Calculated Risk Formula

What was the biggest risk you have ever taken?  Was it something thrilling and exciting like skydiving or mountain climbing?  Or was it taking a chance on a relationship or business without prior knowledge?

A risk is the possibility of losing something of value.  It is to take a chance without being in full control of the outcome.  Generally, we make decisions by determining how likely something is to happen, and judge the value that the outcome has for us.

Sometimes we can focus too much in the pleasure of the reward of taking the risk.  And at other times, we can fear the possible pain or loss and not take a risk.  Emotions can either help or hurt making a decision based on the source of the emotion.

One of the first big risks I took was when I bought my first property at 22.   I bought a two family building with a condemned bar attached.  As soon as I closed on the property I became a home owner, landlord, and rehabber all at the same time.

My plan was to rent out the two units and rehab the bar into another one bedroom apartment, for me to live in.  The project was projected to take four months to complete.  I had my plans drawn up, budget in place, and my contractor lined up.  As the project got going, I started running into additional things that needed to be done, that costed more money and took additional time to get done.  From underground pipes that needed to be replaced, to waiting for building permits and special orders to come in.

Long story short, my project that was supposed to take four months to get done, ended up taking ten months to get done!  I had miss calculated the knowledge, time, and money it would take to successfully get this project completed.  But was the risk worth it? Absolutely!  I learned the renovation process, how to be a landlord, and was able to sell this property for a profit and buy another one.

Is their a "sweet spot" in taking risks and making decisions? What's the formula to making a "calculated risk"?

Here are three things that I learned from my experience in taking this risk:

1. Having the proper knowledge is key.  Before you make a move, whether it be starting a business, new career, or relationship, make sure that you have enough information and experience to successfully meet the goal.  I think that the famous investor Warren Buffett said it best, "Never invest in a business you don't understand".

2. Be realistic about the time it will take to see results.  This is by far, the biggest thing to consider.  You can learn and gain experience as you go, but time is a limited commodity that you can never get back.

3.  Determine the financial sacrifices that may have to be made and how long you can go before you see financial gains or improvements.

It is my suggestion that the riskiest thing you can do is to take no risks.  But we must take calculated risks that include much research and preparation.

Be inspired by the reward of making a dream a reality by taking calculated risks!

"The Worst Time Ever"

Imagine that it's the fourth quarter of the biggest game ever.  Your team is down by six and is on the one yard line of the opposing team's side of the field.

It's desperation time. You need a big play.  You are in charge of calling the plays and the captain of the team.  You can play it safe and run the ball, but that won't get the job done.  Sure, it may give you some more room to work with and get you out of such a dangerous area.  But you are on limited time,  and a safe 1st down won't win the game.

To make matters worst, your throwing arm is hurt because you have been sacked a few times during this game and you have been throwing the ball all day long.

A big play is a big risk.  A big pass is an even bigger risk.  You determine that a pass over the middle is the best option.  The defense is expecting a run or a pass outside to stop the clock.  A pass over the middle is risky because it's a high risk of being intercepted.  And if it's intercepted, the other team can easily get a touchdown to win the game.  To run this play seems like The Worst Time Ever! 

Have you ever felt like it was the worst time ever to start something new in your life?  The worst time to take a chance and do what you love and pursue your passion?

This is what's called the genius of desperation.  When your back is against the wall with little options.  It's when your up to your ears in debt and your burning desire is to pursue your passion for writing.  The worst time ever to start a business is when you are paralyzed with fear.  It's no less of a perfect time to do something for You, when you have so many people depending on you. Your confidence is low because you have made mistakes and failed at doing the even the more safer, reasonable things.

The genius of desperation is that you have nothing or less to lose.  This pressure can be used to take chances or try things that you normally wouldn't have under any other circumstances.  When you are going through "the worst time ever" it causes you to focus on the things that really matter.


Sometimes the best decisions can be made during the worst time ever.  Let us be encouraged to use this pressure to our advantage.

"Two Kinds of People"

There are two kinds of people in this world.  Those who are doing things, and those who watch others do things.  Who are you going to be?

There are two types of followers of Christ.  Kingdom citizens who do what Jesus did, and religious Christians that just talk about what Jesus did.

You can only believe two ways; either by faith with the substance of knowing, or merely hope which is empty and has no substance.

There are two kinds of people in this world.  People who make decisions, and people who let life make the decisions for them.  Which one are you going to be?

Needs, Haves, And Wants

What is the driving force that makes people do things in life?  In every area of our lives we have different things that motivate and inspire us to make the decisions that we make.

I was sitting down thinking about all the things I do on a daily basis.  I came to the conclusion that there are 3 basic reasons that motivate us to do what we do.

1. Have to's-  A majority of our daily tasks consist of things that we feel that we "have to" do.  We have to go to work, have to take care of our kids, and so on and so on....
2.  Need to's- This is where is starts to get more oppressive.  Things we simply do out of need, but we don't necessarily want to.  "Need to" pay a bill, "need to" make ends meet, "need to" buy some time, etc....
3. Want to's- This I mean in the most positive light.  These are things that we have a strong desire to do that comes from within, without the influence or pressure from things outside yourself.

It is my opinion that we need to strive to do more things because we want to.  So many of our choices are made due to oppressive needs and things that we feel we have to do.  Most of these decisions are made out of fear.

When I thought about these main driving forces, I was thinking about my relationship with my wife.  I don't need my wife, I want my wife.  I am not still married because a piece of paper says I "have to".   After 4 years of ups and downs, successes and failures, I am still married today because I "want to".

But how many of us are in relationships because we feel that we "need" a man or a woman?  How many women tough it out because they feel they "have to" for the kids?

How many of us wake up in the morning and go to a job because we "need" to make a certain amount of money?

Can you count the hours out of the day that you don't do things because you "have to"?

By no means am I saying to neglect our responsibilities in life.  But there has to be a time where we step back and look at the quality of our every day lives and strive for improvement.

Let us take steps to do things that we really, really, really, want to do.  From relationships, to careers, down to just how the hours of your day is spent;  It feels good when the driving force behind it is because you really want to!

Mind Rehab

Mind Rehab, it's the process of removing negative, self defeating thoughts, actions, and emotions, and replacing them with thoughts, actions, and emotions that are positive and "true".

When you think about it, it's not really about the mind at all.  The soul; our thoughts, choices, and feelings is what really control our minds.  And that's what it's really all about; the process of making better thoughts, decisions, and having better emotions.

During my 12 years in the real estate business, I learned the process of rehabbing houses.  What I learned is that when rehabbing a house, you have to first remove the things that are old, out dated, and don't work any more.  That's called the demolition process.  We all have things that we need to get rid of in our lives.  Old thoughts, old habits, and old ways that simply don't work any more.

From there you are down to what is called the foundation and framework of the house.  This is the "real you", not the fake facade that you put up to others. Only when you are down to the bare bones can you start the rebuilding process, or else, you are just building over old junk.

The last phase of the rehab is the exiting part, the new stuff!  The improvements, upgrades, and additions are what maximizes a homes potential.  Similar to houses, with the right thoughts, the right actions, and the right feelings, you can be your best you and maximize your potential!