Have You The Ability to Manage Money Successfully?
There are many wealthy people in the world who started with nothing. They did not get gifted money and they did not get it just by working on high salaries. They got wealthy because they had learnt how to manage money and were prepared to sacrifice their wants until they could afford them.
The percentage of lottery winners that have been broke several years later and the high flying sports stars that are in low paid jobs to meet their needs after retiring, is testament to the fact that it is managing money that makes the difference.
Jan Somers is one such wealthy investor who learnt early on to manage money and she states that when she bought the first investment property their family income was low and they had children to support as well. She most certainly is an Australian investor who is worth emulating.
Managing Debt
Continuing to buy property at full leverage is not helping because it means that as your income grows so too does your debt.
In debt management there should be a time when an investor needs to start paying their debt down.
Two things develop from this:
1. Security, because if there should be a property price fall then there is property equity
2. As the debt is reduced, less is needed to pay down the debts and as the rental income increases, the owner can start keeping more
The more debt you have the longer you have to work.
Managing Income
When referring to income we have been talking about rental income but in actual fact if you are aiming for financial freedom, the income from work needs to be treated in the same way. If receiving bonuses or wage increases it is better that it is paid off debt rather than spent on buying a new car or a bigger house.
By paying down debt you will have that money in the end, but just not yet. In other words, sacrificing now to have it at a later date.
Filed Under: Investment Strategies • Quantity Surveyor
About the Author: 
