Working 3 out of the 4 quadrants will mean freedom in 5 years!

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After reading all of Robert Kiyosaki's books on money and real estate there is something that is obvious to me. In order to gain financial freedom I need passive income and lots of it. You can not gain financial freedom from a job or having a ton in savings. You can't even get it from owning a business, trust me I own a business and am not financially free. However through real estate this is completely possible.

The book that really did it for me was the book by Robert called "The CashFlow Quadrant". This book goes into detail about how different levels of income earners actually use their money and how each of them are taxed. When reading this book I had flashbacks from when I was growing up. My father owned a very successful manufacturing business and brought home around $175k/year. We lived in one of the nicest houses in the nicest neighborhood but were still broke. See my parents like many other people in this income level bought liabilities first. Things like houses, cars, clothing, vacations. Then when they were done buying those things they would try to invest with what was left.....which was basically nothing. Then they would wake up and continue to do the same thing day after day after day. 

This book was pretty clear about how people in the different levels of income would handle their money and it was obvious to me that I couldn't do the same thing with money that my parents did. So that is where my journey started.

I decided shortly after that to really take a look at my spending habits and see just exactly how I spent my money. Was I buying stupid stuff first and then trying to invest the scraps that were left? 

After realizing that I was spending money on stuff that would depreciate in value or things that would last for only a short while I decided to really get serious about how I made money and how I spent money.

This is where the quadrants really come into play for my life. For anyone who doesn't know about the quadrants I would suggest taking a look at the book. But a quick summary is that there are four different quadrants that EVERYONE earns their money in. 1) Being an Employee(E) 2) Being Self Employed (S) 3) Owning a Big Business (B) 4) Being an investor (I). Robert goes into the different ways each way is taxed so I won't go into it here but I atlas wanted to give you an understanding of the so you can following with me. 

So finally....How am I using all of these or at least 3 out of the 4 to make me wealthy enough to retire in 5 years?? I currently own and operate a small distribution company that sells hand tools. So that would put me in the (S) quadrant or the self employed quadrant. That is the one out of all of them that gets taxed the most unfortunately. Being an over achiever that wasn't good enough for me to only earn income for one source so I decided to talk with my wife about keeping my business going and working another full time job. So thats exactly what I am doing. I found a job that is 4 days a week 10 hour shifts making about 40k/year on top of what my business is doing. So that puts me in both the E and S quadrants. But thats not it I also own a handful of rental properties in the Kansas City area. So now I am in three quadrants. The E, S, and I. With all three of these is where over the next 5 years I will  do a lot of damage and be able to retire or at least semi retire from working. I Just turned 31 a few days ago so if all goes well I should be basically done working full time when I am 35 or 36. I will support my family on the $40k/yr and the rest will go into paying off my rental properties which some of you will disagree with but I have done the numbers and evaluated my own risk tolerances with loans for rentals and decided for my family paying off the ones we have is the best course of action.

SO..,after 5 years and all properties are paid off we will be bring in around $3,000/month in rental income. That may not seem like a lot to some people but to my wife and I that is the first stair of our freedom #. At that point we will have no payments anywhere and hardly any money going out each month and money coming in. After we accomplish that first goal we decided that we would take half a year off to spend it in California and Hawaii visiting family and friends. Once we where done with that we decided the we would start building our rental portfolio with a firm foundation of paid for rentals. We would of course take loans for more properties but at least we had a firm foundation to work off of instead of being leverage in every way.

Leverage can be good and it could be bad. It really comes down to your own personally risk tolerance and how you feel about being leveraged. My wife and I are ok with about 5 loans at one time but no more than that. After that we just can't sleep well at night and that is just not worth it at all. 

So my strategy is kind of a mix between Dave Ramsey and Robert Kiyosaki. I think both men are geniuses in their own right but one is not all right and the other wrong. Taking both ideas and marrying the two seems to make the most since to me. 

That is my plan and the future of my wealth building to produce a free life for myself and my family. I would love to hear what everyone thinks of my thoughts and my plan. I would like to hear if you think there is a better way or something that could help me. I know I don't know everything about money and investing so I am will to hear everyone out. I have realized that the more I learn the more I don't know.

Thanks for reading,

Jason W.

These are the stories that most people live for on here. Clear goals with powerhouse execution. Love that you are working and own a business and own rentals. You are way further along than most your age. You should feel very proud of the progress you have made. Way to go and keep up the amazing journey!!!

I love all of this Jason, thanks for sharing! I'm a huge fan of the Rich Dad principles and I totally agree with the quadrant (I have experience now in all of the quadrants and I find them to be completely accurate). I also love that you talk about your personal boundaries....after 5 loans you lose sleep at night. Anytime the leverging vs. paying cash debate comes up, I always say that I completely back leveraging all day long but at the end of the day, if it makes you lose sleep at night, it's not worth it. No investment is worth losing sleep.

Thanks again for sharing all this! Was a nice light to my day to read :)

Thank you both for the kind words! I am glad you enjoyed reading a little about our plan for real estate and total world domination. Love to hear about what you both are up too and what the next 5 years looks like for you!

Nice post Jason! I'm right there with you! That book is a game changer! Thanks for the recap as it has been a bit since I read it and I have starting to buy liabilities and not assets! I needed this reminder!

Thanks,