Even if you’re not looking for a property this exact second, you always want to be improving your position.
So, focus on the downtime to improve your finances, get your debt squared away, and put yourself in a better position when you are ready to buy!
It’s important to be sure of your financial position before you buy a property because you might find it’s harder to get that property than you would have originally thought.
Here are a few ways to quickly improve your finances to help you save more, pay down more debt, and qualify for better loans.
One of the most common reasons that people struggle financially is because they simply don’t pay attention to what is going on in their own financial life. If you are not paying attention, you can’t hope to know what is going on and therefore know how to improve matters.
So, the first item on your list is to start paying attention to your finances!
When I’m working on a project, I’m laser-focused on the budget, the details, the costs, etc. But, sometimes in my personal life, I let this slide.
The reality is, when we do have a budget and focus on sticking to it, our bank account balances grow so much faster than when we aren’t using one.
I love to eat out, and my wife loves to buy small things around the house. One day, we looked back over the previous year of spending and found we each averaged over $1,000 per month on our hobbies!
By pulling back a little in each area, we were able to save over $1,000 per month but still do the things we enjoyed.
So, start by having a budget!
Even if you are financially well off and can afford most of what you want, by budgeting for the items and spreading the costs out over several months, you’ll find that you buy less, spend less, and save more.
Also, if you budget to pay down certain debts faster, you’ll see those balances dramatically drop!
So, do not overlook the importance of a family budget.
Save On Other Purchases
There might be a number of other big purchases you need to make before you get hold of your next property, and it is a good idea to make sure that you are only spending as much on those as absolutely necessary.
For any big ticket items, we actually start searching for them months or even a year in advance. For example, let’s consider kitchen appliances.
As you know, a full set of appliances can easily cost $5,000-$10,000 if you are getting high-end products. It includes a fridge, double oven, gas cooktop, microwave/fan, and dishwasher.
The first thing we did was go to the store and decide on two or three brands, styles and product lines we wanted. It’s hard to compare prices unless you are looking at similar products between stores.
Then, for months we’ll watch these items and their prices. Occasionally there will be sales and by tracking the pricing all year, we know which sales are worth getting or not. When we feel we are getting the best price, we’ll buy.
And by doing that, we can easily save $500-$1,000 or even more.
We did something similar with our TV, computer monitors, etc. Basically, anything that is currently working that we want to upgrade. Over the course of a year, we are saving thousands of dollars.
You might also use a money saving app to help.
Saving money in all these places will make an enormous difference when it comes to saving for your next down-payment
Pay Down Debt
With all the money you are saving by budgeting and by planning out major purchases, you might want to use some of it to pay down debt.
You’ll have to decide if it’s better to pay down debt or have a larger down payment because both will hold you back on your next purchase.
But, generally, paying down $1/month in debt is worth about $3/month in income. At least, as far as loans are concerned.
If you do decide to work on paying down your debt, I fully detail a unique debt pay down method to get you into your next rental property faster.
Increase Your Income
Most people just focus on debt, but the reality is you can only cut your expenses so much.
Income, on the other hand, has unlimited potential. So, why not focus on growing your income?
Increasing your monthly income can be done in a number of passive and active ways, and it is worth looking into as many of these as you can to find the right one for you. I outline a number of ways to increase your income in this article on how to earn $10,000 per month.
While earning $10,000 per month in side-income might seem a long way off, it’s important to start! Even if you can earn an extra $500 month now, and grow it slowly over time, it’s worth it!.
Don’t Focus on Just One Thing
As I mentioned already, focusing on just budgeting, or debt paydown can be detrimental to your overall financial goals. It’s important to combine a number of different things into an overall strategy, which includes budgeting, debt paydown, and increasing your income.
When Is Saying No Better Than Yes?
“If you had one shot, one opportunity, to seize everything you ever wanted in one moment, would you capture it or just let it slip?”
Most well-known personalities, singers, movies, etc all talk about saying YES when opportunities pop up. Eminem talked in many of his songs about seizing the opportunity, just like the quote above.
There is value to this because most people won’t take advantage of the opportunities they are given. I’m not an avid listener of that genre of music, but Marshall Mathers really strikes into a vein of our society via music in a way that I’m not sure others have done.
The fact is most people let fear stop them from achieving something greater.
But, for those of us with an entrepreneurs mentality, we naturally say yes when opportunities pop up.
“Yes, I’ll buy that property.”
“Sure, I’ll partner on that deal.”
“This is a great business idea to create another stream of income!”
The problem is that almost no one talks about saying no.
As real estate investors or any other business minded person, it’s Often, saying NO is more valuable than saying YES.
It’s Hard to Say No
It’s easy to make excuses but it’s hard to say no. Be honest with yourself, when was the last time a friend asked you to help them move and you said in simple terms “no”?
Maybe you found something else to do that day. Perhaps you were ‘busy’. Whatever it was, you didn’t just say no.
It’s similar with business. Many people find excuses to not be successful, but few say “no” to success.
But, once you start saying “yes”, it’s addicting. More opportunities, more revenue, more income, more potential.
It’s HARD to say no to those things. But, sometimes we need to. Here are a few reasons why.
Think of Opportunity Costs
I recently met up with my good friend Jennifer over at REIMillionaire while we were both in Oklahoma City checking out some opportunities. She is really successful in real estate and has a number of income streams from various sources related to real estate.
We were assessing some solid BRRR Strategy opportunities. I asked her, “So, what do you think about these?”
“The numbers work. I have a few concerns but I think they are solid.”
“So, are you going to do it?” I asked.
“No, I don’t think so…”
After some more conversation, she pointed out that pursuing those deals don’t fit well into what she was doing elsewhere She wanted to focus on syndicating some new-build multifamily near Seattle that we’re working on together as partners.
It’s important to think about opportunity costs when evaluating a potential opportunity, be it in real estate or in other business.
We all have a ‘bandwidth’ meaning we can only focus on a certain number of things in a given period of time. When you take on a new opportunity, it will take you away from other things that you are working on.
And that is opportunity cost – what you give up in order to get something else.
As entrepreneurs, this is so hard to determine!
It’s Hard to Estimate Opportunity Costs
Think about it, imagine you’re earning money on your real estate, as an agent, with your website, doing some wholesaling. You’ve got a lot of revenue coming in.
Then, someone asks you to partner on a new build, or to start a property management company, or to do…whatever else.
So, you take the opportunity. You can make money doing it for sure.
You also don’t lose any money in your other areas. You’re still earning the same amount, so it’s good, right?
The hard part is going back and assessing if you could have earned even more if you had spent that time building up one of your other revenue streams.
Chances are if you had dedicated the same amount of time to buying more rentals, building your agent business, wholesaling real estate, or whatever else it is you do, you could have earned more.
Say No If You’re Too Excited
One of the problems investors run into is the excitement about a deal. It’s more common in newer investors but it happens with experienced investors as well.
If you find yourself overly excited about something, you might be trying to convince yourself to do it. If this is happening, it’s time to take a step back and take a deeper look.
When you’re evaluating any potential investment, regardless if it’s business, stocks, or real estate, you need to be totally detached. If you catch yourself fudging numbers to make it work, you’re probably too excited.
I’ve done it before tons of times. In real estate, you’ll find yourself bumping rents a little bit or dropping expenses in some way trying to get the numbers to pan out.
Remember, it’s always cheaper to lose a good deal than to say yes to a bad deal! So, it might just be time to walk away if you’re doing this.
Focus on a Few Things
The moral of the story is to focus on just a few things. Don’t get distracted by shiny objects and don’t chase things just because they could earn money.
When you are looking to chase a new project, be skeptical and avoid it if you find yourself getting too attached to it.
What about you, have you ever had to say no to a new project or investment even if it was a good one?
6 Money Saving Tips For Millennials
Millennials make up approximately 25% of the total population in the United States and they are now larger than the Baby Boomer generation.
This has welcomed a new trend—increased spending. The spending power of Millennials is estimated to reach a whopping $3.39 trillion by the end of 2018. A higher education level and more spending power haven’t yet translated into financial literacy.
As financial literacy is not taught in schools, most individuals grow up having no idea of investing and saving options. Most millennials will soon have to start making life decisions—whether it is to buy a home or start a family.
They need to find a way to overcome mounting student debt, skyrocketing rents, a saturated job market, and stagnant wages, while saving enough for retirement.
Sounds tough? Sure. But you need not worry. Here are six financial tips that will help millennials save a few bucks—all the while maintaining financial discipline.
Getting Plenty Of Financial Advice? 5 Money Rules You Can Ignore
Today’s millennials aren’t big fans of debt. Unlike the baby boomers, young adults today are straddling massive financial pressure – be it heavy student loans or home prices reaching unaffordable highs. While all of this welcomes plenty of financial advice, most of them are wrong. Here are five pieces of money rules you can afford to ignore.
1. Buy A House ASAP (And Not Rent)
With home prices almost doubling and trumping inflation and pay, buying a house could lead to a nightmare if you’re taking out a mortgage before your income allows you to afford one. A better option would be to rent until you have enough funding to put down 20%, while taking care to not make payments that are more than 30% of your total income.
2. Ditch Your Credit Card
While this might be popular financial advice from the older folks, getting a credit card that comes with a low annual fee can help you immensely – if used right. What’s more, it comes packed with perks like reward points, cashback, mileage for travel, and can help you meet a large unexpected cost.
3. Pay Down Debts With The Highest Rates
It might be tempting to tackle the biggest debt of the lot and let the smaller ones slip down your priority list. The trick here is to focus instead on paying off your smallest of debts with every dollar you can afford – once it’s paid off, roll over to paying off the next one, until you’re debt-free.
4. Start Saving For Your Retirement (Right Now)
Despite the upside to saving for your retirement now, millennials might often find money too tight. For folks who are just out of university, a wiser option would be to aggressively pay off your debts instead. Although, here’s a caveat – IF your employer offers a retirement contribution match, invest just enough to get that perk (It’s free money!).
5. Buy Yourself A Car
With the shared economy on overdrive, there are plenty of options ranging from car rentals to ride-hailing services. Pumping your money into buying your car could also demand more of your savings for repairs and maintenance – funds you can use to pay off other expenses with. The opportunity cost isn’t worth it if you haven’t got enough financial cushion to meet your important expenses.
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