The King of Pop made the best-selling album of all time, thriller, with sales of 100-108 million copies. Yet in spite of the huge revenues he continued to receive from such recordings, Michael Jackson died broke. How could this be you ask? The answer to this question reveals some important lessons for anyone who wants to achieve long-term financial freedom.
Michael’s main problem was that as his income dwindled in recent years, he never changed his spending habits. In 2005, a forensic accountant testified that Michael was spending $20-30 million more per year than he earned and he was in debt by as much as $285 million.
Unfortunately, Michael did not understand the difference between good and bad debt. Borrowing money to pay for living expenses and possessions that never pay a return is bad debt. It may give you short-term pleasure, but it offers no long term value.
Instead of buying the latest big screen TV and taking exotic trips, set more money aside so you can eventually start investing in assets that will increase in value over the long term. This is good debt and includes borrowing to pay for retirement investments, strategic renovations to your home, or the purchase of a revenue generating property.
It is true that Michael did choose some good debt, like buying the rights to the 259 Beatless’ tracks, now estimated to be worth $1 billion, this investment will at least be enjoyed by his heirs.
Here’s the key lesson you want to implement. Live within your means and set aside at least 10% of your income to invest in cash flow producing assets. Do this, and you will never have to lose any precious sleep worrying about how you will make ends meet.
If you would like some tips on using the equity in your home to start investing in return producing assets, so you can enjoy financial security and avoid dying in “Neverland” – talk to me today. As your independent mortgage advisor, I can offer objective advice and give you access to innovative, affordable financing so you can position yourself for an abundant future.
