Pole vault your way to financial freedom (The Financial Athlete #21)

For the pole vaulter the initial height of the bar is easy to leap over. Next, the height of the bar is increased incrementally until the pole vaulter can no longer leap over without touching the bar. The highest height leaped over marks her final score. Therefore, it cannot be said of a pole vaulter that she is only as good as her last attempt, which is a failure.

Some people approach investing with the continuous, all chips on the table, casino style gambling. In the end, losing is a sure outcome. The forever flipper of residential real estate is a good example. As long as prices were increasing, flipping of properties was a profitable proposition. Flipping took on a frenzy in some regions of America. A housing bubble ensued, which was also propped by lower capital gains taxes and mortgage borrowers’ refinancing with more debt.

It’s inevitable for the market to return to equilibrium. In an asset bubble, prices will decline to reflect the much lower intrinsic value of the properties. The flippers, who had felt so rich only months earlier, became to feel poor because they found themselves stuck with mortgage loans exceeding property values and inadequate rental income to cover debt.

Approach investing like pole vaulting. Increase wealth incrementally, without putting a substantial risk on your assets. Your money should not be played like yo-yo…up and down, up and down.

Think and set goals in terms of FINANCIAL FREEDOM, rather than pursue an elusive pot of gold at the end of the rainbow. The bars to leap over are layers of FINANCIAL FREEDOM. The first bar is meeting all expenses, including paying off the balance of credit cards. The second bar is saving and investing at least 10% of your income. The third bar is owning a home debt free or with passive income exceeding mortgage interest. The fourth bar is passive income surpassing earned income to the point where there is no need for the earned income. The fifth bar is making a difference in your community or country or world thanks to your financial support.

“Someone’s sitting in the shade today because someone planted a tree a long time ago.” — Warren Buffett


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One Response to “Pole vault your way to financial freedom (The Financial Athlete #21)”

  1. The all around athlete (The Financial Athlete #110) « Pasta Man Vibration Says:

    […] For more on financial freedom review Pole vault your way to financial freedom. […]

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