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What I did on my Birthday! September 11, 2008

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Yesterday was my birthday.  My six year old son doesn’t understand why, when you get up in years, birthdays become less of a big deal.  I tried to explain it to him, but it wasn’t really computing for him until I told him what I do on my birthday.  Then as sometimes children do, he made a truly profound statement.  First, some background.

I reserve time on my birthday to think.  I think about the past and present, but mostly I think about the future.  Specifically, I spend some time thinking about how I have planned my financial life.  John Maxwell says this about thinking:

Unsuccessful people focus their thinking on survival

Average people focus their thinking on maintenance

Successful people focus their thinking on progress

So I spend time on my birthday thinking about progress.  This last year I have made much progress, and hope to continue to progress, but you need to analyze what you are doing and make appropriate changes.  Frankly, I am very happy with my investments, but want to start to turn a small percentage of them into income producers.  My cash flow has been good from my business, but my receivables have sky-rocketed. The Shafer Wealth Academy is doing quite well, but needs to be pushed to the next level over the year.  And I am starting another business with a partner that will suffer the pain of being a new business.  My book is about ready to be published.  So I do have much on my plate.

I am evaluating several different income producers to find the right fit in terms of cash flow and risk.

Here is a sample: Reverse Convertible Notes, Principal Protected Notes, Covered Calls, Investment Real Estate.  None of these strike me as the perfect vehicle for what I am trying to accomplish, so I will remain in the thinking mode for a short while about these and other options. 

Now, back to my son! 

“Daddy, isn’t it great its your birthday?”  “Aren’t you excited?”  “Well, no son, I don’t feel that excited.”  “Daddy, what did you do today?”  “Well, I worked out and then I did some thinking.”  “Daddy, why?”  “Because it is important to stop and think sometimes, and I always do that on my birthday.”  “Why is it important to stop and think?”  “Well son, adults get so busy with their everyday life, they don’t take the time to think and plan.”  “And you do this on your birthday?”  “Yes.”  “Daddy, I told you birthdays are important; just think if you didn’t have a birthday and then you would never think!”

Ahh out of the mouth of children!  Here’s to taking time to think.

Double Edge Sword September 9, 2008

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Today we have Jeff Brown giving us another great guest post.  Jeff is as experienced in investment real estate as you will ever find.  Hope you enjoy!

A Makhaira (ma – ki – rah) is the name used, in Koine Greek, (Created, in part by Alexander the Great as the “common language” for his huge military), a dead language, for sword. It was often used, (to the confusion of many) when talking about the sword used by Roman soldiers. They actually used, for 2-3 centuries, a sword referred to as gladius. Keep the faith — slowly but surely, this will dovetail into real estate investing for retirement. The gladius was different. It’s design aided the Roman legionary’s battlefield tactics. First, it was much shorter than what we’ve come to know as a sword. The blade was usually only 19-20″ long. Second, it was double edged, able to cut savagely both ways — a huge improvement. Third, its design went away from the oft used leaf shape, to a simple, straight blade. These changes were a result of Rome’s enemies modifying their defenses. I won’t bore you with the details here, but here’s a description of what a legionary was now able to do in battle. While holding his shield with one hand, he held the gladius in the other, like most soldiers of the time. However, his sword sported a much shorter blade, which helped him get inside his opponent. Also, if his first downward slanting-cutting motion missed his target, it wasn’t necessary to raise his sword arm to try again. He simply reversed the motion, essentially a backhand, and saved precious time, (if not his life) by wounding or killing his opponent that much more quickly. Also, because he was working with the relatively shorter blade, and was therefore more easily able to get inside his enemy’s kill zone, it was far easier for him to thrust into the abdomen, an almost guaranteed kill shot. It was a truly effective (read: nasty) weapon, made possible by it’s planning, vision, knowledge of the enemy, and ultimately, design. Where’s the Roman legionary’s flexibility? His javelin, known as a pilum. It was roughly seven feet long. He used it for both throwing, and thrusting. He had a weapon for close, savage, infighting in the gladius. His javelin gave him the option of dealing with his enemy from a longer distance. The goal was, however, the same for both weapons — victory on the battlefield. And yet… Most military historians agree — the gladius wasn’t really the primary reason for Rome’s military dominance. It was their vision, forward planning, objectivity, but most of all — their massively superior training — which produced brutally reliable discipline. Their vision, planning (Purposeful?), and objectively focused discipline, not only carried out that superior training — but created the ability to be flexible when confronted with (sometimes rapidly) changing circumstances.

Here’s how we can look at this from a real estate investment viewpoint. Leverage, the right financing, solid location, quality construction, tax shelter, tax deferred (1031) exchanges, are all examples of the investor’s gladius and pilum. But they’re not what makes an investor victorious. What provides ultimate victory, defined as a magnificently abundant retirement, is vision, Purposeful Planning, objectively executed, while seasoned with flexibility. BawldGuy Axiom: Don’t mistake the weapons in your arsenal as the way to victory.  What will, in the end, provide you with your dream retirement: vision — plus Purposeful Planning — combined with objective execution and flexibility.  Create your own empire. First though, you have to ask yourself what you want it to look like. What does your retirement look like? Or rather — what does it look like if you keep doing what you’ve been doing?

Thanks Jeff.  You have a way with words!