Why Most People Never Reach Financial Success

The following points are from the perspective of what it takes in starting and maintaining a successful business. Business ownership and financial wealth hold a strong correlation. Below I list observable challenges and such attributes that I have learned to acquire to get where I’m at today. After each segment, I add what I needed to do to get on board with these attributes.

1) The environment and its challenges.
If you’re a single mother with two children, for example, it’s much more difficult to reach financial wealth than a single person with no children or a married couple without children that have STEM degrees making over $300k in combined income. I waited until I was 41 years old to have children. It took me a while to get to a financially stable situation.

2) Direction.
What path to take and believe that is the best path to wealth. Most millionaires take on average 15 to 20 years to reach their status. This is because there are trials and errors in the process. Some of those errors, though educational, cost a lot of time and money two of which many can’t afford. Reading many books and/or getting degrees in lucrative fields are in general good paths but then again both of these require a lot of time and/or money. I studied Psychology in college. After realizing that I didn’t have a passion for the field and that my base salary barely paid my rent, I re-enrolled in college and studied Computer Science. The outcome of this new direction was that I was able to start a business which increased my income.

3) Discipline and Perserverence.
It requires a lot of discipline to acquire wealth. This starts with a goal and a gameplan and sticking with it through thick and thin. Most of this is taught at home. This is also where your environment affects your outcome. I’ve had my eyes on being in business for nearly a decade. It was baked in every career choice I made until finally, I was an independent software developer and then a hotel owner. It was not uncommon for me to work 10-12 hour days some times 7 days a week.

4) Ownership.
This is fourth but trumps on all of the other three. Take full ownership of your life. You are the owner of your life and what you do has a direct effect in where you’re currently at in life. If you acquired bad disciplinary skills growing up, and you blame your parents for this and you are now an adult, then why are you still blaming your parents if they are no longer educating you? Education, no matter what age, never stops. You take your own education into your own hands and make the changes you need to gear yourself for success. This was kind of an eye-opener in that I’ve read it in several financial books. It has really helped me reassess my bad habits and stay the course. I incorporated a mentality that if I didn’t like how things were going, then it had to do with the decisions I’ve made and/or the efforts I’ve placed. I was the cause and effect of my world.

5) Masochism and Resilience.
Most of us humans naturally tend to gear towards easy and stay away from pain. Are most humans millionaires? Statistics to date states we are a rare bunch. You have to be willing to do what most will not or do not do. You have to maintain a high threshold for pain and psychology uncertainty. In other words, you have to acquire a taste for masochism. Masochism translates into working long hours, working an additional two to five hours after you get off of your full-time job, research for hours on end, network and getting out of your comfort zone, risk your life’s savings if you really believe in your service/product, and if you fail, be willing to do it all over again. I once started a paintball park business. In order to complete the project, I had to invest all my savings. Four months later, I was living in a van for the next 7 months. I learned from my mistakes and continued my entrepreneurial journey in other businesses.

6) Patience.
As mentioned before, it took most millionaire 15 to 20 years to reach their goal. They had the patience and maintained the course to get what they wanted. They took incremental steps, daily sacrifices without any gratification. Building wealth is a slow and gradual process that requires a lot of focus. It has taken me about 20 years to get where I am at. I currently have assets in the stock market, own two multi-unit apartments, 15 acres of land, and a beach hotel. This was done slowly and incrementally with a focus on investing and starting businesses.

Amidst the COVID-19 Pandemic, Are We Experiencing the New Universal Basic Income?

The only way for a universal basic income (UBI) to be funded would be through raising taxes – substantially. There I said it! It was simple. No one really debates this topic since the idea of raising taxes is very unpopular. And this is just a start. Since taxes are the government’s real source of income. The national debt continues to rise to make things even more difficult to fund something like UBI. And then you have a situation where the US is a debtor to China and Japan- approximately 37% of the US public debt via bonds. The debt was pretty bad in the 1940s due to WW2, however, the debt was an investment to stimulate the economy. Franklin D. Roosevelt raised spending but also raised taxes. The important distinction here is that he raised taxes to balance the debt. However, we are currently reaching those heights without a crisis such as WW2 and now that we have COVID-19 we can expect a much higher debt since it was already at an all-time high just prior to the pandemic.

Much of this has to do with political parties in their management of fiscal policies. “During the Clinton administration, there was an official surplus of $419 billion during fiscal years 1998, 1999, 2000, and 2001” Balanced budget amendment. (23 April 2020) https://en.wikipedia.org/wiki/Balanced_budget_amendment while Republicans tend to be viewed as fiscal conservatives (based on research it seems further from the truth). If you look at the US debt under Bush it skyrocketed because Bush gave tax cuts and increased spending in an unpopular war. Most of these tax cuts were aimed at benefiting the wealthy. Wars tend to add to the US debt (both Bush presidencies started wars). Republicans overall tend to be war-prone. And then the Obama Administration had to deal with the Great Recession and the housing crisis where he then injected stimulus further increasing the US debt, however, this seems to be the right move to getting the economy back in action as it seemed to have worked. The federal government actually made a profit with the business loans. And then came Trump Administration taking over while there’s a booming economy and did the same thing Bush did – tax cuts without cutting spending and further increased the national US Debt. I don’t find any particular reason the economy needing this tax cut except to gain further political popularity towards Trump’s base supporters which further placed the country in greater debt.

And then there’s the situation with the baby boomers retiring. What’s worse than tax cuts is social security and medicare taking the biggest piece of the government income pie. These are the two entities that are growing out of control as far as spending and it’s getting worse every year. The US is the only advanced economy where the debt relative to GDP is to continue growing. It’ll be like Greece’s and Italy’s debt situation. Only that these two countries had the European Union to bail them out. Nobody is going to bail out the US it’s “tooo huuuuge” (Trump’s version).

The US has an AAA credit rating giving investors confidence in buying US bonds which may now be at risk. Here’s where it gets dangerous. At the rate of accrued debt, in less than 10 years from now, 1/5 of all federal taxes will go to interest payments. That’s 20% of the government’s income that is taken away for defense, infrastructure, education, etc… and that’s with low-interest rates. If the interest rates increase, it gets worse. If the debt continues to rise over GDP then the US will not be able to pay its bills that include bonds to investors (china/japan and US), national security, social services, etc.

To get out of the growing debt, the US will have to restructure two of the most financially degenerative entities: medicare and social security. The issues with medicare and social security have been a heated political debated for decades. To address the problems with Medicare, the Medicare Prescription Drug Benefit seems to be a promising move in the right direction. However, that alone will not be the silver bullet. Either income taxes would need to be raised to twice its current amount or sales taxes to approximate a 30% hike. In order to address social security, in addition to the income or sales tax hike, raising the retirement age to 70-plus would be needed.

Even though the Universal Basic Income idea seems like a good plan for some, dealing with the US debt would have to come first. Most of the initiatives that combat the US debt tend to be politically unpopular. Eventually, a US President will be forced to deal with these really unpopular obstacles and major change is going to be needed. I wouldn’t want to be in the shoes of such a US President.

Need Motivation? Think Again ..

Motivation, for me, serves as a catalyst to get things rolling, to take that initial leap into the challenging unknown. I’m usually very excited and motivated to take on a new challenge whether it be a new business endeavor or learn a new skill that may take months or if not year to acquire. After the motion is set in place and the daily grind is felt, the motivation withers away. The only thing that gets me through the challenge is a conscious thought- a repetitive voice in my head stating “You gotta get through this. There’s no other way. Stopping would be utter failure. What’s wrong with you get moving get busy, now!! Stop thinking and start doing. Forget what you don’t like! You’ll get nowhere focusing on these negative thoughts!” It sounds schizophrenic but it works like having horse blinders that help steer your focus looking forward towards your goal. There will be many days, the majority of them actually, where I want nothing to do with the objective I’m trying to accomplish. What I do is chip at it day by day. Some days will be very productive and some days I’ll be dragging my feet with very little things getting done even though I may spend hours on it. If I work at it every day, then eventually success is reached. You will eventually get to your destination. The outcome is usually more than worth it and it will add considerable value to your life. Keep in mind that if it were easy it probably would not be valuable. Motivation is not the main ingredient to success. It is a conscious decision to complete your objectives or goals. It is a conscious decision to do and continue doing every day until it gets done.

Too Old To Start Programming?

In the Fall of 2002, I started taking my first computer science class at 29 and then three years later landed my first tech job at 32. It took me a bit to grasp programming since I was traveling when possible and working a full time job in an unrelated field while taking computer science courses at a community college. A year later at 33 I became a freelance web developer, circa 2006. In 2011 at the age of 38 I accepted a job offer with the Walt Disney Company as a Web Developer working in a large team of engineers and QA. Some of my coworkers were younger and some were older. It was not really an issue and I learned a lot in that environment. Our team leader which is the person that is one step higher in the hierarchy of developers was probably in his late 50’s maybe early 60’s and had been a tech manager at Yahoo prior to being at Disney. He had been a Java developer all his career. We never saw him as old. We respected him for his leadership and mastery of his skillset.

I since went into a different field and bought a hotel with the money I made as software developer. However, I still write code and have built software to better run my business operations. At 47, I’m currently evolving my business’s apps (POS reservation management system used by my team) and have recently been updating my skillsets in Java Spring Boot. Technology has become a fundamental part of our daily lives such that you can end up using it for your personal use or for your business. I have even been contemplating placing my business under a management team and go work in the industry to better refine my tech skill. It’s never too late. What really matters is your contribution. I believe most software developers would rather work with a 50-something year-old competent developer than a 25 year-old incompetent developer.

You Hate your Boss and Want to Start a Business

Before quitting because you loathe working for your boss or working for anyone period, changing your perspective of working for someone can be beneficial for the business you plan to start. Have a game plan of what can help you succeed in your business endeavors. Choose to work in an industry you would like to do business in. If it requires academic talent such as technical skills, marketing, accounting, etc., take courses to bring you up to speed. Nowadays there are many options with online courses and certifications. You no longer need a 4-year degree to get your foot in the door. Work for someone or a company you admire and want to emulate. Learn how they do things, learn how managers operate, study their management styles, their leadership. Learn what they do to get business walking through the door. How do they formulate marketing campaigns. What do they do when revenue and cashflow dries up. How do managers and team leaders motivate their team to go above and beyond. As a business person, you will encounter all these obstacles and more. Turn your job into a college education of hard knocks. Working for other people may be a bad experience only when you don’t realize the potential it can give you in return. You will have good leaders and bad ones. Learn from the bad ones as well. Learn what not to do and why while being on the other side of the aisle.

I now have my own business and I regret not working more frequently for other talented people. The bosses I did work for, which at the time I dreaded, have been the most influential in how I execute in my business. I did not realize at the time that I was going to be using their tactics and leadership skills to execute in my business. I only realized once I was in their shoes. With the right frame of mind, it is precious information. Your end game is to be in business for yourself and so this way your killing two birds with one stone – making money you can put towards your future business and learning the ropes in a real world scenario. If you can, work for free if it allows you to get closer to the person that makes the decisions. You can study how they operate. Studying and picking the mind of the decision-maker in a successful company would be an invaluable education experience. You can’t get this type of education at a university and by the time you start your own business it’ll be too late.

$100 an Hour as a Software Developer?

I hear and see a lot of vblogs hyping that you can earn $100 or even $300 an hour freelance in the tech industry as a software developer. My question is: if they’re preaching that this hourly rate can be charged, why aren’t they doing it? If I were making a $100 to $300 an hour writing software as a freelancer (being my own boss) I’d be doing just that and not writing on this blog. I freelanced for 5 years using the LAMP stack (Linux, Apache, MySQL and PHP) and its related frameworks. I worked hard and constantly searched for good paying clients. I had a variety of clients but none came close to a $100/hr mark. The closest I got was $60/hr and these clients were far in between and rare. It is simple math. Clients that can afford to pay a rate of $100/hr are mid to large size companies. Most companies that can afford this rate hire full time developers which they can have better oversight over the development/project. I’m not saying $100/hr clients don’t exist but they are very rare. After 5 years of freelancing, I grew tired of chasing work and not being financially stable. I was hired as a software developer by a Fortune 500 Company making $100,000 per year. It was a relief to finally have a lucrative position and stable income. I really enjoyed freelancing, but the income inconsistency and less than favorable hourly rate wore me down. You’re more likely to succeed as a freelancer if you take your self out of the writing the code equation, and hire a coder to do the coding and you focus on building a client list. I learned this a little too late in my freelancing career. I since then bought a hotel in the Caribbean side of Costa Rica (yes with the money I made and saved at the Fortune 500 Company position) and do a bit of software development for our in-house POS system. Overall, $100/hr as a freelancer sounds like a dream job. The only problem is that more times than not, it is too good to be true.

Duplex Vs. Fourplex

My situation may be a little different than most but many can possibly relate. At the time of buying our rental properties we had a business that depended heavily on our input- this is now bettering since we’ve been working on implementing business systems for the past year. And that business was in another country where we had to live in order to run it. As a result, we had little flexibility logistically. These two factors made it extremely difficult to get our duplex property rehabbed and ready for rent with the budget we had in mind. Also, I realized that I wanted to follow a criteria of what was working and avoid what was not. I realized that even though our fourplex was having a lot of problems receiving rent from the inherited tenants and going through several evictions in the process, the cash flow was still positive. The fourplex proved to be much more resilient through hard times compared to the duplex we had (a separate rental ready duplex). Both properties went through hard times as far as receive rent from tenants, and yet at the end of the day, the fourplex, having only owning it for no more than two years, was more than half paid off while with the duplex, also owning it for nearly 2 years, we were negative $3,000 plus the purchase price. I soon realized that the amount of cost and work to get the a newly bought duplex that needed full rehabbing up to speed was no longer feasible for our criteria in investing. It was time to jettison the unnecessary dead weight unpleasant from our portfolio. And so we sold it.

The duplex sold for $12,016.88. We purchased it for the sale price of $7,600 some time in the middle of 2017. It was one of our first properties and we had big expectations with plans of getting our hands dirty, create some forced appreciation, and then rent the two units out. It all made sense and we were eager to start! Nearly two years later, we realized that we had bitten off more than we can chew. By the end of this sale we had reached an expense amount of $16,561.49 not taking into account flights, hotel, and gas (difficult to determine since we have other properties to apply these expenses). With the final payment amount being $10,061.86 a check we deposited with the BofA mobile app while abroad. We sustained a loss of $6,474.63. This is the cost for the tuition of “University of Hard Knocks” There are so many things we would had done differently knowing what we know now. Had we done things differently, I believe we would had come out ahead financially in this deal. There was a lot to like about this deal, but we took the wrong direction and it got way over our heads .. But finally we were able to sell this diamond in the rough and once and for all stitch up the hole in our pocket.

Buying Your First Rental Property

During the time of purchasing one of my first duplexes, I didn’t know what to really look out for. Things like the water service coming from the street was still lead piping and it was leaking. Any rehabbing that would take place and the city inspector would have requested me to replace it. That job would have cost thousands. I didn’t get the sewer laterals inspected. It wasn’t an issue in this case because I never got to the point of renting the units but it could have been. I didn’t factor it the cost for new furnaces and the duct work which tends to be expensive. All these things and the cost associated with them would had made me think twice. However, even if we had replaced all this we still would be between $30k to $40k for a duplex. That’s not too bad. I think the bigger mistake was starting to gut everything thinking we can rehab a duplex in little time and keep costs as low as possible us doing it. We spent a couple thousand dollars just in the gutting out process. Then we added new 220v boxes and meters, etc.. that cost thousands as well. Instead adding all these overhead costs. I believe we could had not put any money in major upgrades, and instead clean it, paint it, do some cosmetic work, fix some holes in the wall, place some peel it flooring, get a new vanity and mirror in the bathrooms and put it back in the market for sale. I think we would had made at least 20% return at the end of the day.

Right after purchasing one of our first duplexes we got ourselves in somewhat of another mess with a bigger property- 12 units building. Fortunately, investors bought the 12-plex and have a mortgage with us due within a year. If things workout according to plan we’ll be able to lessen the losses and use the remaining funds for other deals. Another blow from the lessons of hard knocks! We also learned a lot going through this deal.

Entrepreneur, What Does It Take to be One?

After nearly 8 years ago, I had a net worth of about $20,000. Not much being in my late 30’s. I was an independent software developer with a small pool of somewhat reliable clients. Most of my time was used writing software and then looking for clients which would some times last a month or two to find. I enjoyed this nomadic do-what-I-want-with-my-day type of lifestyle but it was costing me something I wasn’t really acknowledging: I was aging and my net worth was not going anywhere. Being a freelance contractor was not a scalable career- at least not the way I was running it. So one day an opportunity fell in my lap to buy a hotel in a remote Caribbean beach town in Costa Rica called Puerto Viejo. The down payment was manageable. I’d be nearly broke after the down payment but I was optimistic. So I packed my bag and became a new hotel owner in the Caribbean. I can get into the ins and out of running a hotel in the tropics but what I want to focus here is what it has taken for me to survive and strive in this business which I think applies to all businesses- and that is being an entrepreneur in your business. By definition; an entrepreneur is a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so. And this is how I needed to operate to maintain a financially functional running business.

Having a business has taught me many things but more than anything its problem solving on all fronts. You’re thrown an array of challenges; some problems arrive all at the same time, some in a serial sequence and some that will take years to resolve. Since the issues can range from anything from financial security to government policy your best tools are reading as many books and take as many courses as you can on any subject that relates to the obstacle(s) that lies ahead; and maintain a strong will in perseverance and resilience. Financially, you’ll most likely be better off than working the good ole 9-to-5. Just a quick review of the tax codes and you’ll see that it is in you favor to own a businesses. That is already a good financial head start. This year I will be focusing heavily on technology, marketing and business systems as they are all at the forefront in relevance to your business. If you can consume information and utilize in an ever so changing and rapid way, and be able to swim against current for long periods of time, then I think such person would most likely succeed in business which usually translates into doing well financially. Hence, the Entrepreneur!

Only $10,000 to Invest?

Ten-thousand dollars is not much. But it does not mean you don’t have options. It means you’ll need to put a lot more sweat equity to stretch those $10,000. You definitely need more towards the end of whatever you start but the most important action you take is to START. Real estate has many of the benefits of wealth creation. Here’s a quick scenario: buy a beat down, undervalued property that’s selling for much less than what you have. There are many properties here on this site that sell for much less than $10,000.
https://www.stlouis-mo.gov/government/departments/sldc/real-estate/lra-owned-property-search.cfm?nbrhd=All&Usagen=All&ByNbrhd=Search+By+Neighborhood
Before you buy, start reading books and online course on how to do plumbing, tile/bathroom restoration, electrical work, carpentry, painting, flooring, masonry, etc. .. and if possible welding. Being an entrepreneur and financially successful requires a lot of knowledge to avoid digging your self in a financial hole you can’t get out of. With refurbishing a multiunit apartment, you don’t have to be an expert but get familiar with how things are done and get your hands dirty. Before you reach the end of refurbishing the building, start reading books on how to be a landlord and manage your properties like a business- not a passive investment (not yet at least). Your real estate investments will not be passive until you’ve owned enough to hire a professional property manager. You alone will know when that is since it is a subjective matter based on your necessities to live or retire. Once you refurbish it, you rent it out for about $550 to $750 per unit. There are many examples on this site which are multi-units. Those are the bread and butter of most real estate investors. You can start out with a duplex that is probably about 2 to 3 bedroom per unit which is a nice size that is in demand. Once you complete this whole process from start to finish, you do it again. If you start young, you have the best chances of retiring early that is if you get really busy and you’re determined. The later you start, the harder it is for multiple reasons (family commitments, bills, demanding job or career, etc). You may be able to retire in your 40’s. Believe me, you’ll appreciate greatly that you’ll be able to retire at that age. Though it may seem like a million years from now, it is not. It happens in an instant. And in your 40’s, you’re still strong and healthy enough to do all kinds of crazy stuff just as in your 20’s (travel the world, etc.). My only regret was not starting earlier. I believe this is most entrepreneur’s regret once they reached a level of success. And another very important discipline is to never stop learning how to invest, how to create value worth fulfilling people’s need, creating business ran by business systems and read books on successful business people including biographies (Rockefeller, Sam Walton, etc.)