Friday, August 14, 2020

The Purpose of Money: Part 1

On Sunday, December 8th, 2019, I found myself boarding an airplane unexpectedly.  I had just learned that my grandmother had experienced a sudden decline.  No one was saying it, but I could tell everyone feared that we were near the end.  Monday late in the afternoon, I arrived by her side... We lost her the next day.

Five years ago, I wouldn't have had the money for the airline ticket.

Today, I didn't even consider the price of an airline ticket.  It literally didn't matter.  I had the money.

Honestly, I was still stressed out about missing work.  I'm a teacher, and we were still in session for another two weeks.  Not being there for a week is very difficult, and stressful.  That being said, my school leadership had no hesitation.  They told me that family needed to come first and not to worry about it.  My co-teachers took over so instruction could continue as "normal" as possible.  I'm incredibly grateful for all of them.

In the world of personal finance, we spend a lot of time talking about the purpose of an emergency fund, why people need to save money, etc.  They're all valid, and all worth listening to and taking into consideration.  What I'm here to tell you is that the purpose of money is to literally be able to make yourself available when you know it's the end, to be able to drop everything and just go.  Responsibilities may still be falling upon you, but when you've got money, you've got options.  I was with my grandmother the day that she died.  I could afford the airline ticket; I could afford to feed myself; had I needed a hotel, that would've been fine.  Had I been met with resistance from my employer, I could have gone anyway without fear of the consequences, because my emergency fund is large enough to cover several months worth of our expenses (not to mention my partner is also working).

I talk about the Law of Attraction where finance is concerned; diving into how our emotions relate directly to our wealth.  While this was a difficult trip for me to make, I must tell you, I felt amazingly good about making it.  I felt peaceful about the financial aspects of the situation and incredibly grateful for my ability to purchase the airline ticket, feed myself, house myself if needed, and pay all of my bills when I returned.  How can you create for yourself a financial situation where you can feel this kind of peace?  There's a certain feeling of power knowing that you can take care of that which is unexpected, but completely necessary.

If you got "the call," like I did, what would you do?  Would you have the money to drop everything?  If the answer is "no," that can't feel good.  You need to make a plan right away.  My grandmother's decline felt really sudden.  I didn't exactly see it coming as quickly as it did.  Sometimes life gives us a 72-hour notice or less.  When it does, you need to be ready.  If you're not ready, skip a dinner out, dial down your cell phone plan, tighten up your budget.  It's so important that you create a savings account.  It could be a matter of life and death.

Tuesday, August 4, 2020

Adventures in Landloring: 120 Days into COVID-19

Today, I would like to discuss with you some adventures in landlording during COVID-19...  This subject seems important because of the desire many people have to get into rental real estate, and also the concerns that many are having with regards to eviction moratoriums, and the like...

The individuals that rent our property in Oregon have been relatively consistent pre-COVID.  They have only had one late payment, and keep the management updated about repair needs, which we greatly appreciate.  In March of 2020, they paid full rent.  When my management company learned about local shut-downs, they reached out to tenants to make arrangements, etc.  Unfortunately, despite an agreement to pay, they were not able to pay April's rent.  They were also not able to pay May's rent.  In June, they made a partial payment.  Finally, in July, we received a full rent payment again.

During this time, my mortgage payment was still due each month on the first.  So, what did I do?

I paid it.

That's it.  Nothing fancy; no magic wand.  I just paid it...and the truth of the matter is that I wasn't particularly stressed out about it.  Why?  Because we've chosen to live off one full-time income rather than two.  Since we're both working, we just paid it.  Of course, we would have preferred to save that money or invest it, but it was fine.

There are some really important takeaways when evaluating this situation:

  • Real Estate is not for the faint of heart.  Don't get into it before you're ready.  It can be an absolute blessing, but only if you have positioned yourself to weather any possible storms.
  • Budget to one income.  I know this can be difficult, but if you are a two-income household, and you can whittle down your expenses so that it can be covered by one income, a disaster such as this one isn't nearly as stressful.  If you are a one-income household, consider, what percentage of that money do you really need to use to meet your expenses?  Can you trim expenses so that you are capable of living on a smaller percentage of it?
  • The property needs it's own emergency savings account!  We didn't even need to dip into it, but we had it.  Our strategy is to allow the direct deposit from the rent to come into a savings account specifically set up for the rental property.  The mortgage can be automatically pulled from there, and the remainder used to build it's only emergency savings (for us it's about 6 months of the mortgage payment).  Once an appropriate amount is stacked up, use the funds in another way.

The Law of Attraction Perspective:

People that have been reading my work for a while know that I am a believer in the Law of Attraction.  When I consider the situation that came about with our rental property, I am very aware that my emotional state remained steady.  I didn't feel anxious or stressed out.  I never had any negative feelings about the renters.  I love our rental property.  That is not to say that there was no "contrast" within this situation.  I noticed that there was one thing that I didn't feel good about.  It was the mortgage loan itself.  I am very appreciative of this negative feeling where the mortgage loan is concerned. Though mild, the emotion provided me with the contrast needed to highlight what I really do want.  I want to let go of that loan.

For some time, we've been piling up cash so as to move out of our NYC rental into a condo/coop that we own.  That is still our intention; we both feel really good about the idea of moving.  But money is a bit like a chess game to me.  I am always thinking a few moves ahead.  Once my partner and I complete something, we are already aware of what we're going to do next.  Until just recently, I honestly didn't know what our next major move would be (we could go a couple of different directions).  I feel as though the contrast provided by this experience has lead me to an inspired action.  I definitely feel inspired to eliminate that mortgage.  So, after we move out of our rental, I suspect we'll focus our attention on letting go of that loan.  Even the phrase "letting go" of the loan feels very freeing to me.  

Sometimes, an unpleasant experience can highlight things that we need to let go of such as a loan or burden, other times, it might highlight something we would like to draw into our experience.  With all of the harsh experiences during the past few months, is there anything that you've become inspired to either release or draw into your experience?