The band “The Eagles” wrote and published the song “Life In The Fast Lane” many years ago. It was a popular song that headed to the top of the charts. If talked about living large, running at full speed and so on.
In today’s real estate world, many investors seem to be running in the fast lane, which is concerning, to say the least.
Why is it that broke people turn to real estate as the solution? What is the lure to real estate that attracts so many people with dreams of riches and fame?
We Americans tend to idolize those who are perceived to be rich and successful. Those who are “stuck in the rat race” view those that are not as “different”, mysterious and worthy of attention.
What is the rat race? Robert Kiyosaki wrote the book “Rich Dad Poor Dad” which is what first educated me about the rat race. It kinda goes like this..get up, go to work, come home, pay bills, go to sleep, get up and go to work again.
Many Americans are stuck in this rut with no hope of escaping. Many believe that achieving riches in real estate is easy…which I disagree with completely. Simple? Yes, that is a better word, because it certainly is not complicated.
Hard work is something that many folks these days tend to shy away from. Confrontation (or that which is perceived as confrontational) is another thing that spooks many people.
Here’s the deal…you can lose your job tomorrow. You can also lose your big business or government funded pension tomorrow. Getting out of the rat race is all about building up your passive income to an amount that exceeds your expenses.
Let’s discuss how we can accomplish this:
First off, “get your money right” as Grant Cardone says. This means not blowing your money on silly things that do not put money in your pocket. Eating out is a huge expense incurred by Americans that is costing us millions.
Pay off credit cards sooner than later. Begin with the cards that have the smallest balance, this helps gain that feeling of accomplishment.
Avoid the end caps at your local store. These are specifically designed to entice you to buy, don’t get suckered into that (especially at Lowes and Home Depot!)
Before you get started investing, you have to first establish financial prudence. We have to know what is going out every month, where does our money go if you will. Too many “investors” are financial train wrecks and cannot figure out why real estate investing has not solved all of their financial problems yet.
If we cannot control our finances, real estate investing will likely make your financial situation worse before it gets better.
Once we know what our monthly expenses are, we then know where we need to be in order to escape the rat race. Remember, the expenses only provide a “break even” point which does not allow for future growth or expansion. It generally does not include retirement contributions, college savings or anything else outside of basic survival.
The lower we can get our expenses the easier it will be to escape the rat race. Cut out that which you don’t absolutely need until a later time when it will be affordable, trust me it will be worth it. After all, for a couple years I had to stop buying electronics and firearms. I am so glad those dark days are over.
Many people find it rather easy to escape the rat race, only to be unknowingly back in the rat race quickly after escaping it the first time. This happened to me at the beginning of our “second act” of real estate investing. We acquired a bunch of properties (26 in the first year) and because I was so focused on quantity of properties I made a few dumb financial decisions along the way and had to streamline how I do things. I fell into that “rockstar” lifestyle however I was able to jump right back out (after a swift kick in the ass from my wife).