That’s right, $20,000/month in passive income will be enough to set you and your family free from the tyranny of the workforce. Keep in mind; this is living a down-to-Earth, “below your means” lifestyle. If you want the full “American Dream,” you will need much, much more.
Why did I decide to put a number on freedom? Because numbers make everything easier to understand. People used to say that $1 million will set you free. Nope, $1 million will get you $40,000/year of dividend income. That’s $3,333/month of income.
To reach $20,000/month of dividend income (at a 4% yield), you will need $6 million invested in your portfolio. Luckily, we are not going to achieve it only with dividends. We will have to use all of our passive income ideas to be successful.
Over-Budgeting 2: Low Expenses, High Income
How did this topic come up? I had a strange interaction with a young Marine today that brought me to this subject. I asked the Marine if he was in the zone for Staff Sergeant (E-6) this year. He said even if he were selected, he would turn down the promotion. I, of course, asked why he would do that, and his answer surprised me.
“Because I want to spend time with my family, and the Marine Corps won’t let me do that!” He said this with so much disgust that I almost laughed. He said he would get out after serving eight years in the Corps.
This young dude doesn’t have a clue about the cost of freedom. He thinks coming home to his family every day from work is freedom. No, never worrying about money is freedom. But, who am I to burst his dream?
I understand the true cost of freedom, which is why I am still in the Marine Corps. Also, that’s why I am serving in Japan on an unaccompanied tour, away from my family. I finally made it back to America to see them after one year, and everyone I see is just as lost as this young Marine.
New cars are everywhere, along with lovely, long boats. Not just cheap new cars, no, expensive SUVs with extended cabs and tow packages. I told my wife that these trucks cost over $100,000. Again, the drivers think they are living a free life.
How Would You Invest $300,000?
Most of the people driving these trucks will never make $200,000 while working a job. That means that their chances of making $200,000/year in passive income are slim to none. So why such a high number?
You actually can become free a lot sooner, around $10,000/month, but you will still have limits in place. You can hinder your ability to travel, spend, or assist your family with $10,000/month. My favorite author Robert Kiyosaki says it best. “I retired so I can focus on becoming rich.”
So, when we become free, we will continue to grind up our passive income via our wealth generators. That is how the rich make their money by moving from investment to investment. We call the speed at which they can transfer money between assets the velocity of money.
Does $20,000/month seem like a lot of money to you? That’s because it is, however, a very achievable goal. We have plenty of asset classes to invest across, and understanding each can assist us with building up our passive income. I dedicate my channel to understanding these passive income asset classes and also giving ideas in each. The more you know, the more likely you are to find one that resonates with you.
Start Your Debt Payoff Journey
One of my passive income generators is my military retirement. My military retirement will be close to $10,000/month if I stay for another eight years. That’s a big chunk of $20,000. If the young Marine had known anything about the cost of his freedom, he wouldn’t be so quick to leave the Corps.
Don’t let America fool you, though; they want to let you believe you can achieve financial freedom with your 401k and social security. Good Luck. I see it all the time, “401K millionaires” stories abound. Again, that $40,000/year or $3,333/month, plus social security at say $2,500/month. These total to $5,800/month, which is a long way to $20,000/month. Plus, you will be 66 years old as well.
We need an actionable plan right now. Your passive income plan needs to be as over-the-top as possible, helping you get the ball rolling on your dream life. If you are having problems setting goals, read “Think and Grow Rich.” If we can imagine our goals, we can find ways to achieve them.
My Retirement Planning at Any Age (book) series is an excellent place to start, which breaks down each of the decades for your success (the 20s, 30s, 40s, 50s, 60s, and 70s). From there, it is a matter of splitting the $20,000/month between the different assets classes.
Try to focus on what you are strong in and learn more about what you don’t understand. Remember, your main wealth generators are the military, real estate, and business. That means that you want to double down on learning about these assets classes. You require money to fund dividends and crypto to become secondary investments, at least at the start.
Retirement Planning for the Average Person
Let’s do an example of how we can pursue our $20,000/month across our different asset classes. Remember, we may become free at age 40 with $7,000/month income; however, we must continue to grind up our passive income. We never know what the future holds in store, and having a lot of money will assist us with overcoming obstacles for our families and us. Here are the numbers, and then we can review some ways to get to these amounts.
- Retirement Planning: Roth IRA $3,300/month
- Investing: Dividends $5,000/month
- Crypto: Interest $1,000/month
- Real Estate: Rents $5,700/month
- Business: Royalties $2,000
- Business: Automated Business $3,000
Let’s review our example. Remember, business and real estate are our wealth generators, so let’s start there. Josh, our fictional character, begins by focusing on real estate. He house-hacks his first few homes and becomes a real estate agent to find even better deals.
Standard Employee by Day, Passive Income Hero by Night
Once he has a consistent income from real estate, he builds up his passive income from royalties. Like me, he wants to do this via writing. He publishes a weekly blog about his real estate adventures and creates tons of ebooks on the topic.
With both of these income streams set, you can now buy his freedom from his day job and focus on becoming rich—he is 35 years old. Next up is an automated business. Because of his experience in real estate, he first starts a passive Airbnb business. He also bought a few lots of land to rent to beekeepers for passive income during his real estate pursuits.
During this time, he focuses on his various investments accounts. For his Roth IRA, he uses the Total Market Index Fund (VTI) to build an excellent portfolio of capital gains. He will convert these to high-yield products at age 60, all tax-free, of course.
His dividend portfolio consists of index funds, blue chips stocks, high-yield REITs, closed-end funds, and preferred shares. His goal is to get to $2.5 million.
He reaches his goal of $20,000/month in passive income at age 55. His family is now free, and his kids will never have to be oppressed by the workforce. They can work with the knowledge that they can build passive income streams on demand.
The Magic of Rents
It is important to remember that building passive income streams is fun. It is hard work, but you are working for yourself and your family. You work hard at a job for someone else’s company, and someone usually steals the credit from you anyways.
Why not work just as hard to build up your business, brand, real estate, and investment portfolios? If you can understand this distinction, you are well on your way to becoming financially free.
Conclusion. I am well on my way to building my passive income streams from military retirement, dividends, crypto interest, real estate, royalties, affiliate marketing, and ads revenue from my blog.
Happiness Isn’t Free
Without my military retirement, my wife and I are pulling in roughly $3,000/month passive income—this is a massive sum of money, trust me. We are good for the rest of our lives as it currently stands.
But what if we want to travel for a few years and take the kids with us? What if we’re going to buy a home close to my parents in Arizona? What will we be able to teach our kids about passive income from retirement planning, investing, crypto, real estate, and business?
Everything we do, every penny of passive income, is a lesson for our kids. Why would we want to send them blindly into the workforce without passing on everything we have learned? Us parents are here to learn the hard lessons and be life-long mentors to our children.
So, if you think you are buying your freedom because you are home with your spouse and family every day, keep doing you. I know that the grind, whether earned income job or passive income, is real. When you stop grinding, the money from your earned income job stops. The money keeps coming in when you stop grinding for your passive income. Which type of income stream do you want to build?
- Free PDF Downloads: Download FREE PDF books here
- Financial Mindset: Become CEO of Yourself (book)
- Retirement Planning: Retirement Planning at Any Age (book)
- Investing: How We Plan to Retire on Dividends (book)
- Cryptocurrencies: My First Book on Cryptocurrencies (book)
- Real Estate: Financial Independence through Real Estate (book)
- Business: Retire Rich, Retire Comfortable with a Business (book)
- Everything plus way more: The Biggest Book on Passive Income Ever! (book)
- I bought a Kindle Oasis: Check it out Amazon
- Read My Books for Free: Free Kindle Books Schedule
- Sign up to Access our “Hidden” Free Kindle Book Schedule
- My first Children’s book: A Child’s First Book on Passive Income (book)
- Book Reviews: 54 Takeaways from 54 Books (book)
- Want to Build Passive Income from Books and Affiliate Marketing? (Learn here)
- Writing: Can Grammarly Make You a Better Writer? (direct)
- My Favorite Chromebook: The Ultimate Chromebook (direct)
- Follow us: On our Facebook Page and Join our Facebook Group
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.
Leave a Reply