Today, Holly McKhann talks to us about 3 principles she lives by to make her life better. From living below to your means to not being too restrictive on yourself, she explains how these principles can help you build wealth and allow decision making to be easier.
Everyone’s principles are different. Step back and think about what principles you do or should live by.
Mike: Welcome back to the flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Holly: Hi, there. Holly McKhann, your host today for REI Classroom. Today, I’m going to share with you my three guiding principles for building wealth. And this applies not only to real estate investors but everyone.
Mike: This show was sponsored by passiverental.com.
Holly: I was asked this question just today on a podcast. And I think it’s so great to consider this and to live by some principles when you are planning out your life and making decisions. Once you have these principles, it’s easier to make decisions and live your life when you’ve got these guiding principles. And yours may be different than mine. They probably will be. But here are mine.
Number one, live below your means. This is such common sense, but it can be so tempting to take a more expensive vacation than we can afford and charge it on a credit card and just pay it off or maybe you buy a car that’s really expensive, but, “Hey, they’re offering no money down. So I’ll just get it.” Okay, I just did that a few weeks ago. So maybe that’s not a good example. No, I’m kidding. I did take advantage of that because I figured car financing at 0.9% is way cheaper than the private money I pay. So I look at it as financing for my business, which I guess, is another point that if you have reasonable money costs somewhere like that, take advantage of them while you can.
But think about living below your means on a monthly basis. Just get your costs of living as low as you can, but just still be comfortable. You know, I don’t expect anyone to be out living in a tent somewhere so they don’t have a house payment. That would be crazy. But just control the impulse buys and maybe sleep on it overnight if you’re thinking of a big purchase or run it by a spouse or significant other to make sure that you are living within your means.
Number two, my second principle is to take educated risks. It’s really hard to grow your wealth at a fast pace, faster than mutual funds would grow it, or faster than a bank that’s going to give you 0.2% interest will grow it without doing some more either creative investments or aggressive investments, which we are talking about real estate, in general. So real estate offers a lot of opportunities to get a higher return than some of the traditional investments. However, real estate, and investing in notes, and being a lender can be really risky if you’re not educating yourself. So it’s really important to educate yourself on whatever asset class you’re choosing to invest in, whether that’s gold or the stock market or real estate.
So invest money and time in getting educated the right way so that you can take good risks that are educated that will hopefully lead you to a much higher rate of return than you’ll get doing mutual fund investing or investing in a bank. I’m so not a fan of those options and I have no money in either of those places myself.
Number three, this is important too, don’t be so restrictive on yourself that you don’t give yourself a pat on the back for a job well done, an investment well chosen, a deal that’s gone right. Celebrate. So maybe the celebration is you’re going to go to a nice dinner. Maybe, if you’re me, you want to go get a nice massage. Or maybe it’s just going and having a picnic on the beach if you’re still in budget mode and you can’t afford to celebrate monetarily. If you’ve got a great deal, maybe you’re going to go and take a vacation to Mexico as long as it’s within your means and it’s not detracting from your overall financial goals for wealth building.
So one important thing about that is that when you celebrate and reward yourself for a job well done, your subconscious mind wants you to do it more. Because it’s kind of like when a dog is getting trained, when it does the trick the right way, it gets a treat. Well, your brain is the same way. When your brain is producing a result that you want and it gets rewarded and your body gets rewarded with a fun day out or dinner out or vacation or something, subconsciously, your mind is going to be trying to reproduce that result because you’re going to want more rewards. It’s a great way to train yourself for excellent results and for building wealth and for happiness.
So those are my three tips for building long-term wealth and some principles to live by as you’re doing it. This is Holly McKhann from houseflipmasters.com or you can learn more about my strategies at that website and can’t wait to see you next time on REI Classroom.
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Please note, the views and the opinions expressed by the individuals in this program do not necessarily reflect those of flipnerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
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