I have been a little busy. However, never fear your advisor to the financial underdog is here! Ha ha.
Let’s get to it.
The student loan pause has been extended. The Biden Administration has announced that the payment pause on federal student loans for 43 million students will extend through June 30, 2023. Payments will also not start until 60 days after, August 30, 2023.
This means the loan forgiveness first announced in August 2022 will have time to work its way through the Supreme Court (SCOTUS).
I'm confident that our student debt relief plan is legal. But it’s on hold because Republican officials want to block it.
That's why @SecCardona is extending the payment pause to no later than June 30, 2023, giving the Supreme Court time to hear the case in its current term. pic.twitter.com/873CurlHFZ
If you are a Pell grant recipient, that means $20,000 in loan forgiveness for you, if approved, and for all others $10,000, if you meet the eligibility criteria for forgiveness.
This is good news indeed, as it will give many Americans time to squirrel away funds for saving, beef up investments or additional savings accounts, and pay off debt.
My advice is always to start with an emergency fund of $2,500. Then work your way to three to six months of expenses. As debt is paid off, you can increase your savings and investments.
The 0% interest rate while loan payments are suspended is also an added bonus. That means if you owe an average of 6% on the median $38,000 of student loans, then you are saving $2,280 a year on interest. Even higher for those that owe more.
The three-year repayment pause has allowed Americans to save a collective of millions of dollars in unaccrued interest. Basically, the saving on interest has turned this into a form of loan forgiveness.
In addition, to the $10,000 or $20,000 loan forgiveness, if approved, would effectively turn those amounts into grants.
So keep your figures crossed and make this a wish on every star and birthday candle, if you are one of the ones that will get forgiveness as this will allow you to receive 100% loan forgiveness.
Without these estimated $300-$500 loans payments hanging over your head, you are now able to start saving for your future in the form a home down payment and socking money away in your 401(k).
And by the way, the IRS has now raised the 401(k) limit to $22,500 per year. If you were to max out your retirements account with this amount of money, with a historical stock market return since 1980 of 11.34%, you would basically be a millionaire in 16 years with a balance of $978,768.96.
Put every dollar to work that you possibly can.
The math tells you that being a millionaire is within your grasp.
“Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish.” —John Quincy Adams
Stocks are down and housing prices are up. We have seen a shift in way consumers are spending. Mortgages are in. High-priced stocks are out.
Although the stock market has had an astounding run since the Pandemic began in March 2020, it is the acquisition of housing has most Americans chomping at the bit.
The US has minted more than half the world’s new millionaires over the last few years as investments in equities and tech stocks propelled assets higher. Real estate, is generally considered to be a more stable investment than volatile stocks or fluctuation cryptocurrencies and is a tangible asset. Real estate investing has also created 90% of the world’s millionaires.
However, not too far behind is stocks as nearly 70% of their wealth gains over the past year and a half have come from market gains. The wealthiest 1% know this. That is why they own 89% of all US stocks.
Those at the top of the economic food chain know the wealth comes from the owning of assets. The top 1% own a lot of stock my friends. And those at the bottom of the economic pyramid own so little. Meaning they are not keeping up with the rise of inflation and their purchasing power is steadily decreasing.
The dollar in their pocket is worth less now than it was yesterday. This means you are able to afford less at the grocery market and to purchase other consumer goods. For example, the cost of a pound of brisket was listed as $9 a pound. My sister sent me a screenshot of a 9.67 pound of brisket in her grocery store. The cost: $87.
I am sure somewhere my grandmother is looking down upon us and thinking that the family may very well have to turn vegetarian or severely cut back on meat consumption. I know grandma, I know.
According to Pew Research, the Consumer Price Index, the most widely followed inflation gauge, increased 7.0% from December 2020 to December 2021 – its highest rate in nearly 40 years. Families are spending $30 more per week at the local grocery store or farmer’s market. An increase in prices also mean less that is being invested and saved.
The price of lumber has increased by 288% making the cost of homes go up by an average of $36,000. The average new car price is now $47,000. As of 2021, the average monthly car payment in the US is $575 for new vehicles and $430 for used vehicles.
When I put these numbers in my compound interest calculator, it informs me that if I can invest either one of these amounts monthly for 30 years, I can become a millionaire. Therefore, I have come to the conclusion that new cars are wealth stealers and must be avoided at all costs. Rejecting new cars has made me richer. Things have gotten so far out of whack for the average household that people have begun to put groceries and gas on credit! This an absolute no-no. Building wealth requires cash.
Even if using OPM – other people’s money – you still have to bring some cash to the table to invest in index funds or put a down payment on a home. You must have capital to work with if you want to build wealth.
And companies are all too happy to part you from this wealth whether you have some or not. Case in point, I recently looked up the Kelley Blue Book value of my car. I just wanted to know what it was worth. Little did I know that this information gets sent over to local car dealerships who within mere seconds of me inquiring started sending me a barrage of solicitations for my business to put me into a new car.
I know very well that the average car payment is over $500.
These salespeople are looking to increase their monthly sales quota. I continue to get offers to get me into a new car by email, phone and text over the next week.
At this point, my Spider-sense is tingling. Why are folks still calling me after a week? I get it. Business is all about sales. They make fat commissions of us folks once we sign on the dotted line.
I prefer to keep my money where it is; in my pocket.
Just for kicks, I decide to look up the cost of food, housing and cars from the last 30 years.
After doing all of this research, I have come to the conclusion that the future is going to be expensive.
Therefore, it is unwise to use credit for present consumption with yet unearned future dollars.
We can prepare for the increases in living expenses by investing our dollars today. Don’t believe me. Just take a look at all the charts I provide in this article.
Numbers don’t lie.
The constant outflow of discretionary dollars on basic cost of living has consistently gone up. The cost of homes, education, cars, gas, and food are going through the roof!
I truly feel that incomes have not kept pace with the cost of homes and education. Equity may have increased, but so has the cost of homes.
In 1976, the cost of Harvard University tuition was $3,740. In 2019, it was $54,002. How can they justify it? It is almost like that owl in the how do we get to the center of a Tootsie Pop commercial: the world may never know.
This is a mystery that I do not even think Scooby-Doo and the gang could solve no matter how many Scooby snacks Velma has in her back pocket.
I do not say these things to scare you. I am merely your jedi money guide on this journey. I want you to invest.
Own your primary residence and buy those index funds.
As the stock market goes down, buy the dip. Buy low. Get those high returns to sell high.
I did this back in 2013 when I bought shares of Apple (AAPL) for $258. The stock went on to split twice. Once for a 4-for-1 basis on August 28, 2020, a 7-for-1 basis on June 9, 2014. Prior to each split the stock was trading well over $500. It was $656 in 2014 and $656 in 2020.
It went from a billion-dollar company to a $2 trillion-dollar one. At the time of this writing, it is hovering around a $3 trillion-dollar market cap. Off a small one-time investment, I made tens of thousands of dollars.
And that small home that was purchased years ago. It has increased in value over $100k. The equity has gone up by over $100,000 and counting. That is why we invest my friends. So we can keep earning money in our sleep. Our money can work without taking vacations or sick leave. We can’t.
So here is your homework for this evening. I want you to find a home you would like to buy and a stock you would like to purchase. Figure out how much of a down payment or initial but in you will need. Divide this amount by how long you think it will take you to save up these funds.
For example, the VTSAX has a minimum initial investment of $3k. You decide you want to but this investment in a year. Therefore, you divide $3,000/12 months = $250. That is how much you must save every month to but this index fund. Doing the math will allow you to slowly build your dreams.
Let us not forget the wisdom of one of the greatest investors of all time: Warren Buffet. He reminded us that American living standards advanced seven fold in the 1900s, while the Dow rose from 66 to over 11,000. The Dow now stands at 34,934.27 today in 2022. “The model has worked well for America. If you look at all these disparate businesses, such as if you looked at the Dow Jones as a single entity… (though it rotated)… but going from 66 to 11,000 is doing something right. Owning a group of good business isn’t a bad plan.” Yes, owning is good for your pocketbook in the long run. Now I want you to go out and get some assets.
But before you do here is some more Buffet wisdom, “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” And lastly, “The stock market is a no-called-strike game. You don’t have to swing at everything — you can wait for your pitch.” Patience is key. It will take you to the promised land of financial independence.
When I read the tea leaves on the stock market, I see it rising to 100,000.
Why you ask? A little research.
The Dow Jones industrial average index (DJIA) opened in 2018 just shy of 25,000 on Jan. 2, and a little over two weeks later it already had topped 26,000. The DJIA would need to rise by 20% to hit 30,000. We did that. As reported by Kigplinger, the DJIA has enjoyed an annualized increase of 7.33% since 1950, based on Yahoo Finance historical data. Therefore, the DJIA will double every 10 years (9.82 years, to be exact). If we continue at our 1950-2017 pace, the DJIA index will double, or hit 50,000, in 10 years.
If a $100,000 in the market at a 10% return will net you $1,000,000 in 30 years, then you can become a multi-millionaire with help of the stock market. And that excludes housing equity. So get out there and start putting your dollars to work.
Millionaires know that you get rich by saving $20 bucks at a time.
If you were part of the millions who lost a small fortune in the 2008-2009 financial crisis, then this Coronvirus fear and stock market shocks should be a cakewalk for you.
It felt just like this a decade ago, but it lasted for like 15 months.
But I’m here to tell you, “Don’t panic.” Since the Great Depression, America has survived World War II, The Cuban Missile Crisis, SARS, 9/11, and the Great Financial Crisis.
As Annie once sang: The sun will come out Tomorrow Bet your bottom dollar That tomorrow There’ll be sun!
We will get through this. You just have to buckle up and get through the ride like any rollercoaster; it has to come to an end.
Markets dropped 1,100 points on Thursday. That just means stocks are on sale.
I’m strolling down the stock market isles grabbing everything I can get my hands on.
This isn’t the time to hide. Stay and fight for your 401(k). It’s the time to run to the nearest online brokerage and scoop up some stocks on sale.
Berkshire Hathaway is sitting on $100 Billion cash just waiting for another 2008-2009 so they can get those deals.
Nobody wants to pay $3,000 for one share of the S&P when you can get it for cheaper.
So go out there and find some bargains!
SHOULD YOU BUY OR SALE
“Fearful when others are greedy and greedy when others are fearful.” – Warren Buffet
I once read a story about a famous investor who in 1939, when World War II began in Europe, the 26-year-old investor borrowed $10,000 and bought 100 shares each in 104 companies that were selling at $1 a share or less, including 34 in bankruptcy.
A few years later, he made large profits on 100 of the companies; four turned out to be worthless.
This became the foundation for his $13 Billion global growth fund and the start of his road to wealth. He did not let fear stop him. His own the world philosophy made him a billionaire.
Sir Templeton looked fear in the face and marched ahead anyway.
Trust your gut and don’t make any decisions unless you know what you want to do. Fear is no place to make decisions from.
When you are coming from a place of great loss, you don’t sell the house, cut your hair, or make any big decisions until you are back in a place of control over your emotions. At least, that is what all the books say.
Same rules apply when investing. Buy when you are knowledgeable and ready. Not scared.
Knowledge is the slayer of fear.
FLIP A COIN
I could tell you what you should buy. The gurus and financial pundits will tell you that you should invest in this or that, blah, blah, blah, etc. etc.
Well here at Greenbacks Magnet, we keep it simple.
Just buy a good quality total index fund and keep it moving.
Studies have shown that no one can time the market. If you put 25 random stocks on a dartboard, you could do no worse than an active fund manager could by throwing darts to pick your investments.
It’s like the flip of a coin. 50/50 odds or worse. Tails you lose. Heads the house wins.
If you buy the whole market, you are bound to get some winners in there.
PUT YOUR FACE MASK ON FIRST
They say face masks are being bought up all over the world.
The mark up is getting unbelievable as some places are charging three times the normal going rate.
The surgeon general says masks are only good for those already infected to not continue to spread the virus.
Those that are healthy are wasting their money because a mask will not stop them from catching it.
Therefore, instead of wasting money on overpriced masks just invest in the company that makes them. They are making a killing right now!
Increase your wealth portfolio and put on your fiscal facemask for your future generations.
Your future self will thank you for investing that money.
If you have seen the news headlines recently, then you know
many people are in debt up to their eyeballs.
What you may not have known is that car loans are starting
to become an even bigger drain on finances than people ever thought possible.
It was reported that 7 million Americans are 90 days
delinquent on auto loans. It was even in the news that in the UK financing is
become all the norm and putting lots of people in debt. Similar to American
consumers, British consumers are driving themselves into the red.
It makes you wonder if financing or leasing a vehicle the fast lane to debt?
Many seem to think so. Myself included.
If you have been reading my posts, you know how I feel about
cars. They put you on the fast track to bebtville, if you are not careful.
So, how can financing cars cost you $1 million dollars?
I’ll show you.
A LOOK BACK THROUGH TIME
I may not be able to take you back in time by going 88 miles an hour like in the movie Back to the Future, but I can give you a glimpse into what things cost by providing you the data here.
Back when Henry Ford was working on the Model T vehicle for
the Ford dealership, he believed in pricing his vehicles at a rate that even
his employees could afford. He said to pay a fair wage good enough so that his
factory workers could afford to buy his car. Oh how things have changed.
CEO’s used to make 20 times their employees wages on average, now they make 300 times more.
As wages have stagnated since the 1970’s, but the cost of
everything has gone up, it has made it very difficult for people to afford the
price of a vehicle today.
Let’s talk about the average cost of a car in 2019.
COMPARISON SHOPPING
I will give you a quick rundown of the average cost of homes
and cars over the last few decades.
This is a comparison of prices over the last 70 years.
If you focus just on the average cost of new cars, you will notice that a car that was $600 in 1930 is now $31,352 in 2013. The cost of a car has gone up over 5000% in 90 years. Wages have gone up 2250% in the same amount of time.
According to the U.S. Census Bureau, median household income in the United States is $56,516 in 2015. The price of cars have outpaced the increase in wages.
That’s something to think about right there.
WHY SHOULD I FINANCE OR LEASE A CAR?
People used to get around by horse and buggy until the
combustion engine was invented around 1885. Before that, people would rarely go
more than 10 miles from home. That meant you worked, lived, and played within a
10-mile radius of home for your entire life.
Once the automobile was introduced, people were then able to
work further from home. This provided more opportunities.
However, the price of cars has become so inflated that
people are having to decide between paying for utilities or car payments.
If having a car was so great, then why have wages not kept
up with inflation enough for people to truly be able to continue to afford and
enjoy them. I feel the same way about clothes. If your job wanted you to dress
in couture, then they should pay you couture wages.
My sister once said that if a job wanted you to dress in
suits, then they would pay you enough for that. If they want you to wear
designer clothes, but only pay minimum wage, then they get Target and Walmart. Haha.
I laughed so hard at that. Cause it’s true.
When you find yourself needing a car, why not buy what is
affordable?
You could finance a car that you plan to own or lease a car
you plan to trade-in and trade-up in a few years. Either way, it’s going to
cost you.
I say finance to own. Actually, if you can, I prefer you pay
cash for all appliances and that includes a car.
HOW TO SAVE $1 MILLION DOLLARS BY NOT BUYING A CAR
Let me tell you story.
I’ll paint you a picture, like Sophia would in Golden Girls.
Picture it: Washington DC 2003…
It was a brisk day in early Spring. A car salesman was
trying to sell me a more expensive model of the car I wanted, but I declined.
While I waited to sign on the dotted line, I was so nervous
my hands were sweating. It took all day, but I finally got my new car. Sticker
price: $24,000.
I was informed that I would be paying $450 a month. I walked
out and was happy to have a brand new car. Skipping merrily along my way before
reality would sink in.
A mere three years later, as I wrote out that check, I was sick of writing it by then and told myself NEVER again!
I finally paid that car off in 2009. And am happy to report
I have not had a car loan since. I spent about 6 years of my adult life paying
car notes. I promised myself never again. I have not had a car payment in a
decade. I used that money to pay off debt, save, and invest. I turned that car
payment into $100,000 in the stock market.
After doing some math, I found out that $100,000 invested in the stock market could turn into $1 million dollars in 30 years. In addition, if you were to put $5,500 in a Roth IRA for 35 years at an 8% return, you could net a $1 million-dollar portfolio.
Don’t think you can swing that? I think you can. I’ll tell you why.
You could spend a couple hundred grand on cars in a lifetime.
Let me show you how.
The average car payment is over $500 a month. According to Nerdwallet, the average is $530 a month for a car note. That is $6,000 a year. If you are paying that, then that is your retirement money right there.
If you buy a new car every 5 years, at $34,000, then over 30
years you would have spent $204,000. And that is just the sticker price! That
does not include interest, gas, maintenance, car washes or accessories like a
steering wheel cover.
If you can just save a few thousand dollars and buy a car
for cash, then you can save yourself thousands of dollars in interest and more.
You could slowly trade up every couple of years as you save more cash and
upgrade your car.
Do not give up potentially $1 million dollars on cars
because no vehicle is worth giving up that.
“Before you speak, listen. Before you write, think. Before
you spend, earn. Before you invest, investigate. Before you criticize, wait.
Before you pray, forgive. Before you quit, try. Before you retire, save. Before
you die, give.” — William A. Ward
That’s right folks. Step right up. Don’t be shy.
I’m about to simplify your life. Your financial life anyway. A one-tweet financial plan is the way to go.
You see that quote at the start of this blog post.
There, I just gave it to you in the quote stated above. The
end.
Just kidding. But seriously, it is in the quote above. I will just expand upon it.
Warning this post is full of tweets! But lots of information. Stay with me! 😉
WHAT IS A ONE-TWEET FINANCIAL PLAN?
A financial plan that is 240 characters or less and can be sent out in a tweet.
"Whenever I make a decision, I always try to decide: Would I do this for $1?" – David Blaine @davidblaine
I know what you’re thinking. Yeah, right. Well, since seeing
is believing I will show you exactly what I mean.
Here is my one-tweet financial plan.
My 1-tweet financial plan
1. Have a 2-month emergency fund 2. Open a Roth IRA 3. Buy a home for 25% less than you can afford 4. Pay off student, personal, and auto loans ASAP 5. Max out your 401(k)
And due to the recent government shutdown, I have also created a one-tweet financial plan government shutdown edition. 😉 It’s kind of like how they created the Scrabble game deluxe. You take an already good thing and then just expand upon it and make it even better.
My 1-tweet financial plan government #shutdown edition. 😉
1. Save a 9-month emergency fund 2. Instead of maxing Roth IRA use extra funds for your rainy day fund 3. Do not get any student loans 4. Do not buy a new car, home, or go on vacation until rainy day acct 100% funded pic.twitter.com/Xmslbml3qC
I also like to think ahead to the future and plan for my taxes. You need to save today because the future gets more expensive. What costs a $1 today will cost $1.25 in the future. Plan ahead.
The committee’s analysis also found that Americans earning $75,000 a year or less would also face large tax increases by 2027 because of the Senate’s plan to allow individual tax cuts to expire at the end of 2025.
At the heart of the argument is new analysis by congressional number crunchers that finds the plan cuts taxes at first but by 2027 actually raises taxes for anyone making less than $75,000.
Courage is never giving up. Love that its spelled out here using letters from my favorite game: Scrabble. So never give up on your dreams. https://t.co/b7dQUUpZSZ
It is one of the best qualities you can have. Being a good listener can lead to lasting marriages, better employment, and happier relationships.
Fincon18 lessons: 1. Do not challenge @dreamer_money to a dance-off. 2. Take whatever advice @mjp2520 gives you. 3. Anonymous blogging is only annoying when trying to organize a group photo. 4. If you're too shy to approach people, challenging them to tic tac toe is 1 way to go
I started reading about personal finance and attending
seminars or conferences long before I started writing and tweeting about it.
Coming from a place of experience and information gives you a different point
of view (POV). That POV can make you an expert in your field. Never
underestimate the power of just listening and observing.
THINK
I want you to write down your goals, thoughts, wants, needs, and desires. Like I said before, seeing is believing. Think before you act.
My mission, should I choose to accept it, is to be financially independent.
There is nothing wrong with moving slowly or with caution. However, that does not give you the right to move like a turtle. First, think. Then act and move expeditiously once a decision has been made. Move quick. Make haste. Do not overthink it. This can lead to analysis paralysis.
Be careful not to overwhelm yourself, and only follow advice from credible sources, so you don’t fall victim to progress paralysis or unsuitable and potentially dangerous investments.
Moving slowly does allow you to more clearly see the path
ahead. But once you see it, I want you to run toward your goal. Not walk. RUN!
EARN
You have to earn money to save it. It is just that simple.
I was in debt up to my eyeballs. However, I did not toss my hands in the air and say who cares as I will be in debt forever. Nope. Not me. I chipped away at my debt. Then, I slowly started to have savings. I emerged from the debt cocoon I was in and became a soon to be debt-free butterfly.
All the reasons I want you to pursue financial indepence.
1. Freedom 2-100 see number one
That is the answer always, in the illustrious words of #buzzlightyear To infinity and beyond. 😂
I found ways to get rid of my debt. By any means necessary.
It didn’t matter if I had to sell items, save my change, get 0% deals on every
item I purchased, or stop buying chewing gum just to save a buck.
Once the debt started going away, I had tons of disposable income. Go figure.
I got inspired by @johnlegend to start paying off all my credit card debt from a book by @KSchwarzenegger. thank you. My 🙏 were answered because I needed some inspiration to payoff my debt. Money advice I got from John Legend https://t.co/jZmr1PMgew
I cannot stress this enough. Investing can be the difference between you being one of the haves or have nots. I hate to break it to you, but the top earners invest.
Investing is a long game.
I read the wealthy invest up to 20 percent or more of their income each and every year.
"On average, millionaires invest 20% of their household income each year. Their wealth isn't measured by the amount they make each year, but by how they've saved and invested over time," writes Ramit Sethi in his New York Times bestseller, "I Will Teach You To Be Rich."
The 1 percent are making a killing in the stock market. And you can too.
When I decided I was going to be rich, I turned my attention
toward investing. If you want to know where Greenbacks Magnet is investing,
then check out my post below. 😉
May I recommend the books The Millionaire Next Door, The Automatic Millionaire, and Prince Charming Isn't Coming by Barbara Stanny to add to your growing list 😉
According to Grant Cardone, CEO’s read 60 books and attend 6 conferences a year. The average person reads less than one book a year. I read that in the 10X Rule.
Read the 10x rule. Took his advice. Set 10x goals and do 10x more action. It worked. Many thanks! Went from saving $10 to $10k a year. #OBSESSED
I agree. I got like 11 books on my nightstand right now. Reading taught me how to say no to things and people. Money has to be respected and not just squandered. When I say no I tell people its not personal, it's just business. pic.twitter.com/wBARNSbLJ9
You know all those overnight success stories you hear? Well, those are garbage. It takes years of hard work, persistence, determination and sacrifice to get anywhere worth going.
According to the book The Millionaire Next Door, 80-86% of millionaires in America are self-made. Most wealth is earned. Meaning less than 20% inherit their wealth. This is down from a high of 50% or more who did so around the early 1900’s.
All those bands you hear about or people you see on television. They were honing their craft long before records executives starting signing them to deals.
Gene Simmons said he was going from gig to gig in an old van living off hot dogs with his bandmates in KISS.
Don’t be like Beetlejuice. Remember that scene in the movie where he took his number and was impatient. It was hilarious. One of Michael Keaton’s most memorable roles.
The point is that you have to be patient. I do not mean wait forever. I just mean that all good things do take some amount of time.
Don’t be so quick to judge or criticize others, before you know the full story.
“I praise loudly. I blame softly.” – Catherine II, Catherine the Great
FORGIVE
They say it’s divine.
“Always forgive your enemies; nothing annoys them so much.” – Oscar Wilde
And I make sure to forgive. I always forgive, once.
Investing is the ability to research, seek answers, make decisions & being patient. You may make mistakes but forgive yourself & move on. pic.twitter.com/BlJl4Smv26
Don’t be a quitter. Try first. You will never know if you
have got the goods to make it, unless you get out there and do it. Do
something. Don’t just wait to be discovered. Get out there and meet people.
Shake some hands. Knock down some doors. Make some phone calls. Just try.
SAVE
This one thing can change your life. Saving. It is the start of all things to come. The act alone is a reflection of who you are and what you value.
This is how I started, but on an even smaller scale. It took me six years, but I went from saving $1 a day to over $11,000 a year. NEVER give up on your goals. https://t.co/KK1UBABCLx
I read it is good to have 25 times your salary in life insurance. This is to protect your loved ones. At the very least I say 10 times. Just a suggestion. That means for 25x your income, if you make: $20k = $500,000 $40k = $1 million $50k = $1.25 million Are you insured enough?
Dealerships are offering 84 month car loans! Thats 7 years! Forget that. Do you know what you can do in 7 years? 1. Graduate college (twice) 2. Get married 3. Write the next great American novel 4. Learn a new language 5. Start a business 6. Watch all 13 seasons of #Supernatural
You give as a way to reach back and help those that come after you. It is a way to show your gratitude for all the things those that came before you have done.
There was a time there was no stock market. Or anesthesia. 😮
Let’s take a little walk down Wall Street.
The NYSE celebrated its 200th anniversary in 1992. Wall Street started under a tree in 1792 with commodities.
The Dow Jones Industrial Average (DJIA) was founded in 1896 with only 12 industrial stocks. Those 12 companies: American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling & Cattle Feeding, General Electric, Laclede Gas, National Lead, North American, Tennessee Coal and Iron, U.S. Leather and U.S. Rubber.
My how things have changed. None of those stocks are now part of the DJIA.
The good thing about indexes is that unlike individual stocks, when things go south and a business performs badly or goes under, it is culled. That’s right. They remove it from the DJIA and replace it with another business. Usually one that is performing well. That is the reason you invest in indexes. For the protection against a business going out of business and you losing your shirt!
General Electric (GE) is the only member of the Dow Jones Industrial Average that has been in the index since it’s beginning in 1896. It is being taken out and replaced by Walgreens (WBA) as reported of July 2018. That’s a 122-year run.
— Naresh Nambisan | നരേഷ് (@nareshbahrain) July 19, 2018
They have made it easier for you to invest now than 100
years ago.
Dale Carnegie had to ask his mother to mortgage the house so that he could invest the funds in stocks that he knew. That was how he built his fortune. Remember to invest in what you know. Earn a fortune and then give it away.
Giving is one of the best ways to be philanthropic.
Remember that part in the movie Troy where Achilles asks his mother if he should go to Troy. And she says to him only if he wants his name to be remembered and live on throughout the ages.
Giving is a way to have immortality.
Case in point, Ms. Oseola McCarty inspired many others to donate to charity as well after she donated her life savings of $150,000 to a college in 1995. How’s that for a swan song? One of the biggest donors she inspired: Media Magnate and Mogul Ted Turner.
So why is it even noteworthy when Oseola McCarty, an elderly woman, donates $150,000 to the University of Southern Mississippi? In the case of Ms. McCarty, it is the heart behind the gift, and the lifetime of effort that went into it. For her act of kindness, she was awarded the Medal of Freedom, the highest civilian honor and got to ring the stock market opening bell.
How about that for recognition in helping others? And she asked nothing for herself or in return. These things were given to her for her charitable contribution to society.
“There are only the pursued, the pursuing, the busy and the tired.” ― F. Scott Fitzgerald, The Great Gatsby
For many people out there I am sure you have heard of shows like Flip this or Sell that house. Many of them are broadcast on A&E. One of these gems was a show called Flipping Vegas.
The show starred real estate investor Scott Yancey and his
interior designer wife, Amie Yancey. What made this show stand out was the
outrageous personality of its star, Scott Yancey. He could regularly be seen
losing his mind over the tiniest of overages to his immensely short time table
he gave to flip any house. It made for great television. I felt it was the
funniest of all the house flipping shows out there.
Scott would regularly drive around in his Porsche (he loves
cars) and go from house to house that he had invested in to inspect properties.
His wife, Amie, could usually be found at places like Walker Zanger to purchase
materials for all of the homes they were flipping. The couple were constantly
bickering about house design, location, and finances. They were a riot.
What I remember most is that Scott was always very concerned
about the budget as where Aime was not. She believed that a well-designed home
sold itself. However, Scott did not always agree. He would regularly have a fit
if she spent extra money or over-improved a house. It was hilarious.
“When you have a
foreclosure sign on the house, it’s saying, ‘Vandals, homeless: Welcome. Please
strip it,’ ” Scott told The Las Vegas Review-Journal of the properties he
purchases. “We’re in a race to get it done and get it sold.”
So, without further ado, I give you what it’s like to flip
Vegas.
WHAT IS FLIPPING VEGAS?
“The houses that are the worst to buy are the ones we save for TV because we know there’s a great storyline with it.” – Scott Yancey
Flipping Vegas was an American reality television series that aired in the United States on the A&E network for 5 seasons from June 18, 2011 – September 27, 2014. Featuring the husband and wife team, Scott and Aime Yancey. The couple would fix and flip homes in Las Vegas, Nevada. It aired on Saturdays. And ran for 41 episodes.
Meet the real estate players
Scott and Aime
Vegas was hit hard by the housing crash of 2007-2009. Where
most saw disaster, Scott saw opportunity. He would buy low-priced and
dilapidated homes in Vegas, fix and flip them quick for a profit.
Setting a quick timetable of about 4 weeks and even shorter budgets of approximately $10,000. A quick fix schedule and low budget is called flipping. Spend less money equals more or maximum profit. His opposite is Aime, who buys high-end finishes that are not in the budget, without telling Scott. Let the fights over the checkbook begin.
Here is some of the banter on this show.
Real estate agent: Can you all this done in a week? It’s a
lot to do?
Scott: I turn and burn these suckers!
Aime: Scott, you’re so cheap.
Scott: Once again you are unconcerned with deadlines and bottom
lines.
Aime: Give the house a great design.
Scott: This house is an ugly girl. Put lipstick on her, we’re
not giving it plastic surgery.
That’s Scott, always keeping it classy. He works hard and
lives his life fast. He likes quick wins and flips. I’ll give him this, at
least he always kept it real.
In an interview with the Vegas
Sun, Aime said, “I mean, I feel like I’m giving birth to each of them. I
know Scott has timelines to turn them around fast, and we butt heads. He sees
the bottom line, and I fall in love with the transformation. I can’t stop
myself; I really need rehab for designers.”
They generally work with the same contractors and real estate agents to sell their houses. In addition, will also have multiple trades working on one house at the same time to keep up with Scott’s insane open house schedule (think buying a home, renovating it, and putting it on the market in 7 days). And yes, there was an episode that he tried to do this.
The show got is start from a conversation Scott had with some show business friends where he recounted how he had to pull out his Glock (he’s licensed to carry) on some homeless people that came at him with needles in a boarded up house. They recorded some footage of him (Scott paid for their expenses) at work and it got into the hands of someone at Lionsgate. That is how his reality show career got started.
Finance Lesson 101: You have to spend money to make money.
ALWAYS EXPAND
Expand. Never contract. – Grant Cardone
One of the best times to start a business is during a
downturn. Scott is a businessman who owns a real estate brokerage called
Goliath Company. He invests sells, and flips houses. In addition, Scott also
was an executive producer of the show and an author. Reality television star is
also one of his many titles.
When asked what it was like doing the show Scott stated, “It’s reality TV for a reason, but try working with your wife for 12-14 hours a day. [The producers] know our fans. They love it when I break shit, and that’s my favorite part. If I could take a bulldozer and knock out a shed, that’s great. Take a chainsaw to a wall, that’s great. Demolition is No. 1; drama is No. 2. And then education.”
The best episode I saw and my favorite was the Season 2 Episode
10 show entitled, “Yancey’s Eleven” which aired on February 16, 2013. Scott
purchases 11 unfinished villas at Lake Las Vegas for a total of $380,000 and
takes on the gargantuan task of getting them all fixed up at the same time.
A&E episode description(www.aetv.com): Scott takes on
the biggest flip of his life having purchased 11 unfinished villas in upscale
Lake Las Vegas with hopes of flipping all 11 in less than 45 days! It’s a risky
gamble that could have a huge payoff…if Scott can manage to bulldoze through
some unexpected and high-priced construction roadblocks.
Show me the money honey.
The couple then began doing seminars. A no-strings attached
sort of deal. It started out for free with a preview, but then morphs into a sales
pitch. Over three-hours attendees are enticed to pay a $2,000 fee for a second,
more intensive three-day seminar. Those who paid and made the investment in the
three-day event received yet another pitch to invest in the next level that
costs a whopping $30,000.
I, personally, can confirm the first part. I was invited to a Yancey seminar. I went and it was basically someone coaxing and goading you to spend money (not the Yancey’s as they were not there). Basically, it was a high-pressure sales pitch. The free part was just to get butts in the seats. The free meal was a cold sandwich, chips, and a stale cookie. Although, it sounded good, and everyone acted professional. I refused to spend money going to yet-another seminar. After that experience, I swore off all seminars for good.
They said most people did not complete the problem because there was work involved. So, they quit. Customers cry foul. That they were not properly trained. Scam???
Finance Lesson 102: If you are going to expand and ask people for money, then you better bring you’re A-game and deliver. Better to write a book and sell it for a reasonable price, that provide the details of how you became successful then give people false hope and empty promises. A book is at least tangible.
A GOLIATH OF A TASK
“The main thing is that in TV land, they speed everything up. They [the viewers] think, ‘Oh, wow, it’s a breeze. They come in, and it’s done.’ It takes a long time to put them together, to pick out the fit and finish and work on the quality. They only see a glimpse of it.” – Amie Yancey
Scott started in real estate at a young age. He got advice
from a friend to invest his $30,000 settlement from a car crash into real
estate as his family was doing. Scott took the advice.
Forgoing finishing college he still found a way to make a
million dollars. Even though he almost quit real estate after the downturn,
overhearing a conversation between patrons made him change his mind. When he
heard how little people were paying for properties in Las Vegas only to start
renting them out to tenants, Scott saw a golden opportunity to profit. Why not
buy at the bottom?
“At the next table, the discussion revolved around the Las Vegas real estate market and the fact that there were homes available to buy for as little as $36,000 that would rent out for $900/month. Just hearing those two numbers put Scott’s real estate brain into gear. Two things came to mind immediately, ‘You make your money on the buy in Real Estate’ and ‘fortunes are made in bad economies.'” – Scott Yancey
His task was to buy real estate at the bottom. Things have to hit rock bottom become they come back up. You can capitalize on that. It was risky and things were rough. Like me, quotes were in Scott’s mind: “Nothing great is easy” and “Debt equals drive.” Those helped him. He had this epiphany and ran with it.
Similar to the money epiphany I had in 2017. Once I figured out a way to save more, I began to do so massively. Start where I was at and work my way up. I started by saving $50 a month and then slowing increased my savings every day or month. Now, I save over $13,000 a year and increase that number every year.
Finance Lesson 103: Best time to start a business is in an economic downturn as fortunes are made in bad economies. For instance, when the stock market crashes, that is the time to buy.
COLLEGE DROPOUT TURNED MULTI-MILLIONAIRE REAL ESTATE INVESTOR
“I’m not a college graduate.” Scott told Vegas
Seven. “I went to probably five colleges, and I dropped out of them all. I
have ADD. I didn’t come from money. But you don’t need money to be a real
estate investor, and that’s what I teach people. I did my first land deal on my
own without any of my own money, and I netted $2.3 million. I can relate to
most of the people who write to me and say, ‘I’d love to do what you’re doing.
I don’t like my job, but I don’t have any money.’ Great, you don’t have to.
You’re right where I started.”
Scott was hired as a real estate runner for a real estate
attorney named Walther (Walt) J. Plumb III. His salary at that time was
$5/hour. Walt ultimately became Scott’s mentor. He also convinced Scott to get
his real estate license as his last 3 runners had all become millionaires. He
ended taking his advice and making so much money in real estate, that he left
college. He was making hundreds of thousands of dollars, which is a lot of
money for a guy in his 20s.
He was making so much money for Walt that he decided to
strike out on his own.
The $2.3-million-dollar deal allowed him to pay off all his
credit cards and buy the care of his dreams, the Porsche. And put a million in
the bank. He used his big payday to pay off debt. This is similar to what John
Legend did.
You can also regularly hear Scott complain about amateurs on
his show.
In an interview with the Vegas
Sun, Scott said, “but I think there are a lot of amateur-type flippers who
have gotten in in the last little while, and they have short fuses because
they’ve borrowed money to their properties. Scott usually pays all cash.
This is what Warren Buffet says about borrowing: “I’ve
seen more people fail because of liquor and leverage – leverage being borrowed
money.”
He says, “if you don’t know what you’re doing, leave it to
the professionals.” He stills relies on
him and asks his mentor for advice. Looking up the couple net worth online
yields results of $5 million each.
Finance Lesson 104: You can be successful without college. However, you need to decide early and when you are young what vocation you are going to do to try and make a living.
THINGS WILL AND ALWAYS DO CHANGE SO PREPARE
“Flipping is great at first to generate capital, but as an investor, the goal is to take your capital and invest it in rental properties. The rental properties pay you every month. Flipping, you make one payday; you’ll make $100,000 on a good flip. [Investing] that in a rental property [can} make you $5,000 a month. … It’s a lot less work to collect a rent check than to renovate a house.” – Scott Yancey
At one point, in an interview with Vegas Seven, Scott thought that the real estate market would change as it always did. In addition, that there is a false send of high-fiving.
Most purchases are all cash deals being done by investors.
Lots of flippers have left and are out of the flipping market. People are
buying and holding, which should be the real estate investor’s endgame. As far
as renters for his homes go, he wants good tenants that resign every year and
he only takes cash as payment. He also buys near hospitals so many of his
renters are ER doctors and nurses. Basically, those with steady reliable
incomes and paychecks.
I hear that.
I also read a real estate investing book that said a great place
to buy was near college campuses. Get those college rentals going. Not bad
advice. Pretty similar to what Scott has done.
I recently read that the government shutdown has closed up
shop 4 times within the last 10 years. That is a huge problem for RE owners.
Especially, if this trend keeps up and considering that furloughed contractors
don’t get back pay when the government reopens.
Not surprising. A home is only an asset if it can or does
feed you. You can only get access to the equity when it’s sold. The only other
way to make money is to rent it out. Either by the unit, home, or room. If you
want to start a profitable real estate business and become a landlord, then you
better have the funds to handle downturns, bad tenants, vacancies, and repairs.
Finance Lesson 105: All businesses need capital.
You can take that piece of advice all the way to the bank.
