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8 Best Budgeting and Personal Finance Tools

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Taking control of your personal finances is simple in theory. But if you’re struggling with budgeting, saving, or investing, trying a new tool may be the ticket to making better decisions and improving your success.

Here are eight of the best personal finance tools to make sense of your money, stay organized, and achieve your financial goals.

8 Best Budgeting and Personal Finance Tools

Keep reading to learn more about each of these budgeting and personal finance tools.

1. Quicken

Quicken has been around a long time and is considered the gold standard in personal finance software. They have a suite of products that connect to multiple types of accounts, such as banks, credit cards, lenders, and investments, to aggregate your transactions.

Like many companies, they’ve moved to a subscription model where you pay an annual fee and get automatic updates for new features and services.

The Starter version gives you a lot, including automatic expense categorization, limited budget tracking, and a bill dashboard, for $35 per year. Upgrading to Deluxe ($50) or Premier ($75) gives you the Starter features plus customizable budgeting, loan tracking, investment tracking and analysis, bill pay, and online backup.

Quicken has far more features than I’ll ever use, but it’s my favorite way to manage money.

You can use Quicken on your PC or Mac, but PC users can also get a Home & Business version for $100 per year. It helps you manage a small business or freelance work by separating personal and business expenses, emailing custom invoices with payment links, and tracking business tax deductions.

You can enter transactions manually into Quicken if you don’t want to connect to your financial accounts online. And there are Quicken mobile apps to sync up with your desktop version, although you can’t see all your data.

Quicken has far more features than I’ll ever use, but it’s my favorite way to manage money. Every week I import new transactions and make sure they’re categorized correctly, especially those related to taxes, so I can easily create reports at tax time.

2. Mint

Mint is one of the original web-based personal finance management programs. It’s free to sign up and connect your financial accounts, such as a bank, credit card, loans, and investments through an easy-to-use dashboard.  

The Mint mobile app has a lot of functionality, allowing you to check account balances and monthly budgets.

Once Mint…

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5 Legal Documents You Need During a Pandemic

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As Americans grapple with how to stay physically and financially healthy during the COVID-19 pandemic, it’s critical to make sure you and your family have the right emergency documents. It’s much easier to prepare for a potential disaster than to recover from one that blind-sides you. After a tragedy occurs, it may be too late to make critical decisions.

Let’s talk about the different emergency documents and why you may need to create or update existing paperwork. If you get COVID-19 or have another unexpected illness or accident, these documents will help you manage your finances and make essential decisions with more clarity and less stress.   

5 emergency and legal documents to have during a pandemic

Instead of being caught off guard during a difficult time, consider if you should have these five legal documents.

1. Last will and testament

The purpose of a will is to communicate your final wishes after you die. Too many people don’t have one of these incredibly important documents because they mistakenly believe it’s something just for old rich people.

The fact is, every adult should have a will. If you die without one, the courts decide what happens to your possessions, not your family.

The fact is, every adult should have a will. If you die without one, the courts decide what happens to your possessions, not your family.

And once you have a will, don’t forget to update it periodically to make sure it addresses all your wishes, assets, and beneficiaries. Critical life events—such as getting married, divorced, having a child, or losing a spouse or partner—should trigger you to update your will.

If you’re starting from scratch, make an inventory of your assets—like bank accounts, investments, real estate, vehicles, expensive belongings, and sentimental possessions—and decide what you want to happen to them. You can list beneficiaries for specific items, like who gets a piece of heirloom jewelry or an artwork collection. You can also create distribution percentages, such as 50 percent of the value of your assets go to your partner and 50 percent to your only child.

In addition to dealing with your possessions, a will allows you to name a guardian for your minor children.

In addition to dealing with your possessions, a will allows you to name a guardian for your minor children. And don’t forget to leave instructions for what you want to happen to your pets, digital assets, intellectual property, and business assets. You can create a plan for your funeral, such as where you want to be buried and whether you want your organs donated.

Someone must carry out…

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Company fired me, and 6 months later want me back.

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At the beginning of January I was fired from my job for "misconduct". I was the manager of my own department and I had a technician under me who was spouse to the operations manager above me. The spouse/technician would purposefully defy instructions and even told me that he "chooses to ignore me". This happened multiple times, and I would get mad enough to argue about it, and that's what I was fired for. I was allowed to get on unenployment insurance and have been collecting it since, but the company did appeal against it at the beginning (which they said they wouldn't do) and I still won my counter appeal case.

Fast forward 6 months; the main investor/owner of the company calls me asking me if I'd like to work there again, because apparently he was never consulted about the spouse working full time in my department and didn't even know I was fired. He told me he'd be firing the husband and wife and wants me to work the first 30 days on a 1099 contract as a trial to see if I want to take a full time position with them again.

I asked for $4k for the entire month and he agreed, but there arent any clear goals or a contract, just come in for 30 days and see if I like it. He's also aware of my unenployment benefits, and told me to not say anything about payment and keep claiming, so that if I don't want to stay after the 30 days I can just keep claiming UI. I told him I wasn't comfortable with that.

I don't have any other job leads within my area, but I also don't feel very comfortable working with the company again. In all honestly I'd prefer to just stay on unemployment till a new company gives me an offer, rather than risking it for a company that fired me before.

I'm curious what I should do about this situation and the best way to cover my ass if I end up comitting to this contract job. I think I'd feel more comfortable if there was a well defined contract, and if I was able to control my own hours and work a maximum of 30 hours a week, so I could tell UI my earnings and that im working part time. I also feel I lowballed my asking price and I could've asked for much more, my original salary was 45k/yr.

Anyway, if you read all this and you have any suggestions or insight, then please share!

Tldr; husband and wife combo get me fired from job 6 months ago, owner/investor wants me back on a 1099 contract for 30 days as a trial, says the two will be fired. Not sure what to do.

PS. I absolutely plan to tell UI of my earnings and was never comfortable with the thought of committing fraud.

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A 31 Year Old’s Journey to $5,000,000 in Rental Property Value

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Today, I have a great article to share with you from Kyle Kroeger on how to invest in real estate. He has a goal of reaching $5,000,000 in rental property value, and is sharing his plan today.

The prospect of retiring early on real estate is highly intriguing to me. It should be for a number of people and I’ll highlight a bit more below.

For millennials, like me, we don’t have it easy. Despite the mainstream media’s thoughts, millennials have faced a Great Recession, massive student loans and a global pandemic already at a young age.

We’ve seen a lot but that can be used to our advantage for financial planning and life goals.

That’s okay if things are a bit harder for millennials financially. It’s a bit more fun when things are hard.

Here I’m ready to show you why real estate investing can be a great asset class.

Related content:

 

My Background

I’m the prototype millennial that loves buying expensive coffee, avocado toast, iPhone apps, blah blah.

So what? Life is short, so enjoy what you love.

I went to a large public university for undergrad and come from a very much middle of the road family in the Midwest. I knew I wanted to study finance in undergrad as I had more of an analytical mindset and liked numbers.

When I graduated from college, I had a decent amount of student loans. The total amount was somewhere over $60,000 worth of student loans. While I was at school, I really didn’t realize how much student debt I had and how that would impact my financial future.

My family has always had a hardworking mentality, so I worked part-time while attending undergrad (each year).

The problem was that money went to keeping the lights on and paying bills. Not tuition.

Upon graduating, I landed a job in investment banking in Chicago. It was tough to crack into, but the pay was intriguing and the opportunity to get some great experience was invaluable. Even if it meant dealing with unique personalities and long hours.

If I could slug it out for 3 years, I knew I could focus on working, saving and paying off my student loans. I followed a disciplined approach of prepaying my loans as much as possible.

After 5 years of working in finance, I was able to successfully extinguish my $60,000 of student loans. Following my student loan repayment, I quickly saved to purchase my first house. That became my first foray into my comforts of using real estate to build wealth.

 

Why Invest in Real Estate?

Working long hours and being chained to my desk made me realize quickly that there is so much more to life than work and making a ton of money. After my first house purchase, I realized that investing in real estate is very straightforward and manageable.

I believe the minor fixes, capital costs for repairs, etc. are generally overblown.

If you do it right, you can manage through those costs and use low cost of capital (mortgages) to build wealth over the long-term. The key thought here is long-term.

Real estate investing is a marathon, not a sprint. Multi-generational wealth can be built through real estate. There are plenty of case studies to back it up. The fact that real estate is illiquid actually works to your benefit.

If a macroeconomic event occurs, you simply can’t panic sell. You’ll have to stick it out and work through the issues firsthand. The best part is you are in control, so you can control your destiny in a way.

When you invest in index funds or stocks, you have no control. You can analyze and make decisions that may improve your odds of generating an attractive return, but you are not making the day to day decisions.

To me, the pros outweigh the cons on whether or not you should invest in real estate.

Here are some pros of real estate investing:

  • You maintain full control of your holdings.
  • There are multiple types of real estate (single-family, multi-family, apartment).
  • There are income-oriented markets like providing options for low-income, suburban and urban communities.
  • You can invest in specific markets. So specific that you can invest on a particular street that piques your interest.
  • Real estate is simple. We aren’t investing in the next Facebook or Instagram.

Here are some cons of real estate investing:

  • It can be time-consuming.
  • The debate is out there whether real estate outperforms alternatives.
  • It requires a learning curve. Even the most experienced investors are still learning.

Finally, there is no one-size-fits all approach to real estate investing. In fact, there are plenty of strategies out there that can tailor to your risk tolerance.

Related content: Renting or Buying? What’s the better decision?

 

Real Estate Investment Strategies

Here are some general investment strategies to help you understand the risk profile (in order of least risky to most risky). Generally, higher risk can lead to higher expected returns.

1. Core Real Estate

Think of core real estate as purchasing a property for cash flow. The property is in great shape, needs limited repairs and is fully leased. This is one of the most common forms of passive real estate investing. Core investing will end up being the least risky and lower returns.

2. Core Plus

Core plus has a little more risk. Think of core real estate as a base, but it requires you to provide some additional value to the property. For example, you are looking at a property that has 50% of the units in a 4-plex that are renovated. The other units need to be renovated and leased out at higher rates.

You can come in and provide additional value by renovating and finding new tenants. This is the in-between on the risk scale. There is an opportunity for improvement albeit at not too much risk.

3. Opportunistic / Distressed

For simplicity, I’ll group opportunistic and distressed together. This is usually the higher risk and higher return investing within real estate. You’ll likely need some significant expertise in real estate and some sort of angle. A common example is a fix and flip strategy. You seek out properties that are dormant and attractively priced. You already know plenty of contractors and resources to fix the property for an eventual sale.

There are plenty of other strategies and subsets of these but the above should give you a general feel for high-level strategies.

For me, I like core plus because it’s straightforward enough and offers attractive risk/reward. You don’t need to know how to fix a water heater or know every nut and bolt of a house. You simply look for cash flow improvement opportunities in high-demand markets.

 

Journey to $5 Million in Real Estate Value

The main goal with direct real estate investing is to make cash flow passive while still maintaining as much control as possible. You can do things like real estate crowdfunding or invest in REITs, but you’ll lose control and have less flexibility if you are trying to create generational wealth for your family.

If you own a ton of stock and want to pass it down to your family, what’s stopping them from selling? If you do real estate investing right, you can pass a full-fledged business down to your family that also provides consistent cash flow.

 

Why $5 Million in Value

$5 million isn’t a hard number but rather a goal. This number also seems like a lot on it’s face and it is. But this is a total aggregate value of property. Not equity.

It doesn’t happen over the course of a year or two. It’s a multi-year process that takes time and patience. This amount of property value presents a great opportunity for income and scale without too much hassle.

You can remain a “small business” in the real estate space and not overload your life with stress.

 

The math of real estate investing for beginners

The math to why $5 million in rental property value is pretty straightforward. I’d like a six-figure ($100,000) income into perpetuity as a baseline. This would allow me to live comfortably from real estate only while also holding a substantial equity position.

So, the math is as follows:

Targeted Income divided by Cash Yield = Equity Value in Real Estate

Targeted Income = $100,000

Cash Yield = 8%

Cash yield represents the annual cash flow from rental properties relative to your equity position. For example, a rental property earning $8,000 per year of income to you on a $100,000 downpayment would equity to a cash yield of 8%.

This would equate to an equity value of $1.25 million in a real estate portfolio ($100,000/8%). So, if you can meet that bogey of a cash yield you are in good shape. If you exceed it (8+%), you can potentially reach your income goal faster.

So how do I get from $1,250,000 of equity in real estate to $5,000,000?

Well, for investment properties you should have a downpayment of 25% to purchase the property. So, $1.25 million of equity implies $5 million of real estate value ($1.25M/25%).

I built a rental property spreadsheet to help me stay accountable when pricing out real estate transactions. The model serves a number of purposes. Most importantly, I use it to:

  1. ensure I’m putting an offer on a property that meets the above criteria (realistically), and
  2. use it as a budget to track my forecast to what was actually received. The model can become a glorified 5-year forecast for each investment.

I walk through how I use the rental property spreadsheet here while walking you through an exact case study.

I hope you find the complete walkthrough helpful.

How to Get There / How Long It Takes

$1.25 million of equity is a lot of money. Absolutely, but you can get there over time. People do it everyday with their 401(k) and Roth IRA contributions.

It will absolutely take time.

Like your retirement contributions, you should have a full roadmap of how you plan to get there.  I have 3 real estate properties right now so I’ve already gotten started on the plan.

With much more work to go, however.

Here is a plan for 8 years to get to the desired income goals and a $5 million rental property value. The assumptions include:

  • Starting income of $120,000 with a 5% income increase each year.
  • Focus on saving 35% of your pre-tax salary each year for real estate investing.
  • Reinvest any cash flow earned from existing rental properties.

Financial Wolves’s Retire on Rental Income Plan:

These are not my exact income and checking account balances but they are a somewhat close representation.

So, as a 31 year old millennial it should take me about 8 years of hard work to eventually retire on real estate. That would put me in a position to earn a steady living from real estate before I’m 40 years old.

There are a few interesting things that stand out from this plan:

  1. Income is very important: Increasing your income is crucial with real estate investing. Without a continuous flow of reinvestable cash, it becomes harder to acquire more real estate.
  2. Compound interest is no joke: Compound interest from the cash flow of your properties is a huge value driver. When you are in property acquisition mode, you should harvest as much cash as possible to continually make acquisitions. The sooner the better as the cash flow snowball benefits are massive. Finally, you can see at the tail end of the investing cycle you can start investing in larger properties. Once you start dealing in larger dollar amounts, you are in the big leagues.
  3. Rental properties cash flow can be substantial: If you can do real estate investing as a side hustle to your ordinary income, the cash flow benefits can be exponential. Look at the cash balance build up during the back end years (years 5-8). You simply can’t acquire enough property.

Once you achieve scale, you’ll have a ton of financial flexibility. Plus, the above assumes no amortization on the loans so your equity balance will likely be compounding along the way. This will give you extraordinary residual value to work with.

 

Tips for Getting Started In Real Estate Investing

Here are some tips for getting started with real estate investing.

1. Just Start

One of the best pieces of advice I received was from a savvy real estate investor. They said you simply just need to give it a go. It’s true.

If all goes wrong or you don’t like it, at least you can cross it off your bucket list… Hey, I was a real estate investor once.

Not only should you just start. You should start by trying to manage your real estate properties without an asset management firm helping you. This will help you understand your properties. You’ll get used to the ins and outs of repairs, requests and leasing.

With technology now, you should be able to efficiently manage everything.  As you scale, start thinking about how an asset management firm can help you. Yeah, back to the reduce time without sacrificing too much income point.

2. Use Technology

Technology continues to be a very underrated component of real estate investing. Back in the day people would have to manually account for everything.

Some old-time real estate investors still think that you need to take 2 am calls about a leaky pipe… Or, you need to manually collect checks from tenants to bring them to your bank. Reduce your time by using resources like Landlord Studio to do all the required bookkeeping.

Or, a tool like Cozy to manage rent payment with multiple tenants in one unit. You’ll get paid instantly and Cozy even sends out rent payment reminders. What’s not to love?

3. If You Struggle That’s Okay

If you struggle with your property and it requires capital contributions from you right away, that’s okay. Let’s be honest. No one invests to lose money. A property can require a ton of work one year but then nothing for the next 5 years.

Just because something bad happens in the short-term doesn’t mean you completely messed up the long-term. At the end of the day, things can get resolved. When I sold my first property, I realized that anxieties and the stress that I had about the property at the onset were definitely not worth it.

 

Conclusion – Is Real Estate Investing Worth It?

At the end of the day, real estate is not for everyone. However, you can use this as a baseline for whatever asset class you are interested in. To me, real estate provides the optimal solution for building long-term wealth that requires limited time.

You can build a fully operating business out of your real estate holdings that will give you the flexibility to do the things that you enjoy in life. Here are a few tips that I will try to follow along the my real estate investing journey:

  1. Stay disciplined with your investing. Stick to one strategy and be excellent at it.
  2. Focus on the long-term.
  3. Scale your time and don’t be afraid to outsource.
  4. Build a team of people you trust.
  5. Retire early and enjoy life.

It’s not that simple and will take a ton of work to get there, but my early estimations is that it will be totally worth it. Between blogging income and a small real estate business, I should be able to work where I want and when I want.

Have you or will you try real estate investing? Let me know in the comments below. I’d love to answer any questions.

Author Bio: Kyle Kroeger is the owner of FinancialWolves.com. Financial Wolves is a blog focused on helping you make more money to achieve financial freedom. After repaying student loans, I’ve shifted my focus to make more money from side hustles, real estate, freelancing, and the online economy. Follow us on Pinterest, YouTube, Twitter, and Facebook.

The post A 31 Year Old’s Journey to $5,000,000 in Rental Property Value appeared first on Making Sense Of Cents.



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