Financial freedom is possible if you believe it and work hard towards it. A big house, a fancy car, an expensive watch; these things will not bring you financial freedom. Paying off your debt and saving money aren’t sexy actions to take, but they will take you much further than spending money on superficial stuff.
You know what sounds sexy to me? Getting monthly passive income from real estate that I can live on. You know what sounds sexy to me? Not ever having financial stress or worry.
I came across Grant Cardone on YouTube a couple years ago. He’s a real estate guru who has amassed a $300 million net worth. His philosophy is to work your ass off, save up as much money as possible, and only buy a rental property if it has 16+ units and will generate $2,000/month in passive income (after taxes and mortgage payment). One thing he says is, “Rent where you live. Buy what you can rent to others.”
I’ve been obsessed with the Dave Ramsey podcast for awhile now. I listen to his show every day. He’s a bit preachy, but has some really good advice for the average person. His philosophy is to pay off all your debt, cut up your credit cards, build up an emergency fund, and then start saving for a house or real estate investment. Ramsey has a net worth of $55 million.
Several years ago, I read “Rich Dad, Poor Dad” by Robert Kiyosaki. His philosophy is much different from Dave Ramsey, but has some really good points as well. Kiyosaki believes in accumulating assets and leveraging debt to your advantage to increase wealth. He has a net worth of $80 million.
Here are some strategies I’ve implemented that you can use, taking into account various ideas from the above money legends. I may not be wealthy now, but the pieces are in place for that to happen in the future. Staying focused and sticking to the plan will yield inevitable success.
1. Create a budget
Get out a piece of paper and start writing out all of your monthly expenses. I use Mint.com to keep track of everything electronically. Be honest with yourself about how much you spend on alcohol, food, shopping, entertainment, and Uber/Lyft rides per month. These tend to be the trickier expenses because they can vary. Look for any monthly expenses you have that you could eliminate, such as a car payment. It may be wise to sell your car and buy a cheaper car for cash.
2. Get out of debt
Whatever money you have left over after your expenses is money you should use to pay down your debt. Student loans are a huge pain in the ass, and could cost you thousands in interest if you don’t attack them with a vengeance. If you have no debt, it’s like getting a raise. Look at your budget more closely to see how you can improve your savings level. Either increase your income or decrease your expenses.
3. Set a goal
Come up with a financial goal that is realistic and attainable, which lines up with how you want your future to look like. For me, I want to buy a trailer park or apartment building in 5 years or sooner, in order to create passive rental income. Imagine your goal with utter clarity so it gets stuck in your mind. Imagine what this goal looks like, smells like, and tastes like. Weekly fancy steak dinners, expensive wine, and lavish vacations could be in your future!
4. Money buckets
In order to simplify things, I recommend setting up your direct deposit to go into three separate bank accounts; bills, savings, and spending. Move all your monthly expenses to the bills account (rent, utilities, cell phone, etc.). Set aside your leftover cash after your budget, and put this into a savings account. The remaining money, send to your spending cash account. This way, you have peace of mind knowing that your bills will be taken care of, your savings are taken care of, and you know exactly how much money you have to play with until your next paycheck. This forces you to stick to your budget because the other money isn’t in your pocket.
Just like a video game will save your progress periodically, you should set your savings to be automatic. You never want to be making an emotional decision each paycheck, saying, “To save or not to save?” I use Acorns.com to save $25/week. I also use Wealthfront to invest money from my savings account every paycheck. This way, I never have my hands on it. Also, it takes 3-5 business days to make a withdrawal, so it’s more of a pain to take out money.
The next step would be to create an excel sheet that shows your current situation and future situation, month to month. This way, you can see what your future holds and when.
Photo credit: Grant Cardone (@GrantCardone) Tweeted:
Get in rich mode or live a life in bitch mode. #10X https://t.co/jmlxhG4Qwm