Cutting Unnecessary Expenses with Engineer Tracy As you go further along in your career, you should (hopefully) make more and more money, but does that justify spending more money? Brandon walks us through advanced retirement account strategies you may have heard of, such as the Backdoor Roth, Roth Conversion Ladder, and the coveted Mega Backdoor Roth. A big reason this could be happening is simple: not enough income and expense tracking.
This is why Mindy and Scott are always so adamant about having a bad credit catalogues budget (and sticking to it). Jeff owns his home, and it has appreciated a favorable amount since he bought it he also owns a duplex in his home state of California, and a rental property in Memphis.
Jeff wants to get rid of his timeshare so he can put more money into growing wealth.
He also has HELOCs taken out against homes which are burning holes in his pockets on top of the bills he and his partner already have to pay. While Jeff is happy with his line of work, his wife wants to be able to leave her job. Mindy:Welcome to the BiggerPockets Money podcast show number 172, Finance Friday Edition, where we interview Jeff and talk about getting your spending under control, the sunk cost fallacy and selling underperforming assets. My name is Mindy Jensen and with me, as always, is my low hanging fruit expert internet loans co-host, Scott Trench. What I think this show highlights is a classic problem that is crippling middle class America, in general, on this country. And the numbers, the net worth numbers only show up in that home equity and that retirement accounts in a really meaningful and robust way. It feels like if you lose your job, your whole position blows up. And so, I think today, taking fast personal fast loans no credit check loans online that, digesting his position, and spitting out a new framework that allows him to accumulate real liquidity and begin re-distributing his wealth, so that some of his wealth at least is intangible assets that produce spendable cash flow today. He just needs to re-strategize his capital deployment. Before we bring Jeff in, my lawyer makes me say, the contents of this podcast are informational in nature and are not legal or tax advice, and neither Scott nor I nor BiggerPockets is engaged in the provision of legal tax or any other advice.
And a kitchen remodel, which we did before we had our second because our kitchen was literally falling apart, so it had to get done. And depending on your tax, man, the interest is a write off. And we tried a cheaper one and it just did not work. But this year, we had an AC go out and the septic tank go out. And another big one hanging over our heads is, so I have a paid off property in Memphis and I bought that five years ago. So, that will be something that we would be paying off down the road once the house sells and the dust settles as far as exactly how much we owe. And I could take that all out today and pay off a lot of those debts. I listened to it six times to understand step by step. How much can you deposit into a bank account for example, if you were just diverting it there while maintaining your 401k contributions as they currently stand? It is definitely possible to continue to knock that down. Some people like to go beyond that and be more conservative. But if we do move closer into Orange County, then our mortgage will go up a little bit as well, but that will go away. Yeah, grocery store, internet loans a couple of small subscriptions, nothing big.
That seems really low for the Southern California market. I think you said you paid 350, 360 for your current house? Do you want your kids sitting in the back of a car versus having a higher mortgage payment to live closer, which is, we struggle with. Jeff:No, it is going to be one off ramp away that we will move and the cheapest we could probably find is 750. So, we are talking about those strategies but our goal is to try to do this in two years. Because if I could do one or two of internet loans those, I could sort of maybe flip my way up to an affordable house?
So, that would be something we could look into as well. Do we have any other major expenses coming out of your position right now? How much does the car in total cost yet on a monthly internet loans basis between the payments and the gas and the insurance? Oh, and we have two dogs, and so, those dogs between dog food and vet is 175 a month. Jeff:The big ones, unless you wanted less likely, I have an HOA which is 170.
Scott:Give me a sum of the miscellaneous stuff, like how much total are we missing from your spend of the smaller stuff? And I think like your current situation is quite reasonable. What you choose to do in the future will have a big impact as a big fixed expense.
Scott:And you have maintenance, at least one of the cars for those.
And then, with just our normal expenses, the utilities for the house. Which is why you need an emergency fund and a reserve fund for your rental properties.
I asked you if you track your spending in the application and you said yes recently and it was eye opening, but life happens and so do big expenses that derail us. And I want you to know that that is every single person I talked to.
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And so maybe, what she picks with that is her car lease, right, and the gas associated with it, because gas is a necessity no matter what car you drive. Because with your fixed expenses, your grocery bill, I bet you, that grocery bill can stay at 1000 bucks, and you can eliminate nearly all of that 800 bucks.
And it also goes back to with the amount of money that I have in the stocks right now, I could eliminate a lot of it now. If I took care of the car payment and HELOC, that 700-ish, that would be gone. So … Mindy:And you would have to pay capital gains on those stocks when you sell them. This internet loans is more fun, I think, than how can i get a loan with bad credit the spending stuff because the spending stuff is boring. Mindy likes doing this, but very few people like doing this, you got to do it bad credit instant loans anyways. Is that a fair assessment of your general net worth? One, you should cut your expenses, it becomes two months, just by cutting your expenses. But I think you need a significantly higher liquidity reserve, personally. And I think you need to build out that reserve for your rental business as well. So, when you have that rental business, I would like to see like a 15.
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