The Biggest Financial Mistake I’ve Made

Posted 3 CommentsPosted in Budgeting, Finances, Investing, Real Estate

My biggest financial mistake was when I short-sold my condo here in the Bay Area when housing prices were at their lowest in 2012.

I bought the condo at the peak of the bubble in 2006. When the housing market tanked, a lot of people were walking away from their homes. And this freaked me out into thinking that was the smartest thing to do as well. 

But I wanted to do it the “right” way, so I short-sold my property instead of just walking away like a lot of people did. 

I didn’t really have anyone to talk to about my financial situation at that time. The realtor who was helping me was mostly interested in selling the property because he was representing me and the buyer as well.

I remember that I had some friends who told me not to do it, but scared and stubborn young me back then decided to proceed with it anyway. 

I really wished I had a financial coach who could have guided and coached me through the pros and cons of short selling the property. I offer one-off coaching session for quick questions like this now since I have gotten similar questions like “should I sell my property or not?”

If I were to coach my younger self now, I would definitely be telling her to hang in there.

I’d first tell her, she wouldn’t lose any money unless she actually sells the property, and secondly, it’s Silicon Valley. If there is anywhere you would want to own real estate, this is one of the best locations to own one. 

Whoever bought my condo ended up doing really well. Not only are they making good money from the rental from paying down the house in cash, but the value of the property is already back up to the original high price I paid for it.

This definitely served as one of the main inspirations that got me into financial coaching so I can also help people in this type of situation.

So what was the biggest financial mistake you have made and what would your present self tell your younger self now?

Christine Teh
Christine Teh

Christine Teh is a personal financial coach from the San Francisco Bay Area. She helps clients from all over the world virtually by helping them build a great relationship with money so they can achieve their financial goals. Feel free to check out her website and follow her on the different social media platforms below.

The Big City Escape and the New Normal

Posted Leave a commentPosted in Finances, Investing, Real Estate

As we start to adapt to what we are now calling our “new normal,” we see many people teleworking from home. With new ways to track employee output, many businesses are starting to realize they can save a significant amount of money by ditching their office spaces or downsizing thanks to teleworking. This shift in mindset is also affecting those that telework. People that live in big cities will start to migrate to smaller cities or even the suburbs.

During an earnings call last week, Redfin CEO Glenn Kelman said that we will start to see a shift of people leaving major cities.

“More people will leave San Francisco, New York and even Seattle, some for nearby towns like Sacramento and Tacoma that are close enough to support a weekly office visit, others for a completely remote life in Charleston, [S.C.], Boise, Bozeman or Madison.” – Glenn Kelman

What does this shift mean? What will this “new normal” be? More and more real estate agents are setting up virtual showings and selling homes with minimal person-to-person contact. According to Kelman, homes are still selling and in some areas, the real estate market is doing quite well. As more business allow teleworking, the major cities are starting to see bigger drops in real estate sales. Will this help to revive the suburbs as we experience this big city escape?

A real concern in a particular real estate niche is short-term rentals. They have seen their biggest losses ever.  When asked about Airbnb Kelman said “Those are going to be in tough shape. There’s a whole economy that was built around the liquidity there that Airbnb provided. You could get pretty deep into debt and still have somebody pay your mortgage every month because Airbnb and other travel websites were so good at finding someone to rent it out. And I don’t think many of those folks have the reserves that Marriott MAR, -4.84% or that Hilton HLT, -3.62% does. Investors who own Airbnb properties are looking for immediate liquidity. At some level it’s Redfin, Zillow Z, -8.06% and Opendoor picking up where Airbnb left off. If they can’t get cash flow through one website, they’ve got to sell it through the other.”

Related: 6 Ways to Invest in Real Estate

Kelman is basically saying Airbnb is done. It is hard to believe that an entire real estate niche is dying off just as fast as it appeared. Do you think Airbnb can recover? Also, do you agree with Kelman’s thoughts on the big city escape? Let me know your thoughts by commenting below or on the forum

Mike Cavaggioni
Mike Cavaggioni

Mike Cavaggioni is an Active Duty Officer in the U.S. Navy, REALTOR-ASSOCIATE®, Real Estate Investor, and Finance Coach located in Honolulu, HI. He is the founder of Average Joe Finances and host of the Average Joe Finances Podcast. Mike is building a community for people to come together to learn and build their wealth.

7 Steps to Financial Freedom

Posted 1 CommentPosted in Finances

This article is from a video presentation that I was working on and plan to release in the future. The goal of this article is to outline some simple steps you can use to get out of debt and start building wealth. We have researched some of the most successful financial gurus on how they reached their goals. Most of them follow something very similar to this. We have followed these steps ourselves, and even with some setbacks, we are on track to retire before 50! 

Step 1 – Income Sources

Identify all of your income sources and add them up. What does your day job bring in? What about the average you make of your side hustle? After all taxes come out, add all of this together to figure out what your net operating income.

Split your income based on how often you are paid (i.e. monthly, bi-monthly, weekly, or bi-weekly). This is so you can structure your bills and pay them based on your paycheck. If your bills are lopsided and all due near the beginning of the month, try to get some of those due dates moved.

Step 2 – Identify All Bills

Identify all of your bills and when they are due.

Now prioritize all of your bills and expenses!

  • Rent or Mortgage and Car payments are the first bill or expense to prioritize.
  • The second is your Utilities (Electricity, Water, Sewage).
  • The third is Groceries.
  • The fourth will be any Credit Card or Loans.
  • The fifth is our “nice to haves” such as Cable and Cell Phone.
  • And the final expense would be “Fun Money.” If you don’t give yourself something, you’ll cheat.

We added in the fun money for those of us not as disciplined (me). This allows for you to have a little reprieve as you hunker down and make it happen. If you are more disciplined, take this one off and use it in the next few steps.

Step 3 – Make a Budget

Now that all of our income and expenses are put together, we can start to formulate a good budget. This budget can focus on many different things such as ridding yourself of debt, or saving up for a new car. In this step, you will need to identify what your budget priority is going to be. This budget needs to be broken down to:

Pay off your debt


Manage what you invest

For this particular article, we are focusing on getting out of debt. The investing will come later.

We personally have multiple bank accounts that we divide our paychecks into for these different bills and expenses. We have an account for our personal home repairs/car maintenance, pet/vet fund, holiday/birthday fund, grocery fund, family activities fun, and savings account.

Related: Budgeting

Step 4 – Pay Your Bills

Now that you have identified what bills you need to pay, take care of them in accordance with your budget. Let’s get out of debt!

  • To start, save at least one mortgage or rent payment in your savings account for an emergency.
  • Once all of your bills are paid, it is time to “snowball” all of your debt.
  • Pay the minimum payment on all of your credit cards and loans while snowballing the highest interest rate (not including Mortgages and Car loans).
  • Take the credit card or loan with the highest interest rate and take everything left over from each pay check and dump it into that particular debt (If you have credit cards with low balances, you can pay them off first for “small victories”).
  • Once that is paid down, do the same thing for the next highest interest rate.
  • Rinse and repeat until all debts are paid off.

Step 5 – Build Emergency Savings

Now that you are debt free and have a budget, it’s time to save up some money… It’s time to treat your savings as a bill. Pay yourself first! You will need to look at your expenses again, and multiply them by three.

  • This money saved will go to your “emergency fund”
  • This fund will be 3 months’ worth of your expenses. This is in case of any issues with your income in the future.
  • This fund will also be used in case of any unexpected emergency expenses.
  • If you use any of this money, treat it like a loan and pay it back right away.

Step 6 – Save and Invest

As mentioned in step three and now that the emergency fund is created, it’s time to start saving and investing. From here, you will start to save money for future things you want to purchase. This is so you are not using the credit card or taking out loans. 

This does not mean you cannot take out a car loan in the future (some car loans have APR rates so low, that it’s ok). However, the fastest way to financial freedom may involve having a used car for a while…

You should try to live off of 70% of your income or less. The general rule that we like to follow is at least 5% to savings and 10% invested in a retirement account (401k/IRA/Roth IRA) and 10-15% towards real estate or stocks.

Another great investment option is Real Estate. You can read about our first real estate investment property here.

Related: 6 Ways to Invest in Real Estate

Related: House Hacking 101

Step 7 – Rinse and Repeat

Rinse and repeat with your budget. Once you get your savings account to a comfortable level, you can stop putting money in savings and invest more of it towards your retirement accounts or other investments like real estate.

401k’s are good accounts to invest in because most employers will match a certain percentage of your contributions. If you are investing in a 401k, always invest what your employer would match. That matching is FREE money!

IRAs are pretty good accounts to control where your money is being invested. It is important to know the difference between a regular IRA and a Roth IRA. When you take your money out of an IRA, you will have to pay taxes on the payment. Depending on your tax bracket when you retire, you can lose a small fortune to Uncle Sam. With the Roth IRA, you pay the taxes before the money hits the account and when you withdraw it, you will not be taxed.

I personally am not putting too much into my Roth IRA (Thrift’s Savings Plan) as it is not what I am banking on for retirement. It will just be a nice chunk of change when I turn 59.5. I am using real estate as my vehicle to retirement. If I get to a point to where I don’t want to deal with it anymore, I can sell all of my assets and move them into dividend paying accounts and live off of the dividends. I don’t think I’ll get tired of it and plan to pass the real estate to my children.


If you make it through these seven simple steps, you are on the road to financial freedom. Everyone’s situation is different and not everyone can save the same amount of money. What’s important is that you build a good financial plan and stick to it.

Mike Cavaggioni
Mike Cavaggioni

Mike Cavaggioni is an Active Duty Officer in the U.S. Navy, REALTOR-ASSOCIATE®, Real Estate Investor, and Finance Coach located in Honolulu, HI. He is the founder of Average Joe Finances and host of the Average Joe Finances Podcast. Mike is building a community for people to come together to learn and build their wealth.

House Hacking 101

Posted Leave a commentPosted in Finances, Real Estate

House hacking… what the heck is that? In our article 6 Ways to Invest in Real Estate, one of the ways discussed was house hacking. I did not expect to receive so many private messages on Facebook or even text messages from some friends and family wanting to know more about this real estate investment strategy. So, I decided that’s what the next article would be about. House hacking in general terms is relatively easy. Depending on your market and the type of loan you take out on the property, you will essentially live there for free. You can do it a few different ways. We will discuss four different ways here.

1. Multi-Family House Hacking

This is the most common method and also known as traditional house hacking. Using this method, you would buy a multi-family property (duplex, triplex, or quadplex) and live in one of the units and rent out the others. Since you are living in the property, you can take out a low down payment loan such as an FHA loan and put 3.5% down. If you have served in the military, this is a great opportunity for your VA loan. If you are single, this type of house hack can get even sweeter. Get a roommate too! Let’s say you purchased a triplex; you are now collecting rent from the other two units and from a roommate. I’m pretty sure that will cover your mortgage and then some.

Something to consider… If you are in a high price tiered market, even doing this might not be enough to cover the mortgage. Where you buy matters…

Even if you are just breaking even, you will still build appreciation on your property. The beauty of appreciation is that you start to build your wealth without even knowing it.

2. Single Family & Renting out Rooms

If you are living in a decent sized home, this can be a great option. I had a friend of mine renting a room from someone out here in Hawaii. He was renting the room for about $850 a month. Rent out here in Hawaii is a bit high, so the going rate for a single room is between $700-$1,100.

So, while you may not be able to get that kind income on a room rental, you can see where I am going here. If you purchased a three-bedroom home and rent out two of the rooms, or even all three (with you sleeping in the living room; that has some good potential. Where you purchase matters… For something like this to work, you are looking at purchasing in a college town, near a military base, or in a dense population area.

Remember how we talked about appreciation on the multi-family homes? Guess what? Single family homes actually appreciate better. So, consider this if you are single and just getting ready to start in real estate investing.

3. Rent Out Your Primary Residence

I really like this one. You may be asking, if I rent out my primary residence, where the heck will I live? This is actually an idea my wife and I have thrown around a few times. Not sure if we will do it in the future, but its on the table when I retire from the Navy.

So, the premise of this would be to rent out your primary residence and then live in an RV or a supped-up van. There are actually a few people that do that and with great success.

 Depending on the location, you can park on your property while renting it out. With Hawaii being such a high cost of living, this would save us a significant amount of money and allow us to live essentially anywhere we want on the island.

I wonder…

4. Building an Additional Dwelling Unit (ADU)

Another venture my wife and I discussed was finishing our garage and making it an ADU. By doing this, we would turn our garage into an apartment. Our driveway can already park four vehicles and for folks that live on Oahu, you know that parking is prime real estate!

This path can take a bit of work and be more costly than anticipated. The reason why we haven’t pulled the trigger on something like that is simply the cost for our specific unit. We estimate it would cost us around $50k to make it an ADU worth renting out. It would most likely rent for around $1,800 per month. That means it would take us 28 months to pay it off if there was 0% interest or we used hard cash for it. That’s a long time and we could put that $50k into something that will return better and right away.


So now that you see four different ways to house hack, you can see how you can really reduce your largest living expense significantly. Here are some takeaways:

  • You can essentially live in your house for free.
  • Option to buy an investment property with a low down payment.
  • You can build appreciation on your property as you pay your mortgage down and the home value goes up.
  • Being a homeowner, you will be able to save more in taxes

This is just a bird’s eye view to help you figure out if this may be a path for you.

We hope you found this information helpful. Research is important, do not let us be your only source of information. Learn as much as you can, and no matter what, get started as soon as you can.

Mike Cavaggioni
Mike Cavaggioni

Mike Cavaggioni is an Active Duty Officer in the U.S. Navy, REALTOR-ASSOCIATE®, Real Estate Investor, and Finance Coach located in Honolulu, HI. He is the founder of Average Joe Finances and host of the Average Joe Finances Podcast. Mike is building a community for people to come together to learn and build their wealth.

Stimulus Round Two?

Posted Leave a commentPosted in Finances, General

As the world continues to battle this pandemic we see our economy going through some rough times. First time unemployment claims have reached over 30 million over the last 6 weeks according to CNBC’s most recent article on jobless claims (see chart below). Continuing unemployment claims are sitting right under 18 million.

This data from the Department of Labor shows us the reality of where our economy is heading. Not only that, but when you look at the numbers versus where we were in the Great Recession, it’s quite scary. The Department of Treasury is doing what they can by agreeing to keep interest rates near 0% for at least the next 6 months. Lawmakers are discussing different options for the next wave of stimulus checks or other options to keep the economy from tanking. Putting all politics aside, lawmakers on both sides of the aisle have acknowledged that they will need to pump more money into the economy. Right now, lawmakers are looking to have something together by May 4th (May the 4th be with all of them) (Yes, I am a big Star Wars fan…).

If you are in need of unemployment insurance benefits, check your eligibility

Check your stimulus payment eligibility

If you have not received your stimulus payment yet, check the status

So there are three different proposals that are gaining momentum.  Not sure if any of these even stand a chance of making it through, but let’s take a look at these three proposals.

Emergency Money for the People Act

This bill is proposed by Representatives Ro Khanna (D-CA) and Tim Ryan (D-CA). It is meant to provide a monthly stimulus check of $2,000 per adult and $500 for each qualifying child (up to 3 children) for up to a period of one year.

  • Must be ages 16 and older earning less than $130k a year if single and $260k a year if married.  Married couples will receive $4,000 a month.
  • If you are unemployed or claim no earnings, you are also eligible including if you have become recently unemployed.

You can receive your payment easily through direct deposit, prepaid debit card, check, PayPal, Zelle, or Venmo.

The full bill proposal can be read here: Representative Khanna and Ryan’s proposal

Rent and Mortgage Cancellation Act

This bill was introduced by Representative Ilhan Omar (D-MN).  If passed into law, this bill would effectively cancel your mortgage or rent for your primary residence only for one year. No debt would accumulate and no negative impacts will be reported to the credit bureaus. It’s essentially a pause button.

I’m quite sure many of you landlords like myself out there are thinking, “hey, how the heck will I get paid on my rental properties.” Well, this is how…

  • The Rental Property Relief Fund and the Home Lenders Relief Fund would be established and managed by the Department of Housing and Urban Development (HUD aka Section 8). This would cover losses for landlords and lenders enough to cover their losses from tenants and homeowners not paying rent or mortgage payments.

Related: See our post about the benefit of Section 8 Rental Properties

  • Any landlord or lender that accepts this fund will be required to follow federal fair lending and renting practices for five years.
  • An optional fund would also be established for private rental property funding to help increase affordable housing availability.

The full bill proposal can be read here: Representative Omar’s proposal

Getting America Back to Work Act

This bill has been proposed by Senator Josh Hawley (R-MO). This bill is designed to create a payroll tax rebate that’s refundable and covers up to 80% of the employer’s payroll costs (up to median wage). Some of the key takeaways from this bill are:

  • A rehiring bonus for employees returning to their old job that they were laid off from.
  • Would last for the entirety of the ongoing pandemic
  • Keeps employees on the payroll while maintaining employee benefits
  • Reduces the downtime companies face to restart their business

Remember the unemployment insurance numbers from earlier? Well, since more people will be able to keep their jobs or be rehired, this will reduce some of the burden on the unemployment office.

The full bill proposal can be read here: Senator Hawley’s proposal

You might be asking yourself, what do these bills mean? Well, these bills are just proposals. As we know the process for them to be passed into law can be quite… exhausting. However, here is the important thing to think about. When you see those bill proposals above, what do you see? Great, you guessed it! Proposals from both Democrats and Republicans. What does this mean to all of us? It means both sides of the aisle believe we need form additional stimulus pumping money back into our economy. I know many of you may be concerned as I am about the possibility of inflation or even hyper-inflation being caused by this. However, the current chairman of the Federal Reserve Jerome “Jay” Powell suggested the impact would be minimal as the “fed” plans to keep interest rates near zero for the remainder of the crisis.

With all of that said, we hope this article was beneficial to you in some kind of way. Please share our site and join in on the discussion. Do you think any of these bills will become law? If so, which one? Why would that particular bill be beneficial? Hope to hear from you all.

Mike Cavaggioni
Mike Cavaggioni

Mike Cavaggioni is an Active Duty Officer in the U.S. Navy, REALTOR-ASSOCIATE®, Real Estate Investor, and Finance Coach located in Honolulu, HI. He is the founder of Average Joe Finances and host of the Average Joe Finances Podcast. Mike is building a community for people to come together to learn and build their wealth.

6 Ways to Invest in Real Estate

Posted 3 CommentsPosted in Finances, Investing, Real Estate

In this post we are going to discuss six different ways to invest in real estate. These are just wave top options as there are so many different ways to get started in real estate investing. Here are my six favorites:

1. Rent out a room

If you already own a home, this is a great option. You can rent out a portion of your home on a site or app like Airbnb. Renting out a room or portion of your home allows you to generate additional income on your terms. Short term rentals are great for just that, short term. An awesome benefit to renting out a room with Airbnb is that your short term tenants have been prescreened and you are protected against damages.

Renting out a room might not feel real estate investing, but it is. If you’ve got a spare room, you can rent it and pocket some extra cash.

Just like any other investing decision, you should make sure this benefits you. If you have a family with small children would something like this even be an option? If not, there are many other ways and we are discussing more of those below.

2. House hack

One of our favorite YouTube channels to follow is Graham Stephan’s channel. He started off in real estate by house hacking and essentially living for free.

When you house hack, you live in your investment property while renting out another room, or portion of the house long term.

This type of investment is a really smart move for college students or younger single people. This, like doing a short-term rental on a room can be difficult if you have a family. This doesn’t mean it’s not possible.

For example, my uncle lives in Rome, NY. He bought a very large triplex that is essentially three different units in a large home. He lives with his family in one unit while renting out the other two. The beauty of this is he is essentially living for free and still making a little extra cash.

If you can swing it, this is one of the best ways to get started. Buy a property you plan to live in and let your renters pay it off for you!

3. Invest in rental properties

This happens to be the choice of investing for myself and many other real estate investors. Right now, I invest in multi-family units (duplex, triplex, and quadplex). These can be hard to find depending on the state you are looking at. I invest out of state so the important part of this is building a good team before you start. I already had a good property manager lined up as well as a general contractor and fantastic realtor.

Some things to consider when buying an investment property is that:

  • Most lenders will require a whopping 25% down since you are not occupying the property.
  • You will likely have some type of repairs to do
  • You may not always have tenants in the property when you buy

Some other things that are extremely important when buying a rental property is to use the 1-2% method. I learned about this listening to the Bigger Pockets podcast. Basically a quick way to see if the deal will work for you is if the monthly rent equals about 1-2% of the property value. You need to be able to pay your expenses and still make at a minimum $100 per month for it to be worth it. Here is a sample of some expenses:

  • Mortgage
  • Utilities
  • Property Taxes
  • Property Insurance
  • Repairs
  • Lack of occupancy (5% but can vary based on location)

Once you have considered all of this and you think you are ready, then go for it. You can always download our rental property calculator here.

4. Consider flipping properties

If you already have enough money saved up, consider taking some of that cash and buying a property that needs a little TLC and put some work into it. Even if you don’t have the money saved up, you can consider doing a short-term interest only loan.

Consider partnering up with someone experienced in flipping. Learn what made them successful. Flipping can be high risk so having experience on your side will be helpful.

Good research is extremely important when flipping a property. If you don’t make enough on the resale, you can really lose big time. The important thing is to learn the market you plan to buy in. Research what comparable homes in the area are selling for. Make sure you leave a profit margin large enough to make up for it if you need to sell for a lower price. Have more than one exit strategy as well. If you need to refinance it with a new long-term mortgage and make it a rental, then be prepared to do so.

5. Try a real estate investing platform

Another pretty cool option to invest in real estate would be through a real estate investing platform. These platforms connect the investor (you) to multiple real estate developers who are looking to finance their projects. You can expect to receive your returns quarterly. These platforms like any investment come with risk. Just like any other real estate project, things can fall through, or unexpected expenses can “pop up.”

Now the big thing about these kinds of platforms is that you need to already have money… You need to have a net worth of at least $1 million or earned an income of $200k (single) $300k (married) over the last 2 years.

Companies such as Fundrise and RealtyMogul are great real estate platform options to check out. Fundrise also has different options if you do not meet some of the requirements listed above.

6. Buy REITs (real estate investment trusts)

REITs are a great option to invest in real estate without owning physical real estate.

REITs are often companies that own office buildings, apartments, public storage, and other commercial real estate. Most REIT investors use this as a platform to create a passive or supplemental income. It is a great option for retirees who wish to put their money into something that will generate a stable income.

New investors should consider staying with publicly traded REITs

There are publicly traded REITs that can be traded like a stock with a brokerage and there are privately traded REITs that are done directly through the trust owners. REITs are often compared to mutual funds. They are relatively safe and stable investments that usually pay high dividends.

REITs allow you to invest in real estate without the physical real estate. Often compared to mutual funds, they’re companies that own commercial real estate such as office buildings, retail spaces, apartments and hotels. REITs tend to pay high dividends, which makes them a common investment in retirement. Investors who don’t need or want the regular income can automatically reinvest those dividends to grow their investment further.

If you do not have a brokerage account, you can always open one for free on Robinhood or Webull. These brokerages may also offer free stocks when you sign up and open an account with them.

Check out Robinhood

Check out Webull

Mike Cavaggioni
Mike Cavaggioni

Mike Cavaggioni is an Active Duty Officer in the U.S. Navy, REALTOR-ASSOCIATE®, Real Estate Investor, and Finance Coach located in Honolulu, HI. He is the founder of Average Joe Finances and host of the Average Joe Finances Podcast. Mike is building a community for people to come together to learn and build their wealth.