Welcome to western world living. Here we are expected to spend our whole adult life in school and working, all the way to age 65. Well, I am going to be a rebel and refuse to play this game. How did I get to this point? I’ll explain.
I am 40 years old and have been in the workforce for 25 years already. I worked three years in high school—at fast food joints. Then I joined the military one week after high school graduation. I have been in the military for 22 years.
By my quick math, that is 25 years of working for the “man.” I was walking to my car today, and I just asked myself, why am I still doing this? Do I want to spend the next 25 years away from my family, working in an office building?
The worst days to go into the office are the days when the sun is bright and shining. My wife and I live in West Florida, on the panhandle. We are ten minutes from white sand beaches. It is hard to go to the beach when you are sitting in a windowless office.
While I was driving to work on this beautiful sunny day, I thought there is no freakin’ way I am doing this for another 25 years. I choose the sun, my family, and passive income. Those three things will bring immense happiness and joy to my life.
However, there is one slight problem. Money. As much as I would like to drive off into the sunset with my wife and kids, someone has to pay for the car, gas, food, and insurance. Yes, one of the problems with adulthood is being an adult.
Adults have responsibilities, and prematurely leaving the workforce to satisfy my needs would be selfish of me. Luckily for me, my wife and I are already financially independent. We are simply remaining in the workforce to help pad out our numbers. The timeframe between ages 40-50 are prime earning years, and if we can hold on for 4-5 more years, we will reap those benefits for the next 50 years.
How did we become financially independent? The amount of money that our investments provide is enough to pay for our living expenses. At this point, you no longer have to work. Our monthly expenses are $3,000/month, and our passive income is roughly $9,000/month (once I receive my retirement check).
So I will do you a favor by detailing the ins and outs of becoming financially independent using diverse passive income streams. I’ve written hundreds of articles along the way, documenting everything that I have learned. I will lay everything out as neatly as I can, so you can follow my breadcrumbs to financial freedom.
Definition of financial independence. Financial independence is the term used to describe when your passive income streams can support your basic living expenses. There are different levels of financial independence, so you will have to decide what needs you determine to be “basic.” Please read “Financial Independence 101, 102, and 103”.
Financial Independence Mindset. Knowing the definition of Financial Independence is not enough. You will also have to have the accompanying mindset. I read over 40 books in the last year to help build my FI mindset. You must understand how to see the world as a free person—not as an employee. So let’s get you started on your mindset.
These are the first 40 books that I read along the way, “20 Books that Will Make You Rich” and “20 (more) Books that Will Make You Rich.”
Now, I have written over 70 articles on the FI mindset but will narrow it down to ten.
“So You Think That You are Middle Class? ….Haha”
“Keep the Job, Quit the Mindset”
“Living a Middle-Class Life is Stressful”
“How to Create Luck with Money”
“Are Limiting Beliefs Holding You Back From Greatness?”
“How Do You Define Being Rich?”
“Mailbox Money: The Power of Dividends, Royalties, and Rents”
Retirement Planning. Whew, that was a lot of reading, don’t worry, there is much more to do. Planning for retirement is the first leg of our strategy once we have our minds right. This leg consists of employment income, 401k, pension plans, taxes, expenses, etc. Everything that we can do to maximize our cash flow before we start investing and building businesses.
My overall retirement plan is called Retirement 4-50. Inside this plan, we break the retirement into four passive income cash flow pillars: retirement income, investment income, rental income, and business income. I did a deeper dive on the Retirement 4-50 plan in the Cash Flow series (101, 102, 103, 104).
Two of the most critical aspects of retirement planning are taxes and saving money. The Taxes 101 series (101, 102, 103) covers primary tax considerations that every person should know. The tax laws favor investors and entrepreneurs, so we need to gear our post-work lives towards those endeavors. Saving money is bad because our money loses value with inflation. I give some recommendations on how to increase our returns. In the end, passive income comes down to how your life would look like without a paycheck. If you still have money coming in, then we consider that passive income.
Rental Income. Before we start investing our money into the stock market, we need to create a wealth generator. We can put money into the stock market now to learn, but the real gains come when we start putting in real money. We will need to use real estate as our wealth generator.
The first place we want to start is Real Estate Investing 101 and 102. These articles will help us gather up knowledge on real estate and why it is vital to our overall passive income cash flow plan.
Real Estate is a mindset—which would be a fantastic title to an article. Noted. I mean that if you can keep your living costs at zero, you can become rich exceptionally quickly. I explain the techniques in Mortgage Zero: The Art of Having No-Out-Of-Pocket Housing Costs.
When purchasing a property, we want to pay as little down as possible. We call this Maximum Leverage. Also, buying land can make you a land millionaire if you can sell it to others for a significant profit. Remember, “you make your profit when you buy, not when you sell.” This quote means to buy at a great price consistently.
Business Income. Starting a business is one of the best ways to stay busy during retirement and make good money. However, before you start a business, you should become an entrepreneur. Yes, entrepreneurship is all in the mind. Converting from an employee’s mindset to that of an entrepreneur will take education, practice, and time.
Once you understand the principles of entrepreneurship, it is time to jump in. Ensure you have the six traits of a successful entrepreneur before you get started. I recommend that everyone start by becoming some form of a content creator. Having a blog or YouTube Channel will help monetize any other pursuits that we create.
We can start many businesses, including starting a farm, a herb garden, a rental car business (with a Tesla!), or a luxury vehicle business.
As our business and knowledge grow, we will need to learn about advertising (Advertising 101 and 102), Design (5 Takeaways from “The Non-Designer’s Design Book), and sale funnels.
When we create a business, we want to build royalties for passive income or an automated business. You can decide which you like better automation or royalties, or you can do both. It’s entirely up to you. Remember, creativity is one thing that automation can’t replace. So create!
Investment Income. Now that we have created business income and rental income, where do we put the cash flow? Into the stock market, of course. However, we need to know what exact objectives are inside the stock market. We invest for cash flow (dividends), not capital gains. We need to build the mindset of an investor.
Let’s start with the basics, such as stocks vs. bonds and municipal bonds. Then we can jump into stock market investing (101 and 102), preferred shares (101 and 102), real estate investment trusts (101 and 102), and investing for dividends (101 and 102).
These basics should have you earning dividends and building confidence rather quickly. I now have a $150,000 portfolio producing $500/month of passive income cash flow. But we do not become complacent. Cryptocurrency is all the new rage. I recently completed a book, “Bitcoin: Hard Money that You Can’t F-ck With,” and wrote an article “Why I am Investing in Bitcoin.” These are just the start of my future moves in crypto. So get yourself educated and continue to do great things.
Conclusion. There is a whole lot of meat here and much to digest, but how important is your future retirement? Moreover, how important is leaving something to your heirs? That’s right; you can pass on real estate, dividends, and businesses to your heirs. So all the work that you are doing now will succeed you.
If you are like me, you are saying, “No freaking way, I am working another 25 years!” It is time to take control of our futures and free ourselves from the hamster wheel. We have put the work in, and now it’s time to leave this work-life behind. I value my time with my family more than anything. Why not be with family and be receiving retirement income, dividends, rents, and royalties at the same time. It is possible because I am already living my rich life. More power to us!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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