There seemed to be renewed interest in my networth, so I’ll put that back into “the mix”, but preface it every month as being unimportant.
It was a good month to be a Cheap in September (from a financial perspective). I managed to get my last check out of the recruiter (which was quite a trial and may make for a future post). I also got my first check from my new job, so as much as I was worried the “lag time” of pay would hit me, I managed to avoid it.
I managed to save $4062.54. There was also a $739.64 increase in the value of my E*Trade account (this is totally irrelevant, I’m holding these stocks for the long term for dividends, not looking for short term capital gains). My networth increase seems to be pegged at about $4800 (which, to stress for a third time, is totally irrelevant for anything), for a current networth of $91,654.11).
My savings rate is going to start decreasing (because of tax withholding as an employee), but this will also decrease my tax obligation in April, so its all good (as Casey Serin would say).
In September I pursued a variety of long-term, delayed pay-off investments, so unfortunately didn’t make any progress on increasing the proportion of my cost of living being covered by passive income (which currently is at $300.08 or around 26%). My passive income increased slightly because I paid down my margin account due to a false margin call.
I managed to get my cost of living down to $1,151.75 (this decrease is what lead to the “increase” of my passive income paying 2% of my living expenses, which I don’t think is actually going to be sustainable), which will go up after I move into an apartment at the end of October (one of my roommates has annoyed me to the point that I’m moving out). I’m paying $500 / month for a room in a 3 bedroom house and want to find a bachelor for ~$700 / month on the subway line as close to downtown as possible (I work near Union station if anyone wants to suggest a place to live 🙂 ).
One “delayed payoff” investment is my dividends, which are heavily margin-ed now (about 60%). The dividend payments pay off the interest debt (its “cash flow positive” by roughly $33 / month). As long as the dividend payments increase faster then the interest rate raises this should work out well. If it doesn’t, it won’t be a tragedy (I have the income to cover the debt interest). This changed the dividends from being something I was getting a monthly income from, to something that pretty well moves along on its own steam (which I’m optimistic will lead to a higher income later).
The other “delayed payoff” is being a silent partner in a mixed use building purchase (the purchase of which is set to go through in early October). This was $12.5 K so far (which pretty well wipes out my free cash, there’ll be another ~$5 K payment for legal fees). I’m not looking for monthly income from this, as our plan is to save up more in the building’s account, use this to renovate, and convert the building from a rooming house type structure (which it is now) to a bunch of individual apartments (which hopefully will be more lucrative and less work going forward). We’re hoping to immediately change the downstairs bar from being kind of a dive to a higher end place (our ideal clientele would be local business workers going for lunch or an “after work” drink). My “active partner” will be paid 10% of the gross rent for doing all the management (and we’re putting money into the venture on a 50/50 basis).
This is definitely a new sort of venture for me (and hence a bit scary), but my partner is a guy I’ve known for years (he’s been my real estate “mentor” if you’ll forgive the “get rich quick” lingo). I was in his wedding party and have hopes that it’ll work out well (although if it goes belly up, I’ve already categorized this as a “higher risk” investment). He has a wide variety of residential management experience, so I’m also hopeful that he’ll have the background to transition into managing a different sort of residential (rooming house) and commercial (a bar and a retail outlet).
So there’s the “state of the Cheap Union”. My plans going forward (after paying the upcoming legal bill) are to start focusing on my RRSP contributions (looking for about $14K for 2007) and saving to pay off my April tax bill (which I’ll ballpark ASAP to make sure I have enough to cover it). I’m torn between doing a mix of US market / EAFE index funds for my RRSP or getting a couple good US dividend payers (BAC & WM look good right now, and I’d be tempted by something long term like JNJ or KO). I keep advocating index funds to friends and family, so part of me feels like I should actually buy some myself :-).
I’ve mothballed the idea of buying more real estate in 2007. It *might* be possible to get something with a very low down payment (especially now that I have a regular job and am not a contractor any more), but I think the stress of pushing my finances that far wouldn’t be worth the benefits.