Goals - Freedom Thirty Five Blog

Financial Lessons from 2 Broke Girls

May 192013

There’s a sitcom on CBS called 2 Broke Girls. It’s the story about Max and Caroline who are both poor and work at a diner in Brooklyn, New York. Despite their financial circumstance they want to start their own cupcake business (゜∀゜) Their plan is to save $250,000 and open up their own cupcake store one day.

Spoiler alert if you haven’t watched it already but in last week’s episode they discovered an old, hidden storage room in the back of the diner which nobody knew about before. Caroline said “Uhg. It’s so humid and damp in here. Now I know how balls feel” The restaurant manager was about to hire a cleaning company but then Max suggested that she and Caroline could clean the derelict room instead since they could use the extra cash. The manager agreed to pay them $600. In the middle of steam cleaning they discovered the room had some shutters which opened up to the street outside. And Eureka the girls realized this would be the perfect place for them to set up a small cupcake walk-up window, literally a window of opportunity (^_^) This would surely bring them one step closer to success.

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There are a couple of financial lessons we can learn from this episode. Even undesirable work can lead to great opportunity, and if we start from the bottom then there’s no way to go but up Sometimes I feel sympathy for these two girls. Caroline uses free napkins as coffee filters, and in an earlier episode Max experienced sushi for the first time in her life. They work so hard for low wages, and sacrifice so much for their dream of eventually opening up a business together. I think we can all learn something from these two characters I watch the show because it inspires me to work hard, use my financial resources wisely, and keep me focused on my own goals :0)

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Random Useless Fact: More than 8,000 French households’ tax bills topped 100 percent of their income in 2012.

Raising Twenty Five Thousand Dollars in 3 Months

Debt, Goals 61 Responses »

Apr 292013

I have good news and bad news! The good news is I bought another farm yay The bad news is I have to find a way to raise another $25,000 by the end of July for the down payment or I lose my $17,250 deposit forever (O_O) Would anyone be interested to buy some short term, securitized Liquid Independence bonds with farmland being collateral? Lol, just kidding

The property I bought earlier this month at an auction was for 150 acres of grain farmland for $172,500. I had to make a 10% (or $17,250) non refundable deposit. But I didn’t have $17K sitting around. So I used my TD bank’s line of credit at 5% interest rate to basically borrow the entire deposit amount and then transferred the money into the agent’s trust account.

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Unfortunately I bought this farm before I had time to get my financing in order. All lenders these days require a minimum of 25% down payment. My 10% deposit will of course be part of the down payment, but I need to come up with the remaining 15% of the purchase price, or $25,875. I currently don’t have a lot of cash on hand. Perhaps just enough to cover the closing legal costs plus a little extra. This farm deal is scheduled for completion at the end of July. That gives me 3 months to come up with about $25,000. I can’t even save that much in an entire year, haha. But where there’s a will, there’s a way, and I have to find a way because my $17,250 depends on it ಠ_ಠ.

Unfortunately that 10% deposit really did a number on my line of credit account. I’m now using $33K of my $40K credit limit. So there’s not much room to borrow anymore. And they won’t raise my limit, I’ve asked. I could sell some stocks to raise cash or use my credit cards which has a combined limit of over $10K Wait, a personal finance blogger is advocating the use of credit card debt? Yup I don’t believe in good debt or bad debt. Only the cost of capital matters. I would gladly pay the 19% annual interest rate on a $10K credit card balance if it means saving my deposit It’s not clear to me yet how I’ll raise the entire $25K, but it will likely be a combination of what’s already been mentioned.

Was it a bad idea to buy a property without getting pre-approved for a loan first? Maybe Was it risky to wire someone $17K knowing that I would lose all of it if I can’t come up with an additional $25K? Okay, yes it is! But we only live once, and sometimes I like to add a little excitement in my life to spice things up a bit. I am so ready for this challenge \(^_^)/ I’ll keep everyone posted.

Financial Freedom in 10 years

Advice, Budgeting, Controversial, Goals 34 Responses »

Apr 142013

It’s almost been 5 years since I started this journey to financial freedom. How am I doing so far? As shown on the right side bar I’m making about $5,100 of dividend income a year Which is only about 20% of my annual living expenses. So it appears I still have a long way to go but I feel good about the future One thing I could do to reach financial independence sooner is downgrade my lifestyle just a little bit. Right now I live in a large two bedroom apartment, and drive a pretty sweet car. But I realize I don’t need these things to be happy. So I thought to myself what if I lived a more modest lifestyle? Let’s see what this alternative life for me would look like.

Passive Income: $6,500

In order to make life simpler I plan to pay off all my debts. I don’t have enough cash in the bank to do this. Big surprise lol So I’m going to sell my home, car, Saskatchewan farm, gold and silver, and all other financial assets, except my stocks. After fees, commission, and taxes, the total amount resulting from a complete liquidation of these assets should be about $425,000. So after paying off all my $390,000 of debt I will have $35,000 left over If I put this all into a diversified portfolio of dividing growth stocks with an average yield of 4% I’ll be making an additional $1,400 a year. Combined with my existing $5,100 mentioned earlier, my total passive income would be $6,500.

Expense: $12,000

So where am I going to live if I sell my apartment? Thankfully there are many affordable places for rent in the Greater Vancouver area like this cozy little suite for $550, or this one for $580. It’s amazing what you can get for under $600/month. A lot of those listings include amenities I don’t even have today like in-suite laundry, free wi-fi, and cable TV. Wow that would actually be an improvement over my current living conditions haha. I don’t mind living in a smaller place. It’s not like I’m using the entire 800+ sqft space in my current apartment anyway. Since I have no car anymore I’ll be taking public transit to get around. It’s more green anyway Here’s what my new spending would look like.

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Conclusion: $6,500 / $12,000 = 54%

And just like that, if I were to do this today I would already be half way to financial freedom. Woot! Big jump from 20% eh. Who knew just changing a couple of things can have such a big impact on expenses. Besides housing and transportation there wouldn’t be any noticeable downgrades compared to what I have today Holy hamburgers, $6,500 of annual dividend income by investing for the last 5 years means in 5 more years I can probably make $13,000 of passive income and actually retire for real. What an exciting thought! 5 more years. Instead of freedom 35, I can probably get there by 30 All I have to do for now is liquidate my assets, pay off all my debt, and downsize a bit. It’s almost hard to believe that people can spend just 10 years of their lives in the rat race and then retire forever by diversifying their investments and living with low expectations, yet the math totally works out. Does that mean I’ll aim for freedom 30 now?

net worth, freedom 35

Of course NOT Although I would certainly enjoy the simple lifestyle of living on a modest income with no debt to worry about, the reality is not so simple. I want to get married some day so a 1 bedroom basement suite probably won’t be enough eventually. There’s also the possibility of having children, and caring for aging parents. I have to look past my selfish desires for freedom and plan for loved ones to be included in my future life beyond financial independence. So selling my apartment, farm, etc right now is probably not the wisest plan to build long term wealth eh?

Nevertheless it’s very reassuring to know that if I became unemployed tomorrow I should have a pretty good financial cushion to fall back on. This sense of security is more important to me than going on extravagant vacations or leasing a new Lexus, and is also why I will continue to invest my savings and use financial leverage to build up even more passive income! I was talking with my realtor last week and he said the farm I bought last year with $20,000 of my own money has appreciated by $10,000 already, which makes for a 50% return on investment so far (゜∀゜) Check back later this month as I’ll update the official numbers on my blog when the FCC publishes their semi-annual farmland value report. This is why investing rules! Luckily the kinds of assets that I’m heavily invested in like stocks, housing, and rural land, have all performed relatively well over the last 5 years especially in North America But how will my luck fair in the next 5 years? We’ll just have to wait and see

2013 Financial Goals

Goals 29 Responses »

Jan 072013

New year, new challenges. I will do my best to tackle the six financial goals listed below which are similar in nature to last year’s goals. I’ve also included 2 additional stretch goals. These stretch goals will be super challenging so I don’t except to achieve them but it would be a real bonus if I did :0)

“A goal is not always meant to be reached, it often serves simply as something to aim at.”
~Bruce Lee

1) Increase net worth by $50,000. Counting on my savings as well as my nearly half a million dollars worth of investments to appreciate
2) Make at least $6,000 more income than last year. Thanks to my new rental income from the farm this one should be pretty doable.
3) Put $5,000 into my retirement account.
4) Put $5,500 into my TFSA. (Roth IRA equivalent in Canada)
5) Put at least $18,000 towards other investments (net of taking on any new debt)
6) Bring the total value of my non-registered accounts to $100,000. Currently my TFSA, cash trading account, and margin account, has a combined value of $68,700. So I’ll need to grow these accounts by $31,300 this year

Stretch Goals
1) Pay down at least $1,000 of my debt. Adding together the balance on my line of credit, a margin loan, and everything else, my total debt is $357,200. It’s not a lot, and interest rates are still low, so I’m not really concerned about it, but I noticed other personal finance bloggers making it a goal and a priority to pay down their debts this year. So I’m going to try and do the same because maybe that’s the smart thing to do. $1,000 is a lot of money though and I don’t know if I have that kind of discipline, so I’m making this a stretch goal, but hopefully I can get myself to only $356,200 of debt by the end of the year.
2) Make $90,000 of pre-tax income. I’m in a race with this other personal finance blogger to see who can make $100,000 dollars a year first. For 2013 she set a goal to make $90,000 so I’m going to follow suit and do the same :0)

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Random Useless Fact: Auto correct has made it easier to text. But it doesn’t always work the way you expect it to, and that can lead to some unexpected results.

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