The Fear Factor

 

 

Sometimes I re-read my own words from my journals and books that I have written, and it inevitably surprises me how my own words can reinvigorate, inspire and motivate me. And now that I’m almost 75, I suddenly realized how much this thing called “the fear factor” was holding me back on some of my projects, big dreams, and desires.

Quoting a few highlights from my own book, The Courage to Be Rich (I hope that’s not plagiarizing–ho ho):

ACTION GETS THINGS DONE. When we are fearful of something, if we push ourselves to take action, many times that will totally overcome our fear and a big plus is that we get stuff done and isn’t that pretty much the whole ball game or at least a lot of the game. Without action you could be the greatest financial thinker, have the highest IQ, and end up with very little money or even broke. When we are fearful, we really need to give ourselves a big push, even if we stumble and blunder a bit.

FEAR OF STARTING. Getting started is really the most frightening and the hardest part of virtually any task. But even if you do something wrong, at least “do something”. I am not saying take risks larger than you can afford. We all should take risks gradually, whether they are financial risks, social risks, or any other kind of risk.

Some time ago, I was on a flight and as we began our final approach (I wish they wouldn’t call it “final approach”) and as the plane was descending, I noticed the lady next to me was very nervous and somewhat freaking out. Thinking that if I diverted her attention by talking to her, that might calm her down and it did until the pilot let the flaps down and the plane lurched and bounced a bit. I quickly explained to her what the pilot had just done and that gave her a bit of relief. I then suddenly realized that I was in the same plane, in the exact same situation, but my heart rate and blood pressure were normal, unlike my seat mate.

CHRONIC FEAR IS YOUR REAL ENEMY. I knew the damage fear could do because it had done damage to me in the past. I finally realized that I was letting fear dominate my thoughts. I decided to do something about it. Since I travel a great deal, giving seminars or negotiating real estate deals and since being relaxed and rested at the end of a flight is important to my performance, it was very important not to waste so much energy wrestling with fear.

It didn’t take much thinking after that to figure out that the fear factor entered into many of my decisions that had far greater implications than did flying. Why should I let myself be fearful of flying or anything else? After all, does that fear change the outcome of the flight or my financial conditions? People who are the real doers and the super successful people in life face frightening situations almost every day, but they don’t let those confrontations with fear scare them to death or slow down their progress or stop their actions.

I want to write more about the “fear factor” in my next blog, but for now I will end this blog by listing some very common fears.

1. Giving a speech to a large audience.
2. Fear of making a fool of yourself.
3. Fear of losing all your money–or at least a big part of what you have.
4. Fear of losing your friends.
5. Fear of losing the love and respect of someone you love.
6. Fear of criticism.

There are certainly a lot more fears than this short list. Take a look at yourself and analyze your own fears and ask yourself the question as to whether those fears help your situation in the long run or even in the short run.

P.S.  I read that if you take a commercial flight, at random, every day for the rest of your life it would be about 20,000 years before you got on a plane that crashed–so obviously the fear of flying on a commercial plane in totally not rational!

 

Smart Money Hedges Bets In Tough Times

We’ve had quite a few very good years, economically speaking, and we may very well have a few more to come. There are, however, some warning signs that things are starting to change but it’s a slow change. Here are few things the so-called experts are predicting that, in my opinion, are very likely to happen:

1. European expansion will slow down.
2. Japan’s recovery will remain weak.
3. China’s economy will keep decelerating.
4. The rate of inflation will stay around 3%.
5. The Feds will raise interest rates 3 times in 2019.

The experts, however, are predicting that changes will take maybe 2 or 3 more years, and will no doubt happen slowly. Regardless, many of us investors are thinking about hedging our financials that’s right now. You might ask why wouldn’t anybody or everybody hedge their bets if they knew tough times were coming? Of course, many people would, but the average person doesn’t know that tough times are ahead.

Smart money –money that is invested by people with expert knowledge – does not always do well either, but there are indications that give the smart money people a head start on everyone else. No, they are not always right, but they are more often than not.

A very important part of the formula is to be an independent thinker. The overall economy is like a gigantic river. Sure, you can swim upstream, but it is very difficult. What smart money does is watch the general direction of the flow of that giant stream. Smart money people know that the flow doesn’t suddenly turn around and run the over way.

So even though some of the experts are saying our markets and economy is ready to turn around and go down, it most likely will not happen fast. So, these days, I am advising people to do two things to hedge their money and investment bets:

#1 – Save cash. Build up a cash reserve to be invested after the economic pull back.

#2 – Even though you are building your cash reserves, keep making low ball offers to highly motivated sellers. Granted, there are not a lot of motivated sellers right now because the economy has been in an uptrend for quite a while and many people think it will continue. Still, there are always some motivated sellers out there that need to sell for various reason and some of these people need to do it now at under market prices.

Finding those motivated sellers and making those lowball offers is still smart money, especially if you can do so while building up your cash reserve. So, you might as well keep throwing you net out there and see what you can find. That kind of smart investing and saving is the kind of thing that will get you through the tough times, whenever it is they get here.

 

 

The 100% Return Goal

As we begin a new year it’s a very good time to remember the basics, specifically the basics of financial independence through which you make and keep your own fortune.  It’s so easy to forget the basics, especially when we are all caught up in the details of our daily lives, even those details that are involved with building our wealth. For example, if you have a big problem with the plumbing at a rental property or the property taxes just got bumped up, it’s easy to focus on just that, but that can get you frustrated or make you kind of space out on your overall plan.

What you should not forget is that you have to continue to look at the big picture, looking for ways to take advantage of leverage whereby you could earn as much as 100% of your money due to compounding. I’ve certainly been there and done that. Even on the very property that is giving me fits, I many times have failed to step back and realize that my equity on that very property has already exceeded a 100% return on my money and I should be motivated and reminded to keep doing that.

There is a simple example that I used in my fist book, How to Wake Up the Financial Genius Inside You, where I showed how 1 single penny a day compounded at 100% a day turns into just over $339 million on the 35th day alone. Now I know there is no way you can compound your money at 100% per day, but it is possible to compound your money at 100% per year, especially in the first few years. The key to those huge numbers is using other people’s money (your leverage). So, maybe only 10, 20 or 30% of the price you pay is with your own money and then the rest is in a loan from the bank or the seller for the balance. It’s not only possible but many people are doing just that, every day, including myself and many people that I know and have helped.

I do know that finding beat up properties these days can be a bit more difficult, depending on where your market is, but things change and prices go up and down and you and I need to always be looking for those bargains, especially those properties that need fixing up, the ones I like to call “dirt bag properties”. Then, always remember that good ole leverage formula:
If your down payment is only 10%, and you improve the property enough to increase the value by 10% you have made a 100% return on your money. That formula is a little simplistic since it doesn’t take into account your expenses, but you can keep those pretty darn low if you do most of the work yourself. Just don’t let the goal of a 100% return on your investment scare you away because it seems too difficult. If you can get even part way there, say just a 30% return on your money per year on only $10,000, that fraction of the big goal will still add up to over $1,124,000 in just 18 years.

My big point here is that we must keep the big picture in mind and remember that those potential returns are there. If you do, it becomes easier to not be deterred or discouraged by those plumbing issues, property tax increases, or other relatively minor problems.  Keep your eye and your dreams focused on the big prize, because it is all together very possible to achieve that big goal.

My Words Out Loud

I have something very special for you today. Please take a listen to this pod cast I was on recently. There are a few things I share on it that I think can be very helpful to most people. I hope you like it and, if so, please share with others. Thank you so much for taking time to listen. This kind of thing is part of what I am doing to really try to be of help to others. Maybe it’s my age but I am all about sharing and helping these days!

 

The interviewer is Michelle Brown, a fellow Salt Lake City resident who teaches Life Story writing workshops. Get a nice warm beverage and sit back for a really interesting conversation. I hope you find it helpful and motivating!

 

Pleasure and Production

Last week we talked about Authentic Happiness which is both a concept and the title of the great book written by Martin Seligman. In the book, the author continuously emphasizes how much of our happiness comes from inside our heads.

Most of us humans look at rich and famous people and think that they must be very, very happy and content because of all their fame and wealth. Well, guess what… if you look closely, you will find that many of these people are not particularly happy. I think a big reason is that most people think that once they attain great wealth and/or fame then it will automatically make them happy. Only it doesn’t. Then these folks, finding that their brains are not filled with great thoughts of happiness and contentment, start to wonder why. That doubt causes an internal dialog to start up which can work against them, quickly driving them and their mindset downhill. Also, money and fame don’t hold a candle to the kind of true and deep happiness we get from things like the love we give and receive from family and friends.

Although most of us are not rich and famous, we may still find ourselves falling into similar thought patterns. It is so very easy to let our internal self-talk persuade us that things are not going well which brings us down mentally.

There are lots of methods for overcoming this negative self-talk but one very big one is also a powerful antidote for depression – productive gratification. Striving for gratification is automatic but the way to use it so that it overcomes negativity and depression is through producing something truly meaningful to us and/or to others. What we accomplish when we produce meaningful things sends a powerful, purposeful message to our brains and makes us feel so very satisfied and happy.

Martin makes the very good point that “pleasure is a very powerful source of motivation but it does not produce change.” It also does not produce lasting authentic happiness. A simple example is the difference between the pleasure that we receive from watching a very entertaining television show versus the gratification, genuine happiness, and personal satisfaction that we receive from reading a particularly inspiring or informative book. Think back on how you felt after experiencing these two different activities yourself. The difference in how your attitude and your state of mind will probably be quite apparent.

The author suggests that if we really want true, deep and authentic happiness we should all create a list of activities, goals, and deep desires that produce for us, personally, a sense of gratification. Look for goals and things that you do that seem to make time stop and even has you thinking, “I don’t want this to ever end.”

Yes, it’s true that many pleasures take little or no effort to acquire and that the best kind of gratification takes a lot of work. But so be it. It is so well worth it, and I do think and hope you would agree!

 

It Starts with a Dream

Almost every super successful person I’ve ever heard of or have met began as a dreamer. Without dreams, very little will happen in any of our lives. But with a dream, great and wonderful things can, and most likely will, happen but only if you add two more things – specifics to make it a goal and action to turn the goal into reality. But the dream has to come first! So, let’s talk about that.

I once heard that 75 percent of our life is lived in our minds. That may not be entirely accurate, but I think you would agree that a fair amount of our lives is lived inside our heads and since our minds do indeed have great power, there must be great potential there.

Think of yourself in Chicago or New York in the middle of a cold winter.  You’re watching TV or reading a magazine and you see an advertisement for a trip to Hawaii. You’re attracted to the idea, and suddenly you start to dream about going to Hawaii for the entire month of February. What happens? You start to live the trip in your mind. You may even start to work it out in detail, planning exactly when you will leave, where you’ll stay, what you’ll do while you are there, and so on.

You think about it so much that you eventually decide that you are absolutely going to go and, if you don’t have the money to make it happen, you begin to plan how you are going to save enough to make the trip. And, of course, all of this is part of you living the trip in your mind long before you go.

When you finally make the trip, you have the great time that you had pre-lived in your mind and on the way home, you relive what’s just happened to you. That reliving of your trip in your mind can go on for weeks, months and even years, renewing your enjoyment of it each time.

Pictures can be a huge influence in helping our brains relive the good stuff in our lives.  Years ago, I bought a bunch of digital frames (they cost all $10-$20) and placed them all around the house. This way I can just insert a memory card from my camera (I use a new card for each trip or special event) and the digital frame will rotate through all the photos, allowing me to easily relive those great moments in my life. You should try it too. It’s a small thing but it can really enhance your life.

Just don’t forget, dreaming is not enough. You must also follow through with goals and action if you want to make it more than just a dream. Next week we’ll talk more just how to do that!

 

Invest in a Basic Need

Just yesterday, I was on a conference call discussing options for doing a 1031 exchange as a big property that I’m a part owner of was recently sold for many, many millions of dollars. We did make a huge profit on this property and it had a great cash flow during the time we owned it, just like most of the income properties I’ve invested in, but it was time to sell. So, we were looking at our options to buy into other properties which would allow us to avoid paying a huge capital gains tax. We discussed several properties that looked quite promising when one of the partners—a guy much smarter than me—talked about the possible softening of the real estate market due to rising interest rates. Whereas he and others agreed that we are probably due for a pull-back of property values, the new acquisitions looked so promising that a pull-back in prices in the area would not likely have much effect on our possible purchase but it was still a risk.

I was faced with a similar dilemma many years ago and just recently happened to come across something I wrote back then when everyone was worried about a down turn in the economy and a pull-back of real estate prices. My headline was “A Basic Need”. In this piece I wrote, “Why is real estate such a good investment? Why do experts predict that the real estate market may slow down but will probably never fail?”

My answer to those questions is the reason why real estate is such a super great investment – real estate is an answer to a basic need. People always need a place to live, a place to work, a place to shop, a place to stay when on a vacation, and even a place to farm. Improved real estate is especially in demand and it is in demand most of the time. These include apartment units, single family houses, duplexes, etc. And, of course, one of the huge benefits of this kind of real estate is that even if the market softens and price come down, you still have someone else increasing your net worth since their rent payments are paying down your mortgage. Is that a great deal or what?

Even when the market softens a bit, eventually, these properties regain their value as the supply of units shrink and rents begin to climb again. I’ve seen this happen many, many times but investing in small rental houses, duplexes and apartment buildings, through all kinds of market conditions, was how I made my first million. I would keep buying as the market softened and prices and rents began to drop, but I was pretty darn sure the drop would eventually be over and, sure enough, the slump would end and put more millions in my pocket.

Bottom line here is yes, the economy will probably pull back a bit in the next year or so, but this can open up many opportunities for you and can bring you big profits in the long run. So, keep an eye out for good income properties and make offers to buy, whether the economy softens or it keeps on growing.

 

The Energy Generating Brain

I am pretty sure there’s not many people that wouldn’t like a bit more energy. Okay, maybe an 8-year-old kid has plenty, but most of us, especially as we age, really want and need more energy. The amazing thing about humans is that we can actually create more energy with our minds.

The mind can be one of the strongest and most powerful force that you possess. A overly simple example of the mind creating energy is if you were dead tired at the end of a mountain hike and could hardly take another step, but suddenly you were confronted by a grizzly bear, your brain would immediately send a signal that would produce a huge amount of adrenaline and give you plenty of energy to move very quickly to save yourself. Although that is chemical physiology, even quantum physics has proven that your thoughts can be vibrations of energy.

How about this? You are lying in bed, totally worn out with seemingly no physical or mental energy, and suddenly you think of some incredible new invention. You can visualize how this idea could very possibly make you a quick few million dollars. Suddenly, your brain creates a ton of new energy and you jump out of bed, rush to your desk, and begin putting your great new idea on paper.

Your brain really can create energy. I totally believe that your brain is the key to your financial fortune and my experience backs up this belief. Some say that you can obtain wealth by training your subconscious mind to attract wealth, and I totally agree. If you put those money-making thoughts and plans deeply in your mind and then push very hard to turn those thoughts into action, you can and will be successful.

Quoting from one-mind-one-energy.com, “The most potent form of energy is thought because thought waves are cosmic waves penetrating all time and space.”  The 5 steps below, found on that website, make so much sense and are so very true. We really need to watch our brains like these 5 steps advise.

1. “Watch your thoughts, they become words.”
2. “Watch your words, they become actions.”
3. Watch your actions, they become habits.”
4. Watch your habits, they become your character.”
5. Watch your character, it becomes your destiny.”

Good ole Mahatma Gandhi said something similar: “A man is but the product of his thoughts–what he thinks, he becomes.”

Wow, there’s a bunch of good stuff to pound into our brains that can greatly enhance and improve our lives, whether it’s to make millions of dollars or become whatever we’ve always wanted to become and maybe have fallen short. Plus, who among us doesn’t want to have a ton more energy?

A List to Start the Day

A few weeks ago, I talked about how important that first hour of your day can be as the book, The Miracle Morning, talks about. I would add one critical thing that you can do to make that first 60 minutes of your day so much more productive and beneficial to your life – write down, the night before, the items and tasks that you want to address the next morning. Write what you want to concentrate on for those first 60 minutes. You can break it down to six 10 minute items or four 15 minutes tasks, but no matter how you do it, making a list can, and will, greatly increase the odds of you following through on what you want to accomplish.

There is something magic that happens in your brain when you reduce your desires to a list. When you write those items down, it’s like your brain pushes you to act on them and won’t let you go until you do it.

In my book, How to Ignite Your Passion for Living, I have a chapter entitled “Clone Yourself with the Amazing ‘L’ Factor”.  Show me any super-successful person who has accomplished big things and I’ll show you an accomplished list maker. Yes, you can clone yourself by the wise use of list making, plus some good old-fashion delegation.

Of the many specific techniques that have huge value in helping catapult a person to the top of whatever they’re going after, I have to say that list making is at, or near, the top of that list. For some reason most people tend to put a much higher value on just about anything that is on a written list. It’s just flat-out amazing how much more enhanced your life will become and how many more dreams and goals you will be able to achieve by using lists. In addition, daily task lists or to-do lists are the key to keeping track of accomplishing all the bite-size components into which you’ve broken down your big picture goals.

So, if you have gotten away from that ole list making habit, it’s probably a good time to start making lists in order to drive yourself to get lots of stuff done. And I don’t mean just for that first hour of the day, but make lists for your big, huge goals and read over your list often, checking off those items that you’ve accomplished. Then you can give yourself a nice pat on the back for getting the job done!

A Billionaire and a Popstar

I’m sure you’ve taken note of certain people whose lives seem packed full of many marvelous activities, adventures, and experiences. Have you ever wondered how they do it all? Well, a big part of their success is that they are good at making, keeping, and working off of lists.

A good example is British billionaire Sir Richard Branson, who credits his lists of things he wants to accomplish as the key to his getting so much done. He takes the time to go down that list often, adding to it and checking off each item as it is completed.

Here’s a guy who, at the tender age of 25, had the nerve to make a $100,000 offer to buy the Caribbean island of Necker that was listed for sale at $6 million dollars. No, the seller didn’t accept that low ball offer but, later, Branson did buy the entire island for a mere $180,000 which ended up being one of his favorite paradise getaways. And get this … his super luxury cabin rents out for $65,000 a night! Wow. That’s my kind of real estate investment – a place you can rent out, when not using it for yourself, that provides a super great cash flow.

Today, his Virgin group of businesses owns more than 200 different companies. Among these companies are businesses that specialize in air travel, finance, retail sales, music, cell phones, internet, hotels, and even a railroad. In 1999, Branson attempted, and broke, world records in hot air balloon travel and in a transatlantic small boat crossing.

Pop star, Madonna, also has a reputation as a big list maker. Although her accomplishments are in different areas than Branson’s, she attributes her list-making to keeping track of her priorities and getting so much done.

Lists are one of the secrets used by the rich and famous every day of their lives. They help them to run their businesses and to expand their ventures. List making is a common trait of millions of successful people regardless of race, sex, nationality, or occupation. Lists are used to lift their lives and propel them toward fulfillment. And lists can do the same for you and me!

Once again, as I write about this, it truly motivates me to make more lists and be more consistent in doing just that. But here’s a good question to end on: How important is it to “Prioritize” your lists?  We’ll talk about that next week.

In the meantime, how about you or your son or granddaughter become the next Branson? Hey, it could happen, and then maybe you will invite me to a hot air balloon ride across the Atlantic!

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