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“You were right!” by Alecia St. Germain

mom and daughter“You Were Right!”

Just a little over 10 years ago my mom heard the words I can only imagine every parent hopes to hear, “You were right!” For years Mom had been trying to instill the values and concepts from Robert Kiyosaki’s Rich Dad Poor Dad. Even though I had been involved in real estate years prior to that insightful moment, it took the school of hard knocks to help me understand and a parent strong enough to let me suffer a little for me to embrace these lessons. I now meet parents on a regular basis who express to me how much they wish to get their children into the real estate business and show them a path to financial literacy. I thought I might take this opportunity to share some tips that I now realize Mom used to provide me with the foundation to pave my own path.

So as I mentioned it took a little non-traditional “schooling” to get me on track. I didn’t want to do real estate, mostly, because I wanted to find my own way in the world. So I went off to get a 4-year-degree in the medical field. Once I graduated and got a job I had so much more money coming in than I was used to in my E-quadrant mind. What happens when you have the wrong mindset and you suddenly have more money? You guessed it…more problems. You see what happens when you have a job and start making more money, credit companies start extending more credit. Being 22 years old and not financially literate, despite Mom’s best efforts, resulted in a slew of debt spent on doodads. It took me less than two years to see that I was in the rat race and on the verge of financial ruin. Just a few bumps in the road and there I was shamefully back on Mom’s doorstep with boxes of my stuff. Fortunately, I had already started the process to change my mind set. I told her how I thought she was right and that I wanted to learn more about real estate so I could live the way I wanted.

That’s not the lesson though…the real one was what Mom did after I moved back home. The first thing we tackled was my bad debt, over $60,000 to be honest. She explained the difference between good debt and bad debt and showed me a plan to pay it off. I was quickly able to knock down some of it, by selling off some of the doodads, mind you at a loss, but at least lowering the debt by almost a third. That’s the problem with doodads, they hold a lot less value once you buy them. Then we made a list of all my outstanding debt and put it in order from highest interest rate to lowest interest rate. I was to make all my minimum payments and on my debt that was at the highest interest rate I was to pay all my extra income. Then after that one was paid off, all my money went to the next highest until that one was paid off.

For example, if you had $200.00 a month to pay back your debts and 3 credit cards: one at 11.9% interest with a minimum payment of $50.00, one at 9.9% with a minimum payment of $30.00, and one at 7.9% with a minimum payment of $70. You would pay $100.00 to the credit card with 11.9% interest until it was paid off and the minimums on the other two. Then once that was paid off, you would take the $100.00 add it to your minimum payment of $30.00 on your 9.9% credit card and pay $130.00 to that credit card until that debt was gone. Finally, you’d end up making the full $200.00 payment to just that last credit card at 7.9%. This helped me created a predictable budget plan that started me off slowly paying off the debt. Mind you your credit cards need to go on lock down. This only works if you stop acquiring bad debt.

Now this sounds grand but what happened next was the really important part. I made one set of payments and had $38.00 in the bank. With no disposable income and no credit cards available to me, I felt broke. With tears streaming down my face, I cried about how penniless I was to Mom. She looked at me and asked if all my bills where paid. “Yes,” I replied. She asked if I had a paycheck coming in before the next time bills were due. “Yes,” I sobbed. “Good. You have a roof over your head and food in your belly. So you will be fine.” This was all she said and after a big hug we moved forward.

Years later after I was out of that bad debt, we talked about how valuable that conversation was. She expressed her heartbreak seeing me that way and how she could have easily paid off my bad debt for me and even contemplated doing so. However, she did what I imagine was the hard part of parenting and let me suffer, knowing of course, I was safely in her home if anything got too dangerous, like having a safety net only she could see. I watch parents give and give to their children. I have young adult tenants whose parents pay for their living expense while they lounge around and continue to live mediocre lives. I realize these parents are doing the best they know how to try to help their children, but it makes me grateful for the strength Mom showed. Paying off my bills would have been selfish on her part. “What!?!” Yes, I said it, selfish. It would have made her feel better, to not have to see me upset, but I would have learned nothing and the cycle probably would have kept repeating itself. I have come to realize parenting is about doing what sometimes hurts you to help your child.

So I share this with all of you as parents, do what you must to make your children financial literate, even if they judge you and hate you. I imagine this is a tough spot to be in and it would make me second guess myself. So know I support you. If at that moment your kids don’t understand, think of me as your kids in the future. I thank you and I believe in what you are doing. It’s probably not going to always be enough just to teach the concepts. Some kids don’t get it until they go to work at an E-quadrant job and feel that pain after making mistakes. Don’t give up on us…use it to your advantage to make a difference in the course of our lives. I can promise you, I wouldn’t be where I am today without my mom. So carry on…and keep waiting for those three sweet words…YOU WERE RIGHT!


Planning to Reach Your Financial Goals

steps to success

As the clock strikes 12 ringing 2014, amongst all the celebration there is inevitable chatter about New Year’s resolutions. We are now almost to the end of January and that vigor and excitement about the changes you’ll make in the New Year are fading. But why? Change is hard, harder than we really give it credit for. If all it took was a little will power we wouldn’t keep making the same resolutions year after year. This week check in with your financial goals because total wellness should be physical, mental, spiritual, and financial. By now your credit card bills have arrived and the reality of the holiday shopping extravaganza are hitting. Don’t despair, with some good planning and self reflection next year this time could more satisfying.
It all starts with getting back to the basics of Robert Kiyosaki’s Rich Dad Poor Dad. Do you know what your balance sheet looks like? As you get your taxes ready to file, it’s a great time to be looking at the past year and taking stock of all your assets and liabilities. As you probably already realize your financial goals for 2014 should include steps to decrease your liabilities and increase your assets.

Let’s start with liabilities. Look at all the cash going out on a monthly basis and assess which one’s you are over paying, duplicating, or unnecessary. Start looking at other providers that can offer you lower rates. In many areas, cable, internet, and phone services have a lot of competition. Before you decide to change to that other company’s lower introductory rate, call your current company’s customer retention department and offer them the opportunity to keep you as a customer by lowering your bill. Beware of their offer to give you more for your money. Remember your goal is to lower your liabilities not get more doodads. If they refuse, schedule to have your service shut off. You’d be surprised how they change their tune. Please remember to be nice. This isn’t about being a hard negotiator or being rude. You’ll get farther by simple stating the facts and explaining that you’d like to be loyal. I’ve been able to cut my cost by almost 50% by using this method. Also, look into different electric and gas providers. Many people don’t realize you have some choices that can save you money.

Now that you are starting to save money on some of your household expense, don’t turn around and buy more doodads. Take that monthly savings and work towards putting it into assets. Starting out you may not be able to buy that asset that throws off enough passive income to cover your expenses, but start small. Looking into investment opportunities that don’t necessarily require a lot of money like wholesaling real estate, buying mobile homes, or investing in tax liens may be a good starting point. Also, don’t forget the difference between good debt and bad debt. Good debt is debt someone else pays for you. Start looking at what kinds of credit you can use to invest. Those checks that your credit card companies send can often be used to purchase small deals. No credit left? Look for my future blog about strategies for paying off those doodads to free up your credit for investing. Look at your bank for lines of credit. The banking industry is highly competitive, so talk to several and see who can offer you the most bank for your buck.

Be specific about how much savings you are looking to achieve on your liabilities this year and how much you will gain in assets. Without a clear goal there is nothing to work towards. If you find yourself off track it’s time to step back and ask yourself why. Often times it is deeply rooted in old beliefs. Are you creating rules that are holding you back based on past experiences? For example, you might feel like you will miss out if you don’t have ALL the cable channels. Why not just try it out? Do a little test and block all your premium cable channels for 1 week. If you can’t find something on TV that is entertaining to you, use that time to do something else that will advance you toward buying your next asset. Research some areas that might be up and coming for your next real estate venture. You just might discover that your success is much more satisfying than a million cable channels.

If all else fails, get help. This is exactly where coaches can be helpful. There are many different specialized types of coaching out there, so do your research and find out what type of coaching might be right for your situation. The most successful people all have mentors and coaches who help them when they get stuck. You’d be surprised what you uncover when someone helps you create distance from your situation allowing you to get a new perspective. We almost always find that the biggest hindrance to reaching our goals is in our own head.

With all this being said, leave room to forgive yourself for your failures. Sometimes we get so wrapped up in our mistakes it stops us from even trying. You are far too important to neglect. Instead of making your New Year’s Resolution something just fun to discuss, make it an important part of the business of you. Lastly, don’t forget change is uncomfortable and if you aren’t challenging yourself you aren’t going to achieve your goals. Learn to love discomfort like a scary movie or a thrilling roller coaster ride. Wishing you a happy, healthy, and financially rewarding New Year.

New Year’s Resolution or Lasting Change

Happy New YEarFor as long as I can remember New Year’s Eve has always left me with a bittersweet feeling.  I always pictured this cartoon version of the passing year with big white gloves and shoes like Mickey Mouse, saddened and slouched over a suitcase, packing all the year’s memories.  It just reminds me time is a precious gift.   Many people look back on the year and reflect on all things, good and bad.  But it’s the changes and goals that haven’t been achieved that make it so hard to let go of the year passed.  And for just a little while, despair and disappointment grab hold and dampen the holiday spirit.  Then the clock strikes midnight and in a whirlwind the New Year comes running in all bright and shiny.  With one swift kick, the old year flies high into the air and lands far away in the past and we are renewed with hope and vigor that this year we will keep our New Year’s Resolutions.   As you prepare for the coming New Year, here are five tips for making this your year for change.

  1.  Approach change with curiosity. So often people approach change like a battle.  They give themselves pep-talks and tell themselves, “I will not go down in defeat.”  They struggle with fear; fear of failing, fear of the unknown, fear of the departure from what once was, and soon they wave the white flag and surrender to old ways.  Instead, identify small tasks that will help you meet your goal and ask yourself, “I wonder…”  You’ll be less focused on your actions and more focused on the results.  “I wonder how many phone calls I will get if I mailed out 100 postcards to these vacant property owners.”  “I wonder how many offers I will make before I find a seller that will take my offer.”  “I wonder if I will miss watching television if instead I researched properties in probate for the next 2 weeks.”  Don’t be focused on good or bad, just be curious and see what happens.  All of sudden, you’ll find yourself in a different place and making headway without even realizing you were working on making a change.
  2. Why Wait?  Often times we set an arbitrary start date for implementing change.  Isn’t that exactly what we do with our New Year’s Resolution?  And we know what happens to those.  We even do that down to the simple tasks that help us meet our overall goals, telling ourselves we will do it later or tomorrow.  Thomas Jefferson once said, “Never put off ‘til tomorrow what you can do today.”  We spend so much time justifying why we can’t do something and then feeling guilty and disappointed for not doing it.  Why not take that energy and just get it done?   Next time you catch yourself saying I’ll do it later, either do it now, or assign a due date for when you will finish a task.  Later is too broad of a time frame to hold yourself accountable.
  3. Keep inventory of your priorities.  It’s difficult to achieve a goal when your priorities are not aligned.  So often I meet people who want to change something in their lives, but they put the thing they dislike and want to change first.  For example, they want to quit their job and become a full-time real estate investor.  Then they put the job first and the tasks needed to be an investor last on the priority list, using the age-old excuse, “I don’t have time.”  Well, if you want to make changes, you don’t have time not to make it a priority.  Remember our story of the old year packing its bags?  In 168 Hours: You Have More Time than You Think, Laura Vanderkam suggests that instead of saying, “I don’t have time…” say, “It’s not a priority…”  If you feel that pang in your stomach, that’s a good indication you need change the order of your priorities.
  4. Change is a process.  It takes four to 6 month to make lasting change and it’s easier to do it with support from others.  Hiring a coach or being part of a group geared toward supporting change is a powerful tool to help you make change in your life.  Take inventory of your progress.  There’s motivation and joy in your successes and lessons in your failures.  People often look to their failures as a reason to give up, but failures give powerful feedback for refining the process.  You can figure out patterns and situations that specifically lead to failure and learn how to navigate them more effectively.
  5. Resistance to change is routed in deep subconscious and self-protective places of the mind.  As explained in Immunity to Change by Bob Kegan and Lisa Lahey, we are programmed to protect ourselves from harm.  We have immune systems and reflexes to protect ourselves from foreign bodies and our mind does as well.  When you find it difficult to make changes, you have to look deep within yourself to find the self-protective reasoning.  Often times, things from your past have subconsciously taught you not to move forward with change because bad things will happen.  In my experience, this often relates back to fears of being alone, of failure, or being an unlikeable person.  Once you are aware of the drive that is limiting you, it’s much easier to start to overcome it.  For example, if you are having trouble making phone calls, imagine yourself making a phone call and try to tap into the fear you feel when doing that.  Let’s pretend you are afraid you’ll say the wrong thing and they will think you are stupid and hang up on you and ultimately you’ll feel like a failure.  Now that could happen, but you now have to ask yourself, “Does that really mean that I am stupid and a failure?”  Of course not!  We all make mistakes.  Once you are aware of these rules your mind has subconsciously created, it is so much easier to overcome.

So as the clock ticks on towards the New Year take these tips and turn your New Year’s Resolutions into Lasting Change.

Don’t Get Distracted by the “Deal”tails!

deal tailsI received an email today that reminded me how easy it is to get into an analysis-paralysis mode when an owner calls with a property they want to sell.  The potential of getting a deal often sends investors into a frenzied whirlwind of over-analysis.  When buying wholesale, we are looking for situations where we can buy the property at a significant discount.  This usually means we are dealing with owners who are in some sort of crisis.  It could be anything from a nasty divorce to a lost loved one.  In any case, it can seem difficult to unpack the baggage to get the information we really need from the owner.

This is an all too familiar story for many new real estate investors.  Your heart races with excitement when the owner calls and seems motivated to sell.  You start with good intentions to follow the script, only the owner seems to be evading your questions with a canned, “I don’t know!” or going off on some irrelevant tangent.  You find yourself afraid to ask the questions you need answers to for fear of upsetting them and losing the deal.  Or maybe you all together forget your questions because you are caught up in their circumstances.  Once you hang up the phone you realize you are overwhelmed and don’t feel you have enough information.  So you set off on a quest to find the golden nugget of information that will make the heavens part, the choirs sing, and the confidence to make the most perfectly concocted offer.  Only after awhile you are frustrated, overwhelmed, and empty-handed because someone else got the deal.

Understand that owners are often dealing with a lot of stresses and the information or lack of information probably has more to do with the emotional circumstances surrounding the real estate.  The owner may not even be aware that they are giving you the run around because they themselves may not realize the effect the situation has on them.

When this happens, don’t get sucked into the confusion.  Just remember what you really need to begin evaluating a property:

1.       What is its potential? – Will it increase in value if it is repaired?  Will it increase in value because of the market appreciation?  Is there some unseen value by changing the use of the property?

2.       What kind of profit do you need to make on the property to make it a good investment for you?

3.       What expenses will you incur in the process of recognizing the property’s potential?  This could include repair, holding, and closing costs just to name a few.

So now step back and ask yourself, “What do I really need from the owners?”  The biggest thing initially is just access to the property to be able to estimate the repairs.  In Wholesale Buying, I often talk about making offers site unseen to streamline the process, but if you have an owner that isn’t giving you enough information or seems uncomfortable, it may warrant you meeting with them before you make your offer.  So if at the end of your conversation you don’t feel you have enough to make an offer, a good course of action is to make an appointment to see the property.  This will keep you moving forward and make you accountable.

Often I see investors obsessing over things that don’t necessarily change our evaluation process such as the owners’ mortgages, tax liens, and asking prices.  They haven’t even made an offer or seen the property and they are burying themselves in research.  While these things may affect the strategies we use they don’t generally change our bottom line.  We still need to be profitable or we won’t stay in business.  If an owner won’t sell at a price where you can buy, all those other pieces are irrelevant.   Now after you make an offer, if an owner can’t sell because of mortgages and liens, then we can use our arsenal of strategies to help the owner and create a deal.  My point is don’t get caught up in the “deal”tails, before you even know if it’s a deal.  It’s like Mark Ray, Mentor, always says, “If you aren’t making offers, you aren’t making money.”

Now the next question is…if you find yourself caught up in analysis paralysis…what are you avoiding?  I realize that many new investors want to make sure they have all the information to do the deal perfectly.  In reality, you will never do the deal if you don’t take those first steps to make an offer.  All the “deal”tails can be figured out along the way.

Networking for an Event

CLI_097It’s that time again!  Another Rich Dad Education Symposium is just around the corner.  And as Robert Kiyosaki says, “The richest people in the world look for and build networks, everyone else looks for work.”  This is an opportunity to meet like-minded individuals who can unlock your earning potential.  I always look forward to Symposiums because the conversations that are sparked by a group of individuals coming together from all walks of life yields powerful ideas that lead to lasting wealth.  As you are getting ready to come to this or any other Symposium or networking event keep a few of the following things in mind:

Have your business cards ready! People are so intimidated by the idea of a business card.  Perhaps we should call it a contact card, so as not to make it so scary.  Who cares if you don’t have a business entity, the perfect logo, or a website?  You might just be getting started.  Not to worry, many other people at a Symposium are too; or they were in your shoes not so long ago!  My point is you should have something with your contact information on it because as you talk to other people attending a Symposium they will inevitably ask for your business card.

I can’t tell you how often I hear, “Oh I just ran out!”  Figure at any one Symposium there will be around two to four hundred people, so bring enough for at least a quarter of the attendees.  Also, get one of those little detective size notepads for your purse or pocket.  That’s for when you ask for someone’s card and they say, “I don’t have any.” Think what a super networker you’ll be when you are prepared to write down their contact information on something other than your lunch receipt that you disposed your gum in.  Make sure that you get contact info from everyone that you meet.

As a side note, you can get business cards printed, on the spot, from most office supply stores.  They are not expensive and you will look more professional.

Get out of your comfort zone!  People often have a tendency to stick with their partners at any kind of networking event, including a Symposium.  While I understand you decided to take the classes and perhaps even build your business together, you’re not utilizing your time to its full potential.  If you split up, you can meet twice as many people.  When your instructors give you group exercises, use that as an opportunity to make more contacts by going a different direction than your partner.  I know it might be scary, but remember we don’t grow and build character if we are comfortable.

Know yourself and get to know the other person!  Before a networking event spend some time thinking about what you want to tell people about what you do.  Often called an elevator speech, this is how you would describe your investing focus in the time it would take to ride an elevator.  Think about what you want to say so you can have a more targeted conversation with people.  Are you looking for a deal, funding, or power team members?  Be able to convey that message in a clear, concise way.

Now, don’t forget to find out about the person you are networking with.  Ask open-ended questions to get them talking.  Remember they might be just as uncomfortable as you are or even more so.  It’s always helpful to move the conversation along with some questions that will show you have a genuine interest in the other person. Have a list of questions ready and memorized.

It’s not always about you! I always tell people to first look to help others, then yourself.  So ask yourself, “What can I do to help this person be more successful?”  Listen to their needs and offer to be of service whenever possible.  It will come back to you in many ways.  Sometimes it’s a deal or an introduction to someone else who will be a key player in the success of your business.

But sometimes it is about you!  We all know people in our lives that become leaches.  You know, the phone rings or the email comes across and you sigh and roll your eyes.  That’s because you aren’t getting anything from the relationship.  So ask yourself after you meet someone, “Is this someone who either now, or in the future, will be worth me maintaining a relationship with them?”  We only have so many moments in a lifetime and we must be protective of our time.  This is going to help you focus on the quality of your relationships.  In Wholesale class people often ask, “How many investors do I need in my database before I can make offers on properties?”  In reality, the answer is one.  If that person buys every deal, you only need one quality investor.  Focus on quality not on quantity no matter your investing focus.

Follow up and follow through!  The number one place a networker fails is in not following up or following through.  Always take time after a Symposium or other networking events to follow up with those that you met.  Put your contacts into your database and immediately send a personal email.  This will help establish a long term connection.  People can’t send you great deals if they don’t remember you exist.  That means you’ll have to keep following up with them on a regular basis.  Put together an auto-responder campaign using REI Blackbook for a more hands-off approach to maintaining your network long-term.

And if you said you were going to do something, then do it.  There is nothing more powerful than showing someone just how reliable you are when you do what you say you will.  If you offered a contact for a hard money lender, then send it without having to be prompted.  It speaks volumes to your character and makes you memorable.

So remember as you head to your next Symposium, have your business cards ready to go because I’ll be asking.  Happy networking and see you soon!

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