All Forum Posts by: Adam Mangrum

@Rebecca Belnap Yeah. Sadly I just found out that the apartment we wanted isn't available, so we will stay where we are unless we find a similar stellar deal or until we are in a position to sell the house and buy the duplex at the same time. 

Thanks all for the tips.

@Betty Cruz I agree with you that 70k for two college grads is low, but not necessarily low if you consider our (silly) majors. My wife's degree was in Family Sciences and mine was in Exercise Science. Her degree costed a lot because she wanted to do photography but couldn't get into that program. I did exercise science in preparation for dental school, but those plans changed right after I graduated. 

I could still get into dental school, but don't feel like that is the right path for me. I met my wife right before graduating and knew that being with her would mean staying put in Utah (both her whole family and mine are all here) which unfortunately is very heavily saturated with dentists. The LDS/Mormon population here produces a disproportionate amount of dentists who want to live in Utah. Before meeting her I planned on moving to one of the coasts to do my dental career for much higher pay. 

My plan is to avoid $200k+ in dental student loans and work at creating a solid career in software development, which has tons of potential in my area with it being "Silicon Slopes." 

We are both currently looking for higher paying jobs as it is, but I'm also using the majority of my free time preparing for the software career. I could work extra hours in my job on weekends if I truly wanted to, or drive but I feel like the opportunity cost is too much when I can just get my software career going much more quickly by studying more instead of working more. Do you agree with that?

@Andrew B. Yeah, renting out the 2 bedrooms would not be an option to my wife. I'm glad you mentioned that my student loans will be in deferment when I actually start the program (won't officially start it until July, but I'm studying the course material on the web in the meantime). That will free up the $230 payment that my loans have. My wife has the lion's share of the loan payments at $450 per month, and she won't be going back to school.  It's is possible that we could lower the monthly payments on her loans by consolidating them or choosing another plan with her current lender, so I'll look into that.

I contacted our RE agent today and he estimated that we could come out of closing with between 30k and 40k due to how much appreciation has happened in the area. That made me feel even more inclined to go ahead and sell. 30k would wipe out the 8k CC debt, the 6k signature loan, and 

I agree with the advice to pay off the CC debt and the personal loan asap. At the beginning of the year we had CC balances of about $19k (how embarrassing) and we've been very aggressive about paying it off. $2200 from our tax return and the $7,400 we got from selling a 2013 VW TDI back to VW went towards paying down the balances. On top of that, 6k out of the 8k in CC balances are not accruing interest due to a very low fee balance transfer offer that we got on one of our existing CC accounts that we plan to pay off before interest hits. The remaining 2k is on a credit union card at 8% interest, and we're paying that off as fast as possible.

Friends from the neighborhood we lived in before told us that our old apartment is empty, which is owned by a really nice man who only likes to rent to referrals from other people, charges $750 flat for a huge 1800 sq foot 2br 1ba basement apartment (extremely undercharging for this market).  The owner is a very nice man who is close to my grandmother, and he only rents the house to referrals from family and friends. I definitely wish now that we had never left that apartment, but live and learn. 

@Allen Fletcher Yes, doing an accounting of where every penny is going was a big help for us. I've been doing this over the past 4 or 5 months and it's part of what got me thinking about selling the house. And thanks for the advice about aggressively paying off the personal loan. We will definitely more easily qualify for loan for the right type of duplex if we have the $350/mo in CC and personal loan payments removed from our credit report. But you seem to be saying the personal loan should go before the CC debt. I should have clarified that the personal loan is a fixed 5% interest, so my idea was to pay off the CC debt first (2k @ 8%, 6k @ 0% for the next 12 months), since the 2k is charging me more interest and once my 0% balance transfer expires on the 6k, I want to have it all paid off since it was from a ~25%ish credit card. Do you agree with that thinking? I do think you're right though to pay off both of them before looking at getting the duplex. My wife and I are wanting to approach getting in REI with both safety and aggressiveness. At the beginning, I feel that both safety and aggressiveness can be achieved primarily from playing excellent defense with our money and playing better offense in my career development.

Thanks for the replies!

@Ira Ashton Yes, the home values in our neighborhood have appreciated considerably, and that's probably true of the whole metro area. I called our realtor and he estimated that we could net $259k and net $250k after closing costs, and we owe 209k. He very well may be right, we'll have to see. But that has me worried about how difficult it will be to find a good deal on a duplex down the road when we are ready to buy again. 

If my wife and I are able to get back into our old apartment or live cheaply at her parent's place for as long as it takes to get some serious debt payoff accomplished and a cash cushion amassed, it would greatly accelerate our growth in net worth and therefore it's worth it to us. The landlord in the previous apartment isn't totally profit oriented. He's a terrible landlord from a profit-making perspective, yet super good at taking care of things since he lives across the street. He's a nice humble guy who probably has never increased the rents and most likely won't. He only rents to referrals from family and friends, which we happened to be. If we could get back in that place at the same $750 flat, it would be so good for our situation. 

And definitely yes about the Happy wife, happy life. I hate seeing how much she dislikes her current work environment and how much she wants to have another child sooner rather than later. It's up to me to work at getting a software dev career to a point where her income isn't necessary and living as frugally as possible within reason to be able to being our life of REI.

Hi everyone! I'm not sure which place would be best to post this so I'm posting this here and in the introduction section (this is my first post). I apologize for the length but I wanted to give a lot of background to hopefully make the advice given as relevant as possible.

Since joining the site and listening to about 50 BP podcast episodes, I've been formulating my plan to get started with RE investing. An idea recently occurred to me that I would really appreciate some feedback on.

I'd like to preface by saying that I feel like my wife and I have made some pretty stupid financial decisions and we are trying to fix those mistakes. That's the main reason for this post.

Our cash flow situation isn't nearly where it should be before we jump into investing. We bought a 4 br 2 ba home for $215k in 2015 a year after graduating college after conferring with a trusted local investor who I feel gave us some ill-placed advice. He suggested that buying a duplex instead of a SFR as our first home wouldn't make enough of a difference to matter and to go ahead and purchase the SFR as our residence and work on saving up for our first rental property. I sure wish I would have listened to Scott Trench's podcast episode and read his posts before we thought about buying a home!

The problem: our current situation leaves us with only $400 left after all expenses, I'm ashamed to admit. Our expenses include $1,150 in loan payments between student loans ($680 monthly), a personal loan with a 6k balance and a couple of credit cards with balances totaling about 8k. As I said, we weren't the best at money at all and have drastically reduced our spending after reading Mr. Money Mustache and other personal finance/early retirement blogs.

We only bring in $70k gross currently between our two jobs and don't anticipate it changing anytime soon. I am doing a career change (finished a pre-med degree 2 years ago) into software development, and should be done with my second bachelor's in the field in December 2018.

That's the backdrop to our situation.

Before we bought the house, our monthly expenses were $835 less in fixed costs, and we've spent a few thousand dollars between a couple of DIY projects (painting the siding, replacing the main level's flooring) and the tools needed to do those projects. We are contemplating whether we should sell the house and go back to renting until we can buy a duplex. It makes a lot of sense to me to do that, but I wanted to get some genuine opinions from people here about it.

Here are the pros and cons that I've come up with:

Pros:

1. Much more cash flow to be able to quickly pay off CC balances and the personal loan to free up another $350 in monthly cash flow.

2. After paying off the bad debt in #1, much more cash flow to more quickly save for a down payment on a duplex.

3. Overall, getting started in REI much sooner than if we stayed in the home and waited for my new career to pay us well enough to save for the down payment on a second property.

4. Less stress on my wife, who hates her job and wants to stay home with our son and the future child(ren) that will come at some point, or at least only have to work part-time as a photographer (her dream job, and something she's really good at).

Cons:

1. Having to give up the space of a house and get rid of some belongings we have that wouldn't fit in an apartment lifestyle.

2. Having to explain to family and friends why we are taking a step "backwards," and having to admit that we made a mistake based on our new value system. (This one isn't a huge deal, we are humble enough to admit to the mistakes we have made.)

3. If we sell the home, we couldn't qualify for first-time home buyer loans for 3 years (not a big deal I suppose, since it will take the good part of 3 years to pay off bad debt and save up a nice down payment for a duplex)

4. Aaaand the more I think about it, the only cons are the hit to our pride and having less space to store things.

Anyone care to pitch on whether or not I'm thinking about this correctly? Does anyone disagree with the decision to sell our home? If you agree that we should sell the home, do you have any other good reasons that I haven't covered?

Thanks to all in advance for any advice.

Adam

Hi everyone! I'm not sure which place would be best to post this so I'm posting this here and in the introduction section (this is my first post). I apologize for the length but I wanted to give a lot of background to hopefully make the advice given as relevant as possible.

Since joining the site and listening to about 50 BP podcast episodes, I've been formulating my plan to get started with RE investing. An idea recently occurred to me that I would really appreciate some feedback on.

I'd like to preface by saying that I feel like my wife and I have made some pretty stupid financial decisions and we are trying to fix those mistakes. That's the main reason for this post.

Our cash flow situation isn't nearly where it should be before we jump into investing. We bought a 4 br 2 ba home for $215k in 2015 a year after graduating college after conferring with a trusted local investor who I feel gave us some ill-placed advice. He suggested that buying a duplex instead of a SFR as our first home wouldn't make enough of a difference to matter and to go ahead and purchase the SFR as our residence and work on saving up for our first rental property. I sure wish I would have listened to Scott Trench's podcast episode and read his posts before we thought about buying a home!

The problem: our current situation leaves us with only $400 left after all expenses, I'm ashamed to admit. Our expenses include $1,150 in loan payments between student loans ($680 monthly), a personal loan with a 6k balance and a couple of credit cards with balances totaling about 8k. As I said, we weren't the best at money at all and have drastically reduced our spending after reading Mr. Money Mustache and other personal finance/early retirement blogs. 

We only bring in $70k gross currently between our two jobs and don't anticipate it changing anytime soon. I am doing a career change (finished a pre-med degree 2 years ago) into software development, and should be done with my second bachelor's in the field in December 2018. 

That's the backdrop to our situation. 

Before we bought the house, our monthly expenses were $835 less in fixed costs, and we've spent a few thousand dollars between a couple of DIY projects (painting the siding, replacing the main level's flooring) and the tools needed to do those projects. We are contemplating whether we should sell the house and go back to renting until we can buy a duplex. It makes a lot of sense to me to do that, but I wanted to get some genuine opinions from people here about it. 

Here are the pros and cons that I've come up with:

Pros:

1. Much more cash flow to be able to quickly pay off CC balances and the personal loan to free up another $350 in monthly cash flow. 

2. After paying off the bad debt in #1, much more cash flow to more quickly save for a down payment on a duplex.

3. Overall, getting started in REI much sooner than if we stayed in the home and waited for my new career to pay us well enough to save for the down payment on a second property.

4. Less stress on my wife, who hates her job and wants to stay home with our son and the future child(ren) that will come at some point, or at least only have to work part-time as a photographer (her dream job, and something she's really good at).

Cons:

1. Having to give up the space of a house and get rid of some belongings we have that wouldn't fit in an apartment lifestyle.

2. Having to explain to family and friends why we are taking a step "backwards," and having to admit that we made a mistake based on our new value system. (This one isn't a huge deal, we are humble enough to admit to the mistakes we have made.)

3. If we sell the home, we couldn't qualify for first-time home buyer loans for 3 years (not a big deal I suppose, since it will take the good part of 3 years to pay off bad debt and save up a nice down payment for a duplex)

4. Aaaand the more I think about it, the only cons are the hit to our pride and having less space to store things.

Anyone care to pitch on whether or not I'm thinking about this correctly? Does anyone disagree with the decision to sell our home? If you agree that we should sell the home, do you have any other good reasons that I haven't covered? 

Thanks to all in advance for any advice. 

Adam