FINANCIAL FREEDOM
SECRET BEHIND FINANCIAL FREEDOM
It’s Monday morning. You don’t have to rush off for work. You leisurely sip your favorite hot beverage while giving thanks for all your blessings.
You’re debt free, your bills are all paid, you have extra money to spend and you have the freedom to set your own schedule.
You check your laptop and your account grew larger overnight while you were asleep!
This is the Financial Freedom lifestyle!!!
The secret behind Financial Freedom is.... having a source of regular paychecks which don’t require having a job.
Yes… it is possible to receive regular paychecks without having a job. These paychecks are sometimes referred to as “passive income”.
The most common sources of passive income are… Royalties, Rent, Dividends and Interest.
ROYALTIES
If you have talent or skills, you could create a song, book, movie, class, video game or software and collect royalties whenever someone downloads your work.
Or, if you’re like me… no talent or skills, don’t lose hope!!!
RENT
Rental properties are the best investment for US citizens. Regular income, protection against the declining purchasing power of paper money and great tax advantages.
DIVIDENDS
Become part owner of a highly profitable business via the stock market. When the business distributes a portion of profits to the owners (shareholders), it’s called a dividend. A few great businesses (The Coca Cola Co.) have been paying regular dividends for over 100 years.
INTEREST
Now is the best time to collect interest. For the past 20 years, interest rates have been paltry, but now you can receive some decent interest on your savings. I’m collecting 5% on a money market fund from Charles Schwab..
FINANCIAL FREEDOM
To be financially free is having passive income streams greater all your expenses. In other words, when your combined income from Royalties, Rent, Dividends and Interest are more than enough to pay all your living expenses, then... you're financially free.
When your passive income streams are enough to pay all your bills, then your job becomes an option, not a necessity.
GETTING STARTED
You maybe wondering, how you can build passive income streams big enough to live on?
There are two factors to consider for achieving Financial Freedom - Burn Rate and Passive Income.
Burn Rate
Burn Rate - This is how much you spend each month. Obviously, the greater your burn rate (monthly expenses) the more passive income is required to be financially free.
If financial freedom is a goal and priority, looking for ways to reduce your burn rate is important. The lowest hanging fruit is eliminating wasteful expenses. Do you have streaming or other subscriptions you're not utilizing? If you're paying for something but not using it, get rid of it immediately. Learning to cook meals instead of eating out will reduce your burn rate and you'll eat better too. Maybe buy a power rack and some weights instead of paying for a gym membership.
Let me share a real story about reducing burn rate. My friend Jim is in his 60's and concerned about having enough money for retirement. As we talked, I discovered he has a second home in the mountains. Jim and his wife like to go there for the weekends. It's nice for a change of scenery, but that second home has a huge burn rate. Jim was paying property tax, insurance, utilities and maintenance costs for a home that was empty most days of the month.
Realizing how much it was costing him, Jim turned his second home into an AirBnb. Now, instead of costing him thousands of dollars each month, it generates passive income.
Keeping your burn rate low is important for good financial health.
Building Passive Income Streams
Building passive income streams requires intentionality over your working career.
When I was young, energy and enthusiasm was my main asset. With these assets, I was able to get good jobs and climbed the ladder to getting promotions and raises. My paycheck from various jobs gave me money which I saved and invested in income producing assets.
The key is to stick with it!!
At first, my dividends and interest was paltry. I was receiving about $20 a month. It was far cry from Financial Freedom. But hey... it's money for doing absolutely nothing. And to be honest, $20 went a lot further 30 years ago.
Fortunately I had a pretty low burn rate and was able to channel a good part of each paycheck into savings and investing.
Slowly, the tiny trickle of passive income grew. It was a milestone when my dividends reached $100 each month. Hey this was starting to get interesting.
With intentionality year after year, the tiny trickle of passive income grew into stream, then into a river.
Compounding
When you're working and don't need to touch your passive income, you can harness the power of compounding. Warren Buffet calls it snowballing. It's when you use your passive income to purchase more income producing assets. This results in more passive income which you also reinvest to generate even more passive income. The cycle goes on and on.
INVITATION FROM YOUR CREATOR
Did you know your Creator invites you to bring what your heart desires to Him?
Your Creator wants to help you!
Jesus says...
Ask and it will be given to you; seek and you will find;
knock and the door will be opened to you.
Matthew 7:7
Your Creator knows you need money. EVERYTHING is under his power and authority (including wealth). Don't be afraid to talk with your Creator about your desire to be Financially Free. Try it, you'll be glad you did.
You can become Financially Free!!! You got this!
Have a Great Day!
Dragon Xu
