Don’t Feed the Alligators

A Personal Finance Blog from a Small-Scale Landlord’s Perspective

About

Author: MITBeta
01.28.2008

al·li·ga·tor (?l’?-g?t?r) — An investment that has a constant cash appetite, which when not satisfied will eat its owner alive. Alligators have a negative cash flow which reduces or eliminates any return on the investment.

Welcome to Don’t Feed the Alligators.

Don’t Feed the Alligators is a Personal Finance Blog that seeks analysis and discussion surrounding all aspects of personal finance as seen from the perspective of a small-scale multi-family property investor.

My personal background is similar to many other personal finance bloggers:

My story starts in college. The first week I was exposed to all kinds of offers for free T-shirts, Frisbees, etc. simply in exchange for filling out a credit card application. I had some part time jobs in college that allowed me to keep paying the minimums, but I continually flirted with my limits. Eventually I graduated and got a “real” job. I bought a big screen TV and an expensive stereo.

I had a good mentor who helped me to start making a dent in my debt. Together my then fiancé and I saved for a debt free wedding and worked down most of the credit debt. We bought a new car, with all the options. No problem, we could afford the payments. But we still had some credit card debt.

Then we moved and I was out of work for many months. We had very low living costs and my wife’s salary kept us afloat. But the debt wasn’t gone yet.

I finally landed a high paying job and was able to put 30% of my income into 401k — a good deal of which was post tax. We spent a lot of money on stuff that we didn’t need and wouldn’t buy now, even if we had the money back. We did buy a used car. We stopped using credit cards and only spent cash.

But I hated my job, so with quite a bit of money in the bank, I quit. Oh, by the way — that pesky credit card debt remained.

It took about 8 months of bouncing between a few jobs to land the job I have now. It doesn’t pay as much as my old job, but it still pays pretty well and is a lot more enjoyable. We sold our old house and bought another — this time a multi-family so that we could afford to live in the area we wanted.

I discovered Lifehacker one day and that lead me to the “Stackbacks Budget” . I had always struggled with how to budget for discretionary items. Stackbacks did it for me.

I think Lifehacker also led me to GetRichSlowly which also led me to FiveCentNickel.

Get Rich Slowly’s 25 of the Best Books About Money. Last year I read The Automatic Millionaire by David Back and that was the final piece of the puzzle. I funded our IRAs for the year since neither of us has a 401k. We have earned 3 times more in bank interest already this year than any other year before, and we’re just starting the 4th quarter. Now our retirement savings, emergency fund, and many other periodic expenses and savings plans get funded pretty automatically.

We still have debt, in the form of 1 car loan (bought used after selling the other car — growing family; and I drive a 7 year old car (the one I bought new fresh out of college) that has 131,000 miles on it and is going strong), a mortgage, 2 1 more student loans, and yes, credit card debt. But this debt is financed at a very low fixed APR and is solely for expenses on my rental property, which means that the low interest expenses are also tax deductible.

We have a plan to have the car loan, student loans, and credit card debt paid off in 2.5 1.6 years from now. This will allow my wife to stop working if she wants as well as allow us to save a lot more. We have about half of the net worth that we should according to the Millionaire Next Door formula (age * salary / 10), but will have caught up to that in 6 years and be ahead of the curve in 8. We expect to have a million dollar net worth in less than 10 years and to retire at 55 (if we choose) with over $5 million saved.

We feel that we are well on our way down the path of financial freedom, but we have not crossed the finish line. This blog will be a place for me to vet my thoughts on how to earn more, save more, spend more wisely, and help others do the same.

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