I know, I know — I still need to write up my next progress report post. Before I get to that, though, I want to write up something on a new little thing I’m going to be tackling from this day on: small, doable, 5-step financial plans. Here’s my first one:
- Get mortgage on RENTAL PROPERTY
- Pay off DISCOVER loan
- Save $3,000 for EMERGENCY FUND
- Pay off CREDIT CARD debt
- Buy 2nd RENTAL PROPERTY
Yeah, it’s a pretty basic, but it’s my plan going forward: a simple, and most importantly manageable, 5-step financial plan to help get myself back on track and chugging along!
Step 1: Get Mortgage on RENTAL PROPERTY
I’ve really put myself in the hole, buying and fixing up this property. Sure, I’ve had a job I could ultimately fall back on, but I really racked up some serious expenses: a grand total of around $23k.
So, in order to deal with this, I’ll be refinancing the property. I’ve had it for over six months now, so it’s well past the seasoning period. I’ve already gotten this step started with a loan officer at my local bank, with what I believe is a decent mortgage rate and expected cash out amount. Right now I’m just waiting on the actual appraisal, but I can at least rest easy knowing that my monthly payments will be greatly reduced with a 30-year fixed rate mortgage.
Which, of course, leads me to my next step. . .
Step 2: Pay off DISCOVER Loan
I’m not sure if I mentioned it in any previous posts, but I was able to purchase the property with a $19k, 7-year personal loan from Discover at a (cry-worthy) rate of 12.99%. That’s about $346 per month. Yikes. The second the money from the refinance hits my bank account, I’m paying off the Discover loan – stat.
Step 3: Save $3,000 for EMERGENCY FUND
I pretty much burned through my entire savings with this first investment property. Now, I knew that I would – I planned to make quite a few mistakes and spend quite a bit of money – and truth be told, things turned out better than I’d expected. Still, I don’t like not having a safety net, especially knowing that in the upcoming fall, I’ll need to leave my job for good so that I could complete my last semester of college: 16-weeks of student teaching. $3,000 should be more than enough to last me until I graduate and either (a) return to my old job, (b) substitute teach, or (c) do something else entirely.
Step 4: Pay off CREDIT CARD Debt
This is something to do alongside Step 3. While my personal loan might finally be paid off with the cash from the refinance, I’ll still have quite a bit of credit card debt – about $6k in total, which is a mixture of money spent on fixing up the rental property and my own purchases while I was away from work for about 5 months. Whatever I have left over from the refinance will go to this, but I’ll probably have to dip into a few paychecks to pay off my credit card debt in its entirety.
Step 5: Buy 2nd RENTAL PROPERTY
When all the above are completed, I’ll finally be able to focus my attention on saving up for my next property. This time I’ll be going in much more prepared and with a lot more of my own cash on hand to avoid loans as much as possible. How long this will take, I’m not sure. We’ll just have to wait and see.
So there you have it. I don’t know about anyone reading this, but I certainly feel a lot better and more grounded after putting my plan in writing. Now let’s see how much I can accomplish before the end of the year!
NP.
Neurotic Finance 