The very definition of financial freedom is your monthly expenses can be covered by your monthly passive income!
You can stop working. If you have monthly cash flow of $5,000 and your living expenses are $4,500, you are already financially stable.
"Work 5 years for an asset is better than work the entire life for someone else's asset that make they rich."
Even if you have high paying job right now, you cannot feel secured. Jobs cannot be passed down to your children! Income producing assets can do so.
Make sure most of your time is invested either acquiring assets or building assets.
ACQUIRING ASSETS
2 hours spend on looking on cash flowing properties to buy is better then 2 hours spend on working in McDonald.
2 hours spend on studying good business to buy such as dividend paying stocks is better than 2 hours spend on going for an interview for a job.
2 hours spend on finding good website/blog to purchase for passive income is better than 2 hours spend on working as a bus driver.
BUILDING ASSETS
2 hours spend on creating Youtube videos is better than 2 hours spend on watching Youtube videos.
2 hours spend on writing blog posts is better than 2 hours spend on creating backlinks for your website.
2 hours spend on creating statistical data for website contents that are shareable and easy to get backlinks is better than 2 hours spend on spamming website with comments to beg for visitors.
PRODUCTIVE TIME VS NON-PRODUCTIVE TIME
You just need to differentiate between productive time and non-productive time. If you use your time well, after 1 year or 2, and you look back at what you have done, you will be tremendously satisfied.
Which one do you prefer?
Watching youtube videos on how to create a blog for 30 days.
Or
Creating 30 youtube videos on how to create a blow in 30 days.
The key here is to take action! Don't just sit around trying to figure out the ultimate method to be financially free but you did nothing on that day.
PROVEN METHODS ON HOW TO BECOME FINANCIALLY STABLE IN STEP BY STEP
You can sit on the beach drinking a good iced lemon tea all day long while your ATM machines work for you 24 hours a day without your intervention.
Some may believe in passive income, but they just cannot the get the idea of passive income without any effort.
What I can say is that, that kind of passive income do exist!
A good example of that is dividend paying stocks. You just put $1,000,000 in blue chip stocks, set it once by a few clicks, then just wait! The checks will keep rolling to you every quarterly or monthly period.
If you have that large amount of money, by taking 5% of it which is $50,000 per year, equals to $4,100 per month, you will do great with that. Your financial are just fine.
Mostly, average people can live well with $4,100 per month.
But the real task is how to get to $1,000,000 in cash? That is just the core disadvantage in investing with the stock market. You need a good sum of money to live off from the dividends.
The second method is to use leverage in real estate. If you want an asset of $1,000,000, you will only need $100,000 which is 10% of it. Other people's money will build your wealth.
Get a rental property to start with. But, how are you gonna make $100,000 to put on for the down payment?
The main disadvantage of real estate is, it requires a lot of money to start. But real estate is one of the proven ways one can reach financial freedom in shorter period of time as compared to stocks.
If you save up $5,000 to put on down payment of a $50,000 house, you will need some time to make that $5,000. Once you use the money to buy the house, you will have $0 in savings.
There is a smart and cool way that you can use to keep cash piling on your bank accounts even though you keep buying real estate.
This is the secret that real estate millionnaires can reach financial freedom in less than 5 years.
You just need to find deals that have the price below the market value. The difference between current market value and your buying price is the profit you make once you sign the property purchase contract!
Let's say you get a $50,000 house for $40,000, you will make good sum of $10,000 upon purchase. You can get the money by refinancing the house.
And instantly, from just a $5,000 in savings, you will have:
1. A $50,000 house.
2. Monthly cashflow.
3. Extra $10,000 to put on the next deal.
This is the proven ways to be financially stable that most millionnaires do to get financially free in 5 years.
You just don't need to start from $0 in savings to start collecting rental properties after you purchase your first house.
You can keep buying rental properties without time delay saving money for the down payment.
"Your saving accounts won't be depleted if you can find below market value properties!"
Keep buying properties every single year and you will be surprised how powerful is buying below market value properties to get financially stable in shorter period of time which is way better than investing in stocks for financial freedom.
INCREASE YOUR NET WORTH EASILY.
LOOK AT WHAT YOU BUY.
As long as you do the good things with your money, your net worth will eventually increase.
Good things to buy with your money:
1. Buying stocks.
2. Save in high interest accounts.
3. Buy real estate.
4. Loan to someone else and get paid by interest.
5. Buying land to flip/cash flow.
6. Start a business.
7. Paid advertising.
8. Start websites or blogs.
9. All the things that have return on investments and the asset will increase in value over time.
Bad things to buy with your money:
1. Car.
2. Watches, TV's, Refrigerator, Smartphones.
3. Vacation.
4. Personal loan.
5. Wedding.
6. Big houses.
7. Luxury boats.
8. All the things that you use for yourself, have no return on investment and depreciate in value over time.
"When you buy car, the car prices drops to 50% in 5 years! If you buy a rental property, the price of the property will gain by 3% per year (compounded each year)."
ELIMINATE BAD DEBTS
Bad debts kill the middle classes net worth. Do you know two worst debts that can make you stuck in middle class forever?
The first one is buying car before you can afford it. And you pay it using your own salary/earned income.
The second one is buying your primary residence and you paid it yourself.
The better strategy is to buy assets first. Then let assets pay your liability. Delay your gratification as long as you can.
By doing this, your net worth can grow even if you don't have any side business and only depends on your salary.
If you want to buy your first car or home for personal use, make sure you have some money to invest.
Not investing at all is a guaranteed way to become middle class until you die, or worst case become poor even after you have a good job with decent salary.
SURROUND YOURSELF WITH GOOD DEBTS
How good are good debts? Buying rental properties is one of the good debts. How good is the good debt?
You put $5,000. In 30 years, you will have $50,000 worth of asset.
You put $5,000. The asset will appreciate over time. Might be $70,000 in 30 years time.
You put $5,000. You get monthly cashflow of $200.
You put $5,000. You get monthly cashflow of $700 when the mortgage is paid off.
You put $5,000. Other people will give you the remaining $45,000 by rental payment.
Can you see why millionnaires really love real estate? Some of them even making fun of the middle class that loves stock over real estate.
PAY HIGH INTEREST DEBTS
If you are currently in a lot of debts, try to eliminate the highest interest debts before focusing on other debts.
Your aim should be increasing your monthly cashflow. Not to put aside more money every month and get paid once you retired.
SAVE TO INVEST NOT SAVE TO SPEND
The poor and middle class always have a misconception in saving money. They will save $200 per month for emergency fund. Once something bad happen, they simply use the money without feeling guilty to themselves.
They lost their savings instantly after months or years of saving money.
Meanwhile, the rich save and invest the $200 per month. When they have emergency, they will use the return of the investment, not the money itself.
During good times, the rich will start a business, find good deals to invest, looking for assets to buy and once they have enough money to pull the trigger, they will do it wisely.
They have multiple backup of money that they build during good times. They won't sell their assets for profit.
Instead, they will use the cash flow from the assets to use, and the best thing, they can get luxury items with the return of their assets.
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