The Borrow Smart Chronicles - Retirement, AI and Trading Down

Episode 18

Author

Todd Ballenger
March 08, 2024

❝

"There is nothing in being superior to your fellow man; true nobility is being superior to your former self."

Ernest Hemingway

When I was in college someone gave me a set of Brian Tracy VCR tapes to watch, and they were transformative at that time in my life… a little excerpt above to get your juices flowing. 

A simple ask, if you like any of what I'm sharing, please pay me back with a share - use the link at the bottom to share and if you share with 3 people I'll send you a gift!

Weekly Spotlight: Retire From What?

I have long thought about retirement, and one of my biggest questions is: What is it that I want to retire from? If I consistently get rid of ‘that’, then I wouldn’t want to retire. Get rid of retirement and financial priorities shift from doing something I don’t enjoy to doing something I do enjoy, which I would then want to do forever. We have the power to redefine our work. If I keep doing what I enjoy I’ll be paid well for that, so the retirement savings are less critical. With remote work, the coming shift and impact of AI, robotics starting to replace manual task work, and the ability to travel via Zoom instantly to anywhere on the planet, I feel I’m experiencing the very foundation of work itself shifting… if you don’t feel it you are probably so focused on your old way of working that you haven’t let the new work smell into your office, yet!

We can see that seniors are retiring at the fastest pace in history. It’s one reason the job market is holding up so well. The reason people are retiring is because they want to and the Can. Why they want to might be addressed in my comments above, but why the Can is addressed in the market back to all-time highs. Your retirement savings, your house, everything is up and we Can retire now. If the market shifts and those assets drop, we’ll be faced with going back to work or using assets, like your house, in creative ways to maintain that cash flow needed in a retirement without work.

senior are retiring at a record pace, and FIRE movement is encouraging younger people to retire as quickly as possible … who’s going to work in the future?

a BORROW SMART CONCEPT
Mortgage Mistakes

Mo money mo problems? The problem is that we don’t manage real estate wealth as effectively as we manage our traditional equity investments.

Here’s A Thought Experiment

Your retirement accounts are at all-time highs, you have a financial advisor and they’ve never looked at your house as an asset for planning and it’s now worth $1,000,000. Your kids are away at college, and you don’t need the space. You are paying utilities, property taxes, homeowners insurance (that is going up faster than inflation), and other expenses that take away from your cash flow. You could TRADE DOWN and buy a $500,000 house at half the price, half the ongoing expenses, and redistribute that $500,000 gain (after taxes owed) into an income account dedicated to giving you travel money or fun money in retirement. Let’s say you have $400,000 in gains after selling the house and you buy a well-diversified REIT (Real Estate Investment Trust) paying a 10% dividend. You now have $40,000 a year in income to add to your lifestyle during retirement. You pick up another $500 per month in lower property taxes, utilities, and insurance. The smaller house feels more aligned with your use of space (See: The Not So Big House). You more than makeup for the lifestyle difference by being able to travel or join a local country club where you now spend most of your time with friends …

Here’s an article I wrote about this many years ago… still relevant today.






DOWNLOAD this short article about Trading Down I wrote a long time ago, it is still relevant and it’s one strategy we are teaching Financial Advisors through our CLA Designation.

“One can choose to go back toward safety or forward toward growth. Growth must be chosen again and again, fear must be overcome again and again.”

Abraham Maslow

LIABILITIES
What’s Happening?

there is a lot of equity in real estate

interest rates are still locking people up!

most new origination are from purchases, but refi activity is picking up fueled largely by debt consolidation of higher interest rate credit card debt

more stress showing up in the overall financial population

young home buyers trying to be creative with their financing so they can break into the housing market

this is making home ownership rates tick down as more people are forced to rent

renting is much more affordable

people with fixed-rate mortgage won’t suffer stress unless they lose their job

Mind is trained for pattern recognition as part of it’s ‘default mode network’, but it can be very limiting to help you navigate you’ll need new systems of prioritization

REAL ESTATE
What’s Happening?

inventory coming, but will take a while to hit the market

worry is that scared builders are slowing down now

commercial challenges still rising for banks

this is part of what’s hurting real estate

“We're all going to die, all of us, what a circus! That alone should make us love each other but it doesn't. We are terrorized and flattened by trivialities, we are eaten up by nothing.”

Charles Bukowski

ASSETS
What’s Happening?

the 1% now over almost $6M in the United States

passive income investing is exciting and terrifying but that’s another article

when the market drops it always recovers, but it takes time

we are still not saving enough

“When we blather about trivial things, we ourselves become trivial, for our attention gets taken up with trivialities. You become what you give your attention to.”

Charles Bukowski

ON BEING HUMAN
What’s Worth Sharing?

❝

Famous

The river is famous to the fish.

The loud voice is famous to silence,   

which knew it would inherit the earth   

before anybody said so.   

The cat sleeping on the fence is famous to the birds   

watching him from the birdhouse.   

The tear is famous, briefly, to the cheek.   

The idea you carry close to your bosom   

is famous to your bosom.   

The boot is famous to the earth,   

more famous than the dress shoe,   

which is famous only to floors.

The bent photograph is famous to the one who carries it   

and not at all famous to the one who is pictured.   

I want to be famous to shuffling men   

who smile while crossing streets,   

sticky children in grocery lines,   

famous as the one who smiled back.

I want to be famous in the way a pulley is famous,   

or a buttonhole, not because it did anything spectacular,   

but because it never forgot what it could do.

DOPAMEMES
And Other Inspirations…

MTV changed everything for me as a teenager. Music became visual and I consider it one of those ‘moments’ in time… this was so much fun to watch - IYKYK. (hat tip - Brent Donnelly)

AIdeas
Future Hacks…

A favorite AI tool for reading things out loud:

If you aren’t keeping up with Robotic, check this out:

Figure

Figure is the first-of-its-kind AI robotics company bringing a general-purpose humanoid to life.

www.figure.ai

AI jobs expected to be 1% of global workforce by end of 2025

Ben Hunt - Epsilon Theory

Was this email forwarded to you? Sign up here.