I went to a meeting this evening of a real estate investment group I belong to called Philly Connected LLC. Our aim is to provide green affordable housing in Philadelphia. So we members have been working on creating business lines of credit, expanding credit card lines, and fixing our FICO scores so that we have the credit scores and funds to be able to invest in real estate.
So people I know who are investors have built up $1000s to $100,000s of available operating capital from these sources. OR THEY DID... What's happening as both individuals and banks panic is that banks are pulling back credit. So if you have a credit card with a $25,000 limit and $10,000 used, the credit card company may call and reduce the limit to $10,000. The same goes for home equity lines of credit and business lines of credit. If you are a business owner, suddenly the money to run the business could disappear overnight. An individual who has been handling their credit responsibly, with no more than 30-50% of the line of credit used, now, in a moment, has a maxed out their credit card, business or credit line. Their FICO score goes down even though they are still behaving responsibly. The lenders just changed the rules and the realities of the game.
I believe this is a temporary situation that will reverse in time, sooner rather than later. If businesses are unable to run effectively, banks will also be drastically impacted and that situation can't go on for along. The economy either contracts or expands. In a contracting market, the predominant feeling is fear and scarcity so money is moved around to pay bills, make ends meet. Resourcefulness diminishes. In an expanding market, love and action rule, paying bills but also having families, building businesses, buying homes and investment property, investing in the stock market, volunteering, tithing, travelling and going on vacation.
Which choice creates excitement, joy, community, commitment, involvement and love? I choose expansion and growth myself, especially in the face of challenging times. What about you?
