Finances are like a bucket with holes in it. Money goes in and leaks out almost just as fast in the form of expenses. The more income, the more expenses we tend to get.
There are 2 obvious solutions to the problem of running out of money.
- Control the Expenses
- Make more Money
Both are necessary and both are hard to do. Easy to say. Easy in theory. Difficult to accomplish.
Controlling expenses and maintaining a budget is essential. Living within your means is the proper way to keep your head above water. This doesn’t mean you can’t Dream Big. It doesn’t mean you can’t live big.
It does mean paying attention and knowing your numbers. You always need to know how much cash you have and where it is coming from next.
This moves us to the make more money solution. Getting more cash injected into your bank account is essential. If your bucket has holes and you dont get more cash, you’re in trouble.
With controlling expenses, Dreaming Big, and making more money we need details. We need to dig in and be specify with a great plan that makes things easier and better for us.
Expenses:
– avoid subscription or recurring payments
– buy with one-time only payments as much as possible
– lease liabilities, no contracts, cancel at any time
Income:
– Cash is great, don’t spend it – invest it
– Buy Assets with Cash. Buy everything else with Cashflow!
– Cashflow is King
The magic of cashflow in real estate investing is that each and every month the money flows back in to the bucket in the form or rents and refills it.
Get enough cashflow from rentals and you never have to worry about your bucket going empty.