Interest Based Income - part three

 Part one was about some basic math for interest based income. 

 Part two was about some personal math.

 So the numbers I showed you from part two for what I would need if I was to rent out my house.

Single family rent per month =$1,400

Single family rent per year = $16,800

Two family rent per month = $2,800

Two family rent per year = $33,600

Again, this is the magical $30,000 a year just without starting with a million dollars first.

What people don't talk about is that until that money is in your hands, it is not and will not ever be a guarantee. 

There are many landlords who talk about that money as if it was a guarantee and it is a very dangerous mindset to be in. This is how debit and foreclosures happen.

During the plague there were a whole bunch of landlords that not only thought this but demanded this while also telling the renters that they were going to be evicted. Thanks to that type of landlord there is a great deal of justified broken trust.

At an old job one of my coworkers was also a landlord. He would not send that current years rent until the following year. He treated it as interest from an investment. He also still have a full time job. Why? to cover his existing mortgages. His house was paid off. He had at least one other property paid off. He did not consider the next months rent as already in his pocket because he was fully aware that life could happen at the worst times.

I would have loved to have heard him making fun of all the terrible landlords that were crying about their renters leaving them because they jacked up the rent too high & were verbally abusive so now they couldn't afford their own mortgage OR the mortgages of their rental properties. 

Are there terrible tenants? I have known a few but they were always justifying their actions because the landlords were being horrid to them. If they hadn't had that opening they could have been shamed into caring. Mostly they just didn't pay the last month and used the security deposit as their last months rent. Not the best but there are details and horrid landlords.

Also, landlords are not ever able to go into tenants mail because that is 100% mail fraud and USPS will go after them.

This is to say that having a rental is not for the feint of heart or the cruel of mind. IF you are still thinking about it then a property management company is what you want to have. A lot of people don't realize just how much renters think you can control the companies. But you do want to listen to them because they will have the most contact. You don't want a company that drives away your renters.

 Think of the rental properties that you see for sale on sites like zillow. They are mostly listed by people that don't want to be landlords anymore. One would hope it's for good reasons but most are probably landlords that are just burned out and can't be bothered. 

It could be a grandparent that just is too old or they passed away and it is easier to sell then fight with family on who gets it.

It could be a a married couple and one of them landed a job that needs them to move and being an out of state landlord is not something they want to deal with.

It could be that a new landlord has 'graduated' from a smaller property to wanting to focus on larger ones. Which are easier for them to get cheaper loans for.

A divorce of family feud can also cause problems.

 Many seem to be stupid landlords that think their tenants money is theirs and as such planned out non-refundable trips and done other things to spend the money that they think is theirs. This is a very fast track to bankruptcy. Many of them are the type to try and evict people during a plague. They think only of their own benefit and fail to see how no one has to put up with that.

Please don't be like that group.

 

 

 

 

 

 

Interest Based Income - part two

Part one was about some basic math for interest based income.

Now the fun part, how would you could even start getting $100,000 let alone $500,000 saved up?

Yeah, this is the horrible part because most things these days are not designed to make it easy to save money. I have never rented so I can't guess on that type of budget. I do own a house though and that does open a door for me to get started saving. If I chose to sell my house I could in theory make $100,000 after everything is said and done.

I have not put a lot of money into my house but with just the base improvements I could see getting $100,000 from it if/when I sell. 

Could I do more improvements to my house? Of course. I would love to replace all the windows and the siding. But I will never see that money returned to me. It could cost $25,000 for all the windows and $20,000 to do the siding. Then another $10,000 for the driveway. I would just never see that $55,000 investment ever again. Not to mention I do not have the money to even consider doing them.

I will probably look into adding a pull down stairs for attic space. That is closer to the $1,000 range. The potential attic space wouldn't be to much but it would be worth it. Especially considering the only other access it a tiny little square. I still can't figure out how my house inspector got through it because I was cramped when I went through it.

The reason I could even hope to make $100,000 after selling is because I got a very affordable house when the interest was super low a few years ago. I got very luck and I know not everyone will want a cheap house in the middle of no ware.

I have also already updated the electric. That was a nightmare of tracking payments so I'm not full sure what the true total was but it was between $10,000 - $20,000 which was only because he was good friends with my realtor. The work took two years and was worth it.

Never buy a house from a church. Do not do it.

The bad part of that is that my tiny town hasn't seen an increase in prices. It is stuck in a price range and I would have to get very, very lucky to get more. It's just not an area that has houses that go more than $200,000 for my size of house.

On the flip side, if I wanted to rent out my house instead of selling? I could list it as is for renting as a single family house.

If I wanted to rent it as a two family, I would have to rip out two doors to make it a legal two family rental. Then I would have to figure out what to do about laundry for the second floor. So a two family is out.

However! While renting out my house would be ideal, it is only possible if I could find a management company in my area. I know they exist but I have yet to actually find one. My town is full of rentals and I can not for the life of me find any info online. I don't have any idea who in my town I could talk to about it because my town is a little bit weird about some things.

Which brings me back to square one of selling the house once I am ready as being the best option. Pending locating the cryptid management company in my area.

So, why go over all of this? Because it shows just how much a little thing can snowball and branch off into so, so many other things.

The numbers that you want to see (based on what I want to rent out for)

Single family rent per month =$1,400

Single family rent per year = $16,800

Two family rent per month = $2,800

Two family rent per year = $33,600

And that right there is the magical $30,000 a year just without starting with a million dollars first.

What people don't talk about is that until that money is in your hands, it is not and will not ever be a guarantee. 

Part three is going to be going over that very valuable point of view.

Interest Based Income - part one

 Interest Based Income

What I mean by this is earning enough money from your interest based savings account with a bank. I'm going to be tossing around a lot of numbers but the base interest I'll be using will be 3%. It's not the current interest rate but it's the one I'm going to use.

The thing I will not be getting into is going to be the taxes. If you earn $10 you will get a 1099-INT and you will just file that when doing your taxes. File your taxes. It will effect you yearly return. Thats all i have to say on taxes.

The basic amounts that I will be working with are going to be as follows:

$100

$1,000

$10,000

$100,000

$1,000,000

These are the big break points when talking about interest. When you have the small amounts it feels like it's not doing anything but that can carry over to the larger amounts also. The most common way people talk about earned interest is as yearly amounts.

Per Year

$100 = $3

$1,000 = $30

$10,000 = $300

$100,000 = $3,000

$1,000,000 = $30,000

Where I'm from, $30,000 is a full time minimum wage job. 

What you also want to focus on is the per month interest because this is what you will be able to budget with like an additional paycheck. This means that you will want a savings account that will pay you per month and when they pay you will be at the end of that month.

Per Month

$100 = $0.25

$1,000 = $2.50

$10,000 = $25.00

$100,000 = $250.00

$1,000,000 = $2,500.00

The monthly breakdown is how you can see when it makes a difference. $25 doesn't feel like it can do much but that $300 at the end of the year could be a nice cushion or treat.

But $250 a month? That's a bill. It could be an extra payment on a credit card. It could be a car payment. It could be a persons grocery bill. It is a small amount but it is a small amount that will make a difference. If you are able to save it then that extra $3,000 a year is definitely a good amount to have saved up for emergencies or fun.

Will it fix everything? No, but I have had a surprise car repair bill (thanks to chipmunks making a nest in my car and eating the wires) and it was just over $3,000 to fix. I would have been much better off it i had been able to just pay it off with cash instead of using a credit card. The interest I was paying on the credit card was insane.

This is what people mean by wanting their money to work for them.

This is why my ultimate personal goal is going to be to try and get $500,000 because that will be $15,000 per year or $1,250 per month. Which doesn't sound like a lot but it is. For me it would cover my mortgage and car payments. At my current spending it would very much fix everything for me.

I'll be going over my personal reasons in part two.

 I will close with saying that if I had $2,000,000 in the bank I could very easily live off of the estimated $5,000 a month interest. Even if I was paying for my own health insurance.

To be honest I would probably keep my day job just so I wouldn't have to deal with tracking down my own health insurance and then I could keep my 401k. But thats going to be a part three I think.

 Part two was about some personal math.

A Lot of News

Starting my first class at my new college tomorrow night. It's insanely expensive college but unfortunately we are in a world that I need a bit of paper to tell people I know what I am talking about. Stressful.

Then in another week I'll be starting my new job. So even more stress due to giving my two week notice and having to wait the two weeks to start. I didn't think that it would be stressful but it is. The interviewing took almost two months and I can't wait to start.

And! I need to try and scrounge up $1,240 for a website/project/service/business thing. It's a wonderful idea and service. I just do not have the funds this moment and I have been advised to try and get it up as soon as I can. Joy, more stress.

So! Over all hiring agents are the best thing ever and don't ever think you have to stay with one that is treating you poorly. And keep looking. The jobs might not seem like they are out there but you will find something eventually.

You wouldn't believe how many people called in about my job opening that never showed up to fill out the application. My soon-to-be-old manager said he got 62 responses via e-mail for the position but so far I have only seen 6 come in to fill out the application. Just e-mailing a company your resume does not cut it if they tell you to come in person.

Oi... So much stress.

Should I get a Loan to pay off Debt

So... I had an idea. I could get a loan and pay less to pay it back then I am currently paying right now. Right now I am doing this with the assumption that i am paying $550 - $650 for my current credit card and car payments each month.

I am going to be talking about an obscenely large amount of money.

For the loan I am taking a rough guess as to what I still owe totally and a little extra for emergencies for the $30,000. For the $50,000 I was adding in college as well.

My main goal was to find a loan payment that would still be covered by un-employment if i happened to loose my job. Thus I could still make payments and look for a job at the same time. Or if I got my Bachelors in two years I would be able to move to New York City to start looking for a better job and still be able to pay the loan and other bills.

So if i got a loan to pay off my debt right now at:
loan = $30,000
Years to pay = 10
interest rate = %6
monthly payment = $333.06

I could pay off my car and all my credit cards and still have a cushion left over. OR to use the left over to make a large pay back.

I would still be saving money.
I could actually pay you rent every month and still save up money.

a loan for $40,000 @ 10yr would be payments of $444.08 which I don't see as being all that great since it wouldn't cover school. now if i did $50,000 @ 15yrs to cover school, debt and emergency cash...

loan = $50,000
Years to pay = 15
interest rate = %6
monthly payment = $421.93

That I could still handle. I could pay for school and keep the rest in my HSBC hi-interest savings and make some money off it that I could put towards paying it off.

For school I wouldn't have to pay it all in one lump sum. Plus I would get money back from school in my taxes. Which I could turn around and put back into the loan or savings account.

Key Bank only offers personal loans for 5yrs which will not work at all for this.

HSBC doesn't do personal loans just mortgages which doesn't help my situation.

M&T does a general purpose secured loan for 10yrs.

Now, after i poked around on the M&T site i found their calculator to see what kind of intrest i could get. for a new york resident wanting a $50,000 loan the interest rate would be %5.49 Which is lower then what I did my base numbers on.

loan = $50,000
Years to pay = 10
interest rate = %5.49
monthly payment = $542.38

%6 isn't that much higher of a monthly payment at $555.10







loan = $30,000
Years to pay = 10
interest rate = %5.49
monthly payment = $325.43

At this point i would actually have to go in and talk with someone at M&T back to see what my options are. to see if I could really get that %.49 rate and if I could get $500,000 for a 10yr loan.
 if I can't get a 10yr loan, regardless of the amount, there is no real point to me getting a loan.

These numbers are not counting large sum payments made after I get my tax return back. depending what I get back. This would be able to give me the chance to get the principle paid off faster and lessening my interest paid over time.

If I could get the loan, finish school and get into NYC I could have a better paying job in about 2 1/2 years. I would have no car payments and no credit card payments. I would have and emergency build up that I could use for paying back the loan if needed that would not take away for what ever current pay check i would be getting. It would also allow my to make larger payments and knock it down faster.

The sooner we discuss this the sooner I can start school and stop worrying about what I am doing with my life. I can't keep living how I am. If taking out this loan can allow my to make the changes that I need then this is what I need to do.

https://www.mtb.com/personal/loanscredit/PersonalLoans/Pages/Index.aspx
http://www.bankrate.com/calculators/mortgages/loan-calculator.aspx

Saving Money

Back to the saving money bit.

If, like me, you are looking into getting a job in another city/state you will need at least $10,000 - $15,000. Why? Because some leasing companies will not rent to you unless you have that much saved up. They want to make sure that should you loose your job that you will be able to pay them. It also shows that you can pay them.

Makes sense? I didn't think so.

To them you are an investment. If they have to evict you that will cost them a good deal of money and they do not like loosing money. (I heard locally there is about 3 months of non-payment prior to eviction.) So they want to make sure that they won't have to evict you. They will possibly also run a credit check and background check. So don't be surprise if they present you with these forms.

If in 6 years I end up getting a better job locally(fat chance but a possibility) I might use my saved money for a down payment on a house. The housing market here is not all that good right now. But in a few years? who knows. It's a possibility I have to keep in mind.