Krant on Krant(cents) Interview

by Krantcents · 6 comments

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Who else should interview me than me! The self interview is a writing exercise using a question as a strategy for reflection. Something I do often as I get older. It may be a recurring article format if you like the results. I am using it to share ideas, strategies and motivation in an effort to reveal more of myself. I will pick some issues, problems or outcomes that I think you may find interesting.

What do I have to share? Is this just self promotion? I try to avoid talking about myself because my parents said it is bragging. I decided to use the format to share a variety of subjects that I think about or bothers me. Hopefully, I will touch upon some of the issues that bother you too. Most of my career, I made a tremendous number of decisions regarding money, businesses and investments. I considered myself fairly good at it by just measuring my success rate. I will leave it up to you to decide.

“Even a broken clock is right twice a day.” (Stephen Hunt) I was right much more often; however I made more than two (2) decisions a day. You will not make any mistakes if you do not make decisions! The more decisions you make the more likely you will make mistakes. My success rate is about ninety-five (95%) percent. I make mistakes, but only when I give up! My judgment keeps improving because of it. I learn from my mistakes and successes. I am always learning, doing and adjusting. Aren’t you?

I started playing games early! I played cards, board games and a lot more with friends and family. This is where I learned to win and lose! These games taught me strategy which is another word for decision making. I know many people play games now on a smart phone, but they are different. I am not saying they are better or worse than the games I played, but I played with real people present face to face!. Looking into someone’s eyes is different from just participating in an online game.

I am a planner! Why does this matter? I believe that planning helps you achieve your dreams and goals. I think planning also reduces your possibility of failure. Planning does not solve everything, but it it does force you to think more about your decisions. When you plan, you have to look at alternatives, consequences and remedies. Remedies may be adjusting your efforts, changing your plans, but most importantly monitoring your progress. If you are not achieving your objectives, make changes!

How I made it! 

How did you achieve financial freedom? This not the first time, I heard this question! It started a very long time ago. I embraced the axiom of “pay yourself first” before I even knew what it meant. My parents took care of all my needs and I saved for all my wants. Admittedly, I did not have that many wants. When most teenagers wanted a car, I could not have one. My mother gave me access, but would not let me buy a car. I went to prep school and I did not need a car during the year. During the summer, I had access to a car, but that was it.

I did not get my driver’s license until I graduated high school, but still no car of my own. I worked for my spending money in college. I was going away to college and it did not really matter I did not have a car. Earning my own spending money was a great lesson, but the lesson really started when I had to live modestly on my earnings. I added to my savings with paid experiments and other miscellaneous things. You learn to do fantastic things when you do not have a lot of money. Can you say de facto budget?

I cannot overemphasize how important savings are to your short and long range goals. Savings was always a priority and keeping our expenses reasonable.  When my wife and I bought our first home, savings allowed us to buy a better home and still have money to fix it up. Just three to four years later, we took the equity and bought our dream house on the hill. No lifestyle inflation! Every mortgage payment represented one week’s salary for just one of us. This allowed us to keep saving!

Savings is wonderful, but you have to increase the value more than inflation. Just putting it into the bank or money market account would not meet my goals. I wanted control of my investment so I started to look at income property. I spent considerable time researching and investigating residential income property because a colleague told me about his experience. The hardest part was finding a real estate broker who would work with a new investor.

You still need to do your due diligence and a lot of hunting for that hidden gem, but it was worth it. It started out as just an investment until I realized I liked it. Owning and managing income property is no fun, but you must handle it as a business. You get to generate income above your expenses and you keep the profit. I did not need the cash flow, so I reinvested it by increasing the income. I wanted to build value for the future rather than just spend the extra cash flow.

The next steps over the years was to trade (sell) for larger buildings or use the equity to acquire more assets. I eventually (38 years old) has sufficient assets and cash flow to achieve financial independence. It took seven (7) years from establishing a goal to achieving the goal. Some people (including my wife) think discipline was the reason for success. I am sure it helped, but I used many automatic devices such as payroll savings deductions, budgets and a lot of monitoring. Anything worthwhile is not easy!

I cashed out nearly twenty-nine (29) years ago! My nest egg is now in the stock market and has grown over time. I never lived a wealthy lifestyle, but I still enjoy life. My wife and I live in a nice home in a high cost area (Los Angeles), our children attended private school (K-12), and we travel often. I admit that we do not have everything we want, but there is still time to do it. I think the habits I learned as a child still work today. I avoid debt unless it is an asset that increases in value.

The majority of my debt was mortgages and occasionally car loans. The car loans were at very low interest rates or I would have used cash. My approach was if my investments were earning a better return that the loan interest rate, why use cash? As I get closer to retirement, my attitude regarding debt is becoming more conservative, I want to be debt free in retirement, principally because I do not know how long I will live. I am planning on thirty (30) years in retirement, but you know how that works.

Future plans

My philosophy throughout my life is having multiple income streams. I will have Social Security and pension to support my needs in retirement. I will use my IRAs and brokerage accounts for my wants. I have a number of plan B’s such as a line of credit on my residence, antiques, art, commodities and collectibles I can liquidate if necessary. In addition, I have a wide number of ideas that will earn money if I choose to work. My plan in retirement is to volunteer and spread my personal finance knowledge with children.

There are many opportunities to generate income. It is all about choices! I planned my retirement years will be filled with choices. Filled with I want to do versus what I have to do. I want to have a retirement filled with worthwhile and satisfying experiences every day. I started some of the things that will fill my retirement days now to see which I want to continue. If you have a question, you want me to answer put it in your comments! To wrap up the interview, my advice is spend the time at the front end to determine the outcome you want to accomplish whether it is a career or some other goal.

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To wrap up the interview, my advice is spend the time at the front end to determine the outcome you want to accomplish whether it is a career or some other goal.

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