Shiver My Timbers

I tell you, it has been busy around here and I have beengetting behind in my writing. Oh well…

A month ago we had our Son’s 8th birthday party here. Usually he invites his whole class and we endup having some 40 kids, parents and siblings running around our house. I was relived this year when Chancellorproclaimed he wanted a simple “Boys only sleepover”

At first I was relived, “Ah, a few boys at the house,simple.” Wait a minute 7 Eight year oldboys running around my house full of energy and hopped up on cake andsoda???

I quickly devised my “Legacy Dad” plan…

Our son has been really into pirates and the whole JackSparrow/Pirates of the
Caribbean thing, so hewanted a pirate birthday. My thought wasgreat, let’s have a treasure hunt. Wherewe live in Italy is out on farm land, we are on a one lane road that is flanked by fields on allsides. We also have a river runningthrough our yard and around our neighborhood.

So I devised a plan to have the boys run around in the nightwith a compass and flash lights going from point to point (lit by chemlights)and then ultimately finding the treasure (A large box wrapped in Gold andfilled with candy and prizes)

To add to the aura, the fog is thick in Italy atnight and this would create a spooky look that would keep a bunch of 8 yearolds a little paranoid and also make them feel adventurous.

So at about 8:00 PM, after watching Pirates of the Caribbean 2, the boys grabbed a pile of fake swords andsabers and ventured out into the foggy Italian night. I gave a quick class on shooting azimuths ona compass and walking a pace count and off we went. After about 45 minutes of running through theItalian countryside, the boys found the chest buried under a pile of leaves andwood.

They hoisted it on their shouldersand carried the “booty” back to their Pirate Ship. They ran in the house and ate candy andplayed with the prizes until all hours of the night.

The best part was as the boys were leaving the next morning,many told my son that this was the best party ever and the treasure hunt wasawesome. A proud Legacy Dad just drankhis coffee and smiled smugly.

Mission accomplished.

Investing Update: 83% Gains

I posted back in Januaries Investing Strategies that Ibought some call options, EWJ MAR 14 Calls, which index the Japanese Yen. My target gain was 30%, yesterday I sold theoptions for a 83% Profit.  Ithink it will probably go higher but I never try to get too greedy. 

Thanks to Eric at Rosemans Eruptions for the advice and research.  

I also have a normal stock position in BULKW which is now upover 180%.  

Not bad for an hours worth of reading...

Wordless Wednesday: Valentines Day

That's Amore'

The Situation: Saturday morning a friend of my wife’s calls, she has been trying to gether kids and our kids together for weeks but activities have alwayspostponed. She asks to take the kids forthe day and a sleepover.  

The Mission should I choose to accept it: 5 Daysfrom Valentines Day and with no prior planning pull off a wonderful, romanticdate for my wife.

Normally being totally romantic and spontaneous is not easyfor us guys as it is just not in our genes, however, living in Italy aids mequest and makes it much easier for even the most Neanderthal of men.

First I took my wife to Verona,a short trip form our house, for the Verona in Lovefestival. This is an annual festivalthat highlights the fictional Shakespeare love story of Romeo and Juliet. Although the lovers never actually existed,there is a famed balcony and Juliet statue that tourists and Italians frequentfor the sole purpose of touching the Juliet Statues breast for good luck and ahealthy love life. We also walked on thefictional balcony where Juliet stood while Romeo professed his love toher. I know guys, it’s a little corny,but humor me here.

The next stop was a little Cafe on a side street in Verona, caffè doppio forme andcappuccino for the misses. Somethingabout an outdoor Italian café has a romanticism of its own. The cobblestone streets, the small intimatetables with umbrellas and the smells and charm of Italy all around you.

Last stop was a resturante we’ve been trying to get into formonths, Aeolia.  This is a favorite in our areaof Italy and the tradition and history dates back centuries. Galileo and architect Andrea Palladio bothwrote of its charm and early “air conditioning.”

The staff was friendly and helpful and the meal was topnotch. We both had three courses andshared an excellent Merlot from the Colli Berici area.We finished it off with a chocolate desertand coffee. The owner than took us on atour of the wine cellar and showed us his famed Frescos done sometime duringthe Renaissance. An absolute wonderfulexperience.

Altogether the evening was a huge success and the Legacy Dadgave his beauty anight to truly remember and memories that will lastforever. After being married for almost10 years now and with our hurried lives, we sometimes forget to take time forone another to strengthen our marriage and truly show our spouses we stillcare. It doesn’t take being in Italy to createone of these moments, just a little amore’ and creativity.

Happy Valentines Day.

The Legacy After 60

My buddy Joe keeps emailing me and saying “Okay, your retired, your wealth is secured. Now What?”

I will not need income because my wealth and passive income will provide for my needs

Now keep in mind I am far from retirement but for me once I no longer need to work a job for income my priorities will shift to “Self Actualization” Projects.

By this I mean working on projects that leave a Legacy and have significance. During my retirement years to further my Legacy I would look at these areas.

Sharing my years of wisdom and knowledge as a consultant

Starting my own business – a lifelong dream or hobby

Writing a book or books to further share wisdom and knowledge

Spend time and money to help and further worthy causes

I don’t see myself sitting around or RVing the country, I see myself relaxing and working fewer hours but not necessarily sitting around and not doing something.

I believe those who are retired have years of knowledge and experience and they can definitely share that knowledge. The only question is how and using what facet?

Wordless Wednesday: Sirmione, Italy

Good Debt and Bad Debt

Using Debt as Positive Leverage:

The following is an online conversation between an investorwho feels that being debt free is the only way to invest. Some people feel that paying off all theirdebt and mortgage is the way to financial prosperity. 

Many Financial Authors also push this debt free mantra (SuzeOrman, Dave Ramsey, and John Burley) the thinking is that if you have no debtand live frugally you will be comfortable in retirement.

 There is also another way, a way that myself and many otherssubscribe to. It actually increases yourretirement income exponentially and provides a far greater lifestyle thatliving frugally in your retirement years.

The Secret is Leverage.

In the example below you can see how debt used properly canexplode your investing and retirement.

Russ is a real state investor and owns a Bed and Breakfastin Napa,CA

 
Robert Kiyosaki differentiates between bad debt-- stuff that takes money OUT ofyour pocket (a car loan, credit cards, personal home mortgage, etc), and gooddebt-- stuff that puts money IN your pocket (say, a home that you own and rentout, and get $150/mo profit after paying the mortgage, taxes, and upkeep).

When we first got started, we were very anti-debt. We had 2 homes- one we livedin, and the other, a fixer-upper. By 2002, my plan was to sell one house, andwith the money I cleared, pay off the other house's mortgage entirely. We'dinvest what was left after paying off the mortgage, and live off the interest.In other words, if I cleared $500K when I sold the first house and paid thehouse I was living in off for $135K, I would have $365K left to invest. If Iinvested the $365K in interest-bearing Treasury bonds (say, at 5% per year),that would give me $365K x 5% = $18,250 per year to live on, for the rest of mylife, without touching any of the $365,000 principle.

That was my plan, based in large part on what I'd learned from folks like SuzeOrman and Dave Ramsey. This way, once I sold the house, my money would"work for me" (to use an RK phrase), and give me enough to live on.Since my house would be paid off (all of my cars and everything else wasalready paid off), I could easily live on $18K per year.

So, my plan was to have NO DEBT by 2003, and have $18,000+ coming in, while Ikicked back and did nothing.

Sounds pretty sweet, eh?

But then our lives changed. We read Rich Dad Poor Dad, and started playing theCashflow game . . .

Here we are 4 years later from our original 2003 "retirement" goal.We are *not* retired (still working-- lots), and have LOTS of good debt (over$3,000,000.00). The properties we own with this good debt bring in over$700,000 a year before expenses, which pays for the debt payments.

If we sold EVERYTHING today, after paying off all of that good debt, we'd haveabout $4,000,000.00 before paying off the realtors and income taxes.

Or, about $3,000,000 after these expenses.

$3,000,000.00 x 5% Treasury Bonds = $150,000.00 per year.

Seems a little bit sweeter than $18,000, eh?

But we aren't going to cash out-- not yet.

Based on some of Robert Kiyosaki's other principles, we're adding value to oneof our properties, and will sell things in another 5 years or so.

At that point, we'll have about $5,000,000 after sale expenses.

$5,000,000.00 x 5% = $250,000.00 per year income, while we sit around and justhave fun.

The above scenario is one of the things we learned by playing cashflow. Welearned how to handle good debt, and how to get rid of as much bad debt aspossible (e.g., we currently have no car loans or credit card debt).

But we do have lots and lots (and lots) of RE mortgages-- over $3,000,000.00worth. That good debt helps us get over $700,000 a year-- before expenses. Andwithin 2 years, we should be bringing in well over $1,500,000.00 beforeexpenses, since we're developing that other property.

This is just one example of how "good debt" can really work for you--and put you WAY ahead of the game-- using leverage.

There are many others on these forums who are doing the same thing-- withdifferent strategies, and different properties or investments. But all of themcenter around "good debt".

Hoping this makes sense . . .

-Russ H.

Why Versus How

If you notice in my postsand even when I teach in person, I spend a lot of time on “Why” you dosomething. Most people always want toknow “How”

 How do I get my kids to talk to me aboutimportant issues?

 What should I invest in?

 How do I get that spark back in my marriage?

There are a million HowTo books on the market and most of us read these books and then never take anyaction. They have great advice and soundprinciples but unless we have a strong enough “Why”, the “How” is unimportant.

The Why is what keeps yougoing. The why is the bigger picturewhen adversity enters your life. The Whyis what keeps your moral compass on the proper heading. 

Most people just want toknow how, and then they go out and try something and fail and give up. If they had a big enough “Why” the how willpresent itself.

I focus a majority of myeffort and reading on building a strong “Why” because once I know deep in mysoul why it is important to do something, I will search the earth to find the“How”

I take time each week andlook at why I am doing something. 

Why am I trying todevelop my children to be strong Christian Leaders?

Why am I building wealth?

Why do I want to have thebest marriage I can?

Why do I need to set theexample and become a Legacy Dad?

I focus on the endresults, the rewards, and the eternal happiness. If you build a big enough “Why” than nothingwill stop you from finding out “How” 

"He who has a why tolive for can bear almost any how."

- Friedrich Nietzsche