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Archive for November, 2012

Question While Listening to Dave Ramsey

November 26th, 2012 at 08:23 pm

I know his name is a curse word to many, but I like to listen to DR for a variety of reasons. The least of which is that I like to hear the stories of people who have gone from staggering debt to financial security with great effort. What I have learned is that most of them changed their way of living to become debt free, and it is that "change of modus operandi" that I listen for to decide in my head if the person screaming "Debt Free!" is going to remain debt free.

As I've posted before, I put myself into considerable debt over a relatively short period of time due to a variety of reasons. Lost job, contracting business that barely paid the basic bills, retail therapy, and plain ol' stupidity being four of the major causes. Note that my divorce didn't even make the top four.

Well, I sold some stuff including a lake house and a third car, both of which I didn't need, and concentrated on paying off the other loans and such. Right now, I have no debt except my primary mortgage. I'm within a year of paying off the mortgage. I have plans to start purchasing houses to use as rental properties during my retirement for an income stream.

I was listening to Dave Ramsey, and someone with a remote house and payment called to ask about selling the house or keeping it for rental income. Dave asked the caller, "Would you borrow to buy that house?" Now, simplistic questions don't fit every situation, and my situation is different.

I can pay off my mortgage 100% within a year. At that point, I plan to save up $80K as a down payment on a second house, which I plan to purchase when I return to the US. I have no plans to live in my current house again, but it is in a neighborhood that is appreciating at about 6% to 10% per year, plus I can get rental income of about $1000 per month after taxes and insurance. I see no reason to sell such a cash cow. I can reasonably make $150K off of it if I do sell it, though.

My secondary goal, after I save the $80K, is to start saving for a second and third home in the same neighborhood, for eventual retirement rental income. As I'm the spreadsheet king, I have the financials worked out fairly well.

So, after hearing Dave's question, I am questioning myself as to whether I am doing the right thing. I have basically no bills, so everything I make goes into investments such as mutual funds and real estate. I plan to be real estate heavy, because God stopped making land, but lots of folks are still developing mutual funds. I just feel more comfortable with a house in hand versus a number on a piece of paper.

What would you do? Pay off the mortgage and buy property, or sell the house and invest in mutual funds?

Or something altogether different?

Editorial note: I know that many folks reading this are in debt and would love to be having this "problem," but believe me when I say I have not arrived here without a ton of effort and not just a few months where I was glad that the light still came on when I changed the calendar. You're reading about someone who has made it down the road after a very rocky start and quite a few missed turns and flat tires.

Hazards of Teaching

November 19th, 2012 at 04:59 pm

I taught an entry-level course about a week ago and have another one coming up this week. So much for Thanksgiving! Honestly, I miss more holidays due to these obligations than should really be allowed.

But that's not the point of this post.

I get students from all over the world. This last class had a South African, two Indians, a Brit who grew up in Kenya, a Kenyan whom you would think is a Brit, and a guy from Burma (now Myanmar in the news), not to mention a few generic out-of-towners.

One of my students is now out sick with a horrific cough. I'm drinking cough syrup like a ghetto party animal (look up the reference if you are not familiar with the latest drug craze). I wake up every few hours coughing like a 40 year twopack smoker.

Now I have a sore throat and my chest feels like a boa constrictor is thinking about making a meal of me. The worst thing is that I'm going to have to teach again in just two days. That means I won't only be trying to project while almost dying, I'm going to probably be passing this on to several others who are not yet infected with this bronchial infection.

Not-Quite a Job Offer

November 17th, 2012 at 06:07 pm

I was out with a friend the other night. I have a new job possibility, but the location is in Saudi Arabia rather than Dubai. The cost of living is less and the pay is higher - significantly higher. The problem? It's in Saudi Arabia. There is no way I'd take my wife there for the money they're offering. In fact, I cannot think of any level of money they can offer to get me to take my wife.

One possibility would be for me to stay in Bahrain and commute to KSA, but that's a remote chance by itself. I think I might start looking towards Singapore instead. One good thing about the oil patch is that we drill for oil wherever there is oil, so except for the Caribbean and a few other off-limits areas, my choices for where I work are fairly unlimited.

How much of a raise would it take you to move to Saudi Arabia?

Retail Therapy has Causal Link to Sadness

November 16th, 2012 at 05:27 am

A few of you may remember my post where I talked about spending a lot of money when I lost someone very close to me. Well, according to this link, sadness apparently causes people to make bad financial decisions.

http://www.livescience.com/24801-sadness-financial-decisions...

From the article:
'"Our results suggest that individuals who are sad after the death of a family member might exacerbate their financial hardship by making intertemporal choices that favor immediate consumption more than is wise," the researchers wrote.'

What I find interesting is that being behind on everything tends to make people feel bad - which must be close to being sad - which might cause them to become even more behind due to bad decisions.

I know that I did exactly what the research indicates. Anecdotal, assuredly, but still it jibes with my personal experiences.

Randomness

November 14th, 2012 at 01:43 pm

DW and I just signed the rental agreement for our new apartment. We are moving to the Palm Jumeirah, the man-made islands here in Dubai that look like a palm tree from the air. We got a sea-view where you can see the Burj al Arab, the Burj Khalifa, and the indoor ski slope. DD and her husband are coming to visit in December, after we're all moved in, so they'll get to see the view from our window.

As I've been reading the posts of others, I keep seeing people who are trying to save to "retire before we're XX years old." I don't think I'll ever fully retire. Part of my job requires travel. Right now, I'm in negotiations for a job in Australia. If the negotiations come through, I'll take DW with me. For the cost of a plane ticket, she'll get two weeks in Australia at the company's expense. Often, the hotels I stay at are resort hotels or similar. Why should I retire and pay for the vacations out of my own pocket. I may have to work for 8 or 9 hours each day, but I often get weekends off, so there's still time for tours and short excursions.

Does anyone know where Credit Karma and Credit Sesame get their real estate value estimates? One of them has me listed at about 75% of my US house value. The other has be listed at about 20%. Neither of them is right, but how can one of them be off by so much?

Apparently, I have a credit card I don't even know about. It says I've had it for like 5 years, and it has no balance (and never has had a balance). I'm going to call the bank and ask them to send a new card to my US address. DD can bring it with her when she comes. I won't use it, but I hate to have the credit without the card. I don't want to close the account, but it won't affect my credit score if I do, I don't think. 0% of X is the same as 0% of Y credit available.

Speaking of credit cards and Credit S and K, it looks like my score has finally recovered from my depression spending. The Amex that I let go into collections is still showing on one of the reports, but it's gone from the other two. Of course, I paid it off when I started recovering, but it was still hanging around as a reminder of my "don't get a hoot" days from a few years back.

Looking back, letting the bill go ended up being a good thing. Because I did that, I got fed up with banks and bills altogether, and paid off everything. All's well that ends well, I guess.

DW and I are trying to decide if we should buy a house now or wait a bit longer. Interest rates are probably at all-time lows, but the closing can take quite a while, so we'd have to make time to come back to the US for all the paperwork. I'm not sure how my oversea's pay would count toward salary. I guess I'll need to talk to a banker when I make my trip back to the US.

Speaking of the trip back, I was scheduled to leave today (my time), but had to postpone due to job happenings. Basically, a customer had an emergency, which forced me to cancel my reservations. In the end, it turned out that I could have left after all, but now it is too late. Oh, well... things happen.

Next week is DW's birthday. I asked her what she wanted. She said, "new clothes." I told her she'd have to buy them herself. Trust me. She and I don't see eye-to-eye on fashion. Maybe I'll get her a burka. One of the problems with budgeting is that you don't have extra money "hidden" to buy surprise gifts. I really have no clue what to get her. She specifically said not to get her any Pandora charms, which is one of the reasons I got her the bracelet. It gave me a fullproof gift to get her every occasion. I guess I cashed that check too many times already.

November begins

November 3rd, 2012 at 10:10 am

I'm heading back to the States for a few days to catch up on some personal business and grab some "can't get them over here" items... well that's not quite true. You can get ANYTHING in Dubai, but the shipping costs are often more than the item is worth. So, I'm grabbing some low-dollar items while I'm back.

The main reason for the return is some house maintenance. The Son-in-law isn't the most handy of individuals, so I'm going to put in a peep hole as well as find out where the vermin droppings are coming from. I sealed the house very well, and treated the attic with boric acid powder, so there shouldn't be any insects, but it is Texas, and that means there are always bugs. Daughter has gone from the droppings from rats, to mice, to maybe roaches... I'm wondering if it isn't something else altogether. In any case, though, I'll make sure there are no new holes in the walls or siding and also make sure any other minor things are taken care of.

We're moving within Dubai, so we've spent the last couple of weeks looking for places. Right now, we're kind of partial to the Palm Jumeirah, but we may end up in the Marina. There's more to do in the Marina, but the Palm has better traffic. We'll find out when we decide, I guess.

Daughter and SIL are going to be coming out in December. We've set aside some money that we plan to "waste" while they're here. This will likely be their only chance to visit us for a year or more, and it is quite likely that wife and I will return to the US before they come again. We want to certainly do the desert safari and probably a lot of sightseeing such as going up in the Burj Khalifa just so we can take pictures. Daughter is a published photographer, so I'm certain that photography will be high on her list while she's over here.