The Only Step-By-Step Guide To Financial Freedom You’ll Ever Need
A disclaimer, it involves applying austerity for some time.
There is a lot we can all learn from John Soforic. He’s an amazing author. One of the best lessons I learned from his writings has to do with the purpose of our activities. We all love to have a purpose for what we do. If we want to get in better shape, we work out. If we want to lose weight, we pay attention to our diet.
So what would be the answer if we wanted to:
- Be more available for our kids, our spouse, our family members, our friends, and the charities we love to support?
- Have the opportunity to learn new skills and develop our passions?
- Discover new countries and travel around the world?
At first glance, it appears the main ingredient we need to have is time.
John, at some point, wrote:
“I was told that ambition for riches comes from the devil but found that the prosperous life was a spiritual adventure.”
Dictionary.com defines prosperity this way:
1. A successful, flourishing, or thriving condition, especially in financial respects; good fortune.
2. Prosperities, prosperous circumstances, characterized by financial success or good fortune.
To successfully realize our dreams, we need a prosperity plan. In other words, we need a step-by-step guide to get us to financial freedom as soon as possible.
These steps will require practicing austerity for some time but the rewards are well worth it.
The Only Step-By-Step Guide To Financial Freedom You’ll Ever Need
1. Start as early in life as you possibly can.
Consider what the traditional education system can provide you in order to get a well-paying job at a high-performance level.
Practicing austerity means considering alternative forms of education, possibly less costly options, not so focused on a degree but more on the knowledge you acquire.
2. Find one or more sources of income that pay you generously
Ideally, find work that pays you on an hourly basis.
Austerity for this commitment means that you work as many hours as possible for the highest possible rate but spent as little as possible of the money you make.
3. Find an occupation not dependent on a specific location.
These days, one of the best options is to be able to work from home.
Austerity applied here would mean trying to get clients or employers you work for to pay for the equipment you need. This should include a computer or laptop, cell phone, internet connection, printer, etc.
4. Find an appropriate location
Find a location that has a lot of safe but very affordable housing and reliable high-speed internet.
Austerity applied here means to move to that location. When Starlink satellite will be available in 2021, you can move to a truly remote and affordable location and access the internet to do your work using satellite connections.
5. Buy your first property
At the remote and affordable location, find a property that has at least two and no more than 4 living units.
Austerity applied here means not to pay too much attention to the size of the units. Smaller is better. As soon as you have three paystubs, go to a bank and apply for a mortgage to purchase the property.
Do the minimum work necessary to make all units livable. Move into the smallest one and rent the larger one(s). Rural towns with mid-size colleges are ideal.
Alternatively, consider places/locations that have a lot of people with Section 8 eligibility and rent to them. Make sure the rent from your tenants covers all the costs of the whole property (insurance, mortgage, utilities, property taxes).
6. Find local farmers and gardeners who grow organic food
Austerity here means to buy from them and live as healthily as possible. It also means to buy healthy organic food in bulk.
I guarantee you: buying the largest freezer at a warehouse store, buying the longest possible warranty for it, and not be bothered if it has minor cosmetic damages on the outside (not impacting functionality or the warranty) is going to pay off big time. Then, fill it with seasonal organic food you can buy at a very low cost when it’s available in abundance.
This will keep you healthy and able to work as many hours as possible.
7. Develop routines
Establish a recurring rhythm for each day, including weekends.
For your mental freshness, consider practicing what Hal Elrod describes in his book Miracle Morning. Get up early, do the Miracle Morning steps, and structure your day as efficiently as possible. Get 6–8 hours of sleep.
8. Open an accumulation account
Put all the money you earn from your work and any positive cash flow from your property into a high yield savings account. Austerity here means avoiding any spending that is not absolutely necessary.
Try to apply the strategy of paying yourself first. This strategy was first coined in the 1920s by George Samuel Clason, an American entrepreneur who founded a successful publishing business in Denver, Colorado.
9. Build relationships
Meet as many people as you can without losing sight of the fact you need to work as many hours as possible each day.
Identify a realtor familiar with selling investment properties. Find a well-respected home inspector. Make friends with high-quality local contractors. Attend real estate meetings in the local community/area once or twice/month.
Ideally, try to focus all your relationship development efforts on Sundays as that might be the day you can’t work as long as you would want to on other days of the week.
10. Gather information
With the help of some of the people you met, find out what is the typical price level for single-family homes, duplexes, triplexes, and fourplexes in your area.
Calculate the most efficient highest performing properties (single-family up to 4-plex) and calculate the purchase price.
Next, identify how much 25% of that purchase price is.
11. Purchase the next high performing property in your area
For most locations, you can refinance after you have lived in the property for 6 months.
If you follow the prosperity plan to this point, you should be able to move out of your first property within about 9 months of purchase.
At that point, refinance your old property at the best interest rate recognizing the value of your upgrade and renovations. Then purchase the next high performing property in your area and move again into the smallest unit yourself.
Rent out the unit you previously occupied in the first house and all the other available units in your second property.
12. From this point forward, rinse and repeat
Keep applying all austerity measures described above and you’ll be able to purchase a new property every 6 months, give or take. Try to get 4-plexes whenever possible.
For each purchase, put 20% of the purchase price as downpayment, and cover the remaining 80% by taking a mortgage from the bank. Cover all other costs (appraisals, inspections, closing costs) with the remaining 5% from your accumulation account.
Each unit in your 4-plex or duplex and tri-plex is called a door in real estate investing lingo.
13. Dont’worry about what people think
Be aware that people will call you crazy, or they’ll you a workaholic. They might call you worse things.
In a few short years, they will call you lucky. And after that, they will envy you.
14. Finally, you can decide to release yourself from austerity and enjoy prosperity
At this point, you’ve reached the moment where you can truly be free to live your life on your own terms. This is when all the hard work pays off and you can release yourself from austerity to enjoy a prosperous life.
How long it takes will vary from person to person. If you’re lucky and buy a 4-plex each time you purchase a property, then you should be able to be done in 5 years. If you by single-family or duplexes it might be 8 years, possibly even 10 years.
The results of the prosperity plan, in a nutshell
- You worked for 5–10 years as hard and for as many hours as you could and bought about 40 doors of residential real estate. If you started after you got an associates degree you would be between 25–30 years old.
- When you turn 40, probably earlier, your properties will be paid off one after the next and your income will keep going up each year, increasing your prosperity.
- Your net worth when you stop working is going to be at least $2 million dollars, more likely $3–4 million dollars, and will keep increasing for the rest of your life.
- Most importantly, you’ll have total freedom to do what you want, explore what you are interested in, and live your passion to the fullest degree.
- You will never have to work again in your life.
Austerity and applying the prosperity plan has nothing to do with the devil. Most people prefer another route. They will tell you that it’s easier to live a life like everybody else.
But if you think about it, healthy people have a life expectancy of about 80 years right now. This means that, for the next 50+ years, you’re free to explore the answers to the questions we asked right at the beginning of this article (or any other questions you might have).
“Prosperity is a way of living and thinking, and not just money or things. Poverty is a way of living and thinking, and not just a lack of money or things.”
— Eric Butterworth
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