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- The Borrow Smart Chronicles - Borrowing Needs Hierarchy and Inflation
The Borrow Smart Chronicles - Borrowing Needs Hierarchy and Inflation
Episode 24
Todd Ballenger
April 19, 2024
In the beginner’s mind there are many possibilities, but in the expert’s, there are few.”
the basic needs of the human…
As humans, we have these basic needs. We like to apply various models to housing to open up new ways of thinking. Housing (shelter) is a foundational need, it is hard to be physiologically strong without a foundation based on housing needs being met. Safety is next, and where you live and how safe you feel where you live (not just physically but also financially safe) is critical. Love and belonging? That’s being around people that support you, that you know, that you see out walking in the evening. Housing is a big part of that dynamic in your life is it not? How about Esteem? Do you live in a house that meets your basic needs, or one that makes you feel good about yourself, that recognizes your efforts? I would say for me self-actualization is the most important. Yet it is almost impossible without the others in some degree of balance. If you want to be the best you can be, you have to have your basic needs of shelter taken care of, safety, love, and belonging and have the self-respect to be able to consider higher-order functioning.
It is one reason we separate house and home in our conversations. House is this model's physical shelter and esteems aspects, while home is the safety, love, and belonging. Self-actualization involves all of these.
Deep thought: Does your role in housing make it possible for the humans you serve to ultimately self-actualize? Are we not more than the houses we sell, finance, or use as collateral? Maybe we are all in the self-actualization business!
We created our model of this, as a way to think about how the house and home work together. You (as an advisor, realtor, or lender) impact all of these areas, but the key center is the gateway to the real ability to create wealth.
a BORROW SMART CONCEPT
Inflation and Borrowing
This keeps coming up, this sense that I’m making more money but unable to buy as much. That’s called inflation. It is the invisible tax that robs you of spending power.
food you cook at home costs more…
now stand back from this photo and what do you see? this reminds me of inflation - you don’t see it directly, but you can feel it is there watching you.
food you buy out costs more.
Inflation is so painful, but we often overlook the positive impact of inflation on borrowing - we see it in housing as cost go up, but we don’t think about how inflation makes the cost of borrowing go down.
Are you curious about how you can use inflation to help borrowers appreciate their mortgages? Download This and read it first, then…
Want to run your calculations? Here’s a work in progress that you can play around with… working to find an easy way to show others how inflation reduces your cost of ownership over time, but only if you have a loan! |
LIABILITIES
What’s Happening.
trending up but well below the last 10 years…
rates going the wrong way
Source: Calculated Risk
the magic number per Burns is still 5.5%
higher rents help with offsetting higher buying costs
our mortgage payment as a country is getting out of control
“Risk is the down payment you make on success.”
REAL ESTATE
What’s Happening?
back to the prior reading from last October
many or on the sidelines
people are spending a little less (but way above norms) on home improvements, many think this will go up again if rates stay high
we need more housing badly
another look at the cost of low inventory and high rates
have I mentioned we need more affordable housing?
we need minorities to better understand housing and be able to afford it
many have no housing, so be thankful for that
people are moving from higher tax states to lower tax states
the cost of rent as a function of more immediate measures is trending down
have I mentioned we need more housing (.)
"Anxiety is thought without control.
Flow is control without thought."
ASSETS
What’s Happening?
inflation always a factor (see above comments)
retail investors feel rick, but in reality most are getting back to their former richness
we are more active investors that our counterparts abroad
money moves where it is treated best
it is moving out of technology for now toward value
last week was rough
but we are in a typically negative period
and when sentiment gets really bad, stonks will go up again!
ON BEING HUMAN
What’s Worth Sharing?
C.S. Lewis: "Good and evil both increase at compound interest. That is why the little decisions you and I make every day are of such infinite importance. The smallest good act today is the capture of a strategic point from which, a few months later, you may be able to go on to victories you never dreamed of. An apparently trivial indulgence in lust or anger today is the loss of a ridge or railway line or bridgehead from which the enemy may launch an attack otherwise impossible."
As we say in our program - everything compounds just like interest. - Me
"The man who doesn’t read good books has no advantage over the man who can’t read them."
DOPAMEMES
And Other Moments…
for Matrix fans, this is Money in the Matrix… just ask inflation…
AI / Technology
And The Future of Work…
Image description tool - https://imagedescriptiongenerator.xyz/ great for getting a description of an image you like that you can then use to create a new image…
One of my favorite image editing and creation tools: Be Funky
Really fascinating new app to transform that SELFIE! https://higgsfield.ai/
Microsoft just dropped VASA-1.
This AI can make single image sing and talk from audio reference expressively. Similar to EMO from Alibaba
10 wild examples:
1. Mona Lisa rapping Paparazzi
— Min Choi (@minchoi)
2:57 AM • Apr 18, 2024
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