Year: 2019

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Childhood Filled with Conflicting Messages: Why the F*** Did I Listen to My Parents Financial Advice

How the hell do I keep getting all these conflicting messages about what is happening in my life, how I should be acting, and why I am crazy for doing the things that I am doing. This has seemed to be the constant message I receive from work colleagues, friends and my family for the past 3 months since I have entered my obsession with the Financial Independence community. I want to be a financial badass! The main point of this blog post is to give anybody who might be reading this a good understanding of the mindset I had ingrained into me from a young age.

About My Childhood and Parents: I was very fortunate growing up the way I did. I was born in Dallas, TX and had a very stable home life with my two amazing parents and my brother who was two years older. Both my brother and I were extremely competitive in the spots we played growing up and most of my childhood I remember my parents taking my brother and I across the state to play in tournaments for various sports. My mom is your classic Jewish mother who is very loving, always looks out for her boys, and very “Jewish” when it comes to spending money. My father on the other hand was raised Christian but doesn’t really care about religion all too much. They both agreed to raise my brother and I Jewish with the one stipulation from my dad being that we would always celebrate the Christian holidays. My parents both had steady jobs making a median income throughout my childhood. Since I graduated college, both of my parent’s careers seem to have taken off, although they don’t really like to talk about it. My mom is currently working as a Senior DBA for Oracle and my dad is a Regional Sales Rep for Matco tools. I think they both make over $150k/year now which may be why they have seen some sever life creep.

My Parents Money Mindset: This is interesting to think about now that I have started down the path of Financial Independence at an early age. My parents NEVER discussed money in the household. EVER. Looking back, it seems strange that this topic was never brought up. I don’t know if that was my parents plan or if they just never thought to discuss money. I don’t know if they felt insecure about the living they made and didn’t want to share with my brother and I or if there were any financial struggles they had that they wanted to ensure they kept from my brother and me. I know my brother and I had to have been very expensive kids as we trained at a tennis academy twice a week, we traveled to tennis tournaments once a month where we had to stay in hotels and drive 4-5 hours to get there, and my brother liked to frequent the Emergency Room with broken bones and concussions. Maybe my parents were extremely tight with their budget and lived paycheck to paycheck. It is weird trying to bring up money with them now, but they still don’t seem to want to discuss when I try to begin the conversation. The one thing I do know to be a fact is that my mom stresses every day on whether they have enough saved up in their nest egg for retirement. Every day she and my dad are contemplating retirement, but it seems as if they haven’t pulled the trigger (at 61 and 62 years old) because they don’t know if they have enough money saved. One thing I do know for a fact, this is not what I want to be worried about when I am that age. There are so many other things I want to have completed in my life and the last thing I want to be worried about in 40 years is whether I will have enough money to be retired. Things I don’t agree with at all that I see from my parents in the life they live now:

1. My parents pay $300/month in tv/Netflix subscriptions that only my mom uses really because my dad is always traveling. THE FUCK YOU DO THAT FOR? CUT THAT CORD AND INVEST THAT MONEY INTO ASSETS!

2. Both my parents work jobs that seem to make them extremely stressed because of their fear of not having enough of a nest egg for retirement. FUCK THAT!!! WHY DO SOMETHING YOU DON’T LOVE? WHY ADD THE ADDITIONAL STRESS IN YOUR LIFE AT THAT AGE?

3. My parents don’t seem to acquire any assets and are of the Poor Dad mindset of their home being an asset. They currently don’t have any assets that are producing cashflow for them each month. RICH DAD, POOR DAD…YOUR HOME ISN’T AN ASSET!

4. My parents have seen what I have done with house hacking and renting out the two additional bedrooms in my home to live for free and they still think I am absolutely nuts for doing so. They literally have my aunt and uncle living with them in their basement and my parents aren’t charging them a dime. WHY ARE YOU WASTING ALL THIS INCOME POTENTIAL!?!? I HAVE PEOPLE WHO LIVE WITH ME AT MY HOUSE AND PEOPLE THINK I AM CRAZY, BUT FUCK IT, JOKE IS ON THEM, I AM THE ONE WHO IS LIVING FOR FREE!

5. My parents live lavishly and love to spend money on going out to eat often, drinking alcohol for dinner each night, and they continue to spoil family and friends because of being good hearted people. COOK AT HOME MORE OFTEN AND CHANGE YOUR DIET TO BE HEALTHIER! DON’T CONSUME AS MUCH ALCOHOL.

6. My parents have always told me to just put into my 401(k) what my employer would match because it was free money but there is no reason to put any more than that. Why the hell would I not want to max that sucka out every single year!! Even more free money they are missing out on. WHY HAVE I LISTENED TO THIS FOR 4 YEARS NOW AND MISSED OUT ON AN ADDITIONAL $56K IN MY 401(K) PLAN. IF ONLY I KNEW!!!

7. My parents don’t sign up for a HSA account to get the tax advantages the account has to offer! WHAT ARE YOU THINKING! THIS IS FREE MONEY AND SO SIMPLE TO DO!

8. My dad has this fantasy of camping up in the mountains and without even trying it with my mom and the dogs, he decided to buy a supped up $40k truck as well as a brand spanking new camper. Why the hell would you buy a $40k truck and then proceed to buy what was probably a $10-15k camper. SAY ADIOS TO $60-70K.

I know most people reading this (hopefully at least one person has read to this point 😊) might think that I hate my parents and think they are dumb with finances…well that is partially true. I do think they have made a ton of mistakes financially. It is clear they are not dumb people, they have just not been fortunate enough to know there are hundreds of thousands of posts that describe how to be a financial badass! Why not take all that information in and become a freaking Rockstar who crushes it and can feel comfortable later in life from a financial perspective? The last thing I want to do when I get to be my parents age is working a job I don’t truly love and worrying about if what I have saved up in retirement will last for my lifetime.

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Travel Hacking – First Redemption Detailed!

Travel hacking is something I first learned about at the end of 2018 and I am happy to say I am trying to go all in this year and want to document my journey for you to see! One of the big things I believe stops individuals from travel hacking is their worry of what will happen to their credit score if they open many cards at a time. For that reason, I will also plan on documenting what my credit score is along the journey. The other main thing I want to point out before diving into my first travel rewards redemption is ensuring you hear this one thing. Do NOT, do NOT, do NOT begin travel hacking unless you can pay off your credit card statements in full every single month. The only individual who should do this is one who has enough liquid capital to be able to pay off each statement in full without carrying over anything. If you are not able to pay off each statement in full, please please please don’t do this.

Now time for the fun! The first card I have opened this year and already hit the min spend on is Barclays Arrival+. This card promised $700 in free travel redemption after a $5k minimum spend in the first three months of having the card. Many may say that it is extremely difficult to spend $5k in the first three months of opening a card, especially if you are on a path to Financial Independence and are living the frugal life. My feedback would be, I have tried designing my work life around being able to spend a lot of money on my personal cards so I can take advantage of travel hacking. I have been able to negotiate into work the ability to use my personal card for all traveling expenses incurred. I have also had the ability to step into a role where I travel approximately 80% of the time for work trips. My hopes are to hit the absolute jackpot this year with travel rewards!

Within the first month and a half I spent a little over $6k on travel expenses which I put all on my Barclays Arrival+ card. To this point, this has earned me over 90,000 points towards their rewards program!

Now let’s figure out how to go about using my points to wipe out over $700 of expenses! Below is a list of expenses I have incurred during the last two weeks of traveling.

Instead of picking something that won’t max out my points, I am going to go ahead and move on down to an $1,100 flight and redeem my points against that. Let’s click ‘Redeem now’ and see where this takes us.

Dang!! I don’t know if this is a good redemption ratio but looks like I am able to receive $1 for every 10 points. Let’s go ahead and select to use 90,000 points to wipe away $900 worth of transactions!

And boom goes the dynamite!! Really exciting that within the first month and a half I was able to make $900 in cash back based off this card.

If you haven’t already, you are able to pay off the entire balance of the card, and you can frugally spend $5,000 in three months, and the offer for the Barclays Arrival+ card is still around, I would highly recommend opening the card.

The next card I have decided to open is the Gold Delta Amex card! I had something popup on my search yesterday offering a bonus exclusive for the card of 70,000 miles after a $3k spend in the first two months when the original card normally offers only 30,000 points! Talk about a steal! I already got approved for the card and now I am just waiting for the physical card to arrive at my home soon. Looking forward to tracking my next card and showing what I was able to travel hack it to!

Can’t wait to see what the year has to offer from a Travel Rewards perspective. Let me know if there are any cards you are specifically excited about and what you are planning to use them for this yea

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Process of Liquidating Accounts to Invest in Dierks Bentley Whiskey Row – Denver

Time to provide an update on one of the boldest things I have done to this point on my investing journey. Early on when I started speaking with my cousin on the potential opportunity to become an investor in his bar business for a new location in Denver, he mentioned I would have to purchase units in chunks of $106,000. This is a large chunk of change ($$$), but my cousin has been opening and running bars for the last 10 years and has continuously expanded his business. He started out with one concept in Scottsdale called El Hefe and quickly expanded to 6 different concepts spanning the entire country. The major brand having the most notoriety at this point is Dierks Bentley Whiskey Row. I mean if you can get a big-name Country Music artist to go in with you on a bar, you must have great potential for it to fly off. This concept started in Scottsdale and has expanded to Tempe, AZ, Gilbert, AZ, Nashville, TN The newest of the locations would be the brand new one I would be investing in in Denver. My cousin is the president of the company and recently had the owners of the Colorado Rockies reach out to him asking if they were interested in putting a location in downtown Denver across the street from the Rockies stadium. The land is owned by the Colorado Rockies and the bar that was there is called Lodos which was one of the hottest bars in Downtown Denver; however, my cousin worked out a deal with the Rockies owners and they are going to be taking over Lodos and revamping the building entirely. This will entail knocking the building down and building a brand-new building entirely.

With the looming talks of a down market soon, I have heavily debated keeping money in the stock market or looking to place it elsewhere. I was originally going to invest the minimum $106,000 to get 10 units of ownership in the bar, but due to the wildness of the stock market, I have decided to try and up the ante a little bit. Why think small though when I can think big!!! After recently receiving a large $50,000 bonus check from work due to being rated the highest performer on my annual evaluation, I have decided to purchase 20 units instead of 10. This has been a very difficult decision and I have been working to figure out how I would come up with the money. Now let’s figure out how I am going to get to the $212,000 dollar amount I am going to need in the bank to purchase 20 units!

Account 1: Vanguard Taxable Account ($165,734.05 balance as of 3/24/19)

For this account I am going to wait until I get the dividends for Q1 before selling off my money. The only downside of completely liquidating this account is I have already seen a significant capital gain this year after the market rebounded coming off poor performance at the end of 2018.

This is a part of the investing rollercoaster though. I took advantage of the EOY with tax loss harvesting and now I will have to take the gains out this year.

To make things a little simpler once the dividends come through, I have updated my distribution options to keep the money in my Settlement Fund versus re-investing. This will allow the selloff to be much easier than having to wait a few more days for everything to go through.

Account 2: Merrill Lynch Vested Stock ($8,943 as of 3/24/19)

This is a unique account that I have access to based off how I am compensated at work. My total compensation at work is broken into three different parts.

Base Salary – majority of compensationYearly bonusCompany Stock – this account. The only downside to this account is the grants vest over the course of 4 years, 25% each year. For example, this last year I will be granted $52,500 in stock; however, I won’t get any of the stock until next year at which I will have vested $13,125 of the grant.

With the latest vest I received on 3/21/19, I now have 91 shares I can sell. Below are some snapshots of going through the process of selling these shares on Merrill Lynch.  

Account 3: E-Trade Taxable Account ($6,901 as of 3/24/19)

This account was something my parents opened for me when I was in High School and they had a financial advisor determine what I to invest in. Ha, wish I would have known what I know now and told them I would take control of everything because the advisor was picking random stuff that I would have not agreed to. The Walmart and Amazon stock were items I purchased once I had control of the account. Time to liquidate!

Account 4: Bank of America Savings ($11,627 as of 3/24/19. $10,000 to be used to invest)

Since I received my bonus check, I decided to only invest a little bit of it knowing that I would be going through this liquidation process to invest in my cousin’s bar. I have one reimbursement check for my last travel trip for $2,100 coming through in a few days which will take me to roughly $13,700. Of this money, I will take $10,000 to invest.

Now let’s look at where we currently stand from a total cash perspective after these accounts are liquidated.

AccountMoneyVanguard Taxable $      165,734Merrill Lynch WM Stock $           8,943E-Trade Taxable $           6,901B of A Savings Account $         10,000Total $      191,578Deficit to $212,000 $        20,422

I need to figure out how I am going to come up with $20,000 to hit the $212,000 target needed to purchase 20 business units of the business. I am in a fortunate situation where my parents are on the verge of retiring and I have spoken with them to see if they would lend me $20,000 at a 6% interest rate. I don’t want to take advantage of the situation, so I want to ensure they know I am willing to pay for it. After this loan, I will be right at the $212,000 mark and will have enough to invest in the business! SUPER PUMPED!!! I know putting all my eggs into one basket is risky, but my goal in life right now is to invest in assets that will produce cash! This is a risk I am willing to take at such a young age and early on in my investing life. I should complete the paperwork at the end of this week and everything will be official!

Making progress in acquiring assets instead of liabilities as that is the goal in life!