Financial Freedom!!by Beth Riegger I caught a program on 20/20 the other night and I wanted to share their information with the community here.
They spoke with a financial expert and author by the name of David Bach who believes that the key to personal financial wealth is home ownership and I canâ€™t agree with him more, you certainly canâ€™t get rich renting all of your life! Hereâ€™s an interesting fact that David stated, â€œThe average renter in America is worth less than $5,000 while the average homeowner is worth over $172,000.â€ As Arsenio Hall once stated, things that make you go hmmmmmmmmm.
Now, Bach isnâ€™t against investing in other things as well, he just thinks that owning a home is a sure bet so to speak. Can you believe that, according to Fannie Mae, there are close to 10 million renters out there in the United States right now that can afford to own a home but they donâ€™t know it or donâ€™t think they can? Thatâ€™s amazing to me!
One thing I learned by watching this program was that people just live. What I mean by this is they donâ€™t really sit down and look at what they spend their money on, or even plan a budget. This is one of the most basic things that people should do in life. If you just sit down, write out over the last few months what exactly youâ€™ve spent your money on, you would be amazed at how much money you waste. Bach called this his â€œlatte factorâ€ meaning how much money you spend on store bought lattes and such. What he was trying to say was not to cut the fun out of your life but plan for it, donâ€™t just spend it willy-nilly. If you plan for things, make some cuts here and there, you would be amazed at the money you could come up with to save, invest or even purchase a home!! And, best of all, you can still live and be happy!
One very good piece of advice that this expert gave, which I think we all need to advise our spheres of influence on, is to purchase a starter home first, donâ€™t go for the whole nine yards of a dream home your first time out. Weâ€™ve all heard you have to learn to crawl before you can walk and walk before you can run, why do people think they can skip steps when purchasing homes? Itâ€™s really a big dose of reality for people to understand but once this is internalized, so many opportunities arise for potential home owners.
Another part of Bachâ€™s message was to invest in real estate. Not only purchasing a home to live in but purchasing other homes and then renting them out. This has been very popular in the past and it seems that people think only the â€œrichâ€ have done it but youâ€™d be surprised at how many average ordinary people are doing it as well. Now, with the market somewhat cooling and interest rates not being what they used to be, people may think returns on home buying are a little less of a sure thing. We are by no means going back to the 80â€™s where 12.9% was a good rate!! Homes are still increasing in value, just not exponentially!! You are still building equity in your home with every year and every payment, how can this not be a good deal?
I guess I would not suggest to everyone to go out and invest in real estate, unless you know what you are doing and/or you have someone that is experienced enough to advise you and take you under their wing so to speak. Itâ€™s risky to deal with renters but in the long run, adding to your bottom line is what itâ€™s all about, right? In my humble opinion, and I guess that Iâ€™m in good company with a famous author and all, I would say if you can afford to invest in real estate, do it!! Also, if you are a renter, get with your trusted mortgage advisor or Realtor and start talking about buying a house!!
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