Friday, May 2nd, 2008
What happens when you have an investment that has been bringing in income, but then stops? Like a real estate property that the tenant does not renew and you are having trouble finding another tenant. And can’t, or don’t want to, sell the property. Or after buying a real estate property as an investment, but can’t find a tenant?
Answer: It’s always difficult when our investment dreams don’t go exactly as planned, but as in any undertaking you are going to have some losses as well as some wins. The issue is how do you take your “lemon” and make lemonade?
First, take a look at your property and see what value there is in it. Rental income is only one way of making a return on your real estate investment. Right now, the United States is going through a downturn in the real estate market. If you bought “high”, you may be wiser to hold on to your property, at least in part, right now. The interest you pay on your mortgage is still tax deductible (in the US) so you continue to benefit from that advantage, whether or not you have tenants. You may have some equity in the property that you can use to make an alternate investment such as a different property or a different kind of investment altogether.
Another option is to lessen your exposure to short-term loss by bringing in a partner. This isn’t as impossible as it sounds - with the market downturn, there are people looking for opportunities to buy in at a good price. Their “bargain” might be just the financial inflow you need to take that money and look for a brighter option somewhere else.
With your current investment, and with all future investments, go into it with an “exit plan” in mind. There’s more information on this in MoneyMinding Step 10 on Building Wealth: The Foundation. Basically, it’s up to you to decide in advance how much money you are willing to lose - and when you reach that point, follow through with your decision, tracking your loss and using it against your gains in other areas.
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Friday, May 2nd, 2008
Right now, as people in the United States receive their refunds from their tax returns, they are also getting a one-time “gift” from the government, which is meant to give the flagging US economy a boost. It’s called a “stimulus check”, and for average income Americans, the amount is $600 each and $300 for dependent children. A PR Lead came in from a journalist who wanted some insight whether these stimulus checks would have their desired effects. What would people spend the money on? Better yet, what should people spend the money on??
The stimulus checks are just large enough that the average American would notice a difference to the bottom line when received. Not all of it is going to sink into “general household revenue”. Nor should it. This could be an opportunity for people to take an action that would continue to pay them in the long run. Here are some great ways to make your Stimulus Check pay month after month:
- Use it as seed money for a business idea – whether you use it to buy some software, get some business planning advice, license a product for resale, or purchase the raw materials for a product you make, thriving businesses have been started on a lot less.
- Use it to advance your education – particularly in wealth building books and study programs.
- Join a networking organization or club where you can meet and interact with others who are supportive of your goals. Or,
- Buy something – anything – that you wouldn’t normally buy, and that will give you a lasting and significant ‘thing’ that will inspire you to earn that additional money on an regular basis – use it as your personal motivation to do more – and more often.
Putting it into savings and forgetting about will be the least efficient use of the money – bank accounts don’t even keep up with inflation, and if you want to accumulate a pile of money to live on later, $600 isn’t going to make much difference when ”experts” say that you need around $1.5 million saved up to “retire” in comfort. Planning for ongoing income is rarely taught, and it’s the very thing that Americans need to stimulate the economy on an ongoing basis.
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