My Path To Wealth

T

Tennessee

Member
This is a story of over 45 years. Let me start by saying that it is my experience that there are no shortcuts.
In my mid 20s I was living paycheck to paycheck and a lot of credit card debt. At that time I happen to read a magazine article that said, in short, the only way to ever get ahead is get out of debt and live below your means. It took a few months for that to become my way of thinking. I got a 2nd job, part time, and used ever cent of that paycheck to pay off all that debt. I don't consider housing cost be it rent or a mortgage debt. The result was since debt service no longer came out of my primary paycheck I was able to start saving money, $400-$500 every month. It took a bit over 3 years to pay off all my debt. I must confess, at the time, it seem excruciating slow. I worked that 2nd job 2 more years banking every cent of that too.

I will continue this in another post as it may become quite long.
 
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Tennessee said:
live below your means
Click to expand...
This is key. Arguably it's a tough ask for those on low incomes (and who would struggle to find ways to improve their income situation), but for the middle class in most countries I don't think there is any excuse for excessive consumer debt or not being able to save. It is mostly a lifestyle choice for many (even if it doesn't seem that way at the time), choosing to have kids, choosing to live in the flashy house instead of a modest one, choosing to have the latest gadgets, choosing to regularly drink or smoke, choosing to buy brand name food items instead of the cheaper generic equivalents, etc. Look forward to reading the rest of your story :)
 
You are right, it's not easy. Not only must you want to live below your means, you must implement a disciplined plan to do so, no matter how inconvenient. For over 5 years I had no time for myself and little time for my family. But in that time I went from zero in the bank to a little over $40,000 in the bank. I also read a lot of books on investing and financial advise.
 
When I began this I was married with a toddler at home. We had bought a modest home when my wife was pregnant anticipating a growing family. Fortunately the house payment was not all that much more than the rent we had been paying. My wife was a little, to say the least, skeptical about the whole thing at the beginning. But after a few months see our debt going down and our bank account really grow, she was on board. We had a second child 3 years into this. She was a say at home mom. A little about myself. I'm not an educated man. High school grad and a few college courses. But I was not cut out for it and quit college. I went to work as a drapery installer for a large drapery workroom that catered to interior decorators. Not a glamorous job, but it paid the bills. When I got a second job it was stocking grocery store shelves on the weekends.
 
So, at this point I had been working 2 jobs for a little over 5 years. I was exhausted both physically and mentally. I had done little more than work, eat and sleep. I spent little quality time with my growing kids and worst of all with my long suffering wife. On the plus side we were out of debt and had a healthy bank account. It was becoming evident that I had to quit my second job. And I did. But I must emphasize that without this stressful 5 plus years there would be no story to tell.
During this period I had been reading books on investing, the stock market, real estate, etc.. The stock market was hard for me to wrap my mind around. Most of the strategies seem to me to be rather complicated and some what risky. Income producing real estate, on the other hand, seemed rather straight forward. It was mostly a matter of arithmetic. I can add and subtract. I boiled it down to this. Income from rents minus all expenses (debt service, insurance, taxes and maintenance) needs to equal positive cash flow. Also rents never seem to go down, they just seem to go up. So it was just a matter of finding something like a duplex that had, or would have shortly, positive cash flow. The search was on.
 
Now the search was on for something suitable. I should add that in the previous 5+ years we did dip into savings a few times. Had to put a new roof on the house. My wifes car was an older 2 door sedan and it was difficult to put the kids in the car seats in the back seat. So we bought a much newer 4 door low mileage Oldsmobile. I got her old car and I sold my junker. Most of my driving was in the company van they provided for drapery installations. Also, I can' believe how much laundry 2 kids and 2 adults generate and my wife wanted a new high capacity washer and dryer. So we bought a new high capacity washer and dryer.
Back to the search. Over the next few months I made offers based on them generating cash flow. They ended up being low ball offers and all eight were rejected. I found another two bedrooms each unit duplex that had a lot of deferred maintenance, most of it cosmetic. Exterior paint, unkempt lawn and shrubbery. It was in a older neighborhood of mixed zoning. Mostly single family with some multifamily mixed in. The existing rents were also too low for the area. I made another low ball offer and, low and behold, it was accepted. It turned out the owner was older and tired of the hassle of being a landlord and had just let the place go. Turned out the rents were being paid late too.
After I took possession me and a couple of friends painted the exterior, mowed and over seeded the law and trimmed up the bushes. It looked 1000% better. Next I had the tenets sign month to month rental agreements that raised the rents 25%. One tenet moved out within a month. So I was able to renovate the interior. Paint, painted the kitchen cabinets, new Formica counter top, new carpet, and because I was a drapery installer, very nice draperies throughout. I had no trouble getting a new tenet at 30% higher rent than the previous owner was receiving. Three months later the other tenet moved out. I renovated that unit just like the first and same higher rent. At that point the little duplex was generating nice cash flow that went into the bank.
My real estate agent now understood what I was looking for and over the next few years I bought more.
 
Tennessee, thank you for your postings. Very interesting, they don't teach this sort of stuff in schools. Keep on posting, many are reading, thank you.
 
You are right. They don't teach this stuff anymore. In fact they don't seem teach history, geography, civics or economics. It does seem to me that it's less education and more indoctrination. In these days if you have school age kids the best investment you could make is to send your kids to a good private school where the emphasis is on a well rounded education and that teaches how to think. Where they don't teach revisionist history.
 
I now had a nice duplex that was put out a nice cash flow. Every Saturday I mowed the lawn and kept the bushes and flowers looking good. But after six months it was like a part time job, and I was growing tired of it. I was talking to my real estate agent and he told me that his office had a property management department. Actually just a lady at a desk but she was managing about 25 properties. To make a long story short, a couple of months later I turned the management over to her. I liked getting a report and a check every month. I still used property management firms to this day.
I bought six more properties over the next eleven years. My toddler and new born of years ago were now teenagers. We had added a family room to the house and by now had upgraded our cars a couple of times. The properties were generating very nice cash flow that most all went into the bank.
I was still reading books on investing, etc.. I was still not comfortable with the stock market and gold and silver were not even part of my thinking even though they came up periodically in my reading. But one book I was reading at the time had a short chapter on a method of investing that was mostly simple arithmetic. To put it simply, it was to buy fairly large cap stocks that had fairly high volume right after they announced that there would split shortly. I studied the history of stock splits for a number of months. I most cases the stock regained it's pre split price within a few years and many times split again. So one share became two and then two shares became four. This all happened over time. I began to keep an eye out for split announcements. I looked for a year and a half. I finally found one that looked good but it was only a 3 for two split. But everything else looked good. I took the plunge and in 1992 opened a brokerage account and bought 500 shares of DELL.
 
I'm leaving Silver Stackers. It would be instructive for you to read my thread "Why Do You Buy Silver" in the silver forum for the reason. I want to thank those who read this thread.
 
Read the thread in the silver forum "Why Do You Buy Silver" from the beginning to the end. It becomes obvious that few take things financial seriously. Most can not articulate any strategy. They seem by their posts to have no reading comprehension. Making money is not a strategy, it's a goal. One post suggested that they bought silver for the same reason I bought DELL. When was the last time silver split three for two? The answer is never. Look at the last post here, pure silliness. I was hoping to encourage folks to become debt free, live below their means, begin to save money and develop and implement a strategy to get ahead. It is no wonder most folks work all their lives to make money and in the end have little to show for it.
 
My decision to stop posting seems to have been the correct one. In the silver forum I have been called a money grubber looking for a freebie. It's sad that this site has sunk that low. It's also sad that the administrator allows that kind of thing. You can read every post I've made and never see me posting anything like that. But I see that it's ok to lie about other posters.
 
As long as one poster is allowed to lie and slander another poster and no one even says anything about it or report it, this will never be a place for me.
 
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