What’s Going On

Diane told us all about her revised Number in this comment to my recent post:

I worked my number up again last night.

If I am getting this part of the exercise, it is to make us take a hard look at our “wanta” haves and look at see what we will say mid-stream when we get offered alternatives. Do we take Door Nr 3, or do we keep the $3M we’ve already got?

I skinnied down the list to pretty much “today” plus what I really really really REALLY want to do before I die. It shaved $3M off my number and left me with between $5.3M and $5.5M, in 5-6 years.

I also looked at the number from a passive income perspective – if it paid out 10% or 5% and then at 7%, how much would go to taxes (assuming I’m no better at avoiding those than I am now) and how much to covering those minimal things on my list.

This was to give me the picture of HOW MUCH would it take to sustain me later, given that I may be tempted at some point to throw in the towel in the face of aggravation, frustrations, and resistance by others in my life? The answer was a scary $5.3-5.5M.

Now, read on as Diane tells us what’s going on  since then …

It’s a quiet week on-line for me.  I took the plunge and after finally meeting with two of my bosses – who didn’t seem to think they wanted an employee who telecommuted – I resigned from my job as a necessary step to moving to NC.

The typical 2-week notice was (gratefully by me) allowed to shorten to give me time to get things together for the move.

The house is planned for renting to a friend, but I need to meet with a lawyer who specializes in residential real estate so that I can put a lease together that addresses not only standard terms, but also the special considerations that my friend is giving me in return for my reducing his rent – and it has to be something that we can both agree to in writing.

I am also looking at the tax and legal implications of converting the property from a personal piece of property to one that is owned by an LLC, and have talked with a property manager in the expectation that at some point I will need to have a property manager running the property for me (outside of my friend doing some of those functions for reduced rent at this point).  This is new to me – both selling and renting would be – so I am looking for legal advice.  That meeting (with the lawyer) is scheduled for next week.

Health insurance will end at the end of the month, so I have finally gotten to the doctor about my sore shoulder to see what is going on.  It’s more than advil/motrin type products can handle, and I am not sure that a massage will take care of whatever is going on.  He scheduled me for some tests/exams this week (all done now, awaiting results).

Concurrent with the move, I am relocating stuff into the garage for a EVERYTHING MUST SALE garage sale this week, and things that still need to get packed for the move to NC into the living room.  Most of the big items were moved to NC a couple of weeks ago, but I still have some large things to sell (or plan on another rental truck).

Then, the bathroom needs painting, a screen needs fixing, I need to hire carpet cleaners, pick out carpeting for the hall and a room, bring in the carpet layers to measure and install, and then the  whole place needs to be cleaned top-to-bottom!  I’m running out of time already, and most of this is scheduling, not doing it myself, but I am not quite nutso – not yet!

Lots to do, and my casual reading is two books Adrian had recommended, reviewing them while trying to locate a sample lease.  I spoke with a couple of others who deal with leases – another rental investor as well as the property manager at the last apartment complex in which I lived.  Both gave me some pointers on what kinds of terms are standard for different kinds of clientele.  I’m glad I’m not having to learn everything on this one deal, but I am getting my feet a little wet.

I did a lot of working on my numbers last week, and that revealed that I can live off my 401k and IRA AND pay off my credit card debt – up to July of next year without getting a job or other source of income.  (Note that a 10% penalty is less than a 30% drop in the 401k’s value, and that I won’t pay more income tax on the dollars from the IRA than what I would pay on any dollars I earn this or next year.  I will try to defer more withdrawals to next year as I know that this year is probably going to be higher than next year, but I do not think my rate will change that much anyway.  Perhaps now the interest on my student loan will be tax-deductible (as it was supposed to be).

By July 09, I hope to be doing other things that will push that date of being self-supporting (at least for my next investments) out, but I have lived off credit cards before and know that if push comes to shove, I can do it again.  (Note, I am not planning to do it again, I just know that I have paid them off, and I can do it again if necessary.)

I may find other temporary employment to help with cash flow as long as it allows me to have time to work on the really big things, which is the $8.5M in 6 years (first number for what I thought I minimally needed) or $5.5M in 6 years (for my number adjusted down to the true minimum needed).

I hope that momentum will pull me thru and I’ll sail on from the 5.5 to the 8.5, but I expect the first few years will be steep, hard learning curves, and it will grow more exponentially once I get more dollars to invest in me.

So, Mark, I am well on my way to NC now . . . soon, soon.  Where are you off to next?

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