TRP089: Handling Money
April 29, 2020
If you’re looking for honest real world, no BS advice on how to create income, build wealth, and achieve true freedom with real estate, you’re in the right place. Welcome to another episode of the real estate preacher podcast. Joe, where your host Randy Lawrence shares with you his experiences and strategies from over decades as a successful real estate investor. This episode is sponsored by Prosperity Capital Partners. Learn more at prosperitycapitalpartners.net now onto the show.
Hey, I want to welcome you to today’s show. I’m continuing on in a series that we have started at the beginning of the year, but with some of the things that have been going on, we focused on some other things, but really it’s going to be a four part series. First strategic focus. Second, and today’s topic is going to be on handling money. The third in the series is taking specific actions and then the fourth is sustained faith. And so you’ll see those labeled in iTunes for our show and they kind of all go together because what the intention there is that really these are four ingredients that are going to help you to accomplish the goals and the outcomes that you want. And I know right now a lot of people are dealing with the difficulties here from all that’s going on with the Corona virus and how it’s impacting everything.
But the discussion that we’re going to have today still has bearing because praise the Lord, this thing’s going to come and go and you still need to move forward in the accomplishment of your goals, your dreams, your purposes that God has for your life. So today we’re talking about handling money and how you do that. And so we’re going to talk about that first in the current text of what that looks like going forward. And then we’ll kind of segue at the back end to talk some specific items also here for the Corona moment. So first and foremost, handling money, you’ve got to recognize that it is more of a stewardship element, that you are a steward of the money that’s in your possession. The wealth is in your possession. And so to begin to become a good manager, either in your personal life or your business, you’ve got to operate from a budget, right?
And I know because I was a money manager for 15 years in a financial planner, stock broker series, seven registered investment advisors, series 65 and so I met with people and you’d meet with people, they have 500K, 1.5 million, 3 million, whatever the case may be. And quite frankly, like I don’t know, 80- 90% of the people probably, I’d put it at 90 didn’t operate from a budget, or have a family personal budget, right? And so, and I know because why? It’s a pain in the ass, right? Who wants to put down a budget and write all that out and then track your expenses. It’s just easier just to spend the money you got and do what you want to do. However easy is not always the way. So the truth is you’ve got to begin by having a budget that you operate from and that’s in your personal life, right?
That you get ahold of that. I remember my wife and I, when we first got married 23 years ago, we cook together a budget and operated off that budget. And as a result of that, we were able to pay off, I think it was, it was darn near $1,000 a month towards her student loans and some credit card debt that had been accumulated in college totaling almost $50,000 in student loans. But we had an intention to be able to, in the near term, the next three to five years, be able to have a child. And then during that a young child rearing years have the ability for her to stay home with our child. And so there was a plan and that we operated from a budget and now I continue to move that forward in our personal life that we still operate from a budget.
Praise God. It’s a bigger budget than it was then, but it’s still a budget that we have a target with which we want to stay within our spending each month. Now and again, that’s in your personal life. Let’s move that over to your business. Let’s say that you’re a business entrepreneur or business owner. You need to have quality books that are dialed in. and again, there’s no excuse to not have that nowadays. I mean, good Lord, QuickBooks is simple. I remember when I first started off, I had a CPA firm and they collected the books and did it every week. And then every month they would collect the books, reconcile them, generate the reports, all that. And that was fine and well, but it’s like I looked at it, it’s like, man, I can move to the QuickBooks thing and then I’ve got real time access to it.
And so even though it was a pain in the ass, cause I had to code stuff in and do all that. And that’s at a time when it was just me till I hired a guy in the money management arena. But that’s what I did. I moved over to QuickBooks and then by moving over to QuickBooks and then having a accounting firm that worked with me on the QuickBooks, then I was able to get more dialed in. And then of course, now here it is today 20 good Lord, 23 years later that we’re dialed in, right? It’s where I can look at the books and know what’s being spent, how much money we spent on this, what our overhead is. These are truly important things because in order to handle money, you’ve gotta be able to know what you have.
And there’s a great quote I love from the Bible, it says he who’s faithful in little things should be faithful in much. And it’s like, that’s the truth, right? If you can’t handle $1,000, you damn sure can’t handle $100,000. That’s just, that’s just a simple truth, right? And people will, a lot of times this is a lie that we tell ourselves. It’s like, okay, if once I get there, then I’ll do that. It’s like, no, you always got to put the work in first, right? It proves the faithfulness and the reliability that you’re going to be able to handle it. I mean, in an honest way why would God enable you to have that? Because only that you’re going to squander it, right? And so I truly believe without question, you always gotta put the work in. And so that means you start with operating from a budget.
The second element related to that is you’ve got to be willing to create margin in your life, right? Margin. I mean, right now people are struggling financially because they didn’t have margin. And so what that means is when you have this budget, let’s say you’re making a hundred thousand or $200,000, $300,000, whatever the number is, what tends to happen is people have this extra money and because they’re not really firmly committed to a budget, that extra money translates into buying a new car or translates into renovating the house, translates into upgrading their vehicle. It translates into any number of evidence of spending, right? That’s what happens. And so the, again, by putting the budget in place, you can say, okay, my budget is whatever it is, 5,000 a month, 10,000 a month, $15,000 a month, whatever it is, and then you stick with it.
And then now as you make more money than that, there’s a margin that exists. And then with that margin, you’re able to put that money aside. And so the goal is not to live on the Razor’s edge. That’s too many people do that. They, they financially, just really are almost paycheck to paycheck at every level, right? I mean, I’ve seen people making $250,000 a year and really quite frankly, they’re paycheck to paycheck that you’ve got to have margin in your life and that’s done by not overspending. And so that requires you to put in a bit of restraint as well, right? That you put in restraints. So instead of, I remember even good Laura, back in the day when my wife and I were starting off, it’s like, and yeah, I could afford, okay, Hey, let’s buy a new big screen TV.
Right? But it’s like, yeah what, the one we have is good enough for now and so we’re going to keep it. And that’s what we did, right? And so it’s like a prayerful thought of discussion all the way through. And it’s like I love, there’s a great quote. Again, I think this is a provers where it says to establish your work in your fields and then build your house. What the principle of wisdom there is make sure that your cash flow is good enough and sufficient in regular before you go out and spend more money, right? So many times people even like in the example of buying a house, they’ll overspin reach the very limits of what they could afford on buying a house. And then it’s like, I’m going to pray that I’ll make more money to create margin again, instead of recognizing what, instead of buying a $300,000 house, maybe we’re better off buying a $225,000 house or God forbid, let’s wait another year and then see that our income level is up and then go buy the house, right?
And so it’s just a better approach to create margin. Now again, let’s move from your personal life to your business life and the business life. You need to be running a lean operation, right? I mean, I was just having this discussion yesterday with somebody that realistically, a lot of people in business, right? The tide has gone out, the Corona’s hit, and they’ve just got so much excess with employees and expenses and all that, and they gotta just start, cut, cut, cut, cut, cut. It’s better to take the Sam Walton approach, right? He built Walmart and realistically ran a lean operation. Now again, you still need to pay people. Well, you still need to provide the tools and services that they need to be able to do an effective job. But it’s like you don’t need to just overspend. I mean, like realistically, the discussion I had yesterday, we were comparing another organization that’s in real estate and with ours, the person was asking about it and I said, well one of the differences with us in them is we already run a lean operation.
We’ve been like that for years because again, that creates margin in the business, right? That we have much more revenue coming in than we do as just to barely meet our, our, our overhead sufficiencies. And that gives us margin. And so again, that’s what you’ve got to do in your business life as well. And then the third thing is you’ve got to make wise decisions, right? If you’re not making smart money decisions, you’re not going to get where you want to go, right? I mean, that means that you’ve got to begin to evaluate the handling and the use of your money in a wise manner concerning the objectives that you have, right? So again, like you can’t say like, Oh yeah, Hey, I want to invest in real estate, so I’m going to buy I’m going to buy a second home, right? I’m going to buy a vacation home, right?
And then people go, Oh, well, yeah, but I’ll rent it out and I’ll do this and I’ll do that. And it’s like, look, if you’re going to truly invest in real estate, you’d invest in income property where it’s a straight up rental house or it’s a straight up investment in an apartment complex. That I had this conversation with somebody. I said, look, don’t kid yourself right? This, this, this not an investment. What you’re doing is you’re buying a vacation property right now. I said, that’s okay if you can afford it. But it’s like be honest about where you’re at. Don’t try to kid yourself and say, Hey, it’s a real estate investment or worse yet, people will buy a house to live in and they’ll go, Oh, but it’s an investment. No, it’s not. It’s a place for you to live in, provide a place for your family to sleep at night.
You know, same thing with buying a car. It’s like what kind of vehicle are you going to drive? Look, Hey, I’m not against driving a nice car for God’s sakes. I’ve got a Ferrari and a a Porsche, but it’s like I paid cash for the Porsche and I can afford both cars, right? It’s like and I could’ve paid cash for the Ferrari, but it’s like, Hey, it’s just a better deal. Not too. And so it’s, it’s, it’s something you have to look at and again, make wise decisions with how you spend your money. I was talking about that with another person, again, related to making a purchase, right? So, and again, they’re going to buy a property and it’s like, okay, you can put 10% down or 20% down, right? And then what you have to do is to compare the numbers.
Okay, can I take my money that I have and earn a greater return than what I’m getting right now at the bank? And right now the banks give loans at 4% ish, depending on the type of property and credit and all that kind of stuff, anywhere now as low as three and a half on a primary home and four, four and a half on a investment home. But again, think about that for a second, right? If you could then put your money to work in earn seven, eight, nine, 10%, why would you want to put it in there where it’s only making the bank’s willing to give it to you at four and a half percent. So again, you’ve got to become intelligent about making smart money decisions. So that’s got to begin to govern how you look at things.
Because your goal is to have each one of those dollars that you have as like a little soldier going out to accomplish his job in earning more money and coming back to you with more, right? That’s the goal. And so, I mean, that’s ultimately why people invest with us in apartment complex is right. They’re getting income right now from the apartment complex. It’s also appreciating means their principal’s growing in value and they’re getting tax benefits. So it’s like there’s a super value that comes from that kind of investment. But again, you’ve got to begin looking at your money decisions through the lens of smart decision making. Now again, that also may entail that you’ve got to learn some things and praise God has also, while you’re listening to the podcast. And then the fourth element that I look at is handling money as you’ve got to be willing to give, right?
And this is counterintuitive for sure, but it’s like if I give money away, then I’ll have less. But no, praise the Lord. If you give, then you’ll receive and you’ll have more. It’s a principle that’s existed for thousands of years and I’ve operated my wife and I’ve operated off the principle of tithing, giving 10% of our income ever since we’ve been together now 23 years. And I did so even before that when I really came to a place of faith in the Lord. And so what I’m telling you is that every time that you give, then you’re planting seeds to reap a bigger harvest. And so now again, you gotta be purposeful in your giving, whether you’re giving it to your church or your synagogue or your mosque. But then also to, there’s opportunities to give with people around you. Like even with what’s going on with this Corona, we so wan into a Samaritan’s purse into also local food banks here where we live that are helping to support people in all.
And it’s something that is a supernatural principle. There’s not anybody that I know that has accumulated wealth that wouldn’t have testify to the very thing that yes, you need to be a giver because in being a giver, what happens is you become a conduit, a channel that more resources and money are coming to you so that you can create more bandwidth in the giving. Right? You receive more, give more, receive more, give more. It just becomes a cycle. Right? And I mean praise the Lord. That’s the truth. I look back at my wife and I and our giving, it’s continues to grow and that becomes a benchmark for us. We want to focus on giving more and so that means that we’re earning more. So praise the Lord. These are things that you’ve got to implement. Let’s transition here also to the Corona moment here.
Cause that’s where we are at this second in time. So it’s like for most people, what you need to do is immediately eliminate all the expenses that you can in your personal life and or in your business life. If you have existing credit lines, it would be wise to be able to tap into those because again, at any point in time in the near future, the banks may make a decision to stop the credit line right now. Again, will it cost you money? Yes, it will cost you money. If you have an equity line or something like that and it has access for 50 grand and it costs you 4% that’s going to cost you $2,000 over the course of a year. However, they may come at any moment and say, boom, that’s stopped. We’re not going to that. We’re stopping the line.
You say, well, how could it? I’ve already been approved. I saw that happen to people in 2008 and 2009 it’s like bam. When the bank started feeling the pain, boom, they moved quick. So again, you would take the steps that you need to. Now again, I wouldn’t recommend borrowing. Somebody asked me, Hey, I could borrow this money at this 20% interest. I’m like, good Lord. No man, you’re digging yourself a worse hole. That goes back to the smart money decision, right? You don’t do it. So you’ve gotta be wise in your undertaking of those affairs. And now again, at this moment in time, you also need to become strategic about your thinking about what you’re going to be doing, right? I mean, this thing’s going to start lifting up here in the next month. And so as a business owner, or even as an employee or somebody looking for a job, you’ve got to begin to become strategic about what steps you’re going to take, right?
So again, you’ve, you’ve cut all your expenses personally and professionally, business wise as you can. You’ve increased the cash flow or the cash that you have. And then now third is you’re becoming strategic about what steps do I need to take to really be able to successfully move through this thing? So praise the Lord and then lastly, recognize that this is a season. Every season doesn’t last for eternity, right? This is a season where you need to be cultivating, preparing, developing your process. Maybe it is. You don’t have your books doubt in, get them to out in. Maybe it is you don’t have a budget in place. Get it in place, both personally and professionally. Get these things set so that when your opportunity opens up, you’re able to boom, move forward successfully. So, Hey, thank you so much for tuning in today.
I just look forward to having you a part of our show and what I can do to really serve you. Thank you so much. Thanks for listening to another episode of the real estate preacher podcast. I hope today that you learned something that you can immediately apply in your life or business. Make sure that you check us out on iTunes or at therealestatepreacher.com for more information. If you want to find out more about partnering together with me personally on real estate deals, including apartment complexes, go to the real estate preacher.com and click on the invest with Randy link. I look forward to talking with you personally. Have a blessed and victorious week four. This is the week God has ordained for you.