Financial Freedom. Don't you just love that phrase? I hear it a lot - mostly when I ask people what they want to achieve by becoming a property developer.
But there's a problem - what exactly IS financial freedom? And it's when I ask that question that people start to stammer, and look confused, and don't really know what to say. They’ve heard the phrase mentioned, they know they don’t want to work in their job anymore, but don’t have any actual numbers or plan to make that happen..
So let's take a look at what you need to do if you want to transition from your day job into property development.
Step 1 - What's your starting position?
This step is crucial - how can you achieve financial freedom unless you have a clear definition of what it looks like for you? The answer is really quite simple. You need to be earning enough passive income to pay your bills and expenses (debts) on a monthly basis. That's it.
Even better, that number really isn't as high as you'd think. So if you're serious about achieving financial freedom, sit down and work out exactly how much passive income you need each month to get by. Then multiply it by 12, and you have an annual income you need to earn.
Now, notice I said "get by". I didn't say buy a new Ferrari every year, or spend 6 months travelling overseas (that might have to wait a little while thanks to COVID-19!), or dining out at expensive restaurants every night, or buying yourself a massive mansion on the waterfront. That's a whole different level, and while it might be nice, you can escape your day job long before you reach that level.
Financial freedom is only about covering all the regular stuff - mortgage, rent, groceries, electricity bills etc.
So spend some time assessing where you're starting from financially. This includes reviewing things like:
From this you will be able to work out what your magic financial freedom starting position is.
But there's a problem - what exactly IS financial freedom? And it's when I ask that question that people start to stammer, and look confused, and don't really know what to say. They’ve heard the phrase mentioned, they know they don’t want to work in their job anymore, but don’t have any actual numbers or plan to make that happen..
So let's take a look at what you need to do if you want to transition from your day job into property development.
Step 1 - What's your starting position?
This step is crucial - how can you achieve financial freedom unless you have a clear definition of what it looks like for you? The answer is really quite simple. You need to be earning enough passive income to pay your bills and expenses (debts) on a monthly basis. That's it.
Even better, that number really isn't as high as you'd think. So if you're serious about achieving financial freedom, sit down and work out exactly how much passive income you need each month to get by. Then multiply it by 12, and you have an annual income you need to earn.
Now, notice I said "get by". I didn't say buy a new Ferrari every year, or spend 6 months travelling overseas (that might have to wait a little while thanks to COVID-19!), or dining out at expensive restaurants every night, or buying yourself a massive mansion on the waterfront. That's a whole different level, and while it might be nice, you can escape your day job long before you reach that level.
Financial freedom is only about covering all the regular stuff - mortgage, rent, groceries, electricity bills etc.
So spend some time assessing where you're starting from financially. This includes reviewing things like:
- Assets & Liabilities
- Available Equity
- Debt being Serviced, both tax deductible and non tax deductible
- What passive cashflow do you have already
- Other cashflow eg wages, profit from projects
From this you will be able to work out what your magic financial freedom starting position is.