June Event Takeaways

Freedom Founders Event

Key Concepts for Life, Investing, and Business

I always love our Member Events. There is so much energy, wisdom, camaraderie, and lessons present. It might surprise some of you who know I’m an introvert (obtain energy from smaller groups or isolating myself to refuel) but it is these kinds of meetings that give me the passion I have for what I do. It gives me momentum and excites me in a way that other groups do not.

The following are a few takeaways from our event to inspire and lay out key concepts helpful to combat this recession that is becoming more prevalent in our businesses and investments.

Seller Financing: Benefits to Both Buyers and Sellers

Seller financing is becoming a significant opportunity in the current real estate market, especially as volatility increases and liquidity becomes limited. Seller financing is a strategy best used when interest rates are higher and bank lending is not preferred.
Obtaining traditional financing for starter homes has become challenging due to tightening lending standards and increasing interest rates. Seller financing provides an opportunity for affordable home ownership for individuals who may not meet traditional underwriting criteria. For example, many self-employed individuals struggle to document their income, making it difficult for them to meet traditional mortgage underwriting requirements. Seller financing fills the gap left by banks and mortgage companies that are not lending on properties below a certain threshold. 

It is, therefore, important to assess the viability of properties and understand the risks and potential benefits before pursuing self-financing options. A few key components to consider are the state of the seller (willingness to receive payments over a longer period of time and not necessitating a huge influx of cash immediately), the exact terms of the agreement, and the purpose of the purchase.

The Tax Deferral Landscape is Changing. 

The main takeaway is to pay your taxes now, at historically lower rates, which is beneficial in the long run. This applies to converting traditional accounts to Roth accounts, when possible, while tax rates are low. Paying taxes today, at the current lower rates, can increase long-term after-tax wealth. This is because future tax rates are likely to rise. Would you rather pay taxes now at a cheaper rate or later at a higher rate?

Be sure to adapt your thinking to prioritize after-tax wealth (money that no longer has a portion set aside for the government). There is a significant likelihood of changes in the future continuing to make tax deferral less attractive. The more you focus on money that is completely yours, the less you’ll get caught up in money that potentially isn’t, losing time, effort, and money to endeavors where the rules are constantly changing.

Culture that Drives Success 

During a December winter storm in 2022, Southwest Airlines experienced a major system failure. The explanation for this is best laid out in a letter by one of their pilots describing the decline of the company's operations over the years. The pilot highlighted the shift in leadership from operationally oriented leaders like Herb Kelleher to more financially focused leaders like Gary Kelly.
Neglect of technology upgrades and operational tools caused Southwest Airlines' operations to deteriorate, resulting in a major system crash during a winter storm. It is crucial to prioritize the culture you want and need to drive success. A culture that promotes a focus on value, communication, and constant elevation. The consequences of neglecting such culture will result in a decline in value, efficiency, and relevancy.

Money is Tokenized Time

There is a universal measure and constant nature of time. Optimizing the use of that measurement (money) and time is crucial for maximizing the quality of life.
Kandace Phelps in conversation about the value of time now vs later
Conscious choices should be made about how time is spent, considering the impact on personal relationships and overall well-being. Long-term thinking and evaluating the real rate of return on time invested are important considerations. Aligning actions with personal values and goals leads to better choices and outcomes.
Not all time is created equal. Most fall for the illusion of needing to work long and hard for our money for our eventual “retirement” and to support our family now. But isn’t your time worth more while you have your children in your home? While your parents are still young enough to enjoy life with you? Time now is valued more than time later.
The opportunity that money presents is that you can begin to trade it in for more time. That’s why most work so hard to “retire”. The key is to remember: More time is the ultimate goal, not money. You must prioritize and optimize for what truly matters.

The Danger of Wealth Without Knowledge

The most significant challenge facing the next generation is the risk of receiving accumulated wealth without being taught the key principles of how to use and sustain it. Without this knowledge, wealth will be lost. 
There is a massive lack of intergenerational conversation regarding wealth. Many families simply do not discuss the topic, leaving a new generation to misuse what their parents worked so hard for. There have been many a tale of wealth being lost due to the lack of intentional conversations.
Passing on wealth-building principles is so important. Even more so is passing on what that money was for. Creating an intentional legacy requires that intergenerational conversation. Without that communication there will be no understanding of underlying values, the vision you had for that money, and the impact you wanted to create will be lost.

Financial Accountability in Your Investments and Business

Financial transparency and due diligence are essential in evaluating partnerships, suppliers, vendors, and investments. Qualitative standards, such as having qualified professionals (i.e. accountants, controllers, or auditors) involved in financial processes, ensures accuracy and reliability. Timely production of financial statements is then crucial for making informed decisions and assessing the financial health of any company.
Asking questions is critical in uncovering the truth and identifying red flags. Sales-oriented or evasive answers may indicate potential issues. It is necessary to dig beneath the surface and examine balance sheets and financial statements for any irregularities or discrepancies. Don't be intimidated by financial information! Ask questions and seek clarification when something appears unusual.
Be sure to read financial statements and footnotes. This can be challenging, and it is advisable to seek help from tax CPAs or experts to help understand the flow of money and any fees or uncertainties seen.
The most important guard against risk, bad investments, and unforeseen challenges in your business is building a team of trusted advisors and seeking their opinions to provide a more comprehensive understanding. Access to external audits and opinions can shed light on the reliability and transparency of any company. This is how having a support system and community of like-minded investors can provide guidance and assistance in navigating the investment landscape.

The Seasons of Life & Business

Michelle (in white) leading our Members in a fun, season based excercise
Michelle Jorgenson, our guest speaker, emphasized the importance of recognizing and embracing seasons in life and understanding the cycles of growth, change, and renewal. We must break away from the notion of constant growth and embrace the concept of cycles, allowing for rest, rejuvenation, and new beginnings.
There are different seasons in life, both personal and in a broader context. The concept of “seasons” was applied to different aspects of life, such as personality types, work dynamics, and business cycles. 
The seasons that Michelle highlighted were: Spring, Summer, Harvest, Fall, and Winter. Each has its purpose in life and business. Each presents an opportunity to maximize and the challenge of preparing for the next season.
Everyone goes through different seasons, and it's important to understand and adapt to each season's unique characteristics and opportunities. If you know what to do in each season, you can be successful and healthy in every season. For example: Conserving resources is crucial in a time of Winter. Expressing gratitude and appreciation in a time of Summer leads to fulfillment and places value on relationships. Preparing for change, and becoming adaptable in a time of Fall makes you better prepared for new challenges and possibilities.
There were many more highlights and lessons from this event. I hope this is just a start to your own discovery of key concepts for investing, running your business, and taking control of your time to do what matters most to you.


 To your freedom!

  –  Dr. David Phelps

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