Financial Literacy - Smart borrowing
smart spending
Use defensive strategy to get rich

q_v2.gifYou were tucking away money in IRAs and a 401(k) before most of your friends knew what those things were. Weren't you tempted to keep that money "in play" for down payments and such?

a_v2.gifI knew starting young on IRAs and 401(k)s were crucial to my goal of being a millionaire before 30. I considered it my "no touch" money. I made a decision when I put it in and stuck to it. It was tempting at times, but I'd made a promise to myself.

q_v2.gifHave you ever borrowed from family?

a_v2.gifI was in the situation where I borrowed money from friends and family to buy a house. I went to four different people to borrow $5,000 to come up with half of the down payment for a house, and promised to pay them back within two years with 10 percent interest. I made them sign papers because it made me feel more comfortable to be held to this loan agreement. Friendships are lost over business deals and I didn't want any of that.

That was a great deal for them and a good deal for me because I couldn't buy this house otherwise. But I had done the numbers and knew that the rental income was going to pay back these loans for me within two years. I knew, worst-case scenario, I could sell one of my other properties to pay back those loans.

The way it worked out, I was able to pay back all of their loans in one year, but I paid them the 10 percent interest as if I had waited the two years. They were happy because they got more money in half the time, so now if I'm ever in the position where I need to borrow money again, I'm a good lender to my friends and family. Luckily, I've never had to go back to them.

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q_v2.gifHow much real estate did you eventually own?

a_v2.gifI had five houses and one restaurant. I've sold them all except for one two-family house; I live in one unit and rent out the other unit. I sold most of them before the market got soft.

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