FINANCIAL FREEDOM

HOW TO ACHIEVE FINANCIAL FREEDOM

When people hear financial freedom they think, They must be a millionaire to be financial free. Well you don’t have to be a millionaire to be achieve financial freedom, but you do need to start acting like one in order to “retire early” and be “financial free”.

A Few Millionaire Habits:

• Use coupons or shop for deals (save your money)
• Spend less than $200 a month on eating out
• Have credit card balance you can pay off each month
• Use a financial planner or investment professional
• Create multiple streams of income
• They avoid debt

Stage 1 Financial Freedom– You don’t need a day job and can live comfortably.

Stage 2 Financial Freedom- cover stage 1 expense, plus you are able to spend money on more luxury items (nicer car, nicer vacations, etc.)

Whats your why?

First things first, why do you want to achieve financial freedom or retire early? I know that sounds like a crazy question, but before you start you need to know the why behind it.

Read more on this in my post “What’s Your Why?” This post talks more about what’s your why for investing in real estate, but you get the idea.

For me my why is time. I want the time and freedom to do what I want, when I want to do it. I want the freedom to travel, to make more memories with my kids, to serve others, and to pursue new hobbies or passions.

Whats your number?

So like I said earlier you don’t need to be a millionaire to achieve financial freedom. You might be saying but how is that possible?

Well Whats you number? What is the number that will allow you to quit your day job and still cover you expenses?

Read my post on “What Is Your Rat Race Number?“

Basically what does it cost for you to live each month? Remember retirement isn’t an age, it is a financial number. The sooner you achieve that number the sooner you achieve retirement.

Let’s say you live on $60,000 a year with no savings. If you were going to retire tomorrow and live the same way you are living, you would need to draw from your portfolio or make $5,000 each month.

So if you want to retire in say 25 years and we are starting out with $0 invested. You would need to start investing about $1,049 a month. You are probably thinking man that is a lot of money each month.

Lets break that down, How much is your car payment? The average American’s car payment is between $500-600 a month. How much do you spend on eating out? How much is your credit card payment? 

So step 1 is to focus on debt and get that paid off. Then it is to focus on your retirement strategy.

You can also cut down debt quicker and contribute to your investment portfolio by making more money, check out these different online and  part time jobs or passive income ideas.

A lot of these concepts have come from Chris Hogan’s book “Everyday Millionaire”.

His suggestion and recommendation is taking you $1,049 a month and putting it in Index Investing.

My Plan and what I am doing:

Honestly, for me I don’t want to wait 25 more years. I am focusing on a few different things to help me get there sooner.

Focus #1: Multiple Streams of Income:

Having multiple streams of income provides peace of mind and security.

Stream 1:Long Term Rental Properties

My primary goal for income in early retirement is through real estate. My focus is on long term holds (rental properties), 

example:

Let’s say I needed to make $5,000 a month to quite my job and achieve stage 1 financial freedom. How many rental units would I need?

Each rental unit cash flow’s (this is the money after all expenses including mortgage) $250 a month. 

$5,000/ $250= 20 units

This doesn’t mean I need 20 houses, I know some of you were thinking how am I going to buy 20 houses. This can mean 10 duplex’s, or 5 fourplex’s, or one 20 unit complex.

I mean if you bought 1 fourplex a year that generated these numbers. In 5 years you hit your $5,000 a month. One easy way to do this is through house hacking.

Stream 2: Fix and Flips

I like to flip houses when I can. The average gross profit on a flip in the US is around $65,000. So think, if you have your 20 units making you $5,000 a month and then on top of that you flipped 1 house a year and got $65,000 bonus, How great would that be?

Stream 3: Real Estate Crowdfunding

I have started to look into investing with Fundrise. You only need $1,000 to start investing in real estate projects, and you average between 8-12% annually on your returns.

Stream 4: Index Investing and 401k

Trying to follow Chris Hogan’s advice

Stream 5: Blogging

Over the last little while I have really come to enjoy blogging. I like to share my experiences as well as the resources and tools I come across. 

Check out my post How to Make Money Blogging

Focus #2: Eliminating Debt:

I am working on getting rid of all debt (except for my mortgages on my house and current rental properties). This includes car loans, student loans, credit cards, etc.

Somethings that have helped us do this:

• Sign up for a budgeting app/ expenses tracker like Mint
• Track and monitor everything (mint can help you do this).
• Cut back on expenses- for example you don’t have to have cable anymore (with streaming companies who needs it), we also meal prep/ meal plan more. That way we don’t eat out as much
• Take bonuses and extra savings and putting them towards our debt.

So how long until I reach my “Financial Freedom Number”?

Honestly, I don’t know. Life takes you down some different roads sometimes. What I do know is I am going to work towards it everyday, and who knows it might be here before I know it. To be completely honest if I retired early I would still be investing in real estate or finding a house to flip. It is just something I enjoy doing.

Know Let’s Recap What Is You Need To Do To Become Financial Free:

1. Focus on paying of debt
2. Earn more than you spend (if you need to get a part time job to pay off debt so you can do this, then do it for a short period of time).
3. Start creating multiple streams of income/ Increase your income
4. invest early
5. Cut out unnecessary expenses
6. Live a frugal life style (this doesn’t always mean you have to go without, it just means be smart with your money)

REALLY JUST COME UP WITH A GAME PLAN AND STICK TO THAT GAME PLAN.

Tools and Recourse That Might Help:

Passive Income

17 best online and part time jobs

Personal Development and Education Resources

Personal Finance and Investing Resources

How To Start A Blog

How To Make Money Blogging

Getting Started In Real Estate

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