Over the past 3 years, I’ve been documenting my journey towards reaching two goals:
- $30,000 in passive income by 2025
- $1 million net worth by 2027
I’ve posted an update every month during that time.
You can check out my net worth tracker for a full history. I update it each month.
And we had a major change this month!
Closed on a Small Business Purchase
In the past month, I finally closed on the carpet and steam cleaning business I was under contract for in Houston.
The business has definitely altered my financial situation in a significant way.
For one, I have employees to worry about, which is a new layer of responsibility that changes my financial incentives.
At the same time, I now have a significant revenue stream to manage (and plenty of expenses necessary to operate it).
Although I took out debt to buy the business, I have new cash flow that can be used to pay down debt or reinvest back into the business.
At least if all goes well. More on that in just a bit.
I spent around $185k to buy the business and fund the initial operating capital.
If it performs as it did in the last couple of years, it should throw off around $70k per year in cash flow.
However, I will likely make some changes off the bat. More on that in just a moment.
For now, let’s get into the numbers.
February 2023 Net Worth Numbers
As a reminder, my net worth last month was $88,424.85.
Assets – February 2023
Our cash pile from last month has disappeared, as it was invested into the business that I just purchased.
Speaking of that business, it is now listed in my spreadsheet after closing. The current equity I’m assigning to it is $185,000, which is the purchase price plus the cash reserves I added to it
Going forward, I probably won’t change the value of this asset on paper until I have some significant operational history that would suggest a need to change the value.
That said, if I add a significant amount of cash to the business or acquire some new asset within it, I would likely update it at that point.
In other news, the stock market has been on a bit of a tear over the last month, so I’ve seen some pretty significant gains that have been helpful for net worth purposes.
This leaves our assets at $1,282,205.39.
Liabilities – February 2023
As we discussed last month, I took out a bunch of personal loans that allowed me to make the business purchase. Now, I’m focusing on deleveraging.
My current goal is to pay down $200,000 in debt this year.
When it came to debt paydown last month, I focused on paying off my M1 Finance margin. I was able to wipe the vast majority of it, which ended up being about $18,500 in paydown.
The rest of the paydown was just from making minimum payments on the loans.
I’ve also been making “courtesy” payments on student loans, about $500 per month. I will likely stop that to focus on the new, interest-bearing debt I’ve taken out.
This leaves our liabilities at $1,174,296.31.
My Net Worth – February 2023
All told, our net worth is $107,909.08.
That’s an increase of $19,484.23 from last month.
That leaves our debt ratio at 91.58%.
And our passive income remains at about $1,100 per month.
Running a Business (What’s Next?)
With my new business purchase, we have some exciting times ahead of us.
Thankfully, things were already set up pretty well when I acquired the business so there isn’t a ton to do to get things going. It’s more about optimizing and looking for new avenues to grow the business.
I’m in the middle of hiring a manager for the business. I want someone else to manage the day to day operations so I can continue to hold down my day job while still being able to grow the business.
That’s what I’m focusing on currently: building a team, improving systems, and simply trying to put the business in a better position to succeed.
If all goes well, the business should be a nice source of future cash flow.
Regardless, this will be a challenge and there’s a lot to learn!
I’m looking forward to this next chapter in my life and financial career. Whatever happens, it should prove a very educational experience.
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