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in Budgeting Tips | Money Talk · October 17, 2020

How Having a Money Management System Can Change Your Life

Becoming Financially Independent requires some sort of discipline when it comes to managing your money. Yes, I know. It’s boring and dreadful. Wouldn’t it be nice if we didn’t have to put any effort. There are people who are savers, great with money and don’t even need to budget and that’s great. The majority of people aren’t as naturally gifted which means we need to have some sort of money system to become Financially Independence/Work Optional, especially if we are trying to accomplish this at an early age.

Now, if your partner is someone like me (money police and control freak), then you are lucky! Fortunately, for Ryan, I handle most of the leg work of managing our finances. That doesn’t mean he’s off the hook, though!

I remember how much I dreaded budgeting and the likes. It felt so pointless and so restrictive. I thought I could just wing it and it would all work itself out, but it didn’t. Once, I got the hang of it and started seeing results, I was sold.

So, here it is…

Fair warning, over time, I have a become a bit obsessed and so my system to manage our finances keeps getting more sophisticated by the day. I started with the basics and then graduated to what I have today.

The Budget

On the 1st of each month, I set up a new monthly budget. I have a Google Sheet template that I roll over each month. I make modifications as needed and then update as needed during the month. I used to update weekly, but with the other systems I have implemented, once a month is enough most of the time.

I split our budget in 3 sections.

Monthly Recurring Bills. These are my mortgage payment, utilities, life insurance, telephone, car payment, etc. These are the non-negotiable expenses.

Monthly Variable Expenses. These are my groceries, restaurants, entertainment, other household expenses, etc. These are the negotiable expenses. These are the ones I can play with each month. If we are really tight, then pasta and ramen soup for days it is (just kidding!).

Savings and Debt Repay. Currently Paying Debt is our priority, so we have a small budget for emergency fund and the remainder of our leftover income goes straight to pay off debt leaving out with $0 money from that month after everything is set and done.

This is what they call the Zero-Based budgeting. Basically, giving each dollar a home.

Recently, I implemented a new banking system that I am in love with. Ryan, not so much.

We have 4 bank accounts.

  • Income Account- This is where our paychecks get deposited.
  • Bill Account– On the first day of the month, I transfer the exact amount budgeted in Monthly Recurring Bills section of my monthly budget as described above.
  • Other Household– Each month, I transfer the exact amount budgeted in the Monthly Variable expenses above.
  • Savings– Finally, we have an interest earning savings account at Ally.com where I hold our emergency fund and our sinking funds: Car Insurance, Gifts, Vacations. We transfer over money each month to cover future expenses. This account is held in a different bank for a reason. It’s set and forget so we don’t spend it.

Ever since I implemented the new accounts, it has been sooo much easier to manage the budget without having to worry as much about the tracking itself. The balance of our account reflects how much as we have left to spend. Whenever we go over budget, I replenish from the income account.

At the end of the month, I empty out any remaining cash left in the income account by paying down debt or sending to savings.

Ryan doesn’t exactly love having so many accounts, but he doesn’t manage the finances, so that’s okay. We also have our businesses bank accounts, so it adds up. Banks love us. We recently switched banks and opened 7 new accounts between personal and business. 🤷🏻‍♀️

Either way, I still track our expenses using Wave App. I have all of our bank accounts and credit cards linked and I categorize expenses weekly. I review the reports and see how we are doing. Then discuss with Ryan our progress.

Finally, at the beginning of the next month, I update the budget template with my final monthly figures and then update my personal financials.

Personal Financial Statements

Net Worth Tracking- I have all of our accounts links to Mint App as well, but I only use it to track the balances of my assets (cash, properties, retirement accounts) and liabilities (mortgage, loans and credit card debt). I export their report and I copy paste into my Net Worth tracking spreadsheet. I’ve been tracking my progress monthly to see how it changes over time. I started with negative and in the last two months, I’ve been in the positive. Big Horn property was a really nice boost to my Net Worth position

Income & Expense Report– I also export out the income & expenses report from Waveapps.com and add to a template where I track our month by month spending. I use this to analyze spending patterns and compare to previous months to see if we need to budget for unexpected expenses or if we need to make adjustments to some budget items. If I am constantly going over budget in one category, then I need to be realistic and increase the budget.

Keeping Myself Accountable

Finally, I have a monthly check-in with my financial accountability partner to talk about how we did in the previous month. Having that meeting forces me to actually do the work.

And now this blog is also part of my plan to keep myself accountable.

Conclusion

As you can see, I am a nerd when it comes to managing our money, but doing this work has improved our financial position significantly.

Mind you, I started by simply tracking our spending with Mint, then I moved into the Spreadsheet/Wave Combo, then added Net Worth tracking and like that I slowly starting implementing new stuff until I ended up with my current system.

It’s like when you start working out. You dread it at first, then you start seeing results, get more motivated and start doing more.

If you feel like your finances are not where you want them to be, I highly recommend implementing a money management system. Obviously, you don’t have to do anything like I do. You do whatever works for YOU. Start with baby steps and see where that takes you.

If you want a copy of my spreadsheet, shoot me a message and I’d be happy to share.

If you liked this post, please give me a ❤️.

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New Blog Post 🚨 In this week’s blog post I am New Blog Post 🚨 In this week’s blog post I am going over why we bought a short-term rental, our experience so far. Plus what we did prior, during and after purchasing our first short-term rental in March 2022, a Cabin in Blue Ridge, GA.

Check it out at www.beyondjustnumbers.com or link in bio @beyondjustnumbers
I can’t stress this enough. Some investors are l I can’t stress this enough. Some investors are looking to make money from day one, but that’s not always the case. It wasn’t for us and I’ve talked to a lot of rookie investors who have told me “Thank God I have my personal finance situation together.” 

This is just my opinion. Do you agree? Let me know in the comments!

Want to join a free community of like-minded individuals? Join our REI Coffee Chat Community where we talk real estate investing, personal finance and financial freedom, and much more! Link in bio @beyondjustnumbers

Want to learn more about investing in real estate? Read my blog www.beyondjustnumbers.com

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I used to think that investing in real estate was I used to think that investing in real estate was for the rich. I became in love with real estate while working for a real estate investment company that owned hundreds of units. This was back in 2011 and I was 20 years old at the time. I had less than 5 years permanently living the US, so I had no idea about anything. I grew up in Colombia and the only talk of money we ever had was the lack of it. 

The investors I worked for were a wealthy family, so naturally, I thought… Real Estate requires wealth. I don’t have wealth. Therefore, I cannot invest. 

I figured… well shit, I need become wealthy so I can invest in real estate. Eventually, after educating myself I realized how wrong I had it. You can build wealth BY INVESTING in real estate.

Took me a couple of years to figure it all out. Hence, why I didn’t start investing until 2019. I wish I had figured out earlier, but it is what it is. In just 3 years of investing in real estate, I was able to accumulate more wealth than I ever thought possible. 

Just to give you an idea…Did you know you could invest in real estate with as little at 3.5% of the purchase price? For a $150,000, that’s only $5,750. Buy a duplex that needs a little bit of work, fix it up, rent one side and live in the other. This will reduce your monthly expenses significantly, save the money and do it all over again.*

Of course it’s not that simple, but it’s also not that difficult. There are some particular steps and considerations which is  why I recommend doing further reading on the subject. 

Book Recommendation:
✅“The House Hacking Strategy” by Craig Curelop and ✅“Investing in Real Estate with No (and Low) Money Down” by Brandon Turner. 

#realestate #realestateinvesting
🚨 New Blog Post! Continuing the “Getting Star 🚨 New Blog Post! Continuing the “Getting Started in Real Estate Series” 

You’ve found a property either on your own or through a realtor, you’ve run your numbers, you’ve got a lender and now you are ready to make an offer. What’s next?

In this post I want to discuss a few items:

✅Key components of a real estate contract
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✅The main contract contingencies and how they work
✅Communicating with your realtor

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#mindset #realestate #firemovement #realestateinvesting #realestateinvestor #rentalpropertyinvestor #rentalproperty #cashflow #motivation #financialfreedom #financialindependence #financialindependenceretireearly
We see a lot of advice around hiring a real estate We see a lot of advice around hiring a real estate friendly CPA. However, when you look up  CPAs that specialize in real estate, they can be pricey.  However, that doesn’t mean that other CPAs or tax professionals aren’t good. They might not be particularly aware of certain items, but they can research and collaborate with theirs peers. Perhaps it may require you to do a little of work to compensate. Things you can do:
✅ listen to The Real Estate CPA podcast or join the Facebook group
✅follow social media accounts of the pricey Real Estate CPA and take notes of what they are saying
✅attend free educational events 
✅read BiggerPocket book on Real Estate taxes 
✅if you know anyone working with a really good Real Estate CPA firm, ask them what they are doing

Then use that to go your CPA or tax professional and be like “Hey, is this something we can do for me?” They’ll probably say, “Let me look into it”. 

If they are good, they are going to research it and/or ask their CPA peer group. (CPAs and tax preparers also have Facebook groups where they collaborate with each other).

Here is a piece of advice, if they tell you “No, we can’t use this loophole or no, you don’t qualify to use this strategy” —> Ask WHY and “How can I qualify in the future?.” This way you confirm they did their homework and aren’t just being lazy. Don’t just take no for an answer. You can then get a second opinion by asking a question in a forum or to your peers.

So don’t panic if you don’t have a real estate CPA or tax professional. 

Next video I’ll be answering the question… “Can I skip the tax professional altogether and do my own taxes?”

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