Getting to Crunch Time

byoscope

My Exam is quickly approaching. Two weeks from tomorrow I will be in a stress filled room with about a dozen people that have, for whatever reason, elected to torture themselves with the actuarial exam process. As much as I complain about all the studying I have to say I’m grateful for learning many of these things which have had trickle effects in other aspects of my life. Exhibit one would be my VBA sports models, that lead to the book Make Better Bets, and I think two would be my obsession with personal finance and understanding financial frameworks. Even just recording my networth in this journal-style way has given me so much, and I’m not sure I would have stumbled upon this if not for the actuarial exams. My confidence in financial statements has been getting better and I’m even thinking about, after my exam of course, analyzing some individual companies to buy stock. I exited this, for index funds, because I started to realize I had no basis for thinking something was under or over valued.

I want to reiterate that I’m strongly worried about the amount of student loan debt, and general consumer debt for that matter, in this country. If anyone is in need of help to get their finances in order, with a plan, I’d love to help. I honestly think making a personal income statement and balance sheet can do wonders for understanding finances. While starting this journal has helped me tremendously I wanted to give real numbers, and not hold anything back. I wasn’t finding transparent numbers on others’ blogs, which made it hard for me to visualize what really needed to happen to hit my goals.

10-day BS Refresh

Analysis Intelligence

The Opening NW in the 6/30/2020 column is the closing NW from the 6/20/2020 column. The green numbers represent estimated changes to my networth in those categories. For example I was expecting my cash to be $2,500 greater as of 6/30/2020 compared to 6/20/2020. The white “Gain from” rows show how the actual numbers turned out compared to my original estimate, ten days prior. So the $152 Gain from Cash is saying that my cash category increased not by $2,500 as projected but actually $2,652. Sadly the stock market, and my estimated house values, dropped a good bit compared to my projections. These appreciation/depreciation categories are somewhat out of my control and help me look at what I can really control.

Crystal Ball

6/30/2020 I ended with a NW of $338,849. I will be collecting a paycheck in the next ten days. I’m also happy to report all 8 rental leases are filled. My North Carolina house will now be bringing in $2,245/month; The principal, interest, taxes, and insurance are around $2,100 per month, on a 15-year mortgage. You can see below I don’t plan on my cash position changing much. Virtually all my rents will be going towards paying down loans, mostly towards the Michigan properties. Someone asked me about how I was doing this and wondered why I wasn’t building up more cash. I feel like I have a decent emergency fund in place, about $34,000, with about another $30,000 in fairly liquid assets. I don’t see a ton of added value by storing cash unless I had an investment in mind. Consequently, after you have a safety fund, you should be intentional about what you’re doing with every dollar.

I will do a cash flow statement for July that I’ll report on 7/31/2020. Hopefully this will shed some light on things, and I’ll get some practice thinking about how to categorize my sources/uses of cash.

Ideas for increasing NW

  • Get more traffic to websites
  • Spend some time taking Make Better Bet books around to the “leave-a-book-take-a-book” spots.
  • Start analyzing how affiliate programs really work. Right now the only things I would consider are books that I really found valuable. But keep an open mind.
  • My brother brought up tax liens. I read a book about three years ago on this topic and was super excited but I took no action. Hopefully that will change after my exam.
  • I’ve started listening to The Investors Podcast (TIP) from the beginning to get back to the basics and reinforce some concepts. Keep listening.
  • Pass exam. I had an epiphany that one’s abilities are really the best inflation hedge.

Notes:

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