The Reason for this blog

It occurred to me the other day that the title of this blog and the very first post seemed a bit “privileged.”

It might come across that I’m asking “how do you milk other people of their money?” or how are some people “lucky enough to inherit this money?”

I think the former is dishonest, and the later is lucky (albeit undeserved), but I’m not in that situation, so I’m not concerned with asking that question.

The real question of this blog: How do you go from middle class to upper class?  How do you make your own fortune, instead of relying upon luck or good fortune?

I don’t expect to be a mental couch potato and hope it all works out.  I know, ultimately, that my mind will create my reality and I’m in control of what happens in my future, good or bad.  The question is: how do I get to a good outcome?

Random Thoughts on Using OPM (Other People’s Money)

Question: I would like to hear from someone who didn’t have any money and used someone else’s $$$’s to invest. I don’t understand this concept and need to learn more about it.

Answer: It’s everywhere!

Probably the most common strategy is in real estate – it’s not “no money” – but 20% money. For instance, a building that costs $100k. You put down $20k, the bank puts up the rest. You make a small profit every month (say $100 after all expenses + PITI are covered), and get plenty of other advantages as well (appreciation in the market, loan payoff over time, deprecation through taxes, inflation of rents while your mortgage stays at the same rate, etc. etc.).

Obviously if you have no money, you find a good deal and look for investors. And it’s basically the same strategy, except they get a portion of it, and you get a portion of it.

There are lots of other, more complex “no money down” real estate types of transactions (owner financing, etc.)

There’s also flipping with debt financing (usually private money). You take a house, and take on debt from a creditor. You provide them with a high interest rate. In exchange, you do construction on the house. You then sell the house for more than the construction + the price you paid for it (financed by the creditor) + interest on the loan, pocketing the difference.

Or consider any business that is started. A traditional brick and mortar business: you go to a bank and pitch them on your idea, how you’ll make money, etc.. You take on the debt, and are expected to repay them with interest over time.

Or consider startup companies. These are equity financed instead of debt financed. You pitch an idea to an investor, and – if they think it has potential and they like it, they give you money in exchange for a portion (equity) of your company (but – you don’t owe them anything if the company goes bankrupt.  This is why it’s “equity” instead of “debt”).

Or consider writing an e-book or a video course on Udemy/Skillshare/wheverever. It takes your time, but probably not your money. You publish this on amazon or wherever. Every month you make some money off of sales. This is a no-money down transaction.

If you are short of money, you can always swap time. This is what most people do when they work jobs. They trade their time for fixed amounts of money.

Getting Laid Off

Often if you say you’ve been laid off, you get these sorry looks or sorry comments.

It took me my first layoff to figure out a layoff is not the same as getting fired.  You get fired when you are bad at your job.  You get laid off when something out of your control happens (the company gets merged into another one, the company goes broke, etc).

Layoffs are great.  They give you “severance” money.  No other time in my life have I just received money “for free” without needing to work (aside from investing).

A lot of people hate their jobs.  They say, “If only I didn’t have to go in tomorrow.”

If you are one of those people, what actually stops you from showing up for a job you don’t like?

The answer: a paycheck.

What If I told you: “I’ll pay you what you normally get paid – just make sure you don’t commute, don’t do any work, and don’t endure the daily grind.  And don’t worry – no one will be upset that you didn’t show up for work.  Just collect your paycheck.”

Wouldn’t that be great?  Wouldn’t it be “free” money?

It occurs to me that most people don’t like layoffs not because of the free money or the lack of purpose from not having a job, but because it’s a forcing function for change.

Income/Financial Freedom Report – January 2017

I didn’t think it was possible to actually *lose* money with passive income.  Turns out I’m wrong.

Here’s the summary:


Notable Items:

Lending Club

Increased my position in lending club from roughly $6k to $10k, and decreased my monthly contributions to retirement from $400 down to $100.

As I see it, you aren’t going to hit it out of the park with lending club (it’s going to yield 5-10% per year).  But compounded, that’s quite good!

So I’m seeing Lending Club as my new “retirement” fund.  Dangerous?  Maybe.  But what’s more likely?  A stock market crash wiping out half of your savings when you are in retirement (which seems to happen every 5-10 years?), or 100s of people defaulting on their payments at the same time?

Also, another primary reason I stopped contributing as much to my 401k is a tax reason.  When it comes out (after compounding), I’ll get taxed at whatever my rate is.  Assuming I’m not working but still having income coming in (from real estate or whatever else), I’ll actually be in a higher tax bracket.

I think this deserves it’s own post, but needless to say, I think conventional wisdom is selling you a pack of lies.

136 N 10th

Lots of repairs.  The main one was a $1600 boiler that was leaking.

I probably didn’t have to get this fixed (at least not right away), but it was one of the main concerns when getting back the building inspection and actually I negotiated down $5k for the house.

After more investigation, I thought this might cost closer to $10k and wipe out all of the income for the year.

Also, aside from a $1k PITI payment every month, I’m getting hit with $300-400 utility bills from the local gas company.  Maybe it’s time to look into individual metering and/or RUBS? (FYI, “RUBS <state>” is the wrong way to look this up on google – instead “ratio utility billing system <state>”)

Also, got surprised with a $229 bill for water + sewer.  I knew it was coming eventually, I just “conveniently” forgot about it.

On the plus side: At the start of the month, there was one tenant who hadn’t paid on time. He claimed his rent was stolen (but no police investigation – dog ate my homework?).  Was it stolen?  Maybe, who knows.  But he ended up getting a charity to come through to pay his rent.  Whew!  I’m glad for him and glad for me.

Vertical Credit Spreads

I’ve been making money each month with this, just not very much.  Now it’s time to scale up and instead of trading SPY, I’m trading SPX.

I up’ed the cash in my trading account to $15k from $5k. Now I can take 1-5% risk trades comfortably on SPX.

The way I see it: If I want to gain 20% through spreads, all I have to do is make roughly $50 per week.  Most of the spreads I’m trading (if taken to expiration) would make about $100.  So all I really need to do is trade one contract a week (and assuming I’m not losing very often, which I don’t plan to be with such low delta values), I should easily make 20% (others make 40-50% per year).

Treasury Direct

Tried short term t-bills on treasury direct.  Only put in $100 into a 4-week t-bill.

Obviously these t-bills lock up the money.  There’s no obvious way to trade them on treasury direct, so I think I’m going to stay away from these.


Making my first Udemy course.  I already have some results, but that’s for another post.

Financial freedom Report

Maybe not even worth posting – since I had negative numbers.  This month I was 10% in the hole for my financial freedom account.

What’s more interesting is my expenses nearly doubled from the month before?  Why?  I had a few high ticket items:

  • I moved out of a storage space.  I moved all of my stuff across the country (from NYC => California).  I should have done this years ago, but my future seemed uncertain.  This cost nearly $1500 for the movers.  But it will be saving me $150 a month.  Over the long term, this should be worth it.
  • I dropped my cell phone and broke it.  Luckily I was able to contact  A nice guy came over and fixed my phone for $100.  I had another old one sitting around which hand’t booted and was replaced for free by verizon when I was on their coverage. He was able to fix it for $50.  I was able to sell it on ebay and made a few bucks on it.
  • Took my girlfriend to a Kanye West concert.  I’m not really into Kanye, but she certainly is.  Tickets: $150.
  • Also, started donating money to my college again.  It’s only $200 but I think it’s a good thing.

Income/Financial Freedom Report – December 2016


Here’s the summary:


Capital One Savings/Money Market

I’ve got about $50k in savings.  I’ve always been what the M1 group calls an “avoider”.  It’s basically someone who doesn’t want to think about money.

What this meant for me was that I would save some money, but I’d never check my bank balances, etc.

Honestly, if I didn’t feel like I had enough for the next few months – even if those few months contained an “emergency” – I’d totally freak out.

On the other hand, up until the last few months, I wouldn’t even check my savings account very often.  It was all on auto pilot of saving just a few hundred dollars a month.

I’ve moved my money from their Savings to their money market account.  I understand it’s not FDIC insured, but I guess that if things got to that point we’d be in pretty bad shape as a society.

Money market accounts just invest in super safe bonds (that is, if you think the USD is safe).  So it’s basically a liquid/cash equivalent.

The tradeoff: I get 1% in the money market account vs. the 0.75% in the capital one savings account.  I know it’s not much, but it’s free money and I sort of want to keep all of this cash liquid – so why not?

BofA Checking/Saving.

I have a fair amount of money in my BofA savings.  I’ve never had so much, and here’s the story: when I bought my first rental property, BofA pursuaded me to upgrade my account.  Here were the conditions: certified checks (which I needed for the downpayment) would be free plus I’d earn interest in my checking account.  In exchange, I’d have to have to keep $15k in my savings.

So now I have $15k in savings at all time.

That yields $0.14 per month. That’s less than 0.01%.

Lending Club

I now have about $6k in Lending Club.  So far, it’s pretty much performing as expected.

I’ll have to do a post about it later.  So far, it’s one of the highest returning and most passive investments to date.  Of course, time will ultimately tell.

136 N 10th

Only made $71 this month on it.  In the first month it made me nearly $1k.  This is mostly because a bunch of expenses have occurred, and I know I’ll be negative cash flow next month for many of those same expenses.

Vertical Credit Spreads

I’ve just dipped my toes in the last few months into credit spreads.  After taking many courses (mostly on Udemy), I think I understand vertical credit spreads as an income strategy.

I’ve been trading with a small account (roughly $5k).  The loss is just a paper one, and I expect it to rebound.

Financial Freedom Report

My expenses went down considerably last month.  But so did my passive income.  I’m now at 3%.  But I expect once the apartment building is working out well, I should be at roughly 20%.  Of course, the main goal of all of this stuff is to get to 100% ASAP.

Income Reports

As my “day” job winds down and I try to replace my active income with passive income, I figure I should start posting monthly “income reports”.  A bunch of other bloggers are doing this.  It’s fascinating to watch.

Although I doubt anyone is reading this (as of yet), I think posting this publicly will hold me accountable to my future success.