HALF A MILLIONAIRE

About three summers ago, our backyard was blackened by a grass fire because it was very hot and dry. The firefighting captain concluded that the fire was probably started by a live cigarette butt tossed by a careless stranger. He also pointed out that there was a great amount of dead grass on the yard providing fuel for the fire to spread so fast. Because we were deeply traumatized by it, we could not stay in the house. Therefore, we moved in with our relatives for several days to avoid the messy and depressive scene. We slowly regained our sense of reality by talking about how lucky we were for being home on that day. We felt thankful for our neighbors’ warning and assistance. Our spirit was broken but not dead. A few months later, the grass grew back, but the memory of the horrific experience was indelible. We had to find a way to prevent it from happening again.

I began to study about grass fires. I learned that the common cause was the accumulation of foliage. Then, I read about lawn care and maintenance. Finally, I realized that the man whom I hired to take care of my yard used a lawn mower without mulching capability. Therefore, dead grass had been piling up on my yard for about two years. I fired him and took the matter in my own hands. I purchased a Yard Machine mower ($180) and a Homelite trimmer ($80). With the help of my father-in-law, I scalped away the debris on the lawn, allowing new grass to bud.

I am living in a rich neighborhood, where everyone pays for lawn service. My next door neighbor was surprised when he saw me cutting the grass for the first time. He warned me that it would be very tiring when the heat intensifies during the summer. Also, I did not know how to use the gas trimmer because it was very difficult to start. I thought about paying someone to do it for me, but I chose to keep on trying because I believed that I would get better at it. I kept telling myself that I had always been able to solve every problem in my life. Mowing the lawn should not be that hard. I was right. I have become a pro. For example, I have learned after many trials that to start the trimmer, I have to feel the tightness in the cord when I pull it, and I must squeeze the trigger all the way. To have a straight edge, it requires coordination among eyes, arms and feet: concentrate on the lawn’s edge, hold trimmer with steady arms and take small steps. When it gets hot, I do the outside half on Saturday and finish up the other on Sunday. Lawn mowing has become another fun game for me.

Strategically, I like to make “a game” out of everything that I do. For lawn mowing, I keep scores by adding up the amount of money that I save. I used to pay $35 per week or $140 per month for lawn care. I use the money to buy shares of a boring, dividend-paying stock. If the annual rate of return is 5 percent over 10 years, I will earn about $22,000 (minus the cost of equipments). I am also aware of the fact that I spend on average about two hours per week to take care of the yard. Someone can argue that if I can earn more than $35 in two hours from doing something else, then cutting grass is not financially smart. However, I like to look at it from a different angle. I do enjoy lawn mowing. For me, it is like playing golf. Besides being a physical exercise, lawn mowing is an activity that allows me to spend my alone time. Believe it or not, for me, it is like meditation. The concentration that I use to keep the mower on a straight line keeps my mind away form other issues for two hours. The morning air and the smell of freshly cut grass often remind me of my home town where I grew up. I used to play in wheat fields with my childhood friends. For me, it is a mental challenge: It is hot and tiring, but I will not give up. So far, three years have passed.

The hardest game in life is the one in which one’s opponent is oneself. To win, one needs to train oneself daily by approaching hardship or challenges with a positive attitude: I can do it. Although we all have heard the phrase before, only mentally strong individuals can actually do it. The trick is to challenge ourselves with simple goals. Slowly, our confidence will grow, and we will believe that no goal is impossible to reach. And, time will be the only uncontrollable constraint because it never waits for us. I am winning the lawn mowing game. Therefore, I will also be the victor of this game when I have $500,000.

A farmer lost a white mare, so he put on a sad face wherever he went. His neighbors comforted him with nice comments when he complained about his bad luck. A few months passed by, and the man seemed to have forgotten about his misfortune. Amazingly, one morning, while feeding his cattle, he heard horses neighing. He quickly ran to the front gate, and his white mare was standing next to a black stallion. Apparently, the lost horse had brought home a boyfriend. The farmer felt blessed, so he shared his fortune with his neighbors. Some were happy for him, but a few of them were jealous. His son loved the black stallion and begged him for it. The happy father gave his only son the black stallion and instructed him to take good care of the animal. One afternoon, neighbors knocked on the farmer’s door and told him that his son had broken a leg because he fell off the black stallion. The farmer became sad and started to complain about the misfortune that the black stallion had brought to his family. A few years later, a war broke out in the region, and the farmer’s son was exempt from the draft because he had a broken leg. The farmer was joyful, so he shared the good news to everyone.

The above story teaches us a few financial lessons. For example, when one invests in the stock market, one must have the determination to cut losses and move on. Learn from mistakes, but don’t dwell on them. Do not complain about one’s misfortune, but do something to change the situation. Do not tell your neighbors everything about your life because some can become jealous.

Personally, I once acted like the farmer. It was raining cats and dogs, and I decided to drive home after a long day because I did not live very far from work. Unfortunately, my car dipped in a pool of water on the road, and the engine was dead. I quickly escaped as the water rushed in from the engine compartment. It was dark, and I was soaked. I spent a few hours working with Geico to report the claim and to direct him to where he should tow my brand-new car. I was very angry, so I cursed at my stupidity for leaving work in the rain. I blamed every single drop of rain in the sky. Financially, I knew I was in trouble because I still owed money on the car. A month later, the insurance company gave me a check for about $10,000. It was a total loss. I had to finance $24,000 to buy the car in the beginning. I had sent in my car payments for more than two years, so I owed about $12,000. The estimated value of my car at the moment of the accident was about $22,000 because the traveled milage was about 30,000 miles. I knew that I had lost money, but the situation was not so bad. I told the sky that I was sorry for having pointed “the finger” at it. I had to find a way to take advantage of the situation. What should I do with the money?

I spent several days contemplating the problem. I decided that I would not buy an expensive car, and my first choice was Honda Civic because it would burn less gas and was known for durability. I went for a brand-new Civic because a used one was only a couple of thousands cheaper. I paid about $14,000 for it because I bought it from an online fleet. I financed the entire amount at 3%. For my previous car, I had to pay $450 per month, but for the new one my monthly payment was just above $300. I saved about $150 per month, and I had a vehicle to move around. I was elated.

I did think about using the entire ten thousand dollars to pay for the new car, but I felt that I needed to invest it in something. And, I did. I used it as a downpayment for my first rental property. I bought a small, but brand-new house located in an expanding city where there are two large universities and new business developments. It generates about $200 per month when it is occupied. However, because the renting market has become very competitive, I am just making even in the past several years. Although it brings in $2400 per year when rented out, a few months of vacancy will drain all of the profit. My plan is to hold on to it for about ten years, and then I will sell it. Sometimes, I thought if I had made a mistake by investing in real estate when at the time I did not know much about the industry. I have learned so much since then, but this current financial crisis has taught me the most valuable lesson of all, “don’t be too greedy”. I felt lucky because I bought the house in an area where the housing market had bottomed. The price could not go lower than what I paid for.

Regardless, I feel that I have become a smarter investor, who researches before investing. I feel that I am able to take any monetary loss because I have found the source of happiness, which is hidden within life itself. We all carry boulders of burden in life. The secret is to identify and to let go, and life will become more simple and beautiful. When one is truly happy, a million or half-a-million, it does not matter anymore. For the game at hand, my target is $500,000.

Having a monthly budget is very crucial because it keeps one’s spending habit in check. The monthly expenses listed in the below table are very much constant. The areas that we can cut back are cell phone, cable, internet and home phone. Our family’s cell phone plan is the cheapest one. We need our home phone for international calls. We do follow our favorite shows on television. We use the internet for everything. In the future, we will probably cancel our landline phone because we can use the internet to communicate with our friends and family abroad. However, sometimes it is more convenient to phone someone directly than to wait for each other to get online. Therefore, we are still undecided about the issue.

It is totally true that a budget can help one see and understand one’s monthly expenses. However, I would like to direct this topic toward one’s internal self. It is all about focusing on the right areas of life. For me, my health is my first priority because I love life, so I exercise to strengthen my body and mind. A strong spirit keeps mental diseases away and guides one toward true happiness. When one is truly happy from the inside, materialism vanishes. Therefore, the risk of overspending decreases. It is like driving a car. A first-time driver always meticulously follows the lanes on the road because he wants his car to be perfectly in the middle of the two white lines. However, for an experienced driver, he is able to navigate freely and safely on the road without focusing on the white lines. Personally, I believe that keeping a monthly budget is important because it gives a summary of one’s expenses and prevents one from overspending. The numbers in my budget are my white lines, and I am an experienced driver.

A friend tells me that money is the most important thing in life, and he just wants to concentrate on making money because without it he cannot support his life. I agree with him that we all need to have money to support our lives, but it does not have to be first on our list. Life is a number line that starts with birth and ends with death. Along it, one will have to make the right choices to be truly happy. My goal is to be half-a-millionaire. 

The current economy pushes the poor back while for the rich it is a great chance to get richer. The poor man has to worry about food, rent and healthcare cost while the rich sits silently and waits for the right moment to snatch the first opportunity of making a profit. In America, that is how the game is played. The poor man can: 1) complain about his fate, or 2) find a way to become rich. My choice is obvious.

When one is at the bottom of society, education is the only lifeline. My strategy is to study something that I enjoy and at the same time make enough money to support my life. No one wants to work for someone else, but sometimes one needs to take this necessary step to strengthen one’s financial position before venturing entrepreneurship. In other words, I must, first, build myself to become a cash machine because no one will hand me a house or money. I believe that investing in oneself is the best investment because the rate of return is infinite. Besides the money that I make, education has expanded my knowledge of life. I am able to understand its value and beauty.

Although we have some extra money left over after having paid our bills every month, saving it will take decades to reach half-a-million. If I am to put $1000 per month in a box, I will win this game in about 42 years. If I put the same monthly amount in a saving account with an initial amount of one dollar that offers a 2% annual compounded interest rate, it will take 30 years to reach $486,818 (based on simple savings calculator at http://www.bankrate.com). If I invest $1000 per month in the stock market and ”assume” a 5% rate of return, I will earn approximately $400,000 in 20 years (initial amount: $1). I don’t see myself opening a business in the near future. Therefore, I am going to invest in the stock market despite its volatility.

My plan is to invest in dividend-paying stocks. I will focus on consumer staples, healthcare and energy sectors because I believe that people will continue to use gasoline, drink, smoke, eat, brush their teeth and take medications regardless of what condition the economy is in. Therefore, I believe that these three sectors are good for my long-term investing style. I can be a short-term investor at anytime. However, to achieve my objective, I want to put my money in the game as soon as possible because I have to rely on the power of compounding. These boring, dividend-paying stocks will become my cash machines. Currently, I own 1192 shares, which will produce about $1000 per year in dividends (see below table).

Real estate is good investment, but it requires much more energy input. It can generate a lot of positive cash flow if one knows how to do it. At the moment, I am not ready to undertake the risk of real estate investment although I have a rental property, which I use as learning experience. However, in the future, it is a good place to build new cash machines that will propel me closer to my financial goal.

Death is inevitable. I choose to be rich, not because of the money, but to show myself that I have the courage to play the game. You have the right to choose to stay poor for whatever reasons. As a reminder, this financial game is just a game within the game.

These debts have always been in the back of my mind for years. However, believe it or not, tabulating them has given me a sense of liberation because it provides a total picture of my situation. The numbers (see below table) do scare me, but at the same time they motivate me to fight. I realize that it will take decades for me to win this battle. Therefore, it is very important that I focus on the good things.

The house, located in one of the best neighborhoods, has been a wonderful place for my family and me. Although it is small, it has sheltered us and our memories. Despite the current financial crisis, its value has modestly appreciated. With the above reasons, I feel that the mortgage is a good debt.

Several years ago, I bought another single-family house to rent out. I hire a managing company to lease and maintain it. Although it generates a positive cash flow when occupied, it does not give me a good feeling at all. Perhaps, being a landlord is not one of my likings. I like to invest in real estate, but I feel that I am not ready for it because I am not always in control. In terms of investment, the mortgage for the rental property is a good debt. However, I will get rid of it when the opportunity comes.

My educational investment was one of the best decisions that I have made. It gives me a professional career that I enjoy and at the same time make some money to support my family and myself. I have no doubt that the student loan debt is a good one because education has opened many doors for me. Most importantly, it has armed me with analytical and critical thinking tools or techniques that I employ daily in the decision making process.

Credit card debt is bad, but in my situation it is acceptable because the interest will stay at zero for three more years. Although I am able to pay it off, I choose not to because I want to keep the money in my saving account to earn a few more coins. If one is financially disciplined, a credit card can be a good tool because it is convenient and can provide some free cash.

Although I have shown that my debts are good ones, I believe that it is much better to be free of financial obligation. If I had $500,000 in cash, I would pay off my debt immediately and restart. However, in reality, money does not fall down from the sky. I do know that I can eliminate my home and rental-property mortgages by selling both houses and, as a result, decrease my total debt by sixty-five percent, but I will not do it. To live is to make choices, and I feel very blessed to have choices in my life and the ability to choose. I must keep on fighting.

Others wish to have a million dollars, but I only want to have half of a million. The rule of the game is very simple: I can only claim victory when I have $500,000 in cash. My winning strategy will focus on three points of attack: grow money, eliminate debt and control expenses. I know that it will not be quick and easy, but I also know that it can and shall be done.

Life has taught me a valuable lesson: Thinking and talking do not take one anywhere, but action does. At the moment, I do not know what I need to do to win this game, but I know that I will be able to figure it out. First, I will break my ending goal into “smaller ones”, so I do not feel overwhelmed. Second, I will have to “grow, eliminate and control” simultaneously because I do not have time to waste. Third, perseverance is the key to the throne.

Money plays a crucial role in life. Everyone has a different perspective about it. For me, instead of attempting to define it in exact words, I would like to ask this question: Is a “truly” happy man who has millions of dollars more happy than another “truly” happy man with one hundred thousand dollars? My answer is “no” because “true happiness” is immeasurable. Therefore, their happiness is the same. Perhaps, money has nothing to do with their happiness in the first place.

Life is interesting because it has a limit. Although we do not always make the right choices in life, death reminds us that we must find a way to be happy. I am fully aware of the ultimate game whose victory condition is “true happiness”. This is just my personal financial challenge.