Last week's article dealt with the cornerstone of your customer's credit problems, interest. Well a few readers disagreed with me. They said that consumer's biggest problem is that they purchased a home that they could not afford. Do you agree? If so, please e-mail me. I'd like to know what you think.
In my opinion, there is no doubt that many consumers purchased homes they could not afford and many of you helped them.
Today, I interviewed a real estate agent that recently lived in a $1 million home. He applied for a $40,000 per year job. Can you imagine owning a $1 million dollar home last year and being willing/acquiescing to working for $3,333 per month? Now don't get me wrong, I think he should be looking for a job and I hope I can hire him, but, really, give me a break, what was wrong with that picture?
The answer is the concept that you must overcome in order to become wealthy. Interested? If so read on:
If you purchase anything other than assets, you are purchasing either doodads or liabilities. Assets produce income. If you purchase liabilities, then you must make money to pay for them. If you purchase assets, then at least you have a chance of them paying for themselves.
Last weekend, I began negotiations to purchase seven condos on the beach. They were listed for $600,000 per condo. They are for sale for $350,000 per condo. They are worth $215,000 per condo. Question: Were they ever worth $600,000? Not if they could not be rented for enough money to pay off a 30-year fixed rate mortgage on them. Otherwise, the purchase of the condo would be speculative and would not be considered an asset. Since it could not pay for itself, it is not an asset at that price and never was or will ever be.
Second lesson: While interest may be the cornerstone of consumers' credit problems, purchasing liabilities that continue to take money out of your pocket is a close second.
If you want to know more about these principles, e-mail me at
Recently I released a report on the credit repair industry. If you would like a copy, e-mail me:
