I read a post at the Carnival of Debt Reduction at Money, Matter and More Musings about reducing debt without giving up your Lattes. I had a similar aha! moment years ago and made a drastic change in my lifestyle that made a huge difference in my thinking and finances.
I had made some big mistakes investing in real estate at that time. In the end, I was deeply in debt and had a huge negative cash flow every month. I was borrowing more money every month just to make payments on my properties. I did not have a money to spend on Lattes or going out to restaurants or any entertainment for that matter. But I did live in a beautiful home that we had restored and we drove new cars.
So, what could I do to reduce my debt? I was in the trap of continuing to borrow to maintain my head above water. To the great dismay of my wife (who had put her savings and soul into renovating our home), we decided to sell our home, our new cars and move into one of our rental properties. Our monthly housing payment dropped by $800 per month and we got rid of our car payments by trading our new car for an older model that we could afford to own without financing.
The property we moved into was a 1850 single family home that had been converted into a triplex. It was filthy inside and there were more cockroaches living there then residents of NYC (It took us 3 years of weekly pest control treatments to kill them all). The floors were all crooked and the windows so porous that we had plastic covering over all of them. We lived for a year in the first floor of that house while gutting the second floor down to the studs. The house was always filthy with dust and roaches. We had 3 children under the age of 6 to contend with while doing this work. Later we moved upstairs and lived with no kitchen for a year while we redid the first floor. We cooked everything using a microwave and did dishes in the bathtub.
In the end we had a beautifully restored home. But more importantly, our finances had recovered. We never missed a payment, never had a house go into foreclosure nor declared bankruptcy. It wasn't easy and certainly to some extent very humbling. Our peers could not understand us leaving our 4000 sq ft home for this mess. But your peers won't pay your bills and you can't let them make your financial decisions.
This time of my life was a great character building experience. I think it was one of my better decisions. Sometimes to change your financial situation you have to change your paradigms.
Since then I have gone through ups and downs in my finances, but never found any situation unsolvable. Today, I have grown my Net Worth and am in the best shape financially I have ever been. And, I have never owned a new car since.
Monday, February 12, 2007
Carnivals of Debt Reduction and Finance
View the new Carnival of Debt Reduction and see my post on Borrowing to Get Out of Debt as well as many other interesting posts.
Also the Carnival of Finance includes my post on Self-Directed IRA's
Also the Carnival of Finance includes my post on Self-Directed IRA's
Sunday, February 11, 2007
Climate Change
Here's an interesting article about another theory of climate change. The exciting thing about real science is exploring cause and effect. Being open minded to new theories is the mark of a good scientist. Scientists often use correlation to guess at causation but correlation is not the same as causation. That is the problem with the whole Global Warming hoopla. It is all based on correlation. Some say that it is "90% certain" that man made Carbon Dioxide is responsible for global warming but there are several problems with this statement.
- The time frame (sample size) is very small compared to the history of the planet and normal variation could easily explain any deviations in temperature we may or may not be experiencing. There is very limited data from deep sea temperature changes as well as atmospheric temperatures.
- Other causes are not being considered - such as noted in the above article, solar variations. variations in the earths wobble, etc.
- The Mann data (the infamous "hockey stick") has been "doctored" to exclude certain data
- It may be to our advantage to have the planet warmer - consider that people were healthier and lived longer during the Medieval Warming Period
- In statistics we can only be confident of a correlation when we have less than a 5% uncertainty. Even assuming that there is a 10% uncertainty, this is 100% greater than statistical certainty. So 90% certain is meaningless.
Carnival of Observations of life
An interesting new carnival - Observation of Life includes my post on Presidential Campaigns and Christmas
Friday, February 9, 2007
Corporate Profts are dirty - how about yours?
ExxonMobil recently reported record corporate profits of $39.5 billion dollars. This was on sales of $377.5 billion. Our astute Senator, Mrs. Clinton, has called for the government to "take those profits" and put them into an alternative energy fund. I think this is called Totalitarianism, but Hillary would never admit that. To her the money a big corporation makes is unethical and illegal.
Most Americans understand little about capitalism and how it works. They have become deeply suspicious of corporate profits and think that big corporations are evil - polluting the skies, stealing from the poor and taking jobs from hard working Americans and giving them to slave labor in Asia.
But Corporations are rational entities and the goal of every manager is to use the dollars that he has been given by shareholders as wisely as possible. Just like in the Biblical story of the Parable of the Talents, each manager is intent on getting the best return for his lender. Sure, there are some unethical people in companies, but there are just as many or more that operate unethically on a personal level. Most Corporations have checks and balances to help people act ethically, so they may, in fact, be more ethical than the general population.
I think that there is a disconnect between what people say and do in their personal lives and how they think about corporations. In every transaction that we engage in throughout our personal lives we try to maximize our profits. You buy a house for $100,000 and sell it at market price 2 years later for $200,000 - do you protest and and rant about your "individual greed" or do you turn around and reinvest your profits into another house? And when you find a collectible at a garage sale for $10 and re-sell it on EBay for several hundred dollars are you "evil" because you got the price the market valued your item for? Then why do you rant when gas prices go up due to market forces?
So what is the difference between your behavior and that of the corporations? At least the Corporation will report their profits to the IRS - do you always do that? Exxon's profit margin was less than 10%. This is pretty small when you consider the risk involved in finding new sources of oil (often in unfriendly countries), and investing billions in refineries. As an investor, I think their return is too small and risk too high for me to invest in their company.
Money (capital) will always flow to the best returns. When you invest in the stock market are you looking to take the most risk for a low return or do you calculate how much risk you are willing to take Vs the return you will get? Companies follow the same logic. If we make it too difficult for a company to make a profit, the investors will put their money elsewhere. We can see that here, where no new refineries have been built in the US for over 20 years. Then we wonder why a hurricane, that shuts refineries down, can cause gas prices to go up.
Winston Churchill once said "Democracy is the worst form of government except for all others".
If no one else has said it, then someone should make the same comment about capitalism - it is the worst economic system, except for all others.
Most Americans understand little about capitalism and how it works. They have become deeply suspicious of corporate profits and think that big corporations are evil - polluting the skies, stealing from the poor and taking jobs from hard working Americans and giving them to slave labor in Asia.
But Corporations are rational entities and the goal of every manager is to use the dollars that he has been given by shareholders as wisely as possible. Just like in the Biblical story of the Parable of the Talents, each manager is intent on getting the best return for his lender. Sure, there are some unethical people in companies, but there are just as many or more that operate unethically on a personal level. Most Corporations have checks and balances to help people act ethically, so they may, in fact, be more ethical than the general population.
I think that there is a disconnect between what people say and do in their personal lives and how they think about corporations. In every transaction that we engage in throughout our personal lives we try to maximize our profits. You buy a house for $100,000 and sell it at market price 2 years later for $200,000 - do you protest and and rant about your "individual greed" or do you turn around and reinvest your profits into another house? And when you find a collectible at a garage sale for $10 and re-sell it on EBay for several hundred dollars are you "evil" because you got the price the market valued your item for? Then why do you rant when gas prices go up due to market forces?
So what is the difference between your behavior and that of the corporations? At least the Corporation will report their profits to the IRS - do you always do that? Exxon's profit margin was less than 10%. This is pretty small when you consider the risk involved in finding new sources of oil (often in unfriendly countries), and investing billions in refineries. As an investor, I think their return is too small and risk too high for me to invest in their company.
Money (capital) will always flow to the best returns. When you invest in the stock market are you looking to take the most risk for a low return or do you calculate how much risk you are willing to take Vs the return you will get? Companies follow the same logic. If we make it too difficult for a company to make a profit, the investors will put their money elsewhere. We can see that here, where no new refineries have been built in the US for over 20 years. Then we wonder why a hurricane, that shuts refineries down, can cause gas prices to go up.
Winston Churchill once said "Democracy is the worst form of government except for all others".
If no one else has said it, then someone should make the same comment about capitalism - it is the worst economic system, except for all others.
Holocaust Deniers - Evil or Mentally Ill?
Ellen Goodman is a sick woman, as are many on who try to equate people who disagree with the politics (it's not science) of global warming and equate those people to holocaust deniers.
In fact, those who try to equate the two are themselves holocaust deniers because they totally dismiss the atrocity that Hitler unleashed on the Jewish people. I find people like Goodman to be no different than Ahmadinejad, another holocaust denier.
I wrote that the global warming people were cultists, but they go beyond that. They have elevated nature to the status of God and made humans (Jews) lower than animals. These people are far nuttier than those poor souls standing on the steet corner with their "Repent, the end is near" signs. Holocaust deniers are neither ignorant nor innocent (though extremely ignorant people may innocently accept their claims). They are falsifying history for evil purposes. I don't believe an educated person like Goodman is ignorant. Her intent is as evil as Ahmadinejad's.
It's small wonder that the left in this country is rooting for America to lose the war.
In fact, those who try to equate the two are themselves holocaust deniers because they totally dismiss the atrocity that Hitler unleashed on the Jewish people. I find people like Goodman to be no different than Ahmadinejad, another holocaust denier.
I wrote that the global warming people were cultists, but they go beyond that. They have elevated nature to the status of God and made humans (Jews) lower than animals. These people are far nuttier than those poor souls standing on the steet corner with their "Repent, the end is near" signs. Holocaust deniers are neither ignorant nor innocent (though extremely ignorant people may innocently accept their claims). They are falsifying history for evil purposes. I don't believe an educated person like Goodman is ignorant. Her intent is as evil as Ahmadinejad's.
It's small wonder that the left in this country is rooting for America to lose the war.
Thursday, February 8, 2007
Presidential campaigns and Christmas
Has anyone noticed how much earlier the candidates running for President have kicked off their campaigns? It seems like about 6 months earlier than in the previous election. The first primary is a year away at this point. Do we really need to be hearing about Hillary and Rudy for the next 2 years?
The interesting aspect of this earlier start is that we live in an age of 24 hour news, Internet access, blogs and such mass communication that exactly the opposite trend should occur. After all, in 1800 there were no phones, wireless devices, or powered transportation to allow candidates to communicate to the public or even to travel quickly. Yet, somehow, the public got educated and I believe more of them were engaged in the debate then are today.
This trend is not unique to politics, as anyone who thinks about the trend in the start of the Christmas season is well aware. Used to be that the Christmas season didn't start until after Thanksgiving. I think Labor Day is now the day when the Christmas season unofficially starts. Soon it will be the 4th of July.
So why is this happening? The cynic in me would say "follow the money". Presidential aspirants must raise 10's of millions of dollars to advertise themselves and the first one to the trough is going to get the biggest portion of donations. Merchants want to get consumers to spend their Christmas dollars at their store first.
The more media that there is, the more it will cost to advertise, and hence the more money the campaigners will need. One would wonder if being President is worth it considering the cost. Unfortunately, for most qualified candidates, it's not. So we get second tier candidates. And people look at those running and think neither is really qualified, so they lose interest. Not to mention becoming numbed by the hundred's of commercials that they will see and hear in the next two years.
In the end only the deeply partisan people at both ends of the political spectrum are engaged, which in turn, leads us to forever avoid compromise and good solutions in government.
I'm not sure what to do about any of this, but as it's already February I better get started on my Christmas shopping.
The interesting aspect of this earlier start is that we live in an age of 24 hour news, Internet access, blogs and such mass communication that exactly the opposite trend should occur. After all, in 1800 there were no phones, wireless devices, or powered transportation to allow candidates to communicate to the public or even to travel quickly. Yet, somehow, the public got educated and I believe more of them were engaged in the debate then are today.
This trend is not unique to politics, as anyone who thinks about the trend in the start of the Christmas season is well aware. Used to be that the Christmas season didn't start until after Thanksgiving. I think Labor Day is now the day when the Christmas season unofficially starts. Soon it will be the 4th of July.
So why is this happening? The cynic in me would say "follow the money". Presidential aspirants must raise 10's of millions of dollars to advertise themselves and the first one to the trough is going to get the biggest portion of donations. Merchants want to get consumers to spend their Christmas dollars at their store first.
The more media that there is, the more it will cost to advertise, and hence the more money the campaigners will need. One would wonder if being President is worth it considering the cost. Unfortunately, for most qualified candidates, it's not. So we get second tier candidates. And people look at those running and think neither is really qualified, so they lose interest. Not to mention becoming numbed by the hundred's of commercials that they will see and hear in the next two years.
In the end only the deeply partisan people at both ends of the political spectrum are engaged, which in turn, leads us to forever avoid compromise and good solutions in government.
I'm not sure what to do about any of this, but as it's already February I better get started on my Christmas shopping.
Ozone Hole - bigger than ever
Here's a cute cartoon about the Ozone Hole that everyone was so worried about 10 years ago. We solved that problem - oh wait, it's bigger now due to colder than normal Antarctic temperatures!
This was another politicization of science, like global warming, that created lots of costs to replace CFC's. But, at least we eliminated the cause of ozone depletion. Oh, wait....China is still making CFC's.
I guess if we sign the Kyoto Treaty then we will have solved Global Warming and the religious environmentalists can go to there next cause. Um, but China is not included in Kyoto.
Never mind.........I forgot that the real threat to the world is the US and the wrath of the religious environmentalists has nothing to do with the environment.
This was another politicization of science, like global warming, that created lots of costs to replace CFC's. But, at least we eliminated the cause of ozone depletion. Oh, wait....China is still making CFC's.
I guess if we sign the Kyoto Treaty then we will have solved Global Warming and the religious environmentalists can go to there next cause. Um, but China is not included in Kyoto.
Never mind.........I forgot that the real threat to the world is the US and the wrath of the religious environmentalists has nothing to do with the environment.
Wednesday, February 7, 2007
Carnival of Entrepreuners
Check out the Carnival of Entrepreuners and my post on the Three Pillars of Business Success.
Borrow to get out of debt - a smart move?
I've decided to give Prosper.com a try to borrow funds for real estate investments. As I have been browsing through the listing it strikes me how often people are wanting to borrow money to get out of debt. And the interest rates that these people are offering to pay are not some cheap rates - they are 17-25% interest rates. Does this make sense at all?
There's a massive lending industry that has been created to ostensibly help you get out of debt. Lenders try to make you feel that if you "consolidate" your loans or use your home equity that you will finally be able to break the cycle of debt. This is excellent marketing but I doubt that it is very sound financial advice.
Spending more than you make is a very bad habit to be in - and make no mistake, it is a habit. And for anyone who has had a bad habit (I once smoked), you know that habits are extremely hard to change. Everyone that smokes, for example, is well aware that cigarettes are literally killing them, yet even when offered financial rewards to quit, most people will continue to smoke.
So, what makes you think that by consolidating your debt, that somehow you can break the habit of spending more than you make? This illusion that the lending industry has created that by consolidating debt actually encourages us to spend more, since we trick ourselves into thinking that we are better off. For many people this leads to an ever downward spiral towards bankruptcy or foreclosure. In my real estate business, I see the pain that this brings to peoples lives both in sellers and buyers. A house I recently sold as a "Rent to Own" attracted over 1000 calls in 4 weeks from a simple sign in the front yard. Nearly every one had been through some financial crisis that prevented them from buying a house through conventional methods.
The only real way to break a bad habit is through self-discipline. And this is true of debt habits.
There's a massive lending industry that has been created to ostensibly help you get out of debt. Lenders try to make you feel that if you "consolidate" your loans or use your home equity that you will finally be able to break the cycle of debt. This is excellent marketing but I doubt that it is very sound financial advice.
Spending more than you make is a very bad habit to be in - and make no mistake, it is a habit. And for anyone who has had a bad habit (I once smoked), you know that habits are extremely hard to change. Everyone that smokes, for example, is well aware that cigarettes are literally killing them, yet even when offered financial rewards to quit, most people will continue to smoke.
So, what makes you think that by consolidating your debt, that somehow you can break the habit of spending more than you make? This illusion that the lending industry has created that by consolidating debt actually encourages us to spend more, since we trick ourselves into thinking that we are better off. For many people this leads to an ever downward spiral towards bankruptcy or foreclosure. In my real estate business, I see the pain that this brings to peoples lives both in sellers and buyers. A house I recently sold as a "Rent to Own" attracted over 1000 calls in 4 weeks from a simple sign in the front yard. Nearly every one had been through some financial crisis that prevented them from buying a house through conventional methods.
The only real way to break a bad habit is through self-discipline. And this is true of debt habits.
- First, you must start living on a budget that is within your income. Many people tell themselves that they can't do that. Read this post on beliefs and think again.
- Second, you must use a disciplined method to pay off your debt. The snowball method seems to be the best way.
Once you've taught yourself to live within your means, then you can figure out how to increase your lifestyle. Don't do the later before the former. Some people chose to spend their lives constantly being frugal. I do not advocate that approach, I think you should concentrate on generating more revenue. Increase your value by getting more educated, starting a business or investing in real estate. But remember, first get your financial house in order by living within your means - no matter what your income.
Tuesday, February 6, 2007
Can you negotiate a victory in this war?
Our front-leading Democratic presidential nominee, Hillary Clinton, has vowed that we will withdraw from Iraq should she be elected and that the way she will do that is through "negotiation". The fall report of the Iraq Study Group also advocated negotiation with Iran and Syria as a solution to the war in the Middle East. We are constantly told that the Palestinians and Israelis must negotiate a peace settlement to solve all the Middle East problems (since the Israelis are the root of all the problems).
I once was intrigued with Sufi Islam and read Rumi extensively. But since 9/11 I have turned my attention more to other topics in Islam such as Sharia law and Wahabism. Surveys of Muslims in Britain show a large portion desire to have Sharia as the main law of the land. Sharia includes such niceties as "honor killings" for women who commit adultery, while Wahabism is a very violent strain of Islam extolling jihad being taught to the very young and exported around the world (including the US) by Saudi Arabia. There are over 1 billion Muslims in the world today, no doubt many peaceful. But even if only 10% believe in the violent strain of Islam, that's a lot of people. And even more passively agree with the violent strain, enabling the cycle of hatred and violence to continue. And then there are those who are too frightened to say anything since the penalty for apostasy is death.
And then there is President Ahmadinejad of Iran who has plans to wipe Israel off the map once he gets his hands on nuclear weapons. Ahmadinejad was one of the leaders of the Iranian Hostage Crisis in the 70's when the current war with radical Islam really started.
In our politically correct culture, those who tell the truth are ridiculed, as was Reagan for calling the Soviet Union The Evil Empire. Bush took an equally courageous position in 2002 calling out the Axis of Evil - Iraq, Iran and North Korea. But in the past 5 years no one has dared revisit that truth, despite overwhelming evidence of its truth.
The reality is that we have been at war with radical Islam since 1979 and there is no end in sight. Negotiating with evil only shows weakness. With the Soviets, time has proven that Reagan had it right. The limp-spined politicians that we have in Washington only prolong this war and increase the potential for death unequalled in human history.
Machiavelli wrote:
I once was intrigued with Sufi Islam and read Rumi extensively. But since 9/11 I have turned my attention more to other topics in Islam such as Sharia law and Wahabism. Surveys of Muslims in Britain show a large portion desire to have Sharia as the main law of the land. Sharia includes such niceties as "honor killings" for women who commit adultery, while Wahabism is a very violent strain of Islam extolling jihad being taught to the very young and exported around the world (including the US) by Saudi Arabia. There are over 1 billion Muslims in the world today, no doubt many peaceful. But even if only 10% believe in the violent strain of Islam, that's a lot of people. And even more passively agree with the violent strain, enabling the cycle of hatred and violence to continue. And then there are those who are too frightened to say anything since the penalty for apostasy is death.
And then there is President Ahmadinejad of Iran who has plans to wipe Israel off the map once he gets his hands on nuclear weapons. Ahmadinejad was one of the leaders of the Iranian Hostage Crisis in the 70's when the current war with radical Islam really started.
In our politically correct culture, those who tell the truth are ridiculed, as was Reagan for calling the Soviet Union The Evil Empire. Bush took an equally courageous position in 2002 calling out the Axis of Evil - Iraq, Iran and North Korea. But in the past 5 years no one has dared revisit that truth, despite overwhelming evidence of its truth.
The reality is that we have been at war with radical Islam since 1979 and there is no end in sight. Negotiating with evil only shows weakness. With the Soviets, time has proven that Reagan had it right. The limp-spined politicians that we have in Washington only prolong this war and increase the potential for death unequalled in human history.
Machiavelli wrote:
"There is no avoiding war; it can only be postponed to the advantage of others"
What is your greatest love?
This was the subject of my Ministers' homily this past Sunday in our sparsely attended Service (a temperature of 3 degrees and 4 feet of snow kept some people away). Our Minister had been talking about the subject of money the past few weeks and this certainly was one of the potential loves that people have that keep them away from God.
One of the Commandments that we are given is not to worship idols. Now most of us never think that we are engaged in idolatry since we don't have a golden calf that we bow before and worship. But idolatry extends way beyond that concept. It is really about putting other things first in your life before God.
I can think of many situations that this might be true for us humans:
One of the Commandments that we are given is not to worship idols. Now most of us never think that we are engaged in idolatry since we don't have a golden calf that we bow before and worship. But idolatry extends way beyond that concept. It is really about putting other things first in your life before God.
I can think of many situations that this might be true for us humans:
- money and material things or financial security
- sex
- time
- alcohol and drugs
- cultish associations (e.g. environmentalism, PETA, global warming, etc.)
- religious pursuit (i.e. worshipping the tenants of the religious belief above God - would God call you to murder innocents in a suicide bombing?)
During certain periods of my life I can plead guilty to pursuing more than one of these diversions above any admission that there was a deity. I think that it is a difficult thing for us human beings torn by our earthly desires to subjugate those desires to a higher being. Secular people try to worship their own deities (without admitting such) by taking up great "causes" such as global warming. But these are no different than the pursuit of a new car in terms of idolatry.
Our countries wealth has made it easy for us to be distracted by millions of things we "must have" (new homes, HDTV, Ipods, new cars), given us the free time to pursue extracurricular activities like sex, alcohol, drugs or take us causes. But at the end of the day do any of these pursuits make us fulfilled, happier or assured of what comes after death?
In many ways we are no different than those alcoholics in a 12 step program. We feel the tug of our particular weakness from moment to moment and we need to re-focus one day at a time on what is our greatest love.
Monday, February 5, 2007
Private Money Lending: Use Your Self-Directed IRA to Increase Your Returns
Most people that have an IRA or old 401k invest their money in either low yielding money market funds, bonds or stocks. Few people know of something called a Self-Directed IRA from which you can invest in a wide variety of instruments such as mortgages, real estate, tax liens and franchises in addition to traditional stocks. Every financial adviser is telling you to diversify your portfolio but to them, it is usually limited to the realm of stocks and bonds.
With a Self-Directed IRA you are prohibited from investing in real estate that you live in or collectibles, but there are many ways to invest that can be quite profitable. My brother took an old 401k when he left his job and put it into a Self-Directed IRA and has been investing in ocean front property. Since one of the mega-trends in real estate is the growth in the value of ocean front, he has made a small fortune, all accumulating in a Roth IRA which he will not have to pay taxes on.
Another method of making money in this type of IRA is to become a bank. Everyone who has paid interest in a credit card or other loan and then looked at the measly interest rate in their savings account knows that banks can make a lot of money. Many real estate investors are looking for funds and are willing to pay a higher interest rate than normal - 10%, 12% or more.
I am in the process of looking for this type of lender. My program is to pay 10% interest with the loan secured by a Deed, Promissory Note, Title Insurance and Hazard Insurance. Loans will never exceed 75% of the after-repaired value of the house, so even should a lender have to foreclose, he or she should be able to recover their equity. Choosing an established investor should reduce that risk. This creates a relatively safe investment compared to stocks.
There are many companies that will convert your existing IRA or an old 401K into a self-directed IRA:
With a Self-Directed IRA you are prohibited from investing in real estate that you live in or collectibles, but there are many ways to invest that can be quite profitable. My brother took an old 401k when he left his job and put it into a Self-Directed IRA and has been investing in ocean front property. Since one of the mega-trends in real estate is the growth in the value of ocean front, he has made a small fortune, all accumulating in a Roth IRA which he will not have to pay taxes on.
Another method of making money in this type of IRA is to become a bank. Everyone who has paid interest in a credit card or other loan and then looked at the measly interest rate in their savings account knows that banks can make a lot of money. Many real estate investors are looking for funds and are willing to pay a higher interest rate than normal - 10%, 12% or more.
I am in the process of looking for this type of lender. My program is to pay 10% interest with the loan secured by a Deed, Promissory Note, Title Insurance and Hazard Insurance. Loans will never exceed 75% of the after-repaired value of the house, so even should a lender have to foreclose, he or she should be able to recover their equity. Choosing an established investor should reduce that risk. This creates a relatively safe investment compared to stocks.
There are many companies that will convert your existing IRA or an old 401K into a self-directed IRA:
- Equity Trust
- Pensco
- Guidant - Expensive but seems like the most flexible
- Sterling
I've put my IRA into Equity Trust. I can't lend money to myself, but I can purchase real estate using the IRA. One property I plan to buy for $10K should sell for $20K within a month. Last year my IRA had a return of 1% in my stock portfolio.
Should you decide to do this, investigate it carefully and do your due diligence. A good place to find real estate investors is a local REI club which usually has meetings advertised in the real estate section of the paper every month.
Carnivals
The Carnival of Personal Finance is up with my post on Is Creating Wealth an Obligation? listed. Many other great posts to check out.
Sunday, February 4, 2007
Funding from Prosper.com?
Those who have followed this blog know that one of my goals for my real estate investments is to have $500,000 of funds available to finance real estate purchases this year.
To date this is what I have secured:
$20,000 cash
$8000 in a self-directed IRA
$150,000 hard money line of credit
$40,000 HELOC on my lease-optioned property
I have rented a room at a hotel to pitch "private money" loans at the end of February. These are loans secured by real estate which I offer the lenders 10% interest rate. I have a Power Point presentation prepared and just need to advertise the event. If anyone is interested in learning more email me and I can send you information.
I read an article in today's paper about a company called prosper.com which is a peer-to-peer lending concept. The loans are unsecured. I have registered and will see what kind of interest rate loan I can get through them.
I have also been told by CPC that they will finally review my application Feb 15th.
To date this is what I have secured:
$20,000 cash
$8000 in a self-directed IRA
$150,000 hard money line of credit
$40,000 HELOC on my lease-optioned property
I have rented a room at a hotel to pitch "private money" loans at the end of February. These are loans secured by real estate which I offer the lenders 10% interest rate. I have a Power Point presentation prepared and just need to advertise the event. If anyone is interested in learning more email me and I can send you information.
I read an article in today's paper about a company called prosper.com which is a peer-to-peer lending concept. The loans are unsecured. I have registered and will see what kind of interest rate loan I can get through them.
I have also been told by CPC that they will finally review my application Feb 15th.
Friday, February 2, 2007
Why Men don't go to doctors
A lot is written about why men don't go to doctor's as often as women will - like we're too macho or something. I can tell you why - they waste your time!!
My doctor wanted to do some more tests on me because I had lost some weight (I told him my wife had been away for a month, but that didn't phase him). So he had me take an expensive CAT scan and go to another appointment today. This was basically a CYA appointment so I wouldn't come back and sue him if I was really sick.
The appointment was scheduled at 12 for which I arrived promptly. Three hours later I got back to work after spending 60 seconds with the doctor. I complained about the long wait but his response was all the patients (meaning little old ladies) that took his time talking to him was the reason he was late. This was just a flimsy excuse for overbooking. I find this attitude so demeaning. The doctor's time is deemed to always be more valuable than the patients'.
My time is worth about $100 per hour. Including travel time this appointment cost me about $400. He wanted me to schedule another followup in May. Fat Chance. I will have to be at deaths door to go back!
My doctor wanted to do some more tests on me because I had lost some weight (I told him my wife had been away for a month, but that didn't phase him). So he had me take an expensive CAT scan and go to another appointment today. This was basically a CYA appointment so I wouldn't come back and sue him if I was really sick.
The appointment was scheduled at 12 for which I arrived promptly. Three hours later I got back to work after spending 60 seconds with the doctor. I complained about the long wait but his response was all the patients (meaning little old ladies) that took his time talking to him was the reason he was late. This was just a flimsy excuse for overbooking. I find this attitude so demeaning. The doctor's time is deemed to always be more valuable than the patients'.
My time is worth about $100 per hour. Including travel time this appointment cost me about $400. He wanted me to schedule another followup in May. Fat Chance. I will have to be at deaths door to go back!
Environmental Apocalyptical Religion
The press has been twittering non-stop all weekend about the "final" conclusions that Global Warming is undeniable and caused by us wretched humans interfering in the perfect world. The religious fervor of the proclamations is laughable and sad at the same time. I have often thought to myself that the those who extol the next major apocalypse (population explosions, famines, nuclear winter, global warming, ice ages, etc.), are nothing more than heretical religious extremists masquerading as "scientists". In fact, there is only enough science involved in their proclamations to fool most of the population - which is suffering from a science knowledge deficit.
At the American Thinker J.R Dunn begins an article titled A Necessary Apocalypse with this quote:
A man who ceases to believe in God does not believe in nothing; he believes in anything.
- G.K. Chesterton, Orthodoxy
Dunn's article is an excellent read, as is this one by Michael Crichton - Environmentalism as Religion. Both articles point out that those who are least likely to believe in a creator have somehow come up with their own version of creation. I think that this is a very insightful observation and have seen it up close at work.
I work in an R&D environment with many PhD's. I would say that a fair number are secular and have no belief in a God. One woman in particular I have lunch with every day is a bright chemist who, when discussing chemistry is logical, calm and brilliant in her analysis. However, when the subject of Global Warming comes up, she becomes unhinged. She cannot discuss any aspect logically or unemotionally at all. (Mind you, I do not argue with the woman but will just point out a flaw in her thinking.) After a minute or two she will jump up and leave the table unable to talk. Her actions are just like those one would expect from a cultist, not a scientist.
I am a trained Six Sigma Black Belt, which means I have studied statistics and data most of my 29 years as an Engineer. So, I am naturally skeptical when people try to squelch discussion about scientific theories and label other scientists who disagree as "deniers". This is not science, but religion. I have written a couple of posts about this subject Straight Line Thinking and New Ice Age. Maybe global warming could even be a good thing. Vote for Global Warming.
The irony of these secular zealots is that they do much more harm than good. The loss of life in Africa due to the ban on DDT is a crime of massive proportions in my opinion. Rachael Carson ought to be despised not worshipped. And then there are the myriad of celebrities jetting around in their private jets and limousines contributing more to the supposed "global warming crisis" in one trip than any one of us regular folks in a lifetime. CO2 Emissions of Private Jets. One unique attribute of leaders of cults is that they consider themselves above the uneducated masses.
I love debating scientific ideas and data with anyone. But environmental zealots have chosen to drink the kool-aid of their religion and disagreement with their beliefs is not up for debate. As a society we have much more urgent needs to solve world problems then worry about whether the temperature of the earth will rise 0.1 degree C during the next 50 years. Aids, Islamist fascism, mad dictators suppressing people throughout the entire continent of Africa and other problems far exceed the loss of a glacier (which will probably return in greater extremes in the future).
Some blame religion for most of the wars and deaths, but in fact, it is heresies like environmentalism, Marxism and Islamism that are responsible for most deaths. That is, the rejection of the true religion.
Or just have a laugh with Mark Steyn - Fickle Science
At the American Thinker J.R Dunn begins an article titled A Necessary Apocalypse with this quote:
A man who ceases to believe in God does not believe in nothing; he believes in anything.
- G.K. Chesterton, Orthodoxy
Dunn's article is an excellent read, as is this one by Michael Crichton - Environmentalism as Religion. Both articles point out that those who are least likely to believe in a creator have somehow come up with their own version of creation. I think that this is a very insightful observation and have seen it up close at work.
I work in an R&D environment with many PhD's. I would say that a fair number are secular and have no belief in a God. One woman in particular I have lunch with every day is a bright chemist who, when discussing chemistry is logical, calm and brilliant in her analysis. However, when the subject of Global Warming comes up, she becomes unhinged. She cannot discuss any aspect logically or unemotionally at all. (Mind you, I do not argue with the woman but will just point out a flaw in her thinking.) After a minute or two she will jump up and leave the table unable to talk. Her actions are just like those one would expect from a cultist, not a scientist.
I am a trained Six Sigma Black Belt, which means I have studied statistics and data most of my 29 years as an Engineer. So, I am naturally skeptical when people try to squelch discussion about scientific theories and label other scientists who disagree as "deniers". This is not science, but religion. I have written a couple of posts about this subject Straight Line Thinking and New Ice Age. Maybe global warming could even be a good thing. Vote for Global Warming.
The irony of these secular zealots is that they do much more harm than good. The loss of life in Africa due to the ban on DDT is a crime of massive proportions in my opinion. Rachael Carson ought to be despised not worshipped. And then there are the myriad of celebrities jetting around in their private jets and limousines contributing more to the supposed "global warming crisis" in one trip than any one of us regular folks in a lifetime. CO2 Emissions of Private Jets. One unique attribute of leaders of cults is that they consider themselves above the uneducated masses.
I love debating scientific ideas and data with anyone. But environmental zealots have chosen to drink the kool-aid of their religion and disagreement with their beliefs is not up for debate. As a society we have much more urgent needs to solve world problems then worry about whether the temperature of the earth will rise 0.1 degree C during the next 50 years. Aids, Islamist fascism, mad dictators suppressing people throughout the entire continent of Africa and other problems far exceed the loss of a glacier (which will probably return in greater extremes in the future).
Some blame religion for most of the wars and deaths, but in fact, it is heresies like environmentalism, Marxism and Islamism that are responsible for most deaths. That is, the rejection of the true religion.
Or just have a laugh with Mark Steyn - Fickle Science
Another Bank takes a dump
I got my second short sale offer accepted by a bank today. This bank had two mortgages totaling $72k on this house. I offered them $1000, they countered with $7K and I counter-offered $5K which they accepted. I may have been able to get if for less. The foreclosure attorney had let it slip that the bank was going to walk away from the property, so I knew I could low-ball them. It's unusual for a bank to walk away from a large first like this. But the house is in a poor area and the bank must know they made a major screw-up here.
However, there are several problems with this property I still have to fix. First is the rotten NY Home Equity Theft Act I mentioned the other day. This has made Title companies skittish about insuring properties in foreclosure.
The second is that over a dozen creditors have attached liens against this house. It's appalling to me how easy it is for a creditor to attach a lien to your property. The woman that owns this house is elderly, never married, lived there all her life and has no middle initial. But she has a common first and last name. So creditors have attached liens with anyone with the same first and last name, despite some being married, many having (a multiple) of middle initials and some living in different cities. I don't know if I can even get Title insurance, so this will be a learning experience.
However, there are several problems with this property I still have to fix. First is the rotten NY Home Equity Theft Act I mentioned the other day. This has made Title companies skittish about insuring properties in foreclosure.
The second is that over a dozen creditors have attached liens against this house. It's appalling to me how easy it is for a creditor to attach a lien to your property. The woman that owns this house is elderly, never married, lived there all her life and has no middle initial. But she has a common first and last name. So creditors have attached liens with anyone with the same first and last name, despite some being married, many having (a multiple) of middle initials and some living in different cities. I don't know if I can even get Title insurance, so this will be a learning experience.
Thursday, February 1, 2007
Positive Mindset and Wealth Creation carnival
My post on Prosperity or Scarcity is at the Positive Mindset and Wealth Creation carnival - Check out lots of good post there.
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