Monthly Spending and Budget Report-December 2011

My monthly spending and budget report is what keeps me focused. It came very late again this month. We were away on a small holiday. I must say, we are blessed to have opportunities to travel like we do as a family. How nice is it that after all that I have to come and account to myself in this space. This tracking of my income and spending alone has made me much better at taking care of my personal finances. Being conscious of my spending proved to be healthier than I ever imagined. I still hate drawing a budget but I am very aware of where my money comes from and where it goes.I think I will fall in love with budgeting at some point.

My December 2011 monthly spending and budget report:

INCOME	% OF TOTAL	NOTES
Real Estate	56%	Our mortgages is set on some 3 tier interest rates. We have gone past tier 1 and 2 and we are now on 3 where the rates are the lowest. January is my first low mortgage payment.
Hubby Allowance	36%
Once off	0%
Online	8%	December is always bad in my online business. Its my dry month. January will be great, I know.
Dividends	0%	This is not monthly YET. 2012 will be spent growing this.

My online income was down by 33%. I was expecting the worst, which helped. Low expectations are really great in disappointment management. All I want in 2012 is to double my tiny online income. I am not quite in the league of people who live off of their online businesses. I just keep doing this at a slow pace to keep my mind active. The income also helps.

ITEM	%OF INCOME	NOTES
Real Estate	26.1%	1 mortgage, gas & taxes/rates.
RA & Unit Trusts	7.5%	Fixed
Loan to Business	0%
Internet/ Phones	1%	I keep this very low.
Consumer	26.5%	Groceries and all that jazz.
Withdrawals&Fees	11.4%	This was a cash month. I withdrew cash twice.
Giving	8.5%	Back down.
To Invest	19%	so proud of me!

Remember in October I had an extra 54% left over at the end of it all, then November saw me 15% in deficit. I dipped in my savings. In December, despite the holiday, I am back up. I have a challenge on the real estate assets. I have a very late rental payment, which I will do a post about, shortly. That unit will be vacant in March if I fail to get a tenant. Scary thought but that's how the real estate income goes. If you have one unit, a tenant default means zero income. It actually puts you on the negative because you pay for the property itself and then for its maintenance.

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2012 Goals

I haven't made New year resolutions in a very long time but 2012 is the year for which I am happy to set some goals. Isn't blogging great? 2011 was a great year. I achieved most of what I planned to do. I also started this blog in 2011 which I hope to work harder on in the coming year. I will have to review my progress every month quarter here. (OK I didn't).
Quarter 1: Never Done
Quarter 2: HERE...
Quarter 3: end September 2012
Quarter 4: end December 2012
New year 2012 goals below:

2012 PERSONAL FINANCE GOALS

1. Online income to R5000 per month by December 2012. This will take some work in my writing. I expect to spend at least 1 hour per day writing.
2. Maintain at least 12 months expenses worth of an Emergency Fund.
3. Spend an average of 50% of my net income or less.
4. Maintain giving of about 10% of income
5. Buy a new rental property
6. Remodel the duplex that we have put off the market. Prepare that property for rent by the end of 2012, when we no longer need to use it. Remodel the bathroom in a two bedroom property.
7. Push for 70% equity on our home by December
8. Get retirement accounts to 45% of the target
9. Get stocks to 55% of the current target. This is the most important personal finance goal for me. All my wealth growing energies are on this in 2012..

2012 HEALTH GOALS
I got a bit sick end 2011. I was diagnosed with PCOS which may have caused some insulin resistance. I put on a lot of weight in a short space of time. Health is the most critical area in my life in 2012. My target is to make time to exercise 3 times a week. I might join the gym, which is not necessary. I have to put my treadmill, stationary bike, zumba, and tons of DVDs into good use. I am so embarrassed to mention them by name. (LOST 12kg ALREADY - Sept progress)

2012 FAMILY GOALS

1. Holiday in the Mediteranean Europe with hubby in 2012. I just cant wait for this.
2. Spend great amount of time with my family. I spent the past two years in two cities/ countries. My properties kept me busy in one city whilst my business was in the other city.Looking forward to having more time with my family.
3. Visit my parents for at least 2 weeks.

CAREER GOALS
Get training in some media form. This can be online. It can be anything from writing to publishing, production to public relations. Anything at all.

HOBBIES, ETC

1. Read at least one book per month. I have to make time for this. I already have a good number of books that are not read.
2. Finish all my unfinished home and craft projects. I have lots of material. I don't even need to buy new stuff.
3. Do charity work as much as I can.

Have fun whilst doing it all.

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Rental Income vs Capital Growth

Apartment Rental Income vs Capital Growth

Its Christmas almost yet I am here thinking of whether I should choose a higher rental income vs capital growth as a strategy for 2012. When you are in business, there is just no holiday season in your diary.

My strategy was to buy apartments in the apartment blocks where I own individual units. That way I can someday own the whole block of apartments. Sounds like a long shot, doesn't it? Anything is possible.

The apartments are close to the city center. The capital growth is not great but the return on investment is amazing when you rent the places out. The demand is great. I haven't had a vacancy since 2002 in one small apartment. All in all its a "buy-to-let" dream location. I own 3 apartments in the area to show for my confidence. Well, after a long inner planning session, I decided to go buy a few units in the suburbs to balance my real estate portfolio. In the suburbs the returns are lower but capital growth is great. I do have a feeling that I will want to sell some of my properties in a few years.

The Decision on Rental Income vs Capital Growth
My decision should be based on what I will do with the property. If I buy for speculation reasons, which happens to be a possibility, i would rather buy in the suburbs. If I buy for long term rental, I should go to the city. The problem is that I don't have an idea what I will do with the properties I want to buy in a few years time.

Whilst in the dilemma, a nice lady who lives in her apartment close to one of my apartments send me an email.
"Hi REG

I have decided to sell my apartment at a  20% discount. The agent fees will be extra if sold by an estate agent. I am putting my apartment on the market the first week of January.

Happy Xmas"

I was interested in buying this apartment even when it was 100% cost. At 80%, I am super interested but I havent decided whether I want a rental income boost or a quicker net worth growth in a few years. The properties closer to the city are relatively old and not so safe. The demand for rental units is high, but who knows what may happen in a few years. Suburbs offer stability and peace. All owners are usually investors who take great care of their investments. Which is which?

Lord please help me take a decision.

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Monthly Spending and Budget Report Nov'11

My monthly spending and budget report is what keeps me focused. You may notice this is very late. I struggled to post it here because of my ridiculously high overspending. I helped my baby sister with her college fees. I like it when I do that but I never got an opportunity to see it in black and white in my report. Anyways tracking my income and spending has made me much better at taking care of my personal finances. Being conscious of my spending proved to be healthier than I ever imagined. I still hate drawing a budget but I am very aware of where my money comes from and where it goes.

My November 2011 monthly spending and budget report:

INCOME	% OF TOTAL	NOTES
Real Estate	54%	It helps that all (but one) mortgages are paid off.
Hubby Allowance	35%
Once off	0%
Online	11%	I made my target. Its still tiny but I'm not complaining.
Dividends	0%	This is not monthly YET. 2012 will be spent growing this

My income is back down to where it should be, it was a very normal month. My online income keeps growing (close to $50 increase for November). December is usually a bad month, I'm not holding my breath. 

ITEM	%OF INCOME	NOTES
Real Estate	35.9%	1 mortgage, gas & taxes/rates. I overpaid somewhere.
RA & Unit Trusts	7.3%	Fixed
Loan to Business	0%
Internet/ Phones	1%	I keep this very low.
Consumer	12.9%	Groceries and all that jazz.
Bank Fees	0.9%	Shocking
Giving	56.9%	My contribution to baby sister's college fee. Its not a loan.
To Invest	-14.9

We had a trip in November. Unlike in October where I had an extra 54% left over at the end of it all, November saw me 15% in deficit. There go my savings. The real estate assets are doing well, all my properties are fully let, no vacancy. My handyman disappointed me though, some small work still needs to be done in my one apartment.

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Paying off Mortgage

Yes I know what I said in the past about not paying off mortgage and leverage and gearing and returns and alternative investments. Shoot a girl for trying to please a man in her life!
Before getting to this financial decision, let me disappoint you further with my holiday season spending news. The past few weeks of my less than perfect health lead me to "not so cool places" like gynecologists and even heavier names like endocrinologists. These overwhelming few weeks left me yearning for a holiday. I took a short trip with my son and I did spend quite a bit of my hard earned cash. My son scored new games and I even got me a nail grooming kit. Its promising to save me on salon manicure costs.  I guess after the illness you can get yourself into a state of "money disrespect". But at least I am now back only to plan another holiday to Swaziland for next week.

I vow to not overspend on this trip. It will be a lovely holiday for my family. I don't promise not to behave like a tourist though. I may get a few memento items.
On the mortgage news, we decided to just work on paying up our one mortgage. That's the only mortgage standing. After the hubby has begged and begged, and against my better judgement we are paying the darn mortgage up. Debt no more! This whole mortgage pay-up process is made exciting by the tier kind of interest we are charged. We are in the last and lowest interest rate tier. Our minimum mortgage installment has dropped remarkably and I couldn't be happier. This makes it even easier to kill and bury this debt faster.

The reasons I decided against my "never paying off mortgage" position are:

1. I am never going back to work. That means we will be having one salary and other income sources we created over the years. Paying up the mortgage will mean cutting down on our monthly expenses. That should be great news right? It also mean that the hubby can be able to decide to also have his job being optional. He doesn't hate having to have a job as much as I do though.
2. My hubby was nagging me all the time about paying off this debt. He hates it and I think its only fair to make him happy this once. Its not everyday that a girl gets married to a guy who is happy driving an old car and paying up all his debt. I love him again for that.
3. The most important reason is that we CAN. So why not?

I have a suspicion that I will keep thinking about what this extra mortgage payment would have translated to in alternative investment returns. I don't think I should worry about it though as the funeral of this debt will be as rewarding as having a winning lottery ticket. We will try to to have a "paying off mortgage" trip to the Mediterranean parts of Europe next year (2012). That will coincide with our 10 year marriage anniversary. Time flies dear friends. Its amazing how our marriage survived the worst of conditions including tons of relocations even across countries, renovations and more of those, two pregnancies and strong cravings and debates on whether to pay or not to pay debt off. What kept us so happy is having a common goal and values.

If you are a parent, remember that, investing in your health and spirituality is even more important than ensuring a better financial future for your kids. Our children don't need money but us alive for long.

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Monthly Spending and Budget Report

Two months ago I started tracking my income and spending and that has made me a much better investor. Before that, I never knew how much of a consumer I was. Being conscious of your spending can be so healthy. I still hate drawing a budget but I am so aware of where my money comes from and where it goes. I am asking myself why I didnt start this blog earlier. I even decided to live in my house and stop house hunting because, for some reason my house is not that small anymore. Thats what this monthly spending report has done to me.

INCOME	% OF TOTAL	NOTES
Real Estate	50%	Percentage gone down because of increse in allowance.
Hubby Allowance	32%	Doubled, I took all the real estate responsibility.
Once off	9%	Gift from family
Online	9%	About $100 growth this month.
Dividends	1%	This is where I wana grow now.

My income went up but its an artificial growth because its all coming from my family. My online income is what is growing steadily. I got a good $100 increase this month. I hope to see another $100 increase in November.

ITEM	%OF INCOME	NOTES
Real Estate	22.4%	1 mortgage & taxes/rates
RA & Unit Trusts	6.5%	Fixed
Loan to Business	7.7%	Online income slowly taking care of business.
Internet/ Phones	0.9%	Glad I could reduce this.
Consumer	0.6%	Hubby took care of groceries. And I spent a negligible amount here.
Bank Fees	0.3%	Need to pay my bank a visit.
Giving	7.4%
Left for investing	54.1%	Never had 50% left over to re-invest  before.

I nearly had a trip in October, which is postponed to November. Meaning my spending in November will be higher. October has been great in that I had an extra 54% left over at the end of it all. This means my savings are getting a boost. My properties are fully let, no vacancy. I will be replacing some closet doors though, which means November will be a pricey month.

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Early Retirement or Semi Retirement

Early Retirement Extreme

Depending on my mood or on the asker, I say I am on early retirement or semi retirement. Its quite scary to be outside of the formal employment, for some strange reason. But I find the new definitions of retirement (financial independence) less overwhelming. In 2013, when my loooong holiday is over, I have to take a decision whether I go back to work or make my retirement permanent. Whilst having those amazing options is great, its equally scary. "What if real estate investment world goes sour? What if the stocks we have are hard hit?" That should be normal right?

Personal finance blogs like Jacob, the author of the book "Early Retirement Extreme" have been my biggest motivation. Now I know its very possible. I have to admit though, I spent most of my life making extra income from my properties, and CONSUMING it at frightening rates. Whats with extravagant houses, embraced consumerism and 2 hour commuting days, just to go to work and back home. Lots of my money has polluted the air and caused some harm in the environment. Looking back makes me stronger though, so no regrets. Aren't I lucky that even at my rate of consumerism I failed to go into debt.

Now that I have my priorities straight, I am grateful to PF bloggers and random people I meet with amazing stories like the guy we met at my son's school fundraising event. He is an engineer the hubby once took me with to go see at his work. He tells us that he has walked away from his job because he doesn't want to be defined and limited by a box. I supposed that's a cubicle or corner office he is referring to. "So, what are you now doing?" I asked with my ears wide open (thanks to a noisy music background). "I am taking 2 months to myself, just to think of what I want to do with my life". Hubby was impressed by the 2 months, maybe a teeny weeny jealousy too. We never stopped talking about this guy for another day. The truth is that, most people cant go a week without their jobs. Yet this guy looked more alive than when I met him in his office, past his personal assistant. How liberating being at home with your loved ones is, as opposed to being in an office with a PA and people doing whatever you require of them. That's what I will choose in 2013. I will choose my kids, my family, my home again and again.

I will go back to work for 3 - 6 months in 2013 to tie loose ends or rather to loosen tight ends. So am I in Early Retirement or Semi Retirement? I don't care to define it, I am just enjoying myself, my family and my life. I love preparing a healthy breakfast and lunch snack for my son. I enjoy being there with a warm hug to welcome him when he comes back from school. I enjoy working with my daughter's noise in the background. My investments give me a cash flow which is 50% of my previous salary, but I am happier spending 50% less. I choose that. I am saving myself and the planet and that puts the smile on my face.

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How Much Rent to Charge

Determining how much rent to charge does seem easy, I know. Just survey a few comparables, look at what a neighbor charges and what the other landlord in the similar property gets...that easy. NO, in my 10 years as a small real estate investor, I find determining rental levels quite complex. Even when the property has been occupied by a tenant before, one cannot just assume that the last rental paid by the previous tenant, is the one to be asked from the next. The landlord may have to reduce the rent he/she charges because of the changes in the economic conditions, changes in the property and neighborhood, etc. Similarly, he/she can increase because of those changes or because when those changes occurred, he/she couldn't change the rent high enough for the tenant. (You may also be interested in my article on things to consider when buying a rental property)

Every time you have a vacancy, you go back to research on the "going" rental rates. Firstly, if you haven't already read our articles on preparing the property for rent and one on how to market a property, you may like them. Pointers to How Much Rent to Charge: 

Property Appearance from the Outside

1. How the garden, paint, windows (and window treatments), design, driveways, etc, are, play a role in how much of the tenant's hard earned cash he is willing to part with. 
2. Clutter in your driveway, porches or garden will cost you a lot in rental you charge. The house has to be de-cluttered to be shown to potential clients.
3. The whole character of the building, even in multifamily dwellings will affect the rental rate.You will need to bring out the curb appeal of the property.
4. Preparations for the show-house involve some work on the whole "look and feel" of the place. That's what prospective tenants see first, and we know how powerful the first impress ions are. 

Property Appearance from the Inside

1. The layout of the rental unit may be outdated. One may think of changing the internal plan, if the rental increase justifies the cost. In some cases, a few dollars difference in rental doesn't justify the thousands of dollars to be spent on breaking walls.
2. The piping and fixtures also have an effect on how much rent a landlord can charge. A house with outdated lamps is expected to bring in lower income than the one with modern chandeliers. A landlord has to keep updating the fixtures with modern and more economic ones. Older technology costs a lot more to use in electric bills, etc.
3. Finishes are probably the most influential in the tenant's decision to take the place or "pass". Cracked tiles, missing wooden floor pieces, broken blinds, stiff door knobs, and hanging closet doors are not going to get you the best tenant, let alone your landlord neighbor's rent.
4. The best views will earn you slightly more than your neighbor facing the cemetery. Pair that with a balcony with appropriate seating, and you score a great tenant and a few hundreds of dollars.
5. De-clutter again. Nothing is as costly as clutter. Unlike buyers, prospective tenants wont look at the potential. Why should they look beyond clutter, when they have a few options?

More for Multifamily Dwellings
Some of the factors that affect multifamily units are not in the landlord's control. This is more so when the landlord doesn't own the whole building. The landlord should try to be active in the homeowner association (HOA) to have an influence in how the place is run and managed. The following are a few factors that determine "how much rent to charge":

1. Cleanliness and appearance of lobbies and corridors
2. Lifts, doors, stairs, floors
3. storerooms, gardens, garages
4. Employees and their attitude
5. Noise, etc

As a landlord, you should keep up with the trends in the rental rates in the area where you have invested. I do that all the time. Even when I have appointed a property manager. As an investor, its in my best interest to keep with trends and changes that affect my investment. Now, let me go email the photos of the duplex that I have available from 1 October. It has to get a tenant for me to keep on building that emergency fund. The place was remodeled just over a year ago in preparation for the tenant who is leaving end of September. All I need is a reliable handyman to fix the tiny issues like window rails. And then the screening of prospective tenants begins.

Wishing you a great week ahead. Let me know how you also determine "How Much Rent to Charge" in your own properties.

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Tenants' Rights and Landlord Obligations

Tenants' Rights and Landlord Obligations

Over and above the tenants' rights and entitlement to certain minimum standards of accommodation, I would love to think that I go an extra mile to provide my tenants with comfort. I have never rented a unit I wouldn't occupy myself. I pride myself in that. I believe its for that reason that I received an email more than twice from my new tenant declaring her love for her new home... makes me happy. 

*to your left is the image of when this property was being remodeled in 2010. It was really bad*

Off course my tenant has filled my move in move out checklist and identified the following to be faulty.  

Tenant’s checklist

1. Kitchen stove’s plug came off the wall
2. Bathroom sink is cracked. It may start leaking.
3. There is a problem with the bath drainage system. It is quite urgent.
4. Guest toilet sink is coming off the wall and needs to be attached.
5. All bedroom cupboard doors need to be replaced or re-attached. They are loose at the hinges.
6. 1 bedroom cupboard shelves need to be replaced.
7. The balcony door doesn’t close properly.
8. Geyser (water heating) cupboard needs to be closed 
9. The toilet seats in both toilets are broken
10.  The bathroom mirror is broken

I may have missed on telling you that this property was completely remodeled just over a year ago to prepare it for rental. Why does stuff have so much short shelf life when it comes to rental property and tenants? I am happy that there is no major project, but the small repairs do add up and can become too costly.
Having a tenant who seems to be reliable helps though. I hope she keeps being that way. And a huge bonus is that I got me a handyman again. He came highly recommended. I don't think I will easily bounce back if he disappoints me. I trust the property manager who recommended him.

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Monthly Spending and Budgeting Report

Last month I started tracking my expenditure and drawing a budget, sort of. I am very glad I did. My impulsive spending has been tamed, remarkably. I even took over a few financial responsibilities from hubby's hands. Here we go:

Income

Real Estate = 64%

Allowance = 22% (I get this from hubby because all work from home spouses do, I think.)

Online =13% (This is growing, makes me very glad. The $500 per month target is so close)

Surprise Dividends = 1% (not worth talking about)

 Expenditure

Real Estate = 42% (about $300 more this month due to the added tasks taken from hubby's hands)

Gifts = 10%

Home Making = 6%

Small Investments/ Policies = 7%

Phone & internet = 2%

Loan to my small business = 9%

Left for Investments = 23%

I realized that other personal finance bloggers write the amounts. I don't think I'm ready to that for now. I am not frugal, I just work hard at increasing my income streams. I now have the luxury of working from home and spending a great amount of time with my daughter and son (after school). Nothing compares to that, but going back to work part time is an option that I never completely crossed off my list.
I did stick to my budget guide. Nothing beats writing stuff down to help one commit. I took over paying taxes and gas for our holiday place from hubby. Lets just say, we have to have this home. Its a necessary temporary expense.

I still cant believe I managed to remain with more than 20% of my income to invest or save. It makes me feel so responsible about my future and that of my kids.
A huge plus on the income front is that I got a tenant for the duplex that was to be vacant this month. Whoohooo! My new single mom tenant is happy and unpacking her stuff. Tomorrow is the day she sends me her wish list---SIGH.

I will be happy to maintain my budget as it is this month. I will be fixing minor stuff in the duplex which takes me a little out of my budget. This blog is my best time investment for the year.

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