Turning Equity Into Wealth - The habit that holds most Aussie families back

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There's one habit that is so common, it will be obvious when you learn what it is. So many Aussie families fall into this trap and it holds them back from a secure financial future. Check out the video to learn what is the habit that holds most Aussie families back.



Hi, I'm Phil Anderson from LifeCorp, the home of street smart property investors. I've been working with hundreds of mum and dad investors for many years now. And what I've noticed is that most Aussie families spend their whole lives so focused on creating income that very few of them ever get the skills that they need to create wealth in their life. I've also noticed that most of those families fall into one of three financial categories, three types of spending habits. Today, I wanna show you those particular categories, and I wanna help you break free from making many of those very, very common mistakes.

Okay, so let's have a look at these three categories together- cup A, cup B, and cup C. And there are very different ways that each of these categories of people here in Australia spend their money or treat their wealth. The reality is that cup A earns income each week. And this is a growing group of people, not a massive group of people, but whatever they earn each week, they manage to spend just a little bit more- can't resist the shoe sale, gotta have the plasma screen TV, 24 months interest-free furniture package, whatever it may be, but never saving, never getting ready to purchase. And for many people, this is set up by the mums and dads of those families that are feeding that information to their kids saying, "You know what? You're never gonna be able to afford to buy a property. Property's so expensive," and so forth. And these people never have the dream to actually invest in real estate. And they just continue to go on through their life being spenders.

Cup B is the Great Australian Pinup Model. Now, many of you, if you're like me, this is how I grew up. This is what I grew up believing was the Great Australian Pinup Model, where you earn money and eventually- it comes in weekly, monthly- you earn money each week, and whatever it is that you earn, at some stage in your life, you manage to discipline yourself- spend less than what you're earning- giving yourself the ability at some stage- maybe with some family help, who knows- but, at some stage, the ability to acquire the Great Australian Dream, the family home. Now, for many people, this is where it stops. This is where the vision stops. And we follow the Great Australian Pinup model of "let's pay the house out by the time we're 60 or 65 years of age, and the rest will take care of itself." Let's come back to cup B. We'll tell you what goes wrong there.

Cup C is actually the neighbor that you may have two doors down, the gentleman driving around in Ute with a flannelette shirt that doesn't appear to be earning any more money than cup B. But what he does when he builds this all, when he invests in property, is quite different and quite significant. He also earns enough money to be able to, at some stage, save enough, realize the Great Australian Dream and buy the family house. But as compared to cup B, cup C, when the equity grows in their property, they re-tap into that equity- re-tap in to the equity- giving them the ability to be able to add another investment property. And these wealth wheels continue to go, giving this person the ability to add multiples of properties over years, and also putting them in a situation where the reality of how much cashflow they've got, how much is left over each week compared to their expenses, becomes bigger and bigger. And this becomes a big part of their retirement plan, putting equity to work for them.

So, what does cup B do differently? Typically, cup B only paces themselves to pay the house out by the time they're 60 or 65 years of age. That's all they wanna do- pace themselves to pay it out by the time they hit retirement. So, as the equity grows in this property, instead of thinking about leveraging off the equity and buying an investment property or two, many Australians will actually re-draw on the loan- re-adjust their loan, re-draw on the loan, take a trip to Bali, pay down their credit cards, buy the new Commodore, whatever it is- and just continually pace themselves to just be able to pay out that house by the time they're 60 years of age. And unfortunately, like tens of thousands of Australians today, when they hit retirement, unfortunately, that will be their only asset. They look at their super balance and say, "I don't think we can afford to have a great retirement." They look at how quickly that super balance will get exhausted if they keep spending at the lifestyle level they would like, and they realize that after 6 or 7 years, there'll be no super balance left. They look at the pension rate and go, "How could we live on a pension? That's gotta be a crazy lifestyle compared to what we're used to." So, unfortunately, the family home must be sold. We're seeing tens of thousands of people in this category today, because they didn't use their equity early enough, they didn't leverage from their equity- remembering, like I said, this is all about controlling the holding costs as well- but leveraging your equity toward adding investment properties.

And the golden rules, guys, if you're going to do this- if you're gonna leverage your equity, create some investment properties, create cashflow, create lifestyle money, create the ability for you to have significant lifestyle money coming in with or without your superfund- but to create these wealth wheels and get properties working for you and leveraging equity for you, that's all great. But remember, in every buying decision, every single buying decision, if you can't buy a property with your lunch money, remember what I say, if you can't buy it with your lunch money, don't buy it.

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