Real Deal REInvestor Network

In this book P.T. Barnum begins with enlightening us as to what is “true economy.” As I read his examples of what it is and what it is not, I couldn’t help but marvel at how little we humans have changed over the years. This book shows Mr. Barnum’s understanding of not only economics and commerce but also of human psychology and nature. Despite the rigidity and simplicity of the Math, “True economy consists in always making the income exceed the out-go” the human element believes that it can circumvent or else totally negate such a time tested and universal law. Why do our minds so often fool us when we fail to pay attention to details and to real numbers? We just seem to have a natural aversion to truth! While psychologists may have an answer for this, I believe the truth has a spiritual cause. Mr. Barnum may have alluded to this when he said, “A spirit of pride and vanity, when permitted to have full sway, is the undying canker-worm which gnaws the very vitals of a man’s worldly possessions.”

As for “being penny wise and pound foolish” even today we are tempted to drive for miles to a gas station to save a few cents a gallon. We seldom stop to really measure true and total costs for anything. We buy a great vehicle at an affordable price only to find out that the “cost of ownership” is in no way affordable. The same goes for housing. We trade up to a bigger house only to be hit with bigger taxes, insurance and maintenance.

What is it about the human psyche that tends to over reward for hardship? We see this so much in how we eat. We work out for 20 minutes to burn 100 calories only to feel obligated to reward ourselves with a doughnut of 200 calories. So instead of losing weight, we gain weight, become frustrated with our diets and workout regiments. We eventually give up and put on even more weight.

When you look at Mr. Barnum’s views on health and the senseless and common uses of alcohol and tobacco, you realize that not much has changed in our society. We have more knowledge and technology but our core natures are the same. It is no wonder the dark side of the human condition persists from generation to generation. My wife even thinks that things are actually getting worse because we are becoming “desensitized” to the negative qualities of our human nature.

The latter part of the book is where the author gets more into the business side of things. Here are some keys points to note:

• DON’T MISTAKE YOUR VOCATION. As one of the first steps to business and life in general, this is often overlooked or forced upon us by well meaning friends and family. In the last ten years or so, I have tried many things and failed at most. It was a word from a Pastor and a deep little voice inside my head that recently began to reset my path towards real estate investing – a business I have never lost money in. It is only now that all my skills are coming to fruition and my life now appears on a direct collision with mega success.
• SELECT THE RIGHT LOCATION. As we say in Real Estate, “Location, Location, Location!” I also heard another business mentor say that “The size of the catch must match the size of the pond,” You can’t get rich working at Walmart or any other 9 to 5 for that matter. You will need a location that does not limit your ability to earn or just trade your time for money.
• AVOID DEBT. No doubt the borrower is slave to the lender. I especially loved the John Randolph quote, “Mr. Speaker, I have discovered the philosopher’s stone: pay as you go.” As we debate the country’s debt ceiling, how timely and timeless this simple message appears to be.
• PERSEVERE. Don’t fail just inches away from success. It is not easy to always compete and push forward, but we must train our minds and muscles to stick to the task.
• GIVE IT YOUR ALL. I have to always remind myself to apply my full energies. When a break through is being sought after there is no place for partial efforts that only get partial results.
• DEPEND UPON YOUR OWN PERSONAL EXERTIONS. This rule really reinforced my own habit of learning my business hands on from the ground up. Even if I later decide to hire out certain tasks I will know what to expect from those that I hire. I would also be able to fill in for those times that the task cannot be completed by anyone else. I especially loved the Rothschild maxim, “Be cautious and bold.” I take my time to analyze and plan but then pursue quickly once the road map is before me.
• USE THE BEST TOOLS. This applies to physical tools as well as human tools. To get the best results we must always pursue more excellent methods and hire or team up with the best human talents that are available. It is also important to be always providing your human tools with adequate compensation and value to keep them working for your interests.
• DON’T GET ABOVE YOUR BUSINESS. As I am just starting out, I will not allow any false sense of worth to corrupt my attitude and spoil hopes for my business success. The first check is the hardest and most valuable. It take more effort to get an object moving than it takes to keep it moving. Before momentum begins working for me, it will work against me. Therefore I must be patient, careful and consistent in my efforts especially in the early stages. Learning the value of effort this way, will help me later when I begin to handle other peoples’ money.
• LEARN SOMETHING USEFUL. This is helping me even today. I have trade skills that I call on from time to time to help me keep food on the table while I pursue my grand plan.
• LET HOPE PREDOMINATE, BUT BE NOT TOO VISIONARY. I am paying a lot of attention to this. It is not necessary to over plan. Leave room to make adjustments along the way.
• DO NOT SCATTER YOUR POWERS. When we start a business we sometimes have to wear all the hats. The problem is when we get too used to it. The way to cut iron is to focus the flame – anything less is only wasting the gas.
• BE SYSTEMATIC. This is the way to make sure that efficiency and a measure of predictability accompanies your business growth. With a system, things are more measurable. Patterns are easier to detect and adjustment easier to make. Systems can lead to automation or at least make it easier to hire out parts of the operation that are more conducive to doing so. This frees up time for the owner to plan and focus on more lucrative lines of business. As with all things, a balance must also be in place.
• READ THE NEWSPAPERS. This medium might be dated but the intent is still relevant. In real estate we always need to know what is happening at the nation and regional levels. We must also understand what is happening in our local markets. Politics and economics influence our market place and we must be constantly aware of how to make adjustments to continue to be dominant in our niche.
• BEWARE OF “OUTSIDE OPERATIONS.” This reminds me of how important it is to keep pride in check and not get carried away by my own hype or the hype of others. It is easy to get sidelined when the focus is on chasing the dollar instead of on building wealth. Do not speculate. Do not enter markets and niches unless you understand that market or niche and you have a properly prepare plan to beat the competition or to take sufficient market share. Is any new market going to break my focus on what I am doing now or is a natural extension of what I am doing?
• DON’T INDORSE WITHOUT SECURITY. If your business is important to you and your family then you must, “Trust but verify.” Don’t put you life’s work in the hands of someone who might not be willing to do so for you. In partnership you must always be willing to have the business books reviewed by a neutral third party.
• ADVERTISE YOUR BUSINESS. Seems like a simple statement. Yet in tough times this is the first thing that gets cut from the budget. If marketing is the lifeblood of any business then it goes to say that a business cannot survive without it. I will personally make sure that there is money for marketing before I pay myself. A farmer who eats his seeds is on a slow walk to starvation.
• BE CHARITABLE. Resist the human inclination to hoard. You can share and prosper; give and receive.
• DON’T BLAB. Business is a competitive sport. Not everything should be shared. You business plan should not be known by your competitors.
• PRESERVE YOUR INTEGRITY. At the end of the day it defines who you are and establishes your legacy. Do not trade it for money or gain. Once your business starts producing profits reliably you will be more concerned about your legacy and the effect you are having in your community and the world. Short term gains should not motivate you. What is wealth if it brings shame? It is better to have less and to have honor.

So much of this book is like “ deja vous all over again.” So much is timeless. It is a course setting read for those who are starting out as well as a refreshing read for those who are already in business. I fully recommend this little jewel to all my readers and fellow challengers. Go here to get it now.

http://www.hisrealestatenetwork.com/userfiles/P_T_-Barnum-The-Art-of-Money-Getting-Free-Ebook.pdf