Here's how I'm setting myself up for a more financially fit 2021
Hey everyone and welcome back to my blog. As of the start of this writing it is December 9th, 2020 and we are quickly getting closer to Christmas, and therefore, 2021.
The coronavirus really seems to be heating back up right now, too, which is unfortunate. I wasn't able to have Thanksgiving with my side of the family this year due to a few family members being exposed to people with positive cases. Fortunately, I was still able to get some good Thanksgiving eats at my wife's side of the family Thanksgiving gathering, however.
With the end of the year quickly approaching it has got me doing a lot of thinking about how I performed financially in 2020 and the things I'm currently working on to set myself up for a more prosperous 2021.
At the start of 2020 I had a few main goals. I wanted to save over $20,000 from my work salary, max out my ROTH IRA, and grow my portable self storage business by maintaining a high occupancy percentage and getting new units.
Fast forward to today and I will exceed my savings goal and I have one more paycheck in 2020 where I will be investing the final $230 required to max out my ROTH IRA for the year. Additionally, I managed to maintain a very high occupancy the majority of the year for my storage business. In fact, the entire summer and warmer weather months I was completely rented out and had a waiting list of customers.
That's certainly a good problem to have, but I hate not being able to serve new customers when they call. Especially in the storage business, because if you can't serve them when they call then they call the next available competitor until they get what they need and that means you may never see that customer again if they have a positive experience elsewhere.
Fortunately, however, I have 12 brand new units that I expect will be arriving before Christmas. Merry Christmas to me!
With all of that and considering the year the whole world has had with coronavirus, I would consider that a pretty successful 2020. But there are always things you can be working on to improve your financial position and I have a few main projects I'm trying to finalize before the end of the year.
Refinance my personal home
One thing that 2020 has provided is additional government stimulus, which has continued to help keep interest rates low in the United States. In February of 2019, my wife and I bought our first home together and at the time secured a 30 year mortgage at a 4.5% interest rate, which was pretty solid. Fast forward only a year and a half and rates have fallen even further.
I'm currently in the process of refinancing that loan on a 30 year mortgage at 2.8%! That's absolutely fantastic and in my mind, practically free money.
Yes, I could lock in an even lower rate if I was willing to switch to a 15 year mortgage, but with rates this low I might as well extend the term out as long as I possibly can and use the difference in monthly payments to invest elsewhere.
With rates this low I feel my odds of picking investments that earn me a higher return than 2.8% are very good.
My point is, you can find plenty of blue chip stocks paying a dividend yield higher than 2.8% and that's before any potential for price appreciation in the stocks themselves. So, why in the world would I want to pay my mortgage off sooner when I have better opportunities to invest my money elsewhere?
Additionally, the amount of interest I'm paying is so little, why not give myself additional options. If I want to pay it down faster later I still have that option and I can use the extra income I'm earning from my investments to do it.
I'm really excited about this move. I think it will set my family up well for the future and will save us over $60,000 in interest alone if we carry the mortgage for the full term.
So with that, I'll say now is a fantastic time to look at refinancing your mortgage if you haven't already. If you're young and don't own any property yet, now is a fantastic time to purchase your first house hack and secure a great interest rate.
Refinance business debt
The same story applies here. Interest rates are lower and I thought now is a great time to look at refinancing any business debt I can.
I have a total of 3 business loans currently for my portable storage equipment. I got the loans to purchase things like the storage units themselves, my truck, my trailer, and all my other equipment. Currently as I write this the refinance hasn't gone through yet and those 3 loans are at 6.6%, 5.54%, and 5.35%. On average, I have about 5 years left on each of those loans.
Soon, I'll be closing on a refinance for two of the loans at 3.89% and one of the loans I paid off with the sale of a piece of property I owned. That will amount to significant interest savings over the next several years.
(For those of you new here, I own and operate a portable self storage business that I founded back in 2011. I rent out storage containers to customers on a monthly basis and move them all over my local area. I have gone from 0 to 96 units and counting. Check you my YouTube page or my business website at www.boxitnlockit.com where you can see how this business works!)
Close on an investment property
I'm really excited about this investment. My brother and I will be closing this month on the purchase of an old bowling alley that still has all the equipment in it. The building is a 13,300 sq. ft. wide open building on the inside that we will be converting to indoor climate controlled self storage.
I feel we got a great deal on the building so I'm excited to see how this will perform once we get it up and running.
Don't get me wrong, though. This project is going to be a ton of work, but my brother and I (mostly my brother) are more than capable!
I'll be posting a lot about this project here on the blog and also on my YouTube channel. You can check out my channel if you want to follow along and see how we do.
Sell a piece of land I own for a $15,000 profit
This actually already happened a few days ago. Back in 2017 I bought an 11 acre piece of farm land located on a busy road. I added a driveway and a gravel parking lot to park some of my portable storage units for advertising. My long term hopes were to develop the property, but this year with coronavirus and how hot real estate has been I thought it would be a good time to list it and see what I could get for it.
Turns out, a few days after listing it, I had an offer for $15,000 more than what I paid for it. The timing was just right as I have several other projects I'm working on currently and I still feel that I'm years away from being able to invest significant capital into that property to make it a cash flowing development.
This will be a nice boost to my financial situation because I have been making payments on this property for three years while it technically hasn't been earning me anything. I've paid down quite a bit of the loan and selling it for a profit allows me to put a nice chunk of cash in my pocket that I can turn around and invest in some more productive assets.
As 2020 comes to a close I'm grateful that I was still able to string together a nice financial year considering all of the terrible that occurred in 2020. I'm confident that the moves I’m making at the end of this year will set me up for another nice year in 2021. What sort of things are you doing to prepare for a more financially prosperous 2021? Let me know in the comments below!
As always, I would love to connect with my readers more. Be sure to find me on social media at:
www.boxitnlockit.com - my business website