Sell Assets that Hold You Back

If you want to invest in real estate, youll need some extra money to work with. As mentioned in previous articles, your current and future assets might be hindering your ability to invest. Not many people realize this because they mistake certain amenities as necessities, and never understand just how much of their money is either thrown away needlessly or spent on unnecessary luxuries that dont return profits.

The trouble is, a lot people live expensive lifestyles by choice, and have habituated this decision into an expected and desired mode of functioning. But in so doing, they create for themselves financial obligations that only perpetuate this sort of high-cost living. And with so much money feeding this cycle, theres little leftover for investing.

If youre caught in this cycle, you can break free by simply re-evaluating your priorities and goals.

For example, do you really need that second car? Think about how much a car costs. Not only do you have to make a payment each month, but you also have to supply insurance, pay for gas, and fund whatever else the car demands such as repairs or routine maintenance. Just think about how all that dissipated money hinders your buying power, and how it could be used for investing in a piece of property youve had your eyes on.

But dont confuse prioritize for compromiseyoure not compromising one thing for another. Youre sitting down and analyzing what is more important to you in the long run: a car that depreciates over time, or a piece of property that appreciates over time. Youre considering what is more profitable in the long run, and what will allow you to finance a second car later in the future. Prioritizing allows you to have your cake and eat it too. Compromising doesnt.

Part of prioritizing means that you have to stay balanced. You shouldnt deprive yourself of the certain pleasures in life that grant you happiness. Maybe you dont own a second car, but instead love to travel. If in the past youve traveled to distant locales, such as Hawaii, Mongolia, France, or wherever, try exploring closer milieus. Doing so will reduce all kinds of travel expenses such as airfare, lodging, food, and souvenirs, and youll still be able to get away from home. Alternatively, this could allow you to further acquaint yourself with the local geography and learn a wealth of information you would not have gained by traveling afar. And who knows? You might find an investing opportunity nearby.

REMINDER. As an investment property owner, its important to save money for the future. This extra reserve will pay for unexpected costs and buffer against unforeseen ups and downs in the market. Perhaps the roof will need fixing, or youll need to completely renovate a kitchen or bathroom. Its important to have a safety net, or emergency fund, for this specific need.

Of course, you cant prioritize without having a plan. The plan you devise in order to reach your goals should be a long term commitment, unlike something else that you can finance either in the immediate future or on a monthly basis (e.g. a car). Here, the distinction between long-term (investing) and short-term (cars, vacations, etc.) is vast and requires different organizing skills in order to achieve them. Ultimately, you have to know what you want and think about the various avenues you can take to get there. This is a central theme in Rich Dad, Poor Dad. He always asks, Do you want to keep working for money or have money work for you?