My wife and I feel stuck.

[Oscarr Douglas]

Hello BP forums, my name is Oscarr Douglas, I am 29, and I live in Lubbock TX. I am making this post for a few reasons but before I dive in, I want to give you a heads up that it may be a little long. Having said that, let us start from the beginning. My parents are educators. I love and respect what they do but I learned early on that I did not want to follow in their foot steps. I didn't think much of it at the time but looking back I saw the financial struggles they went through. I don't know if I ever had a conversation with my parents about their finances until I was well into my 20s. I still haven't had that conversation with my father beyond surface level chatter. My parents did tell me at an early age that they couldn't afford to send me to college. I guess this went in one ear and out of the other because when it was time for me to leave for university, I decided to go to one of the most expensive options available to me. I will say that I was a preferred walk-on for the basketball team, so that helped me ignore the tuition cost, but stupid is still stupid. Signing a loan for $30,000 at 18 years old would eventually lead to the university recommending that I drop out. I probably thought about it for two minutes before I agreed with them and left school. Over the next year, I would experience a level of shame, depression, and lack of purpose that I had never felt before. I had done what I was told to do, go to school, take out loans, and the rest would take care of itself. I had somehow failed those simple steps. I made matters worse when I didn't pay back my school loans. I had totally forgot about them and they went to collections. Thinking I was good to go, the calls began and I didn't know what to do so I ignored them. I would do this for the next year or two. I call it god but you may call it divine intervention, either way, I randomly came across Dave Ramsey. I was driving to Houston and the only radio station available was playing his show. It was the first time that I had heard anyone go in depth about finances. I was hooked right away and would listen as often as I could. It would be another year before I made any changes to my lifestyle but it was the kick I needed. I eventually bought and read Total money makeover and started to implement some of his techniques. During this time I was engaged and was about 6 months away from getting married and I remember having a conversation with my now wife about how she wanted to buy a house. By this time, she was well aware of my debt and my lack of responsibility in paying it. I felt that buying a house at that time was a poor decision and I brought that to her. This was not a easy conversation to have, in fact, it has been one of the hardest we have ever had. My wife graduated undergrad and PA school debt free. She had help from her parents and grandparents but she also worked multiple jobs during this time. Telling her she couldn't purchase a home was a slap to her face. I had disrespected all the hard work she had put in over the previous 4-5 years. It was at this time that I called into the Dave Ramsey show. I explained my side of the story... but as a wedding gift Dave Ramsey paid for us to go through Financial Peace University. I don't agree with everything Dave Ramsey teaches but I believe it is the best place to start if you have zero financial literacy. We would spend the next two months going through the course and then the following six months paying off my school debt. We used all of my wife's savings and any extra money from our jobs. We were very strict and lived on coupons and sales. I had messed around with robinhood and acorns while in college but never really committed to it. Once we were debt free, I felt this was our time to begin building wealth. My wife had been investing in her retirement account but we hadn't done anything outside of that. It was during this time that I found Biggerpockets and started listening to the podcast. It was eye opening, unlike the stock market, real estate seemed to make more sense. That was the end of 2017 through 2018. I apologize, I know that was a lot. If you have made it this far, we can now talk about our current situation. My wife still works as a PA and I became a Realtor a year ago in June. My wife makes around $120,000 and last year I made $9,500 total for the business. I did not pay myself because taxes terrify me and I wasn't sure what I should pay myself. We have roughly $70,000 in two different retirement accounts. About $17,000 in cash that is split between our savings, checkings, and rental accounts. Our primary is worth roughly $175,000 with a mortgage balance of around $115,000. Our rental is worth about $140,000 with a mortgage balance of around $95,000. We want to jump more into Real Estate but there doesn't seem to be any real estate meet ups in my area. Rates have jumped and real estate prices still seem to be too high. My lack of knowledge and connections makes me feel like we are stuck between a rock and a hard place. I figured BP forums would be a great place to start considering I am pretty shy and have no idea how to start a meet up. I don't even know if I am qualified to start one. I know it was long but if you made it this far, thank you. I will read and respond to anyone who decides to comment. Thank you again and have an amazing day!

[Randall Alan]

@Oscarr Douglas

Have you checked out this Lubbock Real Estate Investor Group:

https://www.lubbockreia.com/me...

I'm not out out to totally bash Dave Ramsey... I think he has his place for those that are lost, buried in bad debt, lack self discipline, or those that just need a place to start to pull their financial life together.  He tends to find safe harbor in religious circles, which I find interesting.   His views on real estate are sort of dumb, though, in my opinion.  He only believes in buying investment real estate with cash... absolutely no financing.  I can only guess because to do otherwise is putting you back in debt, which is the core of what his main tenant seeks to get you out of.  From a practical standpoint It's just a really backwards position to take to actually being successful as an investor in real estate.  You have to realize that buying a property with debt that yields substantially more money than the debt it takes to maintain it pretty much directly leads to more wealth.  It's that simple.  But if you lack the aforementioned self-discipline to realize you can't spend every penny a property makes, and that you have responsibilities as a landlord and such, maybe his position could be seen as sound if that is his primary clientele's attributes... which it may be.  Enough on him.

It sounds like you have pulled yourself out of the worst of your situation.  You don't mention how you obtained a rental... but hurray for you.  I presume you are saying you made $9,500 on your rental?

Here would be my advice to you:  Real estate is something you can easily do while working a full time job.  You don't mention a job for yourself, so I am going to make an assumption that you are not working other than maybe managing your rental.  Your best bet to get ahead, in my opinion, is to go find a job that pays you the most for your talents.  Absolutely do real estate to... at the same time.  Real estate doesn't need to be a full time job at all with where you are currently at... in fact in my opinion... it definitely SHOULDN'T be.    To put that in perspective... my wife and I worked full time 6 figure corporate jobs up until the time we had 20 rental units.  The biggest thing holding you back right now is probably the lack of capital to go heavier in real estate, (which I totally get is probably where you want to be).  You could maybe borrow from your retirement accounts... perhaps... but I think most would tell you that is a bad idea... especially if you were to spend the money on a long term investment with no real way to pay them back quickly.  You really don't have much equity you could pull out of your primary after you leave 25% equity in the property... so that probably isn't worth it; and really, the same thing goes on your rental.  Yes, there is a little there on each one, but probably not enough to mess with and give up a good interest rate for a bad one.  One step you could make would be to sell your primary, and take the proceeds and buy a multi-family (duplex / triplex, etc) and live in one unit and rent out the others... that could possibly work if you wanted to go there.  But you likely have a good interest rate on your current house... so you would just have to balance those thoughts against each other.

No one on a chat board is going to really know your whole situation... but I would paint this picture for you:  With about $25,000 in capital you can buy a $100,000 cheap rental.  With $50,000 you can buy a $200,000 more expensive rental... or 2 cheap rentals.... whatever those are in your area. You need capital... pure and simple, and the best way to get it is for you both to maximize your W2 income for the moment.  Step by step building up cash to buy your next rental, which then leads to more passive income.  You could maybe use some of your Dave Ramsey savings techniques to keep building up your cash reserves to buy your next rental?  If your wife generate $120,000, and you only generated $9,500 last year... that is the biggest problem I see in your whole post (and forgive me if that assumption is wrong... just going with what you mentioned).

My 2 cents...

All the best!

Randy