Almost done

March 20, 2014

7

I am nearly there. I figure I’ll cross the line sometime in April or May of 2014. Recently I went on another ‘depreciation’ spree in my financial software — nothing left to ‘eliminate’ (like cars and gold — these are at zero), but I did cut my properties in this country down to what I think is less than actual value, based on real sales of identical units in the same complexes. I gave myself a few percentage points of error with currency exchange rates but even in the worst case, I am still under the actual value, by a few thousand in each case and probably more. I have made really good money since October and have not traveled or bought anything (though I am looking at apartment #3 here as a fully furnished rental for English teachers — I am managing such a place for a woman here and she wants to dump it — if it rents well I’ll buy it — it won’t affect my USA home-buying plan at all — too cheap).

Also, I found that my pension here has only one attractive option: cash it out. It actually dropped by a few hundred (???) since the last time I checked (and I took it down accordingly). It is apparently in the stock market here. I was considering removing it altogether from my net worth total because I thought I could use it to get more social security money when I apply; well, as it turns out, I cannot use those funds because I already have 40 credits in the USA. Once you hit that mark, adding more from a foreign source, even with an ‘agreement of reciprocity’, cannot be done. Plus, I cannot draw on it here, as I didn’t pay in long enough. So, that leave two options: 1) forget about it, or 2) apply for a lump sum payout when I leave (about $12000). Pretty easy choice!

Another thing is: I cannot really determine the precise date when I will turn this blog to ‘zero’ and end it. A few of the factors in my net worth have fluctuating values when it comes to US dollars. Therefore, while I may cross the line sometime in April, I may not really be convinced, and may want a cushion of a few thousand (ten thousand would be good) so that no matter how I slice it, I am worth more than 1 mil. It will likely be May before I can really convince myself.

Finally, I am going to the USA and renting a fully furnished house right in the same area where I wish to buy and of pretty much the same type I want to buy. In other words, I am taking a test drive of retirement. I leave March 28. I’ll be in that house for one calendar month and will be looking nearly every day at places. Should I see one I like (and I probably will), I plan to put in reasonable offers, 100% in cash. I can go as high as $450K or higher maybe, but I’d like some money left for a car and furniture.

Of course, prices are high now, in 2014. They seem to be leveling off, and there’s always the chance that after I buy, the country enters another recession and my home price drops. Plus, I will depreciate my car and furniture down to zero and actually may dip under the 1m mark again, temporarily.

I won’t be quitting my business (in fact, I just landed a potentially very good contract with the government here!!) but I will be slowing down considerably. I just want to earn more than I spend each month, with rental income counting as earnings. In all honesty, that amount can be earned flipping burgers full time. I just don’t have any expenses! I will not buy cable, or a cell phone. Why should I? I don’t watch TV, don’t need a cell for anything, and love to read. I have an e-reader and I am wearing the poor thing out. Regarding my rental income, I have good tenants in my original place (in a city north of here). They seem to pay like clockwork and have told me that they plan to stay for another 18 months. Just as soon as that place becomes a headache, I’ll come back here and sell it. I have management lined up for when I am not here.

My main place here (a nice apartment in the best part of this city) is also highly rent-able but the cost might scare some off. I am thinking of making it available to foreign researchers who come to this country and to this area (kind of a ‘science area’ of town — lots of research institutes). I have amenities that are not generally available or are very dear (leather furniture from the USA, multi-room a/c, and a clothes dryer which I had imported from the USA, among other things). It would be a very attractive place but the price would have to be high enough to attract only professionals who can afford it. It’s the same reason I am only looking at expensive houses in the USA: I don’t really need an expensive house but I only want neighbors who can afford such places because they tend to be better neighbors. At the prices I can pay, the criminal class, the anti-socials, and the undesirables can’t afford to live anywhere near me. I have, in my life, had more than enough of such people and have worked too hard to put up with them again.

So I have to think about what I am going to do with this place… one very good thing: both of my units in this country are PERFECTLY positioned to increase in value in the future: it’s a no-brainer. In the smaller one up north, the province JUST put in a subway line straight to the capital city, effectively annexing that region into everything the capital city has to offer. There is a subway stop right outside the complex! The value went up instantly and is continuing to do so. The larger place where I am now is very close to a brand new ‘second capital’ city built, out of nothing but empty farmland, from scratch! I am between there and the largest city near that city (my city, which already has 1.4 million people living in it). The land between the two, a 15 mile swath, is being sold in chunks here and there and being cleared. Soon, this place, built in 2005, will be within 15 minutes of both this city’s center AND that city’s center. Plus, I’ve got the research institutes right nearby, and the government is pouring money into that area. There is just no foreseeable downside in either case.

Maybe the next post will be the last one.

Trip 12

October 13, 2013

55

I am on vacation in the USA. Eventually, I’ll get to where I have decided to live (out west) and look at a few more houses and may put in a bid – low of course, and all cash.

In my non-US home, I finally got my rental unit rented! I am happy about that of course. They seem like a nice couple, and, most importantly, I have all my bases covered here when it comes to deposit and contact numbers. I just want to say, “Just pay the rent! It’s that simple!”

Number dropped to 55. I am on track to reach an unambiguous one million dollar net worth sometime in early 2014, unless major changes occur, which is never not a possibility.

I’ll be 48, and retired. Almost there!

Depreciation gone wild

August 26, 2013

64

I dumped the gold – all of it. I still have it but I’ve depreciated it down to zero. The car is at zero — still have it too. Also, both condos I own are now depreciated down to their lowest honest point. I like to be close to the actual worth but I am a little under it in both cases because who knows what sort of tax I’ll have to pay on two places here when I sell.

Every other asset is depreciated down to zero. The only thing left is cash and my brokerage accounts. They are at actual value, so I can’t depreciate them down anymore. That number above, 64, has no fluff in it at all. It represents that I have 64% left from my original number to reach an unambiguous million.

Oh, I guess I also have my pension here. I can’t really depreciate it down to zero because it has a cash value of around $12-14K (not sure – haven’t checked in years). I have the option of taking it as a lump sum when I go, but I can also somehow fold it into my Social Security in the US (which I will get – did my 40 quarters – part-time counts you know!). Not sure how the combination works but I may not cash out that credit so fast before I learn anyway. I can’t depreciate it down to zero because I don’t want to forget about it!

Just for fun I ran a few numbers. When I was 23 I quit my job (actually quit and was not fired or laid off) and packed up my junk in a 1970-something Buick LeBarge, fully determined to take another stab at college. Turns out that was a good choice but 18 years later, whereas I had seen a a big chunk of the world and had lived on four continents, folks I was broke!

Then came my idea.

I didn’t know it when I was 23 (so young!!) but since then I have averaged just about $3000 in savings monthly. Of course I was pretty much broke right up to 2007 so that average is skewed mightily. If you look at those many months, the ‘mode’ is zero or maybe a negative number. But starting in early 2007 the chart comes alive and from there it’s a gentle slope upward. My work took off, I learned about investing at that time, but mostly I worked, diligently. No customer has ever been upset with my timing, attitude, fees, work, or communication. I have not missed it once. That led me to one million (or soon will).

I have been LUCKY! I am no longer young and on some days I feel it. But during my youth, in the late 80s and early 90s, when I was independent, had full energy, had enough money but not ever too much, I want to say that I had fun. I had a nice car, I had really fun girlfriends and great friends — all poor like me – living in apartments with roommates or shacking up with a girlfriend (both of which of course I did too).  I was young and didn’t care. I worked a full-time job AND a part-time job too – just to pay the insurance on my car!

I did not waste my youth – not one day. I don’t regret it a bit. The experiences I had every young man in America should have. It’s our birthright, or it was. The thing is: I wasn’t born rich and never thought I’d be rich. In fact, one million isn’t rich so I’m still right there. Like most American guys of my age, I thought at that time that if I wanted a job I could easily go out and get one, or even two, without too much fuss. Getting an apartment was easy, as was finding a roommate who was pretty much like me. I probably had half a dozen such roommates and what fun we had! Motorcycles, beer, girls, beaches, staying up all weekend at Myrtle beach (before it was so well known).

However, that path leads to misery in most cases. I know friends of family members who kind of stayed the course and they’re no longer young and life is kind of grim. If they work they may hate their job, and want out. Or, they’ve gone from job to job, developing a hodge-podge of skills, or not.  What I am saying that the trade-off for them – partying much during one’s youth – came at full price. For me, I feel I’ve had the best of both worlds. I certainly didn’t worry about entering a career all through my 20s and even into my 30s. I managed to get my education and then, later, my graduate degree. I have had many cool ideas (as you have too) but developed only one.  One thing: I worked very hard to develop my skill which allows me to do what I do here. There are few others with my particular language-related skills. That didn’t come easy.

Don’t know if I mentioned it but I went to Germany, Austria, and the Czech Republic. Another trip is in the cards for October: yet another to the USA and this time I’ll probably put in a few offers. The housing market is just starting to cool from its echo bubble and sellers are nervous about rising interest rates — which do not affect me.

And the new car (the one in the USA)… some trouble there. I don’t want a car that’s 1) angry-looking, 2) phallic-shaped, or 3) only available in various shades of black or white. That really narrows it!

Spending… busy!

July 3, 2013

89

I bought a  new car and paid cash. I also did some major remodeling around my second place — turned an empty room into a fully kitted guest room. As the car was a consumer item, I depreciated it down to zero immediately. Same for all the apartment stuff. Took a long trip too — three stops in Europe, and a few places in the USA too. Alllllllmost bought a house in the USA too. Other than those things, it was business as usual. The number is back up! See, I wasn’t kidding when I said, ‘will I make it’?

Rental unit has been empty for a few months too. A few nibbles on ads but … nothing yet.

That million will have to wait. But, it WILL happen.

Currency appreciation helps!

January 22, 2013

43

The currency in the country in which I live has appreciated gradually for the last 12 months. Because so much of my net worth is tied up in assets that are denominated in this currency, and because I count my net worth in dollars, I have seen a $30K increase in my net worth just based on appreciation (assuming I can sell when and if necessary at my very conservative valuations – which shouldn’t be a problem). Also, from what I can understand, the government here recently changed a law on sales tax on second homes (I have two here), cutting the tax by half. All of this is good stuff. They also changed the LTV rate at which banks can make mortgages. These rates are still much higher than those in the USA (I think they require 30% down here) but all of these moves should have positive effects on property values here. In 2007, when I bought my first place here, I bought just as the bubble was bursting, but I bought a place so unloved that it wasn’t really affected by the bubble anyway. I got lucky because the government planned a subway line that goes right by that place, which immediately put a floor on the price right after I bought it. The second place (where I am living) will be affected by the new law. Future tax payments (you pay sales tax in phases here) will reflect the new law.

I bought my second place during the prolonged housing slump in this country. I really didn’t plan it that way, but I did see quite a spate of news stories about people who are “house poor,” meaning in this context that they cannot sell their places for what they originally paid. I don’t want to paint the people of my host country with a broad brush, but during the housing boom proper, there was a strong “herd mentality” on display, with the TV showing images of people lined up around the block to buy into some new apartment village going up – at rates that would climb even while they were standing in line. Even then, I thought, “Why don’t they recognize a frenzy when they see one?” Most were buying with the hopes that they could immediately list it and get a “premium” of about $30K, sometimes even before it was necessary to pay all of the taxes on it. I ran into plenty of bag-holders while shopping for my second place, but none were really interested in selling at a loss, even though I stood ready to buy and was prepared to walk away, which I did more than a few times before an offer finally got accepted. The thing is, there are few people here who are so overstretched that they can’t make the payments if necessary. They’re willing to wait.

That isn’t to say that some people’s finances here aren’t a mess due to their speculative home-buying. There are cases of people only employed part time juggling the payments for two or three properties (which are sold years before they are built here). They can brag to their friends and to anyone else who will listen for about six months how they “own” these properties here and there, after which it comes time to start making the payments, which, if the place is new, is often $25K every three to six months, with a balloon payment (30%) due when the unit is finished. This allows them time to bail or dump the place but many fail to do so, and should a real slump in the economy come along, they’re stuck and the place goes to auction, which really isn’t well known here. I looked into buying at auctions but from what I could understand, 1) the banks want just as much as you could get from any real estate agent, and 2) you were dealing with sharks (and snakes) when it came to where the real easy money could be made. I met a few women who worked in real estate offices who had gotten in over their heads and were using their offices to cart anyone who walked in looking for anything over to look at their obviously overpriced apartment (typically housing various family members). I also know that it is the politicians’ wives who make the big bucks here, as their husbands come home and tip them off about where the next apartment village will go up, with the wives then scrambling to buy farmland from farmers with no more than an elementary-school education; they get a few million dollars waved in their faces, sell immediately, and then the politicians’ wives sell to the government housing authority for as much as a 10x profit. This is a regular feature of real estate in the third world, and is a well-known phenomenon here.

My next step is my USA place, which will likely be in the desert southwest. I am going to the USA in April and will make reasonable offers should I find anything. It is also helpful that Zillow now shows foreclosures. Work has slowed from the crazy Oct/Nov/Dec period, but it is steady and I am busy. I am of course getting closer to paring it down greatly to just a few good customers and moving back to the first world. Like I noted in an earlier post, younger people have plenty of energy and can deal with the hassles of living in a country like this, but once you’re looking at 50, those hassles really are hassles, no longer quaint or one of the wonders of travel, and you know that every day you are not living in one of the world’s most convenient and developed countries is one less day that you will ever do so – giving up your birthright in a sense. I hope to be gone from here by 2014, with both places rented to stable tenants whose employers pay the rent straight into my bank account here, from where I can transfer it, all in one shot, to an American bank already converted into dollars. There will be bumps on that road, but by then I’ll have one million little shock absorbers.

Busy season

December 30, 2012

48

Every minute I do something other than my normal work means one extra minute must be spent later. It is the busy season for what I do and I have non-stop work. In Oct/Nov/Dec I banked enough to buy a nice German car, not even including investment income or rental income. I am that much closer. I am also starting to ignore other things that used to catch my attention: gas prices, energy prices, food prices. I just don’t care because those things are such a small percentage of my income. Fewer things to worry about. All good. Short entry this time because work continues for me here. Happy New Year. I’ll be right here typing as 2012 ticks over to 2013. I’ll reach my goal in 2013 and by the end of that year I’ll be in my new place in the USA and this present one, hopefully, will be rented to some researcher with a large expense account.

Progress and plans

November 6, 2012

59

 

59 is just one less than 60 so not much of a drop. Remember also that it doesn’t mean that I am 1% closer to a million… that number is more qualitative than quantitative, until of course it reaches zero.  I have had a few good months after returning from the USA during May and June but also have been depreciating things (basically removing them from my financial software despite the fact that I still own them, one example being my physical gold (which exceeds $10K). Also, the price at which I carry condo number 2 is somewhat inflated but given the recent slide in the US dollar, that number isn’t as big as it once was.

 

In terms of work, I had my second-best month (overall) ever in October – everyone paid right on time and the right amounts too. All good. I have decided to go to Germany and Austria on vacation (as much as I get one) sometime this spring, and from there to the USA and then back to Asia. Fewer stops this time — so about 6 weeks overall.

 

The new condo is being furnished and the tenant in the old one is paying on time. Thus, I am coasting towards winter. The work comes in, and the work goes out. My new desk, office, and chair are posh compared to condo number 1, as everything is new and was purchased at a time of plenty vs. 2007, when I furnished my other place with far fewer resources.

 

I went from nearly broke, owning no property in 2007, to this position, where I own two valuable properties free and clear and can see clearly see the goal of 1m dollars. I did it in just over 5 years, during which there was a worldwide stock market crash and ongoing depression. I have been reflecting on the fact that I have been very lucky and was unaffected by the global turmoil, being tucked away in a hardworking but relatively less visited part of Asia running a service very much in demand with a very uncommon and, as it turns out, valuable skill set when applied just so. However, I also think there are other people out there in the world quietly saving their way to a million or more and looking forward in a few years to being free and living a good life in a safe and wealthy part of a developed country like the USA.

 

I noted in a previous post that I said I’d have the money ($420K or so) for a new condo in the USA by 2014 — I meant 2013. Although I don’t anticipate buying in April of 2013 I should have the funds by then, all in cash, after which I can start looking for a condo somewhere warm, safe, and affluent where someone like me can just blend in – an average Joe – and enjoy my freedom.

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