We know a recession is coming, so if you’re considering buying your first home, is this a smart move? Should you be trying to time the market? What’s the best way to stay afloat, and are there any tricks to take advantage of as things head downward? So many questions and so many answers are all in this episode. Allow David Sidoni to guide you in this conversation on how to plan for a recession, laying out where housing sits right now so you can prepare and make the most of the situation.
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How To Plan For A Recession
First Time Home Buyer Tips and Hacks To Handle The Coming Recession
The world is changing fast right now. It has been said that the meek shall inherit the earth, which is also a deep-cut Motown style banger from Little Shop of Horrors, but I digress. I’m all about the golden rule and being kind in our time that we have to everybody that we know on the planet. I also know that when troubles come and suddenly inheriting the earth seems pretty tough for the meek and people feel like everything is rigged against them, there are some people that will whine and complain. Quite often, they are the people who didn’t heed the warnings. We are going to talk about preparing for the looming changes that not only can help you survive but help you thrive in times of disadvantage. Let’s get prepared.
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What is up homies? How are you? Are you super excited to dive into a recession for the second time in a row? How’s it going? It’s part two of my uplifting and optimistic breakdown of the looming economic misfortune that we are all going to experience in the future or possibly are already experiencing right now. For work, I’m on TikTok and Instagram. That’s what I tell people. I do it for work. I’m seeing all the Millennials posting all these videos and I have been seeing them for years where they are cheering and waiting for the economic downturn.
Now that we are talking about a recession so much, it’s starting to become more of a reality. They are always on there, yelling and screaming. I have seen them since 2015. Cheering for the housing crash and a recession so they can finally afford a home. If you are wondering why I have seen them doing this since 2015, it is because we had the first round of bidding wars and crazy demand for homes. That already happened once in 2013 and 2014 pre-TikTok. People were flooding my Facebook, MySpace, and Twitter with early versions of the mantra. The Millennials are waiting for it to crash.
If you are a super geek like me paying attention to all this housing crap, this is nothing new. I have done my best to tell my clients in 2012, all the way up to now that while you are cheering for a crash and waiting for this economic implosion so you could swoop in and finally get a deal, this is the reality of what has been happening while you’ve been waiting on the sidelines.
Since 2012, every year, I have been telling everyone who would listen to me that your rent is going to keep going up in increases that will make your brain melt. Since 2012, I have also been telling people that when mortgage rates were at 3% and 4%, those rates were insanely low. Despite the fact that they might be up a point or two from the last time that you looked, 4%, 4.5% or maybe even 5%, that’s so stupid low.
Since 2012, every year I told them that there’s this thing that happened back in 2008 and 2012. It’s this thing where they just stopped building homes. The builders all went bankrupt and they haven’t come back and we ain’t got enough homes. Not enough homes mean it’s not going to crash. We still haven’t recovered. We don’t have enough homes. The inventory is so low that we could have tons of homes come out on the market and we would still be fine.
If you tried to buy a home in the last eighteen months, you know it has been a mad bloodbath bidding war. Back from 2012 to 2019, some of my local buyers did listen to me and they bought a home, while some of them did not. Those people are still out there making videos every year about how the Millennials are cheering for a crash every single year.
[bctt tweet=”It’s time to take advantage of today to be ready for tomorrow.” via=”no”]
I started the podcast in 2019, trying to give people the information they needed to make the right decision. Now, I see videos of people waiting and cheering for an economic crash. Those people were probably super stoked when they saw my last episode about the coming recession. You are going to hear all kinds of negative numbers, which as a home buyer might get you super excited.
If you tune in to the show, you know all those headlines out there. The negative headlines are all geared toward homeowners and home sellers. Bad headlines for them are usually good news for you. In the last episode, I explained that the recession headlines could be total BS. They are often fueled by political or even worse sales agendas. It’s tough to decipher what is truthful. The ethical people do indeed see something coming down the road so we can weed through the BS and hopefully listen to them, and realize that we are either in a recession or a recession is coming.
Housing Data Game: Home Sales
Prepping for this recession and not cheering for it, that’s the topic of the day. Let’s see where housing sits right now so you can prepare for what’s going to happen to housing in this upcoming recession. Bear in mind that in the last 4 of the last 6 recessions, housing has gone up. You are going to hear these negative headlines in 2022. I saw one that said that home sales are expected to decline 7.4% in 2022 and 9.7% in 2023. That’s a dramatic adjustment from March when Fannie Mae forecast a 4.1% decrease in home sales and a 2.7% decrease in 2023. That was some data for you.
Let’s play the housing data game. I’m going to read that again and you’re going to tell me what the important word in that sentence was. Home sales are expected to decline by 7.4% in 2022 and 9.7% in 2023. A dramatic adjustment from March when Fannie Mae forecast only a 4.1% decrease in home sales in 2022 and a 2.7% decrease in 2023.
What was the most important word in that headline? I have literally seen people on TikTok use this headline and give absolutely the wrong interpretation of it. They say the headline says the housing is going down and it’s going to be a cheaper time to buy. What was the most important word? It’s sales. That’s the thing that people do when they talk about a recession in real estate. Home sales are expected to climb by 7.4%. That has nothing to do with the price, but that’s what you are going to hear on the news. It’s only the number of homes sold.
They did think that it was going to be a 4.1% decrease in sales in the number of homes sold, but now they think it’s going to be a 7.4% decrease in the number of home sales. That has nothing to do with the price of homes. If you are waiting on the sidelines for the market to crash and you hear that headline and you get excited, make sure you understand where the data comes from. When you hear about home sales, it has nothing to do with it. If you learn nothing from this show, you have to learn two things. One, learn how to use literally correctly and stop using it incorrectly. Two, that sales when they talk about home market data, that’s the volume of homes sold and has nothing to do with prices.
Another fun word that the economists and CNBC and all those people love to report on is the health of the housing market. They figure out the health by looking at housing starts. That means the number of homes that are being built. I got news for you. If you are trying to figure out if we built enough homes in the last fifteen years, you don’t need an economic guru. The answer is no, we did not. There are not enough homes.
If you want more details on that, check out every episode I have made for the last few years. Anytime I talk about inventory, inventory is low. It has been and it’s going to be still is. For those of you on YouTube, check out this chart. This chart shows housing starts since 1960. Keep in mind if you overlay the population chart on top of this chart which goes up and down, the population would be shooting from the bottom left to the top right, just like your charts for your rents.
Population goes like my mic because we keep making people, but we went from 1998 to 2008 where we averaged 1.7 million housing starts. From 2008 to 2022, we only averaged about a million housing starts. $750,000 times 14 years is a shortage of over ten million homes being built. Can you say supply and demand?
Since we are in a chart mood, do you remember my old chart that’s showing that in 4 out of the last 6 recessions, housing didn’t go down? Take a look at that chart again. Here’s some news there. Inventory wasn’t this absolutely shrunk up and low in any of those other recessions. Housing still was one of the main stabilizers and didn’t even go down but went up during those recessions.
There’s the subject of interest rates and how many mortgages are being purchased and forecast for 2022 and 2023. As you can see on this graph, this graph shows all the mortgages over $4 trillion worth in 2020 and 2021, but only forecasts $2.8 trillion worth of mortgages in 2022 and $2.4 trillion in 2023. That chart shows that we are totally decreasing. That means people are buying fewer homes and we have got a fatty recession happening, and all those Millennials making their crashing videos. They are finally excited because it’s crashing.
No. Take a look at the chart closely. It’s got two different colors. The light blue in the chart is the refinances, which means they are more than double the $4 trillion worth that we accounted for in 2020 and 2021. Look at the dark blue. That’s the mortgages for home purchases. Let me rock these numbers for you. We are looking at dark blue. The actual purchases used for home mortgages. $1.573 trillion in 2020. $1.871 trillion in 2021. In 2022, we projected $1.927 trillion. In 2023, we projected $1.853 trillion. That’s the actual data of how many homes are being purchased.
[bctt tweet=”There’s nothing that defeats anxiety more than security.” via=”no”]
Look at that chart. Who the hell cares about the light blue chart for refinances? Seriously, just the people who sell refinances. The rest of us don’t care. People want to know how many people are buying homes. Sellers want to know, “Am I going to have buyers?” Buyers want to know, “Am I going to have competition?” The dark blue on this chart is the home purchases and it’s showing that it’s going up.
For would-be buyers being priced out of the market, the good news is the Fannie Mae economists expect that home price appreciation to make a rapid plunge back into the single digits, moderating from a record 19.8% that we saw at the beginning of 2021 and into 2022, down to 6.5% in the first quarter of 2023, all the way down to 3.2% in the final months of 2024.
This one is pretty easy to describe. Imagine a slide with the bottom of the slide being the fourth quarter of 2023. The top of the slide is 19.8%, and that’s in 2022, and the slide goes down to the end of 2023. Let’s keep rocking that slide analogy. The bottom of the slide is the end of 2023. It’s still a 3.2% appreciating market. If you did go down the slide here and you didn’t burn your butt or the back of your thighs going down, or if no one greased the slide with PAM cooking oil.
I can’t recommend that doing with your children. I can tell you it was fun when I did it. Keep them with the slide thing. If you are not a terrible father or if the slide is not the surface of the sun hot, then you stop at the bottom of the slide. At the bottom of this slide where you stop, your feet are still dangling. That sand beneath your feet, that’s zero. That’s zero gains in the market. You think you are at the bottom of the slide, but the bottom of the slide is not even flat. That’s still home prices going up at 3.2%. It’s just a lower appreciation than the craziness that we have had for all these years.
The crash that you are waiting for is still below your feet, below the sand on the playground. The slide ends at the end of 2023 with home prices still going up at 3.2%. You are still playing above the sand, above zero level. At the end of 2023, you are still above the sand. You are still paying 3.2% more for a home that you purchase at the end of 2023 than you would at the same price if you purchased that home in December of 2022.
Your Best Move Against Recession
That’s a prediction. It could be wrong but that’s what people are anticipating based on the supply and demand. “Sidoni, thanks so much for the history lesson. What does all this have to do with me preparing for a recession?” I understand. A recession could change these numbers, but not quite as much as you think. First of all, the recession might not hit until the end of 2023. If you are tuning in to this episode, maybe you are in phase three of your home buying. You are sick of renting. You’ve been preparing and you are going to be ready to buy a home in the next 3 or 6 months. That’s what phase three years are. They are almost ready to go.
These numbers are an important message for you because your actual best play is to try and buy as soon as you can, as early as spring of 2023. That way, you still might be able to get some of that appreciation that’s happening in 2023. That appreciation acts as a buffer for any dips that come in the market. This is preparing for a recession. If you can, you should be thinking about a purchase so you can work that buffer.
If you buy a home for $400,000, that’s close to the national average right now. You buy that home in 2022 or early 2023. By 2023, home values are going up less than they have been. Now, that home is worth $450,000. In 2024, it drops back to $400,000. Let’s say things drop like crazy and you are down to $350,000 in the recession in the year 2025.
You are only down $50,000 because of that buffer. You could have been down a lot more than that if you waited 8, 12 or 16 months to buy. If you are in your position, you might want to think about your best move against the recession is getting in as soon as you can to get that buffer. Not only that you get a buffer but you are going to save three years of renting while waiting for prices to back down. It’s $2,000 a month. That’s $72,000 over three years, and it’s only $2,000 a month if your landlord doesn’t raise your rent. That $72,000 could easily turn into $75,000 or $85,000 when they bump your rent up.
If you read episode 98, you will learn how to use this buffer to your advantage. Using my mistake as an example. The guy who didn’t buy a home at 21 years old, when I totally could have. Back then, we were already in a full-on recession in 1991. In hindsight, what I do is I discussed in that episode how massively better would have been for me to buy in the middle of that recession instead of renting. Now, we are in a way better spot. We are potentially ahead of the recession. You can buy and maybe catch a few years of appreciation and get yourself a buffer.
As I like to say, if you are close to buying now, it’s time to get at it. Maybe you’ve been thinking about this for a while. I’m sorry that your parents decided not to consummate the relationship and have sex and have you 5 or 10 years earlier. You are the age you are now because that’s when they decided to do it. That means at this age now, it’s time for you to take advantage of it now, not 5 or 10 years earlier. Go yell at your mom and dad. You are where you are today, so let’s take advantage of today to be ready for tomorrow.
No matter what’s going on with the market and everything that’s happening in housing, I’m going to constantly update you and let you know exactly where you are in the market at that time so you can take advantage. The advice that I have been giving first-timer since 2012, jump in and take advantage. People in the past had more to take advantage of. You’ve got something to take advantage of, but the bottom line is rents suck and they are going to keep going up. Jump in and use the buffer because who knows? This might change soon. When it does, I’m going to drop a new episode then to make sure you can take advantage of what’s going on in the future.
[bctt tweet=”Appreciation acts as a buffer for any dips that come in the market.” via=”no”]
With all of this in mind, let’s acknowledge that a recession is a real risk. Let’s discuss getting ready and whether you can be lucky in purchasing the next three months or maybe you have to weather the storm and you can’t purchase for three years. As I mentioned in the last episode, some of the pain coming with this recession has a purpose to it. It’s a natural release. The pressure cooker of an economy. Instead of freaking out and putting your plans on hold, you should be doubling your planning. That’s what rich people do to stay rich. Get ready to take advantage.
Better Customer Service, Budgeting, And Automation
They plan during the good times. They don’t hang out, party, and rest on their piles of money. Many of them cash out during the good times and sit on the piles of cash for a little while for a long play. Then when the recession hits, they buy low. It’s all simple, buy low and sell high. In this recession, since we know what’s coming, we can find all the silver linings. One thing that you are going to see what’s going to be a great result of this coming recession is a return to better customer service.
You’ve heard the term low hanging fruit. That disappears when you are in a struggling economy. The ladder for businesses to keep harvesting fruit is quality customer service. I made that up. Make a sticker. Sell it at Nerd.com or on Etsy. Let’s all make some money because there’s a recession coming and maybe we can enjoy better customer service. Customer service should get better because when things tighten up, businesses need to do everything they can to get you to come back and spend some money.
Another thing that’s going to be happening in a recession is something you can do to help prepare is get back on your budget. How about this? Start a budget for the first time. The number one thing to do is go full The Richest Man in Babylon. That’s where you have to live 70-10-10-10. I have said it before and I will say it again. Read that book. It’s 70 pages, in big font and super easy. Live on less. It sucks at first, but you get used to it. 70% to live on, 10% to save, 10% to invest, and 10% to do charity or whatever you want to do with that. Do it.
One of the things I hear all the time is this generation is living with more anxiety than ever. There’s nothing that defeats anxiety more than security. If you have a job, you have the ability to create more security for yourself right now. Don’t put your life on pause. I’m not saying to sacrifice everything. You don’t have to live with FOMO, but you can learn to find a better work-life balance.
If you go 70-10-10-10, those extra 10s, that’s going to give you a less anxious life. It’s going to be hard to figure out how to live on that 70 first. Once you do, you are going to get more of the big O than you ever imagined. No, you dirty sick minded people. Not that big O. The O that relieves anxiety is options. At 49 years old, I quit my broker and started this show to help people. I want to start a revolution because I learned to live on that 70% myself so I could live my own best life. I realized the whole time that it wasn’t about having money in the bank to buy stuff, do things, or invest. It got rid of my stress. I didn’t fear things. I had the option to live stress-free. I had the option to leave my stress and anxiety behind me, and that gave me the option to follow a career path that was more aligned with my values.
I could afford to dump the old stressed-out life and get this new life with you guys. I’m not saying it’s not stress-free. I’m saying I feel a lot better about it. Did I mention please share this show so this life can be more stress-free? No. I share the show so I can help more people. I’m the only guy who has a show that doesn’t have a sponsor. Please share the show. We need more people to find it. I digress. This is about you reducing your anxiety about the future and preparing for it.
If you are reading this, don’t act surprised when the recession hits. You had another reason you should share this show with people that you care about. Do you want to see your friends and family all freaked out and not be prepared when the recession comes? No. Share the show. If you don’t and they do get hit by the recession, even worse, they are going to come to ask to borrow money from you.
How do you live that stress-free life, that anxiety-free life or that 70-10-10-10 life? You live on 70% and your work on the other 30% to make sure that you have a shelter. What you need to do is you need to automate. That’s it. Read the seven-part series on How To Financially Prepare To Buy Your Home. That starts on episode 19. There are tons and tons of resources there to help you automate.
We are going to get into something controversial on how to prepare for a recession. I want you to build up your reserves and savings. I want you to do what Dave Ramsey says. Did I say listen to Dave Ramsey? Yes, I did. If you read closely my tirades before you understand that, I think that he sucks for giving advice on when and even how to buy your first home, but he is a great teacher on early financial practices and kindergarten basic techniques, and then he’s great at helping people reduce their debt.
Get back to basics and start saving now. When you have that low down payment of 3% to 5%, you might want to transfer that cash into a historically appreciating asset. That’s the big one. There’s no magic system to surviving the recession. I can’t predict what the market is going to do. Nobody can’t. We analyze the data. We do our best to make sure that we use history to give us an informed decision about what’s going to happen in the future.
Three Ways To Win During A Recession
All I know is that for most of you, your biggest monthly payment is your rent. The sooner you turn that into a forced savings account, the bigger leverage you have against a slowing economy. Tips on what to do during a recession. There are three of them. Three ways to win when there’s inflation and a recession happening. 1) Save your funds before the crisis hits. 2) Grow your education and grow your cash position. 3) Invest.
[bctt tweet=”Home is a forced savings account. Rent is a necessity that you pay due to a lack of planning.” via=”no”]
Here’s the thing with investing. I know what you are thinking. “How am I going to invest? I didn’t buy a house.” This is the way it works. For most of you guys out there, your biggest and best investment is transforming your largest monthly output, that’s your rent, into a forced savings account and a long-term appreciating asset. What you are doing is you are turning something you already spend, that dead money, into something that you are getting a giant return on. That is investing by simply transferring what you are already doing.
For those of you thinking, you are going to save money by waiting for a crash, I could go on and on as I have in previous episodes about how the strategy is going to lose because we are still going to have rising interest rates, and we are still going to have that slide. It’s still a slide of appreciation. We are anticipating things are going to be going up. All of that math goes against your rising rents. You could do the exact opposite by having a fixed locked-in mortgage payment.
We know this, but what about this? Inflation now is at 8.5%. It’s not going to go away tomorrow. If saving and waiting for a crash is your best way to beat the recession, here’s the problem. Your savings now is worth less than it was last year. Let’s say that you are ready to buy a home now, and you are lucky enough to have $100,000 in the bank, and you want to wait one year to see if housing prices dropped, in case. Here’s yet another mathematical fact that shows that waiting for that option is mathematically a loser.
Inflation is at 8.5% right now and they are having trouble curbing it. Let’s say it stays there for another year. The average savings account is netting you at 1.1% right now. That’s not helping. You got $100,000 in the bank. You are still losing 8.4% because we are going to give you that 0.1% from the 8.5% that you get with your savings account. You are still losing 8.4% of that cash so the $100,000 has been sitting in there while you are waiting for the price of the house to drop. That money is in the bank, which is essentially sitting on your mattress, except the mice are coming in and stealing $8,400, and now you are down to $91,600 instead of $100,000. That’s just one year.
One of the great examples I like to give is that $100 from the year 2000. How many of you feel that 2000 doesn’t feel that long ago? $100 from the year 2000 is only worth $61 now. That’s an extreme example but that’s how it works. That’s how inflationary times grow. Remember, money cash will depreciate with inflation but a home appreciates. That $100 is totally different from the $100 that you put in a house, which shows a 3% to 4% appreciation over the last hundreds of years.
You can’t go look up what your parents’ house was worth in 2000. It’ll feel a lot better than that $100 analogy I gave you. The way it works is you can’t safety your way to wealth waiting for a great deal while you are holding onto your money because we are living in an inflationary economy unless that deal pops up tomorrow, as we have already discussed, that’s probably not going to happen. Especially while you are paying wasted rent every month after month, you are waiting for that deal and your money is getting sucked away.
Having cash is not working while inflation is part of the equation. Your first step to adulting is real estate. It’s not that other big O. It’s real estate. The cash in your wallet, in your bank, in a safety deposit box, or under your mattress is worth less and less every year. The safe investment of holding cash is an old man’s philosophy. It’s not safe at all. It’s losing money. I’m not trying to tell you, “Come on. Don’t hold cash. Get crypto.” I’m not trying to tell you to do that, NFTs, or anything else that I don’t know anything about. It is potentially a smart move for some people, but not for me and I’m not going to tell you about it.
I’m simply trying to tell you that you are already paying out your largest payment to rent and you get zero for that. It’s time to transform that payment into an asset that will gain you for sure if you’ve got a long-term 7 to 10-year plan, and a much bigger gain if you’ve got a super long 15 to 30-year plan. History confirms it. Stop thinking and waiting is playing it safe and you are going to make more money that way. There’s playing it too safe and playing it normal safe. I’m not trying to get you to do something crazy. I’m trying to do normal.
Here’s a great example. Look up Warren Buffett on YouTube when he discussed safe investing. He took a safe investment when people were being extra cautious and being like, “Make sure you got to do this and you let it sit long-term and you’ll make tons of money.” That’s a too safe investment. He then compared that to a normal safe investment. $10,000, he invested into an index fund. He said, “What would happen if I put $10,000 in the index fund back in 1940?” If he did that, it would be worth $51 million now.
Back then in 1940, everyone was saying the safe play was gold. The same investment of $10,000 would have been 300 ounces of gold or would have been $400,000 now. An index fund is still considered normal safe, $10,000 is $51 million, but the regular safe thing sitting on your money and putting it under your mattress. $10,000 of gold is only worth $400,000 now.
An index fund is not a crazy speculative investment and that’s worth $51 million. Buying a home is not a crazy speculative investment either. The difference between investing in gold or an index fund is that investing in a home is something you are already spending every single month with a rent check that you could transform into that index fund’s normal safe investment because you are already paying it. During a recession, what should you do to prepare for a session? Get ready to invest in your future. Save money now while we plan for a recession. Remember a home’s big secret is that a home is a forced savings account. Rent is a necessity paid due to lack of knowledge, and then lack of planning.
Did that one hurt a little bit? I’m on your side. Remember all the to-dos in the recession so you can work your money as the rich dudes do. Save, grow and invest. If you are thinking you can invest in this recession, when you have spent all your money buying a home before it starts, that’s the idea. That was your investing. You bought a house. Great job. Your home is your big investment.
[bctt tweet=”Do not save what is left after spending but spend what you have after saving there.” via=”no”]
You are beating inflation and not being a slave to rising rents by not putting your cash into a rent that reaps you with no rewards. Moving your monthly output into a basic need can also be a huge investment in your future. I have said that 97 times in this show. That’s because the best thing to do to prepare for a recession is to prepare to either take advantage before, in the middle or towards the end. Whenever you can take advantage during the recession, it’s going to be the right time to stop renting.
Recession-Proof Investment
Here’s a bummer thought from an investment podcast that I was listening to. Investors are salivating at this coming recession because they know that’s when they are going to get rich. This is a fact. They are super excited about the world getting into a worse economic position. Buy low, sell high. They are getting in the low and they have been hoarding cash waiting for this time. Do you know what investment they are talking about? Do you want to know what they are calling a recession-proof investment? It’s apartment rentals.
They are recession-proof investments so they can double their money as apartment rentals because rents are skyrocketing and demand for units is out of control, and renters are fighting for units. This show said, “You should buy apartments right now because the minute a tenant leaves, you can jack the price up 15% and you are going to have multiple applications. That’s what people are saying on podcasts when they are talking to wealthy people about how to make money.
If you are freaking out about where you need to live, and you realize your position in life, there’s time for another painful truth bomb, because I have been seeing a lot of people talk about this a lot. Housing is not a right. I’m not saying that philosophically. I’m saying that’s the way it is. Housing is not being treated like a right in the current system. I’m not giving you an opinion. I’m just reporting what’s happening in the current system. What the average American consider suitable housing is not a protected right in our current legal structure. It hasn’t been for years. The government barely regulates rants and the right to an affordable place to live. Do you think that sucks and is wrong? Me too, but here’s the deal. It’s not going to change.
Money rules the world. How much was it for you to fill up your gas tank? The oil companies line the pockets of the people that changed the laws to make them more fair and more equitable for them. Lobbyists and money rule what laws get passed, and that’s the straight-up way it works. I wish it didn’t but that’s what’s happening. Let’s understand that it’s not a right so we have to work on the system.
I wish it was different. Life, Liberty, and the pursuit of happiness. I’m totally down with the pursuit of happiness. The original author before we took it and got working with it was Life, Liberty and Property, but this is not where we are at now. Pursue your happiness. How do we pursue your happiness? We got to figure out what to do to get through this recession. With this recession coming, it’s time to take advantage.
In the list of the billionaires who make their money in this land of Life, Liberty and pursuit of Happiness. Third on their list of the things they use to make their money is real estate. For most of these billionaires on that list, their main job is not real estate, but the third thing they use on their list to make money is real estate. They have tons of real estate investments in their portfolios. Now they pay the politicians to make sure that they can run all their real estate businesses in a hands-off capitalist system just like the oil industry so there’s no regulation. You want to get even more depressed. We have 1,124 more billionaires than there were five years ago. That’s a 50% increase.
A report noted that as the world pushes towards its fifth industrial revolution spurred on by biotech advances and COVID-19, healthcare has become the second most important source of wealth for the billionaires after financial services. What’s interesting is a few years ago, healthcare was not even a top source of wealth. Things are changing and the world is unfair. We are going to get together and we are going to fight.
The first thing to do is get back to the fundamentals. You got to know what works. In order to get in the fight, you got to put on the gloves with me. One of your biggest gloves is automation. Automate your savings. Live 70-10-10-10. I keep telling you to save your money. Who’s a big bummer? This guy. I can hear you right now, “What about my work-life balance?” I want to spend my money when I’m young and I can enjoy it. I don’t want to save for retirement so I can go on cruises when I’m older. I want to be able to explore the world while I can still hike.
FOMO or YOLO. I get it. I understand where you are coming from. Life is a balance and I don’t advocate anyone following one specific set of rules especially if they don’t fit your lifestyle. As a 52-year-old dad with a family and a former FOMO Bohemian lifestyle, I have spent money in my twenties and I had tons of experiences. I could tell you, I could have had my cake and I ate it too. I could have had a lot of those experiences and still been a lot more stable in my 30s. That’s what I’m here to tell you. Convert your rent. You already pay for it. That’s your cake and eat it.
I’m not saying live on 70% of your income forever. Truthfully, that could be a good idea for you, but whatever. You can do it until you figure out how to get enough of your down payment and stop paying your rent. I could have easily bought a home and paid the same in rent and had that lovely and incredible forced savings account. It would have been working for me instead of me dumping my money into my landlord’s pocket.
It simply would have cost me the down payment. Maybe getting to the down payment would have cost me a couple of trips in my twenties, which meant I still would have had plenty of experiences because I was taking four fatty trips a year. Warren Buffett said it best, “Do not save what is left after spending, but spend what you have after saving.”
That’s everything you need to know about a recession and how to plan for it. Planning is not rocket science. I’m just an old dude who drinks. I’m telling you that in my 40s and 50s, I figured out this huge trick that nobody explained to all the renters out there because it didn’t make sense for someone to spend time explaining because they couldn’t figure out a way to get rich doing it.
Please take this at heart. I’m not selling a workshop or seminar. As I said, I’m an old man drink who desperately sees that we can start to bridge this wealth gap by educating renters to help them not be trapped by those landlords who are out there gouging you with these ridiculous rates. That’s a part of the wealth gap that people aren’t even talking about.
You have the power and the control to change your destiny and perhaps the economic destiny of the stupid gap that’s killing the middle-class and the working man as well. Share this info. Please text this show to a friend who you want to be lifted up too, and then I’m going to come back and keep yelling on this mic like a crotchety old Boomer who only wants you to see the potential that you got to help you avoid all the pitfalls that no one is out there helping you to avoid. You can do this.
Important Links
- Episode 98 – Past episode – Time For A New Game Plan To Buy Your First Home – My Story
- The Richest Man in Babylon
- Episode 19 – Past episode – How To Financially Prepare To Buy Your First Home – Part I
This podcast was started for YOU, to demystify things for first time home buyers, and help crush the confusion. After helping first timers for over 13 years, I knew there wasn’t t a lot of clear, tangible, useable information out there on the internet, so I started this podcast. Help me spread the word to other people just like you, dying for answers. Tell your friends, family, and perhaps that random neighbor you REALLY want to move out about How to Buy a Home! A really easy way is to hit the share button and text it to your friends. Go for it, help someone out. And if you’re not already a regular listener, subscribe and get constant updates on the market. If you are a regular and learned something, help me help others – give the show a quick review in Apple Podcasts or wherever you get your podcasts, or write a review on Spotify. Let’s change the way the real estate industry treats you first time buyers, one buyer at a time, starting with you – and make sure your favorite people don’t get screwed by going into this HUGE step blind and confused. Viva la Unicorn Revolution!
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