The Universal Truth Of Use It Or Lose It

I have never been more convinced of the term ‘use it or lose it’ than after a recent episode. 

An elderly neighbour in Fort Lauderdale reached out to us after the successful sale of our unit recently, seeking contacts of our real estate broker to sell her apartment. She had been renting her unit out since moving to a retirement community after her husband’s demise some 10 years ago. Her original tenants just moved out after 9 years, having bought their own apartment.

The tenants were paying a whopping 30% below market rate for that neighbourhood. This really bags the question if renting is better than owning one’s primary residential property.  Upon further probing, she shared that the rent had not been adjusted the past 7 years as the tenants were renting for long-term and always paid on time. 

In addition, her apartment was getting old and she did not want to risk losing her tenants to other newer apartments by adjusting rent. It had only been adjusted once after the initial 2 years when the tenants expressed their wish to rent long-term.

Rental Adjustment

Using an average 2% annual inflation adjustment, a comparison with her actual rental income, as well as against the common practice of inflation plus market adjustment based on housing demand shows up as such:

Simply incorporating inflation into her rental renewal every year would have added more than $7,500 to her total rental income over the 9-year period. This is 1 of the rare occasions where inflation is a friend instead of an enemy. During high inflationary periods like over the past 6 to 9 months, it even makes better sense to invest spare cash instead of paying down mortgage even though it feels otherwise. If the neighbour had been bold enough to apply both inflation and market adjustments, the difference could be more than $13,000 over the same 9-year period.

Under Fort Lauderdale rental property laws, leases can only be drawn up for 1 year and has to be renewed yearly. At renewal, rental rates are mostly adjusted which allows for landlords to cover for inflation increases as well as take into account housing market condition.

This was money she could have earned without much effort, a gift of the market and commonly adopted. Our last rent before sale of the unit, which was the same model as hers, was $1,850 as our unit was more updated and starting rent was higher at $1,400 in the initial Year 1 under comparison. 

Granted that not all markets allow for annual inflation adjustment, such as in Singapore where rental amount is adjusted only upon lease renewal which is often 2-3 years. At the very least, adjusting rent to reflect market rate at lease renewal will ensure that rental income keeps pace with  inflation instead of being eroded by it. This clearly illustrates the difference between exercising one’s right and benefits versus forfeiture.

And the idea of ‘use it or lose it’ has far-reaching implications than beyond just rental adjustment.

Form Follows Function

Take for example bone density. It is designed to bear weight according to how much we carry or lift. A person who often carries 15kg of grocery will over time build a higher bone density than another who carries a much lighter load at 5kg. Our body adapt its form to the function it needs to carry out. This is why it is important to continue to engage in as much weight-bearing activities, mobility and exercise as possible to slow down the loss of bone mass, especially in later years.

Mindwork

Our mind works in the same way too, often forgetting words and terms in languages that we  have learnt but seldom use. I struggle with Mandarin vocabulary due to lack of practice and the brain simply forgets phrases and terms. Like the body, it also needs to work-out in order to flex its ‘muscle’ before it starts ‘losing’ it. 

Another case in point, what I term as the ‘BC’/‘AD’ syndrome, i.e. ‘Before Cellphone’ and ‘After  invention of the Device’. I used to be able to recall telephone numbers and addresses of family, close friends and colleagues as well as being able to commit to memory appointments and important dates like birthdays and anniversaries. 

Since AD, I am at a loss without my handphone, having outsourced these memory tasks to the smart device, eroding my own mental capacity in the process. I feel bad about this but accept it as a curse of living in modern times as I rather deploy my mind to other more useful tasks. The handphone is the first thing I touch in the morning after waking up and the last thing before I go to bed, much to the chagrin of my other half 🙂 

Corporate Scenario

The concept of ‘use it or lose it’ is also highly ingrained in the corporate world where hard-fought budget would be ‘forfeited’ if not spent within the financial period budgeted for. Hence it is not unusual for corporate expenditure to be undertaken even when the situation no longer justifies it. This is 1 of the culprits that causes corporate budgets to increase year by year. 

Wasted Talent

Talent is another aspect that fades and when not groomed or nurtured. 1 recent and well known example is the exceptionally gifted Brazilian footballer Ronaldinho. 

Instrumental in helping Brazil lift the World Cup trophy in 2002, Ronaldinho was twice awarded Fifa World Player of the Year in 2004 and again in 2005. His signature buck-tooth grin and amazing mastery with the ball on the field earned him world-wide acclaim and legions of fans. He was destined to become a football great, and likely for generations to come.

Unfortunately, his penchant for late-night partying and total lack of discipline and commitment caused his premature downfall. He is known for turning up late and drunk for training sessions, sometimes even not turning up altogether. Despite gifted with exceptional talent, it was squandered through lack of discipline and dedication. He could have been 1 of the football greats of all time, instead he lost a lucrative and successful career by not taking his talent seriously. 

Use It and Live Bountifully

Beyond these examples, ‘use it or lose it’ is a concept that applies quite universally, to almost every aspect of life. This cannot be more true than in retirement, where precious resources like time, health and mental capacity begins to run low. It is important to make full use of each and every of our blessing, advantage and benefit to the fullest. 

Someone wise said it best:

Life is a one time offer – use it well.     ~ Anonymous

 

Don’t lose it,

Savvy Maverick

 

(Main image: Mateo Krossler, Unsplash)