First off we are going to go down the financial planner’s route.  To start off, there is a problem with the rates this author is saying he can get with stocks, bonds, and mutual funds.  He is saying that you can get a 7.5% rate on all these things and I have say that I have not had one caller, one email, or heard from any lifestyles member who has been able to get that high of a rate.  It really is the opposite, everyone I have talked to has told me that their mutual funds and stocks have not even come close to performing that well.  So this guy is talking about something that does NOT exist.  That disturbs me because I know that this article was distributed across Texas and I am fairly certain that he is a nationally syndicated author; that means tons of people are getting this bad information and that scares me.

Here is the layout of the identical families in question:

- Both couples are getting into their later years, nearing the sixties.
- Each couple is making one hundred and thirty thousand a year, has 200K in their 401K, ten thousand dollars socked away in their savings account, and another one hundred thousand dollars in taxable savings.
- They both own a house, which has accrued a significant amount of equity.

The financial planner in the newspaper suggests that the first thing the couple needs to do is to take out the equity in their home and start using that money to live on too because their collected 310 thousand is not really going to keep them afloat forever.  Note right here that he is telling them to take something out of their principle money everyone, he is telling them to start cutting up their golden goose, the thing that has earned them the most money over time and make it completely useless.  After that he says that the couple needs to sell this dream house of their and live out the golden years of their lives in something that is much smaller and more fitting to their income level, which after they retire is zero.  Amazing!  Go and get everything you dreamed of before you retire and as soon as you are done with the working world, give it all back!  From here the financial man wants them to put all of their money into a low rate of return COD or bond and live on a fourth of their means for the rest of their life because if they don’t, they will run out of money before they die.  Sounds like a super plan!  So what will the other family’s lives be like when they go out and start their own business through investments?

First we need to realize that this couple is not really making 130K a year.  It says they are on paper, but we all know the truth don’t we?  Its taxed income!  So what is the real number they are bringing home every year?  Let’s move it down to one hundred thousand for the sake of simple math.  Instead of selling their house, as advised by their financial planner, we need to look at what this house has done for them.  They bought this house ten years ago for four hundred thousand dollars.  Over the last ten years they have paid down one hundred and fifty dollars and only owe two hundred and fifty thousand dollars.  That means that today the house is worth eight hundred thousand dollars.  The point that needs to be made clear here is that we need to readjust just how much money this couple has.  So they have saved up three hundred and ten thousand dollars in their 401K and their bank accounts after forty years or more of hard work.  The house has is a liability to them because it has been taking money from you all these years but after ten years it has built up five hundred and fifty thousand dollars in honest equity.  Scary what the difference between working all your life can get you over forty years and how long it takes a house to more than triple the amount you yourself can make, isn’t it? 

What most of you might be seeing is that the financial planner never really did come up with the idea to tell this couple that if they had bought five of these houses they would have gathered 2.5 million dollars in equity over the ten years.  They could have done that with no work at all and they would be multimillionaires in a fraction of the time it took them to save three hundred and ten thousand dollars the planner’s way. 

So there is the solution.  You’ve been reading along.  I’m going to assume you’ve been listening to my shows and now you know what you and your family need to do.  This is what all of us at Lifestyles do and I’m telling you that it can be done with only two hundred thousand of the couple’s saved money.  The financial planner did get the couple up to about fifty thousand dollars by the end of the article.  This was after many more years of hard work, more saving, down sizing their life and dreams, and selling off their house.  I’m going to advise that you keep your houses.  Isn’t that the dream?  Don’t’ you want to retire in this house you’ve lived in forever so that the kids and their kids can come visit and have a place to stay? 

Let’s take that two hundred thousand dollars, go out into the Houston foreclosure market and buy twenty houses.  Don’t do anything fancy with the houses but plan to spend an average of ten thousand dollars of your own money on each house.  The average amount of equity that will be captured per house is twenty thousand dollars.  So now the couple is getting back their initial investment and getting twenty thousand more on top of it to make thirty thousand dollars.  That means that when they are done with their twenty houses, and let’s say it takes them two years, the two hundred thousand dollars is worth six hundred thousand dollars and they are getting four thousand dollars a month in passive income.  That is forty eight thousand dollars a year. 

So, like the article, add in social security income and now we are beating the yearly figure of the financial planner.  There is one MAJOR difference though.  All of this money from the houses…its tax free.  At the end of two years, here’s the magic, they pull out of these houses and because of all the extra costs the pull out five hundred thousand dollars.  They then take that money and buy forty more houses.  That brings them up to 96 thousand a year and within five years they are back to making what they did while they were working.  The only difference is that neither of them are working and they have everything with them that they started with.  So what do you think?  Still want to follow your financial planner?