How are you doing?

I saw this article today about compound interest and it got me thinking of a lot of people I know who just don't save any money- it is all about current consumption and not about understanding that we should be saving for our future. Many times it is simply because they don't even think there is a future, or somehow think they will make it big at some point, or maybe they just love what they do so much that it doesn't bother them to work forever. Or, and probably the most likely, is that they don't have much money to support their lifestyle and they refuse to lower their spending and don't give the consequences much thought. I'll just start next year... oh, I'll hit it big at some point..



But the magic of compounding interest just doesn't lie. If you invest $5k a year from age 25 to 35, you will have over 600k when you retire at 65, and that is if you never again invested a dollar (outside of reinvesting the money in the brokerage account, of course) for the rest of your life! That is less than $500 a month, for 5 years! $250 a paycheck people. Oftentimes you can do this with a tax deduction in your 401k or IRA. This isn't the post to go over Roth vs. 401k vs. traditional IRA strategies, but you get the gist.

Or, invest 5k until you hit 65 and retire with a cool $1.1 million. If you use the 4% rule you will have $40,000 a year pegged to inflation to retire on. But why stop there- 10% is the absolute minimum you should save per year. You need to pay yourself first. So, if you make 50k a year, $5,000 invested in a simple total market index fund will get you there in no time. But, if you are making 100k, you need to up the ante- your housing and food, etc are covered and you have more disposable income.

To live in Washington, DC you will need more money than almost any other city . It also means you should make a little more as well. This gives you, the person who lives here for his profession, but who will retire elsewhere, a huge advantage. Yes the cost to live in DC is more, but with a little effort, you can live a nice life while enjoying the extra money that you are going to get paid. The same job here makes more than the increase in the cost of living. Put in some really simple controls on your spending, and boom- early retirement.

That means you can max out your 401k much easier with a higher salary since your basic needs like food and shelter aren't way more expensive. Ok, they are way more expensive, but you are still coming out ahead.

So do the math. Get your savings to at least 20% of your salary. You will be able to retire much much earlier.. Or at least have a little F U money.. and in this town, you'll eventually need it. That's a promise.

Good and Bad: New 6th St Construction and What it Means

There's been a lot of development news on H St lately. Most of it is good news for those who have been waiting for what I call the 'dead area' to fill in.

The original revitalization plan for H St called for, yes, the streetcar. But before then, there also was a plan to get the bar and restaurant scene started on the eastern side of H. There was supposed to be housing and apartments on the western side, and retail in the middle.

Life and economics have a way of changing things and we saw that the east third thrived and the west side had things like Senate Square and then a few foundation restaurants like Boundary Road, Ethiopic, and others.. and then we started a little creep into the middle third with a sushi restaurant, etc.

Recently there has been the construction of new apartment buildings and a Giant on that western 1/3. Then we heard about new apartments going up on 6th, and yes, even a Whole Foods. The problem was that if you walked from Union Station to 12th, you would still pass shops with roll-ups (those ugly steel bars on the windows of local shops) and some seedy blocks. [I mean, what happened to the cute shop on 7th and H on the SE side? Pull those roll-ups down! It doesn't look good and people don't believe you are for real. I bet they go under in the next 6 months.]

I moved to the middle third a few years ago and kind of liked the grit-meets-new attitude, but always hated the old storage area and the strip mall. The Washington Business Journal is now touting the end of the old 6th at the heart of the dead zone, and trumping the new-look neighborhood. We have new apartments going up with retail on the ground floor, and it will look very very different than the old 6th St. Can you say CVS? Goodbye visits to scary Rite Aid.

This has a lot of good for H St and its NE denizens. Most of these new developments are for high-end Class A apartments- which will add much needed density to the area so we don't need to rely on bar and restaurant visitors from outer locales to visit to maintain. While we are promised the streetcar which should help a lot with both the attraction of potential renters and to bring in more foot traffic from Union Station; it also means we would be unhinged from the whole streetcar if the project doesn't pan out.

The good news for those who own: Your property values will skyrocket. Yes, it can be argued that the development of the neighborhood is already baked in- it really is baked in for retail and commercial properties. Most home buyers don't see potential unless it is right in front of their noses. People have a hard time moving somewhere that had a shooting a few weeks back. They want safety, an integrated community and a reasonable commute to their work.. Not to mention good schools.

The bad is some loss of original details- I mean Ben's Chili Bowl is cool and all, but the farce that they tore down the facade of an old building because it just wasn't safe is b.s. We all know it. But ok, I want you here, so I'm totally ok. Kinda.  You better make good and be a decent neighbor now, bamas.

So, here's my crystal ball- good double income no kid renters will move in, foot traffic will skyrocket, crime will go down (petty crime probably won't), and young couples will find that they can get a spot at a (for DC) reasonable price... although you might have to be crafty.

If nothing else, three supermarkets in a 7 block radius will make living here a much more attractive option. And if you live in Trinidad or a little further out, things could be a lot worse. If the streetcar really does hit its mark, the entire transformation of Benning will be quick to follow.

Now, I don't have rose colored glasses. A lot has to happen right. And the DC economy has to keep plugging along, including financing for these 55 million dollar apartments. We can expect schools to continue to improve. If not, you will see young couples buying and leaving after the kids are about to enter middle school- which is ok. I have a newborn, and I hope we can stay here for a long long time, but right now I just don't see the commitment after Elementary School.

I feel like we are kind of near the NY Brooklyn phneom- there are only so many row houses/brownstones. At some point you want to live in a certain proximity, and so it naturally makes a good spot if the rest of the population density around you skyrockets.

But, home ownership in itself does not a retirement make, and certainly can be one of the worst investments you could make, so don't look at this post and pay more than you can. If you do based on projected future value, you are a speculator, which means you are gambling. But, at the same time, if you could reasonably rent your spot that you buy for about 10% more than your mortgage, you are gold. Find a spot, like it, make it yours and if you decide to move you will not lose money and probably do ok.

Regardless, I like the new development and can't wait for the middle third Dead area to be something more alive and vibrant.

I've been a bit busy lately, but I hope to analyze a new house or two in the next week or two. Until then, Cap O will tweet ya at @CapitalwithanO

Oh, and check out Cusbah- probably my favorite restaurant on H St. wish I took a pic but.. they had a great deal going outside that I spied. "Buy two beers and pay for both happy hour". Ha. Keep it H.

And Toki- got takeout tonight. It was real. I always wonder if I should tip or not when I pick up. I usually do 10%, but figure I could do the same and get grubhub delivery... but it is so much fun hanging out at your spot that I still go just to hear how long the wait is and love that I can go home and eat without waiting...

On a lighter note: Toki! Toki!

I've already heard from friends off of H St. that this is a gamechanger.. well, at least for their taste buds.While I have taken for granted that I can skip the line and order take out from Toki (and other fine restaurants on H St), this is wonderful news for my friends away from H.

@TokiUnderground: Toki is now offering delivery anywhere in DC through Caviar! http://fb.me/2r3XjZSaz 

UPDATE AGAIN: Touching

While I normally would understand that some folks might have to grieve in their own way about a lost friend soldier  (apparently he threatened someone with a gun on Mother's Day), it would be nice that loved ones would understand the ramifications on the community when a shooting occurs near a school.

So, it is with mixed emotions for the bereaved as well as the community that I'm posting this and hoping that those putting up this memorial please stop with the obscenities. Do we really need our youngsters, who are already trying to understand why they were ushered into lockdown amid a murder, need to see F bombs on a poster, let alone wonder what 7th St. Bangers are? As I said, I understand that some grieve in their own way.. I'm just pointing out that there might be a better place than the street near an elementary school to post "Fat F*#$ing Dre" signs.

And what exactly are the 7th St. Bangers?

UPDATE: Man arrested in Morris Place Shooting

UPDATE UPDATE:  Washpo has more news about the whole mess

Dcist is reporting that the police arrested a man in the shooting last Friday near Ludlow Taylor Elementary. The neighborhood can sleep a bit easier, and I'm happy to see that the police have pledged to keep up the extra presence in the community. According to Commander Brown of the MPD:

This incident has raised valid concerns in the community and Ludlow Taylor School which is adjacent to the offense location.  I would like to assure all that the additional resources I have allocated for this area will not diminish with the closure of this case. 

I think we can all breathe a sigh of relief that they caught the alleged murderer and hats off to the police for acting quickly.

Commander Brown's full letter to the community:

Good afternoon,

As you are already aware, on Friday, April 25, 2014, a homicide occurred in the 600 block of Morris Place, Northeast.  Members of the Homicide Branch conducted an investigation and were able to obtain an arrest warrant for the suspect.  It is anticipated this individual will be in custody in the near future.

This incident has raised valid concerns in the community and Ludlow Taylor School which is adjacent to the offense location.  I would like to assure all that the additional resources I have allocated for this area will not diminish with the closure of this case.

Once finalized, I will provide the date for the PSA 104 community meeting.

Thank you.

Commander Jeff Brown

First District

101 M St SW

Washington DC 20024