Comments on: August 2008 Net Worth Update (+1.27%) http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm Building Wealth through Saving and Investing Fri, 19 Mar 2010 19:36:23 -0400 http://wordpress.org/?v=abc hourly 1 By: Chris L http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50397 Chris L Tue, 02 Sep 2008 00:07:38 +0000 http://www.milliondollarjourney.com/?p=627#comment-50397 I suspect a portion of all high income earners is "passive" for they aren't paid hourly or based on any salary. Commission might be a better word, but you can bet a large portion of Donald's income is due to work that is farmed out. He could go hands off and depending on the skill of his replacement could yield equal income. If he hired right, he could likely exceed his income. Once you get high up in pay, the rules change significantly. It's once all your bills are paid and your quality of life is met can you begin to truly live life as it exists for the privileged. Net worth means nothing if it's used improperly. I think passive income is therefore more important, but perhaps less so in the earliest of stages. Net worth must come first before PI comes and PI is almost always only a factor of your net worth. Any asset producing PI has value to someone else. I suspect a portion of all high income earners is “passive” for they aren’t paid hourly or based on any salary. Commission might be a better word, but you can bet a large portion of Donald’s income is due to work that is farmed out. He could go hands off and depending on the skill of his replacement could yield equal income. If he hired right, he could likely exceed his income. Once you get high up in pay, the rules change significantly. It’s once all your bills are paid and your quality of life is met can you begin to truly live life as it exists for the privileged. Net worth means nothing if it’s used improperly. I think passive income is therefore more important, but perhaps less so in the earliest of stages. Net worth must come first before PI comes and PI is almost always only a factor of your net worth. Any asset producing PI has value to someone else.

]]> By: DAvid http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50395 DAvid Mon, 01 Sep 2008 23:30:44 +0000 http://www.milliondollarjourney.com/?p=627#comment-50395 Since properly assembled net worth can be converted to income production fairly easily, does it really matter which measure you use? If one manages a portfolio in it's early years for growth, eschewing income, does it have less value than the portfolio managed entirely for income? I think not. As most of us find our needs change, so will we adjust or portfolios, converting their purpose from growth of value to generation of income! As long as I can extract my net worth, it has the same value as a metric as would 'passive income'. DAvid Since properly assembled net worth can be converted to income production fairly easily, does it really matter which measure you use? If one manages a portfolio in it’s early years for growth, eschewing income, does it have less value than the portfolio managed entirely for income? I think not. As most of us find our needs change, so will we adjust or portfolios, converting their purpose from growth of value to generation of income!

As long as I can extract my net worth, it has the same value as a metric as would ‘passive income’.

DAvid

]]> By: Jon Kepler http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50393 Jon Kepler Mon, 01 Sep 2008 23:17:44 +0000 http://www.milliondollarjourney.com/?p=627#comment-50393 Do Donald Trump, Richard Branson and Steve Jobs profit primarily from passive income? I guess it depends on how you'd define it, but I'd say 'no', as they can't leave their businesses alone long term without creating a nose-dive in sales. Because of this, I'm tempted to believe that a high net worth is significantly more important than simply creating hands-off income. Do Donald Trump, Richard Branson and Steve Jobs profit primarily from passive income? I guess it depends on how you’d define it, but I’d say ‘no’, as they can’t leave their businesses alone long term without creating a nose-dive in sales. Because of this, I’m tempted to believe that a high net worth is significantly more important than simply creating hands-off income.

]]> By: Chris L http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50381 Chris L Mon, 01 Sep 2008 21:35:22 +0000 http://www.milliondollarjourney.com/?p=627#comment-50381 PI is what everyone is really looking for and it's closely tied to net worth... but only if net worth is used properly. A high net worth *invested* properly yields a high PI. If my net worth is held in cash, say $500k I haven't reached my full potential for a high PI. I always aim to yield 10% return on my net worth to put all my money to work for me. Currently that is what my properties return and I always base this return on the current value of the properties i.e. what I could sell them for today. My goal is to reach 500K in net worth, then I know that I can match this to 10% to yield $50k in passive income. Always have to keep an eye on both! PI is what everyone is really looking for and it’s closely tied to net worth… but only if net worth is used properly. A high net worth *invested* properly yields a high PI. If my net worth is held in cash, say $500k I haven’t reached my full potential for a high PI. I always aim to yield 10% return on my net worth to put all my money to work for me. Currently that is what my properties return and I always base this return on the current value of the properties i.e. what I could sell them for today. My goal is to reach 500K in net worth, then I know that I can match this to 10% to yield $50k in passive income. Always have to keep an eye on both!

]]> By: Kelly Parks http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50375 Kelly Parks Mon, 01 Sep 2008 20:27:12 +0000 http://www.milliondollarjourney.com/?p=627#comment-50375 I agree that passive income is a better gauge then net worth. Depends on what you want to count towards your assets as well could really flucuate your net-worth? Is your car really an asset? I agree that passive income is a better gauge then net worth. Depends on what you want to count towards your assets as well could really flucuate your net-worth?
Is your car really an asset?

]]> By: FrugalTrader http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50261 FrugalTrader Sun, 31 Aug 2008 11:11:13 +0000 http://www.milliondollarjourney.com/?p=627#comment-50261 FF, I agree that <a href="http://www.milliondollarjourney.com/passivealternative-income-streams.htm" rel="nofollow">passive income is more important than net worth</a>. The net worth goal is simply that, a goal. It doesn't represent financial freedom for me. FF, I agree that passive income is more important than net worth. The net worth goal is simply that, a goal. It doesn’t represent financial freedom for me.

]]> By: Financial Freedom http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50250 Financial Freedom Sun, 31 Aug 2008 07:41:38 +0000 http://www.milliondollarjourney.com/?p=627#comment-50250 I admire your journey to earning 1 million dollars by 35. But i personally feel that being financially free involves more than just increasing your networth. Perhaps a better gauge would be to have passive income that far exceeds monthly expenditure. I have also recently started on a plan to be financially free by 2022 with the desired end goal of $2800 per month (not adjusted for inflation yet). I am now only at a miserly $190 per month passive income. Do visit my website to see the long journey that I still have ahead. I admire your journey to earning 1 million dollars by 35. But i personally feel that being financially free involves more than just increasing your networth. Perhaps a better gauge would be to have passive income that far exceeds monthly expenditure.

I have also recently started on a plan to be financially free by 2022 with the desired end goal of $2800 per month (not adjusted for inflation yet). I am now only at a miserly $190 per month passive income.

Do visit my website to see the long journey that I still have ahead.

]]> By: Jon Kepler http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50228 Jon Kepler Sun, 31 Aug 2008 02:44:59 +0000 http://www.milliondollarjourney.com/?p=627#comment-50228 Furniture is one of those always-underestimated expenses, especially when you find something you just HAVE to have. I know the feeling; I'm probably at the five figure mark for furniture this year, and there's still more to go. ------------------------------ Also, couldn't get the trackback feature to work for some reason, but here's the blog link anyway: http://www.jonkepler.com/1/post/2008/08/weekend-edition-iv-links-of-the-week.html Furniture is one of those always-underestimated expenses, especially when you find something you just HAVE to have. I know the feeling; I’m probably at the five figure mark for furniture this year, and there’s still more to go.
——————————
Also, couldn’t get the trackback feature to work for some reason, but here’s the blog link anyway:

http://www.jonkepler.com/1/post/2008/08/weekend-edition-iv-links-of-the-week.html

]]> By: moneygardener http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50091 moneygardener Sat, 30 Aug 2008 04:24:14 +0000 http://www.milliondollarjourney.com/?p=627#comment-50091 Your YTD net worth gain is impressive FT. Your YTD net worth gain is impressive FT.

]]> By: DAvid http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50055 DAvid Fri, 29 Aug 2008 20:12:31 +0000 http://www.milliondollarjourney.com/?p=627#comment-50055 Just let us know if you choose the leopard skin print! Looking forward to seeing your shed in 2010! DAvid Just let us know if you choose the leopard skin print! Looking forward to seeing your shed in 2010!

DAvid

]]> By: Chris L http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50036 Chris L Fri, 29 Aug 2008 17:57:20 +0000 http://www.milliondollarjourney.com/?p=627#comment-50036 Thanks DGI. It might be a fun game, but certainly lots of work and require lots of organizing. I was thinking of lending out the remaining balance on my line. If I pay 4.45% right now and could lend an equal amount (to which I owe) out at 10% interest (borrowed from the line) then I could break even as far as interest is concerned. I know second mortgages lend out for 10-13% and I could do it for a 5 year term to match my goal for which I want my entire loan paid. It would yield about $9000/year which makes my entire loan interest a wash since I currently pay about $750 a month interest if my loan is maxed. A little risk and not something I know anything about despite knowing a good local mortgage broker who can both find me clients and a mentor. The wheels are spinning. Thanks DGI. It might be a fun game, but certainly lots of work and require lots of organizing. I was thinking of lending out the remaining balance on my line. If I pay 4.45% right now and could lend an equal amount (to which I owe) out at 10% interest (borrowed from the line) then I could break even as far as interest is concerned. I know second mortgages lend out for 10-13% and I could do it for a 5 year term to match my goal for which I want my entire loan paid. It would yield about $9000/year which makes my entire loan interest a wash since I currently pay about $750 a month interest if my loan is maxed. A little risk and not something I know anything about despite knowing a good local mortgage broker who can both find me clients and a mentor. The wheels are spinning.

]]> By: Dividend Growth Investor http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50030 Dividend Growth Investor Fri, 29 Aug 2008 17:21:40 +0000 http://www.milliondollarjourney.com/?p=627#comment-50030 Chris L, I tried searching for 0% apr on this site but I didn't find anything. I found this website online: http://www.creditcardguide.com/balance-transfer.html ( it's for US only I think and I am not affiliated in any way with them). Normally however 0% APR's on balance transfer purchases last from 6 to 15 months and the credit limit is only several thousand dollars. If you miss a payment on the 0% apr card or on another card they could increase your APR because of the universal default clause.. which won't be fun.. Chris L,

I tried searching for 0% apr on this site but I didn’t find anything.
I found this website online: http://www.creditcardguide.com/balance-transfer.html ( it’s for US only I think and I am not affiliated in any way with them).

Normally however 0% APR’s on balance transfer purchases last from 6 to 15 months and the credit limit is only several thousand dollars. If you miss a payment on the 0% apr card or on another card they could increase your APR because of the universal default clause.. which won’t be fun..

]]> By: FrugalTrader http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50025 FrugalTrader Fri, 29 Aug 2008 16:46:08 +0000 http://www.milliondollarjourney.com/?p=627#comment-50025 Hey Nob! The same house with double garage is definitely in the $450k range here! Best of luck on your landlording adventure. I've got a few articles here that pertain to that subject which may be of help. Hey Nob! The same house with double garage is definitely in the $450k
range here!

Best of luck on your landlording adventure. I’ve got a few articles here that pertain to that subject which may be of help.

]]> By: nobleea http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50023 nobleea Fri, 29 Aug 2008 16:41:07 +0000 http://www.milliondollarjourney.com/?p=627#comment-50023 There are very few houses with single garages in Edmonton. All double or triples. I have seen a six car garage (but the house was 3.4mil). The renters move in this weekend. The rental market is quite healthy. I posted a free ad on kijiji and got maybe 20 responses. The young couple I picked were very grateful for the opportunity. They were keen on signing a 14month lease, which works well with my mortgage renewal date. We'll see how it pans out. Young couples can have a way of breaking up, but they're both on the lease, so they can figure it out. Due to the location, age, and finish, my 1 BR condo rents for $1450/mo. There are very few houses with single garages in Edmonton. All double or triples. I have seen a six car garage (but the house was 3.4mil).

The renters move in this weekend. The rental market is quite healthy. I posted a free ad on kijiji and got maybe 20 responses. The young couple I picked were very grateful for the opportunity. They were keen on signing a 14month lease, which works well with my mortgage renewal date. We’ll see how it pans out. Young couples can have a way of breaking up, but they’re both on the lease, so they can figure it out.

Due to the location, age, and finish, my 1 BR condo rents for $1450/mo.

]]> By: FrugalTrader http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50021 FrugalTrader Fri, 29 Aug 2008 16:32:00 +0000 http://www.milliondollarjourney.com/?p=627#comment-50021 $650k for 2500-2800 sq ft? Wow, that is expensive! Even though prices around here are skyrocketing, a similar house with single garage would go for around $400-450k! Too rich for my blood. So if i'm reading your comment right, you are renting out your condo? What has your landlording experience been like? FT $650k for 2500-2800 sq ft? Wow, that is expensive! Even though prices around here are skyrocketing, a similar house with single garage would go for around $400-450k! Too rich for my blood.

So if i’m reading your comment right, you are renting out your condo? What has your landlording experience been like?

FT

]]> By: nobleea http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50016 nobleea Fri, 29 Aug 2008 15:41:01 +0000 http://www.milliondollarjourney.com/?p=627#comment-50016 FT; I can't comment on the city as a whole, but for the areas that I'm familiar with, I would say it's been as high as 15-20%. In July 07, my condo downtown could've sold for $310K, but a year later, it's a struggle to sell it for $250K. (I'm renting out the condo instead). The house we bought, at $350K, would probably have sold for $420K or more last year. So that's about 18% as well. The biggest struggle is probably in the high end housing. In a city of about 800,000 people (not including the bedroom communities), there are 500 houses for sale at a list price over $650K. Over 100 houses for sale over $1million. And they sit for a long time. There's only so many buyers for them. For comparison, a $650K list price house is typically around 2500-2800 sqft in a newer subdivision. Nice finishes with a standard subdivision yard. Prices can probably still come down by a bit, but if home prices follow wages and salaries, then Alberta and Edmonton should be able to support some of the higher priced homes in the country. FT;
I can’t comment on the city as a whole, but for the areas that I’m familiar with, I would say it’s been as high as 15-20%.
In July 07, my condo downtown could’ve sold for $310K, but a year later, it’s a struggle to sell it for $250K. (I’m renting out the condo instead).

The house we bought, at $350K, would probably have sold for $420K or more last year. So that’s about 18% as well.

The biggest struggle is probably in the high end housing. In a city of about 800,000 people (not including the bedroom communities), there are 500 houses for sale at a list price over $650K. Over 100 houses for sale over $1million. And they sit for a long time. There’s only so many buyers for them.

For comparison, a $650K list price house is typically around 2500-2800 sqft in a newer subdivision. Nice finishes with a standard subdivision yard.

Prices can probably still come down by a bit, but if home prices follow wages and salaries, then Alberta and Edmonton should be able to support some of the higher priced homes in the country.

]]> By: Chris L http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50012 Chris L Fri, 29 Aug 2008 15:24:55 +0000 http://www.milliondollarjourney.com/?p=627#comment-50012 DGL lol! So true! I get 9 hrs of excellent sleep, so I'm good. Credit cards are great for sure, then pull money out of your line of credit if you have to. What about two lines of credit? One for HELOC and one for emergencies? Unsecured would be higher, true, but it's for an emergency...hmm scratch that I don't think it would make sense. I guess if you had a big emergency, you could just keep track of how much it was then subtract it from the interest you can deduct. Is there an article on here about 0% credit cards? I think I could move some of my debt over to cc's then avoid interest. My goal is to have all my real estate paid off in 5 years. If I can get big enough loans at 0% interest, I can pocket/save an extra $8k/year by moving my debt from 4.45% to zero. It would be a lot of work to get all the cc's but it might be worthwhile over the long run. DGL lol! So true! I get 9 hrs of excellent sleep, so I’m good. Credit cards are great for sure, then pull money out of your line of credit if you have to. What about two lines of credit? One for HELOC and one for emergencies? Unsecured would be higher, true, but it’s for an emergency…hmm scratch that I don’t think it would make sense. I guess if you had a big emergency, you could just keep track of how much it was then subtract it from the interest you can deduct.

Is there an article on here about 0% credit cards? I think I could move some of my debt over to cc’s then avoid interest. My goal is to have all my real estate paid off in 5 years. If I can get big enough loans at 0% interest, I can pocket/save an extra $8k/year by moving my debt from 4.45% to zero. It would be a lot of work to get all the cc’s but it might be worthwhile over the long run.

]]> By: FrugalTrader http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50011 FrugalTrader Fri, 29 Aug 2008 15:23:14 +0000 http://www.milliondollarjourney.com/?p=627#comment-50011 Nobleea, how much has the Edmonton market corrected from its top? DAvid, the video was hilarious. I am seriously considering pimping out my shed! DGI, you can read more about my <a href="http://www.milliondollarjourney.com/passivealternative-income-streams.htm" rel="nofollow">alternative income streams here.</a> Nobleea, how much has the Edmonton market corrected from its top?

DAvid, the video was hilarious. I am seriously considering pimping out my shed!

DGI, you can read more about my alternative income streams here.

]]> By: Dividend Growth Investor http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50010 Dividend Growth Investor Fri, 29 Aug 2008 15:16:18 +0000 http://www.milliondollarjourney.com/?p=627#comment-50010 Chris L, Although from a number crunching perspective it does make sense to keep as little cash as possible and put everything towards the mortgages, from a comfort point of view it is very nice to have some cash on cash just in case. Otherwise the best way to save would be to put every penny you can get to in real estate, stocks and mutual funds. If a rainy day comes you can just use 0% credit cards for 12 months or borrow aginst your HELOC.. However PF is stricly personal, so what might be ok for you or me or Ft, might make others sweat at night :-) Chris L,

Although from a number crunching perspective it does make sense to keep as little cash as possible and put everything towards the mortgages, from a comfort point of view it is very nice to have some cash on cash just in case. Otherwise the best way to save would be to put every penny you can get to in real estate, stocks and mutual funds. If a rainy day comes you can just use 0% credit cards for 12 months or borrow aginst your HELOC..
However PF is stricly personal, so what might be ok for you or me or Ft, might make others sweat at night :-)

]]> By: DAvid http://www.milliondollarjourney.com/august-2008-net-worth-update-127.htm/comment-page-1#comment-50007 DAvid Fri, 29 Aug 2008 15:04:36 +0000 http://www.milliondollarjourney.com/?p=627#comment-50007 Frugal Trader, Most of your increase this month seems to come from savings. Given your current situation (new house, new furniture, new family member, wife on maternity leave) that increase is truly stellar! Don't worry about your decorating skills -- you'll likely be building a shed soon! http://www.videojug.com/film/how-to-pimp-your-shed DAvid Frugal Trader,
Most of your increase this month seems to come from savings. Given your current situation (new house, new furniture, new family member, wife on maternity leave) that increase is truly stellar!

Don’t worry about your decorating skills — you’ll likely be building a shed soon! http://www.videojug.com/film/how-to-pimp-your-shed

DAvid

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