Financial Freedom Group Blog

Action!

Action is the first step to success.  The great thing about taking action is that we are all capable of it.  In our investing we see so many people that want to make money in real estate.  We see them spending thousands of dollars on training but they never actually take action toward their goals.  Their perception is that knowledge will make them successful.  Knowledge is definitely needed but more important than knowledge is the willingness to take action.  Through action will you acquire knowledge but you cannot become active through having knowledge. 

What holds most people back is some sort of fear.  This fear gets disguised as, "I don't know everything about  ______ yet" or I am busy with ________, and as soon as that is over I will get started with my investing.  The problem with the first statements is that you will never know everything and the more you learn the more you realize that you don't know.  The second statement  just points out that we are all busy so you need to make time to do your investing.  If you have turned on your TV in the last month or surfed the net then you have time for your investing.  You need to reorganize your priorities and take action toward those things at the top of the list. 

Our most successful students can be categorized by one trait.  They take consistent action toward their goals.  Their success has nothing to do with level of education, gender, etc.  It has everything to do with taking action toward their goal.

Everyone can take action.  What action can you take right now toward your goals?

I can't afford it.

"I can't afford it." 

This little phrase may be the most expensive statement that you can make to yourself.  Once you make that statement your brain instantly shuts off and takes it as fact.  If you tweak that statement and ask the question; "How can I afford it" then it automatically kick starts your brain into action looking for solutions.  If your mind doesn't give you a workable solution keep your eyes open because an opportunity might present its self later. 

To further this activity, and really make it a worthwhile exercise, I would write "How do I afford _______" at the top of a sheet of paper and then I would list 20 ways to afford what it is you are looking to take into your possession. 

Personally I have made it my philosophy that if I have the money to do the deal, I am not stretching myself far enough.  Also, we like to share the opportunities that we are involved in with others.  Julie and I go through the exercise above any time we have an opportunity that needs more investment than we have available. 

By simply stating "I can't afford it." you could be missing out on millions of dollars in profit potential in the form of a deal that seems out of your reach or a seminar that costs more than seems doable for you at the time. 

Activate your brain and you will be amazed at what you can accomplish.

Abundance Mindset

Everyone is in one of two camps.  The first is a poverty mentality.  The second is an abundance mentality.

I would venture to say that 99% of the population has a poverty mentality.  I am also going to say that we are taught this growing up and I am going to put the blame on schools.  How many times do we hear that if you don't go to school and get good grades you are going to end up with a McJob.  This puts us in the mindset that if we aren't the smartest kid in class then we are going to be limited in how much money we make.

We also hear these not so great sayings like, "A penny saved is a penny earned", "Money doesn't grow on trees", "We can't afford that", and many others.  All of these sayings tell us that money is scarce.  The interesting thing about that is if you believe it, then it is true.  Money will be very hard to come by.

Another major reason that people have a poverty mentality is because they earn their money they don't create it.  You can read more about that on my post here.  When you go to work every day and the only way that you know of to get more money is to work more hours then obviously there is going to be a limit to what you can make which is the definition of a poverty mentality. 

So, how do you develop an abundant mindset?  There are three steps

1. Have a positive mental attitude and develop your vision for where you want to go.  There is no way you are going to live in abundance if you think the sky is falling. 

2. Gain specialized knowledge so you can create wealth.  Read books, find a mentor, model successful people that have gone before you.

3. Surround your self with big thinkers that will push you and help you toward your goals (They aren't worried about you stealing their ideas.  They are abundant thinkers and know there is more opportunity out there than they could ever handle).

You are going to need to prove to yourself that abundance is easy through different levels of success.  First, be able to make $5,000 at will.  Then move to $20,000, then $100,000 (this is a major hurdle for the mind) then $500,000 and then be able to make $1,000,000 (another major hurdle) whenever you want to.  You can keep this going as high as you want and the more hurdles you pass the easier it seems to become.  At every level you are going to need to go through the three steps listed above.  You need to constantly be improving your attitude and perception of life.  Your knowledge needs to grow to move through new steps and most importantly you need to have a peer group that is at least where you are but preferably where you want to be so they can pull you along. 

Here is a great test to find out if you have an abundant mindset.  How much of the wealth you possess would you be willing to give away?  The abundant answer: Everything I possess is God's (this is a hard one for most people to truly live). I am also a good steward, so leave me with some living expenses and take the rest.  The wealth I possess will be back in a fraction of the time it took me the first time around and I will be better and more efficient because of it. 

Abundance isn't just wealth, it applies to all areas of our lives (relationships, business, faith, growth, love, etc.). 

Live abundantly!

Luck

Being not too far from St. Patrick's Day I thought luck would be an appropriate topic.

Definition: Luck: When opportunity meets preparedness.

Opportunity knocks all of the time.  Are you prepared?

 

How to get ahead

How do you get ahead financially? 

With Americans on average living at a negative savings rate, meaning that we are spending more than we are making every year, it makes it extremely tough to become financially free and escape working for someone else. 

The answer is two fold.  Have a money management plan and acquire assets. 

Below is a very simple money management plan that I like.  You allocate a percentage of every dollar to a different category.  Open a bank account for every category and then set up your accounts so that automatically the day after your paycheck comes in the money gets redistributed.  We did this for no charge at US Bank and it worked like a charm.

50% to your necessities account (if you are like most Americans this is going to be like 95%+ when you start, more on that later)

10% to your financial freedom fund. (This gets you out of the rat race.  Never ever spend this money ever on anything but an investment.  You can spend the return from the investments but this is your golden goose, don't kill it by spending the money in this account.)

10% to your education account (You have to be educated on how to create wealth and invest your money)

10% to your giving account (100% of what we have is from the Creator, we should give at least 10% back)

10% to your long term savings account (This is for that new car, or PS3 or some other consumer purchase.  If you can't pay cash don't buy it.)

10% to your fun account.  Money and wealth are fun.  Blow this money on whatever you want but make sure you have fun with it and no your spouse can't tell you what you spend your fun money on)

If your expenses don't allow you to get to these percentages start with a 95%, 1%, 1%, 1%, 1%, 1% allocation.  You will show that you are being a good steward of your money and more will flow your way and eventually you will get to the right allocations.  A money management system is key to getting ahead.

Second is acquiring assets.  An asset is anything that puts money in your pocket.  You could purchase some positive cash flow rental property; you could start a business part time or write a book and receive the royalties from that.  An asset is NOT a property you purchase in Florida hoping that the value will go up, that is gambling.  The same is true of stocks.  If you purchase a stock and pray that it is going to go up in value and not because the company is undervalued and has a strong business position then you are gambling again. 

When you acquire assets is when you start to set yourself free.  You assets will help you to earn a passive residual income.  That income will eventually replace your current income and you can choose what you want to do with your time. 

So when are you going to set up your money management system and start acquiring assets?

That is the quick over view of how to get ahead financially.  We will get into this in greater detail in future posts.

SubPRIME opportunity

In the news this week there is talk about how the subprime mortgage lenders are getting taken to the cleaners.  Read about it here. 

This means a couple things for investors that purchase real estate and sell with some sort of owner financing.  We are going to be able to purchase more homes because there are less buyers in the market, and they are going to be easier to sell with owner financing because subprime lending institutions are either out of business or are tightening their lending restrictions dramatically making it more difficult to get a loan. 

This is an outstanding opportunity for investors that buy and sell with owner financing.  Homes are not going to be selling as fast because many buyers are now forced out of the market because of the tightening of the lending guidelines.  This means that seller that need to sell are going to need to rely on an investor to help them out because they can't wait the three months that it is going to take to get the house sold. 

The tightening of the lending guidelines also means that there are going to be many people out there that want to purchase a home but now can't.  This is where you step in to fill the void.  You have a home that you can sell on a Rent to Own basis, Contract for Deed, or a Wrap Around Mortgage and a large supply of buyers willing to buy it. 

I would contact my local mortgage broker and find out if there are any clients that he can't help at the moment.  Business has to be down for her so me paying her for leads that I place in my homes and she can't help will be a win win for both of us.

Earning vs. Creating Money

There are two ways to make money.  You can earn it or you can create it.  There are a couple different ways to do it. 

The first is by going to work and trading hours for dollars.  This is usually in the form of a salary, wage or commission.  This is the slowest way to accumulate wealth unless you hit the jackpot with a Fortune 100 CEO position.  Considering there are only 100 of those spots available and how hard you have to work to get there we aren't going to consider this a realistic possibility.

The second way is to invest your money and earn a return on the cash that you have invested.  This way is still fairly slow but it is leveraged.  You don't have to work to make the income other than picking the investment that earns the return. 

The alternative is creating wealth.  The cool thing about creating wealth is that for the time that you spend, the returns are out of proportion to the time spent earning an income.  To create wealth you need specialized knowledge.  Then you take this specialized knowledge and you use it to create an asset. 

For example, you may know of many different techniques to purchase a house that are outside of the traditional methods (i.e go get a bank loan, pay off the existing loan and send the seller on his way).  The seller has had trouble selling her home through the traditional Realtor and lender channels.  So you purchase a home from a seller by taking ownership subject to the existing financing (you leave the seller's loan in place).  Next, you find a buyer that is looking to get into home ownership but has a few credit problems.  So you offer the home with owner financing.  In this scenario, it would be easy to create $35,000 or more in locked in profits with no or very little cash out of your own pocket.  You created that $35,000+ by applying your knowledge and solving problems...you created wealth.

Creating wealth can be applied to many different areas other than real estate.  Any time you are solving a problem and creating an asset you are creating money.  The wealthy create money.  Everyone else earns it.