The best way to implement this rule is to make it automatic. Have 10% of your take-home pay pulled from your paycheck and deposited into a separate bank account. If your employer doesn’t allow you to do this, simply set up a transfer between your main account and your “ten percent” account equal to ten percent of your paycheck.
Establish a relationship with a bank that offers small business loans. Open a company checking account, after a few months see if the bank will offer overdraft protection.
Analyze your property, the type of neighborhood in which it is located, and what businesses or organizations are nearby. Would this property be suited for young professionals with no families? Would this property be better suited for renovation and resell to a family? Knowing what you are buying will help you better turn a profit on your property.
For example, the cash flow examples is simply a detailed “budget”. You take your monthly sales assumptions and add any other incoming “cash” (loan dollars for example) and subtract your expenses. Carry over any extra (or loss) to the next month until you have populated the statement for 12 months. Voila! Another section completed.
By researching a company’s product line, you can tell where its profits come from. Their annual report is the best source for this information. Check the company’s SEC filings for additional information, like the shareholder letter or the presentation of the company’s product lines.
In short, they calculate the cost of living in your home and know that if you’re exceeding 36% for your housing costs, you’ve probably bitten off more than you can chew.
There are many ways to dissect and collect the data. Hopefully, you have made this a part of your regular monthly data collection and analysis process. If you haven’t done it yet, you need to start.
Now if you ask your brother what stock to buy and your brother happens to be Warren Buffett, well then I think its safe to say you will make a good investment, but how many of us can claim Warren Buffett as our brother?