Paul Meyer Buys Houses

My monthly saving should get easier with less trading…

Recently with my plan to see how far I can get gains as close to 100% a month on my initial investment of $2000 I should be able to save more money in my checking and savings accounts by not depositing more money into my trading account. So far my $2000 has grown to around $8000 in 3 months.

I was putting every extra couple hundred dollars into my trading account to trade options with, but recently I put an end to that because I was just loosing it all. I feel if I give myself certain amount to trade and that is all I get for a long time psychologically maybe I will trade more disciplined and do more solid trades. So far it has worked and money has been building back up in my bank accounts.

So far I have $2700 saved up in my savings account and $1800 in my checking account. If I do not deposit any bi-weekly paychecks into my trading account I should be able to build an extra $1500 a month into my checking and $725 a month into my savings. A total of around $2225 a month or over $24,000 for 2007.

My car note still has $24,000 on it and I’d like to pay it off first and second my mortgage that I receive a rental income on which is still $58,800. My car note is 8.25% and my home 6.5% so paying off my car note first would be the economical choice to save money. My question is should I apply all my extra money to it monthly or pay it off at the end of the year in one lump sum? I guess psychologically if I see it being paid down each month I’ll keep paying it off while if I just leave a big fat sum of money I might start thinking “spending and buying” or even “this might be the big trade” and loose it all on something dumb materialistic things or a bad trade. So, paying off my car monthly with a larger amount probably would be the smarter choice.

If I trade less and focus on just those few I should have less losses and I’m taught it’s not about having big gains, but having very small losses. Recently I receive a big gain then big loss. If I could just stop the cycle of big loss it would really speed up my money goals in trading.

If anyone has any suggestions on what to pay off first my house or my car please comment.
My car has a 7 year note and my house a 30 year mortgage. I could finish paying off my house in 3 years and then have my car note left for 4 more years. Tell me what you think.

6 responses

  1. Making gains of 100% a month would make you
    the best trader on the planet ! I think
    what’s most important is consistency not the
    specific number of trades. Good luck !

    February 8, 2007 at 1:50 am

  2. Rich,

    Thanks for your comment, but you should know trading ETF’s that making 100% on index funds is very possible in a good year. Most ETF’s I’ve researched have doubled or tripled within a year. Thanks for all the hope I need it and I wish you the best too. -FN

    February 8, 2007 at 3:10 am

  3. I have exactly this strategy – I’m putting no more money net into my US trading accounts until I eliminate all previous losses and show consistent profitability. Otherwise money goes into savings accounts or long-term investment (e.g. TFS Market Neutral Fund).

    February 10, 2007 at 8:28 pm

  4. Pay off the car. The mortgage is tax deductible and a lower rate if you itemize on Schedule A. No point paying it off it’s cheap financing for trading and investing.

    February 10, 2007 at 8:31 pm

  5. Moom. This is what I came up with not depositing anymore money into my account. I am addicted to trading. IT has become me. Its almost bad like gambling well its turning into that and I figure the only way to stop it is to stop and giving it a source of funds. My sister has her CFA and shes a more disciplined trader. I wish she could come to hawaii to hit me with a pan before I pressed enter on a bad trade or a gambled addicted trade.

    Have you ever played Rich Dad Poor Dad’s Cash Flow game? Its actually a lot of fun and a little cooler then monopoly. I’m actually thinking up creating my own board game just for stocks and options. I’m going to start a club in hawaii and see if I can get two board games a month and charge a small fee to get people to come to learn about finances and meet some other local people interested in their finances. I guess I’ll have to see how it works out.

    As for paying off my rental property or car first it does make sense to pay off the car. I hear you can use the interest you pay on your car and take that off your taxes too. I understand the points and interest tax credits you can take. I’ve done it twice now and it helps. I’m currently in the poor income tax bracket and get back mostly all the federal and state income tax I pay yearly. As soon as my stock portfolio hits higher I’m sure I will really need all the tax advantages I can get.

    February 10, 2007 at 9:23 pm

  6. You can’t deduct interest on your car unless you have a business that owns it or something like that. Even if you use it for business you can only deduct mileage. I bet your mortgage rate isn’t that high and even if you can’t itemize now (just state taxes pushes me to the edge of itemization anyway) you can later.

    February 11, 2007 at 12:50 am

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