My SHINY Nickels

Live Smart. Save Money. Retire Early.

I Learned My First Business Lesson in 7th Grade. It Wasn’t In The Classroom.

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Credit: abovethelaw.com

[It’s Randy this time around.  Occasionally he steals the keyboard.  Enjoy.]

In seventh grade I walked about a mile and a half to school on most days.  This was way back in the mid-seventies (yes, I’m that old).  Back in those days, the school lunch tray cost forty-five cents (stop looking so shocked, okay?  I already said I’m old!)  My mom would give me a dollar each day for lunch plus a treat at the school snack bar. This snack bar also served burgers, fries, hot dogs, etc.

But this “good” food was way out of my dollar-a-day price range.  I had to get creative.

Conveniently, there was a 7-Eleven on my way to school. I would stop in each morning and spend all of my lunch money on candy.  (Before you start judging, no, I didn’t eat candy for lunch.)

I bought it to sell.

Picking the Right Products

I didn’t buy just any candy.  I needed something I could buy fairly cheap and sell at a higher price, that would sell easily.  The perfect product was Now and Laters.  Do you remember those waxy fruit-flavored chews that last a long time?  Yeah, those.

They were perfect.  First, they were cheap.  I could buy a 7-piece pack for 10 cents.   Second, they were popular.  I would usually sell out long before lunch time.

Demographics, Supply and Demand

Who were my customers?  A whole bunch of kids with lunch money.  Sure they could get candy at the snack bar, but for that they had to wait for lunch.  Most kids barely got out the door with a piece of toast for breakfast.  So they were hungry long before lunch rolled around.  And hunger makes people do irrational things.

These kids were trapped at school with no other options until the snack bar opened at lunch time.  The snack bar did have some good options for sweets.  They had all kinds of pastry products and candy bars.  Most were at least fifty cents.

Now you may be wondering if other kids tried to copy my business model.  A few did, but they were never as consistent as I was.  I had a lot of loyal, regular customers.  (Did you read that?  A 7th-grader with “regular” customers.  I still find that funny.)

Pricing Your Product for Optimum Sales

So, what did I charge?  I broke the 7-piece packs apart and sold them for ten cents a piece.  Anybody can afford to spend a dime.  You could probably go for a short walk and find that much laying on the street.  My price was affordable and at ten cents a piece, I had potential to earn a $6.00 profit from my initial dollar.

I may have been able to double my price and earn a lot more, but hey, I was a kid and wasn’t thinking about higher profits.  I just wanted a snack bar lunch and money for the arcade on the way home.

What’s Eating Away At Your Profits?

In my case, it was me.  I had a backpack full of candy, I was a kid, so of course I’m going to eat into my profits. (In most cases, once I had sold enough to get what I wanted from the snack bar, I just ate the rest.  Again, I was aiming for the short-term game. Oh well.)  My favorite at the snack bar was Hostess Suzy-Q’s.  Remember those? They used to be awesome. The filling would be so thick it would run all over as you ate them. Now the cream is so thin you barely see it in the package.

The Lost Potential

Man, if only I had been able to see the business potential instead of just being satisfied with that darned Suzy-Q.  I could have scaled it up into a serious profit beast.  I could have branched out with multiple sellers where I would take half their profits for supplying the candy.  Can you see it?  I show up in the morning with a case of Now and Laters. Distribute product to my sellers. Collect my share of the profits at lunch. I would have been able to buy my own 7-eleven at 17.

But it’s not all lost.  Looking back, I see that I naturally fell into entrepreneurship without any outside influence teaching me how.  I knew I wanted the “good” lunches the snack bar offered. Getting my parents to spring for it wasn’t going to happen. It was junk compared to the school provided lunches.

I had to figure out my own way.  (There’s a reason why they say that necessity is the mother of invention.)

My mother has told me many times that she’s not surprised at all that I’m a business owner.  I guess I had the entrepreneurial spirit in me all along.

Check Out Our Guest Post Over at 1500Days.com!

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Truth:  I frequently get requests from other bloggers to guest post on my blog.

Another Truth:  I’ve never allowed anyone to guest post on my blog, and I almost never agree to guest post on someone else’s.

But there are a few rare exceptions to those rules.  If you want to post on my blog (or vice versa), I must know more about you than just your Twitter handle, and you must be super-cool-awesome.  (Bonus points if I’ve met you in real life.)

The married duo that blogs over at 1500Days.com easily passed those tests, and while we met because of a blogger conference, the friendship transcended the online space, and we count our time spent with them (and their kids!) among some of our life highlights.

Their blog is so entertaining that laughter will often leave my brain space and actually come out of my mouth.  They bring the full-on ugly laugh out of me.  Not only are they funny, but also super-smart, especially when it comes to money and toy dinosaurs (that last part will make sense if you start reading their blog).  They’ve also reached their million-dollar investment goal, so to say they’re inspiring is an understatement.

So when Mr.1500 asks you to write a guest post, you say “heck yeah!” and start writing.   He specifically asked me to talk about the launch of our other website, Laundromats101.com. (A resource website for people looking into ownership of self-service laundries or existing owners.)

If you want to check it out, the link is here:  My Guest Post on 1500Days.com

(One Last Truth:  My guest post was over a month ago, and I’m just now getting around to mentioning it.  So shoot me.)

Meanwhile, we’ve been working on some new posts!  Here’s what we’ve got in the works…

  • We have another online business on the horizon, that we’re pretty excited about…
  • We’ll divulge some details on how our first online business at Laundromats101.com is doing; the income, how we built it, growth strategies…
  • We finished a DIY major bathroom remodel; there will be before/after pics, construction details, you know the deal around here…

So stay tuned!

Change Is the Only Consistent Thing Around Here.

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identitycrisis

What can I say? We’re human.  We change our minds.

This last June, we announced that this blog would be moving in a different direction.  And that’s true.  But not completely.  Well, hold on, let me just start by giving you some backstory.

The Backstory

When we started blogging about our purchase of the laundromats back in November 2014, we started seeing some significant growth in traffic.  Then in March 2015, we posted “We Bought a Laundromat and It’s All About the Numbers“, and since then that little post has been viewed 70,000+ times (yeah, we were pretty blown away when we looked it up).

In fact, that one post has actually risen to the front page on Google when someone searches for information about purchasing a laundromat. (Go ahead, try it.  Open up Google and type something like “how to buy a laundromat” or “how much money do laundromats make”, and more than likely, we’re in the Top 5 and in some cases, we’re #1.)

Without even trying, we’ve become a resource for other people wanting to do the same thing we did; buy a semi-passive business and become laundromat owners.

That’s originally why we decided to change the direction of this blog. We wanted to give our readers more of what they wanted.  More laundromats.

Deep Thoughts and Late Nights

But…after a lot of discussion and research and some more discussion, we are giving the land of laundromats it’s own site.  I mean, when you think about it, who comes to a personal finance blog looking to start up a brick and mortar business?

So…we’ve launched Laundromats101.com!

new_logo_bottom_crop

We have spent the last few months working hard to build a site we can be proud of.  Our aim is to be the go-to landing spot for entrepreuneurs and investors interested in purchasing, managing and profiting with laundromats.

Since we published our latest guide to laundromat investing, sales have taken off and our own forecasts have been exceeded.  The website felt like a natural next step, and we feel really lucky that this opportunity to add another income stream to our portfolio has basically fallen into our lap.

So, What Does This All Mean?

This blog, MyShinyNickels.com, will continue to document our journey to financial independence; including our experience in earning income online.  The laundromat-oriented content will then move to the new site once we launch.  Since the book is producing a decent income, our goal is to make Laundromats101.com the free resource we wish we had when we started out ourselves.

So, if you want to find out more about owning your own laundromat, subscribe and bookmark our new site at Laundromats101.com.  To continue watching our journey to financial independence, and a behind-the-scenes look at building a website that produces income, stay right here at MyShinyNickels.com.

A Big Thank You

Lastly, for those faithful readers who have been here through it all…from the first post about our financial independence journey, through the “laundromat phase”, and now back again…

THANK YOU.

Thank you for sticking with this sometimes schizophrenic blog that has an occasional identity crisis.

Thank you for the opportunity you’ve given us to branch out and create something new.

Thank you for supporting us and reminding us why we do this.

We’re looking forward to continuing this blog and making it everything it was intended to be, while giving our “laundromat kingdom” it’s rightful place on the interwebs at Laundromats101.com.    Until next time…

Cheers!

randy_laura_sign

Our Latest Project and A New Direction

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As you know, I had been away a while until I posted earlier this month.  Life was swirling around us as usual, and my last post was quite a catch-up novel.  But I didn’t reveal everything that was going on because we were working on a secret project!   A secret project that is finally complete…so it’s time to announce…

WE WROTE ANOTHER BOOK!

Pulling it together felt like the birth of another child, so I guess it deserves a birth announcement:

 

Why did we write another book, you ask?

It was you, dear readers.

Over the last year, I’ve received a ton of reader mail asking for help; about lease negotiations, or how much a particular laundromat is worth, or whether to make an offer or not.  Many of them were requests for consultations.

“I’ll pay you! I just need 30 minutes of your time!” they cried.

So it became very clear that a lot of people out there still need a lot more information.  Well, information and confidence.  And they need more than my blog alone can provide.

Many of you described the fear you have when it comes to investing in a laundromat, or any business for that matter. And that’s understandable.  Fear of taking the first step, fear of failure, fear of living outside your comfort zone, fear of the unknown.

And then it finally hit me.  After I found myself repeating the same strategies and stories and calculations over and over to one reader after another, I figured we should just pull everything we’ve learned directly or from veterans in the industry, and create a complete guidebook to laundromat investing.  From start to finish.  And then to really get folks set on the right path, we’d offer a discounted bundle that includes ALL of the spreadsheets and templates and checklists we used to successfully purchase and operate our own two stores.

Now that it’s all pulled together, it’s quite a package.  It’s everything we wish we had when we started our own laundromat investing journey.

But with the amount of time and effort we devoted to it, we couldn’t just give it away.  The blog costs money to run, and our time is worth something.  So we’re not ashamed to put a price on the fruits of our labor.  But for what is all included, it’s almost like we’re giving it away.

If you’re serious about investing in a laundromat, it’s a must-have.  It will save you both time and money, and help take some fear out of the process.

Click Here to Check It Out …

A New Identity and a New Direction

As I already mentioned, I get a lot of reader mail, and these days about 90% of it is about investing in laundromats. So as much as I’ve resisted it, pushed it aside, ducked it and avoided it…the fact is…I’m now known as…

…the laundromat lady.

I tried to fight it.  I didn’t set out to have this blog be about laundromat investing.  I didn’t even want it to be about laundromat investing.  But the reality is that there is only so much one can say about investing in index funds, or eliminating debt that hasn’t already been said.  There’s a million (ok, maybe not a million, but a lot) of other personal finance blogs out there that cover everything else, but there’s no one that blogs about laundromat investing specifically.

So I guess it’ll be me.  I accept the crown and I’ll wear it proud.

 

UPDATE – We now have a NEW website, Laundromats101.com!
logo_no_reflectionThis blog, MyShinyNickels.com, will remain a personal finance website, while all laundromat-related goodies, including the laundromat section of this blog post, have been moved to Laundromats101.com.
Click HERE to head to the new site…

Yes, I’m Alive. Just Busy. But Here’s a Life Update.

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Let me start by calming your fears.  No, I wasn’t kidnapped by a drug lord.  No, I didn’t go off-grid and join a commune.  And no, I didn’t join the witness protection program and change my name to Consuela Banana Hammock.  (Only fans of the show “Friends” will get that last one, and, you’re welcome.)

I’ve just been, well, busy.  And, if I can be completely honest, I was a little burned out for a while.  Over the last few months, I’ve been swarmed with emails and blog comments, many saying variations of “I want to buy a laundromat.  Can you help me?”  Or worse, those that ask questions that I’ve already discussed in a blog post somewhere.  Urgh.

Some I’ve responded to, and some I haven’t.  I just don’t have the time to get to all of them.  And if I did, my kids would go unfed and I would start to look like Tom Hanks in “Castaway” from lack of consistent bathing.  (So if you wrote and I haven’t responded, I’m sorry.  Sort of.)

castaway

Don’t get me wrong, I love my readers in whatever form they come.  But after a while, I began to feel like “the laundromat lady”.  I was even starting to get quasi-hate mail that said “I wrote you a week ago, and you never answered me.  I need answers.  Are you going to respond???”  As if I owe people something.  So I stepped away for a while.

So What’s The Latest?

It’s the end of the year, so I figured it was time to give an update on life, finances, and laundromats.  I’ll start with the first one.

Life

Life is busy, but fairly normal.  I recently took a sabbatical (possibly permanently) from all social media.  It was taking up time and space that is better used elsewhere.  And two months in, I don’t miss it a bit.

Our second oldest turned 18 recently, and she now has a job, and the independence that comes with having her own car.  In fact, I’ve started calling her “Sasquatch”; I’m told she exists, but sightings are rare and undocumented.

And as you may remember from my last post, my husband Randy left his stressful, exhausting management job a few months ago, and retired at the age of 49.   It’s great having him home (and awake past 6pm), and seeing him so relaxed and rejuvenated.  He’s even started taking drum lessons, something he’s wanted to do for years.

As for me, I got a long-awaited promotion at work to Manager of Client Analytics.  Woot.

Finances

With Randy retiring, it meant going down to one income (mine), but our living expenses were already less than what I make anyway, and I make pretty good money, so it hasn’t been much of a change.  We do have less money for splurges than we used to, but I still wouldn’t change a thing.

As far as our progress towards financial independence goes, our savings have slowed down some.  When Randy was working, he was investing his entire paycheck, so the laundromat income has now had to fill some of that savings gap. But, we’re still investing some of the profits back into the business itself.  So once the laundromat remodel is completely done (we’re close!), we’ll be able to deposit more into our investment accounts.

And I still need to do a new Net Worth calculation to see where we’re at, but I’m admittedly a little nervous about the number I’m going to see.  But I’ll eventually put on my big girl pants and do it.

The Laundromat(s)

When I last checked in, we were in escrow to buy a second laundromat, located about 20 minutes away.  The seller was willing to carry the financing, and we were approved by the landlord to acquire the lease, so we thought things were fine and dandy and set to close.

But…then the landlord decided to dig into their toolbox, find a wrench, and throw it into things.  They wanted to change the way the water bills were handled for the shopping center, which would have increased the expenses for the laundromat by about $600 a month (resulting in a loss of $7,200 in net income annually).

They had no plans to lower the rent to compensate for the additional water expense, and implementing the billing change was taking f-o-r-e-v-e-r, delaying the purchase of the laundromat.  So after 5 months of waiting, with our cash sitting idle and uninvested, and no end in sight, we withdrew our offer.

But just a few weeks later, we found another laundromat for sale. Only 5 minutes from our house.  It’s a real fixer-upper, but we negotiated the price down to the point that we could pay cash for it.  (Details to come once we close escrow.) We’ve already been approved by the landlord to acquire the lease, and yesterday we wired the final funds from our investment account.  We take possession on January 1st.

We have plans to completely gut the place and bring in new (or new-to-us) machines, and perform a full cosmetic overhaul.  So I’m sure I’ll be sharing some dramatic before-and-after shots in the future as we remodel the place.  We’ve got our work cut out for us, and it will likely take at least 6 months to a year to get it all done, but we couldn’t pass up the opportunity.  It’s a calculated risk, and we hope that it pays off.

Well, I better wrap this up, I’ve got a holiday party to get to and I’m sure you’ve had your fill of me by now.  If I don’t pipe up again before the end of the year, have a safe, wonderful, thankful Christmas holiday and New Year.  2015 treated us very well, and I’m hoping that 2016 surpasses all of our expectations.

Until next time…

 

The Decision to Quit: An Interview with Mr.Nickels

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“A bad manager can take a good staff and destroy it,

causing the best employees to flee

and the remainder to lose all motivation.”

Last time, I talked about a major decision my husband had to make: Quit his job and let our savings rate take a hit, or find less toxic employment.  His job was slowly killing him, and our quality of life was suffering.  He didn’t like either of the options we discussed, so we created a third option: Buy a second laundromat.

But having him quit prematurely is a bit risky.  The whole thing could fall apart, our savings rate would tank and our early retirement plan would be in jeopardy.

But we realized it is no longer about early retirement, or savings rates or laundromats. It is much bigger than that.

He needs his life back.

But as I promised, I wanted to get his perspective on this whole quitting thing, and what finally pushed him from…‘I can last a few more years’…to…‘I can’t last another day’.

Let’s dig in.

Me: So, it seems like your job sucks.  What went wrong?

Mr. Nickels: Have you seen the movie “Horrible Bosses”? That title alone should clue you in.  Plus, working 50 to 55 hours a week is taking up too much of my life. And I have no time to have a normal life. I could deal with the hours and the shift, but combine that with the dismal working conditions and it’s no longer worth the money.

Me: If you quit your job, what are you most looking forward to?

Mr. Nickels: Regaining my life.

Me: What scares you?

Mr. Nickels: Being responsible for the destruction of our early retirement plan. I am basically retiring, but I don’t want to delay your freedom.

Me: What do you miss the most with your current job?

Mr. Nickels: Well, since I’m married to you, I have to say spending my evenings with you. I hate going to bed 4 to 5 hours before you do. I feel like I miss a lot of family time.

I also miss running. Before I took a job starting at 3am, I would run in the mornings before work. You know I love running on the American River Parkway. It’s less than a mile from our house, so many trees, and of course views of the river as I run. I can’t safely run at two in the morning and by the time I get home, I am usually exhausted.  How many times did you catch me dozing off while on my computer?  (Me: That is true.  You know those cute videos of kids falling asleep at the kitchen table, and they face-plant into their spaghetti?  Replace the spaghetti with my husband’s MacBook and you can imagine what I’d witness on a daily basis.)

Me: Why are you so worried about our early retirement plans?

Mr. Nickels: With a second store, we can pretty easily replace my income, but originally I wanted to use the extra income to build our retirement accounts that much faster. I just don’t want our plans to be in jeopardy.  I do believe we will increase our income even more when we start advertising, but as with anything financial, it’s not a sure thing.

Me: What caused the shift from ‘I can last a few more years’ to ‘I can’t last another day’?

Mr. Nickels: It was actually a few things, really.

We had just come home from our cruise to Alaska. It was Sunday night, and I was dreading going back to work. Actually, there isn’t a word I can use to really describe it. ‘Dread’ is the best I can come up with and I felt it all the way deep down in my gut.

I’d spent a week of quality time with my family; no stress, no boss, no early hours. Just knowing I had to go back to work was giving me a dull headache.

The feelings were starting to creep in…

…then within a few days of being back to work, I read the post “Yo Ho, Yo Ho an FI Life for Me” by a buddy of mine over on 1500Days.com.

He described how he was closing in on the finish line. He’d reached his million-dollar mark and was getting ready to pull the trigger and quit his job. He was looking forward to what the next chapter of his life would look like, and how he planned to spend his work-free days. He’s only 41!

And while his post made me deeply envious, it was also severely depressing. Don’t get me wrong; he’s my friend and I couldn’t be more happy for him. But it highlighted my own situation, making me think…“I can’t do this for another 5 years. It’s not fair to my wife, my health, my kids.”

I decided to comment on my friend’s post:

His reply “…and I’ll bet it arrives sooner than you think it will…” turned out to be almost prophetic. We didn’t know it at the time, but he was right.

So…with a taste of freedom, a job I hated, and a friend’s announcement of imminent retirement all occurring within a 72-hour window, I couldn’t take it anymore.

Something needed to change.

So I quit.

I gave my two-week notice, and on Friday, August 28th, I turned off my computer, pushed in my desk chair, and left work for the very last time.

The purchase of the second laundromat continues, and we should be closing escrow in a few weeks.

We’re taking a leap, and I couldn’t be happier.

READER MAIL: Hoppin’ Mad in Minnesota

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Occasionally one of my articles gets picked up by a major media outlet. My daily page views will spike to 15,000, I get some awesome new readers and everyone is happy. No, actually, let me take that back. One guy wasn’t happy. At all.

Canada’s national newspaper, the Globe and Mail, picked up my post “Your Starbucks Habit Is Not Why You’re Broke”.   I received this email a few days after it posted.  Maybe it’s just me, but I think I hit a n-e-r-v-e.

“Dear Mrs. Nickels / AKA Laura,

Put this in your pipe and smoke it.  $5.09 at Starbucks PER my wifes 4 PER DAY/& 7 DAYS PER WEEK for the past FU@#ING 9 YEARS.  That’s $66,882.60 ($20.36 per day/ $142.52 per week/ $570.08 per month/$6,840 per year) over the past 9 years!!

So don’t be so biased in your article here. Our cars are paid for….. BY ME, I don’t drink alcohol, and I don’t indulge in Bull$h!t either. We have NEVER had a vacation, we don’t go out to eat.  We have 4 children and a home to pay for.

On top of it all, guess what…….. I am the only income in this family. Take you article and stick it where the sun don’t shine.”

Brad S. –  Minnesota

Oh, where do I begin with this guy? No, seriously. Not sure where to start with this one. (I’ve decided to overlook the spelling and math errors for now.)

I don’t know about you, but my BS meter started flappin off the charts about 15 words in. Maybe his wife goes to Starbucks twice a day (crazy, but somewhat believable), maybe even three times a day (now we’re stretching the bounds of reality), but…4 TIMES A DAY, EVERY SINGLE DAY OF THE YEAR?!?

Sorry, dude. That’s just plain silly.

Maybe he subscribes to the belief that if he exaggerates enough, I’ll just cave and believe him.
But let’s get back to the tall tale by Captain Exaggeration…

“We have never had a vacation, and we don’t go out to eat.”

Again, are you kidding me? Are you trying to convince me that if I took a look at your banking statement for the past 9 years, I wouldn’t see a single meal out? No burger joints, chinese food, sandwich shops…anything? Even my uber-frugal friends still manage to eat out at least a handful of times a year.

There’s my dang BS meter going off again.

I think his goal with all of the inflammatory words was to get me worked up. And it’s true that after I read his email, I cried. Tears from gut-busting laughter.

I get it; he’s frustrated at his wife’s Starbucks habit.  But Brad, if you’re going to yell at me, at least stick to the facts.  I’ll pretend that I believe you for the sake of argument. $500 a month at Starbucks is pretty hard-core, but I still don’t believe it’s why you’re broke.

You poor soul, you missed the whole point. Should anyone be spending $500 a month on Starbucks if they’re in debt or have no savings?  Of course not.  But I don’t think Starbucks is the real problem.  It’s a symptom, but not the problem.

So here is my response to Captain Exaggeration:

Dear Brad aka Captain E,

First, thanks for the kind offer to stuff my pipe, but I don’t smoke.

A $500/month Starbucks habit is pretty crazy. But frankly, it’s not my place to judge where somebody spends their money, if that’s what makes them happy. My only caveat is that all other financial priorities must come first.

  • Downsize your house. We have four kids, and downsized from 2,600 square feet to 980 square feet with one bathroom. Don’t regret it for a moment. Toughen up.
  • Drive reasonable vehicles. Your cars are paid for? Great! Are any of them worth more than $10,000? Sell it and buy something else. Put the cash difference towards debt or savings.
  • Eat out less. Oh wait, you’ve obviously got that one down already. You already told me that you never eat out. * pause for effect *

The truth is, your wife is probably going to Starbucks to escape, not because she truly enjoys the experience. If money wasn’t such a stressful issue, she wouldn’t spend as frivolously to begin with. So reverse engineer that bad boy. Stop spending so much on housing and transportation, and start taking care of your financial priorities (paying off debt, emergency fund, saving for retirement).

Once you’re doing better financially, her need to escape to Starbucks will probably dwindle down to a more reasonable frequency. (Mr. Nickels suggests some marriage counseling as well. You and your wife need to get on the same page when it comes to spending and money.)

But even if I’m wrong, and the Starbucks habit lingers, at least your financial house will be in order.

P.S.  I’ll try sticking my post where the sun don’t shine, but here in sunny California that’s a tall order.

Sincerely,
Laura aka Mrs. Nickels

Mr. Spock Would Say That Emotional Investing Is Not Logical

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[It’s Mr. Nickels at the keyboard today.  I may not write much, but when I do, I usually have something to say.]

The final tactic we used to get the price of the laundromat down to our purchase price of $105,000 actually started early last year.   In pursuit of that earlier investment, we developed a mindset that allowed us to negotiate from a position of power, by removing emotions from the equation.   Not only did we learn to project a ‘take-it-or-leave-it’ attitude, we actually believed it.

Because, as Spock would probably say, emotions are irrelevant.

Lets go back…..

We had a large chunk of money in investments and thought it would be smart to diversify and move some of that money into investments we had more control over.

Our first strategy was to try to get into the real estate rental market. We had a friend that was a retired real estate agent, so we reached out to her to find an agent to help us find the right property. Laura reached out to the agent and told him what we were looking for.

We wanted a distressed property in a middle class neighborhood that could give us nice returns. I also wanted the area to be decent enough that I didn’t feel like I needed to pack heat to go fix a toilet. We had a few houses that we wanted to look at, about 10 miles north of us.  A few days later we met up with the agent and went through the houses on our list.

On that first outing, all of the properties were more distressed than we were comfortable with.  Hmmm.

Where, Oh Where is Our Realtor?

A week passed and we hadn’t heard a thing from our realtor.  To say that he wasn’t helpful is an understatement.  But we had found a few more houses on our own that we wanted to look at so we called him again to set up a time to see them. On this trip out, we finally found the one we wanted to make an offer on. It was a duplex with a two bedroom-one bath in the front and a one bedroom-one bath in the rear. It was distressed, but nothing that we weren’t comfortable with.

When we went to look at the back unit, the gate to get in was locked. He couldn’t find the combination and I had to climb the rickety fence to get into the unit.  Laura refused to climb over, so we relied on my observations and pictures to evaluate it.

While looking at the property, our realtor gets a phone call and tells us he needs to leave. He tells us to lock up when we’re done. (Yeah, we thought it was strange too. And probably not legal. Whatever.) We decided to make an offer. We called up the agent, and he sent over the fact sheet with the property details.  (Remember that locked gate? Yeah, the combination was right there on the fact sheet the realtor had the whole time. No comment.)

The asking price was $97,000. We made an offer of $91,000 and crossed our fingers.

Our Realtor Sucks!

We found out that our realtor didn’t submit our offer for two days.  When he called us back, he let us know there was now an investment group from the bay area that was interested in the property too. (Of course there is.) We were asked to submit our best and final offer. The investment group made their offer sight unseen.

Unfortunately, or fortunately, we lost out on that property. We did find out later that our offer was technically higher than the accepted offer, but we wanted help with closing costs, and we can only assume they went with the deeper pockets.

When our realtor called with the bad news, he apologized for not being more active and attentive with us. He admitted he didn’t take us seriously until he realized we were actually going to make an offer.  (No, we will not be using his services again.)

In the end, I admit we were disappointed, but we knew if it was the right thing for us, it would have happened. There was no emotion involved.  We weren’t going to pay more than it was worth.  This was a totally different attitude than we’ve had in the past.

On to the Land of Laundry

We were moving on to better things….and along came the laundromat in our neighborhood. Early last year, the price was at $150,000. By the time we came into the picture, the price had dropped to $129,500. Our initial offer was for $119,500. Our offer was accepted and we moved into the due diligence stage of the purchase.

The Key to Negotiations…Research, Research, and More Research…and the Right Attitude

When negotiating, the more you know, the better your position. I’ve said it before, Laura is an information sponge. When she is interested in a subject, she will research it until she knows everything about it inside out. So why did we drop our offer to $105,000?  Laura noticed a sudden drop in the rent for 2014, but couldn’t determine why. It was actually the landlord that answered our question. He sent the seller an email and we were copied.

In the email, the landlord said that the seller would have to catch up on his back rent and late charges, as he hadn’t been paying his full rent for most of the year. Wait, what? Not paying his full rent? This was a little slippery on the sellers part, and it had quite an impact on our cash flow calculations.  (In other words, the annual net profit dropped, which means the value of the business went down too.)

I called our broker and sent the seller an email asking for an explanation. That happened on a Thursday, and we had plans to be away that weekend. (After months of nothing but laundry on the brain, we needed a mental break.) But now with the recent news, it wasn’t much of a mental break after all.

Anger Management

By that Sunday, we hadn’t received any response, and we were very angry about the whole situation (let’s face it, I was pissed!). We really thought this was the end of this journey. On Sunday afternoon, we went to a local coffee shop to relax before our drive home. I broke out my laptop and wrote a lengthy email to the broker.

Some key points I brought up besides the latest slipperiness (is that a word?):

We thought the laundromat had a lot of potential, but we would not pay for potential.

The current lease was above market rates. We had negotiated the renewal back down to market rates, but we still had to assume the stinky current lease and ride it out for three years.

In the industry there is a calculation for determining value. I presented our revised calculation, and made our final offer of $105,000. Take it or leave it.

And most importantly, we were not emotionally attached to being business owners. If this fell through, we would find another investment.

That attitude/thought process we had in the end was huge. We really were at peace with it and kept our emotions out of it. If it happened, great! If not, something better would come along. We were both totally prepared to walk away. Without that attitude, if we had let emotion creep in, we would have paid way too much and possibly struggled because of it.

We didn’t get a response until that Monday night, but our final offer was accepted.

Keep Calm and Use Your Head

As I write this, we are almost a month in, and all the numbers are right in line with our projections. It makes me think back to when we were deep in debt. Most of our spending was done with emotion and not logical thought. We have come a long way since then in how we view our purchases.  And we couldn’t be happier.

 

“Insufficient facts always invite danger.” –  Spock

Star Trek: The Original Series, “Space Seed”

We’re Getting an Unexpected Windfall…What Would YOU Do With It?

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Every once in a while, a sweet little cash angel may drop an unexpected gift in your lap.  Sometimes it’s just $20 from a coat pocket, or a crisp $100 bill laying on the ground (this actually happened to me).  But if you’re lucky, it turns out to be a whole lot more than that.

On Monday we received a letter in the mail.  It was from Kodak, my husband’s former employer, asking if he wanted to cash out his pension benefit.  It’s not a large pension, but it would have provided a fixed $6,600 annual payment once he turned 65.   Now they want to cash us out with a lump sum.

Hmmmm.  Interesting.

Turns out we have 3 options:

  1. Take the lump sum in cash (which means a 20% tax withholding and a 10% early withdrawal penalty)
  2. Receive the annuity as originally intended
  3. Take the lump sum and roll it directly over to another qualified retirement plan (no tax withholding or penalties)

So how much is this unexpected chunk of money they’re offering?  

$32,050.20

And with unexpected chunks of money, come decisions.

Decision #1

Take the lump sum in cash?  No way.  Uncle Sam will take 20% in taxes right off the top, as well as a 10% early withdrawal penalty because Randy is not at least 59 ½.  (And… we could still have a huge bill come tax time depending on which tax bracket that extra cash pushes us into. Ack.)

Leave things as they are and just receive a monthly check?  No thanks.  We can invest the entire lump sum ourselves, and get a better return than if we took the monthly annuity option.  So that leaves us with…

Roll over the entire lump sum into another qualified retirement plan?  Yes, please.

Why?

We don’t want a single cent to go to Uncle Sam…yet.   We want every dollar working for us, growing over time.  When it’s time to withdraw, the government will get their cut.  But for now, we want tax-free growth.

And in order to accept the lump sum without that tax withholding or the early withdrawal penalty, it must be transferred to another tax-deferred plan such as a Traditional IRA or a 401k.

Decision #2

Traditional IRA or Randy’s current employer 401k?

If we roll it over to a Traditional IRA, we can’t make (penalty-free) withdrawals until he turns 59 ½, but the IRA will allow us access to all of the low-fee index funds we want to invest in.  If we roll it over to his 401k, he can withdraw the money beginning the year he turns 55, but our investment options are limited to only those his employer offers.

So…drum roll…we’re going to take the lump sum and roll it over to a Traditional IRA.

We’ll have enough saved in other accessible accounts when we begin our early retirement that we shouldn’t need to access this money (or the money it generates) until after he turns 59 ½.  So we’ll open a Traditional IRA, invest the cash in solid index funds and let it marinate for a while.

The decision, for us, was fairly easy.  We looked at each scenario logically, and determined that we would get the most benefit from rolling it into a Traditional IRA.

Why I Am Telling You This Less-Than-Fascinating Tidbit of Our Life

As I said, the decision for us was pretty easy.  A little bit of math and a long-term wealth-building outlook, and we had our answer.

But the sad truth is that for others who find themselves with a lump sum of cash, the decision is made with emotions, not logic.  They don’t have the luxury of sitting back and deciding how this windfall could benefit them long-term.  They can’t see beyond next week,  let alone 5…10…20 years from now.

When your financial life is in chaos, you just take the cash (and the 30% tax/penalty hit) and run.  Maybe there’s unpaid credit card bills, or you’re behind on your mortgage.  So you cash out to get yourself back above water.  Or worse, you see a big shiny car/boat/thing-a-ma-jiggy that has your name on it.

(Now, just so I’m clear, if you’ve got debt, and your intent is to pay it down and become debt-free, then cashing out and paying it down (or off!) is the best thing you can do.)

But my real point is that when your financial life is in order, you can make the decision using logic, allowing that windfall to really work for you. 

A jumpstart towards building wealth.

So don’t wait and hope for a windfall to rescue you from your money troubles.   Get (or stay) debt-free now, so that if/when the sweet little cash angel drops a windfall in your lap, you can use it to really build wealth and be ahead of the game.

 

 

P.S.  Remember that $100 bill I found?  I was 18 years old, on vacation in Hawaii.  I was walking down a path to the beach at Hanauma Bay, and there it was, a fresh $100 bill just lying on the ground.  Not a soul was in sight, so I picked it up and stuffed it in my beach bag, with a grin a mile wide.

Fast forward to a few months ago, and I’m telling the story to my son.  With a look of excitement, he asked if I still had the $100 bill.  I told him, no, of course not, that was almost 20 years ago.  Then he stomped off and pouted, mad that I had spent it.  It was kinda funny, but I have to say I agree with him.  Sigh.

You Don’t Want To Know What Your LAZINESS Is Costing You

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Two months ago, our washing machine stopped working in the middle of a wash cycle.  It’s 15 years old, so we figured it may actually be time to look for a new one.  But if you know us at all, we weren’t going down without a fight.

After some googling, we found it was a simple 2-minute fix.  Literally.

How many people would have called a technician, or worse…bought a brand new washing machine?  (Strangely enough, just a few weeks later, some friends of ours had the exact same problem.  They were just a hair away from buying a replacement, as they didn’t really believe it could be as simple as we described.  They went home, and sure enough…that was exactly the problem. Saved them from spending an unnecessary $700. You’re welcome, friends-to-remain-unnamed.)

Fast forward to this afternoon.

We returned home from an anniversary weekend in Lake Tahoe, and upon walking in, noticed a slight chill in the house.  Which was great news.  Our super awesome Nest thermostat had sensed we were away so the temperature inside the house had dropped to 60 degrees.

And while 60 is not unbearable, I prefer not to wear a ski parka inside. And as I already said, because the Nest is super awesome, it detected that we were home and automatically turned on the heat to reach our preferred 69 degrees.

The efforts to unpack continued, and about 10 minutes later, I noticed something.  Or the lack of something, rather.  The heat still wasn’t on. I stood in front of the family room vent.  No cozy gusts of warmed air.  I went to our bedroom and stood in front of that vent.  No air flow there either.

So I went back to the thermostat in the hallway.

It did turn it on, didn’t it?  It says the heat is on, but there’s no air coming from the vents. Fabulous.

[Randy walks up to me as I stand at the thermostat]

Randy: Didn’t the heat come on when we came home?

Me:  Yes. Well, it’s trying to come on.  I can hear the furnace buzzing, so I’m pretty sure that at least the power is on, but no air is coming out.

Randy: Great.

Me: Yup.

We were home no more than 20 minutes, and we were already putting our DIY caps on.

I checked a few more things to help rule stuff out.  Does the fan/blower work on the manual setting? Yes.  Are the batteries in the thermostat good? Yes. Did we trip a breaker?  No.

So we knew it wasn’t the fan/blower, or dead batteries or a tripped breaker.

Randy got out the ladder, and I got out my laptop and started googling…

I googled “furnace turns on but no air blows”…

I found a few sites right away that gave a list of things to check before calling the HVAC guy.  After turning off the power at the breaker (of course), Randy climbed on to the roof and removed a few service panels on the unit.

Note: Don’t pay attention to the uncut grass. We’ve been gone, okay? I know you just looked. Dang it.

We went through those initial easy fixes, none of them did the trick.

So I googled the actual brand of our furnace, American Standard, which led to some forums on how to troubleshoot problems with that furnace brand. Turns out there’s a blinking red light on the circuit board of our furnace that helps diagnose the problem.

Me: [yelling up to Randy on the roof] Is there a blinking red light anywhere???

Randy: Yes. It’s blinking 3 times.

So I googled that, and it turns out that means it’s the “pressure switch”.  I described the pressure switch, and after a few moments, he found it.

Me: [still yelling] It says to disconnect the rubber tube that leads from that switch, and blow through it to make sure there is no debris or bugs or water.

Randy blows through the tube, and reconnects it.

See that big orange tube?

I turned the breaker back on.

I ran back in the house and switched the thermostat on to get the heat to kick in.  And we waited…then a few l-o-n-g seconds later…WHOOOOOSH!

Gloriously warm gusts of air were pushing their way through the vents…

IT WORKED!

Our house is now a balmy 69 degrees, just how we like it.

Why do I tell you this silly story?

  1. Fixing it ourselves meant we didn’t have to wait for a service technician to come out.
  2. The fix cost us $0.00.
  3. Not all service technicians are honest.  A “good” one will make the easy fix and charge you just the $50 service call fee.  But a “bad” one will make a small problem seem enormous and charge you for labor and parts you don’t even need, easily meaning a bill of $500 or more. And you can’t always tell the “good” from the “bad”.

So don’t be lazy.

The point is to at least TRY. When something breaks, gosh darn it, just Google it.  Or Bing it.  Or whatever-search-engine-you-use it.  Even just running through the “Top 10 Things to Check Before Calling the Service Tech” may help save you some cash.

 

Because the truth is that money should be invested, earning you more money, and not lining the pockets of Big Al’s Furnace Fixers.

Like I’ve said in nearly every other DIY post, we’ve saved so much money by not throwing money at every creak, clink and rattle.  Even if it means asking a handy friend to come over and look at it with you for a promise of pizza and beer, that works too.

Your laziness is costing you money.  Literally.

I’ve gotta ask, partly because I’m nosy, and partly because well, never mind. I’m just nosy.  Have you fixed anything yourself? How much did you save?

 

 

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Now for one last thing , just so I can sleep a little better tonight…

Disclaimer / Legal Mumbo-Jumbo:

DIY projects, such as those mentioned above, are performed at your own risk.

As with any do-it-yourself/DIY project, unfamiliarity with the tools and process can be dangerous. All DIY-related posts should be construed as theoretical advice and aesthetic inspiration. Improper use of tools could result in damage to your property or serious bodily injuries. MYSHINYNICKELS.com is not liable for any damage or injury resulting from the DIY projects listed or referenced.