Let's all see our monthly budgets...???

[Singuy]

So I am not sure how we can critique your budget Texas. There are definitely many ways to cut back compared to my bare-bone budget having a similar income..but your income is passive. Technically you can blow all of it since you are not spending your principle(I don't see you taking out equity loans and spending that).

[TexasHusker]

So I am not sure how we can critique your budget Texas. There are differently many ways to cut back compared to my bare-bone budget having a similar income..but your income is passive. Technically you can blow all of it since you are not spending your principle(I don't see you taking out equity loans and spending that).

My biggest risk is a downturn in business income. A 10 percent decline in business could translate into a 30 percent decline in income.

My strategy is to further expand the businesses so that I am better insulated from that event.

And hopefully if one business is struggling, the other might be flourishing. If they both tubed it, look out below !!!!

Right now I wouldn't say either is all-out flourishing - There is room for much improvement.

[Nutria]

Property Tax: 900

Holy Cannolli!!!

[Singuy]

Holy Cannolli!!!

Yup, and this is in a homestead state!

My HOA charges 1.5k on my property tax probably to pay for this community's golf course....but yeah it's what happens when you live in a guard gated 4400 squareft lakefront house.

[Nutria]

Yup, and this is in a homestead state!

Homestead exemption?

[Singuy]

Homestead exemption?

Yup, which means I am actually paying about 70% of what other people in non-homestead exempt states are paying.

[Nutria]

Yup, which means I am actually paying about 70% of what other people in non-homestead exempt states are paying.

I live in a HE state, too, but my tax is only $80/mo. Lot smaller house, though, and not in a gated golf community...

It also why our schools stink so much.

[tripods68]

Total income for me is from $23,000 to $25,000 per month - depending on how the businesses are doing. So positive cash flow is $2-$4K-ish per month. Business number 1 yields about $6K per month, business number 2 yields anywhere from $12-14K per month, and then I have the revenue off of the vacation home rentals.

I have basically zero in savings right now, as we've plowed hundreds of $ thousands into building these businesses. One location of our other business we opened in 2015, which took over $100K to do.

No retirement accounts at all - we decided that these businesses - and their incomes and values - are in fact our retirement. And of course the vacation homes themselves are hopefully an ever-accumulating asset.


You guys help me out here with thoughts/suggestions.

So you have no retirement, Emergency Fund (income & expenses), but Business 1 yield 6K Business 2 yield 13K average. We're talking about 18K income plus rentals income.

How is the income in both businesses, steady, or fluctuate heavily each and every month? How long you been have averaging 18K in both businesses (3 months, or 6, or 1 year). Depending in how extreme those income varies month to month (low end, median, high end) I would build a year worth of replacement income from these businesses based on mid range of 18K.

1) Replacement Income 12 months X 18k = $216K This is your EF for income, + EF for rental vacations (save 3-6 months worth Emergency expenses).

2) Pay off Debt. How much are you willing to reduce 20K in expenses to pay off your debt? Debt reduction should be your #1 focus to smooth out extreme varying income stream from the business. The reduction in monthly expenses should be used to pay off rental properties much sooner, and all other cost reduction savings you can deploy along the way. This is where you might get "nerdy" following strict monthly budget and ultimately hit your target goal.

Identify your core value (wants versus needs) to reduce unnecessary expenses. Debt reduction will take several years with a target date in mind. BUT once all the debts are gone you can begin maximizing your retirement contributions. With your income, it will be in no-time.

Alternatively, this what I do in order:

1) Focus in paying off debt

2) Emergency Fund (Replacement Income + 3-6 Rental properties)

3) Retirement + College Cost

[Singuy]

I live in a HE state, too, but my tax is only $80/mo. Lot smaller house, though, and not in a gated golf community...

It also why our schools stink so much.

Property tax also includes garbage collection but mostly it's because of the HOA developmental BS taking 1500/year away and the cost of the house which is valued at 550k according to the county..that's still 200k lower than what the actual value is or else my property tax would be 14000/year.

[Nutria]

Property tax also includes garbage collection

That's bizarre. Our's is bundled with the sewerage bill. (But you probably think that is bizarre... lol)

[disneysteve]

Holy Cannolli!!!

And I don't see that number as out of the ordinary, but I live in NJ, home of the highest property taxes in the nation. We pay about $614/month but we have a very modest older home. Plenty of people in our area are paying upwards of $1,000/month.

[TexasHusker]

So you have no retirement, Emergency Fund (income & expenses), but Business 1 yield 6K Business 2 yield 13K average. We're talking about 18K income plus rentals income.

How is the income in both businesses, steady, or fluctuate heavily each and every month? How long you been have averaging 18K in both businesses (3 months, or 6, or 1 year). Depending in how extreme those income varies month to month (low end, median, high end) I would build a year worth of replacement income from these businesses based on mid range of 18K.

1) Replacement Income 12 months X 18k = $216K This is your EF for income, + EF for rental vacations (save 3-6 months worth Emergency expenses).

2) Pay off Debt. How much are you willing to reduce 20K in expenses to pay off your debt? Debt reduction should be your #1 focus to smooth out extreme varying income stream from the business. The reduction in monthly expenses should be used to pay off rental properties much sooner, and all other cost reduction savings you can deploy along the way. This is where you might get "nerdy" following strict monthly budget and ultimately hit your target goal.

Identify your core value (wants versus needs) to reduce unnecessary expenses. Debt reduction will take several years with a target date in mind. BUT once all the debts are gone you can begin maximizing your retirement contributions. With your income, it will be in no-time.

Alternatively, this what I do in order:

1) Focus in paying off debt

2) Emergency Fund (Replacement Income + 3-6 Rental properties)

3) Retirement + College Cost

My debate is this: throw hard earned dollars at $300K of debt, or invest another $300K in my business, with the real possibility that my income could go the $50K per month.

Quit while I'm ahead pay off the real estate, or invest in hopefully more income.

We don't have retirement savings as most people define it (the IRAs etc). But we are functionally retired right now with the income streams we have. If this isn't retirement I'm not sure what retirement would be.

[Singuy]

And I don't see that number as out of the ordinary, but I live in NJ, home of the highest property taxes in the nation. We pay about $614/month but we have a very modest older home. Plenty of people in our area are paying upwards of $1,000/month.

It's only high for people like us in HE states where we get a 30% discount on our property tax vs the rest of the nation.

[tripods68]

My debate is this: throw hard earned dollars at $300K of debt, or invest another $300K in my business, with the real possibility that my income could go the $50K per month.

Pay off the $300K debt.

[Singuy]

My debate is this: throw hard earned dollars at $300K of debt, or invest another $300K in my business, with the real possibility that my income could go the $50K per month.

Quit while I'm ahead pay off the real estate, or invest in hopefully more income.

We don't have retirement savings as most people define it (the IRAs etc). But we are functionally retired right now with the income streams we have. If this isn't retirement I'm not sure what retirement would be.

1. It's not hard earned, you are sitting at home collecting rent.
2. Do you have 300k right now sitting in the bank? If not then you'll have to leverage that 300k to earn you 50k/year...in which after property taxes/fees/closing cost/interest/taxes, that 50k/year return is more like 10k or less. If you pay off 300k worth of borrowed money, you'll save 15k/year on interest so you can pick your poison. If you leverage another 300k, then that's 30k/year total worth of interest on 600k borrowed to get you an additional 50k of before tax money and at your income, not sure if that's worth it.

This is why I think real estate sucks currently. You can double your return during the housing crisis, now it's just too much work for such little return.