Author Topic: Case Study of Rare Situation - Where Should I Go from Here?  (Read 1051 times)

Saraant

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Case Study of Rare Situation - Where Should I Go from Here?
« on: September 19, 2018, 07:33:56 PM »
Life Situation:
Single, 39 year old female, no children (ever).  Living and working on ranch in Las Vegas, NV with boyfriend. 
Housing & maintenance, internet, cable, cell phone, health insurance, fuel, oil changes all paid for by work. 
No commute as I live on property.  Share 1 older vehicle (paid off), spend about $3,000/year on registration, taxes, and maintenance. 

Gross Salary/Wages:
$42,000 (W2) - $7,830 taxes = $34,170 net salary
$7,000 cash in bank.
Saving $1,100/month
Spending $700/month, plus contributing $680 to a joint spending account (matched contributions) - this account pays food, entertainment, household furnishings/supplies, and vehicle expenses.

Other Ordinary Income:
Started my own business in August 2017 flipping raw land with seller-financing.  I'm not really making money on this right now, though I do have $680/month coming in from seller-financing.  The company has no formal debt, although it "owes" me $3,000 (or $20k if you count my start up investment).
I am seeing 100% ROI on these flips. I am trying to keep my annual yield around 100% for the seller-financing. 
I am following the Profit 1st system and using 40% of revenue for land purchases, then from there 50% for operating expenses, 15% for taxes, 30% for salary and 5% for profit. Salary and profits have been funneled back into the business for continuing education, but I would like to start hiring virtual assistants to automate 95% of the business with the money allocated for salary. 

Qualified Dividends & Long Term Capital Gains:
Sorry to say I am not 100% sure how to answer this (I'm super new to all of this financial stuff!). 
I have a few hundred dollars in index funds (S&P 500 and Schwab 500) and a 1 share of Tesla.
I have transferred my traditional IRA over to a Qualified Retirement Plan which costs $300/year to maintain.  I have checkbook control over my retirement funds to buy investments. I planned on using these funds ($15k) to purchase more land investments.  All profits must be deposited into the QRP (cannot be used for operating expenses or anything else).
The land business currently has $33,000 due back from customers taking advantage of seller-financing. 

Rental Income, Actual Expenses, and Depreciation:
Starting to consider the possibility of buying a duplex - but have a lot of learning to do, and saving! (Side note: I was a Property Manager for 10 years)
Have never bought a house.

Current expenses:
Groceries, Restaurants, Bars: $900/month (this is from the joint account which I contribute $680/month to)
Household & Personal Shopping $250/month (1/2-3/4 comes from joint account)
Entertainment: $200/month (comes from joint account)
Travel: $300/month (1/2 comes from joint acct)
Auto & Transportation: $3,000/year (from joint)
=$1,266/month (my estimated contribution to these categories)

Personal Shopping: $200/month (hobbies, personal care, clothing, electronics)
Gifts/Donations: $30/month
Finance Fees: $25/month
Health & Fitness: $100/month


For mortgage payments:
N/A

Expected ER expenses:
N/A

Assets:
Vehicle: KBB $1,500 (it's a '98, I think it's all depreciated? Paid $5,000 in 2012)
Rooftop Tent: Paid $5,000 in 2012, could sell for $2,000
Land: $33,000 due on seller-financing
Qualified Retirement Plan: $15,000
Stocks and Index Funds: $475 paid in, current worth $605
1oz Silver Coin
1/10oz Gold Coin (LOL)

Liabilities:
Personal Credit Card Debt: $800
Joint Credit Card Debt: $400
Business Credit Card Debt: $400


Specific Question(s):
~ I would like to know what I should do next. 

I am trying to save $25,000 as recommended in Scott Tranch's Set for Life book. 

~ Should I put some of my $7k cash savings into my best performing Index Fund to hold onto, instead of sitting in bank?

I plan on having saved $10k by the end of 2018.
I have tightened up my spending and plan on saving another $12k in 2019

* I want to buy a van and travel Central and South America.
I am hoping to scale my business enough in the next year to support me while traveling. 
I think this will cost about $1,500-2,000/month.
I hope to be bringing in $5,000-10,000/month with the land business. 

* I want to have a place to call home when I am done traveling. I envision multiple rental properties throughout the States, and hopefully a small homestead in Mexico.  I would also like to do short-term rentals in multiple tiny homes, or something of that nature. 

- I have no idea where to start (well, I guess I have started, considering I sold everything I owned except the truck and tent when I traveled the States for a year in 2013, I only had $10k in an IRA when I started at this job in 2014 (no cash or assets). I have spent A LOT of money that I will not be spending going forward.)
This job and all its benefits will end when I decide to leave - I can stay for as long as I'd like, but I am getting antsy and want to leave sooner than later, but also want to have a good financial foundation before that happens. 
When I leave this job, I will also leave my partner, so no more dual income.
I expect to be here at least through 2019 (I will turn 40 in Sept of 2019. I really want to take a big trip, but am willing to wait until I have money working for me!)

What would you do if you were in my situation?? 

leighb

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Re: Case Study of Rare Situation - Where Should I Go from Here?
« Reply #1 on: September 23, 2018, 09:39:53 AM »
It seems to me you know exactly where you want to go from here. You want to grow your business and invest more.

Want I would do in your situation? I would be conservative and patient while building your emergency fund and while you're waiting for your new business to establish itself.
  • pay off the credit card debt
  • build emergency fund, decide what you want to build it to
  • spend less on food+drink
  • money left over (index funds are great)
I'm a little unclear how you are getting to 5000-10000/mo coming in from your land business. But I do not know much about seller financing. But once you get to that place you will have more money to invest and will be able to get better advice.

Gin1984

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Re: Case Study of Rare Situation - Where Should I Go from Here?
« Reply #2 on: September 23, 2018, 06:06:23 PM »
I want to know why leaving this job also leaves your partner? 

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