How to Achieve True Freedom in 10 Years or Less

You might be wondering to yourself, how did I get here? I followed all of the rules, received a great education, and worked hard so why do I have so little to show for my efforts?  You may be thinking that you don’t have as much money or savings or more importantly – free time as you thought you would have at this point in your life. I’m here to tell you that it’s not your fault. The old set of rules – “do well in school, get a good job, work hard and retire in comfort” – just don’t work anymore – there are better ways to gain financial security.

In fact, CNBC conducted a recent poll and found that 80% of workers said that in their current financial situation they don’t have enough money to retire and would need to work in retirement citing “financial reasons”. The current situation for a lot of people is that they simply don’t have enough annual income to offset their annual expenses largely because of too much debt.

We’ve been taught to do what our parents and grandparents did with their personal finances, and that approach may not give you the control of your finances to meet your financial obligations like it did for them given the high cost of living and various other factors that affect so many today.

What is Financial Freedom?

“Your time is limited, so don’t waste it living someone else’s life.” – Steve Jobs

I couldn’t agree more…So, let’s first determine what financial freedom is because there is a difference between financial freedom and financial independence.

Financial freedom is by definition having enough passive income through investments so that you do not “have” to work. Your passive income exceeds your expenses.

Picture this…you wake up every single morning knowing you can plan each and every day exactly as you wish. You can live your life by design because you have enough income each month to cover all of your expenses and then some. That’s a great feeling, amiright?

Set Your Goals

So, a good starting point is to talk about the ways you can achieve financial freedom. The first step you should take is to set goals for yourself with specific timelines and measurements. You have to spend a few hours really understanding what it is you want, and just as importantly WHY you want it.

The best way that I have found to set goals is by applying the S.M.A.R.T. method of goal setting.

The S.M.A.R.T. goal is: (S) Specific, (M)Measurable (A)Attainable (R)Relevant (T)Time-Based.

So, instead of saying “I want to make an extra $50K this year”,  you would create a goal such as: “I will make $50K more this year by generating at least an extra $4K a month with a side hustle doing (what’s your side hustle going to be?) and I will reinvest those extra earnings each month/each year in (what will you invest your capital in?), and by the end of the year, I will have an extra (how much extra capital do you want?) amount to compound and reinvest so that I can be retired within 10 years.

Also, always write your goals down. There is a lot of evidence-based data that demonstrates people who write their goals down in a specific manner have a much better chance of achieving those goals.

I won’t go too much further into goal setting here as the S.M.A.R.T goals resource link above is a good way for you to get started really planning and strategizing on the goals you want to set and how you’re going to make them happen.

Track Your Spending & Expenses

Now that you know what your goals are, you have to get serious about where your money is going, right?

Remember, if you want over $4K additional monthly income using the example above, you can cut expenses to drive more revenue to your bottom line as well. You can go back 3-6 months on all of your bank statements and credit card accounts and itemize where your money is going and then start tracking going forward. Knowing where your money is being allocated and determining what you can cut costs on will help you make the appropriate adjustments where you can.

You can use a simple excel sheet to track or you can try some great apps like Mint and YNAB as well as Goodbudget that will help you track your expenses and your spending each month so that you can see where to curb (or eliminate) some outgoing expenses so that you have more incoming.

Set a Budget

Now that you can see where your money is going, you will need to set a budget for yourself.

NerdWallet has a free budgeting sheet you can download in Excel that allows you to set certain parameters for each category of your budget.

They recommend that you use a 50/30/20 budget, which delegates 50% of your income toward NEEDS (housing, food, utilities, health insurance, etc.,) – this is outside of your side hustle income that you’re going to use for investing. And 30% of your budget toward WANTS (entertainment, a vacation, etc.,) and 20% of your budget toward savings and unexpected expenses, as well as your debt repayments such as credit card debt, any student loans, etc.

Another even simpler approach is the 80/20 budget which entails simply taking 20% of your income and putting it toward your savings. The remaining 80% is disbursed among your expense obligations.

Your debt repayment has to be addressed by paying down the debt with the highest interest rates first to truly begin to build up discretionary spending and put the extra money toward investments so that you can start living your life by design.

I’m pretty confident that no one ever came to the end of their life and said that they wished they had spent more money on stuff. I’m guessing that they wished they had done more and seen more and had more wonderful experiences with the people that they loved.

“We’re here to put a dent in the universe, otherwise why even be here.” – Steve Jobs

Determine Your Financial Freedom Number

Once you have determined your total monthly expenses, and you have done your budget, then you know what your financial freedom number is; this is the specific number you need in terms of monthly revenue to be able to quit your job if you so choose. But at the very least you would have enough revenue coming in each that you wouldn’t have to worry about your finances as you might now.

Get a Side Hustle

If you have sat down and gone over your spending and budgets and realize you are still going to come up short every month to reach your financial freedom number, then you’ll want to explore ways to generate more revenue.

When I bought my first property years ago, I didn’t realize it would become such a great investment. I rented out 2 of the 3 bedrooms to friends and that rental income paid my mortgage payment each month leaving me with little to no housing expense, which drastically cut down my living expenses. That was the first time that I realized the power of real estate to add to my investment portfolio and aid my retirement plan.

There are all kinds of side hustle ideas out there from starting a blog to renting out a room on Airbnb. They may not all be sexy but they will help you reach your financial goals quicker, and that’s the strategy, right?

Invest, Invest, Invest

If you have ever read any of our blogs, you know we are big proponents of earning passive income in commercial real estate syndications such as affordable multifamily housing communities.

Using the example earlier if you were to earn an extra $50k a year with your side hustle and cut back on your expenses by paying off debt, then you could invest that $50K into a passive income opportunity in a multifamily real estate syndication – a group investment.

So, let’s say that your $50K investment will pay you a preferred rate of return of 7%, which would give you $3,500 a year in investment returns or cash flow. That may not hit your goals just yet but remember you will be able to receive a portion of the profits when the multifamily asset is sold as well, which can really add up in your retirement accounts.

Let’s say that if the investment had an equity multiple of 2X with an exit of 5 years, then you could feasibly double your investment within 5 years with this particular strategy. Although we can never guarantee, we can project a return when we release each syndication project, so this would be just an example.

So, in this example, if you were to receive a 2X equity multiple on your investment then in 5 year’s time your $50,000 would have given you a return of $50,000 additionally – technically doubling your money in 5 years. That can really add up to a lot of money fast to help you meet your early retirement objectives.

If you were to keep reinvesting your distributions and profits, then your returns will get larger and larger.

Understand the Tax Advantages

Remember, there are enormous tax advantages with real estate syndications as well, so you could have the potential to keep more of what you earn in general, which will help you bring more revenue to your bottom, which will accelerate your ability to reach your goals and help you to increase your net worth.

“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” – Andrew Carnegie, billionaire industrialist

The Bottom Line

At the end of the day more and more people are simply frustrated with the reality that working harder won’t get them to the point of having financial freedom.

But the good news is that strategies that allow individuals to grow their money in smart, tax-advantaged, passive income opportunities such as commercial multifamily syndications may be an approach that will help you reach the goals you have set for you and your family.

Until next time…Earn Passively & Live Abundantly!

Note: we are not financial advisors and are not offering financial advice of any kind. Please consult with your advisors before making any investment or financial decisions. 

Ready to Learn More? 

The best way for you to learn more about commercial real estate syndications is to join the PCRP Passive Investor Club.

Through the PCRP Passive Investor Club, you’ll get a priority review of all the deals we offer. We’ll work with you to determine your investing goals and then present you with the best deals to meet those goals. We’ll then guide you every step of the way as you invest in those deals.

So if you’re ready to start investing passively in institutional-grade, commercial real estate in fast-growing, climate-resilient markets in the U.S., join the PCRP Passive Investor Club  – IT’S FREE! – and get started on your path to EARN PASSIVELY and LIVE ABUNDANTLY!

If you would like to know more about what we do and how it may be of value to you, please reach out to us anytime.  We’re always happy to help!