Align selftalk with your priorities

Are you reading Mortgage Secrets to learn how to deal with shaky credit, low cash, affordability, and so on? Good! You'll find more creative financing ideas here than anywhere else. Yet to focus on creative financing begs the ultimate question: Why do you confront such financial issues? Are you managing your money as well as you could?

Self-Defeating Self-Talk Destroys Wealth-Building

Dr. Shad Helmstetter explains that we create our own difficulties (financial and otherwise) through self-defeating self-talk (What to Say When You Talk to Yourself, Pocket Books, 1987). Do any of the following statements creep into your self-talk?

  • I can't remember names.
  • I'm always running late.
  • I can never get organized.
  • I'm always short of money. I just don't know where it goes.
  • No way could we ever save enough for a 20 percent down payment.
  • No way could we ever afford a property in that neighborhood.
  • Get qualified for a mortgage? Not with my credit.
  • At the rate we're putting away money for retirement, I'll probably be working until I'm 75.
  • I don't believe that infomercial hype. I know that I could never raise enough cash to invest in real estate.
  • I just can't seem to lose weight.

According to Dr. Helmstetter, none of these self-descriptors actually statesafact. But they do determine your future. "The more you think about anything in a certain way," Helmstetter writes, "the more you believe that's the way it really is." And when you believe "that's the way it really is," you do nothing to solve the problem.

The complaint denies your ability to change your behavior. Self-denial vanquishes potential improvement. Now, here's how to bring about the results you really want.

Reprogram Your Thoughts to Deliver Self-Fulfilling Messages

Reprogram your self-talk. Erase your self-denying complaints. Never describe your behavior in self-demeaning ways. Give yourself a jolt each time you let self-denying assertions short-circuit your search to improve.

As you eliminate self-defeating self-talk, replace it with goal-promoting self-talk. Ask yourself questions. Brainstorm answers. Adopt attitudes and habits that advance you toward the life you would like to live.

For example,

  • What are six ways that I can save more?
  • What are six ways I can cut spending?
  • What are four ways I can stop running up credit card bills and start paying them down?
  • What are four ways that I can work toward a $1 million net worth within 15 years?
  • How can I use real estate to help build wealth?

Ask questions that point to where you want to go. Invite solutions into your thoughts. With solutions in view, you motivate yourself to advance toward your goals. Determine how you must change. Create promises to yourself. Live those promises.

Does Self-Talk Work?

Absolutely! I rely on positive self-talk to help avoid all health problems; to maintain a vigorous program of diet, fitness, and exercise; to improve work productivity; and, yes, to save, invest, and spend wisely. Self-affirming, goal-directed self-talk gives you a promising outlook on life. Don't just take my word for it. Go to Amazon.com and search for Shad Helmstetter. His book has accumulated more than 50 reviews with a near perfect five-star rating.

Get Started Now

Review your spending, borrowing, saving, and investing. Where does your money go? Will your current money practices transport you to the life you want to live 5, 10, 20 years from now? Or look at it like this: At current rates of interest, each $100 per month you cut from your spending and instead devote to financing a property can add $15,000 to your borrowing power, and up to $50,000 (or more) to your future net worth.

Look at Table 1.2 and fill in the monthly amounts in each category. Do your spending, borrowing, and saving demonstrate a happy outlook for mortgage qualifying, property investing, and lifetime accumulation of $1 million (current dollars) or more?

If you doubt that money habits can power your wealth building, read The Millionaire Next Door, by Thomas J. Stanley and William D. Danko (Longstreet Press, 1996). You'll see that most people who become millionaires do so through saving and investing—not because they earn six-figure salaries.

Suggested Improvements

Do your spending habits show fits of extravagance, excessive borrowing, too little saving, and a general mismatch with your priorities? Yes? Then match your behavior to your self-made promises. Use these techniques:

♦ Think priorities. Think reward. Realign your money habits to promote your highest values. What do you want most for the next 10, 20, or 40 years?

Table 1.2 Your Spending Profile

Rent

$

Electricity

$

Gas

$

Cable TV

$

Internet charges

$

Online charges

$

Telephone(s)

$

Car payment no. 1

$

Car payment no. 2

$

Gasoline

$

Automobile insurance

$

Groceries

$

Child care

$

Clothing

$

Electronics

$

Lunches

$

Dining out

$

Entertainment

$

Tobacco

$

Beer, wine, liquor

$

Other vices

$

Health club

$

Magazines

$

Newspapers

$

Furniture

$

Appliances

$

School expenses

$

Health insurance

$

Weekend trips

$

Vacations

$

Housekeepers

$

Personal care

$

Credit card interest

$

Other

$

Total

$

  • Stop paying rent. For most people who don't yet own their own homes, rent wastes money. Can you eliminate or reduce rent payments? Can you switch to a lower cost apartment? Can you house share? Can you find a house-sitting job for the next 3 to 12 months? Can you move back with your parents or stay rent free with relatives or friends? Bank your rent money for 6 to 12 months, and for the rest of your life you'll never pay rent again.
  • Cut your food bills in half. Eliminate restaurant meals. Bring brown bag lunches. Buy unbranded foods in bulk. Prepare your food in large quantities and freeze portions in meal-sized servings. Locate a remainder and closeout grocery like Canned Foods, Big Lots, or Drug Emporium. Food prices in discount stores run 20 to 50 percent less than in big name supermarkets. When you find bargain-priced items that you use regularly, buy them by the case.
  • Cut your credit cards in half. Stamp out credit card addiction. Throw away your needles. Adopt a strict cash diet. You will spend far less when you count out real cash. Besides, credit card balances zap strength from your constructive borrowing power. By the time you pay off your credit card balances at 18 percent interest, you pay back two (or more) dollars for every dollar you originally charged— and that's in after-tax, take-home dollars. Since you only take home 65 to 80 percent of what you earn, you have to earn more than $2,000 just to pay back every $1,000 you charge on your credit cards
  • Don't put the car before the house. If you own a car that's worth nearly as much as a down payment on a house, sell it. Get rid of those cash-draining car payments. If the car(s) is (are) mostly paid for, a sale provides a good part of the cash you need to finance a property. If you are thinking about buying a more expensive car, stop! Until you can afford your perfect home, until you have built up the wealth you want, drive the least expensive, dependable car you can find. Use debt only to acquire appreciating assets. If property prices in your area do not offer a great risk/reward ratio, invest in other parts of the country—or the world.
  • Eliminate costly vices. How much do you spend on cigarettes, beer, liquor, drinks at restaurants, clubs, or bars, illegal drugs, or other wasteful habits? Vices can easily squander $2,000 to $4,000 a year (or more).
  • Buy clothes in thrift shops. Even if you're an up-and-coming investment banker on Wall Street, shop for bargains. How about an $1,800 Armani suit for $695 or an Emprio Armani silk paisley tie priced at $40? Both of these (and many comparable bargains) were available at GENTLY Owned in Atlanta. And these fashion items were new, bought at closeout. With recycled clothing, you can save much more. In her newspaper column, Dress for Less, Candy Barrie writes, "I'm a big fan of these [consignment and thrift] shops for their fashion bargains. . . . You'll discover we're not just talking about 20, 30, or 40 percent discounts. Sometimes you can get clothes for 90 percent off retail. Rather than give away their expensive clothes, some wealthy people place them in consignment and thrift shops."

Want to save money? Locate the recycled and closeout clothing stores in your area or a nearby big city. Whatever your tastes and price range, you'll find that you can slash your clothing costs by 50 percent or more. (Of course, you pocket even more savings when you resist buying all those clothes you don't need—regardless of their bargain price.)

♦ Buy "preowned" furniture. As with cars and clothing, many people who dream of building wealth spend too much too soon for furniture. And, instead of paying cash, they buy on credit. They chain themselves to years of payments at high interest rates. (Or increasingly, they are lured into those "no payments, no interest for six months" types of promotions that make slipping into a quicksand of debt all too easy.)

Most furniture depreciates in value faster than it depreciates in condition. You can find terrific preowned bargains. I have bought many beautiful pieces of high-quality furniture at prices far less than the cheap particleboard stuff that the discount stores carry.

When you buy clothing, cars, or furniture, let someone else suffer the depreciation. Pay only for the usefulness of a product. The less money you waste on depreciating assets, the faster you build wealth through home buying and other property investments.

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