Real Estate Mistakes Military Members Should Avoid
Rich on Money – July 21, 2018
Okay first off let’s be clear – these are mistakes everybody should avoid whether they are military or not. It’s just that the mistakes can be compounded if you are doing this every 1-3 years.
Rich is a successful real estate investor and he has hit on some of the biggest mistakes I see people make when it comes to buying real estate. The “houses always appreciate” mantra was a big contributor to the housing crash in 2007…don’t forget that. And I see a lot of people buying houses where the rent they end up collecting only covers the mortgage – nothing for management, or maintenance, or vacancy. And don’t get me started on people buying in high cost of living areas and then freaking out when the house sits empty for a month while the $3500 mortgage still needs to be paid.
Buying real estate as a military member isn’t a bad thing – you just have to choose carefully. If the area doesn’t make sense for investing, just don’t invest there! Renting is not throwing away money. You are still getting something in return for your money – a place to live.
6 Ways That Aren’t Net Worth To Determine If You’re Financially Fit
Young and Thrifty – July 22, 2018
I love this.
You might have seen me talk about net worth before and my problems with it.
While knowing your net worth is useful, and it’s partially helpful in determining your financial security and freedom, it’s not the end-all-be-all number people treat it as. Plus, I think a lot of people fudge their numbers…that’s not cool or helpful.
For instance, a 65 year old probably shouldn’t be satisfied with the same net worth as a 25 year old in the same socio-economic class. And a person making $200,000 shouldn’t be satisfied with the same net worth as someone making $40,000.
This post goes through some other methods of determining financial fitness that I think are more relevant. My particular favorites are 1, 2, and 6. If you score well on those, you are doing better than someone with a $1,000,000 net worth who can’t figure out their finances. IMO, anyway.
Oh net worth… such a frustrating, relatively useless way to determine how you’re doing financially.
Especially when people at all different income levels and ages try to compare themselves to one another using it!
I agree there’s not a lot of use in comparing one person’s net worth to another’s, but I’d definitely suggest that net worth has a place in pursuing financial independence! Kind of like in The Millionaire Next Door, some people are underachievers high income and others are over-achievers with lower income. I view it as a benchmark of how you’re doing with your money, sort of like a grade in a class.
Something that I think helps individuals have a better idea of what their net worth actually means to them is the “Net Investment Assets to Net Worth” ratio. Take your “net investment assets” and divide by your “net worth.” – When you’re younger it should be lower (~10-25%) and over time (more years working, more “time in the market”) should increase, and when you’re closer to retirement should be > 50%, indicating you have most of your assets in investments and not in your house – that you live in! So, I think something like that is a useful, individualized application of net worth for giving someone an idea how they’re doing financially. What do you think?
What are you defining as “net investment assets”?
I’ve always felt that renting was throwing away money but you are right. It is purchasing a temporary place to live. Also right that buying a home in a bad market could actually be like throwing money away. 🙂