Dan on May 30th, 2006
Sorry about the site being down for a while today. I updated WordPress (the blog software) and accidently uploaded an index page I played with a while ago. I guess my server is setup to show .html before .php. The site should be running great now.
Dan on May 30th, 2006
As I may have mentioned before, I took on a lot of debt to start my investment career. I maxed out the majority of my credit cards doing balance transfers and the like. While this has worked out well for me I don’t recommend doing it. I estimate about half of the money I used was lost to poor investments or scams. The other half has been performing quite well and is slowly making up for the lost half. However, in the mean time I have a significant amount of debt and a low credit score. When I initially entered into debt my credit score dropped 100 points in a month and has gone down more since then.
I’d really like to purchase a house to live in instead of wasting my money on an apartment. However, it will be quite hard to get a reasonable interest rate with my current credit score. Even so, I’m still better off buying. However, if I can reduce my debt and bring my score up I’ll be much better off. Not only that but I’ll lower my monthly payments allowing more money to stay in my investments.
There are a few ways of reducing debt and payments. One is to pay more towards the balances every month. While I have been paying above the minimum it really doesn’t make much sense to do this. The 14.99% APR interest my worst card has is much less than what I’ve been making off my investments. Assuming I can maintain my returns at a rate higher than that I would be better off staying in debt and compounding my earnings. Taking this into account I don’t want to use money from my investments to pay down my debt anymore than making just over minimum payments. However, if I can get the money elsewhere I don’t mind using it to reduce my debt. I suppose the return would be a bit higher if I put the money into my investments. However, I feel that I’ll be better off getting out of debt sooner rather than later.
The question is, where else can I get money from? There are two ways I have thought of. One is reducing or eliminating other monthly expenses such as my storage unit. This is money that I’m already spending so it won’t be missed. Rather than wasting it on eating out or some other luxury I can use it to reduce debt.
The second method is selling belongings that I no longer need or use. I’ve been doing this for quite some time now. I’ve sold off almost half of my DVD collection, extra computer components, and other items I owned. Not only did this bring in extra money but it helped reduce the clutter in my apartment. I still have boxes of stuff to sell, I just haven’t gotten around to listing the items on eBay. I’ve sold off most of the valuable items. Now I’m left with $5-25 things that are a bit of a hassle to list and ship. All combined they will still equal a significant amount of money. The proceeds will be used for everyday living expenses and paying down debt.
The next way is reducing the interest rate. This allows more of each payment to go towards the principal balance and reduces cost. I just evaluated my card rates and found most to be quite good. The majority of my rates are below 10%. The few that are above 10% are the ones I’m focusing on either paying off or reducing the rates. I already got one reduced and I’m going to be contacting the others today. I can always do a balance transfer from a lower rate card to a higher rate card, assuming there is credit available on the lower rate cards.
By doing these simple things I can get my debt paid off faster and reduce its cost. The money I’m spending on credit card payments is enough to buy a pretty nice house with a 20 year mortgage, with enough left over for a car payment or additional mortgage payments. Unless I hit an unexpected windfall in the stock market it will take me years to get the debt paid off. However, considering that I used this typically bad debt like good debt for investments that have allowed me to live without a regular job, I’m more than happy to accept that burden 
Dan on May 24th, 2006
Don’t you hate it when you spend 10+ minutes typing something and accidently delete it all? That’s what just happened to me. I had a pretty long entry written out and tried to hit Ctrl+T to open a new browsing tab. Instead I hit Ctrl+R and reloaded the page. I lost the entire entry. Now I have to retype it. Grrrr…
Anyway, this summer is looking like it could be the best ever. My first month of trading went extremely well. I have very few obligations which means I’ll be able to do what I want: relax, workout, trade, and drive. I’ve settled into what I believe will be my daily summer routine. Go to bed around 12:30, wake up in the 6:30-7:30 range. Make breakfast then eat it will checking out market futures and overnight news releases. At this point I plan on working out once I join another gym. Then I’ll come back, shower, eat my second meal, and review how the market is doing. If I feel the need to trade I will. If not I’ll have the day to do whatever I want.
I’m researching some trading strategies that will give me plenty of free time. Instead of being glued to my computer or a TV I’ll be able to watch the general market movement daily and still make a nice return. I’m waiting for some money transfers to go through so that I can open another brokerage account. This time it will be with TradeStation. Trade station’s fees are SIGNIFICANTLY less than my current broker, optionsXpress. For example: If I sell a single covered call the total fees including buying and selling the stock would be $3 with TradeStation and $45 with optionsXpress. That can make a big impact with covered calls and other small transactions. Also, optionsXpress has a $25,000 requirement to trade futures. TradeStation does not have this requirement. I’m not planning on trading futures right now but it’s something I may do in the future (pun not intended). I’m still keeping my optionsXpress account for autotrading with the First Class Advisory service. The FCA strategist has been offering this service for over a year and a half now and has never had a losing trade. His overall results from 8/2004 are well over 100%. He also issues a daily newsletter detailing his options about the market. If you’re interested in the service contact me. The price on his site is about 3 times as much as I can get you signed up for.
I’m developing my summer workout routine. I plan on hitting the gym 6 days a week. My actual workout is still being developed but it’s going to involve focusing on a different muscle group each day of the week. On Saturday I plan on hitting the rowing machine for 15-20 minutes (increasing as time goes by). The first thing I want to do is reduce my body fat. I’m in the 13-15% range right now and have some love handles showing. Once I bring that down I’ll begin bulking again. I’d like to gain at least another 5 lbs of muscle. I also plan on biking and hiking a lot this summer.
One thing I haven’t been focusing enough on is my eating habits. I’ve been straying from my meal plan quite frequently. Not only is it setting me back in my plans of losing some more fat but it’s setting my wallet back too. I think the problem is that my meals don’t vary enough. I have been having frequent cravings for sugar. I’m going to be adding more fruit to my diet in the hopes that it will reduce or eliminate the cravings. I also started getting sugar free mints. Those help quite a bit but not enough.
The autox racing season started a few weeks ago. Taking a year off hurt me. My driving skills have declined significantly! I’ve lost the little smoothness I had and my overall ability has seemed to suffer. Add to that my lack of experience racing a turbo car and the results are sloppy, slow runs. I’m slowly improving but I’m not expecting to place this year. I have a driver’s school at Watkins Glen race track next month. I’m hoping to improve my smoothness and figure out how to drive a turbo car. While significantly different than an autox, a driver’s school on a real track helps every aspect of driving. I learned so much from the one I did in 2004.
Now that I have the time I’m hoping to increase the frequency of my updates. Hopefully I’ll get it back to daily posts soon!
Dan on May 21st, 2006
Other than 2 finals I have this coming week, school is now out for the summer. That means I can concentrate on trading, investing, and speculating. May options expired on Friday and I took full advantage of it. I sold covered options on Wednesday and Thursday and managed to make over 11% return on my entire account after broker fees by the close of the markets on Friday! I can still count the number of trades I’ve done on one hand so overall I’ve been doing very well. I’ve only had one small losing transaction. Overall my account is up 16.25% after fees. Did I mention I’ve only been trading for 1 month? I still have one more open position. Assuming the market doesn’t go up more than ~7% in the next month (very unlikely) my total gains will be almost 19%.
One thing I haven’t been doing well enough is watching risk. In the future I have to watch my exposure much more carefully. I’m in the process of evaluating my overall risk and repositioning to protect myself from fraud. Some of the investment pools I’m in are extremely risky and are not transparent. I am slowly moving my money out of these funds and placing them into managed and autotraded accounts. I just signed up with an options autotrading service I’ve been watching for quite some time now. They’ve been operating for about a year and a half and have had no losing trades. Their overall return is in excess of 100%. I’m going to use this service to increase my knowledge of options trading and hopefully continue with their winning streak. I’m also planning on opening a second brokerage account with TradeStation so that I will finally get some good stock market charting software. Also, between the two brokerages I will be able to open more trades without having the $25,000 minimum to qualify as a daytrader. I wouldn’t be surprised if I get a warning from optionsXpress due to how many trades I’ve done this week Eventually I’ll have the daytrading minimum but until then I’ll have to deal with 3 trades a week per account.
I’ve been trying to find a PHP/mySQL project to do to keep my skill level up. As they say, use it or lose it. I’ve decided that I’m going to develop an investment tracking script. It will track my investments as if I were running a pool (mutual or hedge fund) with outstanding shares. I will update the database daily with my positions and it will automatically track the value and change over time. Of course, the fund will be totally ficticious but it will be a good learning experience. Who knows, maybe I can develop it to the point where I can sell it. Features will include charting, statistics, share owner tracking, individual account tracking for different brokerages and investments, and more.
Dan on May 6th, 2006
I’ve been doing some thinking and some math. I’ve figured out that I can have $1 million in 5 years if I start with $25,000 and earn an average return of 6.35% per month (76.2% per year), compounded monthly. I believe this is achieveable since I’m already earning more than that. If I reach that goal I’ll be a millionare before I turn 30.
My investments are rapidly approaching $25,000 so I’ve almost met that goal. The problem is that I’ve been living off of my investments. If I continue withdrawing enough to pay the bills I won’t be saving enough to reach that goal. This leaves me with a few options.
Option one is that I can find enough stuff to sell to raise my investments to more than $25,000. That means I would need to earn less per month, leaving me with (hopefully) enough money to live off of. I do have a lot of extra stuff I can sell, including my ‘89 Mustang that’s been in the garage for 2 years.
Option two is to find a job *shutter* that earns me enough money to live on. I could even find one that earns me enough extra to grow my investments faster. I hate working for other people so this is my least favorite choice.
The third option is to find a way to get a greater return on my money. That would leave more money above and beyond the required 6.35% per month. While this would be a very nice option I don’t think it’s going to happen. It may be possible once my account grows larger. A few extra percent a month isn’t much with $25,000. With $100,000 it’s enough to live on.
So right now it looks like I need to raise some extra money. I haven’t figured out how much yet but it’s quite a bit. I’m willing to do whatever it takes to become a millionare before I’m 30.
