Path to Financial Freedom: Build Wealth and Give

If you aren’t at this step yet and instead reading this while your in the midst of your path to financial freedom, sometimes it can be hard to imagine a day when you are completely debt free, have an emergency fund, you’ve paid for your kid’s college, your investing for your future in a retirement account, and you have a mortgage free home you can feel secure in. But even though that mountain looks hard to climb, get on the bike, pedal hard, and stay focused. Soon a day will come when you get to the top of that climb and get to coast down the other side. Discipline and hard work will pay off in the end, and if you’re here at this final step you’ve done it. Dave Ramsay, the creator of these 7 steps to financial freedom, famously boils it down best:

“If you will live like no one else, later you can live like no one else.”

How will you live like no-one else?

Will you invest into more passive income producing real estate so that you can continue to build wealth and achieve even more financial freedom? Will you go take that trip to Greece? Maybe you’ll enjoy simple freedoms like spending time at the spa or a round of golf once a week. How will you give away more of your time, talent, and treasures so that you can help, influence, and be a light to the community and world around you?

There are two main goals in this seventh step. 

Number one; put your money to work for you through investments that are increasing your net worth and creating passive income. At this point your monthly expenses should be relatively low. Essentially you have whittled down your expenses to just your everyday costs to live because you have removed the burdens of debt and future saving needs. Your main goal at this point is to level up even further in your quest for financial freedom and acquire assets that create passive income every month regardless of how many hours you put in “on the clock.” If you can grow that passive income to exceed your monthly living expenses, you have truly achieved financial freedom. You can rest assured that regardless of how many hours you punch, or what happens to you or your family medically, that you have income rolling in like clockwork.

Number two, Give back. The point of building wealth isn’t just to stockpile money for yourself or your own benefit, but instead to leave a positive legacy for your children, your community, and the world around you. The saying really is true that giving is better than receiving. And at this point you finally have the financial means to affect real change through giving.

You still need a plan for every dollar.

Keep in mind that even though you are now on the downward coast of that mountain climb, you still are on a journey, and the final destination has not arrived. So this isn’t the time to fall off the bandwagon and veer off path. During this phase it is just as important as ever to remain diligent and have a plan for every dollar you make and put it to work. You must still maintain a budget. You must still keep your savings and investment funds in tact. However, it’s time to start playing a little offense instead of so much defense. There is no exact formula at this phase in your journey, but carelessness and poor investment choices can certainly take you back up the mountain to climb again. To help you navigate here are a few tips to help you build wealth and give with consistency.

5 ways you can build wealth through real estate.

  1. Cash flow. As I mentioned above generating passive income in your next years should be at the heart of your wealth building strategy, and real estate provides one of the best opportunities to generate cash flow compared to other asset classes. You have to have a strategy though or else you risk dangerous pitfalls of losing wealth not building it. I help buyers all the time find income producing properties that can put consistent money in your pocket each month, not take it from you, so you can invest with confidence.
  2. Equity Capture. Real estate also offers the ability to increase your wealth by generating value in a property. If you could buy an asset that you could invest $20k into and increase the value by $50k would that make sense? The answer is absolutely yes. Again you have to be careful and tread lightly with this game-plan. You aren’t nor should you be a real estate pro by this phase so don’t think you have to go at it alone. I’m here to help you every step of the way find the right deals for your situation so you can make the right purchases each time.
  3. Market Appreciation. Although there are fluctuations in short term markets real estate appreciation is roughly 3-4% on average year over year. Unlike investing in a business for example, real estate has virtually no risk in going to zero. Again you need a partner to help guide you through market cycles and determine the best times, and areas to buy investments. Contact me today and let’s discuss the current market conditions and areas that are seeing the strongest growth for your next investment.
  4. Principal Pay Down. Now that you are looking at owning an investment property you are on the other side of the principal equation. Someone ELSE is paying your mortgage interest and principal balance not you. Think about this scenario for a moment. If you are able to own a rental property for 15 years (while applying the same strategies provided in Step 6 on your own primary mortgage), someone else is paying your debt and you get to keep the asset. It’s now paid for, and it has been appreciating by 3-4% per year for the last 15 years. Not bad right?
  5. Tax Advantages. There are many many tax advantages to real estate investing and part of building wealth is not just how much you are earning, but how much you are keeping. Of course, as I’ve mentioned many times, it is best to discuss your particular situation with a tax expert so that they can give you the best and most current information specific to your particular situation. If you need a recommendation call me, I work with tax professionals all the time and help my clients find the right partner for them, I’m happy to help!

3 tips to make giving consistent.

Through the first 6 steps of this process your family has been your top priority, and understandably so, but now comes the real gift of this process being a blessing to the world around you. Anytime is a great time to give, and that is why I outline during step 1 of this process that you should be making room in your budget for 10% of your income to be going toward giving. However, it is nearly impossible to make big financial impacts in the larger community around you when you are laser focused on paying off your own debts and investing in your retirement and children’s college education. Now that those are out of the way your desire for giving can finally meet your ability to give. So where do you start?

  1. Make it personal. There are a lot of incredible organizations and causes out there to be a part of, so where do you begin to choose one that you want to support? One tip is to research organizations, fundraisers, or causes that have a personal connection to you. If you have a personal connection you are much more likely to have a deeper level of understanding and engagement than simply writing checks. So don’t just put your head and hands in it, put your heart in it too.
  2. Make it fun. Get creative and have fun! You don’t just simply have to write a check each month to a cause or organization, have some fun and get the whole family involved! Remember you are not only teaching them strong financial habits and literacy during this journey – but also how to be good stewards of things we have been given. Consider random acts of kindness, a larger than normal tip here and there, or buy a coffee for someone behind you in line. The sky’s the limit – and this kindness is just as infectious as the gift itself!
  3. Stay connected. Although there really aren’t any rules when it comes to giving generously, you do want to strive to be consistent in your efforts. The best way to do this is to stay connected with the groups or organizations that you are investing in. This is an opportunity for you to not just give your treasures away, but your time and your talents as well. Stay engaged and you will get much more out of this than you put in I promise.

Congratulations you should be extremely proud of yourself when you have made it this far. Remember to stay diligent, don’t get sloppy, but most important have fun and embrace the magnitude of this moment. Be proud of yourself and keep pedaling!