Why 40% of People May Never Buy a Home – Episode 568

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[00:01] Welcome to the Prosperity Podcast. Today, we’re going to be talking about the perspective of renters in our economy, and this comes from the unusual whales. So that’s another part of the conversation. So, Kim, can you hear me loud and clear? Are you ready to go? I can, Spencer. You always come up with fun things to talk about. I’m thoroughly looking forward to it. That’s awesome. Here first set the stage of who unusual whales is. And in our pre-conversation, I kind of teased about it, but this is cool. So some context, unusual whales is a researcher that went through and they started to study what politicians were doing with their investments in finance. And because of their political standing, they have to disclose.

[01:00] And so we obviously know about like the S&P 500, or you could say, Hey, I’m putting money into whatever fund it would be. Well, they’ve created an unusual whales fund. Okay. And so people like Nancy Pelosi and others, they’re tracking what they’re doing and their return is real. Like, we’ll just say you’d have to be a really good investor to keep up with that. And so one, we’ll put a link to unusual whales so people can kind of see what’s happening behind the scenes, but there was a post that was recently made, said nearly four in 10 renters in a new nationwide survey said they don’t believe they’ll ever own a home, up nearly a quarter from last year. Okay, home ownership, four out of 10 say they will never believe

[01:56] that they’re able to do that. Let’s get some coaching from you. Well, this is an interesting space because I’m doing a bunch of work right now on our perpetual wealth book and pulling pieces and parts out of it. It’s our largest book and it’s got so much good wisdom in it. And one of the things that we pulled out is the seven phases of prosperity. And it’s interesting because we can liken each phase to an age, but it’s really more important about the phase. It doesn’t matter whether you’re in your 20s or your 30s in those decades, it matters what phase you’re in. And without a doubt, phase two and three, and possibly even one, right? Of course, it’s dependent on the person. It is very clear that one way to stop throwing money away is to stop

[02:45] renting and purchase a home. And without a doubt, I am a fan of renting for people that need to get into a community if you’ve moved or you’re just coming out of college, you need to figure out the lay of the land before you purchase, but six to 12 months max. And then home purchasing is what sets the foundation for wealth building because you are building equity in a home and though we know that equity is locked up in the walls of that home, it is at least an asset. And so even if Robert Kiyosaki sometimes says that our own primary residences are not assets because they’re not putting money in our pocket, he often doesn’t calculate in the cost of renting in that overall calculation and when you do that, a home is not necessarily

[03:32] a fabulous investment, but it’s a critical piece for one central theme that operates throughout these seven phases of prosperity, and that is what we call optimization. So optimization is not a super common word. It’s actually an economic term and it means to make most efficient. Well, if you view your finances as a bucket and rent is a hole in the bottom of that bucket, it doesn’t matter how much you pour in the top in the form of income and earned investment opportunities, if rent is a hole in the bottom of the bucket, you have a leak and until you plug that hole, you’re going to have inefficiencies and so it’s sad that so many people are just tossing their hands to the wind and saying, oh, I’ll never be in a position

[04:25] to buy a home. Well, go look for opportunities in smaller towns, go look for remote work so that you can afford to buy a home and it doesn’t have to be in California or Florida or New York or the bigger cities where they are more expensive, yet you can plug that hole in the bottom of the bucket. Yeah, absolutely. So first we’ve got the, call it the emotional intelligence needed to be able to make the decision to buy a home, then you’ve got the financial intelligence needed to be able to do it. Those two may seem similar, but they’re very different. So walk us through how you’ve been able to see, one, you’ve seen your own kids go through this and then two, you’ve helped clients as you’ve coached them through that.

[05:16] So let’s tackle those two separate and then we’ll combine from there. Well, I love that you brought up those different intelligences because it does really contribute to our ability to learn additional aspects of intelligence if we don’t already have them. And so somebody’s not quote smart or quote dumb. They’re just smart in a particular way. And without a doubt, homeownership is a different ball of wax than renting because there is work involved. And just like in our prosperity ladder, where we say work is the first thing that gets you up off the floor, work, providing value, creating, and like sometimes physically and obviously sometimes mentally being actively engaged is an very important element of

[06:13] homeownership because you cannot purchase a building and then just ignore it. There may be lawn care, there may be repairs, there may be painting that is needed. There may be things that break, the refrigerator, the plumbing, the air conditioning, whatever it is, that has to not only take some money, but also some muscle, if you will, some elbow grease to solve the problem. And so it is a very important element of life and you have to decide, you have to make a choice. Am I willing to put in the work so that I get better financial benefits or do I just want to bump along in life and rent and not have work involved because I just call the landlord when something goes wrong, but understand that I am leaking money out of the bottom

[07:00] of the bucket. So very extra element to think about. Totally learnable though, right? That’s what YouTube is for. Yeah, absolutely. You brought up my kids just switching to that side of the story. I was amazed at the skills that my son, when he had his first home, was learning through YouTube. And then my daughter, a year later, like electrical work and putting in flooring and fixing plumbing. I mean, incredible what these kids were able to just with a little bit of patience and a little bit of YouTube help and some tools at Home Depot or Lowe’s fix. And while as an older adult, I’m happy to pay for that money. Now it does help that I have a very skilled handyman husband. But as a general rule, when we’re older, maybe we pay for that

[07:52] unique ability. But when we’re younger, it’s awesome to learn it. And it’s such a cool thing because the power and the pride, humble pride, of course, but the pride that they have in not only the ownership of that home, but the ability to fix it up and make it look nicer. Yeah, you actually, you hit on the exact point that I was going to make, which is this, that we in real estate, we can almost compare this scenario and let’s scale it all the way back to another epidemic that’s happening. So again, the premise of this episode, four out of 10 say they never believe they’ll own real estate. Now we’ve got a generation of people and I’m not saying it’s bad, not saying it’s good. I’m just stating that there’s a lot that, um, lie on Doordat or

[08:42] fast food because they haven’t learned to cook. So taking that into the real estate scenario, it may be watching a YouTube video to save money. So you’re not paying a contractor. The other side is the confidence you get and the pride of it. And when you’ve built something, you fix something, it feels amazing. So let’s talk about that with what we can do to help this generation of people to go from, let’s say a four out of 10, believing that they’ll never own. How do we change that? So it’s, we’ll call it eight out of 10 believe that they can. How do we do it? Well, I think there’s a very simple act and that is to simplify your savings and this is a message that I have been working with for a long time.

[09:31] And it’s the most boring part of personal finance. But simplifying your savings means savings is a verb, the act of putting money away, as well as savings is a noun, the act of storing that emergency opportunity money, because clearly with the purchase of a home, you have to have down payment capability and you have to have additional money set aside for emergencies and opportunities. For example, the air conditioning does break and maybe instead of replacing it with a fill in the blank, a one ton air conditioner that was kind of struggling to cool the house, you can turn that into an opportunity and replace it with a two ton air conditioner that’s now more efficient that will, while costing a little bit more on the front end, save you

[10:09] dollars over your lifetime of the use of that air conditioner because it’s more efficient, so it is both an emergency and an opportunity. And there is a straightforward, simple structure to solve this problem, the problem of the desire to simplify the savings, but the human nature lack of ability to do so. And the problem is that us human beings live out of our checking accounts, we spend whatever money is in our checking accounts. And so the default position when you start a job is you open a checking account and you deposit all of your income into that checking account, and then you live out of that checking account. When you do that, you will not be able to simplify your savings. There is too much going on, including the Amazon buy button.

[11:03] Here’s a fun fact. Did you know that the one click buy on Amazon and the trademark and the system behind that is the most valuable patent that Amazon owns? Is that sad? That’s sad and genius at the same time. Exactly. It’s amazing. And there are so many other places now where that one click buy can occur. So as a human being, we have to put structures on ourselves in order to overcome the high that we get from buying and instead develop a way to get a high from saving. And you can do it with a structure that we can invite you into, or you can do it yourself. And the way to do it yourself is stop putting your income into your checking account, put your income into a separate account, and then put

[12:01] only what you need to live on for the month into your checking account. That act alone will drive behavior that you’ve been wanting to accomplish with what people typically call as budgeting, which we know doesn’t work. Now you can go a little bit further and pick up on the momentum and the motivation that you will get by seeing that other account rise on every two week basis or every month basis, depending on how you get paid. And of course, if there’s more people in the household earning income, then it’s even more often. And that’s what our structure can provide is a lot of momentum and motivation. Nevertheless, you can totally do this on your own. Just have to separate out your daily living from your income.

[12:48] Very helpful. So it’s being intentional and the intention piece of what you’re talking about, this works for any type of asset that you are planning for, if that be car, house, business, whatever that looks like, could even be for the liabilities that you want. I want to go and do a quick rapid round and like me prod you and go through and do a little bit of coaching around helping the, call it the emotional intelligence around this real estate piece. So for example, four out of 10 believe that they’ll never be able to real estate, buy real estate. For me, I look at it and say, well, you know, go and buy a fourplex. That’s considered not a commercial property because it’s under four units, buy one of the units, rent out the other three.

[13:39] Let’s talk through a couple other things that will help people. Cause yes, we need the structure in place to save. And I want to those that may be on the edge say, I got some hope. I think I could do this. Well, you said it really well. And that is that it’s got to start in our thought and that’s why our company is called prosperity thinkers. And sometimes I feel like I spend more time helping people know how to think about the problem than fixing the problem, because you as a listener have all that you need to solve problems. That’s what human beings are put on this earth to do. And also take advantage of opportunities and it all starts in our thought. And if you’re going into your daily life with a, I can’t approach,

[14:24] I can’t buy a home, I can’t save enough for a down payment. I’ll never be able to fill in the blank. Then what you are thinking is correct. And this goes back to Shakespeare in terms of the quotes around what you’re thinking is what’s going to happen. There are many others that have made this kind of commentary. And so this is something that actually I got from Robert Kisaki long ago when he and I first met is to switch your language around, which of course then is evidence of your thinking and a simple shift as in stating rather than I can’t afford it, I can’t afford a home or I can’t afford to build a down payment up or whatever it is. Ask yourself the question. Well, how could I afford it?

[15:09] How can I afford it? And just shifting that thought will open your eyes to spaces that you never even knew were possible. And it might be gig pay. It may be working a little bit more efficiently at work. It might be taking on an extra project at work whereby you could get a bonus. It might be having somebody work in your household that wasn’t fully intending to work. It might be if you’re a young family and you have children that are now at an age, five, six, seven years old, where they can help out, it might be tackling some of our prosperity parents courses and learning how to cut the cost of raising a child in half because you teach them about gigs and then after they get good at doing gigs in the home for pay,

[16:04] this is not allowance, this is gigs in home for pay, then they go out in the community and they do gigs in the community and that enables you as a parent to not have to pay for as many things for your children as you had been thereby giving you more money to build that down payment. The key is going to be how do you capture that extra? Cause it starts small, right? It says a hundred bucks. It’s 500 bucks. How do you capture that so that it doesn’t just get frittered away? And this is what that separate account does. Oh, I love it. It’s so good. So my aspiration for this episode is that we don’t have a society that feels like they’re stuck and they have to order their food by pushing a button and someone else make it and send it to them.

[16:51] We’re not in a society where a person says, I can’t buy a house because I really, I wouldn’t even know how to change a light bulb. No, we’ve got YouTube solution there. And then if there is the hope, the glimmer, the inkling of it, then as you mentioned, there are systems for saving your money so that you do the hard work, you come out on the other side and you’re ready for any of you listeners that happen to children, relatives, people that you know, by listening to this podcast, you probably already have a lot of this. But if you’re just starting, send an email to hello at prosperitythinkers.com. Kim will get that system to you and it’ll help you out. And this may be the episode that helps someone have a little bit of hope

[17:41] knowing that they can control that future. So Kim, great conversation. Thank you so much. Thank you. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.