Photo credit: loanswithrob.comt

Home Sweet Home

I have to admit that I admire those who jump in early … writing these posts is no exception: by posting first, Scott – and now Ryan – are taking a chance. But, taking chances is what life is all about: jump in and see if the water’s fine … find out for yourself, don’t wait for somebody else to tell you

I think there’s a flaw in Ryan’s reasoning around the 20% Rule – but, I’ll have to double-check his NetworthIQ profile to be sure – in the meantime, can anybody else see it?

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I purchased my house in February 2007 for $685,000. It was just after everyone knew the bubble had popped, which is why we were able to purchase it for $65,000 less than it had previously been listed for (what we thought was a great deal!). Since then, it has dropped in value to around $630,000 (Yikes!), and we have paid off $20,000. This means we owe about $35,000 more than our house is worth.

My monthly “nut” for this house, including everything, is $4700 (hence the picture at the top of the post!). This is 34% of my net income, BUT, because my home is large enough to serve as my office as well (large dedicated space for storage of product, meetings, etc.), I do not have to lease another office. Therefore, my corporation pays me $1200/month for the use of that space, taking my gross house liability to $3500, or 25% of my net income.

As for the 20% rule, I would be right on with $101,000 net worth and $20,000 of mortgage paid off. BUT, the value has gone down, so technically the 20% rule says I should pay off $55,000 more, right? Though if that is the case, I would probably not follow the 20% rule due to my adherence to the 25% rule and not seeing any additional return on that investment (of course, my payment would go down, but it’s only at 5.25% and I can write off the interest). What do you guys think? What would you do?

As for our plans with this house, we will likely live here for another 8 years or so, until I retire with my number!

“Crevices and Foot Holds”

It’s only fitting – since Lee invented the “Lee’s List” (as it is affectionately known here) – that Lee gives us the first sneak peak at his updated list …

If I understand mountain climbing, and I do not, part of the event involves finding the crevices and foot holds. These are the things that give us opportunity to move upward and onward.

In trying to place some $$ value to things on my “Lee’s List” it has come to my attention that in so doing it will increase the size of my mountain.  I’m not sure I agree with that or to say the least I don’t understand.  In my estimation placing $$ value to the list is nothing more that redefining when we go on this mountain adventure.  While it “could” increase the size of the mountain, most likely it will just show me where the crevices and footholds are and force me to decide if I really want to keep going in this same direction.

My biggest problem is that a lot of the things on my “List” are ongoing activities and will call for involvement from others.  People who will purchase and use the class materials, the Magazine.  Hopefully some of the cost will come back to me in profit. I’m not sure how to estimate that.  Then I have to factor in daily costs. Still another issue that makes this difficult is that I haven’t done any real homework regarding the cost to do and/or produce what I have listed. I’ve done a lot of dreaming.

Anyway here is my “very feeble attempt” at coming up with some figures for the MINIMUM’s on my “List”

(A).  $ 350,000 …….  Design, write and publish course materials.

(B).  $ 500,000 …….  Travel to states & Countries 6 times a year.

(C).  $ 300,000 …….  Help Establish chaplains programs & donate.

(D).  $180,000 …….  Two vehicles & expenses (domestic type)

(E).  $ 400,000 ……. Create & Publish Magazine (God & Stress management)

(F).  $ 550,000 ……. Two yearly Personal “Family” vacations (stress relievers)

That comes to a total of $2,280,000 which I will definitely come back with a better figure for I realize I need to do some more research.  To me the figures seem outrageous but then again I’ve never tried thinking world wide.  My world has pretty small in the past.  I also understand that these are figures to just get me started.  Continued income, passive and/or active will play a major role.