Tag: how to retire young
10 Levels of Financial Independence And Early Retirement | How to Retire Early
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
Long-term financial goals can sometimes seem
so big that they feel almost unattainable especially when we’re just getting started
on our road to financial independence. I and many others like me in the financially
independent, retired early community have found it helpful to break down the goal of
becoming financially independent into smaller and more manageable levels of financial independence. Not only because it makes it easier for us
to track our progress, which in turns helps us to stay motivated throughout the process,
but also because it helps us get over that initial hurdle of starting to chip away at
this mountain of a task. In today’s video, I’m going to take you
through what I consider to be the 10 levels of financial independence as well as give
an example on how to go from the first level to the top level in your lifetime. Hey everyone Daniel here and welcome to Next
Level Life a channel where you can learn about Investing, debt, retirement, and many other
general financial education videos because the school's aren't going to do it for us.
So if any of those topics sound interesting
to you or if you want to learn how to better handle your money and have more financial
freedom be sure to hit that subscribe button and the bell next to my name to be notified
every time I upload a video. And if you want to further support the growth
of this channel you can check out some of the links I’ve left down in the description
below which includes a 30-day free trial of Audible and 2 free audiobooks of your choice
as well as a list of some books on money I’d recommend checking out, or you can share this
video with a friend, and leave a comment below letting me know what topics you’d like me
to cover in future videos.
Now obviously these ideas of the levels of
financial independence are not solely my own nor are they very new as there are many articles
and blog posts that have covered this topic already and have done so for many years. So consider this more of a summary of many
of the ideas expressed in those articles and if you want to learn more about the topic
feel free to check out some of the articles for yourself. I’ve left some links in the description. With that out of the way, let’s get started. Okay so real quick the 10 levels of financial
Independence are Level 0 Financial dependence, level 1 Financial solvency, level 2 Financial
stability, level 3 debt Freedom, level four coasting Financial Independence (also sometimes
known as freedom from employer), level 5 Financial Security, level six Financial flexibility,
level 7 Financial independence, level eight Financial Freedom, and finally level 9 Financial
abundance. The levels are usually defined as something
like the following: Level 0 – Financial dependency is when your
debt payments and other living expenses are greater than your own income.
This means that you are in one way or another
dependent on someone or something else to help you pay for your bills or if you happen
to be a kid and don't actually have any bills you need someone else, usually your parents,
to pay to put food on the table and keep the lights on and have a roof over your head. This is the level that all of us start out
on and it is referred to as level 0 because as a financial dependent you obviously have
no Financial Independence. Level 1 – Financial solvency is when you are
current on all your debt payments and you can meet your financial commitments and your
other living expenses without any outside help. Level 2 – Financial stability is usually defined
as when you have built some sort of emergency fund in addition to being financially solvent. Level 3 – Is again debt freedom and it's defined
differently depending on who you ask. For some, it is being completely debt-free,
mortgage and everything.
For others, it's being just free of the high-interest
debts like credit cards but you still might have a mortgage or other debts like student
loans. And for some others, it is paying off all
of your debts except for the mortgage but your credit cards and student loans or car
loans all that stuff is all paid off. Level 4 – Coasting Financial Independence
also sometimes known as freedom from the employer, Barista Financial Independence, or Agency
in blogs and other mediums. I personally like the idea of it being coasting
Financial Independence so that's what I'm going to be using in this video but know that
some people refer to it by one of those other titles but the idea is the same. You have reached the level of coasting Financial
Independence when you could, if you wanted to, step down from a job that may be higher-paying
but may also be either less satisfying or more stressful or both into a new job that
is lower paying but more enjoyable or less stressful or both.
This is because in the early years of your
career or just thought most recent years you have managed to save a very decent sum of
money that would be able to provide for the later years of your retirement after it has
grown even if you don't put much more in. Therefore all you need to do is make enough
money to get you to age 60 or 65 or 70 or whatever your numbers work out to be when
that amount of money you've already invested will be able to fund your lifestyle because
it's been given enough time to grow. So in a sense, you've worked really really
hard and been very frugal in the first few years so that you can coast into your retirement. I have gone into more detail on the various
types of financial Independence in a previous video which I'll leave Linked In the description
if you're interested in learning more.
Level 5 – Financial Security is effectively
when your cash flow from wealth such as you are investments has grown to large enough
that it can provide for your annual basic survival expenses. Now I say survival expenses because I do differentiate
that from living expenses survival expenses are just the basic things you need to survive
Food, Water, Shelter, some form of transportation, clothing and probably insurance. This does not include things like Netflix
subscriptions or cable bills or things like that it is purely survival expenses. So this may not be exactly the ideal spot
to retire and I certainly wouldn't want to retire at this point but it is an important
level to keep in mind because it does give you… well security. If you were to get fired today and you were
on level 5 you would be okay you could survive until you found another job. This is essentially the first level that really
gives you I guess that piece of mind even if the lifestyle should you have chosen to
live it may not be the most lavish.
Level 6 – Financial flexibility is similar
to Financial Security just one step up. It is when you have the ability to live off
of your current cash flow from your wealth assuming that you have a flexible spending
plan that adjusts for up and downs in the market. So if the markets up 20% one year you're able
to spend a little bit more but if the market is down 20% the next year then you don't spend
quite as much. I’ve seen it defined many different ways
so it could vary depending on who you ask, but the one that I personally like the most
is that it is roughly half of your full financial independence goal, or roughly about 12.5x
your current annual expenses if you follow the 4% rule to get an idea of how much money
you need to retire like I’ve explained in previous videos.
So it isn't quite Financial Independence yet
but it's close. Level 7 – Is financial Independence and it's
usually based on the 4% rule which I have covered in a previous video. You can follow the 4% rule when you have saved
roughly 25x your annual expenses. The vast majority of the time this will be
enough money to allow you to maintain your current lifestyle in retirement and as a result,
you can be considered financially independent. And some articles end it right there but I
think there are a couple of levels that are a bit higher than that that are worth considering
even if some of us may decide to not ever try to achieve them because being at level
7 allows them to do what they wanted all along. So let's talk about those other levels. Level 8 – Is Financial Freedom which I've
often seen defined as the cash flow from your Investments is greater than financial Independence
and a few more life goals.
Life goals, of course, will differ for everybody
but this is could be something like taking a trip or two overseas or moving to a new
place you've always wanted to live but haven't had quite enough money to live there up till
now or whatever the case may be for you like I said it's different for everybody. Level 9 – Is financial abundance and this
is quite simply just that the cash flow from your Investments is more than you will ever
need.
You could spend it if you really wanted to
but it would actually take some effort. And the stuff from level 8 doesn't really
cut into it much at all. So you could up those goals even more and
still have more cash flow left over at the end of the year. This also probably has a slightly different
definition for each person depending on who you ask, but I like to think of it as roughly
3x your financial freedom number because this would allow you to experience a horrible bear
market where your investments go down by 50% and still has 1.5x the amount that you would
need to maintain the lifestyle you lead when you reach level 8.
To me, that means that it is likely more than
you will ever need, but again that one is strictly my own opinion on the matter. So those are the 10 levels of financial Independence,
now let's walk through a hypothetical example of how someone could go from Level 0 to being
financially independent in a single lifetime. John and Jane are recently married couple
each making $20 an hour at age 23 or $83,200 a year between them assuming no overtime. They manage this because they are not only
good hard-working people but got great grades in school and we're selective about the job
that they decided to pursue. Obviously just like everyone else they would
have started off as Financial dependents and as they were going through college they would
have been building up student loans that they would not have had the money to pay off (assuming
of course that they didn't earn enough money while in school to keep up with the rising
debt).
In all they have credit card debt, two car
payments and the student loans which have balances of $5,000, $35,000, and $60,000 respectively,
but since they got their jobs they are no longer financially dependent and their incomes
have allowed them to become current on all their debt payments without the help of others. In addition to the regular monthly debt payments,
their annual expenses are $48,000 a year. So they are currently in level one Financial
solvency and trying to figure out a way to move to level 2 Financial stability. In order to do that they need to figure out
a way to build up an emergency fund.
Now if they're following the 10 levels system
to a T then they would look to build a 3 to 6-month emergency fund of their survival expenses. However, this is not the only way to approach
it say if you were to follow Dave Ramsey 7 baby steps you would start off with just a
$1,000 starter emergency fund and then get right onto attacking your debts. And other Financial systems and plans may
have you approached it an entirely different way.
Either way is perfectly fine because the 10
levels system is not meant to be a financial formula per say it's more there to give us
some sort of guidepost so that we can better track our progress towards achieving Financial
Independence. But for the purposes of this video, I am going
to assume that they follow the 10 levels in order so we are going to be building up a
full emergency fund. In order to find how much of an emergency
fund they will need we will need to know how much money they need to survive not necessarily
on their current level of expenses while they have jobs but purely on Survival expenses
which are basically your four walls of your financial house or in other words food shelter
including utilities Basic clothing and some form of transportation as well as the insurances
that are related to that assuming there are any.
In this case, I'm going to assume that their
survival expenses are right around $3,000 a month. Which means that in order to get a 3-month
emergency fund they would need $9,000 in order to get a six-month emergency fund they would
need to save $18,000. Both John and Jane feel that their jobs are
pretty darn secure and the market is doing fairly well so it's not likely at least in
the near-term that they would get laid off because the company has to downsize so they
decide together that they are comfortable with having just a 3-month emergency fund
of $9,000. So with $83,200 a year in income, $48,000
a year and expenses, plus minimum monthly payments of $100 on the credit card which
is 2% of the balance, $550.78 on the car loans, and $621.83 on the student loans they will
have approximately $1,660.72 a month left over to start building their emergency fund.
However, both John and Jane have been looking
into their finances and researching a lot lately and they become fired up at the possibility
of becoming financially independent while they're still young. So they want to see if there's a way that
they can speed this whole process up. And as it turns out thankfully there are many. After taking a look at the options they decide
that they're going to work as much overtime as they possibly can (for the sake of Simplicity
I'm going to assume that they manage to work on average 5 hours per week of overtime which
will increase their monthly income by about $1,300 a month, meaning that instead of $1,660
a month they will have $2,960 a month left over) and they're going to sell both of their
cars and buy some nice used cars with cash to help knock down some of that initial debt. After putting out a couple of ads online they
managed to find buyers for each of their cars that is willing to give them $15,000.
So they take that $30,000 and use $5,000 of
it to pay off the credit card balance and another $10,000 to buy a couple of used cars
from someone that they know takes good care of their Vehicles whether that be a family
friend or just a mechanic that they Trust. The remaining $15,000 is thrown at their car
loans. This means that the credit card loan is fully
paid off and therefore the hundred-dollar minimum payment is no longer needed. So John and Jane start throwing $3,060 per
month into their emergency fund and get it fully funded in 3 months with a little bit
left over at the end of the third month to throw out their car loan. Over the course of those first three months,
they managed to bring the car loans balances down to $18,423 thanks in large part to the
$15,000 that they threw at it in the first month after selling the cars and also making
the minimum payments in the first three months. Now that their emergency fund is fully funded
however they're able to throw that $3,060 a month in addition to the $550 a month minimum
payment at the car loan and get it paid off in 6 months flat.
So a mere nine months into their Journey John
and Jane not only have a fully funded emergency fund but they also have paid off both of their
car loans. Now there are just the student loans to tackle. And thanks to the fact that they've been making
minimum payments on them for 9 months and the fact that they had a little over $3,000
at the end of the ninth month after paying off their car loans their student loans now
have a balance of $53,263. John and Jane follow the same pattern that
they did with the car loans throwing the $3,600+ which is what they now have left over at the
end of every month because they no longer had a $550 car payment to make and they managed
to get their student loans paid off in full in 13 months. So John and Jane have managed to become debt
free and have a fully funded emergency fund in 22 months.
They have now reached level three and because
of that they now have over $4,200 a month left over to start investing. This brings us to level four coasting Financial
Independence. Let's assume that John and Jane want to retire
by the age of 65. That means that whatever they put in now needs
to be enough to grow to a point where it can support their lifestyle in retirement by the
time they're 65. If we assume a rate of return on an average
in the market of about 10% before inflation and an inflation rate of about 3% per year
on average then we can get a rough estimate of how much John and Jane need to put away
in order to achieve a state of coasting Financial Independence. In this case, since they're 24 about to be
25 they will have somewhere in the neighborhood of 39 or 40 years to let the money grow before
needing to take any of it out. If their expenses were $48,000 a year at age
23 then 42 years later if we assume a 3% rate of inflation they would need a tad bit over
$166,000 each year to live on.
Again assuming we follow the 4% rule to figure
out how much they need once they fully retire to be financially independent that means that
they would have to have at least $4.15 million invested in the market by the time they turn
65. In their case, they would need about $110,000
saved up give or take in order to achieve coasting Financial Independence and because
they're able to save about $4,233 a month now that they’re debt free, they’re able
to hit that goal in 2 years flat.
Meaning that in theory, they would be able
to step down from their jobs to a more rewarding less stressful but probably lower-paying job
just 3 years and 10 months into their financial Journey. That is incredible! But like I said coasting Financial Independence
wasn't their end goal. They wanted to be fully Financial Independent
so they keep working and investing for now. The next level is level 5 Financial Security
which is achieved when your cash flow from your Investments is greater than your annual
survival expenses which remember is $3,000 a month or $36,000 a year in John and James
case. Because they are debt-free, are making good
money at their jobs, and being intentional with their finances they Achieve Financial
Security in a little over 4 years with over $367,000 in their portfolio.
It is been a mere 87 months or 7 years and
3 months since they began their financial Journey. John and Jane are 30 years old and they are
able to get by on their Investments alone. In theory, they could retire now, it wouldn't
be the most glamorous retirement and it wasn't their goal but it is an option they have. They don't have to worry about losing their
jobs anymore because even if both of them lost their jobs today they would be able to
make it long enough to either find a new job or some other source of income. This is really the first level where you start
to get that piece of mind when it comes to money at least in my opinion. Next is financial flexibility which as I mentioned
earlier in the video has many definitions depending on who you ask but for the purposes
of this video, I'm assuming that it is roughly 12.5x your current annual expenses which for
John and Jane would be roughly $600,000 or about $855,000 if you account for inflation. This means that they would Achieve Financial
flexibility 9 years and 8 months into their Journey not accounting for inflation or about
11 years and 9 months if we do account for inflation.
John and Jane continue investing through all
the highs and lows of the markets until they reach Financial Independence exactly 14 years
into their financial Journey assuming we don't account for inflation or 18 years and 3 months
if we do. So you might be wondering why did I split
up the accounting for inflation time frames and the not accounting for inflation time
frames should we always be accounting for inflation? Well technically yes but the reason I split
them up is because in my experience taking this journey myself as well as seeing others
take it, this journey changes how you view a lot of things and more often than not those
changes lead to you valuing things such as freedom of mobility and location and freedom
of time to be able to spend with the people you love more and valuing more material things
that cost possibly a lot of money less and less. That's not to say that everybody becomes minimalist
going through this journey, I'm not saying that at all but I have seen a lot of people
who have gone through this journey become closer to minimalist than they were when they
started the journey as they find out more and more things that they used to buy just
don’t provide enough value or happiness for them to be worth the purchase.
They find better uses for their money and
time and as a result, they generally tend to spend less. Which means that even though inflation is
technically increasing your expenses by making every dollar less and less valuable over time,
if you're also decreasing your expenses because what you value is changing it may even out
or in some cases, you may even see your regular expenses going down year-over-year as you
continue through this journey. So that's why I split them up. And, before I go, I do want to mention that
based on what I've seen on various articles and forums some people really like to have
even more goals to chase as they go through this journey than what I've laid out today
in this video so if that's something that would help you feel free to break down these
levels even further then I have today this is obviously just the list that I used and
what worked for me, but you could take it even further.
For example, Debt Freedom could be broken
down into three separate stages: One where you are free from all high-interest debt,
a second where you are free from all debts except for the house (if you have one), and
a third where you are totally debt-free. You could tackle the coasting Financial Independence
level in a similar way breaking it down into two stages: One where are you have invested
enough to survive in retirement and a second where you have invested enough in order to
maintain your current lifestyle, adjusting for inflation of course, in retirement.
And the financial independence level could
also be broken down into three stages: Stage one would be where you are at a survivable
level of financial Independence, stage 2 would be where you have achieved leanfire status,
and stage 3 would be where you have achieved full Financial Independence on your current
lifestyle assuming that it is above the leanfire level. So what do you guys think of this 10 levels
system of tracking our progress to financial Independence? Do any of you use a similar system to track
your progress? If so, what is it and what level, step, or
stage are you guys currently on? Let me know in the comments section below. But that'll do it for me today once again
if you enjoyed this video be sure to subscribe and hit that Bell next to my name so that
you'll be notified of all my future uploads.
I generally upload every single Monday, and
if you have a friend that would be interested in this kind of content be sure to share it
with them and let's really get this information out there and start our own Financial revolution..
How To Retire At 30 Living Off Investments
Jason 0 Comments Retire Wealthy Retirement Planning
in order to live off of
your investments completely. And I know that the title of this video may sound crazy about retiring by 30, and there are a lot of people
out there selling a pipe dream of you can retire by 30
as long as you invest in this course, or go buy real estate and while that may work for some people I'm not here to sell you guys a course or to pitch you on any
kind of product like that. What we're going to
simply talk about here is how much money you need to have invested in order to live off of your investments and essentially not have
to work to earn your money. And believe it or not, there's
actually countless people out there who have in fact
retired as early as 30 years old, by following this exact strategy
that I'm going to outline. So if this idea of retiring early and not having to work for your money is something that interests you. What I want to ask you
guys to do is go ahead and drop a like on this
video just show your support.
I really do appreciate
that as it helps out with the algorithm and allows this video to get shared with more people. But what we're going to look
at in particular in this video is something called the 4% rule, and that essentially
shows you just how much money you need to have set aside, in order to live
off of your investments. Now you can in fact live off of different types of investments like real estate or the stock market for
example or a business that's providing income for you. But what we're going to use in this video as an example is a passive
stock market investment, and we'll show you exactly
how much money you need to have invested in order
to live off of that income. So the goal here with this
strategy is to simply invest your money and have a large
amount of money invested and then you would
essentially be living off of the interest income or
the growth of that money without touching the principle.
And as I'm sure you guys can imagine if you're not touching the principle or your initial investment, then your money could
foreseeably last forever. Now, the sooner you're able to retire is all based on how much
money you're able to save up and how little money you are
spending each and every month, and there's actually a
whole movement of people that are following this
exact strategy, and it's something out there called FIRE, and FIRE stands for financial
independence retire early. And there's a lot of
people who are doing blogs and videos and all kinds of
stuff about this concept, and there are countless
examples out there, of people who have retired
as early as 30 or even less. By following these strategies. Alright guys so there's
basically three steps you have to follow in order to do this, and as I'm sure you can imagine, step number one is to be frugal or to spend as little money as possible, because ultimately what
you're looking to do is save and invest enough
money that the interest or the dividends, or
whatever the growth is pays for your monthly living expenses.
And as I'm sure you guys can guess if your monthly expenses
are $6,000 versus $3,000, you're going to need a
lot more money invested to cover those expenses. So being frugal and saving
as much money as possible is actually going to serve
two different purposes here. Well, number one, the
less that you're living on the more of your paycheck
you're able to save up, and the more of your paycheck
you're able to save up, the more you're able to
contribute to that freedom fund, which will eventually be paying for all of your living expenses. And then second of all by spending as little money as possible
every single month, you actually don't need
to save up as much money to potentially live off of the interest or the growth of your money.
And we're going to go over
those exact numbers right now. Alright guys so step number two
that you have to follow here is going to be a tough one, but that is going to be saving 50 to 70% of your take home income and again, if you're looking to
retire by 30 years old, let's say you want to work from 20 to 30, and then not work for
the rest of your life, you're going to have to take
some drastic actions here.
And that is why you need to live off of a microscopic amount of money. And that's why step number
one is so important, by cutting down as much as possible on those monthly expenses. So people who are trying to do this, you're not going to see
them driving brand new cars, you're not going to see
them going on vacations, they're probably going to be,
you know, eating canned beans and doing campfires in the
backyard as summer entertainment. Not that there's anything wrong with that, but they are literally spending
as little money as possible, because they're focusing
on the long term picture of what they are trying to do. So people who are following
this FIRE movement are often aiming to save 30
times their annual expenses, and that will allow them to
withdraw about 4% per year without basically touching that principle and that is where that
4% rule comes into play.
And that is basically where you're able to draw from an account about 4% per year, and over a long period of
time based on the growth of that account and those investments, it shouldn't be chipping
away at the principle which should in theory
give you unlimited money. So what you're aiming
to do here is to lower your monthly expenses as much as possible.
Figure out what it costs
you to live per year, multiply that by 30, and then
save up that amount of money by saving 50 to 70% of your
paycheck every single week or month, or however often
you are getting paid. Alright so now the question
you guys have been waiting for, just how much money do
you need to have saved up and invested to live off of that money following the 4% rule. Well if your annual expenses
are $20,000 per year, they would recommend having 30 times that amount of money saved and
invested, so $600,000. If your annual expenses were $35,000, that number becomes 1.05 million. If you're somebody
spending $50,000 per year on your living expenses
you would need to have $1.5 million saved and invested,
and for the final figure here, if you spent $100,000 per
year on cars and housing and food and all of that,
you would need to have about $3 million to successfully
follow this strategy.
So I'm sure this goes without saying guys, the best way to follow the strategy and to reach that retirement as quickly as possible is going to be
to keep your monthly expenses as low as possible. And just to put it in
perspective for you guys, every additional $100
that you spend per month, if you follow this is
an additional $36,000 you need to have set
aside in that freedom fund to support that $100 of monthly spending. So if you're serious
about this and you want to retire at 30, or even younger, you are spending literally as little money as humanly possible. Alright so the final step
to following this strategy is going to be passively
investing in the stock market. So most people following this strategy are actually following
the Warren Buffett style of passively investing in index funds. And if you're not familiar,
index funds are basically a way for you to have diversified
exposure to the stock market. Where you're not essentially
picking what stocks are going to outperform,
you're just passively owning the entire market.
So people following this strategy are not out there trying
to beat the market, they are not stock
traders or stock pickers they simply passively invest
in these low fee index funds, one of the most popular ones being VOO or the vanguard 500 fund. And essentially what you are doing, is buying a small piece of the 500 largest publicly traded companies out there, and all the different
dividends those companies pay are all collectively put together, and then you earn a quarterly
dividend from that ETF.
And over the last hundred
years or so the stock market, on average, has returned
about eight to 10% per year. So if you were only drawing
4% from that account, based on historical data, you should never be
touching that principle over a long period of time. And that is how you would
be able to live off of 30 times your annual income, if you save that money and invest it. Now that being said that
is the perfect segue into the sponsor for this
video which is Webull. So if you guys are
interested in getting started with investing in the stock market, this is a totally commission
free broker out there, meaning you're not paying
any fees to please trades with them and you can
purchase the Vanguard 500 ETF that we're talking about in this video right on that Webull platform, and not only that, they're
willing to give you up to two completely free stocks just for opening up an account with them. Number one, if you open the account, you're going to get a free
stock worth up to $250, and then when you fund the account, you'll get an additional
stock worth up to 1000.
So if you do the math there, that is two completely free stocks worth up to $1,250. Now I am affiliated with Webull, so I do earn a commission in the process if you use my link, but
if you guys are interested in grabbing two completely free stocks that is going to be down
in the description below. So finally, the last
thing I want to do here is to put all of this together, and go through a real
example of how you could in fact follow this strategy and even retire by 30.
Now again, this is going to
require some very drastic saving because essentially you're trying to work for about 10 years of your life and then not have to work
for the rest of your life. So most people will never
be able to accomplish this, because of the amount of
sacrifice that is required, with that being said, let's go ahead and run
through the numbers now. So let's say you're earning
a salary of $75,000 per year from your job, and ideally,
you don't have any, you know school loans,
student loans, medical bills, or anything like that. So you haven't gotten
sucked into the consumerism and you don't have like a brand new car so your expenses are as low as possible.
And I know this sounds like
you know theoretical situation, but this was actually
about the same situation I was in, when I graduated
college I was 20 years old, now I was making about $68,000, so a little bit less, but I had no debts, I had no car payment,
and so I was somebody who could have potentially
followed this strategy. So after you pay your
taxes, your take home pay is going to be around $56,250. Now we know already in
order to pull this off, you need to save 50 to
70% of that take home pay in order to actually build up enough money to live off of that income. So we're going to assume
you are saving 70% of that take home pay. So you would need to live off of 30% of that post tax income, which
amounts to just over $16,000, or around $1400 per month.
Now, is that possible? It absolutely is. Is it easy? Absolutely not, you're certainly not going to be going out to the
bar and buying beers or going out to dinner,
you're probably going to be living in a tiny apartment driving an old car and eating at home for breakfast, lunch, and dinner. But if that type of
sacrifice is worth it to you for the long term picture, it is something you may
be willing to do yourself. So each year you would
be saving and investing a staggering amount of money, which is 70% of your take home pay
or just over a $39,000. And that is how you would
be able to pull this off, and assuming you kept that
cost of living the same at around $16,000, just over 16,000. your freedom number, or 30
times your annual expenses, would be just over $506,000. So, how long would it take
you to save up that money? Let's go ahead and answer that now.
Well if you took that
$39,375 per year of money that you are saving and
invested in the stock market, earning 8% return, and
as we said, historically, it's an eight to 10% so we're going to go on the conservative side, well in 10 years at 8%
return career you would have $570,408.40, meaning you could then, if you kept those living
expenses the same, following that 4% rule, not have to work for your
money past that point.
And just to circle back
guys what this really comes down to is the level
of sacrifice involved. Are you really willing to live
off of about $1400 per month, or do you want to have vacations and going out to get dinner
and things like that? So it's not people who are doing this that are out there traveling and dining it's people that are living
as frugal as possible and finding enjoyment
in other areas of life other than just, you know,
spending money on dining and things like that. Now, is this a strategy I
would personally follow? Probably not because I
am one of those people that enjoys traveling, I enjoy dining, and I do spend a little bit
more than the average person, so my freedom number would be
multiple millions of dollars, but instead I follow the
strategy of earning as much as possible and saving a
lot of that earned money, and then eventually allowing
that to supplement my income by having that interest
or the growth of my money paying for a lot of
those things that I want.
And believe it or not,
guys, there are honestly countless people out
there that have followed this exact strategy and
retired at 30 or less. One of the most well known people being Mr. Money Mustache, he has a whole blog where he documented this whole journey of becoming financially
independent and retiring early with both him and his wife. So I'm going to link up his blog down in the description below
as well as a couple of other stories about
people who have followed this exact strategy and
retired at 30 or less. So that's going to wrap
up this video guys, thanks so much for watching. If you're new to this channel, make sure you subscribe and
hit that bell for notifications so you don't miss future videos, and I hope to see you in the next one..
How we Retired at 40..💰7 tips to succeed for Early Retirement💰
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
hey guys retired at 40 I'm going on a
little road trip today just me and Murph and last week I reached a milestone on
my channel and I hit a million views total and 10,000 subscribers in the same
week since I've been getting requests for quite a long time about how I
retired at 40 and I'm on a long road trip right now I figured what better
time to share the story so without further ado here's the retired at 40
story so before I get started I want to say that this is not in any way a brag
story in fact I'm definitely not a showy type guy I enjoy very simple things in
life and money to me is more of just a vehicle to be able to retire young and
have my family live a comfortable and an easy life and to be able to enjoy lots
of life experiences and be comfortable in life before I'm old and gray so
really the journey began in about 2002 graduated from Iowa State University
with a degree in marketing and business and by that point I have met my wife
Kelly she had already graduated from school and she was kind of waiting for
me and we wanted to move west out of the Midwest to move west see some new
territory and get closer to the outdoors so I grabbed my degree ran out the door
packed up my 1987 Ranger fully equipped with eight foot hay racks full of all of
my personal belongings and we drove to Littleton Colorado and at this point in
my life I had $200 in my pocket and Kelly had about the same so being
completely naive and basically completely broke but with a degree I was on the search for the best suit and tie job that I could possibly find
so I bounced around for a couple months just working some kind of halfway jobs
and I quickly realized that I did not want to wear a suit and tie and I wanted
nothing to do with the man and working a nine-to-five job well Kelly had found a
job in a real estate office working the front desk and she had become friends
with a couple of the big-time Realtors there one of which you caught wind that
I had some handyman type skills but he made me a deal that if he paid cash for
a house and I fixed it up that he would split the profit with us 50/50 and at
this point in my life all I saw was dollar signs if I was completely blown
away that there was someone that could pay cash for a house
this is coming from a guy who had less than $200 in his pocket at this point it
was pretty much scraping by I tried to hold back my excitement to him but
naturally I said yes please let's do that I was working the graveyard shift
at Target stocking shelves I'd worked for 10 hours I would go home grab a
little bit of breakfast and I'd head over to the property and work on it for
another five or six hours I try and catch a few hours of sleep and then I
would rinse and repeat it was at this point in my life that I learned a few
different things one you really have to dig deep to reach your goals in life
because I was not getting paid by the hour and at this point I didn't know how
much money I was gonna make I didn't know if I would make $500 when this was
all done or if I was going to make $5,000 when this is all done so I
learned that a lot of things that can benefit you financially you have to put
in the work upfront without knowing what your final outcome is going to be
after about three months which seemed like an eternity of working seven days a
week for sometimes 15 sometimes 20 hours a day on this house the house was ready
to go on the market and it was all finished it looked great and then before
you knew it it's sold and then the house closed and at this
point I still didn't know what we were gonna make off it but for me it didn't
matter the hard part was done I didn't have any of my own money into it I just
had my time basically so the guy we were doing the investment with hands me an
envelope and I opened it up and at $8,000 being twenty-two years old and having
$8,000 I might as well have hit the lottery and that brings me to my second
valuable lesson that I learned and that is being responsible with money so when you have $8,000 and you're 22
years old a lot of people would go buy a new car they'd go buy some flashy
things some pretty things but to me I had realized that if I can make $8,000
once I can make $8,000 again and again and again and again so I can either go
p*&% the $8,000 away that I had worked my a#* off for or I can take that $8,000 and do exactly
what he did but do it myself and potentially make twice or three times as
much money so my wife being in a real estate office we became acquainted with
quite a few smart people financially smart people we learned a lot about real
estate very quickly because we were willing to learn which is my next
valuable life lesson is that you never stop learning so we
took our $8,000 we put a small down payment on a condo in Littleton
because we realized that giving someone else our money was you might as well be
throwing it away we wanted to be working towards something and it own something
on our own so we took our other four or five thousand dollars and we started our
search for a real estate investment that we could do all of our all on her own
and get a hundred percent of the profits so after some searching we did find a
place we found a small town home it was not in as nice of area as we were living
it was smaller it needed lots of work but that takes us to our next light life
lesson that we learned and that is to sacrifice for a greater payoff in the
future so we had only lived in our condo for a very short time but we realized
that if we moved into the real estate investment that we could rent out the
place that we are living at and move into the place that we were fixing up
that we'd have to be paying a mortgage on anyway we had our first real estate
investment and we had our first rental so being 22 years old and owning two
properties and carrying two mortgages and at this point I'm still working at
Target was a pretty scary proposition in life but all I could see was that $8,000
check they had started to change our lives I also want to point out and kind
of give a shout-out to my parents and to my wife's parents because
neither one of our parents ever handed us anything in life they
always made us work for what we achieved in fact when we move we tried to
convince my parents to co-sign on our mortgage for the condo that we bought
and they said no way at the time I was very very mad at them and I thought I
would never forgive them in hindsight it was one of the best
things they've ever done for me because it just made me have that fire
in my belly and really just want to work to get what I wanted so back to having
two mortgages that was a completely scary thing in my life I was making
something like 10 dollars an hour at Target
I think Kelly was making $13 an hour at the real estate office she was working
at we could barely afford the condo we had but now he had two.
God bless the
banks lending money to anyone at that point on the very plus side of that we
learned that someone else can pay our mortgage and we're basically getting
that money for free and then later we figured out that there are many many
many tax benefits and huge benefits of owning a rental property so we quickly learned that trying to pay
for materials and the things needed to fix up an investment property on just
barely over minimum wage is not easy to do the thing that happened next couldn't
have come at a more perfect time so all of a sudden I had money to spend to fix
up this house and it would just get me to that next
big paycheck that much quicker so that's what we did we fixed up the house we
doubled our money we rolled it into the next one so we kept bouncing from house
to house quite a few times and that sacrifice of from going from a nice
house to live in to going to a crappy house to live in to fix up to making it
nice again to going to another crappy house to fix up it became pretty
stressful but we always had our eyes on the prize "are you still with me Murph?"
after doing this two or three times I remember getting a check for the last
one and the check was forty one thousand dollars
so at that point it didn't make sense to work at Target anymore so I just started
doing it full-time but we never took the big proceeds from the real estate and
put it into our actual living we always rolled it into the next property and
that kind of gave us the baseline of even how we live today we always live
well below our means we take the money that we make and we put it into things
that will make us an income not into something that will lose us money but
you do have to treat yourself every once in a while otherwise there's no reason
to make the money in the first place Kelly saw many of the high producing
Realtors making large amounts of money so she decided to get a real estate
license and she created her own real estate business so now we really felt
like we had the world by the balls because we were getting paid a
commission to buy the property and then we were saving half of the Commission
when we sold the property and I was fixing him up so we just get rolling our
profits in rolling our profits in rolling our profits in until family we
were able to buy a house and now that we could get a house we were playing with
the big boys the profits were much larger but so was the risk and we really
didn't want to lose all the way it worked for for the last couple of years
so we did a few houses and we made some great money but instead of selling them
and pulling out our profits we kept them as rentals and it was at this point that we really
started building up our rental inventory at this point it was about 2006 or 2007
and real estate was starting to slow down a little bit but we have purchased
a large house I'm a courage that was really a big risk for us it was a large
house to fix up it was our biggest project for sure it took us the most
money to fix it up and we had the most money into it so we lived in this house
for about 8 months while we were fixing it up and we kind of decided after doing
about 12 properties that the moving all the time was starting to get kind of old
and we were kind of getting older ourselves and we decided that we wanted
to have kids and kind of settle down a little bit Murph are you with me? sometimes I feel like I'm just talking to myself so after the eight months was up we
finished the house we sold it and shortly after the real estate market
completely crashed the bubble had burst and Colorado was one of the hardest hit
States we got out of the house just in the nick of time and not only did the
real-estate market bubble burst we found out that we couldn't have kids and it
seemed like a real low point in our lives but around 2007 when all this
happened we realized our next lesson with every negative there is a big
positive that can be gained from it and you can just use it as fuel for your
fire so the recession was tough we thought
our great life had come to an end we thought we were gonna have to get
regular jobs you know people were losing their jobs left and right people were
losing their houses Colorado was hit very very hard one of the worst states
during the recession and we learned that what goes up must come down
and in this case it came down hard in many cases not just real estate when
things are bad that's the time to invest and if you're smart with your money and
you've been saving while everyone else spending that's the time to benefit
though from about 2008 to 2012 we were buying rentals so we were able to adapt I started doing
contracting because that's pretty much what I was doing before but now I had to
be doing work for someone else and Kelly's always been a mover and a shaker
and even a bad real estate market she was able to keep her business moving we
were buying things for pennies on a dollar and even though we were not
making great money and in some cases losing a little bit of money on rentals
we were able to stick it out and after lots of lots of years of lots of lots of
heartache and lots of lots of doctors we were able to have two boys so about 2014/2015 real estate started
creeping back up again prices kept going through the roof and just when he
thought it was the peak they just kept going up stuff was flying off the
shelves you could list a house and it would have multiple offers within 24
hours so we had about age 35 we were
completely debt-free we had several rentals that we were cash flowing we
didn't owe any money on the rentals so all that money was just rolling into a
bank account when you have no bills and you have an income coming in your net
worth starts to grow very quickly so we rode out the storm Kelly's business was
doing great my contracting business was doing great
we have liquidated a lot of our real estate in Colorado we had capital to
play with we had two beautiful young boys and then I fell to my knees crying
like a little baby I had herniated a disc in my back and I
was on a walker for about a month contracting for me was out of the
question I didn't even want to think about picking something up so I took
some time off and I raised our kids which at first I thought would just be for a few
months and then a year passed and then another year passed and I decided that I
kind of liked it we had rental income coming in Kelley's business was doing
better than it had ever been in fact she had started her own she had several
people working for her and just as a little side income I got to do what I
love to do which is antiques I was just buying and selling antiques so we were
trying to be very strategic at this point because we owned a fair amount of
property in Colorado but we knew that our ultimate goal was to retire at 40
and at the rate things were going up we didn't want to sell too early because we
didn't want to miss out on that upside but we didn't want to sell too late
because we didn't want to risk the chance of taking a step back so as some
regret we sold the majority of our properties in around 2017
but this was a game-changer because we were able to make cash for every rental
that we purchased so we loaded up on rentals in Iowa we actually purchased
our property that we're going to move into which is actually where I'm headed
now and that kind of brings us up to speed
to current date I take care of our 10 rentals which keep which keeps me pretty
busy just in itself i buy and sell antiques i get to see my kids all the
time we have a good rental income coming in now we do youtube oh yeah we also do
a couple fix and flips every year Kelly has her real estate team with about 10 employees
and in June of 2020 we're going to retire at 40 so all in all life is great
I have a wonderful family I have enough assets and passive income to live a
comfortable life I don't need Ferraris and yachts to make
me happy in fact for me it's quite the opposite so if you're new to the channel
take a moment to subscribe click the bell to get notifications and new videos
we like to live life simple on this channel if you like the content we
provide give us a thumbs up I'm almost always available to answer questions and
I love hearing from you guys I'm glad you were able to enjoy my roadtrip with
me I'm just pulling into the house right now in the meantime this is retired at
40 remember to live life simple I'll catch next week
5 Easy Tips To 💰Save Money💰…Money Saving Hacks
Jason 0 Comments Tips for Retiree's
I’m going to do a video on 5 simple things you can do to help your financial situation and I realized that I need to do a follow-up to the retired at 40 story video because there’s a huge need for financial education in this country and really everywhere it pertains to every single person doesn’t matter what your financial status is you can always use help and there’s always little tip tips and tricks that and things that you can do to better your status it always amazes me how scared people are to talk about their finances to put something on paper to basically take a look at where their money is going what’s getting saved and how everything is getting spent and I’ve met people time and time again that are highly educated very smart people but they know nothing about finances and they are terrible with money management so before we get into the 5 tips I want to strongly urge you to make a financial statement for yourself figure out where your money is going currently and figure out how much you’re saving and basically figure out where you can trim the fat for so many people a financial statement or just finances in general is like a bad word they’re just terrified of it but the only way that you’re gonna be able to improve your finances is to face the music alright so now that you’ve had a chance to go through your financial statement you definitely know where your money is going but how can we save more and what you really need to aim for is about 6 months of reserves especially if you’re getting ready to invest money into something or if you’re doing some kind of career change or some life-changing thing and all of these five tips will more than likely be a line-item on your financial statement so let’s go to financial tip number one hey I’m going to have to call you back I’m shooting a video right now so this first thing is something that we’ve all become very very accustomed to in the last 10 to 15 years and that is a cell phone and people tend to spend absurd amounts on their cell phones whether it’s the bill or the cell phone itself mainly the cell phone itself so that’s my first financial tip is shop on eBay or Amazon for a cell phone that’s refurbished or used or one this may be just a couple years old I actually just purchased a cell phone on ebay because I’m having trouble with my current one and I got on to my cell phone providers website and the most expensive phone that’s like mine now is $1,200 that’s insane to me so I got on eBay I found one that’s similar to the one I have right now it’s new but it’s a couple years old and I got it for less than $200 another thing that you can do is ask for some kind of loyalty benefit from your cell phone provider cell phone providers are constantly trying to earn your business and if you’ve been with them for a long time and you can convince them to keep you around by offering you some kind of benefit they’ll jump on the chance just by going into my provider recently I have a cell phone bill that was about a hundred and ten dollars a month I told them that I’ve been with them for close to 15 years they knocked it down to sixty-seven dollars and I have unlimited everything now tip number two is what I call going to youtube University or getting a YouTube education we live in the most amazing time ever right now there is information everywhere and it’s so easily accessible don’t ever stop educating yourself it’s so easy to find out how to do things these days you’re doing yourself a huge disservice if you don’t take advantage of that so how does that pertain to saving money well you can save money by doing tons and tons of things yourself instead of paying someone else to do it just look at the platform that you’re watching right now for instance you’re watching a video on how to do something so that how-to can be anything from changing brake pads on your car to changing the oil on your car to fixing a leaky faucet or the toilet flapper not working on your toilet all the way to how to the meal which brings me to my next point number three so food is a necessity in life but is it a necessity to go out to eat or go to Starbucks once or twice or every day the amount of money that people spend on food and going out to eat fast food Starbucks McDonald’s it really adds up quick and I don’t think that people realize how much money they’re actually spending on it because it’s just five or six or seven dollars here and there but if you add that up over the course of a month or a year or five years or ten years I think the result would be pretty staggering cook your meals at home pack your lunch for work make that fancy coffee at home it’s not that tough to do there’s so many great ideas and resources on YouTube and Pinterest and vlogs and blogs this channel included if you need a place to start scroll through my channel I have lots of cooking videos if you want to take that a step farther you can start growing your own food and if you don’t have a big green house like this you can grow a lot of food just in five gallon buckets even on a little deck if you don’t know where to get started see tip two number four is something that really hits home for me because me and my wife are both self-employed and we have been for 15 plus years so number four is insurance and although I don’t like insurance companies because I think they’re a giant scam it’s a necessary evil and you can also use that to your advantage you can put them against each other insurance companies much like cell phone companies are begging for your business and they’re constantly trying to outdo each other with with certain benefits or promotions so make them put their money where their mouth is and put them up against each other constantly and not just insurance companies you can do this with all kinds of different companies you should always be price checking these companies the ball is in your court make them earn your business all right I’d saved the best for last tip number five is taking advantage of bank account and credit card bonuses and this tip is begging for a separate video all on its own because I could go on about this for a long time but if you’re not taking advantage of credit card bonuses for sign ups or credit card cash back or travel miles or if you sign up for a bank account a lot of them will give you a large sum just for putting your money with them now I want to be clear I’m not promoting just going out and spending a bunch of money on a credit card but more putting the things that you already spend money on into the credit card it’s money that you’re spending anyways put your mortgage on a credit card if you can insurance is a good one it’s not super expensive but at least we’ll get you a couple hundred bucks on your credit card unless of course it’s health insurance and then you’re talking in my case thousand to twelve hundred dollars a month here’s another good one groceries it’s something that you always have to have and depending on how much you go to the grocery store it could add up to three or four hundred bucks a month sometimes six hundred maybe even more no-brainer here put your gas on a credit card you can always put your utilities on your credit card too if your utility company will allow it next from tip one your cell phone bill now depending on how much some of these are and if you are allowed to actually put them on your credit card you’re talking some pretty major money that you can get a bonus from if you’re getting two percent cashback that really adds up not only that but you’re increasing your credit score while you’re doing that so as long as you’re financially responsible and you pay this every month you’re reaping a large benefit a lot of credit cards will give you a 2% cashback they’ll give you a $500 signup bonus that’s free money in my opinion the free bank bonuses or even better than the credit card in my opinion because the bank account is something that you have to have anyway a lot of them will give you $500 for a small deposit as long as you put your direct deposit with them all the way up to I’ve seen $1,000 before and if you have a little bit more money to play with some of the online money market accounts like Capital One will pay you up to 2% or some even up to 2.5% just for keeping your money with them so some of these things may not seem like it’s saving you a ton of money but when you take up those extra fives and tens and occasional hundreds and you put them to work for you as opposed to something that you’re normally spending you’re not only saving the money because you’re not spending it but you’re putting it to work and doing something else with it and you’ll find that your your finances will start to collect very quickly so if you found the video helpful and you enjoyed the content take a second to give me a thumbs up it really helps out the channel and it helps the YouTube algorithm get this video out to people who actually need to see it also don’t forget to subscribe we do some gardening some frugal living some food preservation and cooking some gardening and you get to join me and my family on our retirement at the age of 40 after you’ve clicked subscribe click the bell notification also and it will notify you every time a new video comes out and it’ll keep you in the loop of the community all right I appreciate you sticking with me through this whole video so I’m gonna give you an extra bonus tip with an extra 100 or 200 or 300 or more dollars per month that you’re saving with just cutting back on a few things you take that extra money and you pay down debt with it the faster you get out of debt the closer you’re going to become to financial freedom and whenever you’re paying off debt always choose the smallest balance first because it gives you that extra little boost and if you can pay it off faster it gives you that extra bit of confidence to rock into the next one so once you’ve paid down your smallest debt move on to your next smallest debt take that money that you’re saving from the smallest debt that you’re not having to pay any more and add it to the money you’re saving from the 5 tips that I’m giving you and apply it to the next smallest debt and when that one’s paid off you roll it into the next one you roll that one into the next one and so on and so on in the meantime this is retired at 40 check out these other helpful videos if you have a minute remember to live a life simple and we’ll catch you next week oh hey I’m gonna have to call you back and shooting a video right now this is right my god get out of debt
As found on Youtube
Read MoreHow To Retire Early? (Young And Rich: Is It Possible?)
Jason 0 Comments Retire Wealthy
Hey, what’s up? John Sonmez here from simpleprogrammer.com. Tired of pushy recruiters sending you LinkedIn requests for jobs you have no interest in? Tired of blasting out resumes into the dark? If so, you should check out Hired.com. Hired.com flips job searching on its head by having top employers like Facebook come to you after you fill out one simple application. You also get your own job coach to help you on your next job search. If you haven’t checked it out, I highly recommend you at least fill out the application. Just go to Hired.com/simpleprogrammer. When you get hired with Hired, you’ll get double the normal sign-on bonus for using that link. Today we’re going to be talking about real estate.
Yes. I have done some videos on real estate. Some of you are like, “What the heck? Why is this guy talking about real estate?” Well, I’ve done fairly well in the real estate realm. If you’re interested, you can always check out my playlist on real estate investment and investment in general. I’m not going to go into all the details here, but occasionally I like to answer a few real estate questions on this channel. I got one here from Jonathan and he says, “I’m 21 and set a goal that I want to retire by 40 to 45.” Cool. “With 20K of passive rental property income.” Man, that’s awesome. I like that. I love that goal. That’s a good goal. “Currently saving money to buy my first property and hopefully, when I get a web development job I can speed up the process. My question is how do I plan for this goal?” This is good.
So, 21, Jonathan is 21 and he’s thinking this way and he’s got this plan by 40 to 45 to make 20K of passive income from rental properties. I love this. This is great. “Thanks for everything you do and have a beautiful day.” I am having a beautiful day. Thank you, Jonathan. “P.S. I was thinking of buying a duplex and live in one and I rent out the other one so basically the tenant pays my mortgage.” So, okay, there’s a lot of ways to approach this. I think Jonathan has got his head screwed on right. Well, I’ll start with the last, the P.S. of renting out a duplex and living in one side. I think that’s a great idea. This is a fantastic thing. More people should do this. A lot of you young people out there that are thinking about renting or buying a house, consider buying a duplex and renting out one side and if you find the right deal which—it’s out there, you could actually have the renters pay your rent.
You see what I’m saying? You could actually live for totally free by having a duplex and renting out one side. I’m not going to say it’s going to be super easy. I’m not going to say that those deals are everywhere. It depends on where you’re at. You’re not going to find that deal in California or New York, San Francisco, not going to happen, but if you’re in the Midwest you might be able to find that deal. I’ve seen it before. I think that’s a great idea, but let’s talk about the plan. 21, you want to retire by 40 to 45. You want to get 20K of passive real estate income. It’s not going to be easy, but it’s certainly doable. What you need to do is you need to calculate backwards where you need to be and have a real solid plan for this.
I can give you a general outline, but I haven’t run the numbers so I can’t tell you exactly. There are going to be some factors in here, but you actually need to take a spreadsheet and actually need to calculate this and figure this out. It’s going to be fairly complex, but you don’t have to be super detailed. You can kind of ballpark this, but you do need a spreadsheet. You can get some rough answers here, but calculate this out, 20K of passive income from real estate. Let’s say 45. What does your gross need to be? You’re going to have expenses, you’re going to have rents, I mean you’re going to have property management, you’re going to have a bunch of things here. That can give you an idea of what kind of wrench you need to be pulling in. It’s not going to be a 20K wrench, you’re not just getting 20K. It might be like 30 or 40K a month of rents. In order to get 40K a month of rent how many properties do you need and how much will those properties cost? How can you divide that over time and put inflation into the equation a little bit here over that period of time? Work backwards and make a spreadsheet and run some scenarios.
This is going to take time and some planning. Like I said, you can rough ballpark it. If I were just going to give you what I think would probably work for you, it also depends on how big your budget is. How much money are you investing every year? How much money do you have to invest every year. If you can put 10K down onto a rental property every year that’s different than, “Hey, I’ve got 50K to invest in real estate every year.” That’s different. Or 100K. Those are all different scenarios. What you’re planning based on your current scenario might—there may not be—there might be this gap and you might be like, “Well, how do I get there?” It might not be apparent.
You might have to do some other things. You might need to make more money in your job or start a side business in order to fuel that. I had to do that to reach some of my real estate goals. Think about that and calculate that out. I’ll give you kind of a rough timeline, a rough plan that I would have if I were you which would be something like—and this was the plan I initially developed when I was doing this which would be to buy one property every year, regardless. The nice thing I like about this plan is that it’s scalable.
The size of the property depends—is dependent upon how much money that you have in that year. When I first started in real estate investment when I was close to your age, I think I bought my first house at 19, but I really started doing investments around 21 and started this plan of buying one house per year. I think the first house that I bought I was able to put $10,000 down. It was like a $100,000 house or $120,000 house. The next year it was probably about the same and then probably like the third or fourth year I had more money. I was able to put $20,000 or $30,000 down. I got to the point where I was buying properties and I was putting about $20, $30, $40,000 down every year on a property when I buy it. Some of that was because of the real estate that I was already making me money. Some of it was because I was making more money in my job and I had businesses and side things going on which helped me to do that. That’s the kind of plan that I would—it’s not going to happen magically. I think that’s the key thing. You actually have to have a solid plan for this and you can run these numbers and calculate this out.
There’s actually a really good book that I recommend called The Millionaire Real Estate Investor. I think that’s by Garry Keller, the founder of Keller Williams if I recall correctly. I don’t recommend very many real estate books, simply because a lot of them are crap. The reason why I’m really going to recommend that book to you is because it has these charts that show you—it gives you a realistic expectation over 20 years what the value of a property is likely to be, how much money you’re likely to make from it, cashflow and all that. Again, it’s as complex equation. You’re not going to be able to nail this down perfectly, but at least if you run the numbers and you do the best job that you can, you can have a ballpark idea and you can always adjust the plan. You’ve got to have—you’ve got to know where you are and where you need to go in order to reach these goals. I’ll also recommend for you—I have a course that I created called Simple Real Estate Investing for Software Developers.
You can check that out here. If you buy that course, obviously it has a money back guarantee on it, but that’s going to help you to give you the basics of everything I know about investing. Just to give you a background, I have about 26 rental properties. They are all paid off. I started investing when I was 19. I kind of know what I’m talking about here. I don’t give a lot of bull shit advice about this. I give you exactly—practical advice on how to get started and how to do this.
The reason why I created the course, even though it might not seem like it goes along with a lot of my other content, it was just simply because I was tired of so many people giving BS real estate advice and doing all these kind of scamming, no money down, speculative moves that just doesn’t make sense. You need some kind of practical advice so that’s what I put together there. Go check that out. This is good. I think you’ve got a good plan here. You just need to develop the plan further and it’s going to be very dependent on your individual factors and—I think you have information though to say, “Okay, can you do this in 45—by the time you’re 45?” absolutely! I believe that you can. It’s not going to be easy, it’s going to be hard to do. 20K is a pretty big number but it’s certainly possible, but you’re going to have to start moving now, which it seems like you’re going to do, and you have to have a plan and it’s going to take a lot of work and a lot of effort and you got to find good deals in order to be able to do this in that time frame.
All right, I hope that is helpful to you. If you have a question for me, you can email me at [email protected]. Don’t forget to click the subscribe button if you haven’t already. Click that Subscribe. Click the bell to make sure you don’t miss any videos especially if you like the real estate stuff because, hey, those videos might not show up and then you’d miss it and then you wouldn’t find out the secret to life and how to make millions of dollars. All right, I’ll talk to you next time. Take care .
As found on Youtube
Read MoreHow we Retired at 40..💰7 tips to succeed for Early Retirement💰
Jason 0 Comments Retire Wealthy
Hey guys retired at 40 I’m going on a little road trip today just me and Murph and last week I reached a milestone on my channel and I hit a million views total and 10,000 subscribers in the same week since I’ve been getting requests for quite a long time about how I retired at 40 and I’m on a long road trip right now I figured what better time to share the story so without further ado here’s the retired at 40 story so before I get started I want to say that this is not in any way a brag story in fact I’m definitely not a showy type guy I enjoy very simple things in life and money to me is more of just a vehicle to be able to retire young and have my family live a comfortable and an easy life and to be able to enjoy lots of life experiences and be comfortable in life before I’m old and gray so really the journey began in about 2002 graduated from Iowa State University with a degree in marketing and business and by that point I have met my wife Kelly she had already graduated from school and she was kind of waiting for me and we wanted to move west out of the Midwest to move west see some new territory and get closer to the outdoors so I grabbed my degree ran out the door packed up my 1987 Ranger fully equipped with eight foot hay racks full of all of my personal belongings and we drove to Littleton Colorado and at this point in my life I had $200 in my pocket and Kelly had about the same so being completely naive and basically completely broke but with a degree I was on the search for the best suit and tie job that I could possibly find so I bounced around for a couple months just working some kind of halfway jobs and I quickly realized that I did not want to wear a suit and tie and I wanted nothing to do with the man and working a nine-to-five job well Kelly had found a job in a real estate office working the front desk and she had become friends with a couple of the big-time Realtors there one of which you caught wind that I had some handyman type skills but he made me a deal that if he paid cash for a house and I fixed it up that he would split the profit with us 50/50 and at this point in my life all I saw was dollar signs if I was completely blown away that there was someone that could pay cash for a house this is coming from a guy who had less than $200 in his pocket at this point it was pretty much scraping by I tried to hold back my excitement to him but naturally I said yes please let’s do that I was working the graveyard shift at Target stocking shelves I’d worked for 10 hours I would go home grab a little bit of breakfast and I’d head over to the property and work on it for another five or six hours I try and catch a few hours of sleep and then I would rinse and repeat it was at this point in my life that I learned a few different things one you really have to dig deep to reach your goals in life because I was not getting paid by the hour and at this point I didn’t know how much money I was gonna make I didn’t know if I would make $500 when this was all done or if I was going to make $5,000 when this is all done so I learned that a lot of things that can benefit you financially you have to put in the work upfront without knowing what your final outcome is going to be after about three months which seemed like an eternity of working seven days a week for sometimes 15 sometimes 20 hours a day on this house the house was ready to go on the market and it was all finished it looked great and then before you knew it it’s sold and then the house closed and at this point I still didn’t know what we were gonna make off it but for me it didn’t matter the hard part was done I didn’t have any of my own money into it I just had my time basically so the guy we were doing the investment with hands me an envelope and I opened it up and at $8,000 being twenty-two years old and having $8,000 I might as well have hit the lottery and that brings me to my second valuable lesson that I learned and that is being responsible with money so when you have $8,000 and you’re 22 years old a lot of people would go buy a new car they’d go buy some flashy things some pretty things but to me I had realized that if I can make $8,000 once I can make $8,000 again and again and again and again so I can either go p*&% the $8,000 away that I had worked my a#* off for or I can take that $8,000 and do exactly what he did but do it myself and potentially make twice or three times as much money so my wife being in a real estate office we became acquainted with quite a few smart people financially smart people we learned a lot about real estate very quickly because we were willing to learn which is my next valuable life lesson is that you never stop learning so we took our $8,000 we put a small down payment on a condo in Littleton because we realized that giving someone else our money was you might as well be throwing it away we wanted to be working towards something and it own something on our own so we took our other four or five thousand dollars and we started our search for a real estate investment that we could do all of our all on her own and get a hundred percent of the profits so after some searching we did find a place we found a small town home it was not in as nice of area as we were living it was smaller it needed lots of work but that takes us to our next light life lesson that we learned and that is to sacrifice for a greater payoff in the future so we had only lived in our condo for a very short time but we realized that if we moved into the real estate investment that we could rent out the place that we are living at and move into the place that we were fixing up that we’d have to be paying a mortgage on anyway we had our first real estate investment and we had our first rental so being 22 years old and owning two properties and carrying two mortgages and at this point I’m still working at Target was a pretty scary proposition in life but all I could see was that $8,000 check they had started to change our lives I also want to point out and kind of give a shout-out to my parents and to my wife’s parents because neither one of our parents ever handed us anything in life they always made us work for what we achieved in fact when we move we tried to convince my parents to co-sign on our mortgage for the condo that we bought and they said no way at the time I was very very mad at them and I thought I would never forgive them in hindsight it was one of the best things they’ve ever done for me because it just made me have that fire in my belly and really just want to work to get what I wanted so back to having two mortgages that was a completely scary thing in my life I was making something like 10 dollars an hour at Target I think Kelly was making $13 an hour at the real estate office she was working at we could barely afford the condo we had but now he had two.
God bless the banks lending money to anyone at that point on the very plus side of that we learned that someone else can pay our mortgage and we’re basically getting that money for free and then later we figured out that there are many many many tax benefits and huge benefits of owning a rental property so we quickly learned that trying to pay for materials and the things needed to fix up an investment property on just barely over minimum wage is not easy to do the thing that happened next couldn’t have come at a more perfect time so all of a sudden I had money to spend to fix up this house and it would just get me to that next big paycheck that much quicker so that’s what we did we fixed up the house we doubled our money we rolled it into the next one so we kept bouncing from house to house quite a few times and that sacrifice of from going from a nice house to live in to going to a crappy house to live in to fix up to making it nice again to going to another crappy house to fix up it became pretty stressful but we always had our eyes on the prize “are you still with me Murph?” after doing this two or three times I remember getting a check for the last one and the check was forty one thousand dollars so at that point it didn’t make sense to work at Target anymore so I just started doing it full-time but we never took the big proceeds from the real estate and put it into our actual living we always rolled it into the next property and that kind of gave us the baseline of even how we live today we always live well below our means we take the money that we make and we put it into things that will make us an income not into something that will lose us money but you do have to treat yourself every once in a while otherwise there’s no reason to make the money in the first place Kelly saw many of the high producing Realtors making large amounts of money so she decided to get a real estate license and she created her own real estate business so now we really felt like we had the world by the balls because we were getting paid a commission to buy the property and then we were saving half of the Commission when we sold the property and I was fixing him up so we just get rolling our profits in rolling our profits in rolling our profits in until family we were able to buy a house and now that we could get a house we were playing with the big boys the profits were much larger but so was the risk and we really didn’t want to lose all the way it worked for for the last couple of years so we did a few houses and we made some great money but instead of selling them and pulling out our profits we kept them as rentals and it was at this point that we really started building up our rental inventory at this point it was about 2006 or 2007 and real estate was starting to slow down a little bit but we have purchased a large house I’m a courage that was really a big risk for us it was a large house to fix up it was our biggest project for sure it took us the most money to fix it up and we had the most money into it so we lived in this house for about 8 months while we were fixing it up and we kind of decided after doing about 12 properties that the moving all the time was starting to get kind of old and we were kind of getting older ourselves and we decided that we wanted to have kids and kind of settle down a little bit Murph are you with me? sometimes I feel like I’m just talking to myself so after the eight months was up we finished the house we sold it and shortly after the real estate market completely crashed the bubble had burst and Colorado was one of the hardest hit States we got out of the house just in the nick of time and not only did the real-estate market bubble burst we found out that we couldn’t have kids and it seemed like a real low point in our lives but around 2007 when all this happened we realized our next lesson with every negative there is a big positive that can be gained from it and you can just use it as fuel for your fire so the recession was tough we thought our great life had come to an end we thought we were gonna have to get regular jobs you know people were losing their jobs left and right people were losing their houses Colorado was hit very very hard one of the worst states during the recession and we learned that what goes up must come down and in this case it came down hard in many cases not just real estate when things are bad that’s the time to invest and if you’re smart with your money and you’ve been saving while everyone else spending that’s the time to benefit though from about 2008 to 2012 we were buying rentals so we were able to adapt I started doing contracting because that’s pretty much what I was doing before but now I had to be doing work for someone else and Kelly’s always been a mover and a shaker and even a bad real estate market she was able to keep her business moving we were buying things for pennies on a dollar and even though we were not making great money and in some cases losing a little bit of money on rentals we were able to stick it out and after lots of lots of years of lots of lots of heartache and lots of lots of doctors we were able to have two boys so about 2014/2015 real estate started creeping back up again prices kept going through the roof and just when he thought it was the peak they just kept going up stuff was flying off the shelves you could list a house and it would have multiple offers within 24 hours so we had about age 35 we were completely debt-free we had several rentals that we were cash flowing we didn’t owe any money on the rentals so all that money was just rolling into a bank account when you have no bills and you have an income coming in your net worth starts to grow very quickly so we rode out the storm Kelly’s business was doing great my contracting business was doing great we have liquidated a lot of our real estate in Colorado we had capital to play with we had two beautiful young boys and then I fell to my knees crying like a little baby I had herniated a disc in my back and I was on a walker for about a month contracting for me was out of the question I didn’t even want to think about picking something up so I took some time off and I raised our kids which at first I thought would just be for a few months and then a year passed and then another year passed and I decided that I kind of liked it we had rental income coming in Kelley’s business was doing better than it had ever been in fact she had started her own she had several people working for her and just as a little side income I got to do what I love to do which is antiques I was just buying and selling antiques so we were trying to be very strategic at this point because we owned a fair amount of property in Colorado but we knew that our ultimate goal was to retire at 40 and at the rate things were going up we didn’t want to sell too early because we didn’t want to miss out on that upside but we didn’t want to sell too late because we didn’t want to risk the chance of taking a step back so as some regret we sold the majority of our properties in around 2017 but this was a game-changer because we were able to make cash for every rental that we purchased so we loaded up on rentals in Iowa we actually purchased our property that we’re going to move into which is actually where I’m headed now and that kind of brings us up to speed to current date I take care of our 10 rentals which keep which keeps me pretty busy just in itself i buy and sell antiques i get to see my kids all the time we have a good rental income coming in now we do youtube oh yeah we also do a couple fix and flips every year Kelly has her real estate team with about 10 employees and in June of 2020 we’re going to retire at 40 so all in all life is great I have a wonderful family I have enough assets and passive income to live a comfortable life
As found on Youtube
Read More
Recent Comments