Think like a Banker; move money to make money, and always use other peoples money.
I remember watching a program years ago called leveraged real estate investing with other peoples money. In the program, the real estate investor explained how he used loans for 90% of a homes value to purchase homes. He was paying 10% of the homes value with his money and getting loans from a bank for 90%, which was what he called other peoples money. He apologized for getting rich using the banks money.
Now I chuckle, when I think of his apology, because he felt bad borrowing so much money from the banks to buy real estate, because he thought he was borrowing the banks money. He was in fact borrowing the money of the banks depositors. In short, people deposit money into a bank and banks loan out 90% of the total deposits. In other words the banks make money, loaning out other peoples money.
In fact, because of Fractional banking, the requirement that banks only keep in reserve 10% of their deposits, banks can loan out your money to Bob, then after Bob deposits that loan in the bank, they loan out 90% of Bobs deposit to Charlie, and after Charlie deposits his loan in the bank, they loan out 90% of Charlie’s deposit to Susie and they do this about 9 times for every initial deposit.
The banking system is run by people who are the masters of using other peoples money. And the banking system is run by people who are masters at moving money. Bankers take your deposits which you deposit in their bank and you don’t move it, while they move it nine times and generate a new loan or stream of income with every move.
Now you probably think you can’t move money, because your not a bank, but in reality, you can move money and free up money for investments, if you think like a banker. A banker knows two things, moving money, makes money, using other peoples money gives you capitol to loan out and create streams of income. As long as you keep the money moving, everyone gets paid and you make money. But you have to stop thinking like a consumer and think like a banker, and keep your money moving.
Example:
Consumer Thinking like a consumer:
Consumer has $1,000 to pay 5 bills of $200.00 each. Consumer pays each bill $200.00 and is done. The consumer’s money moves once, from consumers checking account to creditors bank account.
Consumer thinking like a Banker
Consumer makes $2000 per month, rent and food equal $1000, which leaves the consumer with $1,000 to pay 5 bills of $200.00 each. But this consumer thinks like a banker. This consumer sets $400 aside and pays first bill $600.00, then borrows $500 from first account and pays $500 to the second account. Then consumer borrows $400 from second account and pays $400 to the third account. Then the consumer borrows $300 from the third account and pays $300 to the fourth account. Then the consumer borrows $200 from the fourth account and pays $200 to the fifth account. The consumer money moves multiple times and pays multiple bills, leaving the consumer with $400 to put into an investment which pays $20.00 per month.The consumer uses the movement of money to pay bills and free up cash for an investment. The money is borrowed from a lender or bank, who got their money from depositors. In other words other peoples money. The next month the consumer does the same thing and now the consumer has an additional $400.00 to invest and now generates $40.00 in investment income. After ten months the consumer has had an Extra $400.00 to invest each month, for a total of $4000.00 and his investments now generate $200 dollars in income each month. But his debts haven’t increased by $4000.00 each account actually went down by $100 each month or $1000 over ten months, yet the consumer generated $4000 dollars of investment Capitol from the movement of money, and using other peoples money. If the consumer keeps this up for 100 months, he will have invested $40,000 and be generating $2000.0 investment income per month, which is equal to his salary of $2000.00 per month. All using the movement of money and other peoples money. This is an example of the concept, there are other models.
Now at this point, your probably thinking that this is crazy. Your probably thinking it can’t be done. But step back for a moment and think about Fractional banking. It’s crazy, but it’s done everyday in every state all over the country, if not the world. Think about how your average American consumer is juggling $20,000 in unsecured debt on credit cards and lines of credit. As long as the minimum payment is made, the creditors are happy. They don’t mind if you take a longtime to pay them, because that’s how they make money on interest payments and on your checking account deposits.
Finally, some of you are looking at this and you thinking, that you could do this, but it’s to much work. When people tell me that, I think your right. It’s easier to work overtime digging ditches, carrying furniture, building walls, assembling cars, paint homes, installing roofs or teaching night classes. All those physical labors, which consume extra hours everyday and keep you trading time, the currency of life, for money. They are thought of as easier then what I have described above.
I suggest you reconsider spending extra time sitting at your desk or your computer, writing down exactly what you need to do each month to make this work. Then scale it, figure out how to double it, triple it, see if you can do it in 50 months not 100, 25 months not 50. The limiting factor here is frequently the amount of time you spend reasoning through the plan. Then it only takes a few minutes or a few hours a month to keep it going. You can do this and start yourself on the road to freedom or remain a wage slave, trading time for money and extra time for extra money. After all, It’s only time, the currency of life, and probably the most valuable commodity there is on earth. Unfortunately, once you spend it, it’s gone and you can never get it back.
Knowledge is power, power is wealth and wealth is freedom. The freedom to spend your time. The currency of life, as you see fit.
✍🏼 by Shortsegments
Picture Credit:
Pixabay Royalty Free Photos. www.pixabay.com