Actuary Gone Rogue

Quite selfishly I’m starting this as an online journal to track progress, get better at projecting my financial position, and keep me accountable.  The goal is to not “need” a job.  This is not to say I don’t want to work because I do like working but I’ve noticed it’s never good to “need” a job.  I definitely have things to contribute to the actuarial, personal finance, and FIRE movement communities. 

This will hopefully benefit people wanting to take control of their financial position.  For the past year I’ve been running my life like a business.  I’ve been tracking my net worth every ten days; this may be excessive but keeping it at the forefront of my mind has benefits.  Analyzing the balance sheet I’ve been able to see certain drivers to my net worth (assets – liabilities).  More recently, I started to try and project the next ten days in hopes of getting better at forecasting the future. 

10-day BS Refresh

Analysis Intelligence

The green cells are the projections that I made at the start of the ten-day cycle.  The opening NW in the 4/10/2020 column is the NW as of 3/31/2020.  The Opening NW in the 4/20/2020 column is the closing NW from the 4/10/2020 column. 

I currently have 4 houses.  One is in North Carolina where I live and I rent out some of the rooms.  The other three are in Michigan, near where I grew up, and are managed by a property manager; the Michigan properties include two single family (rent for $595 and $675) houses and one small three unit (two units rent for $350 and one rents for $325).  When I’m at full occupancy my rents are about $4,200 per month and the PITI (principal, interest, taxes, and insurance) is about $2700.  I budget a few hundred extra for capex, maintenance expenses, and vacancy expenses. My net worth increases on the North Carolina house mainly come from the loan paydown at the moment as I have it on a 15 year mortgage; currently paying off about $1100 on principal. The Michigan houses are mainly cashflow properties but the appreciation prospects on those are less than what the Charlotte, NC property has been showing.

Before this COVID-19 thing I was planning on taking an actuarial exam April 29th.  My exam has been pushed out to July 15th.  Since I thought I’d be studying so much I planned on paying down more principal on my Michigan properties, that are seller financed at 6% (sounds very high at this point); that’s why I had expected my net worth going up so much from loan paydowns.  My plan was to have them paid off by beginning of December and when I had more time, without the studying, I’d get them refinanced hopefully at a much lower rate and able to pull cash out to put to work in other projects.

Rates are going down and I have a feeling that most real estate will be going down in the near term.  It has got me questioning whether I should be paying down so much extra and instead be hoarding more cash, thinking I could buy properties now, while prices are depressed. 

The cells in the white are the actual numbers compared to my projections at the beginning of the ten-day period.  You’ll notice my gain from stocks has been much more than projected.  COVID-19 has the markets very volatile.  Before I lost a lot from the stocks, now it seems they’re bouncing a bit.  I definitely find forecasting the stock movements a near impossible task.

My takeaways are as follows:

  • Gold and Bitcoin have been going up driving the increase from currencies.  As more money is printed and fear/uncertainty spreads through the economy people will flee this paper money, as it loses value
  • My cash projection for 4/10 was off because I didn’t receive the Michigan checks right away but my projection for 4/20 was better as I received all of the checks, except one for $350
  • Market volatility will likely persist and throw off my projections for the next couple of months with the stock projection

Crystal Ball

4/20/2020 I ended with a NW of $303,375.  I will not be getting a paycheck and may or may not receive that last unpaid rent of $350; I do expect to split utilities amongst my roommates which will be about $250.  I expect stocks to go up slightly with gold and bitcoin, while real estate depresses a bit.  I consider my credit card a loan, because that’s exactly what it is, and that’s why I include that number in my loan paydown.  I expect to put about $244 on my credit card over the next ten days.  I’m projecting my net worth goes down to $301,776 when 4/30/2020 comes around. 

Ideas for increasing NW

  • Start Fired to FIRE
  • My ebook, The Bet is Round, is for sale on Amazon.  I personally don’t like ebooks though so I’ll be releasing the paperback soon.  I project profit to be about $5/book sold and think it’ll take awhile to get any real sales.  This may be good for $100/year but is totally passive now that I’ve set it up
  • Look into refinancing some/all of the Michigan properties to pull cash out at these very low rates.  Or should I stay with the plan and not refinance until I totally pay off the loan in December, and focus now on studying for my final actuarial exam?  Paying an extra three grand to pay off principal has been challenging and I don’t want to leave myself spread too thin. 
  • Try to setup at least two viewings of houses that I find attractive for rental properties.

Notes:

  • If you want the excel workbook that I use to help me track just message at jackallweil@gmail.com
  • I’ll try to go over segments of the calculations each week

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