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October 2020 Net worth update

This is a short post and update on the Net worth. My last net worth update was in August 2019, when I was around $185,000.

Today we are about 36% above that previous number.

We have had few hiccups due to our car accident. This spiraled down into a train of expenses that we did not expect but thanks to our financial discipline we have saved up an emergency fund that has been a life saver.
We were in need of a different car after the accident, we got it. We did get a small loan because, why not? I may pay it off after we settle the car accident with the insurance, but in the meantime I prefer stashing the cash.
I also had the opportunity of getting another car for an awesome price and then selling my current vehicle; that was another expense that I’m expecting to make back when I sell my current vehicle. I may even make a decent profit.
The rest is the same as usual. We got a budget. We have automated everything so that every time I get my paycheck, money gets withdrawn and deposited right into our savings account.
Looking into your net worth is a great exercise. I love Personal Capital and how easy it is to analyze where you are.
Just few years back I had nothing, but a credit card with 9K in the red. I felt like I was drowning. I felt like there was not progress regardless of how much I worked.
Today I feel excited about my finances and my future retirement. I feel that I am in charge of my money and I feel how little by little that money is freeing my mind from the daily oppression of having to work to cover my basics.

We are considering plunging into buying another property. We are debating if we should go for another rental near us, or a vacation home with potential to rent on a weekly basis through Airbnb.

I am wondering if we can keep that 36% growth rate for the next five years.
Please feel free to share any ideas and opinions you think may help this family of six(Plus one) on their FIRE journey. I am thankful for being able to share this adventure with you.

Surviving the Summer Pandemic 2020

Pandemic Coronavirus Composite
As we crossed the line of over 1 million deaths worldwide we got our share of health issues.

One makes plans, life simply laughs at us.


I wanted to start my post today with this quote because more than ever quote speaks volumes to me. We all read and discuss how important setting goals, being determined, frugal, and resilient is. We make plans and along with that, we create expectations of success and certainly we hope to reach our goals within the time frame we have estimated.
Unfortunately, more often than not, things do not exactly go as we planned. Life likes throwing curve balls at you. You plan to go from A to B, but somehow the whole alphabet happens in between those two and you may end up in a totally different place from what you planned; sometimes for good, sometimes for worse, or sometimes you may find yourself right back at where you started but with different priorities. Life is just simply full of unexpected surprises and unknowns.

This can lead to frustration and disappointment, making you give up your goals or even your desire to plan anything. “What for?” You may ask, if anything ends up going sideways. Unless, of course, you understand that these frustrations and disappointments are just part of the journey. Rarely a journey is one straight path.

Needless to say, the FIRE journey is not an easy one. It is simple. Yes. In the sense of what you need to do it is very simple. Maximize your earnings, maximize your savings, invest and widen the gap between earnings and spending. Likewise though, there are many parts of your life interconnected that must synch and align for everything to work out and fall into place. From your own physical and mental health, to your own variety of responsibilities with your family. It can be very complex.

I have been dying to sit down and write more since my last post called “Pandemic Proof Finances.” When I thought I had everything all aligned, even during this Corona virus time and I was perfectly on track to reach my goals this year.

Everything was secure. My teaching job gave me nothing to worry about as I saw thousands of people losing their jobs and feeding the unemployment rates. My rental was doing fantastic and I had nothing to worry about because my tenant is a subsidized housing program participant; which means that I get paid mainly by the government not the tenant.

The only thing I had to worry about was making it through these crazy times of uncertainty as we face a potential fatal virus of still unknown consequences.

Like everybody else we went through the pain of wiping our groceries, paying extra for food, hoarding a few things trying to create a small inventory of food to feed our family of six, plus one more person (An extra family member who got stuck with us due to the pandemic) in the given case the food distribution chain broke down.

Jewel grocery deliver
This is a privilege not available to all people around the world. We don’t take it for granted.

Of course, we also faced the “gruesome” fear of getting to our last roll of toilet paper!!!

Somehow though, things worked themselves out. Financially we made it. Safety wise, we kept to ourselves, we practiced social distancing rigorously, as we saw the images in New York of refrigerated trucks outside of hospitals storing deceased Covid-19 victims. We also saw the horrible images of a world that is still ravaged by inequalities. Countries where the most basic access to medicine is a privilege that only a small percentage of the population can enjoy. 

To add more stress to our pandemic situation, we added a new member to our family. My mother, who had come to visit for just a few weeks, got stuck with us since the time when the world shut down. This added a lot of stress to our marriage, our family dynamic, and of course it gnawed on our budget and finances one day at a time. This could be a whole post in itself, but I will summarize it as this: I have one heck of an amazing wife- It has not been easy!

More of 2020

We made it to August, enjoying our small pool, which became the focus of our summer entertainment. Usually in August we go on a family camping trip. This year though we were leaning on the idea of just calling it off. However, by August we noticed a lot of people taking small trips and enjoying themselves. The kids were devastated with the idea of not going on our yearly adventure. So on a whim, we decided to go for just a few days. As long as we followed the same safety guidelines recommended by CDC, such as washing hands, social distancing, etc, we should be OK, we thought.  Usually we go for 10-15 days, we decided to go for only 5 days.

We got everything ready. New front tires for the car, small muffler repair to our old trusty minivan, bought our provisions, etc. We were ready!

 Before we knew it the days flew by and we were all waking up early, getting in the car, all bags in, even the dog was excited for the big adventure. Coffees set in the car’s cup holders. Camper hooked, all the lights on, cruising the last minutes of the night as the sun was trying to come up. Little did we know that our trip was not going to go far at all. 

About 10 minutes away, maybe one mile from reaching the highway, we settled in our seats, ready to enjoy the ride, maybe take the first sip of home-brewed coffee with Gregory Alan Isakov at dawn as the soundtrack of our 2020 summer vacation. 

Out of nowhere, and in a matter of a split of a second a car traveling in the opposite direction rear ended another car that was waiting for us to pass, so it could turn left. The rear-ended car got driven right into us.
That is really the aftermath explanation after we were able reconstruct what happened. In the moment it simply felt like a drone attack; out nowhere we were impacted, and it was hard.
Our driver’s side took the brunt of the impact. Our car got impacted all the way from the front to the back. The airbags got deployed. I managed to keep everything going relatively straight despite the impact and in a blink of a second we stopped. My wife asked me to call 911. She was hurt. I felt extremely tight on my back and neck, but I was conscious and facing probably the worst moment of my life; my kids!

Taking that first look to the back of the car wondering if they were OK was terrifying. I was fearing the worst. Were they hurt? Or even bleeding? Killed? Had I just lost one of my kids?

Luckily, they walked out of the car completely unscathed. Unreal! The rear window on the side of the impact also exploded. The sliding door was also damaged and caved in, but nothing touched our kids. Unfortunately, my wife suffered a triple femur fracture. We don’t know if it was caused by the impact, even when her side was not impacted directly, or if it was due to the impact of the airbag.

Airbag deployed
I hope to never see this again in my life.

She was rushed to a nearby hospital and had to have surgery that night to have an intramedullary nail; which I thought it was a pencil like kind of support but in reality it is more like a rebar, driven from the top of your hip all the way down towards the knee.

Intramedullary Nailing of Femoral Shaft
This is one of her last X-rays. everything is in the right position and moving towards full recovery.

Since the day of the accident until now it has been a whirlwind of doing, from taking care of her, the kids, phone calls, answering to our lawyer’s emails, making meals, going back and forth to the hospital, appointments, and my own physical therapy. I was supposed to get back to work few days later after our trip but I had to take two weeks to stay home  as she regained some mobility, and we sorted out the so many things going on in our lives.


Did we get off completely off the FIRE tracks? Is everything lost?

Well, my first thought was this is the end. We are going to be buried with bills. Right away I was advised by a good friend of mine, who is a lawyer, to get legal representation. He didn’t have to say much more than “Insurance companies feast on people who are not represented legally.” 

That ended up being a pretty smooth process, although from the beginning I knew there were going to be some hard pills to swallow with all this.

When you get in a car accident there are two parts, maybe three, to deal with. The simple one is property damage. The cost of reparation or replacement for a vehicle. Who is at fault, etc.That is pretty straight forward. In our case I knew my car was worth nothing. I had bought that car for two thousand dollars 5 years ago, and although it was reliable I knew I would have been lucky if I got even one thousand back.

The other issue to deal with, is bodily injuries. This can be extremely difficult to deal with, because in reality sometimes all the money in the world can not repair an injury that will also have life long consequences. It is difficult to determine what the needs for therapy may be in the future, how much suffering a person will sustain in the coming years as a consequence of an accident. It is hard to put a price tag on a missing limb, brain injuries, the ability to walk, or even losing a family member. Likewise, it is extremely difficult to face the bottom line, which is the fact that your recovery or reparation paid to you and your family will be determined by the kind of coverage the person at fault has. If the amount of that coverage is not enough, you can then tap into your own insurance policy if you have underinsured motorist coverage. Which means exactly that; if you get in a car accident, as long as it is not your fault, and the damages can not be covered by the insurance of the other driver, your own insurance will kick in to cover those expenses and compensation.

The third aspect to deal with, is the one related to justice and the desire of seeing the law punishing reckless behavior such as speeding, cell phone usage and in other instances DUIs, etc. 

In our case, there was very likely some sort of distraction going on in the vehicle that caused the accident. The accident occurred on an ample two lane road on each side(4 lanes total), straight, very light morning traffic. For the kind of damage we suffered, and given the fact that we were impacted by a car that was not in motion, but pushed with such force into us that totaled our car, it leads me to believe that the car at fault was going easily over sixty miles per hour on a 45 zone. Was the person texting, talking on the phone or watching videos while driving or didn’t even brake? We will never know, because unless there is a fatality in a car accident the police does not check phones at the scene of the accident, and getting those phone records may cause another hefty expense ultimately diminishing your compensation or reparation. 

You hear all the time of people getting sued left and right for what seems to be petty things, but it is not as easy as you would think. Besides that, it may not be worth it at all if the person you are suing does not have the means to pay for damages or bodily injuries. For example, it would not be worth it to sue an individual who is 40 years old, living in an apartment building, earning a minimum wage, with no assets. What could you possibly get to compensate your damages even if your lawyer ends up garnishing wages? If a driver hits you or someone in your family, by a driver that only has a 50K coverage, it may look like a 35K payment(Standard fee for lawyer’s is a third of the compensation paid) is nothing but that may be the very best shot you got at getting some compensation for damages. With that said, if you sustain a severe injury that will impact your life forever, this compensation will indeed be a drop of water in an ocean of medical bills. On the other hand, suing the driver may get you nothing at all but frustrations.

Legal representation is also expensive. This is not a complaint. There are many costs involved in litigating a case and lawyers have to upfront these expenses hoping that they will be compensated when the case is resolved. The standard fee is one third of the insurance pay out or compensation goes to the lawyer’s office. If you are compensated with $100,000, the lawyer will keep roughly $33,000. 

They do not have to take your case either. They can decide if they want to represent you or not, which makes it for a good profitable business.

Besides losing 33% of a possible settlement from an insurance company, you may also have to pay back to your own health insurance company. The expenses of your treatment upfronted by your health insurance, such as surgery, ambulance transportation, therapies, etc, may have to be paid back. Once that you are compensated, if your health insurance company paid for your expenses in the first place they will very likely exercise what is called subrogation, which basically gives your health insurance company the right to be reimbursed for what they paid on your behalf.

It has been a very trying year. And this where we are at… deep sigh!!!
A wife who is recovering from a triple femur fracture. A summer vacation that got ruined after the first 10 minutes of the trip, E-learning unfolding, still at the mercy of a threatening world pandemic, a very unclear financial horizon, and possibly on the hook with some medical bills. Plus, last but not least a co-living situation with an extra family member who is still stuck with us. How many more months of 2020?

But there is always a silver lining to any situation, and I have learned that when you think you got it bad, for sure there is always someone in much more pain and suffering. I am thankful for having my family all together, and despite our accident situation we are getting our lives back day by day.

Lessons Learned During These Few Months

First of, I regret, and I think it was a terrible decision to simplify my auto insurance buying only liability. The underinsured motorist coverage is a must, at least for bodily injuries; for property damage depending on how old your vehicle is, it can be debatable.

 If you are in a car accident and you are not at fault, but the other party has, let’s say a 50K coverage, you may be in trouble to cover all your medical bills. Even if your own health insurance is terrific and covers most of the bodily injury, it is highly likely that you will not be compensated for the pain and suffering from a severe injury, such as a broken bone, losing a limb, a brachial plexus or brain injury where your current ability to even work will change forever. 50K will hardly cover medical expenses.
And let me share this nugget with you: There are companies out there selling products with only 50K coverage for bodily injury. So protect yourself and your family. Underinsured motorist coverage is a must.

Likewise, if you are on the other side of the equation and you are at fault with only a 100K coverage, and the other driver suffers a severe injury, your 100K coverage will not be enough if that person, for example, loses the ability to walk or any cognitive ability as a consequence. If you are working towards FIRE it is likely that your net worth will be above that amount and lure any lawyer to file a lawsuit against you on behalf of the victim. 

For all these reasons, I went from only having liability coverage to full coverage with underinsured motorist coverage plus an umbrella coverage up to 1 million dollars. Yes, it costs more but I sleep better. I would hate to lose everything I have managed to save in the given situation I get in a car accident and I am the one at fault.

Two Years of FIRE 

Maybe almost three…
I am still far far away from FIRE but my short journey proves to me every day that I am simply much better off today that I have ever been.

First of,I have saved enough to feel secure. I have no financial worries about covering any expense, mortgage, etc.

We are still undergoing a world crisis and potentially we will be facing a financial one in 2021. I have no worries. My job is secure, my rental is paid by the government; life is good.

We had a devastating event that a few years ago would have caused us a lot of financial unrest. Today, thanks to working towards financial independence we had no concerns whatsoever making it over this hurdle. I was able to purchase a new used car in no time and I felt empowered when negotiating for it. I felt like I could get anything I wanted and on my terms, or at least for what I considered a fair price.

I am estimating a small compensation from the insurance company representing who caused the accident and by no means I am happy about this. There is no money amount that could equate the suffering my wife has endured. But that’s life. Unfortunately we cant rewind time. Once we fully make it through all this craziness we will deploy again our plan of buying another rental; we are currently evaluating the option of and Airbnb as well.

I will be posting soon and update on the net worth. 

In the meantime, we are happy we are all together again. Our sails are filling up again and we continue on our journey.

Blackwell Forest Preserve
Lately we have been enjoying our small sailboat in local lakes.

Learning from other people’s experiences can be a great help. Feel free to share this with anybody that may benefit.

If you have any question, suggestion drop me a comment below.

Stay well.

Covid-19 pandemic crushing the world markets

Pandemic Proof Finances

This will be a time to remember. We just have to survive to tell the story.

I went from publishing my delayed post on March 8(talking about financial goals) to this current post in the middle of a full blown out pandemic a la 1918, when the Spanish flu shook up the structure of civilization and the human race.
Inevitably, our intertwined economies, amazing means of transportation and our human connection to family and friends in different parts of the world make us more vulnerable and maybe more profoundly affected by these kind of challenging events than we were 100 years ago. However, with all the medical and technological advances of our current world you would think that we would be able to dig ourselves out of this one and minimize the human cost.
We’ll see…In the meantime…

Is the FIRE movement dead?

Absolutely not. I think it is more alive than ever!!! As someone that jumped on the bandwagon of financial independence two years ago I can tell you that thanks to looking into my finances I can still go to bed and have a great sleep in the middle of this global disaster.
If the Corona virus would have hit two years ago I would have had only $400-600 in the bank, 6-8K of credit card debt and the pending burden of non-discretionary bills, such as my mortgage, utilities and food.
Today, in the middle of this pandemic chaos I am in the best position I can possibly imagine. No debt, living in a great area with nice trails, a decent amount of cash stashed away, and with our mortgage as my only liability.
I am far away from retirement. Maybe 9 years, according to that awesome countdown timer on my splash page.
I’m not even financially independent, but my situation illustrates perfectly why the FIRE movement isn’t dead, but more alive than ever. I depend on my salary heavily, but being part of the FIRE wannabes has given me the capability to endure this unprecedented time.
The desire for FIRE has secured a solid financial foundation to weather this financial storm with my family.

My Biggest Financial Concerns During this Pandemic

I was sent home on March 13, 2020. Not much later than that, I received an email from my school district confirming that we would continue getting paid while being home. At first, those days were supposed to be accounted as snow days, God events, but later we moved into the idea of E-learning.
Luckily, we were guaranteed our regular payment as we continue working from home. Of course, if everything extends further than expected, and people start losing their homes, not paying taxes, etc., that would eventually impact my school district as well and trickle down to me. Hopefully we don’t get there.
My biggest concern, besides continuing getting paid my regular income, was to secure my rental income. That would have put a big dent in my pocket if I had to absorb an extra mortgage. Luckily, what once was an iffy decision due to all the horror stories around affordable housing and the Section 8 program, I can tell you that today I feel like the luckiest man on Earth for having a Section 8 tenant. My current tenant is responsible for about 2% of the total rent amount and the government pays the rest. The tenant not only keeps the property in superb condition but also pays electronically right on time; sometimes even earlier.
Again, you would think that in these difficult times money should be the least of our concerns, but it’s not. It’s the main concern besides avoiding getting sick with that Covid-19 crap! Money and money related stresses are going to devastate a lot of families and individuals. I am confident that we will see the financial repercussions of this pandemic for several years to come.
Now, thanks to my FIRE goals, all I have to worry about is staying healthy and keeping my family entertained in the comfort of our home.

The Emperor Has no Clothes

Analyzing this pandemic with a critical perspective, you just can’t deny that besides being an unprecedented event, it’s exposing what we knew all along, but we refused to see.

We live a in a world full of inequalities and abuses that will be now accentuated by this pandemic, bringing dramatic consequences to countries where medical care is available to only those with economic power within that particular social group. While the pandemic keeps unfolding in less fortunate countries, not only will medical attention be limited , but also food, water, electricity and transportation. Besides, of course, information! **India less than 500 deaths with a population of of 1.3 billion people, really?**

So, if you are in a developed country, I hope you realize how privileged you are. Getting your groceries delivered to your door, having a guaranteed network of food distribution and Amazon providing you with any crave you may have to satisfy your hobbies and intellectual needs is as privileged as privileged gets. That is not the normal for most of the world.

This is not to say that in developed countries there are not less fortunate folks being ravaged by the consequences of this pandemic, but never at the levels of countries like Venezuela where poverty is rampant.

Can we really overcome this chaos if we continue overlooking the fact that we don’t give an absolute shit to what is happening in other countries as long as we can continue getting cheap labor and products? Or do we call this pandemic an “externality” of our privileged lives and move on as we watch the John Hopkins Corona Virus Map gain another death?
It is hard for me to imagine a pandemic free world and coming out of this one triumphantly without focusing on some of these challenging issues pertaining social justice domestically as well as internationally.
I am left wondering if this pandemic will trigger the necessary changes for some less fortunate countries. Likewise, I hope this chaos settles for once and for all that health care should not be just a money making enterprise or privilege for a few people, but a right that helps us all.

Corona virus map by John Hopkins Hospital showing the current state of contagion and death in the world.

Lessons Learned from an Unprecedented Event

First of all, I would not recommend anybody to make any drastic changes during this time. This is not the time to take chances using your emergency fund to invest it on a winning stock, with hopes that the market will rebound after stocks have dropped more than 20% of their value.
If you already have money in your 403B/401K , IRA, Roth or any other account, likewise, this is not the time to be moving things around if you are a conservative investor like me. Not worth it! To me, my sanity and tranquility is worth more than a few thousand dollars.
Now, if your expenses are covered and you have extra cash to play the game of buying the dip without jeopardizing your current situation, that’s a different story. Increasing your current contribution to your tax deferred accounts can certainly bring some reward once we are out of the woods with this pandemic. In my case, that is not part of my game right now. Besides, I recently increase my 403B contribution right before the pandemic dilemma started. Hence, I feel like I already put a check mark on that one.

My second lesson learned from all this, and please, imagine myself kissing the ground thanking the universe for this one, is start your FIRE journey as soon as you can, which is right now. Remember, any drastic changes aren’t worth it at the moment, but start thinking about it! What is your number? What is your blueprint to become financially independent? Once you start that journey it doesn’t matter how fast you walk it, you will always be in the best position you can possibly be financially.

My other lesson learned from this pandemic debacle is DIVERSIFY!!!
It doesn’t matter what you do, diversify!!!
In my case, what once was an uncertain path of doubts holding me back from renting to Section 8 tenants, it has become a life saver. Thanks to the fact that my rent is back by the government I have no worry about getting paid or not. In my mind, Section 8 will always be part of my rental portfolio as I continue acquiring properties.
I am planning on getting one or two more rentals in the future and I think that government backed tenants are a great mix in a landlord’s portfolio as long as you do your diligent work of screening your tenant properly; just like you would do with any tenant.
Another nugget of wisdom that I will continue to treasure is to avoid high leveraged deals. All those folks out there preaching OPM(Other people’s money) strategies sound very smart when the wind is blowing in their favor, but if by any chance you get stuck in the doldrums of a financial havoc, things can get ugly pretty quick. Especially if a 2008 Tsunami all of the sudden comes your way it’s unlikely you’ll survive. That leverage can work both ways!
We don’t know exactly how the housing and rental market are going to react to the Covid-19 scar, but undoubtedly we are already seeing some consequences and it will definitely have some profound effects as we see record high unemployment applications; even if a Covid-19 vaccine was found tomorrow it will take some time for the economy to recover, including the time to convince the antivaxxers to get the shot.

Don’t be ashamed for sitting on a nice cushion of property equity. Buying and holding a rental until you pay off your mortgage before you move on to buy another property is perfectly fine and quite risky as it is. There is no reason for gambling.
Call me lame, but that’s what I am doing, and life is great!

2020 Goals Modifications

After getting out of debt this year 2020, we set up a new target: Paying our rental’s mortgage off.
Right away, after paying our student loan we received our 2019 tax return and stashed it away. Using the snowball debt paying strategy we started detouring the former student loan payment towards the new debt target.

However, I didn’t want to wipe out the account right away and just dump it on the mortgage; not quite then. And thank God I didn’t! Not much later, after we pooled all the money together and we were going to make a move, Covid-19 started creeping in. By March 13th I was sent home as the Coronavirus had made its way to the Chicago area.
Now, a month later, I still haven’t moved any money and it is just accumulating in the bank as a safety net. I am still getting my regular income and actually we are saving quite a bit of money by staying home. I am still hesitant to make a big move and nearly zeroed my account by dumping money on a mortgage. We will wait.
I have also been tempted to buy the dip and sink the money in the stock market, but sincerely a 20-30% gain doesn’t justify the peace of mind I have right now, knowing that I can cover all my expenses if necessary using that money stash.
Call me risk averse, but I prefer having a nice sleep at night. I have a wonderful life and I can provide for my family quite comfortably. That’s what matters to me. Why push it?
My biggest financial move during this pandemic, which I also accredited to my pursuit of FIRE, is having just scored a nice refinancing opportunity through a local credit union. We had a 4.75% 30 year fixed mortgage. Now, we will have a 3.3% rate which will bring about $140 in savings monthly. It doesn’t sound like much, but yearly it will save us $1,680. At the end of 30 years we would be saving $50,400! That’s quite a bit of money. And I prefer it in my bank account rather than the bank’s!
To conclude, my 2020 goals are keeping the course with a few changes. Financially I feel that we are secured. Now, we just need to make sure the whole family makes it through through these troubled waters. If so, I think we will come out in an even better situation we had anticipated for 2020 due to our mortgage savings, going nowhere and so far one stimulus check that just came in.

I would love to hear how is this pandemic affecting your financial goals and what changes you have had to make.

Setting Goals for 2020

New year means new financial goals.

A bit late confessing my 2020 resolutions but this has become a must for me. Setting up financial goals for the year helps me stay focused and stick to the plan. If you have not set yours I hope this inspires you to do so.

So far, from the moment that we started our journey towards FI, besides getting out of debt, my second goal was to free up some cash. We didn’t have big amounts on credit cards and it was relatively easy to pay them off once we got on a budget. However, my wife’s student loan was a total  @#$**!!! We had acquired it around 2003, and by 2016 we had barely made any progress. After moving to our new place and settling in we became   landlords but we were still sitting on the debt pile for the student loan  for $22,000.

After looking at our budget and sticking to our guns we decided to go hard at the student loan. If our calculations were right, after two years of making extra payments the loan would be gone. A little miscalculations made us miss the finish line but not by much, and we actually had some unexpected gains that we didn’t account for, which I explained in my previous post here.

But finally and without hesitation, I can say proudly that we have accomplished our goal. We have completely paid our student loan!!!
Now we have available to us all the cash we were using towards that payment. The regular payment was $235, but we were paying $716.
Now we have set free those seven-hundred-sixteen bucks, who are now diligently working for us 24/7 helping us to increase our net worth.

What’s next?

Well, after surviving our first run as landlords we have stepped up our game bringing some extra rent income. Now we have some extra cash-flow in rent and $716 that were previously going into student loan payments. All this together gives us a lot of flexibility and brings awesome investing opportunities.
Besides all these good news, we have always had an awesome tax return averaging about 10K . This year we broke that mark!
I know. We loan money to the government for free but we love that juicy check in the spring. It’s like a forced saving stash of cash.
In the past, we have used whatever we get in tax returns to just pay credit cards and do few little repairs around the house. We would stay afloat for few months, and then around November we were gasping for the next tax return again to pay off debt. A pretty frustrating cycle. Sounds familiar?
Luckily, that’s a thing of the past. After working our budget, we were able to brake that cycle and become more intentional with our hard earned income.

Debt Snowball Method

If you haven’t heard of the snowball method to pay debt, it is one strategy that can really help you further your financial success.
How does it work? It’s pretty simple. You determine what debt you would like to pay off, such as a credit cards, student loan or even mortgage; the general recommendation is to choose the smallest amount of debt with the higher interest rate; most likely credit cards. After paying one debt, and eliminating that liability you will repurpose that payment and dump it on the next bucket of debt.

To illustrate, I would use my own case. We first chose to pay off our credit cards by making not only the minimum monthly payments but also paying additional cash towards the principal we owe. Once we paid the credit cards, instead of saying, “look! Now we have extra cash to spend,” we pretended the money was not there and kept a tight budget. We looked again at our budget and chose what debt was next. In our case the student loan was next, with a balance of 22K at a 6.5% rate. We used the regular monthly payment of $238 we were obliged to, plus the cash we had freed up from the credit cards debt. Our final number was $716. Now, instead of continuing paying $238 to the student loan debt, we were paying a total of $716; $478 extra towards the principal every month.
Was it easy? Well, some months were better than others. Some months were a real squeeze. But we stuck to the plan.
One of the strategies we used to help us out a bit paying off the student loan was using a home equity line of credit. By doing so, we reduced the interest rate from 6.5% to 4.5%. This gave us an estimated saving of $416 yearly if we committed to pay the debt within two years.
However, if we didn’t pay this debt and continued on the minimum payment track we would have stayed on that same track until 2028; that was the loan’s maturity date and it also included accruing $1430 of interest payment yearly (22K x 6.5%)!
Instead, we saved 8 years of burden saving us $11,440($1430 x 8 years) of interest payment! This is nuts! Now I can expect that number to eventually come on my side of the ledger as years go by.

Next target

Now we are aiming to pay our rental’s mortgage off. That is what I envisioned as part of our blueprint to reach FI. This one is not going to be an easy goal and will require some perseverance to endure 4 years of sticking to a plan. By doing this, we will increase our yearly income by 35K.
17K from gross rental income, 8.5K from cash that we have freed up from debt( Student loan and credit cards), plus approximately 10K that we get yearly in our tax return.
In 2024, we are thinking about getting one or two more rentals, in the same area we have the current rental. We feel like we could comfortably manage one or two more properties as the first rental will be completely paid off.
In 2024 I will have only four more years left before I reach my goal of retiring in the summer of 2029. In this mix, of buying real estate we also would like to buy a small house in Michigan. This may be the place where we think we would like to retire once the kids are done with high school. That’s a bit ahead of the game and will remain a thought for a while, so more on that in future posts.

Silent Weapon

Something that I highly recommend and has helped us tremendously as well is technology. I like using regular Excel spreadsheets or even Google Sheets to keep track of our budget. But I also like using Personal Capital and Mint.

With Personal Capital I can really look closely to all my accounts, budget, and even take a quick snapshot of our Net Worth.
Mint, on the other hand is what I use on my phone for just a quick look of bank accounts and ongoing expenses on a daily basis.

However, the ONE silent weapon that we use all the time is automatic money transfers through our bank. We look into the budget, set up a goal and schedule these transfers as a one time event or re-occurring events. By doing so, all you need is to figure out your strategy, setting it in motion and forget about it.

In our case, we sat down to determine the amount we needed to pay toward the student loan in order to meet the pay-off date we desired and we were done. At times we just made sure we were still on track and simply kept on going.
If you are in the same situation of trying to pay off debt, start with your budget. That is really a financial GPS. Determine what is the maximum extra payment you can make and schedule that payment to be made as soon as you get paid. Don’t wait for the month’s left overs in your account to figure it out; that’s a recipe for disaster. Pay yourself first. Figure out how many payments will be required for you to reach your goal and stick to it. Ask yourself what will be your next goal? Pay more debt or invest? Likewise, is there anything you could do to increase your income? Maybe a side hustle or cutting off some unnecessary expenses like cable?


Financial literacy is a must for everybody. I wish I would have taken a more active approach in my early years and set some financial goals as my younger self. However, I am amazed at how much progress you can make financially by just paying attention to your expenses, determining your priorities and setting financial goals every year. It’s never too late; never too early.
You don’t have to be on a beans and rice diet to achieve financial goals. I still have an amazing life with my four kids and wife. I have become just more intentional with my money.

I would love to hear about your financial goals for this year 2020 or any achievement (Big or small) you feel proud of on your FI journey.

How to Get Out of Debt

GPS showing financial destination
Start with a budget, set the course, get to work.

First off, let me tell you this: You won’t find anything here that will fix your debt problem in an instant. There is no magic wand. There is no secret. Likewise, there are no smoke and mirrors trying to sell you anything. Usually, my posts are a personal snapshot of my finances with enough information to help somebody else.
Just like when people are trying to lose weight, there is no magic pill or secret that will take you there. What really makes a difference in reaching your goals is the subtle changes you make on a daily basis. Small changes compound and yield the best results!

In June 2018, after catching up with the FIRE movement( Financial Independence Retire Early) movement, my wife and I started looking at all our debt and liability. Things that we could do to be in a better position financially.
Now, let me backtrack 4 years ago, when we had about nine thousand dollars in debt with one of our credit cards, plus a student loan on my wife’s name that had started at 27k in 2003 and it had barely changed 15 years later when we still had 22K to pay.
In other words, our starting point was -9K at 25%, and -22K at 6.5%. My teacher’s salary kept going up every year but somehow we always found ourselves gasping for the next tax return to pay down debt. Not long after paying the card, more debt started accumulating again and before we knew it we were back in the same situation- repeating the same vicious cycle. Sounds familiar?
To add more stress to our financial situation our neighborhood was pushing us out and we were determined to find a better school environment for our kids. If we sold, we would have ended with about 5-6K in our pocket. Instead, we decided to move and rent out our house for at least a year. A year turned into two and recently I just survived my first 42 months as a landlord.
Anyway, we moved and life was great. The rental was cash-flowing about $500 a month after expenses, but we were still in the same financial predicament fighting off debt. After getting in touch with the FIRE community, things started to change. In June 2008, my wife and I sat down and started looking at our budget. Not only going through the motions of looking at how much we are spending, but we were trying to find where the holes of our financial vessel were. Where was the money going? What could we cut to save? What debt could we pay fairly quick to free some of our precious cash coming in?
After getting rid of some ludicrous expenses like cable and a magazine subscription we realized that we had a decent amount of cash coming in but somehow was disappearing in miscellaneous expenses. We started a spreadsheet that accounted for every single penny and decided to charge against the pesky credit card and student loan debt.
We transferred the credit card debt to another credit card with no interest for 24 months. With help of our tax return, we paid the card off fairly easy.
At the time, the monthly payment of our student loan was $235 monthly. We cut the cable saving $150. That was right away allocated as an extra payment to the student loan. We decreased my 403B contribution and started paying $716 monthly towards the student loan.  In my calculation, the student loan would be paid in January 2020. We automated 2 different withdraws to be transferred to our loan holding bank. From there, we would manually make the transfer at the most convenient time for our finances. We kind of made that account work as an emergency fund as well. We would pool some money there and then make the principal payment.

I Failed!

Image result for gif crying

You can’t imagine my disappointment when I was about to make what was supposed to be my last transfer! My wife reminded me that we had put our Christmas expenses on the card! At some point, between driving the kids here and there, lessons and just the demands of tending to a family with 4 kids our communication failed; my fault.
I had calculated and planned this moment for almost two years and it was not happening. My wife felt guilty. I probably overreacted with my frustration, although I reassured her it was not her fault but mine. But I just had a terrible feeling of failure! I felt defeated.

I went to work that day, tried to forget about it and then resumed to strategize how to pay the $1000 extra I didn’t account for. I started thinking about all the interviews in podcasts where people talk about the importance of being flexible in the pursuit of FIRE and how important it is to keep enjoying life, as well as the importance of not damaging relationships on the way.

With all those thoughts in mind, I reassessed the situation and realized that I was still in a terrific situation. I could not pay the whole loan off when I expected it but I am still very close. I took a couple of extra responsibilities at work to make extra money and I am still able to reach my goal next month! No big deal.

Wait! I failed but I am actually winning

In my moment of doom and gloom, feeling like a total failure I logged into my Personal Capital account looking for answers. I was looking at all the reports and started reflecting on it.
Our net worth is about $210K at the moment!
Hold on a second!- I thought.  I may not have paid the student loan…BUT we have increased our net worth from -31K to 210K in a matter of 4 quick years! What? That is super fantastic! I still can’t believe it. 210K! Yes, it is mainly equity. But remember, I was going to move out of my first home and walk away with 5-6K. Nothing!
No debt. Other than our mortgage and YES! The pesky student loan that will be obliterated and announced on Twitter for sure very soon. So help me celebrate that one!

How we did it?

First and foremost, you need a budget. Everybody needs a budget regardless of how much money you make.
Distribute your money according to your needs. Define what is a want and what is really a need. Cable is not a need! Lattes and eating out are not needs. They are privileges- expensive ones. You can still have them, but understand that they are impacting your investing capability. Are they worth it you working more hours of your life so that you can afford them? Only you can decide that, but be mindful of the trade-off.
Once you have your budget, determine your purpose. What are you trying to accomplish? Maybe retirement or FIRE is your ultimate goal? What other goals or milestones do you need to reach for that final goal to happen?
I like to call this my financial GPS. I need to know where I am financially and where I want to go. Without one or the other, I am lost and likely to get lost in debtland.
Check the course often, reassess and keep on going. You won’t reach these goals from one day to another, but every day you will be in a slightly better financial situation. More importantly, as you plow through and you implement some of these strategies you will continue optimizing your system and pave your way to reach your goals and beyond.
Be flexible and forgiving with yourself. Don’t get fixated on the goal. Focus on your strategies and system you have created to reach your goals. The rest will fall in place.
Automate as much as you can. Schedule those monthly withdrawals to pay off debt or invest. Remember, “out of sight, out of mind.” Don’t wait for the month’s left-over to allocate it or find a purpose for it. Pay yourself first, and pay everybody else with the rest.
Do not wait to determine your financial goals. It is never too late to plan your financial goals, but it is also never too early to plan and define your journey toward financial independence.
I truly hope these words get to someone looking for a change in their finances like I once was. I would love to hear your story or struggle.
On my end, I am already planning my next financial milestone but that will be coming soon in another post.

Image result for sailing off into the sunset gif

The biggest financial mistake that can get your marriage and life derailed from the start

Wedding cake
Spending thousands of dollars on your wedding day does not necessarily guarantee a great event nor a successful marriage.

One of my side hustle ideas that has helped me along the way of FI with some extra cash is wedding-photography. I have been doing it as a side business that fits perfectly my full-time teaching job. 

In the beginning, I started with acquaintances and family members getting married. Then with a bit of word of mouth I got myself to some nicer places, and I can proudly say that I have even been flown to Hawaii to photograph a wedding.

In the Chicago Land area, I can’t say that I have been to every single hotel, but I have been to quite a few; several on the so called Magnificent Mile of Michigan Avenue in Chicago. Likewise, I have been also to lots of backyard & tent events, where people use their creativity to come up with their own decorations and maybe even cater from their favorite local restaurants.

The verdict?

Weddings are very expensive events and there are a lot of social pressures that push people to spend way beyond their means. In the same way that we feel that we have to buy the biggest house, go to the “look-at-me-college,” buy X,Y,Z brand clothing we are pushed into the idea of affording a big party that many times results in family tensions and stress, hurt feelings and even worse: Debt! The start of married life with the burden of unnecessary debt. 

Breaking it down

When you think of the basics of a wedding, the first things that come in mind are the venue, food, DJ, photographer, dress, cake, flowers, centerpieces, decoration and a plethora of miscellaneous items.

I’ll base my budget here according to my area, which is Chicago and the burbs. According to The Chicago Tribune, Chicago ranks as the fifth most expensive place for weddings averaging 50K. Sadly, paying 50K for a wedding does not guarantee that your day will be unforgettable; maybe only because it was an unforgettable mistake! Especially when 50K may be half the amount you need to fund your retirement 35 years down the road.

100K invested in the market at a 7% average return will likely yield 40K a year using the 4% rule for the rest of your life

Meanwhile, your money savvy friend who got married in a forgotten barn of a rural area may have had the most beautiful wedding on a low budget, and still enjoy some awesome food, gorgeous photography and best yet: Debt free! Now if money is not an issue, by all means, please! Blow the money away like there is not tomorrow!
On the other hand, if money, your future and retirement are indeed aspects of your life that concern you, then this piece of advice is for you.

Why would it matter what I have to say? Well, because as a photographer I have been to many fancy weddings and I can’t recall them neither being the most fun nor the most memorable, when compared with some “low-budget” events.

If you do a quick search for venues you will quickly see that in the Chicago area most venues start around 8-11K; that is just starting prices, that will cover around 100 guests. I would love to be more specific about different venues but my intention is not to attack any particular business.
As you spread your search towards the suburbs prices improve, but like in any business there is the hidden potential of lots and lots of up-sales.
Some of these places can be beautiful but not a requirement to make your day better.

I have been hired to photograph weddings in many fancy venues as well as barns, clubhouses, VFWs, and party halls. I can tell you that I have never been to a fancy hotel where I walk out saying “wow, the food was absolutely amazing.” Most of the times I make it home with some sort of stomach issue or wishing I had a burger instead of the whatever fancy-nicknamed chicken the venue served.  Whereas it is at those” low-budget events where people are not obligated to cater from the venue where I am always amazed with the menu. Where people can cater from whatever place they want and are not obligated to buy the overpriced menu ($150+ per guest).
I am now to the point where I am very particular about what I eat at these fancy venues. The food is far from impressive, and understandably so. The hotel can’t have a Chef in the back carefully concocting a master dish for each of the 200 guests awaiting; yet the venues charge as if that was the case. 
To add insult to injury, most guests also complain left and right about everything, as huge piles of food, and of course money, are scorted to the garbage cans behind closed doors. Why would you agree to pay thousands of dollars on food that you know will be wasted? Why do we have these social norms and pressures of what is considered a reasonable  wedding celebration?

Where should you not be a cheapskate on your wedding day?

This is what kills me, and you may say I am biased, but hear me out. People spend a fortune on the venue and its food service, but they want a deal with the photographer and the DJ. They want these services for as cheap as possible. When in reality these are the things that will probably make the greatest impact on the wedding day. 

If you have a bad DJ I can guarantee you that once your guests finish dinner they will start trickling out the door, regardless of how impressive and expensive the venue was. I don’t care if Michelangelo decorated the walls and ceilings. If your guests can’t have fun, after they eat they’ll be gone. A DJ that doesn’t know how to read the crowd or can’t deliver the right music for the moment will kill your party without a doubt. 

Also, let the DJ do his(her) thing. You can, and should request some of your favorite songs, but remember that your musical taste might not be what gets everybody down on the dance floor. Let the DJ do her/his thing.

The next area where many people try to snatch the $500 deal is with photography. Seriously? You’re willing to spend 10-15K on a venue and feeding people that will complain about the food, but you won’t spend 2-3K in the images that your family heirs will look at? Or, you don’t want an album because you’re a scrapbooker and you are going to take care of the album? Really? These are the images that may get displayed at your funeral to remember some of your better times. Yet, you don’t want to spend money on them? After you spent all that money feeding a bunch of people that you probably won’t ever see again(insert here: a deep sigh!).
Hey, to each their own. Whatever floats your boat, but just keep in mind that after the party is done, all the plates are picked up and the leftover food (your $$$) is in the garbage and the lights are off, all you will have the next day of that special moment is your pictures of that day, which will be forever to remember. If you are going to spend money, spend it on yourself first. Do not cheap out on your wedding photography!

The best wedding I have been to was actually a wedding in a barn. The food was catered from Famous Dave’s; ribs, pulled pork, potatoes, few salads and corn. A truck pulled  by the barn and roasted a whole pig in front of the crowd against a fading sky at the end of a cornfield. 

The DJ was amazing, he was animating and leading the crowd on the dance floor, with a great selection of music. The DJ really knew how to get people dancing. I would estimate the whole event was probably 8-10K for close to 200 guests. It was a great time, even for me, who was there only as the photographer. 

Expectations and social pressures

We are really good at pinpointing how kids put down others who don’t comply with the norms and expectations of peers. However, adults are not too far from that. We like to believe that we don’t judge others, but we do it so often that we are oblivious to the fact that we do.

Weddings, among other things, are one of those social expectations that people tend to judge others on. They are extremely expensive. Many times people make the critical mistake of even going in debt to pay for them. The guests criticize and complain about everything regardless of how much money is thrown at these events trying to make them unique. At the end, all of them end up following the same pattern of bridal party introduction, tosses, speeches, dances, etc; not very unique.

Not only do people spend a fortune in these socially-expected events, but many times the stresses and the emotional baggage of a wedding create a lot of animosities among family members and friends. I am sure I don’t have to tell you about the good friend who was not chosen as Maid of Honor, or the parents who didn’t feel as included as the “other parents”, or got to share a speech, picked the flowers or decoration, or any other diatribe that in the real sense of life are plain and simply irrelevant. Not to mention that sometimes after all these issues flare up, relationships become damaged beyond repair, leaving a trail of resentments. Which doesn’t help the fact that marriages have almost 50%( slightly less than 50%) chance of succeeding, and even fewer chances for subsequent marriages.

If none of these things sound familiar to you, consider yourself lucky!

Bottom line

You don’t need to spend a fortune to have an awesome wedding. Know that there are alternatives to the big shebang.

Care less about the venue with the awe factor and worry more about your music, food and please, please…please! Your photography! That is what you will look at 50 years down the road when your memory starts failing and you barely remember your name. Isn’t that a song?

Sometimes less is more. It is perfectly fine to choose to get married on a beach, or cruise and skipping all the other expenses.

Break any rule you want. It’s your day. You don’t have to comply with anything you don’t want to. Feel free to skip any protocol. Even if your  groomsmen can do a full-out Haka, or lip-sync any Britney Spears’ song along with the biggest show on Earth. It’s OK. You don’t have to. 

I am not sure you, but I am at the point in m life where I really care less about what wine I drink. If it’s a $4 bottle or a $200 one, I absolutely care less. What I care about is who I am spending my time with, and how much I enjoy being with that person.
In these days it seems like more effort and passion is put into the celebration of the wedding day than even staying married or together with the person we once chose. Spending boat loads of money will not guarantee a successful marriage if you are not willing to do what really matters in your relationship. And of course, never spend the money that you don’t have.

If you liked what you read, agree or disagree, I would love to hear your point of view and experiences.





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