This is not the end of the world or mankind by any chance. It is the end of YOU being irresponsible with your MONEY. MONEY is a treasure, it is a game, and it is a necessity. You need it to live happily and fulfilled in life. No matter what ANYONE will tell you, if you do not have any money there is no way you can live a FULL and COMPLETE life and achieve Happiness. 

Having said that, the only way to have money is to go and FIND IT. ATTRACT IT and CAPTURE IT. As good Mr. Kiyosaki will say, there are four quadrants in which anyone can bring money to the table. Let me repeat them to you, these are the Employees, Self-Employed, Owners and Investors. I will not get into too much detail on the quadrants, if you are interested in learning a lot from them please read Mr. Robert Kiyosaki’s book named The CashFlow Quadrant and you will learn a lot from this book. I think it is his best book so far. 

I really don’t care where you get your money from. It can be from a job, from your own side hustle, from owning a business in shape, or from investments. The investments can be active (where you have to be on top of them to make them happen) or passive (where you forget about them 90% of the time). Let me tell you a little truth. There are NO 100% PASSIVE INVESTMENTS. Even the most passive one requires you to sign something or take a look at something once in a while. 

My question is: Once you receive the money, what do you do with it? Spend it? Save it? Invest it? There are three stages in personal finances which I will touch base on that will lead you to achieve Financial Freedom. What is Financial Freedom?

Financial Freedom is the epitome of personal finances. It is the sweetest of the fruits. It is the Oasis in the desert. It is the SIX PACK of Fitness. Something that everyone talks about, and very few people follow through. 

Financial Freedom is a state of money where your EARNINGS (money coming in) equal or are greater than your EXPENSES (money coming out) WITHOUT taking into account a Job. 

If you make $3,000 a month in your job and spend $2,500 on your Fixed and Variable Expenses every month, you are left with $500 in Savings. Are you Financially Free? The answer is OF COURSE NOT!

The moment your job goes away, and trust me, on this scenario we are living it may go away very quickly, you lose it all. Your income goes to 0. Your expenses will keep being $2,500 a month. This is when your life falls apart if you don’t have an emergency fund accounting for at least 6 months of monthly expenses. ($2,500 x 6 = $15,000 in this example) 

Each and every person is in one of these 3 categories: 

I will explain briefly each one of them and encourage you to jump from Stage 1 to Stage 3 the fastest way possible with my help. If you haven’t done it already, please download my BUDGETING spreadsheet becoming a member so you can start doing it now!

This stage is the most comfortable one of all. More than 60% of Americans fall into this Stage and it is very dangerous if you ask me. You do not have a budget, you do not know how much your Fixed and Variable expenses are, and how much you can save every month.

You are drowned in debt other than your House/Apt. I don’t take mortgage or rent into account as Bad Debt because everyone is capable of getting a loan to get a place to live at a low interest rate instead of freezing all their cash in a house. Never freeze your cash into something that is not generating any income for you! 

The spender stage is bad, and people do not figure this thing out. They love Amazon, and they love retail shopping online and in-store. They buy and buy and buy stuff they don’t need to impress others and satisfy themselves quickly. I see this new wallet online and I go quickly and buy it. What is the excuse? It was on sale! There were only 2 left! I THINK my wallet needs changing. 

This is BS. Your wallet does not need changing. IT needs more money inside! Your baby does not need more clothes. Your wife does not need new shoes. You don’t need a new car. This is the Spender Stage. When you use my Budget calculator you will find out that you ARE NOT saving 20% of your income by any means! You are spending 90-100% or more of your income every month and even getting into debt! The “I DON’T MAKE ENOUGH” is BS. When you are in the Spender Stage, you can make $1,000 a month or $20,000 a month and still spend it all and be in bad shape. Why do actors sometimes file for bankruptcy if they make MILLIONS every year filming movies?

Once you ran the numbers on the spreadsheet and you control your spending, increase your income, and budget accordingly, you are now welcomed to the Saver Stage! As you might have seen in YouTube, people say that Savers are LOSERS. That is just Marketing. Saving is Step 1 into Financial Freedom. IF you do not have money left to play with, you cannot invest and create more money. Don’t let them fool you. SPENDERS are LOSERS. That’s for sure.

Say you make $5,000 per month and you save 25% of it every month. You can account for $1,250 every month in Savings. You can place that money into a High-Yield Savings Account or a Money Market Account for it to protect from inflation a little bit. It is not a good long-term move, but it is better than having the money sit on a Checking Account. 

The nice thing about being in the Saver Stage is that you always HAVE money. When an emergency occurs, you have the means to get out of it. I will say a good 30% of Americans are in this position today. The problem with this stage is the Long-Term goals of it. Accumulating money in an account than gives you 0 or 1.5% interest every year will never make you achieve Financial Freedom. You need to invest and diversify your income. 

 

This is the final stage where every American should be in this moment. Unfortunately, only 10% or less of Americans say they are in the Investor Stage. Others just spend their money with no control, are in debt and with no emergency fund. Even others just save and save money to lock it and freeze it in a bank account hoping for the best. 

The Investor Stage is when you get your SAVINGS (from Stage 2) and inject them into a vehicle of investment. This vehicle of investment will give you a certain ROI (Return on Investment) under a certain risk. I cannot go over all the investment vehicles out there, but I will touch on one of them which is also my favorite: Real Estate Investments on Single Family Rentals.

When I can save $40,000, I go to the market and find a good single-family residence. The house will ideally be worth $100,000, and I could get it for a little under market value. Then, I will put 25% down on a 30-year mortgage and put another $5,000 - $10,000 in both renovations and fees. Then, this property will get a tenant and give me enough to pay back the mortgage and escrow, plus giving me an extra $400-$500 per month in cashflow. 

IS this the only way to invest? No, of course not. Am I telling everyone to go and invest in Single-family rentals right now? Probably not. I am giving you an example where you can invest your hard savings into something that will make you richer every day for the rest of your life.

If my Fixed + Variable expenses are around $4,000 per month, I will need to get enough cashflow from around 10 rentals to breakeven and achieve financial independence. I do not count money coming from a job, or side hustles, or anything else I do. Not even from this blog or social media. That is a different story. If I want to be Financially Free from Rental Income Properties, I would have to own 10 of them. I would need around $400,000 of investment money to get there. How can I get the money? This is where your CREATIVITY and VALUE stands!

Whether or not you are an employee or a business owner, you need to BUDGET your MONEY. Everyone starts in the Spending Stage and works themselves up to the SAVER and the INVESTOR. The faster you move to Step 3 the better. You can invest in Wall Street, Real Estate, Businesses, etc. I will only recommend you read and learn about them first before you invest any money and put yourself in extra risk. Every investment has risk, but it should be CONTROLLED RISK, not gambling. If you think gambling in Wall Street is a good idea, please DON’T. 

Making money and keeping money is hard. You need to analyze what you feel comfortable doing as investments and go for it. Do not be an “ALL TALK NO GAME” person that gives advice to people and doesn’t do anything. 

IF you are in the SPENDER STAGE please get out of it NOW! You will be DECAPITATED very soon in this market of uncertainty. If you are in the SAVER STAGE, congratulations, please go slowly into the Investor STAGE with controlled and analyzed investments. You will never go back into the SAVER Stage once you reach this. 

Don’t Forget to download my spreadsheet to BUDGET your income and achieve Financial Freedom and keep safe!