Look at the title of this lesson one more time.
Many of you might recognize those lyrics from the old Kenny Roger's country song, The Gambler…
But how many of you actually follow Kenny's advice?
Successful real estate investors are very good at marketing, finding deals, rehabbing, renting out properties, dealing with tenants, and selling their finished product. But many of them overlook what a lot of successful business owners in other industries take for granted – counting their money after the dealin's done.
Sure, you may walk away from a closing table with a nice fat check in hand. Or you may be the guy who goes out to his mailbox and collects the rent checks there, adding up the amounts in your head. Either way, you probably proceed to enter the amounts in QuickBooks, or whatever software you use to track your real estate holdings, right?
Perhaps not.
It remains true that many investors stubbornly wait until tax time before they put it all together. During the rest of the year, they simply don’t spend much time analyzing their business and figuring out what is (and isn’t) working.
Of course, they may have recently made a killing flipping a great house, but the money is dribbling out of their accounts due to needy tenants, or perhaps unexpected taxes.
And what about the investor's personal life? Could an investor be making a mint in real estate, only to have it fritter away because his family is eating out every night, or buying all kinds of unaffordable stuff?
If describes you, then although you may currently feel wealthy at this present time, you may be quickly distancing yourself from that wealth.
Making a Mint? Use Mint to Keep It.
You see, one thing many wealthy people do very well is to ensure their money is working for them, month after month. They do this by keeping a personal balance sheet and income statement on themselves.
That way, they can tell if they are moving in the right direction. And if they discover that the are not moving in the right direction, they can see what is holding them back.
One great way to do this is by using a helpful app called mint.com. Mint is not just another accounting program for keeping track of all your receipts. It's a great little financial planner for everything you do.
And the even better news is this: Once you set it up, it’s all automated – and it’s free!
Once you have downloaded Mint, you simply provide usernames and passwords for all your bank accounts, loans, and investments. Then Mint does the rest. Specifically, Mint downloads all your balances and transactions (going back a couple of months), then it automatically categorizes your income and spending habits, to help you maintain a comprehensive mastery of your personal financial health.
As time goes on, Mint’s software even analyzes the inflows and outflows for you. At a glance, you can see how you are doing overall, and identify any “problem” areas you may have.
Although Mint may not be perfect at tracking which of your rent payments were derived from specific properties, it can tell you “how much rent came in” versus “how much cash went out” to the big box stores, contractors, taxes etc.
So you may want to keep your other software for tracking the granular nuances of certain real estate transactions, but I have personally loved using Mint as a sort of virtual assistant to keep track of my personal finances, and you owe it to yourself to at least take a look.
But be prepared… Because Mint is brutally honest about your finances – which a good thing. It's easy to overlook certain charges when you manually type them into other programs, because you can rationalize their exclusion by saying "I was really tired last week – and that's why I spent so much on coffee".
But with Mint you might realize that you're spending a heckuva lot on coffee (or something else) every single week!
But Wait, There's More...
Sounds scary, doesn't it? Giving up all the keys to your financial information?
Don’t be scared, my friend.
Mint uses bank-level encryption security, and even Mint's own employees don’t have access to your information. Additionally, since Mint is a service provided by the upstanding folks at Intuit, they have quite a reputation riding on their ability to keep you safe and secure.
In fact, your utilization of Mint’s services may actually make you even more safe and secure than you currently are.
For example, you can set up spending alerts that can be customized for your email account or text messages on your phone. Those messages may help you maintain a disciplined approach to your personal financial management, or the can also be used to inform you of any suspicious transactions happening in your account.
And Mint is able to tell you about all of it in real time, as soon as it happens.
There are also “Bill Pay Reminders” for you to set up within Mint’s software. Wouldn't it be great to know when the property taxes are due, or when the six-month “no interest” period is up for your local big box store? With timely bill pay reminders, you don't need to worry about the government penalties or the gazillion percent interest charge if you miss your next due date.
You can also set up budgets, to see if your spending each month is exactly what you thought it would be. If your spending is approaching your budget, then you can quickly view it in the form of an intuitive graph, or you can receive one of the aforementioned alerts. That way, you can enjoy the opportunity to “cut back” on your spending before you go overboard.
But You Don’t Have To Take My Word For It…
Below is a video from Mint's founder Aaron Patzer. He has no idea that we’re posting this stuff about his company, but he describes a few more of Mint’s additional features in this video – and I just thought you guys might share my personal fascination with this stuff…
Mint founder Aaron Patzer explains how to use his software …
In other words, think of Mint as a free and automated virtual accountant for your finances – both personal and professional. It’s like an accountant that will let you know very quickly if you are on the right track, or if you need to look more deeply into some area of your business in order to “stop the bleeding”.
Set Up a Monthly Schedule – To review your finances and real estate business. Look for where you are making money and where you are losing money. Make adjustments based on the feedback.
D.E.A.L – Delegate, Eliminate, Automate and Liberate. That’s the acronym from The Four-Hour Work Week. Tim Ferris uses it to eliminate all the tasks that don’t bring him the most value. Think about how you can use it in your business. Tracking your finances may be a great place to start!
Set Up Budgets – Figure out what kind of return you are looking for and how much you want to spend on advertising, deals, rehabs and other expenses. After you make the return, check that your expenses were in line with your budget. If they were not in-line, make some adjustments for your next deal or campaign.
Watch Your Personal Finances – Don’t watch your real estate finances like a hawk, only to have the profits frittered away in your personal life. Be prudent on both the business and personal side.