Are Financial Advisors Worth It? Insider Tips You Should Know
Are Financial Advisors Worth It? Insider Tips You Should Know
Kat from CashFlowKat grew up in the 80s watching LA Law. She knew deep in her heart that she’d become a lawyer one day. In fact, Kat says, “I set my life goal to become a lawyer. I would become a law firm partner by age 30, have children after that and fold them seamlessly into my high-power career.”
She graduated law school in 1993, but things didn’t work out like she planned. “I got a job and was utterly shocked that practicing law was nothing like a television drama,” recalls Kat. “It consisted primarily of tedious paperwork, to be completed meticulously on tight deadlines, and requiring minimal collaboration with others.”
In 1996, she moved in with her boyfriend in New York City. She decided law wasn’t for her and started putting in applications for a human resources position. No one took immediate interest, so she started a waitress job and remembers being the only person on the staff who wasn’t an aspiring actor.
She was carrying a $44,000 student loan debt and not making much money. “I was worried because I still had loan payments and our expenses in New York City were so high,” says Kat. “We were in a fourth floor walk-up, 650-square-foot apartment paying $1,750/month (in the 90s!).”
She ended up going back to law, and was able to pay off her student loans within a year. By 1998 they were both debt-free and they moved to Washington, D.C., so her husband could work for the federal government.
“Even though I was not particularly happy in my career, I had come to terms with it for the time being,” says Kat. “My legal work provided us a solid paycheck and enabled us to make a 20 percent down payment on a $214,000 home in Silver Spring, Maryland. Shortly after we closed on our home, I found out I was pregnant.”
She received a generous maternity leave but found she could not return to work after it was over. Staying home with her daughter became her priority. They could live off one salary in D.C., they thought. But things quickly changed — her husband was transferred to Los Angeles and their living expenses skyrocketed.
Once they arrived they decided that they should buy a home rather than rent. “We bought a home that was twice the price of our home in D.C.,” says Kat. “The purchase turned out to be a huge sacrifice for our lifestyle because almost all of our disposable income went into our housing payment.”
They were broke. They had no money for a sitter, for dining out or for vacations. Kat says, “I was used to being frugal, but this was too extreme. I wanted to find a way to work and contribute financially to the family, but I was conflicted about spending full days away from my young daughter.”
Then she thought she found the perfect solution.
But she didn’t. “With zero retail experience, I took the last of our savings and opened a small specialty children’s shop on a quaint street in nearby El Segundo,” recalls Kat. With her toddler by her side she started working — but it was nearly impossible.
“Any mom who has tried to work with a toddler in the room can tell you that it’s beyond challenging, bordering on impossible,” says Kat. “So, I hired a part-time nanny to help out for a few hours a day.” Bad move. “I added the nanny expense almost immediately and then the rest of the expenses snowballed as I learned some hard realities about running a retail shop.”
The most surprising was advertising costs. She didn’t do any research on foot-traffic before the purchase and soon realized that no one walked by her shop. “Instead of making money for our struggling family, I was losing money,” says Kat. “I knew that I had to stop the bleeding and close up shop. I had lasted barely a year as a shop owner. An utter failure.”
In 2004, Kat realized that real estate prices had been climbing significantly and that their home was worth much more in that market. “We had a good chunk of equity built up through both our mortgage payments and appreciation,” says Kat. “I had worked with real estate investors as a lawyer and I was aware that this equity gave us options.”
They almost sold the home immediately but she realized she could take another path. “We took out a HELOC on our current home and used that money to make a down payment on a less expensive house in a less expensive suburb of LA,” says Kat.
She then created an ad and posted it on Craigslist and Zillow. Their home was officially for rent. She received immediate responses. “I made appointments to show our home,” says Kat. “I had no problem doing this with my kids around. Most of the families looking at our home didn’t mind the children and sometimes they had their young kids with them too.”
Once she found her tenants and began collecting rent checks, Kat never looked back. She found her dream job. “With our first house rented and bringing in cash, I knew this was the side hustle business that I wanted to build,” recalls Kat. “Because in addition to adding money and a sense of professional purpose to my life, I became a true believer in the wealth building power of real estate.”
Kat did the bookkeeping and learned about the tax laws and realized that real estate is so heavily favored, that she just wanted to keep adding properties. And she did. “I now own nine rental homes that I manage myself,” says Kat. “My kids are now teenagers and my daughter just started her first year of college. Her college tuition is being paid by rental income.”
After becoming a landlord, Kat severely reduced the financial stress on her family — but she still lives frugally. “I was driving a 98 Honda Civic with 150,000 miles on it until a year ago,” says Kat. “It was such a worry-free and cheap little car that I didn’t want to give it up. Finally, I relented and bought a used Infiniti G37 in cash.” She likes the upgrade.
Kat know she took a big chance when they rented their first home, especially with raising her kids, but she persevered. “Stay at home parents know that there is sometimes not much left in the tank to run a side hustle or home-based business, especially when the kids are young.” But the real estate business fit her needs.
Kat started her blog in 2017. “I am still at the bottom of a steep learning curve with blogging!” says Kat. “I am learning the basics of social media marketing, graphic design and coding. Sometimes it’s frustrating and too time-consuming, but it’s incredibly rewarding and entertaining communicating with investors, bloggers and anyone else who has an opinion.”
She communicated some advice for anyone else who wants to start a side hustle:
Follow Your Heart: Don’t stay forever in a corporate job that leaves you unhappy and unfulfilled. Maybe you need to spend some time in that job to make ends meet or establish a solid financial base, but then get out and explore your options!
Frugal Living Gives You Options: If you keep your spending habits in check, consistently spending less than you are earning, you will enjoy more options in life. If I had started spending like a high-priced lawyer from the day I got my first paycheck, I probably would have never been able to walk away. Instead, I avoided getting caught up in an expensive lifestyle.
Take a Calculated Risk: Opening a children’s retail shop with no experience and no research into advertising or area foot traffic was NOT a calculated risk. It was a stupid risk. On the other hand, converting our first home into a rental property was a calculated risk. I researched rents, likely tenants, maintenance costs and expenses prior to making the leap. Sure, something could have gone wrong, but the chance of success was much greater because I had done my homework.
I’ll leave you with these poignant words from Kat: “You are strong, you are capable, and you can win if you take a calculated chance. I did it, and so can you.”
Published by Debt.com, LLC Mobile users may also access the AMP Version: Kat Thrives as a Stay-At-Home Mom - AMP.