... "A Fool and His Money!"

Many in "my generation", probably remember the famous line from the 1980's Movie "Wall Street" by Oliver Stone, when Michael Douglas leans over to Charlie Sheen (Bud Fox) and says:

"... A Fool and His Money - It's a Wonder They Ever Got Together In the First Place!"

Got to think about that one.



I think the Number One Reason folks never get started investing in real estate is because they do not want to look, or for that matter "be" foolish.

#1 - They are completely afraid to ask for help. Maybe it has something to do with our society, and our education system, but we seem to want beat the snot out of any one who appears "weak", if they dare raise their hand and say, "... excuse me, but I don't quite think I understand, can you please explain that to me again." I guess only "girly-men" (and what ever is the appropriate metaphor for a woman) ask for help, when they are dazed and confused about something.

Much more MACHO to just plunge ahead (in your ignorance) and do the deal - regardless of one's understanding of what they are doing. And those who realize how dumb this is, fall in to the second group:

#2 - For fear of looking dumb by asking for help, you simply choose to do nothing. Taking comfort that "doing nothing" is the "safe choice". Unfortunately, doing nothing is actually worse than being Macho. Cause the Machismo Man (or Woman, if I can say it that way), if they are teachable - will jump off the cliff without a parachute, and then if they survive realize the importance of packing a chute next time they jump. Or as John Maxwell says in one of his best selling books on leadership and life, they will "Learn to Fail Forward", and as result will be better off if they do not quit.

However, the person who chooses to do nothing, is worse off for two reasons: a. They have begun to build a prison for themselves. A prison of fear. Every once in a while you have to get out the sword and slay the dragon. It is a fact of life and a cornerstone of every religion - While no one wants to go around fighting their way through life, every once in a while even the most passive amongst us is faced with a fight. Sometimes the fight is physical, but as we grow older the majority of our battles are fought within the six inches between our ears. If we choose to avoid every battle we face, we automatically begin to build a wall around ourselves. A wall that will ultimately imprison us in fear, where we will be afraid to make any decisions that will result in something "New" happening in our lives. And where would we be if we never had anything "new" come into our lives...?

For some people, the thought of living out our "golden years" on a rocking chair on the front porch of our Smokey Mountain Cabin with a shot gun in our laps to shoot "buck salt" at any "trespassers" who come on our land, is a very exciting idea. I personally would rather be traveling via private jet to all the great beaches of the world with my family and friends, but for those who want the grey beard down to the toes, and a husband to give them epson salt foot baths, the Smokey Mountain Woman thing is o.k. < - here come the emails, "incoming!" But seriously, practicing the habit of fear by "hiding in a cave" every time you are faced with a difficult decision is a bad idea. And for many people, anything having to do with money and investing is a "difficult" decision.

But the reality is that if you do not learn to invest, you have also sentenced yourself to a life of "9-5". And in an ever changing world, where the average job is "offshored" or "right sized" every 5-7 years, what you have really done is subjected yourself to an ever declining quality of life, once you pass a certain age, like around 47-53. During the last round of layoffs, did you take note as to who got the axe first, and when the organization started to hire again, who got picked up, and who didn't...? Don't tell me age discrimination is not real!

And b) Even if you are able to avoid getting caught without a chair when the music stops, the reality is that there is always something going on in the economy called "inflation". Inflation is the "thief in the middle of the night" - it steals from us all without regard to age, race, or religious back ground. Real Estate is the only investment that is universally regarded as a "hedge" to beating inflation. Why...? Because you can raise the rents to counter the effects of inflation.

But back to why Inflation is a THIEF! Simply stated, if you made the same amount last year that you made this year, you were already 3% poorer, because inflation picked your pocket. If you do not believe me, then you must not drive a car, or your spouse pays for the gas. If on average, you spent an extra $50.00 at the pump each week, in 2005 vs. 2004, you spent only an extra $2,500 for gas. Said another way, if you make $45,000/year, you had to work an extra two weeks last year just to pay the extra amount that gas cost you in 2005.

"So, what...?"

If you do not have an investment plan that beats inflation, then every year you think you are standing still, you are really going backwards.

"No problem. My job will take care of me!"

No, not really. Even if you get an annual raise that keeps pace with inflation, which most people do not. The average person will be laid off 3-5 times over the course of a 30 year career, and will not receive any form of a pension. Meaning, unless you want to keep on working until you drop dead at your desk, YOU have to put aside money for your retirement. And the money you have to put aside has to account for The THIEF - INFLATION. And not only does it have to account for Inflation, it also has to account for the fact that during the periods of time that you are "in transition" you will receive little to no income, and the last two times you are laid off, when you do go back to work it will probably be for less money than you were use to making, because once they off shore your job, the only jobs you will have any chance at getting will require you to be re-trained and although it is illegal, most employers will still not want to hire folks past 50 that they have to train, when they can hire someone under 30 to do the same thing, and pay them a lot less - Welcome to reality.

So the next time you are thinking, "should I really make the effort to learn how to do this real estate thing", or "gosh, I really feel dumb asking a question like this", think of the old grey guy in the corner cubicle who use to be a Senior Vice President, and say to yourself, "but for the grace of God.... "

And I hope you come to the conclusion that you should "give this real estate thing one more shot..."

"...If there is no struggle, there can be no progress" - Frederick Douglas