A young real estate agent I’m mentoring said to me the other day, “Tim, I want to follow in your footsteps. What is the ONE THING I should concentrate on to ensure that happens?”
My answer to her may surprise you. I said, “If you want to be financially free, then you have to play really tight financial defense.”
She looked quite puzzled and asked, “What do you mean?”
I replied, “I’ve seen MANY Realtors and other business people do really well and not have anything to show for it over time.” I told her about the agent I coached years ago that said she made $700K per year and spent “somewhere” between $600K and $900K per year to make that!!!
What??? Yes, that IS a true story.
She had NO IDEA WHAT SHE SPENT PER YEAR and yes, this is an over-the-top example, but it does make my point.
Let me put it another, more normal way. What I’ve experienced is when someone’s income goes up their spending naturally increases along with it. So when they are making $30K per year and don’t have much, they live within that. Then their income goes to $50K and the expenses go to $49K; $100K in income, and they spend $97K. They are simply not playing “tight defense.” With this pattern you will never get ahead. I’ve actually seen a lot of people go bankrupt as their earnings surged because they WAY overspent.
The people I’ve seen that have started with modest means and accumulated wealth over time have done a few things right (besides inheriting it).
1. They increased their income over time.
2. They created a monthly budget and meticulously watched where they had “leakage” and fixed it.
3. They avoided big debt, except appreciating assets.
4. They chunked off their “bad debt.”
5. They learned how to invest their profits wisely.
Sure there is a lot of other important factors involved in “getting somewhere” in life.
You MUST deliver great service. You must learn your trade. You must “play nice” with those you come across on your journey.
However, if you want a life of leisure and luxury someday, there has to be some sacrifice along the way!
“D” UP my friends!
To connect with Tim, you can send him an e-mail at Tim@Timrhode.com