I personally was $5 million in debt in 1990 and technically broke. 7 years later in 1998 I retired. If you had the information I am giving you in this article, you could easily have done it in less than 5 years.
The steps:
- Calculate your total income and expenses
- Cut your expenses.
- Create a surplus.
- invest the surplus
- Replace your salary with passive income.
Total income and expenses: Create a graph of the last 6 months of your exact total income and expenses. You can now see your exact financial position from a cash flow standpoint. Check this every month.
PS A picture is worth a thousand words.
Cut your expenses: This might require moving out of your home, renting it out, and finding affordable accommodation. You must make sacrifices if you want to speed up the retirement process.
Create a surplus: Pay yourself first each month and create a surplus. This needs to be automated so that it happens every month. This money can be deposited into a savings account or your access bonus, to be used for income-producing investments later. It keeps creating this surplus which is purely for investment purposes.
Invest the surplus: Invest in positive cash flow investment properties. Use the money from the bank or find a partner to put up the money and you do the work. Your partner has the property as collateral.
Replace your salary with passive income: If you’re willing to do without them for a few years, the income from your properties (passive income) can eventually replace your salary.
All it takes is making a decision, believing you can do it, and then acting.
Also, you need create systems for everything, so you can do more in less time. For example, there are 24 hours in a day;
- 8 hours to work
- 8 hours to sleep
- 8 hours for family and recreation.
If you max out those 8 hours of work, you’ll find that you’ll eventually finish in 6 months what would normally take you a year. So 10 years now becomes 5 years.
The good news! You don’t need any special talents, luck, education or higher knowledge to be financially independent. Just apply the basics and keep it simple.
The most important part to focus on is your “cash flow”
Here are some ways to increase your cash flow:
- Reduce your living expenses immediately.
- Consolidate your debt.
- Pay off the debt with the highest interest rates first.
- Rent or sell your house and move to a cheap flat.
- Increase bonds (refinance) if you have investment property.
- Do your own rent if you have investment properties.
- Save on tax deductions: “any expense in the production of income is tax deductible.”
- Run your office from home.
- Increase your jumps to 30 years.
- Rent rooms in your house.
- Turn your house into a Bed & Breakfast
- Rent your garage.
- Turn your exterior rooms into a granny flat.
- Add a floor above your garage.
- Find part-time work.
- Rent a property and sublet it at a profit.
From the above you will notice that you can do this without money. You use the banks money or someone else’s money that is not making a decent return.