Hedging Our Bet

by Mitchell Lehrman
(Castro Calley, CA)

OK Deflation Preparers: My wife and myself are baby boomers currently 58 and 60 years of age. We grew up with parents that went through the depression and for years, heard all the drama that they went through. With our careers now in the sunset we are actively seeking strategies to not only preserve our wealth we are looking to increase our wealth.

We are in the apartment rental business. It has it's good and bad qualities of course and what we are doing is taking some of the principles of the deflationary hedge and putting them to work for us on our financial horizon.

As our wealth began to escalate because of inflationary times so did our ego. This is the part of ourselves that told us how great we were because we had some worth. Well, that's now somewhat under control. We are no longer looking at buying more properties. We are NOW looking to pay off our debt and own as much as we can with out any mortgages. If the properties we own were worth say,$100. at the peak and we own them with no mortgage, it doesn't really matter what they are worth because what ever they are worth can buy a similar piece for.

The big problem is that when a property depreciates in value it kills any equity which is what can be used to purchase something else. If we have 100% equity we can if we want, buy another piece, leverage into another piece (which isn't that sound a strategy in today's market)or stay put and collect the cash flow. If rents decline, other expenses eventually well decline too. We will also get rid of one less expense, the biggest of them all.........interest!

So that's our story and in the meantime, we are keeping expenses way down, figuring new ways to cut expenses even further and defiantly working hard at reducing our debt.