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“A life spent making mistakes is not only more honorable, but more useful than a life doing nothing.” – George Bernard Shaw

If you are making mistakes, usually that means one of three things…

The first reason that we make mistakes is that we’re trying new things. We’re making mistakes because we are learning. This is the best reason to make mistakes, just be sure to make sure that you learn from the lessons being taught (through successes and failures). We should always look to expand your skill set, and with that will come a lot of trial and error.

The second reason that we make mistakes is due to a lack of focus. In these scenarios, we have the ability to get to the correct solution, but maybe our mind is preoccupied on something else. If we give the problem at hand the attention it deserves, we will get the results that we want. This is an easy fix.

The third reason that we make mistakes is that we might be in over our head…whatever we’re trying to do, maybe it is too complex for our mind to grasp with how we have approached learning that subject. This does not mean that we will never “get it,” but it does mean that we either need a lot more practice or, even better, a new way to think of how to achieve the desired result. If we are still unable to figure it out, we may not have the mental capacity to understand what we are trying to learn. This sounds harsh, but it’s really not. Sometimes we have to confront hard truths. This hard truth is that we all have limitations (physical and mental). The problem here is that most of us use these limitations as excuses to not put in the work. Before we say, “I can’t do that,” we must ask ourselves if we actually tried our best to figure out whatever it is that we’re struggling with. More often than not, the answer is that we haven’t tried everything – not even close – but we aren’t willing to put in that extra effort.

In conclusion, go out there and start making smart mistakes! Don’t do anything that will sink you (financially or otherwise). Read, learn as much as you can by talking with others, then go out and try it. You will make mistakes along the way – that is inevitable. But give your best effort, focus on the task at hand, and grow your skill set. You will be amazed at what you can accomplish when you frame mistakes or failures properly.

“If you can’t feed one hundred people, then feed just one.” – Mother Teresa

Sometimes, we have these grandiose plans – plans to feed the world or save the planet (literally or metaphorically). But when we realize the undertaking of which that would require, we become demoralized. We give up because it is too much. After all, we’re just one person. How could we possibly achieve such an ambitious goal?

Instead of becoming overwhelmed by such lofty goals, what we need to do is focus on just getting started. If you can make a difference in even one person’s life today, you are making the world a better place. If you can ease someone’s suffering, or make their day brighter in some way, find a way to do it. Lend a helping hand. Provide encouragement. Life can be tough, but it can be beautiful as well. Make sure that you’re doing your part to show others the latter.

I have a hypothetical situation that I would like to present to all of my financial advisor friends, real estate investors, and anyone else interested in financial independence. It has to do with where you would put your money in today’s market. Let’s lay out a hypothetical scenario…

THE BACKSTORY

Let’s say the individual in this situation is relatively young (under 40), has no consumer debt, and has $150k in retirement accounts that they will not touch. They have a rental property that has about $150k remaining for the mortgage, but they have $50k of equity in it. Their own home is paid off, and their overall lifestyle is fairly basic (they live below their means). Lastly, let’s say they have $10k in the bank, but with the COVID-19 pandemic, their income has been reduced (whether due to their working less hours, their job being furloughed, etc.), and they would like to keep that money as an emergency fund.

THE OPTIONS

In option A, this individual believes that this market downturn will blow over quickly and things will be back to normal within a couple of months. He/she decides to stay the course with the rental property and keep investing in the stock market (perhaps more aggressively, or at least as aggressive as they feel comfortable). This would take far less work for them (since they’re already basically doing this) and still let’s them build towards their financial independence goals. The renters are still paying down the mortgage on the rental property and the individual is theoretically getting the stocks at a discount (by buying when the market is low). In their mind, slow and steady wins the race.

In option B, the individual is a bit more pessimistic about the short term outlook of the Coronavirus. They think that this pandemic will affect the country as a whole for 2-3 full years (meaning stock prices won’t be back to what they were until the end of that time period). This individual decides to sell the rental property (incurring all of the costs associated with this) and puts all of the proceeds from the sale into the stock market. Their expectation that stock prices will rise considerably once this is over, and that their investment in the stock market will more than make up for what their net worth would have been if they had followed the same route as the individual in option A.

CONCLUSION

Which investor is better off? Obviously it depends on the numbers…where the stock market is today, where it will be in 3 years (with the lump sum of money added to it versus essentially dollar cost averaging over that same time period), what the housing market does (how much will the rental property’s value increase over that same period of time), etc. Part of it also depends on your risk tolerance and the anxiety levels that each decision brings with it. Will your quality of life suffer in one scenario because you can’t take your eyes off of what the stock market (or the less volatile housing market) is doing? This scenario is made up, but I’m wondering, what would you do if you were in that individual’s shoes?

When speaking with others, try to sincerely compliment them. This can help to make them feel better, build their confidence, and, hopefully, pay it forward to someone else. The opposite is also true if you improperly criticize them (even just nitpicking little things). That person will either be stripped of their confidence and be afraid to make any decisions, resent you and not want to be near you, or let it negatively affect their mood, which can rub off on others.

Be wise with when you praise others (sincerely, and mixing in private praise with public acknowledgement) and when to give them necessary constructive criticism (privately, relating it to how you may have done something similar in the past, and what you’ve learned from it).

When you live below your means, are debt-free, and have been investing in your future, it frees you to become the best possible version of yourself. You are in a position of strength. If your work disappears overnight (as it has for many during the COVID-19 pandemic), it allows you to not go into complete freak out mode. It allows you to gather your composure and to reset. You are ok. Now it’s time to plan for your future.

If you have been living paycheck to paycheck, and are feeling unusually stressed at this point in time, now is the time to reorganize your finances and put things into perspective. Can you find ways to earn more money (changing careers, working side jobs, or selling things around the house that you don’t use)? Can you find ways to cut your expenses (not buying/renting more house than you need, owning a car outright – even if it’s not as nice as you’re used to, cooking your own meals instead of ordering out, or just not buying things that you feel like you “deserve”)?

If you’ve never budgeted before, try it out today. See what you’re actually spending money on (maybe some subscriptions that you never actually use) and you’ll be amazed at how much money you can “find.” Practice living below your means and you’ll soon find out that it doesn’t feel like a life of deprivation. No, living below your means will actually free you, and you’ll be much happier in the long run.