Wednesday, September 24, 2014

Stacking Chips, Tens and Hundreds of Dollars at a Time

Hey everyone.
So in the past two days, I made $600 from legal work and the way that I allocated that money was as follows: $100 towards my credit card bill (I now have a balance of $961), $100 toward my 2013 tax bill (I now have a balance remaining of $1,100), $110 towards my professional liability insurance bill, $50 towards my Roth IRA, $25 towards my regular investment account, $40 towards tithes, leaving me with $75 in checking until the next time I receive money. Which will be tomorrow.

Currently, I make about $150 a day, 7 days a week, 365 days a year. I aspire to make $300 a day next year, which will put me in the six figure income bracket. $300 a day translates into $109,500 a year. Having more income means that you can save more. I advocate saving anywhere from 7 - 15% of your income, even when you have credit card debt. However this is only provided that your credit card debt is $1,000 or less. When your credit card debt starts to creep above $1,000, that's when credit card interest really starts to burn a hole in your pocket.

I do agree with financial talking heads that one should pay off credit card debt as aggressively as possible. However, I believe that there is a place for saving, no matter how small your income is, if you have credit card debt at $1,000 or below. I believe that if you have credit card debt above $1,000, you should use 90% of your money allocation for savings/investing to pay it down and just save 10% of the amount you would normally have saved. (Example: You have $5,000.00 in credit card debt. You were originally planning to save $250 per month. Instead of saving that entire $250, use $225 of it to pay down your credit card debt and allocate $25 towards your savings.)

The reason that you are not using the entire $250 to pay down your credit card debt is because having some reserve makes it less likely that you will have to rely on your credit card to fund future purchases. And for me, I feel much richer when I can look at my bank statement and see money in my account/see that I'm a member of the investor class, as opposed to calling a loan company representative and hearing how much debt I've paid off.

As I've mentioned in my previous post, my most immediate goal is $10,000 in savings/investments by the end of the year. After getting $1,000 in savings/investments, the next major milestone, in monetary terms is $10,000. The reason for that is primarily psychological for me, but I also feel as if $10,000 allows one the ability to make a significant investment in an individual stock or several stocks. By significant, I mean that the amount of capital you invest in a stock can generate a nice bit of money if the investment doubles. (If you buy 2 shares of a $200 stock, and it doubles, you've made $400. But if you buy 200 shares of a $200 stock, and it doubles, you've made $40,000.)

When making purchases for my own stock portfolio, I usually buy in amounts of $500. That is to say, I usually invest $500 at a time. Although it's not a lot, I believe that waiting until I have $500 to invest forces me to take time to evaluate the merits of each investment I purchase. Speaking of investments, as of today, my investment account stands at $1,341.41, with $1,210.12 of that being in my Roth IRA and the remaining $131.29 in my regular investment account. I made $14.36 today in my 2 shares of  BIDU and $6.15 in my 3 shares of LMT for a total of $20.51. My portfolio is down .3% and I started my portfolio at the beginning of September.

At any rate, I think that's more than enough for a post. I hope to see everyone again soon and thanks for reading.

Monday, September 22, 2014

Opening Up My Financial Life

Hey everyone.
So as I promised in my last post, I'll be disclosing my own personal financial state, in my quest to become a millionaire. But before I do so, I'd like to say that while I don't endorse everything that Suze Orman says on her t.v. show or in her books, she once said that she believes the three impediments to achieving wealth are fear, anger, and  shame. I wholeheartedly agree.

There were times in my life when I was fearful about when I would make money, or whether I would make money, or generally around the topic of money. There have been times when I have been angry at how little money I had, while jealous at the amount other people have had. And I have definitely been embarrassed about my financial state at various times in my life. However, I have managed to resolve my money anxieties and I realize that I am always able to generate income if and when necessary. I have also managed to resolve my anger around not having the same amount of money as some of my peers. And through opening my financial life up to the public, I hope to resolve my issues regarding shame and money.

Money in general, and debt specifically is such a taboo topic. I am a 31 year old male and I have a total of $90,000.00 of federal and private student loans from my undergraduate education at Duke University. I also have another $122,000.00 in federal and private loans from law school. I owe my mom $5,000.00 for a loan she gave me after I passed the bar exam and I have $1,069.00 in credit card debt. The credit card debt has been mostly from paying monthly healthcare premiums and for a $500.00 plane ticket I had to buy unexpectedly for my grandfather's funeral. So my total debt is $218,069.00.

As of today, September 23, 2014, I have a total of $1,253.99 in my investment account, $1,147.70 of which is in my Roth IRA. I currently own 2 shares of (BIDU) and 3 shares of Lockheed Martin (LMT). Although most financial planning experts advise paying off credit card debt - which I am doing aggressively - I feel a certain sense of security and financial well-being when I know that I am making my money generate money for me. My investments have acted as a kind of make shift savings for me also over the past few working years.

The most money I've ever had in my savings/investment account is $15,000.00 and I had that amount right after Duke. I saved and invested while living at home and working while paying no rent. Over the past decade, I have saved and invested several 4 and 5 figure sums. However, life and more specifically paying for education expenses over the past few years, rent and groceries in New York City, along with sporadic employment prior to late 2012, has dwindled my safety net.

Fortunately, I am beginning to rebuild my savings and investment portfolio and I recently moved into a spacious new one bedroom in Manhattan. My rent is currently $1,100 per month; my professional liability insurance is $90.00 per month; my phone and internet service costs $250.00 per month; my office rent is $500.00 per month (but it's sometimes abated); my health insurance is $354.00 per month; my disability insurance is $180.00 per month; my life insurance is $107 per month; and my student loan payments that I am currently making total $1,000.00 per month. I'm on track to make $55,000.00 this year as a solo practitioner lawyer and  on my quest to be a millionaire by December 31, 2016, I am aiming to have $10,000.00 in liquid assets by December 31, 2014. The road to major goals is paved with smaller, more attainable ones to promote perseverance.

Aside from ridding myself of shame surrounding my financial situation, I want to chronicle my journey toward millionaire status and show people that anyone with a sufficient income ($45,000.00 in major cities and $40,000 in smaller towns) can become rich - myself included. As I journal about my own personal journey, I'll be sure to include money/personal finance/investing lessons, as they pertain to my personal situation. Lastly, please send in any questions or comments about any personal finance topic you'd like to see me discuss. Thanks for reading and good night!

Thursday, September 18, 2014

Reality Finance - The Millionaire Challenge

Hey everyone.
I read an article today that talked about Federal Reserve Chairwoman Janet Yellen and her insight that the poorest of Americans have not benefited from the economic recovery that has taken place over the past five years. I've always believed that anyone can learn to manage their money well and become a millionaire - myself included. But sometimes it's harder for those who 1) aren't earning enough; 2) don't understand what to do with their savings, if they are able to save; or most importantly 3) haven't seen anyone close to them become wealthy independently. I would like to remedy the problems I just mentioned. That's where my Reality Finance - Millionaire Challenge comes in.

You see, I WILL BE A MILLIONAIRE BY DECEMBER 31, 2016.  More specifically, I will have paid off all of my debt and have $1,000,000.00 in cold hard cash in my bank/investment account by December 31, 2016. But in the process of becoming a millionaire, I would like to expose to the world how I do it. That's the "reality" part of Reality Finance. I want to show people that with perseverance and hard work, it is possible to achieve financial independence. I also want to help specifically groups that have been ignored by the financial/wealth management industry such as younger people (ages 6 - 30), women, and people of color. I remember interviewing with a wealth management company some time ago and the interviewer telling me that I couldn't make money working with a person who did not have a lot of money. That concept really rubbed me the wrong way - mainly because it's not true!

At any rate, I've decided to open up my finances for the world to see. I will disclose my debt load, my investment account balance, how much I save and spend on various things throughout the day, how I choose investments, and any other thing readers/viewers would like to know. Tomorrow and in the coming days, I'll be opening up about these pieces of information about myself. I'll be doing this in an effort not only to chronicle my own journey toward  $1,000,000.00, but to show the entire world that anyone with drive and an income can become wealthy, no matter what their financial starting point is.