Ditching the Stock Market

2008 stole 1/3 of the value of my IRA funds from the market. I told myself if the market ever got back up to 11,000 (it was down around 7,000), I'd take all my funds out. Spring 2010 it did so I did. I took all my money out in CDs here in town. For return they are getting crap, but something and I know at least that I will not lose anything. Last month the market last 2%, my investments made between 1 and 2.5 percent depending on the investment. Not what I would like better than it could be.

Now I'm 65 and so money I lose I have less time to earn back. If I were 35 I might have made a different decision. I had to get rid of those 13% interest payments on my credit card. I was getting killed on the spread.

It did the trick and I came out with some investments in tact and all of my debt gone. But the fun part is just beginning.

Stay tuned.

Declaring All Out War on My Debt

When I knew that my income would be relatively fixed and I knew I had a debt I had to get rid of or I was going to pay through the you-know-what interest I knew I had to get rid of my debt.

I had to get rid of my debt no matter what it took, NO MATTER WHAT IT TOOK, NO MATTER WHAT IT TOOK.

So I declared war on it. For ammo I had my 401K plan, what was left from the funds from the sale of my car, and social security and a small pension.

I saw these could handle the overage, so I did a bail-out.

I cashed out my 401K plan, took a huge hit, and paid off my master card bill. I had already stopped adding to the amount on my card but I had to something about the pile itself. I also dedicated the amount I had gotten from my car to retiring the overage.

It decimated my finances but had to be done. I've never looked back and never regretted it. Now I'm starting to build back up, slowly because interest rates on deposits are crap.

(To be continued)

Selling my car, part II

(Continued from yesterday.)

I had a couple of options. I could sell it to a dealer. I took it out there and he looked at me down his nose and had a mechanic look at it and offered me almost nothing for it. I said thank you very much don't call me I'll call you.

I talked to a friend who said I should sell it on Craig's list and that he would do it for me for no charge. I said fine and waited for him to do something.

Meanwhile a friend called and said she was looking to buy a car. I told her I was trying to sell mine but she said she wanted a new car.

Two weeks or so later she called and asked if mine was still for sale and how much I wanted for it. She offered me less but enough and I said I would sell it to her but didn't she want to test drive it. (I had told her I'd just had it inspected, which I had) She said no problem she'd be in with the check.

I probably could have got more on Craig's list but I wanted to get rid of it right away. I took the money and put it in the bank. Turns out it helped me get clear of my debt left over from RE.

Converting an under-used asset helped me immensely in getting financially stable.

Selling my car

A few years ago I shrunk my real estate practice. Rather than run all over the city I focused on my market area where I was likely to get sales worth the effort. One day a warning light on the dashboard of my Corolla came on.

I took my car to my regular garage. They were good honest guys and always had worked hard for me and never charged me much much. They worked on the light and it went off.

A few days later the light came on again. I took it back in and they worked on the light again and it went off again.

A few weeks later the light came on a third time again and the car started to not start on hot days. Once it happened when I was supposed to transport a client to a closing. Not my shining moment as a realtor.

Finally it started and after the closing I took it back to my favorite garage. They said it was some kind of environmental sensor and they had run out of tricks so I had better take it to the dealer who had equipment to deal with it. My guys meant they didn't want to do any more work for me for free with no result. So I took it across town to the dealer who fixed it and charged me $327. I had never spent anything on repair and wondered if this was the tip of the iceberg going forward. I had no more trouble with it but I began to wonder if I really needed the car at all.

So I went home and figured how much the car was costing me to run. The answer was $300 per month for parking and insuring not counting repair, upkeep, gas and oil, parking tickets, and yearly inspection. And because I really wasn't driving it much this $300 per month was mostly wasted.

I decided I didn't need it any longer and decided to put it on the market. (To be continued)

Causation and Correlation

I find correlation more interesting than causation. I take correlation to mean: two things are correlated to the extent that two phenomenon occurr at the same time. Like age and wealth. Most people get wealthier as they get older. One does not caus the other. They may both be "caused" by an underlying cause.

Causation is tough. One thing is caused by another if the first thing wouldn't have happened with out the second thing happening. Take away the second thing and the first thing wouldn't happened.

For example a commonplace is that slavery is a cause of the civil war. It's true that slavery and the civil war coexisted. Would we have had the civil war without slavery? A matter for historical debate.

Or the rise of Hitler caused WWII. It might have happened anway but differently.

Fiinancial Stability (Continued)

Once I got my revenue stabled, applying for social security I knew I had some work to do. So I had to figure out where my money was going.

I'd made some investments in my real estate practice was a thing of the past, I looked at all the automatic payments I was making to that support that practice would no longer be valid. So I did my best to get rid of those. Some I could just bail out on right away. Others I was contracted for a little longer so I had to put up with those payments.

By the end off three months time or so, all my payments for real estate things, like lead generation prgrams, web-based tools, etc. were things of the past. There was more work to do, and I'll tell you what I did next after that.

Financial stability

First I wanted my undiscovered country to be financially stable. That meant I wanted positive cash flow every month. Every month. Not up one month and down the next. But my revenues exceeding my expenses on an ongoing basis.

First, I had to get my revenue solid and consistent so that I would know what it would be. I was 63 at the time. Real Estate was giving me nothing anymore and with the great recession at full bore with unemployment pushing 10+ percent and no immediate prospects of that turning around my first job was to figure out where my money was coming from.

I could wait on applying for social security or I could do it right away. The upside of waiting was that my monthly payment would be higher if I put off applying for Social Security until I was 65. How much more.

I got the figures each way and did a little time-sequence analysis. I found it would be a good 20 years before my delayed income would make up for what I was losing by not signing up. So I signed up. My other salary potential is capped, but so far no other outside salary is likely to come along in the near future so not to worry.

More on this next time