Introducing the Cash Flow Statement!

I just wanted to reiterate that if anyone would like my excel workbooks that I use to produce these numbers I’m happy to pass it along and discuss setting it up. No charge, absolutely free. Now let’s get to it!

I was welcomed at the beginning of the week to another tenant being distraught. After five years in that house, and almost two with me, seems he’s having a mental breakdown. I don’t know if this is COVID related but he said he’d be out of the house today. No thirty day notice. I was checking and I don’t actually think the security deposits were transferred over to me at close:( I’m going to check with the former owners if they’d be willing to give me them. We’ll see how this goes. I’ve definitely learned a lot of things to watch out for going forward.

On a brighter note I woke up last weekend and saw that Bitcoin had broken out of this trend channel, bouncing between 9,000 and 10,000 most recently, that I had been following and thought we were going to see big moves; we have seen a moderate breakout:

10-day BS Refresh

While it’s nice to see my net worth go up in dollars my sentiment is somewhat tempered when I look at a decline in my net worth when priced in gold or bitcoin. I think it’s important to look at these numbers under a couple of different lenses and ask yourself, ‘what does this actually mean?”

While I kind of struggled to figure the proper way to show my cash flow over the past month I did come up with this:

I’ll definitely tinker with how to best illustrate the changes in my cash but I think this a good start. I consider the house I live in a side project, as I purchased it to house hack it. While my cash went down over the month my net worth went up about $24,000. My cash this month was hit hard by almost $3,000 in MI summer property taxes, the $3,700 payment I made to the former owners to accelerate the payoff, and an unexpected $650 fee to remove a tree. This illustrates the idea that one’s cash going up or down doesn’t have to correspond with their net worth moving in the same direction. Once one gets an emergency fund/risk capital setup every additional dollar should be given a job/role to help your long term financial position. As I really don’t know what to make of the market moves I’ve really just been paying my houses down and locking in the 6% that they’re financed at and buying more Bitcoin.

In Summary:

Analysis Intelligence

The Opening NW in the 7/31/2020 column is the closing NW from the 7/20/2020 column. The green numbers represent estimated changes to my networth in those categories (green numbers in 7/31 column are the changes that I estimated on 7/20). The white “Gain from” rows show how the actual numbers turned out compared to my original estimate, ten days prior. You’ll notice my cash position was down $956; I bought more bitcoin and that is what is predominantly driving the “Gain from Currencies”, along with gold.

Crystal Ball

The 10th of the month is always driven by the loan paydown in my current framework. I’ll be paying down about $1,100 on my primary resident, an additional $3,300 to the Michigan properties, and paying down my credit card bill. It’s hard to believe that I’ll just have to make four more payments on my the Michigan properties! I will have paid off $55,000 over two years. While I don’t agree with a lot of what Dave Ramsey says I do think there’s a valuable psychological component to paying off debt, which he touches on often. It’ll be interesting what I choose to do with that $3,700 that has been going to pay down these properties, come January. The whole point of this endeavor was to give me more options and I think that is what it will do. That being said I probably shouldn’t be counting my chickens just yet as I now have two vacancies in Michigan, contributing about $950 in rent per month, and who knows the extra associated turnover expenses from this.

Ideas for increasing NW

  • Get more traffic to websites. I just bought a book called Born to Blog. We’ll see if I get any nuggets from it.
  • 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. I think I’m going to table this idea for now but would like for others to explore it.
  • I’ve started listening to The Investors Podcast (TIP) from the beginning to get back to the basics and reinforce some concepts. Keep listening.
  • My brother and I are going to start a podcast to enrich people’s lives through giving them messages from books. If you have any suggestions on books to review please message me. We were even thinking of taking requests from people and then having an individual on the podcast to discuss with us.


2 thoughts on “Introducing the Cash Flow Statement!

  1. Debananda Roy July 31, 2020 / 8:09 am

    Its informative. Keep it up.
    One of my question is bit coin a scam???

    • byoscope July 31, 2020 / 8:23 am

      I think one needs to go into Bitcoin with the knowledge that this could very well go to $0. Another person could ask, “isn’t money printing a huge scam, meaning basically isn’t the USD to some extent a scam?” A currency is a belief system. The one thing that scares me about Bitcoin is about enforcing contracts in court. If you tell me you’re going to pay me some Bitcoin, I deliver a good to you for that Bitcoin, but then you don’t pay me what happens? I don’t really have a way to get my Bitcoin from you in a court, that’s my concern.

      From a monetary perspective I think it is exactly what would be constructed if the world were starting from nothing. It has a fixed supply of coins, which is very attractive, and doesn’t cause people to feel the need to spend spend spend because their dollars will by less next year. Savers are no longer crushed from just holding dollars. That being said no government will voluntarily give up their power of controlling the currency.

      I’ll leave with a remark that I wish I could pay off my mortgages by going to my back room and printing money to pay for it.

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