The Changing Seasons of Wealth

When I hear about how many people are scared about the changing economy, I want to say to them, “Change your strategy!” Unfortunately too many people these days are stuck riding the “desperation roller coaster.” Desperation is what happens when you hope like crazy for the old ways to work and when they fail, you try harder and harder to make them work. This is like trying to beat a dead horse back to life with a stick. This is a poor strategy, the worst strategy.

One truth evident in this world is that the seasons always change. If you want to move into the top circles of wealth, move in harmony with the cycles of life, and with the financial seasons. The rich know all about the financial seasons and they not only prepare for them, they move gracefully within them.

Let’s use the housing market as an example. When the housing bubble was just about to burst, (if you were paying attention you could actually feel it getting ready to go) the savvy investor sold his home because it was about to go from being an asset (money making investment) to a liability (money losing investment). The savvy investor did not look at the home he bought in terms of dropping his roots and paying it down over the next 30 years. The savvy investor fast tracks the process of owning his dream home by looking at every other home as a stepping stool to the big home—the one he will eventually pay cash for. If you could have the nicest home you can imagine in the best location and pay cash for it in a fraction of the time it would take to pay it off making one mortgage payment at a time, wouldn’t you prefer this route instead?

The smart investor uses keen insight, makes intelligent purchases and has impeccable timing. He sees every purchase as an investment. He befriends Real Estate professionals and talks to them about the market and its trends. He taps into multiples sources of accurate information so as to make a calculated decision based on reliable facts. So when the season begins to change and the climate turns, the investor changes direction and puts into place the next phase of his strategy.

The strategy I used was to sell my home (we turned a 400% profit in the sale) and move into a rental home where I could safely ride the market down. Now in my new home, my floor plan and my neighbor’s floor plan is exactly the same, but he pays a $4000 mortgage, property taxes, home owner’s insurance and home owner’s association dues while I pay a flat $1895 per month for the same home! I get all the write-offs I need by owning a business and I pay $2100 less each month to rent the home than own the home. That’s a $25,200 annual savings to live in a house that has fallen from $780,000 to $650,000 in value over the last eighteen months! I save money monthly, and though I live here, I suffer none of the losses because I take my $2100 “profit” each month. As the market here in California falls, and it is falling fast, I sit in a stable position with no risk at all. And when I feel the market has bottomed out I will buy my next house at a steal of a price and ride the market right back up again.

The rich know that buying a money making asset is smart, and holding desperately to a liability as it falls in value is a poor decision. Timing is everything. A wise investor pays attention to the seasons, knowing and eventually feeling, when shifts will occur. To others their timing is a skill many people marvel over, but timing is a developed skill. The skilled investor does what everyone else will not, cannot, or does not do. They do this knowing that “keeping up with the Jones’s” is not a cute pastime but the path to financial insecurity, and in many cases, financial suicide. A smart investor only invites advice from industry experts, not their friends or co-workers or Aunt Judy.

The same lessons can be applied to a job or a business. If you do not move with the seasons you may be out of work, working for less than you are worth, or bankrupt. Maybe you’ll survive a little bruised and battered, but the lesson is still a salty one to swallow. Continuing with the real estate market as our example, let us look at real estate as a business. If the real estate market is tanking and you’ve made your living as an agent/broker/refi-specialist, don’t you think it might be time to take a hard look at your business as it relates to the changing economy? When sub-prime lending is being investigated, when banks are tightening their lending belts, when housing inventory is at record-high levels, when the news is talking day and night about the housing crisis, and when there is a credit crunch in full effect, maybe it’s time to diversify your business, or switch occupations all together.

Rather than sit back and baste in your fears, your failures or your complaints, ask yourself, “How can I serve the most people possible where they need to be served right now? How can I make money in this changing economy utilizing my current skills? How can I work in harmony with the trends rather than against them?”

I encourage you, for the sake of your own financial strength, to look at the recent decisions you have made openly and honestly. Could you have made better choices with your money? Can you resolve these issues right now? And if so how? Make a plan, put it on paper, act on it right away. Ask yourself if your occupation is in jeopardy? If so what can you do to make yourself more valuable in your current company or business, or in another field of work. Can you start a side business that brings in a few extra hundred or thousand dollars a month? I left my last job four years ago when my “side” occupation became worth twice that of my main occupation. I now pay less taxes as a business owner than I did as an employee. I work less than half the time as well. You never know where creativity, a good plan and inspired action will take you, so take action now for in action is where you will find the seeds that will guarantee your financial success.