All About Benjamins
This week's topics have been all about personal finance. I guess its just been on my mind, how can I be of service to those of us who might be having financial trouble, but are willing to read and listen to a different perspective. If you read, Ways To Reduce Debt With A Plan or 7 Streams Of Income, you know I listed several links that showed that more than 1/2 of Americans could not come up with $500 to cover and unexpected expense. What do you think the reasons could be why they couldn't come up with that amount of money? Ponder that.Debt and Life Knock Us Down
I know that talking about and acknowledging the debt we are in can be embarassing and shameful that we screwed up our finances, or just when it seems like we are getting ahead something comes up to knock us back down. Today, I had a situation where my tenant calls me and says the A/C and heat are not working, but I have a home warranty and I call to put in service request, but then the rep starts saying stuff I'm going to need to come out of pocket for such as R22 freon, which the government is phasing out. I'm ok with being more environmentally friendly, but then I start thinking, and ask what if the condenser which uses the freon goes bad, am I covered, the answer was basically no. I didn't have some conversion in my policy that covers that. An update from my tenant was that it's just a control board that is having issue, but if it was that A/C unit no longer taking the charge, I would have to come up with not $500, but probably a couple thousand. Fortunately, my situation is just not wanting to potentially fork over that kind of money, instead of not being able to.My Guidance For You
Ok, it is what it is, and I am not hear to criticize you for choices you may have made in your yesterday's today which still is impacting you today. I look back and see choices I made that I definitely would have made differently if I knew what I know now. We both can only work on our situation in the here and now; thus, I want you to know that Os(that's me) is not trying to prevent you from living the fabulous life when I discuss personal finance, au contraire. Like I wrote in my blog, A Pivot In Mindset Concerning Personal Finance, I am simply trying to give some guidance like my parents tried giving me before I seen their wisdom and stopped resisting.Change How You Consume
I am here to say, you can have the things you want in life, but we are going about getting them, in my opinion, the wrong way. Let's take a simple example, I want a new car. Since I have a Honda Accord, I'll use this in an example where you enter your desired monthly payment. 
I pick a 5 year term ((422.94 x 60) = $25,376) to finance. This is what old me did. However, what if I gave myself the goal to save up the money for 5 years, or faster if
you have the means, but knowing that a car is a liability that will depreciate in value as soon as I drive it off the lot, suppose I was to take that money I saved for the car and used it as the 20% down payment ($24,000) for a rental house I could purchase for $120,000. Then suppose I rented it out for $1,200 and my expenses were $800, I would net $400. I wanted a car and through a little deferred gratification and saving, I purchased and asset that could pay for my liability. Although the car has $422 note, your net from rent is $400, but an out of pocket expense of $22 is surely one you will willingly pay. Now, think about the other way this could have been done, which doesn't include an asset. What do you have at the end of this? A liability that has a shelf life.
I pick a 5 year term ((422.94 x 60) = $25,376) to finance. This is what old me did. However, what if I gave myself the goal to save up the money for 5 years, or faster if
you have the means, but knowing that a car is a liability that will depreciate in value as soon as I drive it off the lot, suppose I was to take that money I saved for the car and used it as the 20% down payment ($24,000) for a rental house I could purchase for $120,000. Then suppose I rented it out for $1,200 and my expenses were $800, I would net $400. I wanted a car and through a little deferred gratification and saving, I purchased and asset that could pay for my liability. Although the car has $422 note, your net from rent is $400, but an out of pocket expense of $22 is surely one you will willingly pay. Now, think about the other way this could have been done, which doesn't include an asset. What do you have at the end of this? A liability that has a shelf life.
This is how I have pivoted my mindset to think, and I hope to encourage you to do likewise, so get the things you want in life, but do not do what the poor mindset does, instead, think in terms of using assets to purchase more assets and cash flow from asset to purchase liabilities.
Poll Result
I posted on my blog last week a question, what would you do with $20,0000 if you had only one choice of the below options and here were the results. |
| Poll Results |
Conclusion
Get your mind right and then getting your money right comes easy. Let's be in the position of not wanting to come up with money for unexpected expenses, instead, of not being able to. Let us get the things out of life that make us happy, but not at the expense that all we get out of the deal is a liability.Check out my Affiliate and Referral links here for products in services to help with investment, credit, cashback, and award travel. Also you can find more of my blog post on Start Here.
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