The BIGG Successs Show
Lessons Learned From A Bankrupt Business Owner
Today we’ll look at what we can learn from a bankrupt business owner, who's story we found in the New York Times...Listen to the show and read the summary here.
Welcome to our 19th big success show. Today we'll learn some lessons from a bankrupt business owner The big success show with George and Mary Lynn On our last show we talked about jump-starting your passive income through real estate investment and today we're actually going to do a case study of a real estate entrepreneur and this real estate speculator is named Todd and we found out about him through an article in the New York Times Mary Lynn this is a very informative story and so let's go back to 1994. Oh I thought you were gonna say 1999. Party like it's 1999. We're not talking about prints we're talking about Todd. Okay gotcha. So Todd at that time was a 20 year old so I ran the paper for a real estate by real estate with no money down seminar and he thought man great because I don't have any money that's perfect right? So he attended and Todd was a quick study. Guess what he did? He immediately got started. Went out, found a property, bought it, fixed it up, sold it, made a $4,000 profit and he was able to quit his day job and decided to go full force into this whole real estate investing. That's right so now let's come all the way forward to the year 2006 the month of May by that point in time Todd who was 33 at a 5,000 square foot house worth about 1.2 million in his driveway a BMW and a Corvette. Jay Leno Jr. right there huh? Yes and he's got 89 properties sitting there waiting for buyers. He owns an office building, life is great. And living the American dream right? Absolutely. Unfortunately it turned into a nightmare. Yes because now the banks have taken it all back. He's lost absolutely everything. And he's in debt. And he's in debt. Yeah about $6 million. He's lost the house. He's lost the cars. Life's not so good. He's driving a beat up old pickup now. He had to get a job again even though he's still doing some real estate investment on the side. So what we want to do now is talk about what went wrong. What can we learn from his mistakes? And I'd say the first one is when you're living on borrowed money you may be living on borrowed time. Yeah and you know Todd like a lot of people starting out in business was deep in debt. You did almost all of it on somebody else's money. The problem is this. That's a two-edged sword. You're sorting out with a small amount of money and you're levering it. You're either going to get wealthier faster or you're going to go broke faster. And unfortunately we see what happened in Todd's case. Lesson two when it comes to your standard of living keep your standards relatively low. I thought you were going to say keep your standards low. Keep them in check. At least you said relatively. Yeah relative to your income in other words. And you because your Todd had the two hot cars and he had the McMansion which I'm sure was decked out to the nines. I mean isn't this typical of people who aren't used to having a bunch of money that they'll over spend. Actually I think it's typical of almost all of us right. This is true. So you know Todd's not that unusual. The difference is just everything in his business and his personal life was borrowed. You know the thing is big success it's all about having fun right. But here's what we really want. We want fun when it will last forever. Okay and and how do you do that. You create the passive income so that so that you constantly have this stream of money coming in to pay for the lifestyle that you want. Lesson number three fully analyze your situation by considering numerous situations. And what what this really means I think is just simply ask yourself what if. What if my sales aren't what I think. What if my costs are higher. Or maybe in the case of flipping how you know we can all picture flipping a house right. You buy it you sell it you want to make a profit. Right. But what if like it is right now what if it's going to take longer than you think to sell it. What if you can't sell it. Can you rent it out if you can rent it out now I've got a backup plan that's what you're looking for. Yeah you've got to have a plan B. I mean just like what we were talking about a couple of days ago that the people who are truly successful are the ones who are masters of reducing risk. Yeah they find ways to make the risk controllable and that's exactly what we're talking about. All right so let's review what we've discussed. Today we talked about three lessons you can learn from Todd's unfortunate situation first when you're living on borrowed money you may be living on borrowed time. That's a two-edged sword make sure you understand how to manage it. Second when it comes to your standard of living keep your standards relatively low. We want you to have fun permanently. And third fully analyze your situation by asking yourself what if. And what is my plan B. That's right. You can find a written summary of today's show on our blog at big success.com also a link to the New York Times story about Todd. We applaud Todd for being willing to share his situation with us. Yes and we are confident he is going to rebound. All right before we go let's get our big quote for the day. Our quote today Mary Lynn is from Jonas Salk. Gotta be careful how you say that. I think we all know the name probably he's the developer of the polio vaccine and this is a great quote. He said I have had dreams and I have had nightmares but I have conquered my nightmares because of my dreams. So shake off the nightmare and rest assured your sweet dreams will come true. And on our next show we'll offer tips for starting over for turning misfortune into fortune. It's the flip side. That's right. And until then here's to your big success. The Big Success Show at B.I.G.G. Success.com. [BLANK_AUDIO]