie’s soap so no need to additional softner.
Mike from Balanced Dividends:
On your question, we probably do 6-8 loads a week. But we have a tiny washer/dryer in our downtown Chicago apartment.
Mrs. 1500 would get along magically with Reader Elena:
We are a family of 5 (with 3 kids under 3, 2 of them still in diapers), and we do 8 loads: one per day plus an extra one on Saturdays when I change the sheets and towels.
Finally, Tawcan seems to have a struck a nice balance:
Given that we have a 22 months old still in cloth diaper and a 4-year-old, they go through clothes a lot, especially when they go play in the yard. I would say we probably go through like 2 or 3 loads of laundry each week. We try to reduce the number of loads by wearing clothes for multiple days (both kids and adults).
I’m a sensitive guy (not really) and comparisons to Darth Vader make me cry (nah, they’re kinda funny), so I’m moving on to less controversial ground.
Financial Goals?
I had asked about goals a couple weeks ago. In the post, I listed out mine for the year. Gen Y Finance Guy made an interesting observation:
Not only had I not made any financial goals, I had not even thought about any (the software project that Gen Y mentions is proceeding full-on). This is a big and positive change for me.
Money insecurity used to terrorize me. Sometimes, I’d wake up in the middle of the night in a cold sweat after having a nightmare that I was broke. Since I started my journey to financial independence, those fears have faded. Pivoting to a frugal lifestyle along with saving more money than I’ll ever need has squashed all money fears.
Don’t get me wrong, I still care. I wouldn’t be buying trailer parks and continuing to investigate syndication deals if I didn’t. However, it’s not as important as it once was.
My one and only goal this year is to max out 401(k)s. Mrs. 1500 will max hers out at her job and I’ll do the same with my solo-401(k). I think that this is the optimal way to save because:
- We have enough in post-tax to last:
- We have almost $700,000 in post-tax investments. Even if Mrs. 1500 quit her job tomorrow, this is enough to last us until 59.5 when we can start withdrawing from a 401(k).
- We also have $450,000 in home equity. After younger daughter finishes school, we’ll probably sell our home and either rent or buy something much smaller and cheaper. All gains up to $500,000 are tax-free, so this money allows us to coast into our mid-50s with huge padding.
- We won’t pay much in taxes when we do access the 401(k): The standard deduction for a married couple is $24,000 and we won’t have to withdraw much more than that to live on. Tax law specifies a required minimum distribution (RMD) that will make us withdraw more than we need (and result in taxes), but that doesn’t kick in until 70. And I don’t expect the RMD to be more than our current income.
So, I think the best course of action for us is the focus on the 401(k) to limit our tax burden now. If I’m wrong here, chime in.
You?
How about you? What are your financial goals for 2018?
My goal is the same as yours except I have a government Thrift Saving Account which is basically the same as a 401k. The max we can contribute is $18500 this year and now that I’m only working 20 hours a week and my salary is cut in half it’s going to be much harder to max it. But damn it, I will!
Accidental FIRE recently posted…Area Loser Would Be Loser In Every Possible Time Period
I’m familiar with TSPs and they are awesome! Super low fees!
20 hours a week sounds like a good balance to me as well. I wish that I would have done it earlier in my career.
Money goals? I’d like to keep my dividends growing in 2018. We managed 10% growth last year, so a nice 8% improvement would be a nice spot to be in for 2018.
Other than that, I’m pretty content. My mantra is “just keep compounding”. The market will do what it does (up or down). Either way the bills get paid and the money compounds.
Mr. Tako recently posted…The FIRE Movement Was Inevitable
Good post, Carl. I think your ‘surgical’ diversification into real estate/syndicate deals may turn out to be smart. Think of it this way: The expected forward return in the US stock market for the next ten years is well under 4% (I didn’t say this, Jack Bogle did some while ago, based on valuations, which have only gotten worse since). So, you have a low bar to beat in investment real estate – your income yield alone will likely be significantly higher than this figure, even if the underlying asset didn’t appreciate at all. This may turn out to be a smart investment like your well-timed move into FANG stocks some years ago! Best wishes for a great 2018!
Ten Factorial Rocks recently posted…FIRE Without Smoke
Yeah, I’m optimistic that real estate was a smart move because I’m pessimistic on the markets. I know that Buffett said the same thing as Bogle too. It’s just that the market has been on an absolute tear. Anyway, I’ll reassess in 2020!
You have a great 2018 too!
Nice post, Carl. I’m also liking your moves into RE – especially the trailer park! As commented previously, they seem to offer a lot of potential if in a good location, etc.
On your question re: goals, for 2018:
– Taxable Accounts: increase passive income derived from taxable investments vs. non-taxable assets.
– Schedule and Frequency of Distributions – consider obtaining appropriate assets that payout during lower contributing months (NOT: March, June, September, and December).
– Liquidity: continue to be mindful of the massive disproportion of passive income from investment vs. banking/savings accounts.
– Type of Income and Diversification: look for new sources of passive income beyond traditional “portfolio” income.
Overall, we’re also looking to diversify our current real estate exposure via Fundrise. – Mike
Mike @ Balanced Dividends recently posted…6-Month Update: Fundrise Passive Income Review
Oooh, I’ve been doing Fundrise for a couple years now and am happy with it. It hasn’t been tested with a recession yet, so I don’t think it will always be as good as it is now. However, I’m not worried either.
You didn’t really specify what you will be doing with your solo 401k. Have you considered doing a self directed.
I have considered but haven’t pulled the trigger.
Given your fondness of real estate, that would allow you to do more private lending and such. I”m struggling with what to do this year, leaning towards paying down mortgage since we will also be taking standard deduction in 2018. First time in 15-20 years I won’t be itemizing.
Oh yeah, I should have elaborated! I have a post coming up soon about my portfolio, but in the meantime, here is the answer: All of those real estate investments are in a self-directed solo 401(k). I LOVE mine because of the taxes. Since all of these real estate investments pay regularly, if I had them in a post-tax account, I’d have a hefty tax bill (and a lot of paperwork). Having them pre-tax keeps my accounting easy and my tax bill low.
Regarding paying off your mortgage, rates are going up. If your mortgage is low, you may want to hang on and divert the money elsewhere. I don’t have any fancy letters after my name, so take my advice with a grain of salt. This is just what I do.
Since we have plenty in investments, my main money goal is to make enough to cover our costs and fund 401k. Nothing more.
Real estate is kind of terrifying to me; our primary residence and maybe $20k of VGSLX in a Roth IRA are more than enough to scratch that small itch.
As far as goals, I like to set expectations low. It’s safer and more consistently satisfying. A couple years back I predicted a 14-year path to FI, then forecast milestones each January 1 to get us there (assuming $30k in annual contributions and average 7% market growth).
Well, we started putting away significantly more than that, and we all know what happened to the markets over the last couple of years. So we’re right now only $12k away from where I expected us to be on 1/1/2019(!). Those milestones are the only financial goals I’ve got, and I’m more than happy to watch them dance past ahead of schedule.
“Real estate is kind of terrifying to me.”
Nothing wrong with that at all. Real estate is a lot of work, even for passive investments like ours (research in our case). One of the keys to success in life is identifying your circles of competence and staying within the boundaries.
“Well, we started putting away significantly more than that, and we all know what happened to the markets over the last couple of years. So we’re right now only $12k away from where I expected us to be on 1/1/2019(!). ”
Incredible! Two years ahead!
And this reminds me that I did the same thing way back in early 2012. I had my portfolio reaching $1,563,000 in 2024 and I reached it this month. Crazy.
Ummm… Darth Vader did NOT blow up Alderaan. It was Grand Moff Tarkin that ordered it. Frankly, I’m a little disappointed you got this wrong. If you made a simple mistake like this, I can’t trust this whole website. 😉 Just joking… Anyway, that’s what our kid would think.
Yeah, I would wash the towels when they start to smell. Mrs. RB40 has less tolerance so she usually ends up doing them.
Money goal this year? Increase my bond allocation from 22% to 25-30%. Increase my real estate exposure. Simple to say, but tough to sell stock when they are going gangbusters.
Joe recently posted…A Landlord’s Second Worst Nightmare
I wouldn’t worry much about the timing of the real estate shift. In a year or two, you might be looking really smart.
We have one big goal for 2018 on the financial front: to get our total spend back to $40k. We’re going to an all cash (well, mostly cash) system. Still paying the mortgage, gas, Amazon, etc. electronically, but the rest is going cash money. 🙂
Done by Forty recently posted…A Peek at the Future
Cash is a good way to go! I’m curious to know how it works out though because it is a pain in the ass. Lately, I’ve been doing touchless transactions with my phone and they’re awesome!
My financial goal is the same every year. Beat the S&P with lower volatility with an equity/bond mix and sale of options for premium income. So far so good.
Financial Velociraptor recently posted…Monday Trades ON, MTCH, MSFT
Hey Carl,
For other readers (definitely not me, I’m super smart) who may not know what a syndication deal is, could you point them towards info on what that is and how it works?
I’m sure I (I mean THEY) could just use google, but what’s the fun in that…
I’ve also got a goal to do more real estate investing (more than the current 0), but that may not happen this year, more of a long term plan.
Thanks!
Andy recently posted…My Camp FI Experience
Hey Andy! For the other readers (of course), a syndication deal is this: https://www.biggerpockets.com/renewsblog/2010/08/30/real-estate-syndication-3-ways-you-can-profit/
They are all a little different, but in mine, I pool with a bunch of people to buy an undermanaged/dated apartment building. Over the course of 3-10 years, the operator fixes it up and raises rents. When the time is right, the building is sold and the investors split the proceeds. In the meantime, investors get quarterly dividend payments. Here is the company that most of my deals are with: https://praxcap.com/
Money wise, keep growing our dividend income/passive income and net worth. Trying hard to keep up with you lol. :p
My key focus this year will be on personal fitness and happiness.
Keep up with me? I thought you were already ahead!
2018 Financial Goals:
-continue maxing out 401K and HSA
-continue delving into where my discretionary money is going and how to further optimize my spending
-start saving after tax $ into Vanguard account
-continue ignoring market fluctuations, bitcoin, and other noise contrary to ‘set it & forget it’
-continue researching & visiting cities/towns to potentially retire to
-figure out when I might be FI
Part of my goal of becoming financially independent is to think about money less! I am trying to balance my desire to think about money less with my desire to become financially independent (which requires me to think about money).. My goal for 2018, is to invest in real estate! I’m copying you.. We bought a trailer home last year and it’s been working out great for us so I’d like to venture more into real estate investments.
Jared | MrFiGuy recently posted…December 2017 Financial Update
I’m keeping it pretty damn simple: save at least as much as we saved last year and retire at the end of 2018.
Mrs. BITA recently posted…Magic Internet Money
Wooo, retire at the end of the year! That’s a pretty great one!
Our new financial goal is to get our TFSA to $1,000,000 (TFSA = Tax Free Savings Account, a tax free investment account funded with after tax dollars). We just maxed it out for 2018 so we’re on the right track. Our goal is to get to $1,000,000 by age 55. At the pace the market is going we’re ahead of plan (so far anyway).
Owen @ PlanEasy recently posted…Three Extreme Ways To Save Money This Year
My only money goals this year are to be conscious with my spending, max out all tax deferred accounts, and plow the rest into the brokerage account. Same goal. Every year 🙂
Fervent Finance recently posted…Diverting Attention
Turning 41 this summer and have/had two goals this year. Consolidate and simplify investments (vanguard indexes) and pay off one of four rentals. I’m at 1.7m net worth, maxing out 401k and hsa, but now for the curve ball – my wife who I love very much is talking divorce. ?. So….seems like my money goals will take a backseat to family chaos. Rocky seas ahead.
Wow, I’m really sorry about your situation. I’m so sorry. I can’t even begin to relate to your situation. Hang in there.
We have two goals this year:
1. Pay off our mortgage (this is getting delayed a couple of months as 5 out of 6 of our appliances have broken in the last six months!!)
2. Decide on an FI date (likely in about 5 years) and set action plans in place to ensure I reach that goal. Spouse wants to keep working, but I don’t! I think I currently have enough in tax-deferred accounts and just need to squirrel more away in taxable investments to get me through the five years before my Roth ladder money becomes available.
Carl,
Long time reader, first time commenter. First off, you rock. Sorry there are all the haters on the web who try to bring you down. Second off, my goal is to reach FI sometime in the second half of the year! After that, I’ll save up a cash pot of 1 yr living expenses and then peace out!
Dave! Thanks for the kind comment! Also, FI in 2018! That’s awesome! Congratulations!
Man im surprised you have some haters out there! My blog isnt that huge or anything but I dont ever get emails from people calling me names or anything! I do get emails almost every day though but typically asking for my advice on something.
Now i kind of wish I had my own haters!! 🙂
I think your plan is great man, you are so far ahead of most people that sticking to maxing the 401k at this point is a no brainer.
Alexander recently posted…My AirBnB Experiment in Indianapolis – Traditional Rental Converted to a Vacation Rental
I’ll stop by and leave some f-bombs on your site!
My biggest goal is to find a balance between investing in tax advantaged accounted and our post tax brokerage account. we’re hauling ass on our 401k’s today, but since we want to retire early we’ll need more post tax investments to live off of before turning 59 1/2. I know there are workarounds to avoid paying early withdrawal penalties on your tax advantage accounts, but I want to avoid that as much as possible. It’s not as tax efficient as it could be, but I’m okay with that for now.
Interesting. Even with the 10% penalty, in a lot of cases, it’s still best to max out the 401(k) and just take the hit. Listen to this for more information: https://radicalpersonalfinance.com/314-can-get-money-early-retirement-using-ira-401k-even-pay-10-penalty/
I’m maxed out on all retirement accounts (TSP, HSA, Roth IRA). My latest money goal is to diversify into long-term treasury bonds, commodities, and maybe corporate bonds. I have a good portion of my portfolio in stocks and it’s time to balance that with some less volatile investments.
Nice work! You’re killing it!
Bahahaha! Who knew you were a true villain, Mr. 1500? You devil! 🙂
As far as 2018 goes, it’s going to be a bomb-diggity year. We’re scheduled to pay off our student loans(!) AND our car loan by 1/1/2019.
Uhm, that means we’ll only have a mortgage at that point. Five years ago I didn’t think that was even humanly possible. Mind blown. 🙂
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