When we met with the financial counselor a few days ago, he shared with us a principle he and other investors use to generate income called OPM (Other People’s Money). He advised us to use other people’s money instead of our own whenever possible to pay bills, purchase groceries, or make investments. Now if I only knew other people with money!
Actually, he went on to explain, other people’s money can be anything from a 2 for 1 deal on shampoo to rental property income covering the cost of your car payment. The point was that anytime you use coupons, send out a rebate, use discounts, or invest in something that creates a steady return, you are utilizing other people’s money and keeping your money to save, spend, or reinvest.
This in mind, my husband and I are considering purchasing a duplex and living in one side while we rent out the other side. Our plan would be to use this other person’s rent money to cover the mortgage payment. We essentially would be living rent free (so that takes care of that bill) and would have the ability to double up on mortgage payments to pay the duplex off quicker. Once the duplex is completely paid for, we could either rent both sides out and buy another duplex (lather, rinse, and repeat), or we could buy our first house. Really, time and circumstance would determine the choice we’d make at that time, but the idea of this is really exciting. We already live in a duplex now, so we’re used to keeping our material possessions condensed in a smaller space. The only difference in our situation now and what we’re looking into is that someone else’s money would pay for our living space.
Another option, which my husband is researching now, is buying foreclosed homes for resale. This venture would definitely take more careful research and thoughtful consideration, but it may be something we explore in the future. He actually read about it in a book called Rich Dad, Poor Dad by Robert Kiyosaki (another recommendation from the financial counselor), which I bought using my Barnes and Noble discount card. This saved me about a dollar and sixty-six cents. Now that’s the power of other people’s money!