A few days ago, I was discussing the real estate market, investing and opportunities in the market with some friends. One of the interesting points that came up in the discussion surrounded the ability for some to make money in these areas and the inability for others to do the same.
As we talked about some examples I realized that what we were actually doing was comparing our outcomes to others without knowing the whole story. What I mean by this is that I sometimes compare my success (and failures) to others who may have different skills, resources, goals and abilities than I do.
Keeping up with the Joneses
The old line, Keeping up with the Joneses, has begun to mean very little to me over the last few years because I’ve learned that you need to live life by your own terms. Doing this involves setting your goals based on your abilities and financial resources. This also means that you spend your money with you and your family in mind; not with the interests of your friends, neighbors or colleagues as a focus.
One of my goals is to create multiple streams of income from real estate, investing and businesses (on and offline) that will generate enough income to cover all of my monthly expenses. Once this is accomplished, I will consider myself retired. To achieve this goal, I’ve decided to set aside money for advertising, website development, sales expenses and other marketing efforts.
Once I set these goals, I set my focus on accomplishing them. Does it make any sense to spend time worrying about how someone else can afford a new car, cabin or boat? Maybe, but it depends on how they got them. If you know that they created a successful business from scratch or made money investing in the market (and that fits your goals) get all the information you can from them. Integrate their approach into your business and push it forward.
To Spend or Not To Spend?
As you can see from the recent credit crunch throughout the United States, most people as spending much more than they make. The ratio of expenses to disposable income went negative for the first time about 2 years ago and we’re feeling the hit today. This means that for every dollar in disposable income a person makes, they are spending about $1.02 – not a good situation. If this is the case, how does it help you to model your life after someone who may be spending all their income on depreciating assets?
If I had been living according to other people’s goals, I may have taken that additional income each month and put it into something important like a larger television, unnecessary computer upgrades and other material things. This is not to say that I do not spend money on things I enjoy; it’s simply that I set aside money within my budget to generate passive income. If I was concerned about fulfilling other people’s goals – impressing neighbors, creating jealousy with colleagues and pronouncing my ‘wealth’ – I wouldn’t be in the position I am today.
Please don’t get me wrong. I am not trying to determine your goals for you. Setting goals will only work if they fit your lifestyle and direct your vision of your own future. My advice is simply that you plan your financial future and don’t let marketing or peer pressures divert you from your path.
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