Making Money 201 – Going for Broke!

If Making Money 101 could be drastically over-simplified as ‘saving’; then Making Money 201 is equally over-simplified as being about building your income.

If you were serious about getting your financial house in order quickly, then you probably already did some income building to help you pay debt off quickly while you were working your way through Making Money 101.

Unless you’re a CEO of a Fortune 500 company, or a top professional doctor / dentist / attorney / accountant, then you will need to think about starting a business.

And, to accelerate your business or professional income you may also decide to get into the business of active investing (renovating/flipping real estate, trading stocks and options, etc.).

This is the stage that you get to take RISKS (that’s why you need a solid foundation and plenty of runway … you WILL fail at least once, twice, three times …) because that is the only way to get the big financial REWARDS.

This stage is hard work!

But, it is where you actually sow the seeds that will eventually make you rich …

There are plenty of books and a few blogs around, but most of them are specific to just ONE WAY of making money … the author’s way; some are good and some are lousy.

By the end of this stage you will be earning more than 90% of the US population and will be accelerating rapidly down the runway to financial health … but, spending will also increase dramatically and you will struggle to hang on UNLESS you ALWAYS remember your Making Money 101 lessons about saving!

Paradoxically, you will be the ‘richest’ that you will ever be in your life during this stage IF to you, being ‘rich’ means being able to spend lots of money

… the problem is that your ‘wealth’ is only based upon your income, therefore only lasts as long as your business or job does.

Also, many of the Making Money 101 rules now need to change, as do almost all of the tools ….

For example, dollar cost averaging and index funds are replaced with sensible investment and savings rules and strategies.

You are still far from ‘rich’ …

In fact, you are still Just Over Broke … but, starting to break free!

The 4-step, never-fail plan to making a fortune in real estate …

There is a lot of BAD stuff written about real estate and a little bit of GOOD stuff … start by finding and reading some of these good books (google “John T Reed” and see which books he recommends and which ones he pans).

The truth is that most people MAKE money through a business, then KEEP money by investing in real estate.

If you can’t (or won’t) start a business (even on the side) then you can at least accelerate your LIFE SAVINGS PLAN by buying and holding income-producing real-estate.

Right now, it’s very simple:

1. If you don’t yet own your own home (but would like to) BUY one now and LOCK in the interest for 30 years.


Home prices are relatively cheap (if you think they will get cheaper then wait a little longer … if you’re not SURE they will get cheaper, buy now).

Money is cheap – mortgage rates are probably 2% lower than they will be by 2009 or 2010.

You want to keep buying that cheap money for as long as possible …

… but, only IF you are prepared to take the next step, which is to …

2. Assess the increased / excess equity (what your house is worth – what you still owe) in your house yearly and use that excess equity to buy another as soon as you can scrape up a reasonable deposit (20% if you are conservative).

3. Lock in the interest rates for 30 years; rent the property out; keep raising rents; reassess the value of all of your properties yearly.

4. Repeat until Rich!

Now, this will take 10 to 30 years … to accelerate: start that little (or big) side-business and use the excess cash-flow to buy more investment properties rather than Porsches!

Simple … and, you couldn’t be starting at a better time in history.

Let's not confuse 'saving' with 'investing' …

My point is simply this:
IF your retirement plan is on track, then keep doing what you’re doing.
But, the vast majority of people can’t simply SAVE themselves into their ideal retirement; they have to INVEST in their future.
I call it ‘investing’ – investing in our future – but, if starting a part-time, work-at-home business, experimenting with actively trading stocks or options [not my personal choice], renovating then holding an income-producing property, etc. is ‘speculation’ to you …
… I simply say:

Bring it on baby!

Is NOW a good time to buy real estate?


… it’s pretty much ALWAYS a good time to real-estate estate.

But there are two BEST times to buy real estate:

1. When REAL ESTATE is on sale

This means that prices are weak, or you can buy the property at a real discount (I don’t mean when the developer listed the property at an inflated price then ‘discounted’ it later!), or you can buy it and ‘tweak’ it (renovate it, change its use, or add value some other way).

2. When MONEY is on sale

Historical interest rates hover around 8% (they have been much lower for the past few years … but, remember when they hit 15%?!), but when they drop below 6% money is ON SALE! This means that you can afford a much larger mortgage payment, and rents can even be higher than your mortgage payment.

Usually, property prices and interest rates work in opposite directions:

When money is cheap real estate prices go sky high (remember what happened to property prices in the last few years?).

When money is expensive real estate is usually cheap (at 15% interest rates, who can afford to buy?).

Soon … or, even right now for some real estate in some areas, for perhaps the first time in living memory, BOTH real estate and money is ON SALE!

This is the big double whammy that you can’t afford to miss out on. How to you take advantage of this?

BUY real estate …. but, do your research: some areas are still dropping … look for areas that have bottomed out (or look for emerging markets)  or you feel are close to it.

Now, here’s the secret …

If real-estate still drops a little, it doesn’t matter! Why?

Because, you will:

1. Buy and hold for the long run

2. You will make rental income (that will increase over time, while your mortgage payments stay flat, assuming you fix the rates)

3. You will lock in your finance for AS LONG AS THE BANK WILL LET YOU … because MONEY IS ON SALE and you want to keep buying it at that price for ever if you can!

There will be plenty of opportunity here to make mistakes … but, the combination of cheaper property prices, incredibly low interest rates (compared to historical averages) and holding for the long term will correct any small errors in judgment made now.

Open your eyes to the bargains that should start appearing soon (if they haven’t already) and …. buy!