The two most important assets you have in business are time and money. How you spend them will dictate the success or failure of your business. Everything you do will have a direct impact on one or both of these assets. Having said that, it is amazing just how little attention is given to getting the most out of each. If you can make minor shifts in how you allocate your time and money, you will see big returns. This may not happen overnight, or even in a few months, but eventually you will start to see an impact. When that happens, it can change the way you view the investing business. Take note of the best ways to spend both your time and money. It may be what takes your business to the next level.
Personal finance and money management are the cornerstones of any wealthy person. While it is a simple concept, there really isn’t much that separates the successful investor from an average one. The successful investor will generate residual wealth from compounding interest or other wealth building strategies that will give them access to capital for one or two extra deals a year. These are the extra deals that can lead to paying down debt or owning future property free and clear. This starts with the idea that wealth building does not happen overnight. Steps should be taken today to ensure a greater return in the future. If all you are worried about is the next deal, instead of looking at the big picture, you will never reach the point when you don’t have to worry about money.
What the truly wealthy understand is that wealth isn’t judged by the car you drive or the home you live in, but the amount of assets you have. If you live in an expensive house, but have trouble paying the mortgage and you have little to no equity, you are doing much more harm than good. As you build your investing business, this is an important lesson to remember. Your goal should be to have a sustained business that will last for many years. However, it is important to note that it will not always be smooth sailing. If you do not have the nest egg to combat these lulls, you will end up pulling money from other sources that will have a direct impact on the number of deals you close. If you live within your means and are responsible with your money you won’t be forced to make bad decisions on certain deals and you will have more opportunity.
Closing deals is great, but if you are only closing them just to get out of debt you are just chasing your tail. Using debt to make money is a strategy that makes sense in certain situations. It is when you use and abuse debt that you will start to see your debt grow faster than your income. In much the same way that compounding interest helps you grow your money, paying high interest rates on credit cards will accelerate losing it. Debt should only be used on items that will have a direct impact on you making more than you would have without it. If you use debt for glamor items that are wanted rather than really needed, your debt will pile up and any deals you close will be used to offset this. Good debt has many good purposes, but when used in the wrong way it can destroy your business or your personal finances.
How you spend your time is often directly correlated to your finances. Wealthy and successful people realize that there are only so many hours in a day: how you spend them is important. Spending time on your fantasy football website or reading celebrity gossip columns is a good way to kill an hour, but it won’t do too much in the way of getting business. Many investors complain about not being able to find new deals, yet spend only half of their day really working. The reality is that there are many deals to be had if you are willing to work and find them. This doesn’t mean you have to work 20 hours a day and never take any time off, but when you should be working, you need to really work. As a self-employed investor, there is nobody looking over your shoulder or a clock you have to punch. You have to be self-motivated to put the work in even if you don’t see immediate results.
Being savvy with your money is just as important with how much you actually make. If you do not come from a finance background, you should consider taking a personal finance course or letting someone with experience guide you until you feel comfortable. A few dollars here and there may not seem like much, but it all means something. A high balance on a credit card could mean the difference in your credit score, allowing you to finance your next purchase or having to wait until the score goes up. It is the small things like this that can have big effects on your real estate business. How you spend your time and money is often a direct reflection of your real estate business.