It seems that saying you are starting a business, going off on your own or being an entrepreneurial is really trendy right now. It seems like some see entrepreneurial employment as the entry into adulthood. Somehow you have made it, or you are better than your friends because you are not a slave to your employer and your desk job. I am not sure how entrepreneurial-ship has become such a prideful term, but I unfortunately do not feel it needs to have that stigma. My personal story with entrepreneurial employment is all I know. My Dad has owned his Commercial Landscaping business for 30 years in Central MN and before him, my Grandpa started a local Glass Company in the same town. Yes, I have highly influential family members in the traditional work sphere, but for some reason I personally was more attracted to my Dad and Grandpas work style than others.
In 2011, Spencer started his Real Estate Company. He left his University Recruiting/Golf Coaching position for the unknown career of Real Estate. The leap into Real Estate was so unknown to both of us. Spencer was highly confident in his abilities, but I was highly incompetent in my abilities. I promoted myself to CFO quickly and decided I wanted to make sure all the income Spencer would generate would be managed with excellence. I knew that his income was our only source of 'steady' income. I was pregnant and working a part-time bookkeeping job. I took the job to be taught by someone and make money as the same time. I wanted the job to be a launching pad for our business. It was exactly that. I am forever grateful for my first bookkeeping job. I learned SO MUCH! In the first year of our business these were the steps that were most critical to our success:
Good luck and let me know if you have any questions!
It seems to me that most people, including myself, have a very small understanding of what others do for a living. I know I will be the first to admit that I have a narrow understanding of what others do even if I am in close relationship with them. That is why I felt it would be a good idea to give you a glimpse into what it is that I do and how I have developed a successful business model.
RELATIONSHIP & FREE ADVICE
For me, my business model begins at the point I am in a conversation with someone. This conversation can be between myself and a friend, family member, realtor referral or a cold lead. It could also be someone I met at a social hour, at the local park, a community event, or a coffee shop. The options of beginning a conversation are endless. It is my responsibility that I am not out looking for business on a regular basis, but instead that I am in tune to opportunities to let others know that I might be able to help them, should they need help, with their finances. However, I believe there is so much more to who I am then my career as a Mortgage Advisor. Often times I steer clear of discussing finances and mortgages, unless I am approached with the topic. I understand finances can be a very touchy subject so I do my absolute best to respect when and where I bring the topic up. Though these encounters are rare, they do happen. When they do, I work with the individual to schedule a private discussion at a later time.
Once a discussion around finances has begun with said individual, I see this as my chance to let them know my business model. Here is a snapshot of how that discussion might go:
Me: "That is amazing you just got a bonus at work, thank you so much for sharing that information with me. Do you mind if I ask how you plan to utilize it?"
Future Borrower (FB): "Oh, I have no idea, I usually just put it into savings and then see what happens from there."
Me: "Very cool, well if you ever want to discuss further how you can utilize those funds to get ahead financially feel free to reach out to me. I love finances and it is my joy to invest in others in this way."
This relationship and discussion may never develop into anything. However, that is okay because it is one more person who knows my business model. I know you are wondering, but Amber that was not a discussion about a mortgage or them needing a mortgage. You were just talking about their bonus. My response to them would be, "you are correct! My business model is built in such a way that I work to build trust first on a non-expense service basis and then share with them the second part of my business model.
Fast forward to 6 months later when I receive an email that reads the following: "Hey Amber, I am reaching out because I was thinking about my finances today and thought you would be a good person to talk to. I am not sure if you remember me, but we met at Snail Lake Park and you had mentioned to me if I ever needed help with my finances to reach out." We schedule a 30 minute call and I give my advice on all finance questions they have. At the end of the call I am always asked, "how can I compensate you for your time?" My response is the following,
"Thank you so much for asking, however this service to you is FREE. All I ask of you is that you would share my information with anyone you know who is in need of a home loan either purchase or refinance."
My ambassadors are all over, they are spreading my business model to their spheres. The reason this business model has been successful for me is because it is my heart. This is not a model that I found in a book or heard on a podcast. It is exactly what brings me the greatest joy professionally. I love to teach above all else. I love to empower others, and the area I love the most is, finances! I am so thankful for each ambassador that is out and about sharing my vision. I would not have the reach I have today if it was not for you, so THANK YOU SO MUCH!
So what happens next, FB is in a conversation at work and hears a co-worker discussing their frustration with their confusion around the mortgage process and FB sees an opportunity. No FB does not have experience with me as a Mortgage Advisor, but they do have an experience with me and how I approach finances. This experience is all they need. My approach toward general or comprehensive financial advice and mortgage advice is cohesive.
I just happen to get paid when someone chooses to use me as their Mortgage Advisor. My passion is to teach, educate and protect.
If you have any finance or mortgage questions you want help with, please email me at email@example.com. I am always looking for more people to share my passion with, and engage in wealth building discussions.
My sister came to me a few days ago and said, "Amber, have you seen the website - https://mn.gov/commerce/consumers/your-money/find-missing-money/". My response was something along the lines of, "No Danielle, that has got to be a joke!" She responded by saying, "No Amber, I searched your name. You have missing money...just make sure you go to the .gov website." I thought, well I should look into what she is talking about. So I went to the website and there it was, My name, my previous address and a line item stating I had missing money outstanding from PayPal inc. I thought, there is no way. I do not lose things and I do not have a PayPal account. However, I was really intrigued because it was the MN.gov website so it was legit and they already have all my information, so I knew I wouldn't be giving them anything they did not already have. I refreshed my browser and clicked on claim my property. The website did not communicate the amount the money would be other than it was for a value under $500. Three days later, a check was in my mailbox for $171 from St. Paul Commerce. Honestly, I have no idea what I over paid, but I am thankful that the money was returned to me. I deposited the check and it is officially back into my account.
I would highly recommend you jump onto this website and browse for your own name, or close family members. I know it is only a little bit of money in come cases, but it helps those companies close out their financial books when checks like these are cleared from their systems. It also, helps you and I because we get our money back!
When was the last time you examined your bank account to know all the miscellaneous memberships you are paying every month? I would highly encourage you to review your accounts once every 6th months to be sure you are not throwing money away on subscriptions you are no longer using.
COUPONS, COUPONS AND MORE COUPONS
When I am thinking about buying something via the internet, I will use a google extension called Honey. This extension will browse the internet for any coupons that could be used for your purchase. If the extension comes up empty, I will open a new browser and look to see if the website has a promo for 20% off if I sign up for their website. I honestly, hate having promos being sent to my personal email, so I have an email account that I have only for these promo's so I can receive the discount coupon. If that does not work, I will ultimately pay full price, but at least I tried to save before I paid full price. When I am at Target, I use my Target Red Card which is linked to my Checking Account. I do not open Credit Cards with any retailer, but I will if it is linked to my checking account. Receiving a discount to spend my own money! Sign me up! I also scan my cartwheel just before I pull into the register to be sure I have benefited from any coupons on only the items I know I am buying. I do not select my cartwheel before I fill my cart because I notice I buy items I do not need simply because they are on sale if I do that.
I do not consider myself frugal, as my husband tends to say, "you are not high maintenance, you just like nice things!" This is 100% true. I do like nice things, and I believe you pay for what you get. This is why we own two BMW's free and clear. They are incredible cars! You get what you pay for. The cars are worth the money we invested into them. However, to make these purchases we were not flippant. We diligently looked for a car that fit our criteria, but had the lowest cost: greatest gain option.
The belief that you either have a poverty mentality with no money, live paycheck to paycheck and steal from the system, or you have way too much money, you inherited it all and you do not understand what it looks like to live paycheck to paycheck has to die. These beliefs are not accurate to the general population of society. Yes there are cases on both ends of the spectrum, but it is not the normal. If you are looking for a book that challenges this belief, I recommend Chris Hogan's book titled, Everyday Millionaire (https://www.chrishogan360.com/store/product/everyday-millionaires-book-by-chris-hogan) . Highly, highly recommend this book!
Do you have any money tips and tricks you utilize that helps you save financially for your family?
I have noticed a trend among my discussions that I need to address. I am not sure where the miss information is originating from, but what I do know is it is causing confusion for my borrowers, that I want to bring clarity to.
It is a MYTH, based on the way I do business, that all you need is one generic pre-approval at a max dollar amount after which you can offer and purchase any home you want at or below the approval amount you have been given!
This is a MYTH, and not in your best interest!
Honestly, if that was all it took for the approval process I would consider my job incredibly boring and super cookie cutter. What I love about my job as a Mortgage Advisor is working with my borrowers to make sure their approval is the best approval for their financial situation. I do not believe a generic approval is best. That is like saying, well Honda Civics are good and reliable so it is the only car that the car salesmen is going to sell and suggest. If the customer has X amount of money to spend, then the only option the customer would have is to purchase the Honda Civic. This route of course is the easiest route, but I do not believe it is the best route.
The TRUTH, in my opinion, is that you the borrower be given a property specific pre-approval. The reason this is my recommendation is because of the following:
1. Each property has its own characteristics. For example: if you are hoping to spend $2,000 a month on your mortgage there are many combinations of expenses that can add up to the $2,000. Do you remember when you had to do combinations in math class? For the variable A and B there was only 2 combinations AB and BA. If you were trying to get two combinations of four variables the options open up to 17 combinations AB, AC, AD, AE, BC, BE, BD, CE, CD, BA, CA, DA, EA, CB, EB, DB, EC. Why am I pointing this out? I want you to understand that $2,000 is made up of at a minimum 2 variables, but with the potential to have 7+ variables. The variables may include- Principal Payment, Interest Payment (Interest Rate), Homeowners Insurance, Property Taxes, Homeowners Association, Mortgage Insurance and/or secondary financing fee and with each variable they change based on the property. As you can see, the more variables the more combinations there will be, which in turn means the more volatility to what your estimated monthly payment will be.
2. In addition to all the variables that can alter the generic pre-approval, a good Listing Agent is going to want a Purchase Agreement to be submitted with a Property Specific Pre-Approval. They are aware of these variables and they want to be sure that the Purchase Agreement that is being submitted is vetted and fully backed by strong finances.
3. My third reason for making sure you have a pre-approval that is property specific is to protect your emotions and expectations. If you as the buyer assume you can afford and be approved for a $250,000 home regardless of the property variables then you could be setting yourself up for an emotional rollercoaster. I recommend my borrowers send me the top properties they are interested in so I can run the numbers to confirm they can be approved for the property. I will also provide an estimated monthly payment and how they will need to structure their offer in order to be awarded an approval. The borrowers then have the ability to discuss this with their Real Estate Advisor prior to falling in love with the property.
With the current state of the Housing Market in Minnesota and the COVID-19 regulations I believe it is in the best interest of all parties that you, the borrower, receive a thumbs up for approval on each and every property you are interested in submitting an offer on. This will show you are committed to the process and respect everyone's time by not viewing a home you realistically can not submit a competitive offer on.
If you have questions on the Pre-Approval process please do not hesitate to reach out!
I guess you do not need one, but I highly recommend you have one. I recommend you have one for your household and your business(es), if you run any. Budgets are not restricting. They are tools to help guide you toward your goals. They do not tell you what you cannot do. They tell you how you will accomplish what you want to do. I am not sure who started the rumor that budgets are only for nerds, or only for those who love Excel spreadsheets. To be honest, I can put together a super cool Excel document, but it is not because of that skill that I believe in budgets or create one every month. In my opinion, a budget is the key tool toward wealth building. Discipline is the character trait needed to execute on a budget, but your budget is the key to your wealth building.
The reason a budget is key to your financial success is because it outlines exactly where you are going with the finances you have coming in. I believe in a zero-based budget. This is a Dave Ramsey approach to budgeting. Our household has subscribed to this concept for 10+ years and it works incredibly well. Here’s how it works – the last day of every month I sit down and start my budget for the following month. I pay for Dave Ramsey’s EveryDollar App. It is $9.99 a month and I utilize it at least three times a month. There is other software on the market like YNAB and Mint, however I have found this software to work best for our family.
Establishing your first budget will be more intensive than it is now for us because we know through consistent and habitual spending what our expense categories will look like. If you are new to budgeting, sit down with a piece of paper and write down the following variables: monthly take home per paycheck (look at your most recent paystub, or on your bank statement, find your most recent deposit). If you are paid hourly or on commission and your income is not consistent, that is okay. This is just a place to start. Okay, you now have your income documented for all income sources in the household for one month. Next, start by writing down all fixed expenses. These expenses are the ones that do not change from month to month. This would not be what is pulled from your paycheck. Those are expense you pay either with a debit card, checking account or savings account. List these out. You will likely forget some, but that is okay. This is just your first draft of your budget. Once you have listed all these expenses and their monthly costs, subtract them from your total monthly income. What remains is your discretionary income. You will then take this amount and leave it in a lump sum for month one. I want you to work under this format for your first one to two months.
The reason for this thirty-thousand-foot approach toward budgeting is because 80% of financial management is about mindset. If you can understand how much money you have each month, know your required expenses and then how much you have left over at the end, you will be more likely to notice when you might be making a purchase that will result in you spending more than you have remaining.
Just start here and see where it takes you. Budgeting does not have to be 10 pages on an Excel spreadsheet with lookup features. Just keep it simple and notice more about yourself, your money management, and your emotions around your money.
On September 14th we found out that Spencer, my husband, was having mini strokes called Transient Ischemic Attack (TIA). It occurs when part of the brain experiences a temporary lack of blood flow. The symptoms he was experiencing were numbness in his left arm and tongue and tunnel vision. As a result of the TIAs, he was diagnosed with a disease called Moyamoya Disease. Fast forward to December 4th when Spencer underwent an 8 hour brain surgery to bypass the blocked artery. I am now, as of December 7th, at home with Spencer on day 3 of recovery, Payton on day who knows of distant learning and Elliot on day 1 million of having more energy than I know what to do with. I, myself, I am on repeat. Each day I am working to balance it all. To be honest, it is a moment-by-moment circus in our home. One minute I am patting myself on the back and looking for someone to high-five, and the next minute, I am about to pull my hair out and want to yell. Why? Because this is all hard. It is hard to continue to be a Mortgage Advisor with excellence, keep the fridge stocked with food, meals cooked for all, house picked up, laundry cleaned and put away, dog fed, school work and Zoom calls completed, made up football plays and soccer games executed, get the advent calendar and Elfie setup for the night, and be a 24-hour nurse and caretaker for the wounded (in addition to all the other things I do on a day to day basis). It is simply a lot. I can see why, if I did not love finances, I would push them off as the one thing I did not have to focus on right now.
However, I am here to remind you that no matter what you do day in and day out, your finances are always a factor in your daily rhythm and they can never be pushed aside and focused on at a later time. What do I mean by that statement, “Your finances are always a factor in your daily rhythm!” I mean that even though you and I might feel more comfortable pushing them aside to a later date, your spending habits are not pushing pause, so you can not either.
I have always lived by the statement money never sleeps. I have to personally inform you that this statement got real really fast for me/us when Spencer’s medical bills started rolling in. We were in such a state of survival. The doctors admitted him on the 14th of September and just started running ALL the tests. We honestly didn’t think about what it would cost. All I cared about was why he was having TIAs and what we had to do to fix it. He was discharged 72 hours later with minimal answers and the advice to go to Mayo for a specialist to review his condition. 3 days later, we arrive at Mayo and the tests start repeating themselves. $100,000 dollars later we are left with the findings that brain surgery was the only solution. Wow, was that a whirlwind… in under 7 days we had incurred $100,000 in medical expenses. What is always so shocking is not how fast we can spend money, but how LONG it takes to save money. This was a perfect example of the speed of how fast money was spent.
After a day or two of having minor and major meltdowns, we started to explore our options. We have a high deductible HSA insurance plan through Health Partners so we knew the first round of tests would go toward our deductible. However, after those fees were tallied it was brought to our attention that Mayo was not in-network. Oh boy I thought to myself. This is going to destroy us. All the financial growth we have achieved over the last 10 years is going to vanish in a few short weeks. I was so discouraged. Out of one side of my mouth I was so grateful we have saved so well for such a time as this, but out of the other side of my mouth I was devastated. It took me a few days to calm down, but after much research, Spencer and I were able to identify that we could petition for Mayo to be in-network. We jumped through all the necessary hoops and found out by a miracle that Spencer’s care would now be considered in-network through our health insurance with Health Partners. Additionally, this means that we will be lifelong consumers of their Health Insurance. On a positive note, it means I can ignore open enrollment every year because we will never be open enrolling again.
I get the question often about what to do for health insurance. I hear people complain that their premiums are so expensive and that they are healthy, so why do they need a big box insurance company? I hear the complaint that they don’t want to be forced to pay for health insurance, or they would rather do a non-traditional health share program. I am neither saying you should or you should not do one or the other. I am rather here to share our story. Not only was Health Partners unbelievably gracious while we went through the appeal process, but they were also very sympathetic and willing to do their best to work with us, if we were willing to work with them.
A few of the factors that aided in the appeal going through were, that Moyamoya Disease and the specific surgery could only be done at Mayo Clinic, we have never missed a payment since being their customers, they read through our consumer notes about the positive feedback we have given based on our customer experience and we have been with them for 5 years. These actions and decisions by us may seem like little choices on the everyday, but on this day, the day that changed our life financially forever, it made a HUGE difference.
Lastly, I would like to encourage you. Do not get discouraged with the health insurance process. Each family needs to find what works best for them, but it is the heavy lifting you have to do to find the right coverage. Spencer’s appeal and Elliot’s heart surgery were financial miracles AND I worked my butt off to make sure I had exhausted every option possible to be sure we were not strapped with millions in medical debt. We consider ourselves incredibly blessed to be a family that has had 2 MAJOR surgeries and we are walking into this recovery with zero medical debt. The reason for this, we did not put off our finances. As soon as we had a second to breath, it was the first item we focused on. Please hear me, your finances matter and so does the health insurance you pick. Invest time into your overall financial portfolio or before you know it you could be turned upside down financially with zero warning. Spencer and Elliot were rare cases. Prior to their surgeries, by all tests they were both healthy.
As many of you know I have a day job as a Mortgage Advisor. In addition to my day job, I enjoy sharing my voice in the personal and business finance space. As of lately, I have started to reflect on the question of should someone who has college debt, first pay-off all your student loan debt and then save for a home, or should you continue to pay what you can toward your student loans, and save for a home purchase at the same time. I know what you are thinking, but you are all about Dave Ramsey and Financial Freedom and eliminating debt- Amber, how is this even an option for me to consider? Let me explain:
Debt is nasty do not get me wrong. As a general rule of thumb I would say, get rid of your debt as fast as you can. However, there are different types of debt, we as consumers, have access to in our economy. There are three types of debt; secured, unsecured and mortgage debt. An easier way to understand these debt categories is by considering the types of debt you may have in your name. Education Debt, Consumer Debt, and Equity Building Debt.
Education Debt: This debt is what the name says, it is debt that is linked to your educational journey. This could be debt that is secured or unsecured, but it is linked to provide funds for your education.
Consumer Debt: This debt is tied to a product or service that you used credit to complete the purchase This could be purchases you made on your Credit Cards, or an auto loan.
Equity Building Debt: This is debt that is taken out in your name that has the ultimate goal of building equity. There are two ways this can build equity for you, the first way is the portion of the payment that is the principle payment. These funds go to pay down the loan principle that ultimately will be available to you should the asset maintain or gain in value. The second way is if there is a growth in appreciation. If the asset the debt is tied to grows in value you can recoup this equity in the form of cash.
Now that you know the foundation of the types of debt that are accessible in our economic system. It is time for us to address the main question. Should you first pay off your debt and then save, or pay off as you can and save at the same time. According to Experian, an industry leading credit reporting agency, states "the total amount of outstanding student loan debts have reached an all-time high of 1.41 trillion. "This is a combination of 44 million borrowers, which is 69% of all students"-cnbc.com. That is a lot of people living with educational debt. In conjunction to the debt load of these students, the average annual salaries for students who graduate from a 2 year education is $41,528 and a 4 year is $47,393 in their first year of employment post graduation, according to Minnesota Office of Higher Education.
Let me break down these stats a bit further for you. If the average graduating student has $32,000 in their name with an average of 4.53% interest rate on those loans then the student has a minimum payment of $332/month to just pay the interest on this debt. With the average income being $44,000 in MN that equals ~$3,705 gross income per month.
Fast forward, to the day that the $32,000 or $64,000 total debt for a married couple is paid off by the time you are 32 years old and their income has grown 3% over the 5 years post graduation. This would convert their $44,000 each into now combined they are making ~$100,000 annually. There is now less debt and greater income for their future home purchase. However, they are now 32 years old, have zero debt, but they also do not have liquid cash for a down payment.
So what would I do with my, hypothetical student loan debt, if I was faced with these statistics? I would do the following three steps:
Step 1-Evaluate ones heart posture toward money: This is KEY! Our heart posture toward money and money management is key. If I had debt that is on a credit card, I would NOT consider the option of looking to purchase a home while still having student loan debt. However, if I only had a minimal car payment or better yet, no car payment at all and student loan debt I would then consider my options of not paying it all off yet. The reason I would look into this option, based on my heart posture, is because I know I would have the ability to maintain a healthy money-debt relationship with a new equity building debt.
Step 2-Evaluate the current market: At the time of writing this post, interest rates are almost at the lowest they have been since 2016. In addition, home values are still considered affordable compared to other states, which makes renting and owning a comparable price. With these two factors being as they are, buying now could be a great option for me considering my heart posture. In addition to the current market, the current 'First Time Home-buyer benefits' can have factors that require the qualified borrowers to have a median income that is less than or equal to the programs median income. These programs can help with getting a great interest rate.
Step 3-Evaluate my budget and how I am saving: Reviewing my hypothetical budget given the above statistics - Income of $3,000 monthly net minus $1500 for rent, $333 interest toward student loans, $250 groceries, $200 misc/lifestyle, $100 auto loan, $150 utilities, $200 for 3-6 months saving, $200 bonus toward student loans. $150 auto insurance & misc. This would allow me to still save, pay down my loans and live comfortably. Of course double these if you are married and have joint income.
If I was to wait until my debt was paid off and the average income I am making pushed me outside the 'first time home-buyer' programs available. If this were to happen, I might end up with a higher interest rate on my 30 year home mortgage than the average amount I was paying on my loans, which would be a net negative benefit for my net worth. Rates are good right now allowing one to possibly have a net gain as they prioritize their spending. However, they might not always be this good. If you are contemplating buying now or continuing to pay off your loans. I would recommend you going through the Evaluation Steps above to determine if purchasing while moderately paying off your loans is an option that fits your financial story best. However, if you can not honestly trust yourself with Step #1, this will not be a wise decision for you.
Lately, Payton has been extra expressive about her wants. She notices what others have and does not shy away from saying, "Ugh, I want what they have...why don't we have that?" These comments cause me to cringe quite a bit because I know we have more than we deserve and our kids are extremely blessed. I feel like I have margin to learn how to better communicate what it means to appreciate what others have, while not forgetting the extravagance of all we already have. It could just be me, but I feel as a society we have margin to learn this concept. I do not feel like it is just a 7 year old topic of discussion, rather a societal conversation. What I am learning is that society grooms our minds to believe we need to have a consumer mindset. One that encourages discontentment and discourages thankfulness and patience. The first step, I believe to not engaging with this mindset, is to notice when we are discontent or laking thankfulness. Step two is naming the discontentment or comparison and then, lastly checking our hearts and the source of the discontentment.
Discontentment is an active voice in our everyday lives because of the constant data exposure we have fueling our minds both consciously and subconsciously. I have decided to make it an objective of my everyday to counteract these voices with a voice of thankfulness. This has been challenging because it means I have to notice when to speak it, believe what I am speaking and then speak it out in humility. This is no easy task, however I am motivated to do it, because I am really unmotivated by the repetition of Payton's inquires.
In addition to noticing and naming the spaces of discontentment we have in our lives. It has also been healthy for our family to discuss our financial goals and how we are going to accomplish them. Another comment Payton defaults to when she is trying to gain our attention and we have stepped away for a quick phone call is, "You are ALWAYS working!" Although, she feels in that moment that we are ALWAYS working this is an exaggeration. Spencer and I have the privilege to flex our schedules and often work from home. Although he puts in more than 40 hrs a week, the hours are very flexible and unconventional. We are both home, present and actively engaging together, with the kids. With that being said, we have had to be clear on when it is work time, and when it is play time. This has been an adjustment, but having the kids around us while we work and setting healthy boundaries has helped our kids understand hard work=money which=security, adventure and opportunities. It also allows us to teach them to be thankful for the flexibility we have.
One of our 2019 goals for our family was to find a family activity that we all could enjoy together that was outside the home and one that could grow with us. I was blessed with a family growing up that taught me a lot through experiences and I desire the same for our family. After several months of brainstorming ideas, we landed on purchasing a family JetSki. We live within 3-10 miles of 4 great fishing, tubing and cruising lakes and the size of a JetSki seemed very practical for our wants. After intensive research we found the ideal JetSki to fit our families goals. Although, we started discussing this purchase in March we were patient until we found the best option for us. Before we purchased we; saved up the cash for the purchase, found an incredible deal on the purchase, had reviewed the pros and cons of the purchase, and had an exit strategy incase the purchase was not the best for our family.
This purchase was a teaching opportunity for our children and for us. We all needed to be patient and content. We all had several conversations about the JetSki. They knew we were actively pursuing it, they came with us to look at it in person, they sat on it, pretended they were riding it. They reviewed For Sale classifieds for options. They knew that hard work and constant savings was going to result in accomplishing our goal. Teaching that it is best to be content with what we have and that our approach is the best approach for our family is a VERY hard discipline to teach, but I am thankful this is the approach we use because the gratitude of Payton and Elliot after their first ride was priceless.
Wait, both of you are in 100% commission jobs? Is that hard? How do you do it? These questions I have received from acquaintances who find out for the first time I am a Loan Officer and Spencer is a Real Estate Agent. Honestly, it is not a concept I think much about, or consider it a challenge because it is all I know. I grew up in an entrepreneurial family. My parents owned a Landscaping Company, which meant we were also 100% commission. Growing up there were a lot of discussions around finances. My parents made it very clear, if we do not have the cash, we would not be getting x y or z. My parents were and still are very wise with their money. With confidence I can say, my knowledge of money started at a very young age observing their financial behaviors. In my life, it is true that what I witnessed was what I became.
Today Spencer and I are living a life that is dependent not on punching a clock, but on our own aspirations. We wake up each day, wondering where our next lead will come from. There is no guarantee and there is no magic ball we can rub that will tell us when our next bonus will be granted. This is what being an entrepreneur is. It is a lot of not knowing! However, there may not be a lot of knowing, but there also is a lot of flexibility and personal voice.
This morning, while Spencer was prepping Payton's school lunch and I was struggling to open my eyes and drink my morning coffee. I muffled, "Babe, whats your schedule today?" With a quick reply he said, "I am going to take the morning and be home with you and Elliot. I have been gone so much this week, I think it will be a good idea!" I was ecstatic, although I kept my cool and simply responded, "oh that is great, but are you sure we are okay?" Being 100% commission takes teamwork and self-discipline. I am constantly checking in with Spencer with the key question, "Are you sure?" His responses are always so comforting. There has not been one day in our 7 years of Real Estate that his answer has been anything but, "Yes, Babe, I am sure!"
Is it hard? ABSOLUTELY-I would be joking if I told you that being an entrepreneur was easy. 7 years ago when Spencer left his 9-5 job as an athletic recruiter we had no idea what we were getting ourselves into. Not only was he stepping into Real Estate, which is a difficult market to break into, but he was doing it with a pregnant wife by his side. We had a crazy amount of support, but much of me thought, these people have got to be crazy. Are they aware that I am going to have a baby in a few months, and he has NEVER DONE THIS BEFORE! It was not like he was going to sell golf clubs, these are houses. But, we did it and here we are 7 years later and we made it. Actually, we did not just make it. We have flourished. Being an entrepreneur has been one of the most challenging opportunities, but also one of the greatest blessing for our family.
How have we done it? Here are few quick tips on how we manage to survive on a 100% commission income:
CLOSE THEN CASH
We do not spend our money until it is deposited in our bank account. This is a huge one. In Real Estate and Lending our deals are never final until our checks are processed after closing. This is a tough one to get use to with the ease of credit cards. However, I believe it is a key mindset to build from. No money is spent on a today purchase with money from tomorrow.
We talk a lot about where we are at with our personal and business boundaries. We review our pipeline and cross reference our capacity on a weekly basis. I am fairly tolerant of the exceptional adjustment to our boundaries, but rarely do we go outside of them. A few of our boundaries are built around our cash reserves, our family time, cell phone use and childcare needs.
CLIENTS OVER PRODUCT
We prioritize our relationships over our commissions. We know that our industries are popular industries. It is accurate that everyone knows someone who is either a Realtor or a Lender. However, we have found that being friends and supporting our community as if we worked a 9-5 job is a winning approach. We prefer to have authentic relationships instead of sales relationships. Approaching our industries with the mindset of people over product has helped us stay focused on why we do what we do. It is about our clients, not about the commissions we earn from their transactions, It is a mindset that has allowed us to succeed as a 100% commission family.
I know, I know you all want your tax return because you deserve it. What if I was here to tell you I thought that was not a statement of the wise? Did you know that your tax return that you receive back from the Government is money that you could have kept in your pocket?
Here is the deal, I am going to let you in on a little secret, the Government does not want you to know. Your dollars you earn through out the year and then get back in your tax return is you actually giving a small interest free loan to the Government. Once your paycheck has the deductions taken out of it, they shuffle the funds around for their use and then they decide, based on a tax code what portion to refund to you after you file your taxes.
It is not a sobering thought to consider, I know. However, you have options:
HIRE A PROFESSIONAL
REVIEW YOUR PAYCHECK
Be an advocate for your financial story. You are the author. If you are frustrated with the outcome of this years tax return, or the outcome is a shock to you. It likely means you are uneducated about your financials in some capacity. Get in the know by hiring professionals who can help educate you and prepare. You need to be your own advocate and pursue your own destiny. Wealth with not happen to you. You need to strategically pursue it.